In its quarterly financial report, Resideo (NYSE:REZI) is reporting a slight dip in revenue for 2023 and the fourth quarter of the fiscal year due to slower residential repair and remodel activity, HVAC inventory rebalancing, and a slower demand within the residential security category as it relates to distribution business ADI.

However, that hasn’t dampened investor sentiment, as the company stock is currently up 21% as of writing this article.

According to the Scottsdale, Ariz.-based manufacturer and distributor of smart home and security products in its financial report, Resideo reported net revenue of $6.24 billion for 2023, which was down 2% from 2022. Income from operations of $547 million also took a drop from the $611 million reported last year. The company noted $42 million in restructuring charges om 2023 and $35 million in 2022.

Meanwhile, Resideo reported fully diluted GAAP earnings per share of $1.42 and non-GAAP earnings per share of $1.58 for 2023, compared to $1.90 and $1.99 in 2022, respectively.

Cash provided by operating activities was $440 million, up from $152 million in the prior year.

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Fourth quarter figures reflected similar changes, with net revenue of $1.54 billion compared to $1.56 billion in the prior year’s fourth quarter. However, income from operations was $147 million, up from $98 million in the fourth quarter of 2022. However, the 2022 figure includes $35 million of restructuring charges.

Fully diluted GAAP earnings per share were $0.56 and non-GAAP earning per share were $0.48, both improvements over the $0.26 and $0.25 reported in the fourth quarter of 2022, respectively.

Also in the fourth quarter, cash provided by operating activities grew to $263 million from $139 million in the last quarter of 2022.

Resideo reported declines in its products and solutions segment, with net revenue down 4% to $2.67 billion.

According to Resideo, volume declined across product categories due to slower residential repair and remodel activity and inventory rebalancing in the HVAC channel. However, those challenges were partially offset by a strong price realization and a full year of revenue and expansion from First Alert since its initial acquisition of the company.

Meanwhile, the ADI distribution business reported full year revenues of $3.57 billion, down $17 million from 2022.

According to the company, ADI saw growth in the access control and audiovisual categories but continued slower demand within residential security category.

Resideo says ADI’s e-commerce channel grew 8% in 2023 compared to the prior year period, representing 20% of total ADI revenue. Overall touchless revenue, which includes e-commerce, email order entry and EDI, was 38% of ADI’s total revenue for 2023.

Resideo president and CEO Jay Geldmacher says the company finished 2023 on a strong note, with results exceeding the midpoint of the fourth quarter outlook driven by continued improvement in order activity and gross margin in the products and solutions business.

Geldmacher pointed to improved cash generation, as the company ended the year with $440 million of operating cash flow.

“This performance, and the high level of free cash flow conversion over the past three years, highlights the strong cash generation capabilities of both of our businesses,” he said.

Geldmacher also cited the sale of the Gensis Cable business for $86 million, new product introductions, new digital capabilities and reducing structural costs.

“Looking to 2024, we are focused on further expanding the margins and profitability of the business, both through ongoing portfolio optimization efforts and operational improvements,” Geldmacher said.

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