Earnings Call Transcript - REZI Q1 2021

Operator, Operator

Ladies and gentlemen, welcome to the Resideo Technologies First Quarter 2021 Earnings Conference Call. This call is being recorded. Now it's my pleasure to introduce Vice President of Investor Relations, Mr. Jason Willey. Sir, I hand it to you.

Jason Willey, VP of Investor Relations

Good afternoon everyone and thank you for joining us for Resideo's First Quarter 2021 Earnings Call. On today's call will be Jay Geldmacher, Resideo's Chief Executive Officer; and Tony 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 now turn the call over to Jay.

Jay Geldmacher, CEO

Thank you, Jason, and good afternoon everyone. Q1 was a strong quarter across the business. We grew revenue 20% year-over-year as both Products & Solutions and ADI continued to benefit from a strong residential demand environment with ADI seeing improved activity in commercial markets. We are building on these market tailwinds with improved execution across the business for manufacturing and supply chain through the engineering, innovation and sales organizations. With positive demand driving better-than-expected revenue, we delivered meaningful profitability expansion. Both businesses leveraged the higher revenue into improved operating margin. Operating profit grew by $96 million year-over-year and cash from operating activities expanded by $79 million year-over-year. As discussed previously, we are taking advantage of the strong market conditions and business performance to accelerate investment in high-return activities. Focus areas within Products & Solutions include key new product initiatives such as accelerating Pro series releases, enhancing customer experience staffing and tools and a number of activities aimed at optimizing the sales organization and processes. At ADI, we continue to invest in our digital platforms and initiatives. Sales force effectiveness tools and expansion in adjacent categories organically and through M&A. Products & Solutions saw strong demand across the markets and channels during Q1. This is a continuation of trends that developed last summer as people focused attention on their homes and security. We also believe we benefited in a number of markets by having the ability to step up and meet our increased customer demand. The underlying market trends and spending on both repair and renovation and new home sales remained positive in the first quarter. Trends we see continuing throughout 2021. While repair and renovation work are the largest drivers of Products & Solutions sales, we are encouraged by early signs of success in our stepped-up Residential New Construction or RNC efforts. An example is our recent engagement agreement with Meritage Homes to integrate a range of our products into their homes and provide the platform to support their connected home offering. This win demonstrates Resideo's unique opportunity in the RNC market created by our broad product portfolio. We believe this product breadth will take on increasing competitive importance as builders look to integrate more in front of and behind the wall connected and smart home content into their portfolio. In the face of meaningful logistics and supply chain headwinds, the team did an excellent job delivering for our customers. While our backlog is elevated relative to where it has historically trended, we believe that in aggregate we are managing through these challenges better than the overall market, presenting us with opportunities in certain categories and geographies. During the quarter, we completed a comprehensive strategic review and planning process within Products & Solutions. The development of eight strategic pillars outlined on Slide 4 of our earnings slides was a key outcome of the process. This work formed the foundation for the strategy we outlined back in early March at our Virtual Investor Event. These pillars were developed to balance long-term decisions with key immediate actions. As part of this process, Products & Solutions will prioritize a shift from discrete traditional products to cross-category solutions with an emphasis on enabling the Pro through data analytics. We are focused on thinking about the home holistically with clarity on where to play and where not to play. The team is now executing to this strategy, taking the concepts and turning them into actionable items with clearly defined owners. At ADI, Q1 performance reinforces our continued leadership position in the security distribution market. The business is benefiting from increased interest in security products across residential and commercial markets and industry-leading execution. On the Commercial side of ADI, which typically makes up over two-thirds of their business, we saw an acceleration of activity. Residential focused categories remained strong in the quarter. In line with our strategy to increase investment in ADI, we continue to enhance our e-commerce capabilities and the rollout of our sales force effectiveness tools. E-commerce continues to grow as a portion of ADI sales. We also saw positive expansion in our private label business which remains a relatively small part of ADI's mix but an attractive long-term opportunity. During the quarter, ADI completed the acquisition of Norfolk Wire & Electronics, a US regional distributor of data communication products with 11 physical locations in the Mid-Atlantic. And earlier today, we announced another acquisition in the distribution space with Shoreview, a US distributor of ProAV products. Shoreview serves the entire US through distribution locations on both coasts and brings a strong brand portfolio that builds on our existing Herman ProAV business. Both acquisitions are an example of our strategy to utilize M&A to accelerate expansion in attractive adjacent categories. I want to welcome both the Norfolk and Shoreview employees to the Resideo team. With that, I will turn the call over to Tony to discuss our first quarter performance and 2021 outlook in more detail.

Tony Trunzo, CFO

Thank you, Jay, and good afternoon, everyone. Both ADI and Products & Solutions exceeded our expectations in Q1 and delivered substantial year-over-year improvement across key financial metrics. Consolidated Q1 revenue was $1.4 billion, an increase of 20% compared to Q1 last year. Gross margin of 25.9% was up 180 basis points from the first quarter of 2020. Selling, general and administrative expenses totaled $238 million, down 5% from Q1 last year and representing 17% of total revenue compared with 21% of total revenue in the first quarter of last year. Operating profit for the first quarter was $130 million or 9.2% of sales compared to $34 million or 2.9% of sales last year. Products & Solutions first quarter revenue of $606 million was up 28% due to improved demand and strong underlying market conditions across all of our major product categories and channels. Products & Solutions gross profit margin in Q1 was 38%, up from 33.9% in Q1 2020. P&S operating profit was $130 million or 21.5% of sales compared with $58 million or 12.2% of sales last year. This improved operating performance is due to fixed cost leverage on higher volume as well as over $10 million in engineering materials productivity improvements. These benefits were partially offset by $12 million in higher freight and logistics costs and increased investment of approximately $5 million targeted at new product development, marketing, and sales force effectiveness. ADI first quarter revenue of $813 million was up 15% year-over-year. ADI had three more selling days this Q1 compared to 2020. Thus, the daily sales average for the first quarter was up by 10%. Demand was strong in residential and commercial categories led by intrusion and video surveillance. ADI's investment in e-commerce and digital selling tools has continued to yield results with e-commerce sales up 60% year-over-year and now accounting for 15% of total ADI sales. ADI gross profit margin in Q1 was 17.2% versus 17.9% in Q1 2020. The lower gross margin was a result of lower supplier rebates year-over-year and unfavorable sales mix in the EMEA region. However, we did see a 40 basis point increase in underlying product line gross margin. ADI operating profit was $59 million or 7.3% of sales, up 23% from $48 million or 6.8% of sales in Q1 last year. ADI operating profit benefited from higher revenue and continued focus on cost management, partially offset by increased investment activity of approximately $3.5 million largely around digital and sales force effectiveness initiatives. Corporate costs for the quarter were $59 million or 4.2% of sales compared with $72 million or 6.1% of sales in the first quarter of 2020. This reflects a reduction in spend and transformation-related costs of approximately $20 million, partially offset by the build-out of our internal innovation transformation and strategy teams as well as higher compensation and bonus expense. Consolidated cash from operations for the first quarter was $5 million, an improvement of $79 million compared with the use of cash of $74 million in the prior period. The first quarter is typically our lowest cash generation quarter due to payment of annual bonuses and customer rebates accrued in prior quarters. We ended Q1 with cash and cash equivalents of $508 million and total outstanding debt of $1.2 billion. Our net debt stood at $688 million compared to $1.2 billion at the end of the year-ago period. As a result of our robust Q1 results and the expectation of continued strong demand for the remainder of 2021, we are raising our outlook for the full year and now expect 2021 revenue to be in the range of $5.5 billion to $5.7 billion, an increase of $300 million across the range and implying year-over-year growth of between 8% and 12%. Consolidated gross margin is expected to be in the range of 26% to 29%. GAAP operating profit is expected to be in the range of $500 million to $550 million, an increase of $50 million from prior guidance. Our 2021 outlook anticipates corporate expenses of approximately $235 million compared with $290 million in 2020. Additional outlook details can be found on page 10 of our earnings slides. As a reminder, ADI will have two fewer selling days in 2021 compared to 2020 reflecting three more days in the just finished first quarter and five fewer days in the fourth quarter. Revenue of approximately $40 million arising from the acquisitions of Norfolk and Shoreview are included in our revised outlook. But we expect these acquisitions to have minimal impact on 2021 operating profit due to acquisition and integration costs. Post integration, we expect both acquisitions to contribute operating profit at levels above ADI's current margins. For the second quarter of 2021, we expect revenue in the range of $1.4 billion to $1.45 billion. Consolidated gross margin is expected to be in the range of 25.5% to 27.5%, and GAAP operating profit is expected to be in the range of $115 million to $125 million. Our outlook both for the year and for the second quarter takes into account supply chain constraints, higher freight and material expediting charges and market shortages of certain components, such as microprocessors, all of which we now expect to persist through the remainder of 2021. Also included in our revised outlook for 2021 are incremental investments compared to 2020 totaling approximately $50 million. At ADI, these investments are targeted at driving scalable growth, including systems to accelerate our e-commerce offerings, sales effectiveness, and improved customer service. Within Products & Solutions, we're investing in incremental engineering and innovation capabilities, customer experience, sales force tools, manufacturing optimization and processes and systems enhancements. And at the corporate level, we're focused on numerous back-office transformation projects as well as ongoing innovation, strategy and transformation activities. That concludes my comments. I'll now turn the call back to Jay for concluding remarks before we take questions.

Jay Geldmacher, CEO

Thanks Tony. As we look to the remainder of 2021, we see the strong market trends in the residential and overall security markets continuing. We also expect increased opportunity for ADI within its core commercial categories as more geographies and markets open up and work begins or is restarted on projects. And we remain focused on execution on our transformation efforts targeted at both cost optimization and growth initiatives. We see this work driving significant long-term value creation with progress expected to be increasingly visible in our financial results as we move through 2021 and into 2022. We win in the market because of the quality and reliability we deliver, which combined with our customer service and breadth of products provides a compelling offering for the professional, whether through Products & Solutions or ADI. We are putting in place a strategy to further leverage these strengths and enhance our innovation, which we believe will position us to drive sustainable long-term outperformance in the markets we serve. This concludes our prepared remarks. And operator, we are now ready for questions.

Operator, Operator

All right. And our first question is going to come from the line of Amit Daryanani with Evercore ISI.

Unidentified Analyst, Analyst

Hey, everyone. This is Michael filling in for Amit. To begin, I'm interested in the Q2 guidance. If we consider the midpoint of the revenue and operating profit, it seems to suggest that margins are decreasing by around 70 basis points sequentially. Is there anything specific to mention regarding this?

Tony Trunzo, CFO

Yes, hi Michael, it's Tony. First of all, in Q2 we're going to shift the mix a bit towards ADI instead of P&S. We provided the investment number for the full year, and we plan to have more investment in the business in the second quarter compared to the first. From a mix perspective, P&S has a less favorable sales plan for the second quarter of 2020, which will also impact the margin. However, there are no structural changes in the margin outlooks for our core markets.

Unidentified Analyst, Analyst

Okay. And then a bit more strategic of one. I'm just curious. So, the M&A strategy with the ADI business seems very logical given how fragmented that market is. So, the only real risk we see here is kind of around execution. So, Jay and Tony as well. I'm just kind of wondering if maybe you could give us some insight into how you approach acquisitions and maybe some past experience you've had with this sort of strategy?

Jay Geldmacher, CEO

I'll share some thoughts. This is Jay speaking, and then I’ll let Tony add in. The individuals we’ve brought into our organization over the past year possess extensive experience in managing integrations from our previous roles. Rob and his team at ADI have established a solid integration playbook. For instance, the Herman acquisition they completed just before COVID was handled exceptionally well, even during the pandemic. They're leveraging the lessons learned from that experience to inform the current acquisitions they are executing. I have strong confidence that the ADI team, with their playbook, along with the transformation team and other experienced individuals we’ve brought on in P&S, will execute this effectively. As you know, successful integration is crucial for M&A. Some companies struggle with it, while others excel. I’m confident that as we engage in M&A activities, we’ll do an outstanding job in this area. Tony, do you have any additional insights?

Tony Trunzo, CFO

Yes. I'd just add that to Jay's point, while M&A is relatively new to ADI as a component of their strategy, they have a very structured execution-oriented, process-oriented culture that lends itself really well to M&A. And as Jay said, they've prepared for this for a long time. We have beefed up the hour M&A capabilities not just at the executive levels, but also a little further in the organization with some folks who have pretty deep experience in M&A. And I guess the last, well, two more points, these deals individually are pretty small, right? I mean, we've got two deals here that – over the next nine months we're going to generate $40 million of revenue. So we've definitely started it cautiously in terms of scale. We're going to walk before we run, we're going to make sure that we don't overburden them with too many deals at the same time and we'll monitor the progress as we go forward.

Unidentified Analyst, Analyst

Okay, thanks for that information. I just wanted to confirm one number. You mentioned $40 million from the two deals you've completed so far?

Tony Trunzo, CFO

Correct.

Operator, Operator

And our next question will come from the line of John Lovallo with Bank of America.

John Lovallo, Analyst

Hey, guys. Thank you for taking my questions. The first one is the 26% to 29% full-year gross margin range, it's fairly wide. First quarter gross margin, I think, was 25.9%, second quarter you guys are thinking 25.5% to 27.5%. So this would seem to imply the second half gross margins, we need to be well in excess of 30% to hit the high-end of that range. So can you just help us think through some of the potential drivers of the high and low end of this gross margin range?

Tony Trunzo, CFO

Sure. Yeah, so hey, John, it's Tony. I guess the first thing I'd say is we've expanded the range by a point is – as I'm sure you've noticed, we were 26% to 28%, we moved it to 26% to 29%, because, and you're right, I think that's a broad range at this point in the year. But it's somewhat of an unprecedented year. We have concerns around the cost of rates, we have concerns around expedited delivery. We actually had some supply chain concerns about making sure that we can get everything we need for some of our product lines. And that's part of the reason why the range is relatively wide. Your calculations are – you're right in the sense that second-half gross margins are going to be higher than first-half gross margins that was the case last year as well. And to be honest with you I would say that, Jay and myself and the leadership team as we continue to focus things we kind of understand over the last couple of quarters that that's probably a structural aspect of the mix of sales in the P&S business. It's just that the – you have a heating season and you have a cooling season. And this is a gross oversimplification, but the products that get sold in one season are – may have a somewhat more profitable profile than the ones that get sold in other parts of the season. And then there's all kinds of puts and takes. I mean, in one part of our business, we have a – we basically – we have a wire business where we pass-through the cost of copper. And it's basically a pure pass-through. So those dollars go through as revenue but we kind of empty calories, because they don't drive any margin. A fair bit of that in the first half of the year and relative to the – relative to revenue in the second half of the year, that type of activity is likely to be less.

John Lovallo, Analyst

Got it. Okay. That's -

Jay Geldmacher, CEO

I'd also – just one other thing I'd add is the transformation team you've heard us talk about as that team has really picked up momentum and had done a lot of things that is our actions that are very critical for the future of the business as part of our DNA going forward, but there are also a lot of things that they action to help offset some of the things that we're facing that people in the world are facing with logistics and supply chain that Tony talked about. So again, I think that does add, sort of, the fact that we want – we're being careful in terms of exactly what we're communicating to all of you. But it Tony's comments about what we've learned about the business or I would agree with also.

John Lovallo, Analyst

Got it. Okay. And then you may going back to the question that Michael asked and just looking at the second quarter guide. The outlook of 14% to 14.5% on the top line is pretty similar to what you printed in the first quarter. Let's assume the midpoint of the gross margin range of 26.5%. I mean, that would seem to imply a pretty decent step up quarter-over-quarter in SG&A, we call it $15 million to $20 million. Just wanted to take that operating profit range that you're talking about, and how much of that $15 million to $20 million is the incremental investment? And what else is potentially driving that higher?

Jay Geldmacher, CEO

Significant majority of that is the incremental investment. There's some smaller stuff in there John. There's ordinary increases kick-in on April 1st things like that. But the large majority of it is incremental investment from compared with where we were in Q1.

John Lovallo, Analyst

Okay. Thank you guys.

Jay Geldmacher, CEO

Thank you.

Operator, Operator

And our next question will come from the line of Ian Zaffino with Oppenheimer.

Ian Zaffino, Analyst

Hi, great. I actually just wanted to ask for that mix question again. I think you said 2021 mix is going to be different, or is that not what you meant and we're really talking more about a seasonal mix? Because I understand the heating/cooling seasons but just kind of wanted to clarify if that mix is an actual 2021 thing versus 2020, or is it seasonal? And if so, what would be driving that mix of business year-over-year?

Jay Geldmacher, CEO

Sorry broadly, what I was driving at here was that it's seasonal. We have a more profitable mix particularly in Q3 and Q4 than we do particularly in Q3 we have a more profitable mix than we do in Q1 and Q2. It's not to be – broadly speaking the mix of products within P&S and the mix of sales between P&S and ADI are not – they're not massive shifts in mix compared to last year. It's really just the seasonal flux that we're talking about. And this doesn't really have a cooling season. So it tends to be – they don't – as we ramp a cooling season in North America there tends to be a little less of that in EMEA. And then like I said, the heating season in season just tends to be – those products just tend to be a little bit more profitable.

Ian Zaffino, Analyst

Okay. I got you. And on the microprocessor shortage, where does that hit you that would mainly be in security? Are there other areas where it's going to hit you? Any color there would be helpful.

Jay Geldmacher, CEO

It depends on where the demand is, but it's not solely about security. It's also related to various components, including resins and other materials that companies are processing. I would say that there are a variety of different areas affected. Security is one of the larger segments, but it's not the only one.

Tony Trunzo, CFO

Yes. I mean we've got...

Jay Geldmacher, CEO

But also, go ahead Tony. No, I'm just going to say comfort, in particular comfort and security. If I had to pick two categories, the thermal solutions group a little bit. I mean because the supply chain issues, it's a matter of degree, which ones are bigger problem children than others. But in general, I'd say security and comfort.

Ian Zaffino, Analyst

Okay. Great. Thank you very much.

Operator, Operator

And our next question will come from the line of Erik Woodring with Morgan Stanley.

Erik Woodring, Analyst

Hey, guys. Thanks for taking my call. Congrats on the quarter. I guess I'll throw out two for you guys here. Just starting in terms of your performance in the first quarter maybe you could just provide a little more commentary on just how P&S did across comfort versus security versus residential, thermal anything that you'd call out there? And then same for ADI on the geographic side, anything of note that you'd call out?

Tony Trunzo, CFO

Thank you for the questions. On the P&S side, all three of the traditional business lines experienced strong growth during the quarter, with security being the standout performer. ADT was a key customer in that sector and performed exceptionally well. We launched our Pro series line, which was well received in the market during Q1. While security showed the most significant growth among the three segments, all three demonstrated substantial growth. Regarding ADI, there isn’t much to highlight; EMEA performed slightly better, but there aren't any notable developments in terms of their geographic mix to report.

Erik Woodring, Analyst

Okay. That's super helpful. And then maybe Tony or Jay either one can take this. But big picture your leverage has dramatically improved over the last 12 months. You no longer have any significant maturities before 2026. You saw some ratings upgrades. So just curious how you're thinking about your target capital structure and leverage going forward? And then how you'd prioritize cash uses given this dynamic? Thanks.

Tony Trunzo, CFO

Great question. We will provide more details on this in the upcoming quarters. We presented some of our long-term targets during Investor Day. We are now considering more carefully where we want to be regarding return metrics and similar factors, which will influence our long-term capital structure. Early in my time at Resideo, I expressed my desire for us to achieve an investment-grade credit profile. While our business performance supports this, our track record and consistency may not be where we want them to be. Additionally, we have significant exposure to the Honeywell IRA. Therefore, when we think about our leverage, we consider the reimbursement agreement with Honeywell as a fixed obligation. As our business grows, this will decrease relative to our overall figures, but it’s an important factor in our capital structure considerations. In short, we are currently carrying less leverage than we believe we could sustain over the long term. If there are reasonable opportunities to deploy cash that would increase our leverage slightly, we would be open to that while keeping in mind the constraints I mentioned.

Jay Geldmacher, CEO

I want to emphasize that we're being more cautious. However, I believe we have positioned ourselves well to take advantage of opportunities as they arise.

Tony Trunzo, CFO

In terms of capital deployment, our focus is on inorganic growth. The deals at ADI are funded with cash flow and are not of significant scale. Now that we have clarity on our future strategy in P&S, we've recently appointed a new treasurer with extensive M&A experience, and we're developing that strategy. We are outlining our approach for engaging in that market. The purpose of refinancing debt and raising capital last year was to ensure we could be strategically proactive. That’s our current standing.

Jay Geldmacher, CEO

Yes. I think Tony expressed that very well. In our presentation deck, there is a one-page slide titled P&S strategic overview that outlines the strategic pillars I mentioned. These are the key focus areas for the P&S business. As we progress in each of these pillars, we want to ensure we have the flexibility to act as needed, whether through organic growth or M&A, while being smart about our decisions.

Tony Trunzo, CFO

This is a long answer to your question, but one other thing I want to mention is the transformation of our capital structure and the deleveraging of the business over the last 12 months has had a profound impact on the strategic and operational decision-making in the business. We've really been able to point people to make the best decisions for the business over a reasonable time horizon or the time horizon we're over a multiyear time horizon as opposed to thinking about what's the cash implication or what's the EBITDA implication of something. And that was really one of the reasons why it was second high priority for us early in the game as the new leadership team if we wanted to take concerns about important strategic and operational decision-making, we wanted to take the financial concerns surrounding those decisions off the table for people. And it feels like we've done that.

Erik Woodring, Analyst

That was great color. Thank you very guys.

Operator, Operator

And our next question is from Paul Dircks with William Blair.

Paul Dircks, Analyst

Hi, good afternoon and congrats on a good quarter.

Tony Trunzo, CFO

Thanks Paul.

Jay Geldmacher, CEO

Thank you, Paul.

Paul Dircks, Analyst

So, two for me. First in P&S given the robust nature of the residential market now and the very tight labor market that we're seeing nationally and into trades. Is the value proposition that Resideo is offering to pros strengthening? In other words, are there things that you guys can do in this kind of market environment to differentiate and to grow closer to some of your contractors and perhaps even recruit new contractors to your brands and to your products?

Jay Geldmacher, CEO

I'll jump in first because I get excited when you ask me that question and I'll let Tony. But yes, I mentioned in my comments Paul as you know about RNC the Residential New Construction and the total portfolio of products that we can offer as part of our growth together and deepening the relationship further with this great asset of pro installers that we have out there. So, that's just one big example that we've got a lot of focus and effort on. Also, Phil Theodore who's President of Products & Solutions and his team have been working a lot in terms of training out there into the trades. And you'll hear more about that as we move forward. And that's an important part and one of many things to be able to as young new people come on board in this market and in those areas with the trades that they learn about us as partners. We're there to help support that. So, your question is a really good question and one that we're very focused on both short and long term. Tony, you've got anything to add to that?

Tony Trunzo, CFO

Yes. Paul, that's a challenging question because we've been focusing on this issue within P&S. You're correct to raise it in light of the pandemic and labor shortages. However, there's a long-term issue for our professionals: their labor force and skilled technicians are aging, and we aren't producing those technicians at the necessary rate for the future. We have engaged significantly with several customers to assist in areas like scholarships and supporting young people entering these trades for various reasons. First, it's the right thing to do; second, it benefits our customers today. Helping someone with their education creates a lifelong supporter. There's a lot of value in that. Additionally, when we design our products, one of our key focuses is to ensure professionals succeed. This means that when they arrive at someone's home, they need to be well-trained on the product, which should be easy to install and durable. This approach enhances the labor efficiency of professionals when they go out to homes. So, your question ties back to our product design processes.

Jay Geldmacher, CEO

Yes. Good feedback.

Paul Dircks, Analyst

Got it. That's very helpful color. I appreciate that. I'm sure there'll be more to come on this topic. Second question for me switching to ADI, in particular, on the e-commerce side, the e-commerce growth in the quarter up 60% year-over-year very robust. I believe last year was somewhere in the 20s maybe mid- upper 20s. I guess what's working there? And specifically, are there any changes in the marketplace or with your execution that you can point to that have increased your effectiveness and are now commanding more investment dollars from you?

Tony Trunzo, CFO

It's undoubtedly attracting more investment. There's no doubt about that. We've significantly enhanced our e-commerce experience, but there is still much work ahead. We are also introducing product information systems as part of this investment, which will further enhance both the web and e-commerce experiences for our customers. Additionally, we want to train our customers to use the portal for routine purchases. Our aim is not only to boost overall sales and improve the customer experience at ADI but also to enable our sales associates to focus on providing consultative support to customers. By shifting the more administrative aspects of order taking online, we can create a valuable e-commerce experience, allowing our sales associates, who are currently performing exceptionally well, to be more consultative with customers in our branches.

Jay Geldmacher, CEO

Yes, I think Tony made an excellent point. I would add that, as you mentioned Paul, we've experienced significant growth since last year, which has provided us with opportunities during COVID. In fact, it accelerated our progress. There's no doubt about that. Now, as we emerge from COVID, people are looking for easier ways to do things, especially through digital experiences. Therefore, as Tony said, we are investing more in this area to boost our efforts. Rob and his team at ADI are very enthusiastic about this because they see the positive results each month.

Paul Dircks, Analyst

Understood. I appreciate the thoughtful answers. Thank you.

Jay Geldmacher, CEO

Thanks. Paul.

Operator, Operator

And at this time, it appears we have no further questions. I will turn the call over to you for any closing comments.

Tony Trunzo, CFO

I just appreciate everyone's participation today on the call. Please reach out if you have any follow-ups and we look forward to speaking with you over the coming weeks and months. Take care everyone. Thank you.

Operator, Operator

Once again, we'd like to thank you for participating in today's Resideo Technologies conference call. You may now disconnect.