Resideo Technologies, Inc.

Hello, ladies and gentlemen. At this time, I would like to welcome everyone to the Resideo Technologies fourth quarter 2023 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. It is now my pleasure to turn today's call over to Mr. Jason Willey, Vice President of Investor Relations. Mr. Willey, you may now begin.

Good afternoon, everyone, and thank you for joining us for Residio's fourth quarter 2023 earnings call. On today's call will be Jake Altmacher, Residio'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.residio.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 the forward-looking statements as a result of a number of factors, including those described from time to time in Residio's filings 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 and our annual report on Form 10-K and other SEC filings. With that, I will turn the call over to Jay.

Thank you, Jason, and thanks, everyone, for joining us today. We finished 2023 on a strong note. Q4 revenue and profitability were above the midpoint of our outlook, and cash generation was strong, with full-year operating cash flow of $440 million. We built momentum throughout the year in order activity within products and solutions. We also made significant progress on our key strategic operational initiatives and in meaningful reducing structural costs. During 2023, we made substantial progress reshaping our portfolio and operations with the divestiture of Genesis and the outsourcing of our casting facility in San Diego. Work continues on rebalancing our product portfolio, manufacturing operations, and ADI footprint to help position the business for profitable long-term growth. We expect to have more to share on both fronts as we move through 2024. We also advanced the ball on the partnership front, strengthening our relationship with major insurance providers, establishing new relationships in the energy management market, including our recent announcement with Ford, and meaningfully expanding the depth of home builder relationships. We have spoken previously about our progress building content with home builders. This work is led by our First Alert and BRK professional brands. We have expanded content with existing builders and increased the number of partners we are selling to, adding over 20 new builder partners in 2023. We believe we are well positioned to drive growth in this channel as the new construction market recovers. We also expect this additional content will have positive long-term benefits to our potential replacement base. Our innovation within products and solutions, we significantly improved our new product introduction cadence. This included new video doorbell and outdoor camera products for our professionally monitored security offering, launching Pro Series for the EMEA security market, first alert branded connected water leak detection and shutoff products, and the rollout of UL 8th edition smoke detectors. We are seeing results based on all these actions. We are encouraged by order trends within products and solutions, which have stabilized year over year and grew sequentially in Q3 and Q4. Through executing on new product introductions and taking effective cost control actions, We are achieving gross margin expansion despite volume headwinds and continuing to invest in key long-term initiatives. At ADI, we continue to grow our digital capabilities. Building a leading digital experience is critical to customer engagement and is expected to be margin accretive over time. For 2023, e-commerce sales were up 8% year over year. Total touchless sales, which includes e-commerce, electronic data interchange, and email automation, now account for 38% of ADI's total sales. We made significant investment during 2023 in our product information management and data asset management systems. This work helps to enhance the usability of our web experience with a focus on speed, intuitive search, and accuracy of availability and delivery information. ADI continues to make progress with its expansion into adjacent categories, particularly in the audiovisual market. ADI acquired BTX in early 2023, adding new capabilities in the professional AV market and insourcing custom fiber assemblies. RhoAV was one of ADI's better performing categories in 2023. growing 6% on an organic basis and now accounts for 10% of ADI sales. With that, I will turn the call over to Tony to discuss our fourth quarter results and 2024 outlook.