Resideo Technologies Inc (REZI) 2023 Q4 法說會逐字稿

Hello, ladies and gentlemen. At this time, I would like to welcome everyone to the Resideo Technologies' fourth-quarter 2023 earnings conference call. (Operator instructions)

女士們、先生們，大家好。此時此刻，我謹歡迎大家參加 Resideo Technologies 的 2023 年第四季財報電話會議。（操作員說明）

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.

現在我很高興將今天的電話轉給投資者關係副總裁 Jason Willey 先生。威利先生，您現在可以開始了。

Good afternoon, everyone, and thank you for joining us for Resideo's fourth-quarter 2023 earnings call. On today's call will be Jay Geldmacher, Resideo's Chief Executive Officer; and Tony Trunzo, our Chief Financial Officer. The copy of our earnings release and related presentation materials are available on the Investor Relations page of our website at investors.resideo.com.

大家下午好，感謝您參加 Resideo 2023 年第四季財報電話會議。Resideo 執行長 Jay Geldmacher 出席今天的電話會議；以及我們的財務長托尼特倫佐 (Tony Trunzo)。我們的收益發布和相關演示材料的副本可在我們網站的投資者關係頁面上找到：investors.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 future performance or results and involve a number of risks and uncertainties.

我們想提醒您，今天下午的演示包含前瞻性陳述。本次電話會議中除歷史事實之外的陳述可能構成前瞻性陳述，不能保證未來的業績或結果，並涉及許多風險和不確定性。

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.

由於多種因素，包括 Resideo 向美國證券交易委員會提交的文件中不時描述的因素，實際結果可能與前瞻性陳述中的結果有重大差異。該公司不承擔更新任何此類前瞻性陳述的義務。我們在 10-K 表格年度報告和其他 SEC 文件中確定了影響我們績效的主要風險和不確定性。

With that, I will turn the call over to Jay.

這樣，我就把電話轉給傑伊。

Thank you, Jason, and thanks, everyone, for joining us today. We finished 2023 on a strong note. Q4 revenue and profitability were above the midpoint of our outlook, and cash generation was strong with full-year operating cash flow of $440 million. We built momentum throughout the year and order activity within Products and Solutions. We also made significant progress on our key strategic operational initiatives and in meaningful reducing structural costs.

謝謝傑森，也謝謝大家今天加入我們。我們以優異的成績結束了 2023 年。第四季的營收和獲利能力高於我們預期的中點，現金產生強勁，全年營運現金流達 4.4 億美元。我們全年都在產品和解決方案領域建立了勢頭和訂單活動。我們在關鍵策略營運措施和有意義地降低結構成本方面也取得了重大進展。

During 2023, we made substantial progress reshaping our portfolio and operations with the divestiture of Genesis and the outsourcing of our casting facility in San Diego. Work continues on rebalancing our product portfolio, manufacturing operations, and ADI footprint to help position the business for profitable long-term growth. We expect to have more to share on both fronts as we move through 2024.

2023 年，我們透過剝離 Genesis 和外包聖地牙哥鑄造工廠，在重塑我們的產品組合和營運方面取得了實質進展。我們將繼續努力重新平衡我們的產品組合、製造營運和 ADI 足跡，以幫助業務實現盈利的長期成長。隨著 2024 年的到來，我們預計將在這兩個方面有更多的分享。

We also advanced the ball on the partnership front, strengthening our relationship with major insurance providers; establishing new relationships in the energy management market, including our recent announcement with Ford; and meaningfully expanding the depth of homebuilder relationships.

我們也在合作關係方面取得了進展，加強了我們與主要保險提供者的關係；在能源管理市場建立新的關係，包括我們最近與福特的聲明；並有意義地擴大住宅建築商關係的深度。

We have spoken previously about our progress building content with home builders. This work is led by our First Alert and BRK professional brands. We've expanded content with existing builders and increase the number of partners we're selling to, adding over 20 new builder partners in 2023. We believe we are well-positioned to drive growth in this channel as the new construction market recovers. We also expect this additional content will have positive long-term benefits to our potential replacement base.

我們之前已經談到我們與房屋建築商一起建造內容的進展。這項工作由我們的 First Alert 和 BRK 專業品牌主導。我們擴大了現有建構商的內容，並增加了銷售合作夥伴的數量，到 2023 年將增加 20 多個新的建構商合作夥伴。我們相信，隨著新建築市場的復甦，我們有能力推動這項管道的成長。我們也預期這些額外內容將為我們潛在的替換基地帶來正面的長期利益。

Our innovation within Products and Solutions, we significantly improved our new product introduction cadence. This included new video doorbell and outdoor camera products for our professionally monitored security offering, launching Pro Series for the EMEA security market, First Alert-branded connected water leak detection and shutoff products, and the rollout of UL 8th Edition (sic - "UL 217 8th Edition") smoke detectors. We are seeing results based on all these actions. We're encouraged by order trends within Products and Solutions, which have stabilized year over year and grew sequentially in Q3 and Q4. Through executing on new product introductions and taking effective cost control actions, we are achieving gross margin expansion despite volume headwinds and continuing to invest in key long-term initiatives.

我們在產品和解決方案方面進行創新，並顯著提高了新產品推出的節奏。其中包括用於我們專業監控安全產品的新型視訊門鈴和室外攝影機產品、針對EMEA 安防市場推出Pro 系列、First Alert 品牌的聯網漏水偵測和關閉產品，以及推出UL 第8 版（原文如此- “UL 217 ”）第 8 版”）煙霧偵測器。我們正在看到基於所有這些行動的結果。產品和解決方案的訂單趨勢令我們感到鼓舞，這些趨勢逐年穩定，並在第三季和第四季連續成長。透過實施新產品推出和採取有效的成本控制措施，儘管銷售量不利，我們仍實現了毛利率的擴張，並繼續投資於關鍵的長期計畫。

At ADI, we continue to grow our digital capabilities, building a leading digital experience is critical to customer engagement and is expected to be margin accretive over time. For 2023, e-commerce sales were up 8% year over year. Total touchless sales, which includes e-commerce, electronic data interchange, and email automation now account for 38% of ADI's total sales.

在 ADI，我們不斷增強數位化能力，打造領先的數位體驗對於客戶參與度至關重要，預計隨著時間的推移，利潤將不斷增加。2023年，電子商務銷售額年增8%。非接觸式總銷售額（包括電子商務、電子資料交換和電子郵件自動化）目前佔 ADI 總銷售額的 38%。

We made significant investment during 2023 in our product information management and data asset management systems. This work helps to enhance the usability of our web experience with a focus on speed, intuitive search, and accuracy of availability and delivery information.

2023 年，我們在產品資訊管理和資料資產管理系統方面進行了大量投資。這項工作有助於增強我們網路體驗的可用性，重點關注速度、直覺搜尋以及可用性和交付資訊的準確性。

ADI continues to make progress with its expansion into adjacent categories, particularly in the audiovisual market. ADI acquired BTX in early 2023, adding new capabilities in the professional AV market and in-sourcing custom fiber assemblies. Pro AV was one of ADI's better performing categories in 2023, growing 6% on an organic basis and now accounts for 10% of ADI sales.

ADI 在向鄰近類別的擴張中不斷取得進展，特別是在視聽市場。ADI 於 2023 年初收購了 BTX，增加了專業 AV 市場和內購客製化光纖組件的新功能。Pro AV 是 ADI 2023 年表現較好的類別之一，有機成長 6%，目前佔 ADI 銷售額的 10%。

With that, I will turn the call over to Tony to discuss our fourth-quarter results and 2024 outlook.

接下來，我將把電話轉給托尼，討論我們第四季的業績和 2024 年的前景。

Thank you, Jay, and good afternoon, everyone. Fourth-quarter financial results exceeded the midpoint of our outlook range for a second consecutive quarter, led by continued momentum in the Products and Solutions business. We drove sequential improvements in gross margin in P&S for the third consecutive quarter and generated $263 million in cash flow from operations. For the year, cash flow from operations was $440 million, a record since spin. Over the past three years, we have converted 89% of GAAP net income into free cash flow, demonstrating the strong cash flow characteristics of our business.

謝謝傑伊，大家下午好。在產品和解決方案業務持續成長的帶動下，第四季的財務表現連續第二季超過了我們預期範圍的中點。我們連續第三個季度推動 P&S 毛利率連續改善，並產生 2.63 億美元的營運現金流。全年營運現金流為 4.4 億美元，創下分拆以來的最高紀錄。過去三年，我們將 89% 的 GAAP 淨利潤轉換為自由現金流，展現了我們業務強大的現金流特徵。

Resideo fourth-quarter revenue of $1.54 billion was 1% lower than Q4 last year, but flat excluding the sale of our Genesis wire business. Operating income for the quarter was $147 million, an increase of 50% compared to last year. Adjusted EBITDA was $136 million, up 11% compared to Q4 of 2022. Fully diluted earnings per share were $0.56 and $0.48 on a non-GAAP basis compared with $0.26 and $0.25, respectively, last year. Non-GAAP EPS exceeded the upper end of our guidance range for the quarter.

Resideo 第四季營收為 15.4 億美元，比去年第四季下降 1%，但不包括出售 Genesis 線業務，營收持平。該季度營業收入為1.47億美元，較去年成長50%。調整後 EBITDA 為 1.36 億美元，較 2022 年第四季成長 11%。以非公認會計準則計算，全面攤薄每股收益為 0.56 美元和 0.48 美元，而去年分別為 0.26 美元和 0.25 美元。非公認會計準則每股收益超出了我們本季指導範圍的上限。

Products and Solutions fourth-quarter revenue of $683 million was 1% lower than the fourth quarter 2022, but up 2% when adjusting for the sale of Genesis. Price realization added approximately $16 million to revenue, and overall volumes, excluding the Genesis impact, were down low-single digits.

產品和解決方案第四季營收為 6.83 億美元，比 2022 年第四季下降 1%，但根據 Genesis 的銷售進行調整後成長 2%。價格實現增加了約 1600 萬美元的收入，並且排除 Genesis 的影響，整體銷量下降了低個位數。

First Alert delivered a strong quarter, particularly in residential new construction, and we also saw growth year over year in lot of products. Orders were up sequentially following the stabilization experienced in the third quarter. While channel inventory remains elevated in some areas, we believe order activity and point-of-sale data indicates channel inventory overall is normalizing.

First Alert 的季度表現強勁，尤其是在住宅新建領域，我們也看到許多產品較去年同期成長。繼第三季穩定之後，訂單量連續增加。儘管某些地區的通路庫存仍然較高，但我們認為訂單活動和銷售點數據顯示通路庫存總體正在正常化。

Products and Solutions gross margin in Q4 was 39.5%, up 110 basis points compared to last year. Gross margin improved sequentially in each quarter of 2023 as we achieved reductions in raw material costs, manufacturing headcount, and freight costs, which more than offset the impacts of reduced volumes and labor rate inflation. As unit volumes and factory utilization rates recover, we continue to believe P&S gross margins can further improve. Products and Solutions fourth-quarter operating expense was down $14 million year over year, excluding restructuring costs. Products and Solutions operating income was $147 million (sic - see press release, "$143 million") in the fourth quarter, up 50% compared with Q4 2022 and up 16% when adjusting for prior-year restructuring charges.

第四季產品和解決方案毛利率為39.5%，較去年成長110個基點。由於我們實現了原物料成本、製造人員數量和貨運成本的降低，2023 年每季的毛利率都出現了環比增長，這遠遠抵消了產量減少和勞動力價格上漲的影響。隨著銷量和工廠利用率的恢復，我們仍然相信 P&S 的毛利率可以進一步提高。產品和解決方案第四季營運費用年減 1,400 萬美元（不包括重組成本）。第四季產品與解決方案營業收入為1.47 億美元（原文如此- 請參閱新聞稿，「1.43 億美元」），與2022 年第四季相比成長50%，調整上一年重組費用後成長16 %。

Turning to ADI, Q4 revenue was $854 million, down 1% versus the prior year. The business continued to experience pressure in residential security and video surveillance sales, which was partially offset by growth in access control and professional AV categories. ADI gross margin in the fourth quarter was 18% compared with 19.1% in Q4 last year. Gross margins were negatively impacted by transitory inflationary pricing benefits experienced in 2022, reduced vendor rebate activity due to lower volumes, and more competitive pricing in certain categories. ADI operating profit of $59 million was down 14% compared with prior Q4, reflecting the lower sales and gross margin on flat operating expenses.

至於 ADI，第四季營收為 8.54 億美元，比上年下降 1%。該業務繼續面臨住宅安全和視訊監控銷售的壓力，但門禁和專業視聽類別的成長部分抵消了壓力。ADI第四季毛利率為18%，而去年第四季為19.1%。毛利率受到 2022 年暫時性通膨定價優勢、銷售下降導致供應商回扣活動減少以及某些類別定價更具競爭力的負面影響。ADI 營業利潤為 5,900 萬美元，較上一季下降 14%，反映出營業費用持平的情況下銷售額和毛利率較低。

Corporate costs were $55 million in Q4, down $12 million compared with the prior year. Adjusting for unusual items in both periods, we drove $3 million of structural cost savings versus the prior period. Q4 cash from operations was $263 million, up 89% compared with $139 million in Q4 last year. Improved cash generation, and specifically working capital performance, was a major initiative throughout 2023, and we more than achieved our objectives. For the full year, we generated $440 million in operating cash. During the quarter, we repurchased 719,000 shares of our stock for a total cost of $11 million. For the full year, we repurchased 2.6 million shares for $41 million, and our fully diluted share count declined year over year.

第四季企業成本為 5,500 萬美元，比去年同期減少 1,200 萬美元。在這兩個時期的異常項目進行調整後，與上一期相比，我們節省了 300 萬美元的結構性成本。第四季營運現金為 2.63 億美元，較去年第四季的 1.39 億美元成長 89%。改善現金生成，特別是營運資本績效，是 2023 年的一項重大舉措，我們超越了我們的目標。全年我們產生了 4.4 億美元的營運現金。本季度，我們回購了 719,000 股股票，總成本為 1,100 萬美元。全年，我們以 4,100 萬美元回購了 260 萬股股票，完全稀釋後的股票數量逐年下降。

As we look toward 2024, our guidance is predicated on the following assumptions. We expect residential repair and remodel activity to be flat to down low-single digits year over year, and residential new construction starts to grow by low- to mid-single digits. We have assumed HVAC channel inventory levels largely normalize in the first half of 2024. We expect to drive 50 to 100 basis points of gross margin expansion year over year within Products and Solutions, moving sustained P&S gross margins close to 40% based on the benefits of ongoing efficiency initiatives in an essentially flat market. ADI gross margin is expected to be flat for the year as we continue to see year-over-year headwinds from inflationary benefits in the first half of 2024.

展望 2024 年，我們的指導基於以下假設。我們預計住宅維修和改造活動將同比持平至低個位數下降，住宅新建活動開始以低個位數至中個位數成長。我們假設 HVAC 渠道庫存水準在 2024 年上半年基本上恢復正常。我們預計產品和解決方案的毛利率將年增 50 至 100 個基點，基於在基本平坦的市場中持續實施效率措施的好處，使 P&S 毛利率持續接近 40%。由於我們繼續看到 2024 年上半年通膨收益帶來的同比阻力，預計 ADI 全年毛利率將持平。

The sale of our Genesis wire business will reduce 2024 Products and Solutions security sales by approximately $105 million and operating income by approximately $10 million compared with 2023. At the end of December, we executed an amendment to our contract to directly supply ADT hardware for their North American residential security offerings. Our agreement now runs through early 2025, at which time deliveries of these products will conclude. Based on this agreement, we expect our 2024 security hardware sales to ADT to decline by approximately $100 million compared with 2023 levels with a similar additional reduction in 2025. The impact of the new agreement is fully reflected in our 2024 outlook and is expected to be immaterial to Products and Solutions 2025 profitability.

與 2023 年相比，出售 Genesis 有線業務將使 2024 年產品和解決方案安全銷售額減少約 1.05 億美元，營業收入減少約 1,000 萬美元。12 月底，我們對合約進行了修訂，直接為其北美住宅安全產品提供 ADT 硬體。我們的協議目前有效期至 2025 年初，屆時這些產品的交付將結束。根據該協議，我們預計 2024 年對 ADT 的安全硬體銷售額將比 2023 年的水準減少約 1 億美元，2025 年也會有類似的額外減少。新協議的影響充分反映在我們的 2024 年展望中，預計對 2025 年產品和解決方案的獲利能力並不重要。

Our guidance moving forward will focus on revenue, adjusted EBITDA, non-GAAP EPS, and operating cash flow. We believe these metrics in combination provide the best view into the health of the business. With that said, here is our outlook.

我們未來的指導將重點放在收入、調整後 EBITDA、非 GAAP 每股盈餘和營運現金流。我們相信，這些指標的結合可以提供了解業務健康狀況的最佳視角。話雖如此，這是我們的展望。

For the first quarter. We expect revenue to be in the range of $1.46 billion to 1.51 billion, adjusted EBITDA in the range of $120 million to $140 million, and non-GAAP EPS, $0.28 to $0.38. The first quarter is typically a slower seasonal period for Products and Solutions due to reduced new construction activity and more limited restocking by our distribution channel.

對於第一季。我們預計營收將在 14.6 億至 15.1 億美元之間，調整後 EBITDA 將在 1.2 億至 1.4 億美元之間，非 GAAP 每股收益為 0.28 至 0.38 美元。由於新建築活動減少以及我們的分銷管道的補貨更加有限，第一季通常是產品和解決方案的淡季。

For the full-year 2024, we expect revenue to be in the range of $6.08 billion to $6.28 billion. Adjusted EBITDA is expected to be in the range of $560 million to 640 million. Non-GAAP EPS is expected to be in the range of $1.48 to $1.88. We expect to generate at least $320 million of operating cash flow for the full-year 2024.

2024 年全年，我們預計營收將在 60.8 億美元至 62.8 億美元之間。調整後 EBITDA 預計在 5.6 億至 6.4 億美元之間。非 GAAP 每股盈餘預計在 1.48 美元至 1.88 美元之間。我們預計 2024 年全年將產生至少 3.2 億美元的營運現金流。

We finished 2023 on a positive note with strong Q4 results driven by outperformance in P&S. While uneven quarter to quarter, our cash generation was excellent in 2023 and has been strong since 2020. We are cautiously optimistic about a more accommodating macro backdrop as 2024 progresses. However, the current interest rate environment and related low housing turnover continues to provide headwinds to our business. Despite market uncertainties, our initial 2024 outlook implies low single-digit sales growth at the midpoint, adjusting for the Genesis and ADT impacts and higher adjusted EBITDA, adjusted EBITDA margin, and non-GAAP EPS compared to 2023. As unit volumes and factory utilization rates recover, we continue to believe Products and Solutions margins will further improve.

我們以積極的態度結束了 2023 年，在 P&S 表現優異的推動下，第四季業績強勁。雖然季度與季度之間不平衡，但我們的現金生成在 2023 年非常出色，並且自 2020 年以來一直強勁。隨著 2024 年的進展，我們對更寬鬆的宏觀背景持謹慎樂觀態度。然而，當前的利率環境和相關的低房屋成交量繼續為我們的業務帶來阻力。儘管市場存在不確定性，但我們對2024 年的初步展望表明，經Genesis 和ADT 影響調整後，2024 年的中點銷售額將實現低個位數增長，與2023 年相比，調整後EBITDA、調整後EBITDA 利潤率和非GAAP 每股盈餘將會更高。隨著單位產量和工廠利用率的恢復，我們仍然相信產品和解決方案的利潤率將進一步提高。

I'll now turn the call back to Jay for a few concluding remarks before we take questions.

現在，在我們回答問題之前，我將把電話轉回給傑伊，讓他做一些總結性發言。

Thank you. Looking back on 2023, both businesses navigated significant market headwinds with an almost 20% reduction in existing home sales in the US, leading to the weakest housing turnover year since 1995. This had negative implications for our residential security business within both Products and Solutions and ADI. Consolidated sales fell only 2% in 2023 despite these headwinds. Because of our strong product offering and customer relationships, we were able to drive price realization within Products and Solutions and ADI's broad commercial market exposure provided diversification.

謝謝。回顧 2023 年，兩家公司都克服了巨大的市場阻力，美國現有房屋銷售量下降了近 20%，導致房屋成交量出現 1995 年以來最弱的一年。這對我們的產品和解決方案以及 ADI 的住宅安全業務產生了負面影響。儘管面臨這些不利因素，2023 年綜合銷售額僅下降 2%。由於我們強大的產品供應和客戶關係，我們能夠推動產品和解決方案的價格實現，並且 ADI 廣泛的商業市場曝險提供了多元化。

We finished the year with strong cash generation, improving order trends and gross margin momentum in our Products and Solutions business. As Tony noted in his remarks, we'll be winding down the existing contractual hardware portion of our long-standing relationship with ADT. Since I arrived to Resideo almost four years ago, our team has built a collaborative, constructive relationship with ADT from the executive level down. While we are wrapping up this legacy contract, we believe these relationships have created a strong shared foundation for continued collaboration and partnership.

我們以強勁的現金產生、改善的訂單趨勢以及產品和解決方案業務的毛利率勢頭結束了這一年。正如托尼在演講中指出的那樣，我們將逐步終止與 ADT 的長期合作關係中現有的硬體合約部分。自從我大約四年前加入 Resideo 以來，我們的團隊從高階主管到下層都與 ADT 建立了協作性、建設性的關係。在我們完成這份遺留合約的同時，我們相信這些關係為持續合作和夥伴關係奠定了堅實的共同基礎。

As we look to 2024, the Products and Solutions, we are focused on executing further portfolio and facility optimization efforts as well as increasing velocity of MPI. With our cost actions and transformation work, we believe we are well-positioned to drive improved margin and profitability as market conditions improve. At ADI, we'll continue to expand our digital initiatives and build upon our adjacent market and exclusive brands expansion opportunity. Our focus remains firmly on executing our key strategic initiatives while driving profitability expansion and strong cash flow.

展望 2024 年，我們的產品和解決方案將專注於執行進一步的產品組合和設施優化工作以及提高 MPI 的速度。透過我們的成本行動和轉型工作，我們相信，隨著市場狀況的改善，我們有能力推動利潤率和獲利能力的提高。在 ADI，我們將繼續擴大我們的數位計劃，並利用我們鄰近的市場和獨家品牌的擴張機會。我們的重點仍然是堅定地執行我們的關鍵策略舉措，同時推動獲利能力擴張和強勁的現金流。

I want to again thank the entire Resideo employee base for their outstanding efforts during 2023, and I'm excited to continue to build on the momentum together in 2024.

我想再次感謝整個 Resideo 員工在 2023 年所做的傑出努力，我很高興能夠在 2024 年繼續共同發展這一勢頭。

Operator, we are now ready for questions.

接線員，我們現在準備好提問了。

(Operator instructions) Ryan Merkel, William Blair.

（操作員指示）瑞安·默克爾、威廉·布萊爾。

Hey, everyone. Thanks for taking the questions. I wanted to start with the comments about order activity, improving, and stabilization in the market. But it looks like the first-quarter revenue guide is maybe a little softer than we were thinking. So is that just seasonality, or maybe talk about the cadence of how you see sales progressing in '24, maybe at a stronger second half?

嘿大家。感謝您提出問題。我想從訂單活動、市場改善和穩定的評論開始。但看起來第一季的營收指南可能比我們想像的要軟一些。那麼，這只是季節性因素嗎，或者也許是談論您認為 24 年銷售進展的節奏，也許下半年會更強勁？

Yeah. Hey, Ryan, it's Tony. So yes, there is an element of seasonality in Q1. There is also -- security sales are going to be lower because of the disclosure we just made about ADT and our expected reduction in revenue from them during Q1 and also the Genesis -- the impact of Genesis in Q1, which is at $25 million-ish, somewhere in that ZIP code.

是的。嘿，瑞安，我是東尼。所以，是的，第一季存在季節性因素。還有 - 由於我們剛剛披露了 ADT 的信息以及我們預計第一季和 Genesis 的收入減少，證券銷售額將會下降 - Genesis 在第一季度的影響為 2500 萬美元 - ish，在那個郵政編碼的某個地方。

If you look at the, what I'll call the trade channels, it's still a little bit up and down. But by and large, we've seen inventories begin to work their way down. I think there's still some normalization in some areas that's got to happen in the next couple of quarters and that's certainly contemplated in our guidance. But then beyond that, I think things really are starting to settle out a little bit as well. So yeah, all those things are affecting Q1, and that's why you're going to see a little bit of a ramp as we go through 2024.

如果你看看我所說的貿易管道，它仍然有一點上下。但總的來說，我們看到庫存開始下降。我認為在接下來的幾個季度中，某些領域仍然會出現一些正常化，這肯定會在我們的指導中被考慮。但除此之外，我認為事情也確實開始好轉。是的，所有這些因素都在影響第一季度，這就是為什麼在 2024 年到來時你會看到一些成長。

Okay. That's helpful. And then the gross margin in P&S. stood out. Just curious, are you're going to be able to build off the fourth-quarter level as we think about '24, to talk about the pluses and minuses and sort of the direction of gross margin for P&S?

好的。這很有幫助。然後是 P&S 的毛利率。挺身而出。只是好奇，您是否能夠在我們考慮 24 年的第四季水準的基礎上，討論 P&S 的優點和缺點以及毛利率的方向？

Yes. So I think the two things we were most excited about in 2023 was our ability to generate significant cash flow. A little choppy, but we certainly did a great job, I think, over the course of the year. And the other was the sequential improvement in gross margin in P&S. We expect that to continue. If you look at it year over year, quarter to quarter, again, you still might see some variation. But we've really made a lot of progress underneath kind of all of the volume declines and all that sort of stuff in our fundamental cost structure. We talked a little bit about that in the script in terms of what those things are and the expectation of half a point to a point of gross margin expansion in P&S this year is predicated on basically flat volumes. So we really feel like there's an opportunity if we see margin -- I'm sorry -- volumes begin to grow again for some really meaningful margin expansion in that business.

是的。因此，我認為 2023 年我們最興奮的兩件事是我們產生大量現金流的能力。雖然有點不穩定，但我認為，這一年我們確實做得很好。另一個是 P&S 毛利率的環比改善。我們預計這種情況會持續下去。如果你再逐年、逐季觀察，你仍然可能會看到一些變化。但在所有銷量下降以及我們基本成本結構中的所有此類因素的影響下，我們確實取得了巨大進展。我們在劇本中就這些內容進行了一些討論，並且今年 P&S 毛利率擴張半個百分點到一個百分點的預期是基於銷量基本持平的基礎上的。因此，我們真的覺得，如果我們看到利潤率——我很抱歉——銷量開始再次成長，從而在該業務中實現一些真正有意義的利潤率擴張，那麼我們真的覺得有機會。

I would add also, Ryan, that I talked -- I think we've been talked about even on our last call together that as supply chains continue to improve, the input costs continue to be trend in a favorable fashion. And that has continued, including between material componentry and, of course, freight, which is a good thing. And that's just going to continue. And the various actions that we've talked about that you guys have heard us talk about over the last couple of quarters cost actions that impacts provides a benefit to us on the gross margin expansion. So I think between what I had said, as well what Tony had said, that we feel very positive about the opportunity there for further margin expansion.

瑞安，我還要補充一點，我說過——我想我們甚至在上次電話會議上就已經討論過，隨著供應鏈的不斷改善，投入成本繼續以有利的方式發展。這種情況一直持續，包括材料零件，當然還有貨運，這是一件好事。而且這種情況還會持續下去。我們談論過的各種行動，你們在過去幾個季度中聽到我們談論過，影響成本的行動為我們的毛利率擴張帶來了好處。因此，我認為，根據我和托尼的說法，我們對進一步擴大利潤率的機會感到非常積極。

Great. Sounds good. Thanks so much. I'll pass it on.

偉大的。聽起來不錯。非常感謝。我會把它傳遞下去。

Thanks, Ryan.

謝謝，瑞安。

Erik Woodring, Morgan Stanley.

艾瑞克‧伍德林，摩根士丹利。

Hey, guys. Thank you for taking the questions. I have two. Maybe one, just on the clarification point on ADT. Just to confirm, the North American hardware business seems to be gone after 2025. You're kind of very clear on the trajectory of that, but is there anything else with them? Because Jay, you mentioned kind of other areas of collaboration and partnership. And so just want to kind of understand it one level higher, how you think about the relationship with ADT after 2025? If there's anything that you can do that's incremental or if you still have a relationship, just how that stands? And then I have a follow-up. Thank you.

大家好。感謝您提出問題。我有兩個。也許有一個，只是關於 ADT 的澄清點。需要確認的是，北美硬體業務似乎在 2025 年後就會消失。你對事情的發展軌跡很清楚，但是他們還有其他的事情嗎？因為傑伊，你提到了其他領域的合作和夥伴關係。所以我想更進一步了解一下，您如何看待 2025 年後與 ADT 的關係？如果你可以做一些漸進的事情，或者如果你們仍然保持著關係，那麼情況如何？然後我有一個後續行動。謝謝。

Yeah. Thanks, Erik. As we indicated, this legacy hardware program that Tony talked about in terms of that -- the end of that program into 2025. But as I've not just stated today, but I've indicated for quite some time, our relationship with them is very good, and we spend a lot of time on that. And so we're continuing to talk about other opportunities, and we'll keep you guys informed.

是的。謝謝，埃里克。正如我們所指出的，托尼談到的這個遺留硬體計劃是在 2025 年結束該計劃。但正如我今天不僅說過，而且我已經在相當長的一段時間裡說過，我們與他們的關係非常好，我們在這方面花了很多時間。因此，我們將繼續討論其他機會，我們將隨時向大家通報情況。

Okay. That is very clear then. And just maybe it's for Tony, any update to how to think about the ceiling for P&S gross margins? Like if I just think about some of the comments you've made tonight. You've obviously taken cost actions on that business. You're getting leverage in that business despite flat volumes. It seems like getting rid of Genesis and ADT will be margin accretive. And I'd imagine that when volumes recover, that's all positive for P&S gross margins. And so anyway to think about the longer-term trajectory? Are there any headwinds that I'm missing that I'm -- that we're not necessarily considering as we think, again, one, two, three, four, five years out? And that's it for me. Thanks so much.

好的。那麼這一點就非常清楚了。也許對於托尼來說，關於如何考慮 P&S 毛利率上限的任何更新？就像我只是想想你今晚發表的一些評論一樣。您顯然已經對該業務採取了成本行動。儘管銷量持平，但你仍能在該業務中獲得影響力。看來擺脫 Genesis 和 ADT 將會增加利潤。我想，當銷量恢復時，這對 P&S 的毛利率來說都是正面的。那麼無論如何要考慮長期軌跡嗎？我是否遺漏了一些不利因素——我們不一定會像我們想像的那樣考慮一年、兩年、三年、四年、五年後的情況？對我來說就是這樣。非常感謝。

Thanks, Erik. So obviously, I don't have a number for you in terms of the long-term gross margin target for P&S. And the reason we don't have one is because of the long list of things you just laid out and the puts and takes around them. From where we sit today, there are more from a market perspective and from our own execution and our own sort of position in the market. I think the balance is certainly looking out over a few years more tailwinds than headwinds. We've done a really good job maintaining price, which was, if you recall back during the inflationary surge, we were basically matching increased input costs with our price increases and that was dilutive to margin because we weren't getting margin on top of it. But we really felt like as input costs abated, we were going to be able to hold price. And that has proved to be true.

謝謝，埃里克。顯然，我沒有 P&S 長期毛利率目標的具體數字。我們沒有這樣的原因是因為你剛剛列出了一長串的東西以及圍繞它們的 put 和 take 。從我們今天的立場來看，還有更多來自市場的角度、我們自己的執行力和我們自己在市場中的地位。我認為未來幾年的順風勢肯定會比逆風多。我們在維持價格方面做得非常好，如果你回想一下在通膨飆升期間，我們基本上將增加的投入成本與我們的價格上漲相匹配，這稀釋了利潤率，因為我們沒有獲得利潤它。但我們確實覺得，隨著投入成本的下降，我們將能夠維持價格。事實證明這是真的。

We have made substantial progress in a number of other manufacturing efficiency areas. We have divested some businesses that are lower margin. And we feel like there are opportunities to grow in some higher margin areas. And all of that is happening against a backdrop over the past, I guess five or six quarters, of declining volumes as volumes -- as the decline slows and as volumes flatten out, you're seeing that in the in the gross margins. You're seeing a little bit more benefit. And to the extent that you begin to see mark volumes expand again, I think there's a real opportunity for us to see significant margin expansion.

我們在許多其他製造效率領域取得了實質進展。我們剝離了一些利潤率較低的業務。我們認為在一些利潤率較高的領域有成長的機會。所有這一切都是在過去的背景下發生的，我猜有五六個季度，銷量不斷下降——隨著下降速度放緩，銷量趨於平緩，你會在毛利率中看到這一點。您會看到更多的好處。如果你開始看到銷量再次擴大，我認為我們確實有機會看到利潤率顯著擴大。

And I'd also add just a couple of as a summary. Of course, the input costs, I talked about that before in the last call or cost actions that we've been taking, the price piece that Tony just talked about, and, of course, the leverage opportunity when the market begins to come back. But just a couple of additional comments, the portfolio optimization piece that we've been talking quite a bit about and then the proof of the [putting] is things like Genesis as well as operational optimization like when we closed off the San Diego facility, moved that to the offshore third party. We have other opportunities there, and we'll share more of those.

我還想添加一些作為總結。當然，投入成本，我之前在上次電話會議或我們一直在採取的成本行動中談到過，托尼剛才談到的價格部分，當然還有市場開始復甦時的槓桿機會。但還有一些額外的評論，我們一直在談論的投資組合優化部分，然後[推注]的證明是諸如創世紀之類的事情以及運營優化，就像我們關閉聖地亞哥設施時一樣，將其轉移給離岸第三方。我們在那裡還有其他機會，我們將分享更多機會。

And the other that I wanted to just mention is because with our heavy focus on MPI, just in terms of bringing more new products to market. But also as we -- as with that and looking at opportunities with more growth tied to MPI, but also mark margin expansion with new products. So all those wrap together, I think is a great way of summarizing. We're not just relying on one or two pieces. I think we have a good plan of attack with all the different items that we've mentioned here between Tony and I.

我想提的另一個問題是，我們非常關注 MPI，只是為了將更多新產品推向市場。但我們也同樣在尋找與 MPI 相關的更多成長機會，同時也透過新產品標誌著利潤率的擴張。我認為所有這些總結在一起是一個很好的總結方式。我們不僅僅依賴一兩件作品。我認為我們對托尼和我在這裡提到的所有不同項目都有一個很好的攻擊計劃。

No, that is super helpful. I totally realize there's a lot of moving pieces, so I appreciate all that color and honesty. So thank you.

不，這非常有幫助。我完全意識到有很多感人的片段，所以我很欣賞所有的色彩和誠實。所以謝謝。

Of course.

當然。

(Operator instructions) Cory Carpenter, JPMorgan.

（操作員說明）Cory Carpenter，摩根大通。

Hey, this is [Danny Grant] on for Cory Carpenter. Thanks for the questions. On the first, given the uncertain timeline of the broader macro recovery, do you think you have any further room to take price if necessary? And maybe, if so, any color on kind of what that cadence could look like throughout 2024? And then the second, maybe on the pace of product innovation within Products and Solutions for 2024, are there any specific verticals to call out for having kind of the most runway? Thanks.

嘿，這是科里·卡彭特的[丹尼·格蘭特]。感謝您的提問。首先，考慮到更廣泛的宏觀復甦的時間表不確定，您認為必要時還有進一步定價的空間嗎？如果是的話，也許整個 2024 年這種節奏會是什麼樣子？第二個問題，也許是關於 2024 年產品和解決方案的產品創新步伐，是否有任何特定的垂直領域需要擁有最多的跑道？謝謝。

Sure. Thanks, Danny. So on price, our outlook for 2024 assumes basically 1% on price. So not a significant factor in our 2024 outlook. I think we'd be cautious about taking us more assertive position there just as the market has been a little bit soft, and we want to remain competitive and all that all those sorts of things. We're not losing price, which I think is really important because we did achieve a significant amount of price. Incremental leverage on the price line is probably going to have less of a factor on our results than that operating leverages we see -- as we see expansion in volumes.

當然。謝謝，丹尼。因此，就價格而言，我們對 2024 年的展望基本上假設價格上漲 1%。因此，這不是我們 2024 年展望的重要因素。我認為我們會謹慎對待在那裡採取更加自信的立場，就像市場有點疲軟一樣，我們希望保持競爭力等等。我們沒有失去價格，我認為這非常重要，因為我們確實實現了可觀的價格。價格線上的增量槓桿對我們業績的影響可能比我們看到的營運槓桿要小——因為我們看到銷售量的擴張。

But I would agree with that. I would just say that not losing prices it is a very important piece. And as the market, we all know we're all watching what's happening out there in the world in terms of inflation and with supply chains have normalized, then you are going to be -- we're in a situation than that there's a little more competition, competitiveness out in the marketplace that we see for both businesses.

但我同意這一點。我只想說，不損失價格是非常重要的。作為市場，我們都知道我們都在關注世界上發生的通貨膨脹和供應鏈已經正常化的情況，那麼我們就會面臨這樣的情況：我們看到這兩家企業的市場競爭更加激烈。

And Danny --

還有丹尼--

You also asked about, I think, Danny, right, on security MPI? Or for MPI in general? (multiple speakers)

我想，Danny，您還問過關於安全 MPI 的問題？或對於一般 MPI 來說？（多個發言者）

Sorry, go ahead.

抱歉，請繼續。

No, I was going to say -- I'll make comment on MPI in general. I've said it before, but it's worth saying again, I mean, we -- MPIs is very important to us in terms of capturing additional market share, looking at opportunities to expand our tool will reach the market in terms of share with new products. We mentioned this time and before about content in a home. And we also mentioned about being able to add a bunch of additional wins with our R&C builder community. One of the reasons with that is the expansion of our footprint in each one of those new homes. And as we continue to do that, we will have more new products that will able to expand our footprint there. So our focusing on the velocity of new products in each one of the segments we serve is top -- is big focus for us. And that's why I've highlighted not just today, but through the past few quarters, the number of new products that we are bringing to market, and there will be more to share.

不，我想說的是——我將對 MPI 進行總體評論。我以前說過，但值得再說一遍，我的意思是，MPIs 對我們來說非常重要，因為它可以獲得額外的市場份額，尋找機會擴展我們的工具，從而以新的份額進入市場。產品。我們這次和之前都提到過有關家庭內容的內容。我們還提到能夠透過我們的 R&C 建構者社群添加許多額外的勝利。原因之一是我們在每一棟新住宅的足跡不斷擴大。隨著我們繼續這樣做，我們將推出更多新產品，從而擴大我們在那裡的足跡。因此，我們對我們所服務的每個細分市場的新產品的速度的關注是最重要的——這是我們的重點。這就是為什麼我不僅在今天，而且在過去的幾個季度中，都強調了我們向市場推出的新產品的數量，並且還會有更多的產品可供分享。

Thanks.

謝謝。

There are no further questions at this time. I will turn the call back to Jason for closing remarks.

目前沒有其他問題。我將把電話轉回給傑森，讓他發表結束語。

Thank you, everyone, for participating today. We look forward to speaking with you over the coming weeks and months. The best of your day. Take care.

謝謝大家今天的參與。我們期待在未來幾週和幾個月內與您交談。你一天中最美好的時光。小心。

This concludes today's conference call. We thank you for joining. You may now disconnect your lines.

今天的電話會議到此結束。我們感謝您的加入。現在您可以斷開線路。