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Resideo acquires Shoreview Distribution, releases strong Q1 results

Resideo acquires Shoreview Distribution, releases strong Q1 results

Resideo acquires Shoreview Distribution, releases strong Q1 results

AUSTIN, Texas—Resideo Technologies, Inc., a global provider of home comfort and security solutions and distributor of commercial and residential security and audio-visual products, announced it has acquired privately held Shoreview Distribution, a distributor of professional audio, video, lighting, display and broadcast equipment. Terms of the transaction were not disclosed.

Shoreview was founded in 1989 and is based in Foxboro, Ma., with warehouse locations on the East and West coasts, serving customers across the U.S. and will be part of Resideo's ADI Global Distribution business.

"A key component of ADI's strategy is pursuing acquisitions to drive continued growth in adjacent markets and expand our base of customers and suppliers," Resideo President and CEO Jay Geldmacher said in the announcement. "This acquisition represents another important step in that strategy by further solidifying ADI's position in the Pro AV market and marks the third acquisition for our distribution business since the beginning of 2020."

Shoreview strengthens ADI's portfolio with key industry brands and builds upon its presence in the Pro AV market with an assortment of conferencing and collaboration systems, audio equipment, projection systems, video displays and digital signage. Additionally, the acquisition increases ADI's footprint with added warehouse operations to help provide immediate product availability to customers.

"Today's professional integrators demand a high-performance distributor that can provide them with top industry brands, and the support and services they need," said ADI Global Distribution President Rob Aarnes. "This acquisition expands our offering and fits into our strategy to make ADI the indispensable partner of choice for Pro AV. Shoreview complements our Herman Pro AV business, and with our scale and resources, robust product lines and industry experience and subcontracting services model, we can deliver even more value to a greater number of integrators."

Q1 RESULTS

Resideo announced its first quarter 2021 highlights, which included:

  • Net revenue of $1.4 billion, up 20 percent from $1.2 billion in the first quarter 2020.
  • Gross profit margin of 25.9 percent, up 180 basis points compared to gross profit margin of 24.1 percent in the prior year comparable period.
  • Operating profit of $130 million, an increase of $96 million over operating profit of $34 million in the first quarter 2020.
  • Positive cash provided by operating activities of $5 million, an improvement of $79 million compared to cash used for operating activities of $74 million in the prior year comparable period.

"Our positive momentum continued across both Products & Solutions and ADI in the first quarter," said Geldmacher. "Residential market demand remains robust, and ADI is seeing improved activity in commercial markets. Strong top-line performance along with our ongoing transformation work enabled us to expand our consolidated margins and overall profitability while also increasing our investment in both Products & Solutions and ADI." 

Resideo’s consolidated revenue of $1.4 billion in the first quarter 2021 increased 20 percent compared with $1.2 billion in the first quarter 2020. Products & Solutions revenue was $606 million, an increase of 28 percent compared with revenue of $475 million in the prior year comparable period due to strong demand across Products & Solutions' primary end markets and channels. ADI Global Distribution revenue was $813 million, an increase of 15 percent compared with revenue of $704 million in the prior year comparable period due to improved demand for products serving both commercial and residential markets and growth in e-commerce sales. 

Gross profit margin for the first quarter 2021 was 25.9 percent, up 180 basis points compared to 24.1 percent in the first quarter 2020. Products & Solutions gross profit margin of 38 percent increased 410 basis points from 33.9 percent in the first quarter 2020. The increase was primarily attributable to higher sales volumes and engineering and supply chain productivity improvements, partially offset by higher freight and logistics costs.

ADI Global Distribution gross profit margin was 17.2 percent, a decline of 70 basis points compared to the prior year comparable period gross profit margin of 17.9 percent. The decline was primarily a result of lower supplier rebates and an unfavorable sales mix in the EMEA (Europe, Middle East and Africa) region, partially offset by higher product line margin in the North America region.

Resideo's operating profit of $130 million in the first quarter 2021 was up $96 million compared to first quarter 2020 operating profit of $34 million. Products & Solutions operating profit of $130 million in the first quarter 2021 increased from $58 million in the first quarter 2020. The increase was the result of higher volumes, improved gross profit margin and a reduction in overall operating expense. ADI Global Distribution operating profit increased to $59 million in the first quarter 2021 from $48 million in the first quarter 2020, primarily due to higher revenue. Total Corporate costs were $59 million in the first quarter 2021, down $13 million from $72 million in the prior year comparable period primarily due to transformation program savings, reduced spin related expenses and lower restructuring costs.

Net income for the first quarter 2021 was $49 million, or $0.33 per diluted common share, compared with a net loss of $21 million, or a loss of $0.17 per diluted common share, in the first quarter 2020.

The company reported net cash provided by operating activities of $5 million for the first quarter 2021, an increase of $79 million from the prior year comparable period. This improvement was primarily due to higher net income. On April 3, 2021, Resideo had cash and cash equivalents of $508 million and total outstanding debt of $1.2 billion.

"We are well positioned in both of our segments to take advantage of current market tailwinds and the positive long-term secular trends of increased investment in the home and demand for professional security solutions,” said Geldmacher. “While we continue to closely monitor developments around COVID-19 and supply chain and logistical challenges, our current visibility indicates a favorable operating environment as we move through 2021."

The company today updated its outlook for 2021 and now expects full-year revenue to be in the range of $5.5 billion to $5.7 billion, gross profit margin in the range of 26 percent to 29 percent and operating profit in the range of $500 million to $550 million.

The company expects second quarter 2021 revenue to be in the range of $1.40 billion to $1.45 billion, gross profit margin in the range of 25.5 percent to 27.5 percent and operating profit in the range of $115 million to $125 million.

 

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