Resideo Technologies, Inc.

Good afternoon. My name is Kathleen and I will be your conference operator today. At this time, I would like to welcome everyone to the Resilio 2024 fourth quarter and full year earnings call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, Simply press star followed by the number one on your telephone keypad. And if you would like to withdraw your question, press the star one again. Thank you. I would like to hand the conference over to your host today, Chris Lee, Global Head of Investor Relations. You may begin your conference.

Thanks, Kathleen. Good afternoon, everyone, and thank you for joining us for Resideo's fourth quarter and full year 2024 earnings call. On today's call will be Jay Geldmacher, Resideo's chief executive officer, Mike Harlett, our chief financial officer, Rob Arness, president of Resideo's ADI global distribution business, and Tom Saran, president of Resideo's products and solutions business. A copy of our earnings release and related presentation materials are available on the investor relations page of our website at investor.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 in our annual report on Form 10-K and other SEC filings. With that, I will turn the call over to Jay.

Thank you, Chris, and thanks to everyone for joining us today. Let me open by saying how happy I am with how the products and solutions and ADI business segments finished 2024 strongly, delivering revenue growth, healthy gross margin expansion, and record free cash flow generation in a global macroeconomic environment that is still mixed. As a result of our team's continued excellent execution, Resivio exceeded the high end of the range for all the metrics we provided in our annual financial outlook. Reported total net revenue of approximately $6.8 billion grew 8% year over year. Total adjusted EBITDA grew 17% year over year to approximately $700 million. Total cash generated from operations was $444 million, a new record and was well above our outlook of at least $375 million. Let's now go into some of the annual highlights for each business segment. Products and solutions continue to improve its fundamentals, experiencing growth in organic revenue and gross margins in 2024. The year-over-year annual change in organic net revenue improved approximately 300 basis points versus 2023, resulting in a positive growth rate that rounds to flat year over year. Organic growth excludes the impact of currency and the divestiture of Genesis. This was due to realized price increases across substantially all product categories, offset by volume declines. Reported gross margins for 2024 expanded by 240 basis points year over year due to structural improvements that increased operational efficiency. Our commitment to new product introduction was evident in 2024 with the launch of the Focus Pro thermostat and Vista security products in the last two quarters. And customer reception and demand for these products continues to be very positive. We are excited for these products. and for a range of new products scheduled to be introduced in 2025. ADI achieved 2% organic net revenue growth year-over-year in 2024, after excluding the impact of currency and the acquisition of SNAP-1. ADI overcame soft market conditions during the first half of the year, with digital channels and product categories such as video surveillance, residential security, and fire and access control showing second-half strength We acquired SNAP1 in June 2024, and its integration into ADI continues to progress very nicely. We achieved approximately $17 million of run rate synergies in 2024, approximately 40% higher than expected. In summary, we had a strong end to 2024, and this momentum is setting us up well for continued revenue growth, gross margin expansion, and durable free cash generation. Before I hand the call off to Tom, Rob, and Mike to talk about the drivers of the fourth quarter, we want to comment that the global macro environment remains mixed with continued U.S. dollar strength and the potential for changes in the tariff environment adding uncertainty to 2025. The residual team is prepared with comprehensive planning to address potential tariff changes including detailed actions that are designed to address the potential impact. Examples include commercial actions, price increases, and operational and supply chain moves. Let us now turn the call over to Tom, who will provide additional details in the fourth quarter for products and solutions.