Resideo Technologies, Inc., a global provider of home comfort and security solutions and distributor of commercial and residential security and audio-visual products, has announced financial results for the fourth quarter and full-year ended December 31, 2021.
“2021 was a year of record performance for Resideo as both ADI and Products & Solutions delivered double digit revenue growth and operating margin expansion,” comments Jay Geldmacher, president and CEO, Resideo.
“The team executed through a challenging supply chain environment, stepping up to deliver for our customers. This operational execution and early returns on our transformation efforts and investments resulted in meaningful growth in earnings and cash generation.”
Products & Solutions delivered record revenue of $2.5 billion in 2021, up 16% compared to 2020. Demand was strong across all key product areas and channels driven by security and energy products and our OEM partners. Operating profit for 2021 was $541 million, or 21.9% of revenue, up 33% compared to 2020 and representing a 270 basis point expansion in operating margin. Revenue in the fourth quarter 2021 declined 6%, reflecting ongoing supply chain challenges as underlying demand trends remained solid.
Breaking down the numbers, the Resideo Q4 (fourth quarter) results came against a backdrop of significant supply chain, logistics and cost inflation challenges throughout the year. These challenges the company continues, impacted its ability to fully meet strong customer demand; Resideo says it also drove additional costs for components and freight, and these challenges required significant resource reallocation, which negated some of the financial impact of our transformation efforts and volume expansion.
While products & solutions implemented several price increases during 2021, these price movements did not fully offset input and logistics cost increases for the full year. Cost pressures from materials and price realization came more into balance during the fourth quarter, although lower volumes weighed on gross margin during the period.
“As we look to 2022, we expect to build on the strong 2021 performance with continued growth and margin expansion. At ADI we are focused on accelerating the momentum in our digital initiatives and continuing our expansion into adjacent audio visual and data communications categories,” notes Geldmacher.
“Within Products & Solutions we now have the foundation in place to build on our product and channel leadership to drive innovation and new revenue streams and we are excited about the opportunities created by our pending acquisition of First Alert.”
Resideo Q4 Revenues and ADI Financial Performance
Looking specifically at the Resideo Q4 financial results, consolidated revenue reached $1.45 billion in the fourth quarter 2021, which was a decrease 3% compared with the prior year of $1.50 billion.
Gross profit margin for the fourth quarter 2021 was 27.2%, compared to 28.2% in the prior year. Resideo’s operating profit of $141 million in the fourth quarter 2021 compared to a prior year operating profit of $152 million. Total Corporate costs were $54 million, down from $73 million in the prior year primarily due to impacts from transformation program cost savings and reduction of spin-off costs. Net income for the fourth quarter 2021 was $67 million, or $0.45 per diluted common share, compared with $59 million, or $0.44 per diluted common share, in the prior year.
ADI, which Resideo also owns, closed 2021 strong with fourth quarter 2021 revenue up 8% on a daily sales average basis and flat on a reported basis compared with 2020, reflecting five fewer selling days in fourth quarter 2021. For full year 2021, revenue expanded by 15% driven by strong demand across key product categories and within commercial and residential end markets. As the year progressed, vendor supply issues became more prevalent, particularly in categories such as video surveillance and intrusion, which resulted in elevated backlog at year end.
Operating profit of $268 million for 2021 was up 38% from $194 million in 2020. ADI delivered approximately 100 basis points of gross margin expansion for the year, reflecting investment and execution on pricing initiatives, which have provided the ADI sales team more real-time insight and the ability to price more efficiently. Gross margin was also favorably impacted by the current inflationary pricing environment, particularly during the second half of the year.
ADI also continued to expand its investments in digital initiatives in 2021. This included e-commerce experience, pricing optimization and salesforce effectiveness tools. These investments drove touchless sales to over $1 billion for the year, or over 30% of total ADI sales, half of which were through e-commerce.
With this omni-channel expansion, ADI is better positioned to serve customers how and where it wants to transact, whether in-person or online. This move to more digital interactions also frees sales associates for more consultative and value-add interactions. The positive impacts of this are seen in the total sales generated per sales associate, which expanded to over $2 million per sales head in 2021, up 14% compared with 2020.