Ladies and gentlemen, at this time, I would like to welcome everyone to the Resideo First Quarter 2024 Earnings. Today's call is being recorded. [Operator Instructions] It is now my pleasure to turn today's call over to Mr. Jason Willey, Vice President of Investor Relations. Mr. Willey, you may now begin...

Good afternoon, everyone, and thank you for joining us for Resideo's First Quarter 2024 Earnings Call. On today's call will be Jay Geldmacher, Resideo's Chief Executive Officer; Anthony Trunzo, our Chief Financial Officer. A copy of our earnings release and related presentation materials are available on the Investor Relations page of our website at investor.resideo.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 Resideo'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, Jason, and thanks, everyone, for joining us today. I'm excited by the results the team delivered in the first quarter and the progress being made in transforming Resideo. For the quarter, we reported revenue at the midpoint and adjusted EBITDA at the higher end of our previously provided outlook. Our momentum within Products & Solutions continues to build, evidenced by a 180 basis point expansion in gross margin and 9% growth in segment adjusted EBITDA year-over-year. We continue to make great progress on our strategic priorities across our portfolio, operations and cost optimization initiatives. This is highlighted by our agreement to acquire Snap One, which we expect will enhance our transformation efforts across Resideo. For our ADI business, Snap One will expand product breadth and capabilities across audiovisual and smart living distribution while expanding our ability to serve our core security customers. The combination better positions the business in attractive growth categories adds new high-margin proprietary products and services and broadens ADI's customer base. We see opportunity to expand Snap One's Control4 and home automation offerings through tighter integration with products and solutions, extensive connected product offering, specifically within safety and security. We also see opportunity to leverage our supply chain expertise and Snap One's proprietary product design and development capabilities to drive efficiencies in both organizations. For Resideo as a whole, we expect the acquisition will be accretive to gross margin and to adjusted EPS in 2025. We've identified meaningful cost synergies between the 2 businesses and a path to quickly lower our post-closing leverage levels. Needless to say, the team is quite excited about the future integration of Snap One into Resideo, and we expect the acquisition to have a meaningful positive impact on our long-term value creation. We are leaving no stone unturned to unlock…

Thank you, Jay, and good afternoon, everyone. First quarter profitability was above the midpoint of our expectations, continuing the trends we've seen over the past several quarters, powered by strong gross margin and cost reductions in products and solutions. Margin momentum continued in Products & Solutions as we posted our fourth straight quarter of year-over-year gross margin improvement. Resideo first quarter revenue of $1.49 billion was 4% lower than Q1 last year and down 2%, excluding the impact of the divestiture of our lower-margin Genesis wire business last fall. Operating income for the quarter was $128 million and included $7 million in restructuring costs. These actions are expected to generate $8 million of savings in 2024 and $13 million on an annualized basis. Adjusted EBITDA was $137 million compared to $138 million in Q1 2023, and adjusted EBITDA margin expanded by 30 basis points. Fully diluted earnings per share were $0.29 and $0.47 on an adjusted basis compared with $0.38 and $0.51, respectively, last year. Beginning with this quarter's reported results, we modified our adjusted EPS calculation to exclude the impact of stock-based compensation and amortization of intangibles. These changes better reflect the way we view the business and provide a clear direct comparison to peer companies. Products & Solutions first quarter revenue of $620 million was 6% lower than the first quarter of 2023, but essentially flat adjusting for the sale of Genesis. We believe our HVAC distribution channel inventory has largely returned to normal levels. Thus, we expect our sell-in will largely mirror sell-through moving forward. First Alert delivered another strong quarter, driven by our BRK branded products in the residential new construction market. Our efforts to develop homebuilder relationships over the last several years are bearing fruit as BRK has now posted 3 consecutive quarters of year-over-year…

Thank you, Tony. In closing, we continue to make significant progress on our key strategic initiatives and remain focused on strengthening the business. Products & Solutions is benefiting from new innovative products and cost optimization with improving margins. Our recently announced acquisition of Snap One will add immediate value across our business in terms of accelerating key strategic initiatives and enhancing our overall profitability. We believe all of these efforts position us well for growth and profit acceleration when the market environment becomes more favorable. I want to thank the entire Resideo employee base for their outstanding efforts in the first quarter, and I'm excited to continue to build on the momentum together as we move through 2024. Operator, we are now ready for questions.

[Operator Instructions] Your first question is from the line of Cory Carpenter with JPMorgan.

I had one and then a follow-up. I was hoping you could start by expanding on order volume trends. It sounded like perhaps they took a step back this quarter after you talked about stability the last few quarters. But if you could just kind of flesh out the trends that you're seeing there and your expectations for the rest of the year.

Cory, it's Tony. Order trends have been pretty stable. I mean I'm not sure if you're referring to the business as a whole or to one of the segments. But within P&S, order rates have been pretty darn stable. And that's kind of -- that's what we indicated. So, we're starting to see that flatten out and the sell-in and the sell-through seem to be aligning. So that's a positive. We did see softer orders and softer daily sales averages in the first 2/3 of the quarter at ADI. March was a little bit better. Daily sales averages in March were roughly in line with where they were in the prior year period. That business definitely is seeing some softer market dynamics than maybe we've seen a year or so ago. But overall, I don't think there's a significant change really in the order patterns.

I'd add, Cory, this is Jay. There's definitely normalization in the HVAC inventory, which is I'm really pleased about. I know that's something you guys have been asking about the last couple of quarters. And I'd also say that we're excited about the continuous -- the growth of success with the first alert, specifically in the homebuilder channel, and that's very positive. And I think we got ourselves from an operational standpoint, structured correctly so that when this market does begin to turn back up, which it will, we're in a good spot to move forward for them there and to leverage up. The thing on ADI, Tony is right. I mean we mentioned it last quarter, market demand has slowed, but ADI sales and markets have historically been less volatile and they're diversified end markets and customer base. So yes, they have softness, but those are some of the things that I think will hold up well for them as we move forward through the year.

And just, I guess, probably for you, Tony, for a follow-up. For the 2Q guide, it came in a little below -- the Street, but of course, you reiterated 2024. Just curious if there's anything you can call out in 2Q in terms of seasonality or something that perhaps we were not incorporating in your models?

Cory, no, it's our phasing. I mean you -- yes, I guess we were a little light relative to what the consensus was for Q2. But we're not like relative to our internal budgets, and we're not light relative to what our expectations were entering the year. We'll take the outperformance in Q1. We continue to have some caution around the full year. But net that, to your point, we're pretty comfortable with where we sit and we're holding guidance for the year.

Yes, I agree.

[Operator Instructions] Your next question is from the line of Ian Zaffino with Oppenheimer.

I wanted to just ask you about the ADI guidance. Kind of what gives you confidence in the growth into the second quarter while first quarter wasn't as strong? And then also, you pointed to e-commerce, but I guess e-commerce was only up, I think, 1% or so last quarter. So how do you get to where your AI guidance is for the second quarter?

Yes. I mean, we didn't give -- just so we're clear, we didn't give specific ADI guidance for Q2. When we look out over the landscape of the year, I think the again, what we saw when we gave guidance around the way the year was going to play out, we expected the second half of the year to be a bit stronger for ADI. It's definitely playing out that way. The main inputs, as you know, I mean, that's a pretty quick turn business. The main inputs that we have really are the frequent touch points with customers, whether it's at the branch or whether it's at trade shows or just the regular sales cadence we have. And we get a sense from them as to what their project flow is and what their bid activity is and that sort of stuff. And their view is that things have been delayed and they're hearing from their customers that those delays are likely to release as we move through the year.

I'll also add too that as we mentioned, because they have experienced softness there's more competition out in the market right now because of the market softness. And so that ties into that. But I think everything that Tony mentioned, I think he's spot on. And I think that in terms of how we see it today, I think we feel good about what we put forward to you guys.

Okay. Good. That's helpful. And yes, so that's for the full year. I apologize. And then if we could turn to PMS. Maybe talk a little bit about First Alert how is that doing inside the company now? And then how is it doing versus listen the legacy business?

Tony talked a little bit about it, and I just mentioned it a little bit, but the strength at First Alert BRK has been really good in the builder channel. I mean I'm super excited about the progress there and the stickiness of being able to expand that. And that's -- my chair, it maybe exceed my expectations. So, I'm very, very excited about that. The -- I think in general, we'll continue to leverage that with the First Alert BRK in terms of that channel. And we talked about content and we've talked about that probably for the last 12 months of increasing overall content in R&C. And the BRK has helped expand that, and we'll have more opportunity beyond that to expand the content within the RNC channel.

At this time, there are no further audio questions. I will now hand today's call over to Mr. Willey for any closing remarks.

Thank you, everyone, for joining us today. We look forward to talking with you over the coming weeks. And as always, please feel to reach out if you have any questions. Have a good rest of your day. Thank you.

This concludes today's call. Thank you for joining. You may now disconnect.