Resideo Technologies, Inc.

Ladies and gentlemen, at this time, I'd like to welcome everyone to the Residio Technologies first quarter 2022 earnings conference call. Today's call is being recorded. All participants will be in a listen-only mode until the formal question and answer portion of the call. At that time, if you do have a question, please press star one on your telephone keypad. It is now my pleasure to turn the call over to Mr. Jason Willey, Vice President of Investor Relations. Mr. Willey, you may begin.

Good afternoon, everyone, and thank you for joining us for Resideo's first quarter 2022 earnings call. On today's call will be Jay Geldmacher, Resideo's chief executive officer, and Tony Trunzo, our chief financial officer. A copy of our earnings release and related presentation materials are available on the investor relations page of our website at investors.resideo.com. We would like to remind you that this afternoon's presentation contains forward-looking statements. Statements other than historical facts made during this call may constitute forward-looking statements and are not guarantees of future performance or results and involve a number of risks and uncertainties. Actual results may differ materially from those in forward-looking statements as a result of a number of factors, including those described from time to time in Residio's violence with the Securities and Exchange Commission. The company assumes no obligation to update any such forward-looking statements. we identify the principal risks and uncertainties that affect our performance in our annual report on Form 10-K and other SEC filings. With that, I will now turn the call over to Jay.

Thank you, Jason, and good afternoon, everyone. We began 2022 on a strong note, continuing the positive momentum that has been building across the business since the middle of 2020. First quarter performance again demonstrated our ability to navigate the challenging supply chain and inflationary environments to deliver for customers. At the same time, we drove higher revenue, margin expansion, and strong earnings growth. We also continue to make progress on strategic priorities of both products and solutions and ADI around capital deployment, accelerating new products and services, and increasing exposure to high growth in adjacent categories. In the first quarter, we deployed over $630 million in capital to value-enhancing M&A activity. Within Proxxon Solutions, we completed the acquisition of First Alert, a leader in residential smoke alarms and carbon monoxide detection. First Alert expands our sensors within the home and occupies a highly strategic position on the ceiling. We are already working together to create value in the channel, leveraging First Alert's presence in retail, and residual strength and scale with professional distributors. Over time, we see opportunity to integrate First Alert products and technology with our existing product portfolio. We are also excited by the potential to drive smoke and carbon monoxide detector category growth by expanding connected offerings. While First Alert has only been on board for a month, we've already seen significant interest from partners looking to work closely with the combined First Alert and Resideo product capabilities. During the first quarter, ADI continues expansion in the data communications category with the acquisition of Arrow wire and cable. The business complements the 2021 acquisition of Norfolk wire and electronics geographically, strengthening ADI's product offering, category expertise, and customer exposure in the growing data communications market. I want to welcome both the First Alert and Arrow teams to Resideo, and we look forward to demonstrating the significant opportunity for value creation these acquisitions bring. Turning to segment performance in the first quarter, products and solutions delivered 2% year-over-year growth. Overall demand trends remained healthy across product categories and channels, as homeowners continue to invest to improve the security, energy efficiency, and comfort of their surroundings. The semiconductor supply chain environment remained challenged during the first quarter, and shipping costs have stayed at historically elevated levels. Helping offset these headwinds to revenue and costs was the flow-through of price actions we implemented throughout 2021. We've rolled out further price adjustments in April and May across parts of the portfolio. We are increasing investment in engineering to accelerate innovation and development efforts in support of our long-term strategy. Underpinning these efforts is significant progress around creating an integrated software and applications platform to support a residual products and services ecosystem. When completed, this platform will enable new value-creating solutions for our customers as well as provide more simplified experience for homeowners. We are excited by the progress and opportunity here, but acknowledge we have significant work to do in order to reach the ultimate vision of fully leveraging our unique product breadth within a connected home ecosystem. We are also expanding our business development efforts, focusing on innovative partnerships with other major players in the broader connected home market. Early results of this work include several design wins with OEM customers and initiatives underway to expand our presence in attractive growth categories such as multifamily, residential new construction, hydrogen, and energy management. At ADI, revenue grew 9% in the first quarter with strength in North America and categories that typically support commercial customers. As a reminder, approximately two-thirds of ADI's business typically comes from commercial customers. Growing backlog of products in numerous categories restrained ADI revenue growth in Q1 and is expected to remain a challenge moving forward. Over the past 12 months, ADI has made meaningful progress expanding into key adjacent categories of audiovisual and data communications. ADI drove significant expansion in total AV category sales during the first quarter. With the integration of the Shoreview acquisition into ADI, our AB business is seeing the benefits of ADI's scale and strength in customer service and supply chain, and the ability to win and execute on larger projects. ADI continues to expand its private brand offerings, introducing over 75 new SKUs in the quarter, with an extensive roadmap of future introductions. Private brand revenue grew over 40% compared to the first quarter 2021 at very accretive margin. With that, I will turn the call over to Tony to discuss our first quarter performance and 2022 outlook in more detail.