Q4 2024 Resideo Technologies Inc Earnings Call
[music].
Good afternoon, My name is Kathleen and I will be conference operator today.
At this time I would like to welcome everyone do they receive D O 2020 for fourth quarter and full year earnings call.
All lines have been placed on mute to prevent any background noise.
After the Speakers' remarks, there will be a question and answer session.
If you would like to ask a question during this time.
Simply press Star followed by the number one on your telephone keypad.
And if you would like to withdraw your question press the star one again.
Thank you.
I would like to hand, the conference over to your host today Chris.
Lastly, <unk>.
Global head of Investor Relations you May begin your conference.
Speaker Change: Thanks, Kathleen good afternoon, everyone and thank you for joining us for our residual fourth quarter and full year 2024 earnings call.
Speaker Change: On today's call will be Jay Gould, Makar, <unk>, Chief Executive Officer, Mike <unk>, Our Chief Financial Officer, Rob Arnez, President of resilient with Adi Global distribution business, and Tom Saran, President of residual products and solutions business, a copy of our earnings release and related presentation.
Speaker Change: Materials are available on the Investor Relations page of our website at Investor that <unk> Dot com.
Speaker Change: 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.
Speaker Change: 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 Brasilia as filings with the Securities and Exchange Commission.
Speaker Change: The company assumes no obligation to update any such forward looking statements.
Jay: <unk> identified the principal risks and uncertainties that affect our performance and our annual report on Form 10-K, and other SEC filings with that I will turn the call over to Jay.
Jay: Thank you, Chris and thanks to everyone for joining us today.
Speaker Change: I opened by saying, how happy I am with how the products <unk> solutions and Adi business segments finished 2024 strongly.
Speaker Change: Delivering revenue growth healthy gross margin expansion and record free cash flow generation.
Speaker Change: Global macro economic environment that is still mixed.
Speaker Change: As a result of our team's continued excellent execution.
Speaker Change: <unk> exceeded the high end of the range for all the metrics, we provided in our annual financial outlook.
Speaker Change: Reported total net revenue of approximately $6 8 billion grew 8% year over year.
Speaker Change: Total adjusted EBITDA grew 17% year over year to approximately $700 million.
Speaker Change: Total cash generated from operations was $444 million, a new record and was well above our outlook of at least 375 million.
Speaker Change: Let's now go into some of the annual highlights for each business segment.
Speaker Change: Products and solutions continuing to improve.
Speaker Change: As fundamentals experiencing growth in organic revenue and gross margins in 2024.
Speaker Change: The year over year annual changed in organic net revenue improved approximately 300 basis points versus 2023.
Speaker Change: Resulting in a positive growth rate that rounds to flat year over year.
Speaker Change: Organic growth excludes the impact of currency and the divestiture of Genesis. This was due to realize price increases across substantially all product categories.
Speaker Change: Offset by volume declines.
Speaker Change: Reported gross margins for 2024 expanded by 240 basis points year over year due to structural improvements that increased operational efficiency.
Speaker Change: Our commitment to new product introduction was evident in 2024 with the launch of the focus probe thermostat and this does security products in the last two quarters.
Speaker Change: And customer reception and demand for these products continues to be very positive.
Speaker Change: We are excited for these products and for a range of new products scheduled to be introduced in 2025.
Speaker Change: Adi achieved 2% organic net revenue growth year over year in 2024, after excluding the impact of currency and the acquisition of snap one.
Speaker Change: Adi overcame soft market conditions during the first half of the year with digital channels and product categories, such as video surveillance residential security and fire and access control showing second half strength.
We acquired snap one in June 2024, and.
Speaker Change: And its integration into Adi continues to progress very nicely.
Speaker Change: We achieved approximately $17 million of run rate synergies in 2020 for approximately 40% higher than expected.
Speaker Change: In summary, we had a strong end to 2024 and this momentum is setting us up well for continued revenue growth gross margin expansion and durable free cash generation.
Speaker Change: Before I hand, the call off to Tom Rob and Mike to talk about the drivers of the fourth quarter.
Speaker Change: Want to comment that the global macro environment remains mixed with continued U S dollar strength and the potential for changes in the tariff environment, adding uncertainty 2025.
Speaker Change: The resilient team has prepared a comprehensive planning to address potential tariff changes, including detailed actions that are designed to address the potential impact.
Speaker Change: Examples include commercial actions price increases and operational and supply chain moves.
Speaker Change: Let's now turn the call over to Tom who will provide additional details in the fourth quarter for products and solutions.
Tom Rob: Thanks, Jed the fourth quarter was another period of solid execution and operational progress for products and solutions highlighted by the seventh consecutive quarter of year over year gross margin expansion.
Tom Rob: Gross margin continues to expand due to structural improvements that increased operational efficiency.
Tom Rob: In the quarter gross margin was 48% up 130 basis points year over year.
Tom Rob: Moving onto net revenue after excluding the impact of currency and the divestiture of Genesis fourth quarter organic net revenue declined by approximately 1% year over year.
Tom Rob: Our HVA see OEM electrical distribution and retail channels continued to be strong.
Tom Rob: However, these results were offset by softness in the security channel.
Tom Rob: Let me walk through the puts and takes.
Tom Rob: The HVAC channel Chief both price and volume growth in the quarter buoyed in part by the successful launch and shipment of the connected and non connected focused pro thermostat devices during the quarter.
Tom Rob: Inventory levels of our products within the key North American HVAC channel continued to be healthy.
Tom Rob: The OEM channel was another bright spot in the quarter posting growth for the first time in many quarters.
Tom Rob: <unk> posted a double digit growth percentage year over year led by strong EMEA demand for boiler furnace and other products that drove increases in both price and volumes.
Tom Rob: The retail and electrical distribution channels continued to perform well in the fourth quarter.
Tom Rob: Volumes of our B R. K branded safety products sold to professionals through our electrical distribution partners continue to be healthy.
Tom Rob: We saw both an uptick in the number of homebuilder relationships and an increase in content per new home due to the quality and trusts associated with our <unk> product line.
Tom Rob: Those same attributes are also associated with our first alert and Honeywell home brands.
Tom Rob: Retail sales were again strong near the record high established in the third quarter.
Tom Rob: The security channel continues to experience soft market condition conditions.
Tom Rob: However, I am encouraged by two things in the quarter.
Tom Rob: First security sales with a large customer were better than anticipated and second customer reception for the new Vista product introduced in the quarter was very positive.
Tom Rob: This new product is the first among our full line as we upgrade the Vista portfolio.
Tom Rob: I remain excited about our return to our regular cadence of new product introduction and the profitable growth opportunities we are targeting.
Tom Rob: I started my comments by stating that the business is making operational progress amidst an ongoing turnaround.
Tom Rob: Primary goal of residual has been to get products and solutions healthier and in a better position for future profitable growth. We have made meaningful progress towards this goal in 2024 and believe we will soon capitalize on this momentum.
Tom Rob: We are energized about the profitable growth opportunities associated with the new product slated in 2025.
Tom Rob: The first of which was the matter enabled smart thermostat announced at the consumer electronics show.
Tom Rob: As we release more new products, we look to sustain and improve upon the year over year gross margin expansion trend we have achieved.
Ralph: With that let's turn the call over to Ralph.
Speaker Change: Thanks, Tom ATI achieved 39% year over year growth in reported net revenue in the fourth quarter growth was driven by the inorganic contribution from the acquisition of snap one broad based organic growth across product categories and accelerating digital revenue.
Speaker Change: All of my following remarks on growth year over year represent organic business activities and do not include the impact of currency or the snap one acquisition unless otherwise noted.
Speaker Change: In the fourth quarter organic net revenue growth was 9% year over year, driven by strength across nearly every product category and from large commercial customer activity. Our daily sales average in the quarter achieved another record high.
Speaker Change: From a product category perspective, we saw double digit percentage growth year over year in multiple categories with notable contributions from the video surveillance and fire product categories, partially offset by low single digit percentage decline in the residential audiovisual category, we continue to achieve healthy expansion into our <unk>.
Strategic growth verticals, our professional audio visual and Datacom.
Speaker Change: E Commerce net revenue grew 22% year over year, achieving another quarter of sequential revenue dollar growth and a new record high in daily sales average and our ongoing strategic investment in ecommerce continues to yield positive returns.
Speaker Change: E Commerce is structurally accretive to total Adi gross margin and is becoming a bigger contributor to total gross profit dollars.
Speaker Change: Our investments also position ATI as well as a leading omnichannel distributor.
Speaker Change: During the quarter, we enhanced the onsite search experience using a leading AI product discovery technology and saw an almost immediate improvement in conversion rates.
Speaker Change: We are really excited about our exclusive brands net revenue increased 34% year over year, and we launched almost 80 new products in the quarter. We are already seeing the strategic benefit of our combined Adi and snap one as we offer a greater amount of more profitable products across more stores to draw.
Speaker Change: Five higher customer engagement and cross sales opportunity.
Speaker Change: As Jay mentioned the integration of snap one is going very nicely. We have achieved approximately $17 million of run rate cost synergies in 2024 since welcoming snap into resilience as.
Speaker Change: As we move into year two of our integration we are seeing early positive signs.
Speaker Change: In exclusive brands cross sell opportunities that complement some of the store consolidation activity planned for 2025.
Speaker Change: Our customer first ethos is integral to how we execute operations.
Speaker Change: It was foundational to our fourth quarter performance and is foundational to our future as we look to carry that momentum and continue driving profitable growth in our strategic focus areas, achieving further deal synergies and running an efficient organization throughout 2025.
Mike: Let's now, let's now turn the call over to Mike to discuss our fourth quarter financial results and 2025 outlook.
Mike: Thanks, Rob good afternoon, everyone.
Speaker Change: Let's get straight into the quarterly results starting with revenue.
Speaker Change: Fourth quarter total company net revenue was $1 86 billion up 21% year over year and up 5% on an organic basis, excluding the impact of currency the snap one acquisition and the Genesis divestiture.
Speaker Change: Reported total company net revenue exceeded the high end of our outlook range.
Speaker Change: Both Tom and Rob spoke earlier about the drivers of that revenue in their respective businesses.
Speaker Change: Total company gross margin in the quarter was up 28, 5%.
Speaker Change: Up 100 basis points year over year.
Speaker Change: The increase was primarily driven by the continued operating efficiencies gained in product and solutions, partially offset by more competitive pricing in certain categories at Adi.
Speaker Change: Fourth quarter total company fully diluted adjusted earnings per share was <unk> 59.
Speaker Change: And GAAP fully diluted earnings per share was <unk> <unk>.
Speaker Change: Adjusted earnings per share was towards the high end of our outlook range.
Speaker Change: Total company adjusted EBITDA was $187 million in the quarter growing 26% year over year and exceeding the high end of our outlook range.
Speaker Change: The primary driver of the increase was the positive contribution from step one.
Speaker Change: We exceeded our annual outlook by generating $444 million of cash from operations.
Speaker Change: This was driven by better than usual working capital metrics that resulted in a more efficient cash conversion cycle as well as by the positive contribution from SAP one.
Speaker Change: Before I provide our 2025 financial outlook, let me walk you through some of our market perspectives and forecast assumptions for 2025.
Speaker Change: Let's start with our market perspectives.
Speaker Change: We have a relatively cautious market outlook as the current macroeconomic environment remains uncertain.
Speaker Change: Despite some signals that new U S. Residential homebuilding is back to normal levels and the outlook for U S repair and remodeling has reverted to modest low single digit percentage growth.
Speaker Change: Mortgage rates remained high the.
Speaker Change: The existing U S home resale market is still soft.
Speaker Change: Inflation remains persistent globally.
Speaker Change: Our 2025 financial outlook does not include assumptions for changes in the current tariff environment.
Speaker Change: We cannot predict what tariff change will occur.
Speaker Change: But if tariff changes implemented and we have detailed action plans designed to substantially mitigate the impact as Jay indicated.
Speaker Change: Our 2025 financial outlook is based on December 31, 2024 currency rates.
Speaker Change: Note that those December 31, 2024 rates reflect U S dollar strengthening against many currencies during December of 2024.
Speaker Change: We have no assumptions in our 2025 finance and financial outlook for future currency rate fluctuations.
Speaker Change: Now our forecast assumptions.
We anticipate both business segments to achieve year over year net revenue growth in 2025.
Speaker Change: We forecast the growth rate of Adi and 25 to be higher than products and solutions.
Speaker Change: Yeah.
From a linearity perspective, we expect higher revenue in the second half of 25% versus the first half in line with our historical seasonality.
Speaker Change: Two items to note unmet revenue.
Speaker Change: Relating to Adi, we are updating our synergy target to now achieve at least $75 million of annual run rate synergies from the staff one acquisition exiting year three.
Speaker Change: As Rob noted we are seeing the potential for some revenue synergies to occur earlier than anticipated.
Speaker Change: And relating to products and solutions we.
Speaker Change: We communicated on the 2023 fourth quarter call that we expected 2020 for North American residential security hardware sales with ADT to decline by approximately $100 million with a similar additional reduction in 2025.
Speaker Change: We saw better results than expected from ADT and 2024.
Speaker Change: And we also expect a better the previously communicated impact in 2025.
Speaker Change: ADT remains an important customer and we continue to work with them on our long term relationship.
Speaker Change: Moving to 2025 gross margins, we forecast 100 to 150 basis points of expansion and total company gross margin versus 2024.
Speaker Change: This was supported by higher gross margins forecasted for each business segment and 25 versus 2024.
Speaker Change: We are also investing in each of the business segments in 2025 to drive future growth.
Speaker Change: This includes the strategic growth initiatives that Rob mentioned for Adi as well as driving speed to market and awareness for the new product introductions that Tom mentioned for products and solutions.
Speaker Change: We have a durable cash flow generation engine.
Speaker Change: Evidenced by our conversion of over 100% of GAAP net income into free cash flow in each of the last two fiscal years.
Speaker Change: In 2025, we forecast a healthy free cash flow conversion ratio, but one that will be lower than 2024, due primarily to adi's higher capital expenditures for strategic store expansions and consolidations as well as the implementation of a new ERP system.
Speaker Change: Considering all of these assumptions here is our 2025 financial outlook.
Speaker Change: For the full year, we expect total company net revenue to be in the range of seven to eight five to $7 45 billion.
Speaker Change: Total company adjusted EBITDA to be in the range of $725 million to $805 million.
Speaker Change: Total company fully diluted earnings per share to be in the range of $2 23 to.
Speaker Change: So $2 47.
And cash provided by operations to be in the range of $345 million to $405 million.
Speaker Change: For the first quarter of 2025, we expect total company net revenue to be in the range of $1 72 to $1 77 billion.
Speaker Change: Total company adjusted EBITDA to be in the range of $150 million to $170 million.
Speaker Change: Total company fully diluted earnings per share to be in the range of 27.
Speaker Change: To 33.
Speaker Change: Our earnings presentation includes our outlook ranges, along with some modeling assumptions, which can be found on our investor Relations website.
Speaker Change: So in closing resilient was building upon the business momentum it has generated while also investing for future profitable growth.
Speaker Change: New product introductions, and accelerating synergies from the Snapple and acquisition will contribute to growing revenue.
<unk> gross margins and generating durable cash from operations in 2025.
Speaker Change: Let's now open the call up for questions operator.
Speaker Change: At this time I would like to remind everyone.
Speaker Change: Order to ask a question. Please press Star then the number one on your telephone keypad.
Speaker Change: Well pause for just a moment to compile the Q&A roster.
Speaker Change: And the interest of giving everyone an opportunity. We appreciate that you limit yourself to one question and one follow up.
Speaker Change: Okay.
Speaker Change: Your first question comes from the line of Cory Carpenter of Jpmorgan. Your line is now open.
Cory Carpenter: Hey, good afternoon. Thanks for question.
Cory Carpenter: One and a follow up so to start just hoping you can talk a bit more about the new product innovation that you've been working on it certainly seems to be a key theme, maybe just expand a bit on what you've gone this far and how it's being received and then also what you can tell us about the product roadmap for 2000 <unk>.
Speaker Change: Yes, hi, good question, Okay. So let's start with what we're doing we're revitalizing the products lines that we have in our existing markets to our existing customers in the current product categories, and we're making those investments to improve the value our customers receive.
Speaker Change: And so in terms of the products that we've released so far we have two that have gone to the market and I couldn't be happier with actually how they were received.
Speaker Change: Exceeded expectations in terms of the response, we've gotten in terms of where we're going we're going to continue that we're going to we've got a number of products in our thermostat product lines, where we revitalize that whole line, we've got new offerings coming in the security products, We've got new offerings and our safety. So you were going to see a cadence.
Speaker Change: Being up here in 2025 and thereafter.
Speaker Change: As we get past revitalizing the current product categories and current lines that we have we'll be expanding into new product categories for the existing markets. We serve and then subsequent to that we will be expanding into new markets for our customers.
Speaker Change: That help.
Speaker Change: Yes. Thank you and then just a follow up wanted to ask a little bit more on Paris. Thank you for the color on what Youre, assuming in the January and a lot of contingency plans or maybe what would be helpful. If you could just kind of go over.
Speaker Change: You kind of supply chain footprint today and.
Speaker Change: Kind of loaded question, but what you can cover.
Speaker Change: And kind of where you feel like.
Speaker Change: In talking to some of your contingency plan. Thank you.
Speaker Change: Hey, Cory as Jay.
Jay: Good question.
Speaker Change: In my remarks, as you know I had just a couple of examples.
Speaker Change: Let me first start off with and I'm going to give a little more color on those examples but to start off with.
Speaker Change: As you know from following us over the last few years I've been here five years now and one of the big investments that we've made is extra investments with our customers to deepen the relationships we have wishes.
Which has really paid off in a lot of different ways, but in terms of what.
Speaker Change: We looked at.
Speaker Change: And kind of a playbook to address this we reached out to all of our customers in a very proactive way, both the products and solutions Division with Tom and his team as well as Rob and Adi snap to contact all our major customers and say hey, we need to sit down and talk with you right now and go through what they are.
Speaker Change: The possibilities are b and talk about maybe price what we're doing other things operational a supply chain wise to offset but.
Speaker Change: Price may have to go this way depending on what.
Speaker Change: What happens with the tariffs they all responded in a very positive way.
Speaker Change: And saying think we were like one of the few that have reached out in a proactive fashion like we did.
Speaker Change: And said, we fully understand and we'll work together for the most part that.
Speaker Change: A very positive response from most customers for both divisions. So that was good.
Speaker Change: In terms of.
Speaker Change: Levers you've heard me say already about price so that's pretty straightforward in terms of opportunities there.
Speaker Change: Commercial actions as quite a laundry list of things that both divisions have looked at such as like an inventory buy ahead, but there's many other things than operational.
Speaker Change: Supply chain moves.
Speaker Change: There are things you can do in the short term and things you can do in the long term, but we have come up which we feel are pretty comprehensive playbook.
Speaker Change: That makes it all that.
Speaker Change: Who knows exactly what's going to happen right.
Speaker Change: But I think we have the comprehensive playbook I think puts us in a pretty good spot.
Speaker Change: Great. That's helpful. Thank you.
Speaker Change: Your next question comes from the line.
Speaker Change: I mean, there <unk> any.
Speaker Change: Many of Evercore ISI. Please go ahead.
Speaker Change: Yeah.
Speaker Change: Great. This is Michael on for Amit Thanks for taking my question.
Speaker Change: Just curious on the <unk>.
<unk> gross margin up 360 basis points year over year, which is pretty impressive and I'm just wondering.
Speaker Change: Within that improvement the 34% growth in exclusive brand revenue is there any way to quantify how much that contributed to the improvement and just maybe how to think about the margin upside potential from exclusive brand going forward.
Speaker Change: Yeah. So let me let me make sure.
Speaker Change: Great question by the way, Michael something I think about quite a bit.
Speaker Change: Let me first just.
Speaker Change: Go back to some of the question yourself. So the 34% growth that I mentioned in my remarks was gross growth on the Adi legacy exclusive brands product not the comprehensive all in product with with snap. So just level set there first but obviously now that we have the snap exclusive brands.
Speaker Change: Product combined with our legacy Adi exclusive brands, we see a great opportunity, especially with the snap product to distribution and get those into the hands of our adi's wide customer base, which was significantly larger than the snap customer base and any opportunity we have to drive a higher mix of those exclusive brands is it's obvious.
Speaker Change: <unk> going to be accrued at accretive to overall gross margin. So you can expect that to be a focus area for us for the foreseeable future.
Speaker Change: That help.
Speaker Change: Yes definitely thank you and then also on the snap one looks like.
Speaker Change: Synergies are coming in well ahead of expectation both already realized and what Youre looking forward can you just talk about what's driving that like where are you seeing maybe a bit stronger and benefit than you anticipated.
Speaker Change: Yeah. So I'll first just say couldnt be it couldnt be prouder of what the team accomplished to get to that $70 million and really just six five months post close. So we're really pleased with with that and just how the entire integration is.
Speaker Change: Is progressing the majority of that all stages to answer your question is from cost.
So I'll say that right upfront.
Speaker Change: But the other part of your question in terms of how that's happening I really attribute that to the manner in which we've approached the integration here I think I said on my on the last call that we've taken a lot of time to make sure. We bring the best of both of these organism organizations together to include and starting with our leadership team. My leadership team is 50 50.
Speaker Change: Snap legacy Adi as is the next layer down and as is the next layer down and we took those steps early on post close that has allowed both sides of the business to really understand at an accelerated rate each other's businesses go to market and subsequently to identify those synergy opportunities faster and then.
Speaker Change: Allow us to act on those so that is the primary driver behind deliver that $17 million.
Speaker Change: Number in 'twenty four and also we will continue to be the driver as Mike mentioned to deliver.
Speaker Change: North of that $75 million as we exited the third year.
Speaker Change: Great. Thanks for taking my question.
Doug: Thanks, Doug.
Speaker Change: Your next question comes from the line of Eric <unk> of Morgan Stanley. Your line is now open.
Eric Woodring: Thank you for taking my question. This is <unk> on behalf of Eric Woodring.
Speaker Change: Just a question on <unk>.
Speaker Change: Paris would you say that most of your competitors are facing similar issues, where there's a lot of production in Mexico, and then I have a follow up.
Speaker Change: Some of our competitors are in Mexico.
Speaker Change: But some of our competitors are little locations too. So it's a mix and as you might guess is part of the comprehensive review that by teams have done we've looked at all of that so it's really a mix it's a mix.
Speaker Change: In terms of locations a different.
Speaker Change: A different manufacturers.
Speaker Change: As you might as you might guess some of our competitors are in China.
Speaker Change: It's just it's really a mixed bag.
Speaker Change: Okay.
Speaker Change: And just on Adi you mentioned record growth in your exclusive brands and E. Commerce like how would you expect the strong areas of demand to translate to pricing power overtime, and Adi and would you still describe the market is competitive in terms of pricing.
Speaker Change: And that's it for me thanks.
Speaker Change: Yes, so maybe I'll take your second question first.
Speaker Change: The the market certainly throughout the year last year became more and more competitive I would say the height of that was really in Q4, where we saw the majority of that the majority of those.
Speaker Change: Competitive pricing pressures that and then the mix of our commercial large project business presented headwinds for us in Q4, However that said.
Speaker Change: And a great point that you bring up.
Speaker Change: Two of them two of the more margin accretive parts of the business right. In fact, the most margin accretive parts of the business are from E Commerce channel as well as exclusive brands and the investments we are making in our omni channel experience, bringing new products to market are all geared to <unk>.
Speaker Change: Try and drive the mix of those two categories higher into this year as well as next year I think that's the single biggest thing we can do along with pricing.
Speaker Change: Along with our investments in the ERP that that Mike mentioned, which should unlock for us greater pricing disciplines and capabilities are.
Speaker Change: Are all going to benefit us from in the future I would also say that I.
Speaker Change: I mentioned I think last time that we had lapped all of the deflationary impacts in Q3, we did not have any any of those in Q4, and we don't expect any of those going forward.
Speaker Change: Yes.
Speaker Change: Again, if you would like to ask a question. Please press star one on your telephone keypad.
Speaker Change: Yes.
Speaker Change: And your next question comes from the line is Ian Zaffino of Oppenheimer. Your line is now open.
Speaker Change: Yes.
Speaker Change: Hey, Good afternoon, guys. This is Isaac housing Ian Thanks for taking my questions. My question is just on Adi and snap one.
Speaker Change: Maybe if you could provide some details on the organic growth assumptions for Adi.
Speaker Change: And some of the main drivers of growth there between video.
Speaker Change: Fire some of the strength that you've seen towards the latter half of 'twenty four.
Speaker Change: A follow up thanks.
Ian Zaffino: Sure Ian Thank you.
Speaker Change: What I would say.
Speaker Change: And I think I said this last time as I remain.
Speaker Change: Cautiously optimistic about the about our ability to deliver.
Speaker Change: <unk> into 2025, despite the macro environment being mixed and I say that because as I look at our opportunity pipeline right now, especially in the commercial categories.
Speaker Change: It remains at a record level, our backlog remains very very healthy and our project bid level is is very very strong. So that gives me a lot of confidence that we're going to be able to.
Speaker Change: See continued growth throughout the throughout 2025 and look we are we're seeing nice pickups from the from the staff and snap business, especially from control for dealers. They delivered generally in line with our expectations into Q4, and we expect them to continue to do the same throughout the year.
Speaker Change: This year.
Speaker Change: Okay, great. Yeah. Thanks, very much and then just on the follow up on Southwind.
Speaker Change: It's very large.
Speaker Change: Yes, I guess contributing to growth this year.
Speaker Change: Just maybe some of your assumptions in growth drivers and sort of what you expect charge it as far as margin accretion there. Thanks.
Yes so.
Speaker Change: I think I've mentioned this on the last question I answered.
Speaker Change: First of all I will say that snap is incredible at launching new products launching new products that continue to be accretive to our business. I mean, we launched over 400, new products last year, we're continuing to do the same thing. This year. So a very strong road map there are several enhancements coming in in <unk>.
Speaker Change: Troll for products, including the user experience, we announced that at as CTO with the X four logs.
Speaker Change: Launch that is going to be later this quarter early second quarter. So we think there's some real opportunity there and then second of all to be able to take the snap product line.
Speaker Change: Into the.
The Adi customer base, which again is much larger than the snap customer base represents a real opportunity to expand overall margins as we drive a higher mix there in complement to what's happening on the E Commerce channel as well.
Speaker Change: Okay understood thanks very much.
Speaker Change: Okay.
Speaker Change: As there are no further questions at this time.
Speaker Change: This concludes today's conference call. Thank you all for joining you may now disconnect.
Okay.
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