Both the product side and the distribution side of Resideo’s business sustained solid Q2 revenues, helped by the inflationary pressures that have allowed the company to raise its prices. Resideo Technologies, (NYSE: REZI) financial results for the second quarter ended July 2, 2022 showed an overall 14% increase in revenue to $1.69 billion.
Within that number, the company’s Products and Solutions group had record revenues of $764 million, up 28% compared to the second quarter 2021, while its ADI Global Distribution unit hit record revenues of $922 million, up 5% compared to 2021.
“ADI and Products & Solutions delivered record quarterly revenue and combined operating profit exceeded the high-end of our outlook,” commented Jay Geldmacher, Resideo’s President and CEO.
“We have remained focused on delivering for customers and we believe our execution has enabled us to improve our positioning at key distribution and retail accounts, add new OEM business, and solidify our position as the distributor of choice for security contractors.”
“Products & Solutions grew volumes in the quarter and we continue to see good realization on our price actions,” he continues.
“First Alert delivered a strong quarter, and we are in the very early stages of tapping the meaningful commercial and operational opportunities from bringing the organizations together. Investments to expand digital initiatives and private brands continue to deliver strong growth for ADI. Returns on these investments and ADI’s relentless focus on execution drove another quarter of meaningful gross margin expansion and record operating income.”
Overall, Resideo had a gross profit margin of 27.7%, and an operating profit of $186 million, or 11.0% of revenue. That is compared to $121 million, or 8.2% of revenue, in the second quarter 2021.
Within the Products & Solutions Group, the operating profit was $154 million, up 19%. The company says its price increases drove over $60 million of year-over-year revenue improvement. Demand was strongest in the distribution and retail channels, which offset expected declines in security. The supply chain environment remained challenging during the second quarter, constraining the business’ ability to fully meet demand.
At ADI, the $922 million revenue number was driven by a strong pricing environment and recent acquisitions. Demand was again strong in categories that typically serve commercial end markets including fire and access control, according to the company.
Vendor supply issues remained a headwind to additional growth in the quarter. Sales through ADI’s e-commerce channel grew 29%, representing 18% of total ADI revenue, with overall touchless revenue reaching 36% of ADI total revenue. Private brands sales grew over 35% compared to the second quarter 2021.
Operating profit of $86 million for second quarter 2022 was up 30% from $66 million in the second quarter 2021, exceeding 9% of revenue.
At the beginning of the third quarter, ADI acquired Electronic Custom Distributors (ECD), a regional distributor of residential audio, video, automation, security, wire, and telecommunication products. With four branch locations and a 30,000-square-foot distribution center, the acquisition adds to ADI’s growing capabilities in the audio visual market. ECD is the fifth acquisition for ADI since 2020.
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