Resideo Technologies, Inc. (NYSE: REZI) and its distribution division ADI have both reported positive revenues for their Q4 2022 and full fiscal year 2022, despite suffering from supply chain woes. Citing economic uncertainty ahead, the company has announced it will make a 5% workforce reduction.
For the full year 2022 ended on December 31, 2022, Resideo had record net revenue of $6.37 billion, up 9% from $5.85 billion in 2021. Resideo’s products and solutions side of its business represented $2.78 billion of the total revenue (up 13%), while the global distribution side of its business (ADI) accounted for $3.59 billion (up 6%) of the full-year revenue. Narrowing it down to just Q4, the company had net revenue of $1.56 billion, up 7%. The company’s gross profit margin was 27.6%.
“Across the organization the team continued to deliver for customers in the face of the dynamic supply chain environment and challenging macro-economic backdrop,” commented Jay Geldmacher, Resideo’s President and CEO. “Feedback from customers and our data indicate our competitive positioning remains strong across the majority of our key markets. This is evident in the results both ADI and Products and Solutions delivered in 2022, with record revenue and expanding profitability even as residential market growth began to slow in the second half of the year. We remain focused on executing on the substantial long-term opportunity to improve margins and drive higher profitability through product innovation, cost optimization, and manufacturing efficiency initiatives.”
Resideo Cost Reduction Actions Underway
“Given elevated near-term uncertainty around the macro-economic environment and the residential market outlook, we have taken action to reduce costs,” says Geldmacher. “This includes headcount reductions, scaling back certain investment initiatives, and further rationalizing corporate spending. We have also begun the manufacturing optimization work delayed due to supply chain challenges. These actions will position us to better respond to market fluctuations while continuing to support our customers and invest in key innovation and profit enhancement initiatives.”
Resideo has initiated cost reduction actions that are expected to result in an approximate 5% decrease in its global workforce and approximately $70 million of annualized savings once fully implemented, which is expected to be within the next 12 to 24 months.
According to the company, the key initiatives will include right-sizing the business, simplifying the organizational structure, optimizing manufacturing, and rationalizing corporate spending. These cost reduction measures are expected to improve the focus of operational resources on advancing strategic initiatives and better position Resideo to scale with future growth.
The restructuring is already underway, with the company incurring $35 million in restructuring and impairment expenses related to these costs reduction actions in the fourth quarter of 2022. Cash costs associated with these actions are expected to be approximately $25 million and paid throughout 2023.