RESIDEO TECHNOLOGIES INC
For the period ended Jun 29, 2024. Filed Aug 9, 2024.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 29, 2024 · Filed Aug 9, 2024
REZI$19.40-1.0%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-03-30; filed 2024-05-02.
0001740332-24-000045
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-06-29; filed 2024-08-09.
0001740332-24-000053
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 103 previous paragraphs and 130 current paragraphs.
64 unchanged; 28 reworded; 33 added; 11 removed; 0 previous and 5 current paragraphs rearranged.
Tables are not compared: 3 previous and 2 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (33)
Current report
•compatibility and ease of integration with third-party products and services, outside of our control;
Current report
•our reliance on independent integrators to sell and install our solutions;
Current report
•provisions in our governing documents discouraging takeovers;
Current report
•currency exchange rate, stock price, and effective tax rate fluctuations;
Current report
•the CD&R Stockholder's interest in and influence over us that may diverge from, or event conflict with, interests of the holders of our common stock, and the reduction in the relative voting power of holders of our common stock resulting from the issuance of preferred stock;
Current report
•our ability to maintain effective internal controls, deliver timely financial statements, and avoid the financial statements to become impaired and damage public opinion, including the process we are currently undertaking to assess the internal controls over financial reporting of Snap One, which had disclosed a material weakness at the time we acquired the business;
Current report
•impairment of other intangible assets and long-lived assets;
Current report
•being required to make significant cash contributions to our defined benefit pension plans; and
Current report
•We completed the acquisition of Snap One, expanding our distribution into and reach with smart-living products, services, and software.
Current report
Net revenue for the three months ended June 29, 2024 was $1,589 million, a decrease of $13 million, or 0.8%, from the same period in 2023, due to $33 million of lower sales from the divestiture of the Genesis business during the fourth quarter of 2023, lower sales volume of $16 million, unfavorable price impacts of $10 million at the ADI Global Distribution segment, and unfavorable foreign currency fluctuations of $6 million. The decrease was partially offset by $45 million of revenues from Snap One and price increases of $8 million at the Product and Solutions segment.
Current report
Net revenue for the six months ended June 29, 2024 was $3,075 million a decrease of $76 million, or 2.4%, from the same period in 2023, driven by $68 million of lower sales from the divestiture of the Genesis business during the fourth quarter of 2023, lower sales volume of $53 million, unfavorable price impacts of $14 million at the ADI Global Distribution segment and unfavorable foreign currency fluctuations of $3 million. The decrease was partially offset by $45 million of revenues from Snap One and price increases of $17 million at the Product and Solutions segment.
Current report
Gross profit of $447 million increased $11 million and gross margin of 28.1% was up 90 basis points (“bps”) as compared to the same period in 2023. The change in gross margin was driven by favorable manufacturing costs of 140 bps, favorable pricing of 40 bps and favorable impacts from acquisitions, net of the Genesis divestiture of 60 bps, which was partially offset by unfavorable margin mix shift of 180 bps.
Current report
Research and development expenses for the three months ended June 29, 2024 of $21 million were down $8 million compared with the same period in 2023. The decrease is primarily due to a $6 million shift in resource allocation to align IT with the Products and Solutions strategy.
Current report
Research and development expenses for the six months ended June 29, 2024 of $46 million were down $10 million compared with the same period in 2023. The decrease is primarily due to an $8 million shift in resource allocation to align IT with the Products and Solutions strategy as well as a reduction in third-party spend of $2 million.
Current report
Selling, general and administrative expenses for the three months ended June 29, 2024 were $280 million, an increase of $38 million, or 15.7%, as compared to the same period in 2023. The increase was primarily driven by acquisition costs of $34 million and $12 million from incremental Snap One operating expenses. The increase was partially offset by lower employee expenses of $8 million.
Current report
Selling, general and administrative expenses for the six months ended June 29, 2024 were $511 million, an increase of $25 million, or 5.1%, as compared to the same period in 2023. The increase was driven by acquisition costs of $34 million and $12 million from incremental Snap One operating expenses. The increase was partially offset by lower employee expenses of $21 million.
Current report
Intangible asset amortization increased $3 million for the three months ended June 29, 2024 compared with the same period in 2023. The increase was due to additional amortization expense associated with the new intangibles from the Snap One acquisition.
Current report
Intangible asset amortization increased $3 million for the six months ended June 29, 2024 compared with the same period in 2023. The increase was due to additional amortization expense associated with the new intangibles from the Snap One acquisition
Current report
Restructuring, Impairment and Extinguishment Expenses
Current report
Products and Solutions net revenue decreased $47 million, or 7%, as compared to the same period in 2023, primarily due to $33 million from the divestiture of the Genesis business during the fourth quarter of 2023, lower sales volume of $16 million and unfavorable foreign currency fluctuations of $5 million. The decrease was partially offset by price increases of $8 million.
Current report
The chart below presents net revenue and income from operations for the six months ended June 29, 2024 and July 1, 2023.
Current report
Products and Solutions net revenue decreased $85 million, or 6.4%, as compared to the same period in 2023, primarily due to $68 million from the divestiture of the Genesis business during the fourth quarter of 2023, lower sales volume of $28 million and unfavorable foreign currency fluctuations of $6 million. The decrease was partially offset by price increases of $17 million. The volume declines impacted several categories including original equipment manufacturing, security distribution and HVAC, partially offset by expansion in electrical distribution.
Current report
ADI Global Distribution net revenue increased $34 million, or 3.7%, as compared to the same period in 2023. The increase was driven by acquisition revenues of $45 million partially offset bydecrease in price of $10 million and unfavorable foreign currency fluctuations of $1 million.
Current report
Income from operations decreased $9 million, or 13%, as compared to the same period in 2023. The decrease was primarily due to unfavorable sales mix of $7 million and unfavorable manufacturing costs of $3 million.
Current report
The chart below presents net revenue and income from operations for the six months ended June 29, 2024 and July 1, 2023.
Current report
Income from operations decreased $24 million, or 18%, due to an unfavorable sales mix of $16 million, unfavorable manufacturing costs of $6 million and lower sales volume of $2 million.
Current report
Corporate costs for the three months ended June 29, 2024 were $70 million and $33 million for the comparable period. The increase in Corporate costs was driven by $30 million of Snap One acquisition costs, $6 million of debt extinguishment costs, and $5 million impairment of an equity security. These increases are partially offset by lower employee expenses of $5 million.
Current report
Corporate costs for the six months ended June 29, 2024 were $103 million and $64 million for the comparable period. The increase in in Corporate costs was primarily driven by $30 million of Snap One acquisition costs, $6 million of debt extinguishment costs, and $5 million of favorable adjustments related to the tax indemnity accrual, and $5 million impairment of an equity security. These increases are partially offset by lower employee expenses of $8 million.
Current report
In June 2024, we completed the acquisition of Snap One. This was partially financed in the amount of $600 million in incremental term loans under our A&R Term B Facility, with a maturity date of May 14, 2031. Additionally, we issued Preferred Stock on June 14, 2024 for $500 million to partially finance the Snap One acquisition. The remainder of the cash purchase price was financed with our existing cash.
Current report
In June 2024, we obtained $600 million in incremental term loans under our A&R Term B Facility to partially finance our acquisition of Snap One. We also extended the term of our A&R Revolving Credit Facility for a new five-year term.
Current report
Common Share Repurchase Program
Current report
Net cash provided by operating activities for the six months ended June 29, 2024 was $94 million. Compared to the six months ended July 1, 2023, net cash provided by operating activities decreased $23 million. This is primarily due to a decrease in net income of $34 million and unfavorable changes in working capital of $7 million. These amounts are offset by an increase in non-cash charges of $18 million.
Current report
Net cash provided by financing activities for the six months ended June 29, 2024 was $1,052 million. Compared to the six months ended July 1, 2023, net cash used for financing activities increased $1,070 million, primarily due to an increase of $582 million incremental term loan borrowings under our A&R Term B Facility, and an increase in the issuance of Preferred Stock in the amount of $482 million each related to the Snap One acquisition.
Removed paragraphs (11)
Previous report
•inability to timely satisfy the conditions to close and consummate the Snap One transaction and related financing and to recognize the expected benefits from such transaction;
Previous report
•currency exchange rate fluctuations; and
Previous report
Net revenue for the three months ended March 30, 2024 was $1,486 million, a decrease of $63 million, or 4.1%, from the same period in 2023, driven primarily by lower sales volumeof $38 million and $35 million from the divestiture of the Genesis Cable business during fourth quarter 2023. These decreases were partially offset by higher selling prices of$6 millionand favorable foreign currency fluctuations of $4 million. Volume declines were driven by lower demand across multiple product categories primarily in the ADI Global Distribution Segment.
Previous report
Research and development expenses for the three months ended March 30, 2024 of $25 million were consistent with the same period in 2023.
Previous report
Selling, general and administrative expenses for the three months ended March 30, 2024 were $231 million, a decrease of $13 million, or 5.3%, as compared to the same period in 2023. The decrease was primarily driven by lower employee expenses from executed cost savings actions.
Previous report
Restructuring Expenses
Previous report
Intangible asset amortization was consistent at $9 million for the three months ended March 30, 2024 and the same period in 2023.
Previous report
Corporate costs for the three months ended March 30, 2024 were $33 million and $31 million for the comparable period. The increase in selling, general, and administrative costs was driven by a favorable prior year tax indemnity adjustment of $2 million.
Previous report
Share Repurchase Program
Previous report
Net cash provided by operating activities for the three months ended March 30, 2024 was $2 million. Compared to the three months ended April 1, 2023, net cash provided by operating activities increased $6 million primarily due to improved working capital management in the Products and Solutions segment.
Previous report
Net cash used for financing activities for the three months ended March 30, 2024 was $8 million. Compared to the three months ended April 1, 2023, net cash used for financing activities decreased $1 million primarily due to a reduction in other financing activities, net of $2 million offset by an increase in stock repurchases of $1 million.
Reworded paragraphs (28)
Previous wording
•the impact of disruptions in our supply chain from third-party suppliers and manufacturers, including ourinability to obtain necessary raw materials and product components, production equipment or replacement parts;
Current wording
•the impact of disruptions in our supply chain from third-party suppliers and manufacturers, including our inability to obtain necessary raw materials and product components, production equipment or replacement parts;
Previous wording
•the impact of potentially volatile global market and economic conditions and industry and end market cyclicality, including factors such asinterest rates, inflation, availability of financing, consumer spending habits and preferences, housing market changes, and employment rates;
Current wording
•the impact of potentially volatile global market and economic conditions and industry and end market cyclicality, including factors such as interest rates, inflation, energy costs, availability of financing, consumer spending habits and preferences, housing market changes, and employment rates;
Previous wording
•the significant failure or inability to comply with specifications and manufacturing requirementsor delays or other problems with existing or new products or inability to meet price requirements;
Current wording
•the significant failure or inability to comply with specifications and manufacturing requirements or delays or other problems with existing or new products or inability to meet price requirements;
Previous wording
We are a leading global manufacturer and distributor of technology-driven products and solutions that help homeowners and businesses stay connected and in control of their comfort, security and energy use. We are a leader in the home heating, ventilation and air conditioning controls markets, smoke and carbon monoxide detection home safety and fire suppression products, and security markets. We have a global footprint serving commercial and residential end-markets. We manage our business operations through two operating segments, Products and Solutions and ADI Global Distribution. The Products and Solutions operating segment, consistent with our industry, has a higher gross and operating profit profile in comparison to the ADI Global Distribution operating segment.
Current wording
We are a leading global manufacturer and distributor of technology-driven products and solutions that help homeowners and businesses stay connected and in control of their comfort, security and energy use. We are a leader in the home heating, ventilation and air conditioning controls markets, smoke and carbon monoxide detection home safety and fire suppression products, and security markets. We have a global footprint serving commercial and residential end-markets. We manage our business operations through two operating segments, Products and Solutions and ADI Global Distribution. The Products and Solutions operating segment, consistent with our industry, has a higher gross and operating profit profile in comparison to the ADI Global Distribution operating segment. In the second quarter of 2024, we expanded the business through the acquisition of Snap One, which has been incorporated into the ADI Global Distribution segment. The acquisition expands our distribution into and reach with smart-living products, services, and software.
Previous wording
Our ADI Global Distribution business is a leading wholesale distributor of low-voltage products including access control, fire detection, security, and video products and participates significantly in the broader related markets of audio, communications, data communications, networking, power, ProAV, smart home, and wire and cable. Our ADI Global Distribution strategy is focused on growth in our omni-channel presence, expansion into adjacent markets, and continued enhancements to our value-add services to support our professional installers’ efficiency and profitability.
Current wording
Our ADI Global Distribution business is a leading wholesale distributor of low-voltage security products including access control, fire detection, fire suppression, security, and video products and participates significantly in the broader related markets of audio, communications, data communications, networking, power, ProAV, smart home, and wire and cable. Our ADI Global Distribution strategy is focused on growth in our omni-channel presence, expansion into adjacent markets, and continued enhancements to our value-add services to support our professional installers’ efficiency and profitability.
Previous wording
Our financial performance is influenced by macroeconomic factors such as repair and remodeling activity, residential and non-residential construction, employment rates, interest rates and bank lending standards, supply chain dynamics, and the overall macroeconomic environment. The ongoing uncertainty and volatility in the global macroeconomic conditions have affected and could continue to affect our visibility toward future performance. While we believe supply chain and logistics will continue to normalize over 2024, customer demand continues to moderate as inventories rebalance over the period and uncertainties remain including the potential for changes in inflation and interest rates, increased labor costs, reduced consumer spending due to softening labor markets, elevated mortgage rates, unfavorable foreign currency impacts from a stronger U.S. dollar, and potential market and other disruption from the ongoing conflict between Russia and Ukraine as well as the Middle East crisis between Hamas and Israel.
Current wording
Our financial performance is influenced by macroeconomic factors such as repair and remodeling activity, residential and non-residential construction, new and existing home sales, employment rates, interest rates and bank lending standards, supply chain dynamics, and the overall macroeconomic environment. The ongoing uncertainty and volatility in the global macroeconomic conditions have affected and could continue to affect our visibility toward future performance. While supply chain and logistics continue to normalize over 2024, customer demand continues to moderate as inventories rebalance over the period and uncertainties remain including the potential for changes in inflation and interest rates, increased labor costs, reduced consumer spending due to softening labor markets, elevated mortgage rates, unfavorable foreign currency impacts from a stronger U.S. dollar, and potential market and other disruption from the ongoing conflict between Russia and Ukraine as well as the Middle East crisis between Hamas and Israel.
Previous wording
•Net revenue of $1.49 billion, down 4.1% from $1.55 billion in the first quarter of 2023
Current wording
•Net revenue of $1.59 billion, down 0.8% from $1.60 billion in the second quarter of 2023
Previous wording
•Income from operations of $128 million, or 8.6% of revenue, compared to $138 million, or 8.9% of revenue in thefirst quarter of 2023
Current wording
•Income from operations of $122 million, or 7.7% of revenue, compared to $153 million, or 9.6% of revenue in thesecond quarter of 2023
Previous wording
•Fully diluted earnings per share of $0.29, compared to $0.38 per share in thefirst quarter of 2023
Current wording
•Fully diluted earnings per common share of $0.19, compared to $0.34 per common share in thesecond quarter of 2023
Previous wording
•Cash Flow From Operations was $2 million in the first quarter of 2024 as compared to a $4 million use of cash in the first quarter of 2023
Current wording
•Cash Flow From Operations of $92 million in the second quarter of 2024, compared to $121 million in the second quarter of 2023
Previous wording
Expectations for key macro trends expected to impact our business for the full year include residential repair and remodel activity flat to down low-single-digits year-over-year, and residential new construction starts expected to grow low to mid-single digits. We expect ADI’s key commercial markets to grow low-single-digits with continued headwinds in the residential security business. We expect these trends to support our 2024 year-over-year revenue outlook of flat to down low single-digits. This outlook does not include any impacts from the proposed acquisition of Snap One.
Current wording
Expectations for key macro trends expected to impact our business for the full year include residential repair and remodel activity flat to down low-single-digits year-over-year, and residential new construction starts expected to grow low to mid single digits. We expect ADI’s key commercial markets to be flat to up low-single-digits with continued headwinds in residential focused markets. We expect these trends to support our 2024 year-over-year revenue outlook of flat to down low single-digits.
Previous wording
Gross profit dollars of $400 million decreased $18 million and gross margin of 26.9% was down 10 basis points (“bps”) as compared to the same period in 2023. The change in gross margin was driven by unfavorable margin mix shift of 170 bps which was partially offset by 80 bps of favorable material, freight and other manufacturing costs, 70 bps of favorable pricing, and 10 bps from the divestiture of the Genesis Cable business, foreign currency and other.
Current wording
Gross profit $847 million decreased $9 million and gross margin of 27.5% was up 38 basis points (“bps”) as compared to the same period in 2023. The change in gross margin was driven by favorable manufacturing costs of 130 bps, favorable pricing of 50 bps and favorable impacts from acquisitions net of Genesis divestiture of 50 bps, which was partially offset by unfavorable margin mix shift of 180 bps.
Previous wording
We took actions to align our cost structure with market conditions. The intent of these actions is to lower costs, increase margins, and position us for long-term growth. The following summarizes our restructuring expenses for the three months ended March 30, 2024 and April 1, 2023, which were primarily related to workforce reductions.
Current wording
For the three and six months ended June 29, 2024 we recorded $5 million in impairment expense related to an equity security and $6 million in debt extinguishment costs as part of the Snap One acquisition. In addition, we continue to take actions to align our cost structure with market conditions. The intent of these actions is to lower costs, increase margins, and position us for long-term growth. For the three months ended June 29, 2024, we incurred no additional restructuring expenses compared to $2 million for the three months ended July 1, 2023. We incurred $7 million and $4 million of restructuring expenses for the six months ended June 29, 2024 and July 1, 2023, respectively. Restructuring expenses primarily related to employee termination costs.
Previous wording
Other expenses, net consists primarily of Reimbursement Agreement expenses in the amount of $43 million for the three months ended March 30, 2024.
Current wording
Other expenses, net consists primarily of Reimbursement Agreement expenses in the amount of $47 million for the three months ended June 29, 2024 as compared to $44 million of Reimbursement Agreement expenses for the three months ended July 1, 2023.
Previous wording
Interest expense, net decreased $4 million for the three months ended March 30, 2024 as compared to the same period in 2023, due to higher interest income as a result of effectively investing excess cash.
Current wording
Interest expense, net decreased $2 million for the three months ended June 29, 2024 as compared to the same period in 2023, due to higher interest income as a result of effectively investing excess cash.
Previous wording
Income tax expense increased by $6 million for the three months ended March 30, 2024 compared to the same period in 2023. The effective income tax rate increased by 11.5 percentage points for the three months ended March 30, 2024 compared to the same period in 2023. The changes are primarily driven by income before taxes, the mix of earnings across the jurisdictions in which we operate, non-deductible expenses, and U.S. taxation of foreign earnings.
Current wording
Income tax expense decreased by $15 million for the three months ended June 29, 2024 compared to the same period in 2023. The effective income tax rate increased by 230 bps for the three months ended June 29, 2024 compared to the same period in 2023. The changes are primarily driven by lower income before taxes, the mix of earnings across the jurisdictions in which we operate, relatively fixed non-deductible expenses, and U.S. taxation of foreign earnings.
Previous wording
On January 1, 2024, certain corporate functions were decentralized into the operating segments aligning with the business strategy. As a result, $11 million and $7 million of information technology, finance, tax, business development, and research and development functional expenses incurred during the first quarter are now recorded within the Products and Solutions and ADI Global Distribution segments, respectively. For the period ending April 1, 2023, $12 million and $8 million of corporate expenses have been reclassified into the Products and Solutions and ADI Global Distribution segments, respectively, decreasing reported Income from Operations to conform to the current year presentation. Additionally, certain prior period amounts have been reclassified to conform to the current period classification.
Current wording
On January 1, 2024, certain corporate functions were decentralized into the operating segments aligning with the business strategy. For the three and six months ended July 1, 2023, $13 million and $25 million of corporate expenses have been reclassified into the Products and Solutions segment while $8 million and $16 million of corporate expenses have been reclassified into the ADI Global Distribution segment, respectively, decreasing reported Income from Operations to conform to the current year presentation.
Previous wording
Products and Solutions net revenue decreased $38 million, or 6%, as compared to the same period in 2023, primarily due to $35 million from the divestiture of the Genesis business during the fourth quarter of 2023 and lower sales volume of $13 million. The decrease was partially offset by price increases of $10 million. Income from operations increased $7 million, or 7%, from the same period in 2023, primarily due to lower selling, general and administrative expenses of $13 million and lower material, freight and other manufacturing costs of $10 million, and favorable pricing impact of $10 million. Partially offsetting the favorable impacts to income from operations was unfavorable mix of $17 million from mix shifts to lower priced products, lower volumes of $6 million and higher restructuring costs of $3 million.
Current wording
Income from operations increased $22 million, or 10%, from the same period in 2023, primarily due to lower material, freight and other manufacturing costs of $40 million, lower selling, general and administrative expenses of $20 million and favorable pricing impact of $17 million. Partially offsetting the favorable impacts to income from operations was unfavorable mix of $37 million from mix shifts to lower priced products, lower volumes of $10 million and $8 million from the divestiture of the Genesis business during the fourth quarter of 2023.
Previous wording
ADI Global Distribution net revenue decreased by $25 million, or 2.8%, as compared to the same period in 2023, due to adecrease in volume and price of $25 million and $4 million, respectively. The volume declines impacted several categories including residential security, access control and video, partially offset by expansion in fire and data communications. The decrease was partially offset by favorable foreign currency fluctuations of $4 million. Income from operations decreased $15 million, or 23%, due to unfavorable sales mix of $9 million, lower sales volume of $2 million, unfavorable freight costs of $2 million, unfavorable rebate and purchase discounts of $2 million, and restructuring costs of $2 million partially offset by a $2 million decrease in selling, general and administrative expense.
Current wording
ADI Global Distribution net revenue increased by $9 million, or 0.5%, as compared to the same period in 2023, due to additional $45 million from incremental Snap One revenue and favorable foreign currency fluctuations of $3 million. The increase was partially offset by adecrease in volume and price of $25 million and $14 million, respectively. The volume declines impacted several categories including residential security, access control and video, partially offset by expansion in fire and data communications.
Previous wording
As of March 30, 2024, total cash and cash equivalents were $603 million, of which 35% were held by foreign subsidiaries. Our liquidity is primarily dependent on our ability to continue to generate positive cash flows from operations, supplemented by external sources of capital, as needed. Additional liquidity may also be provided through access to the capital markets and our $500 million A&R Revolving Credit Facility. We are assessing the impact of the potential Snap One acquisition on our liquidity.
Current wording
As of June 29, 2024, total cash and cash equivalents were $413 million, of which 52% were held by foreign subsidiaries. Our liquidity is primarily dependent on our ability to continue to generate positive cash flows from operations, supplemented by external sources of capital, as needed. Additional liquidity may also be provided through access to the capital markets and our $500 million A&R Revolving Credit Facility.
Previous wording
As of March 30, 2024, we had $1,406 million of long-term debt outstanding under our A&R Credit Agreement and Senior Notes due 2029, of which $12 million is due in the next 12 months. We have entered into certain interest rate swap agreements to effectively convert a portion of our variable-rate debt to fixed rate debt.
Current wording
As of June 29, 2024, we had $1,991 million of long-term debt outstanding under our A&R Credit Agreement and Senior Notes due 2029, of which $12 million is due in the next 12 months. We have entered into certain interest rate swap agreements to effectively convert a portion of our variable-rate debt to fixed rate debt. Additionally, as part of our acquisition of Snap One, we acquired an interest rate cap with a notional of $346 million and a strike rate of 4.79%, which effectively caps SOFR on the notional amount at that rate.
Previous wording
On August 3, 2023, we announced that our Board of Directors authorized a share repurchase program for the repurchase of up to $150 million of our common stock over an unlimited time period. During the March 30, 2024, we repurchased 0.1 million shares of common stock in the open market at a total cost of $1 million. As of March 30, 2024, we had $108 million of authorized repurchases remaining under the share repurchase program.
Current wording
On August 3, 2023, we announced that our Board of Directors authorized a share repurchase program for the repurchase of up to $150 million of our common stock over an unlimited time period. During the June 29, 2024 period, we did not make any common share repurchases. As of June 29, 2024, we had $108 million of authorized repurchases remaining under the Share Repurchase Program.
Previous wording
Cash Flow Summary for the Three Months Ended March 30, 2024 and April 1, 2023
Current wording
Cash Flow Summary for the Six Months Ended June 29, 2024 and July 1, 2023
Previous wording
Our cash flows from operating, investing and financing activities for the three months ended March 30, 2024 and April 1, 2023, as reflected in the Unaudited Consolidated Financial Statements, are summarized as follows:
Current wording
Our cash flows from operating, investing and financing activities for the six months ended June 29, 2024 and July 1, 2023, as reflected in the Unaudited Consolidated Financial Statements, are summarized as follows:
Previous wording
Net cash used for investing activities for the three months ended March 30, 2024 was $22 million. Compared to the three months ended April 1, 2023, net cash used for investing activities decreased $4 million primarily due to a decrease in acquisitions of $6 million related to the BTX acquisition, which occurred in the prior year.
Current wording
Net cash used for investing activities for the six months ended June 29, 2024 was $1,364 million. Compared to the six months ended July 1, 2023, net cash used for investing activities decreased $1,309 million, primarily due to an increase in cash used for acquisitions of $1,328 million related to the Snap One acquisition offset by favorable changes in capital expenditures of $13 million.
Previous wording
In connection with the Spin-Off, we entered into the Reimbursement Agreement with Honeywell. As of March 30, 2024, a liability of $660 million was deemed probable and reasonably estimable; however, it is possible we could pay $140 million per year (exclusive of any late payment fees up to 5% per annum) until the earlier of: (1) December 31, 2043; or (2) December 31 of the third consecutive year during which the annual reimbursement obligation (including in respect of deferred payment amounts) has been less than $25 million. During the three months ended March 30, 2024, we paid Honeywell $35 million under the Reimbursement Agreement. For further discussion on the Reimbursement Agreement, refer to Note 16. Commitments and Contingencies to the Unaudited Consolidated Financial Statements.
Current wording
In connection with the Spin-Off, we entered into the Reimbursement Agreement with Honeywell. As of June 29, 2024, a liability of $672 million was deemed probable and reasonably estimable; however, it is possible we could pay $140 million per year (exclusive of any late payment fees up to 5% per annum) until the earlier of: (1) December 31, 2043; or (2) December 31 of the third consecutive year during which the annual reimbursement obligation (including in respect of deferred payment amounts) has been less than $25 million. During the six months ended June 29, 2024, we paid Honeywell $70 million under the Reimbursement Agreement. For further discussion on the Reimbursement Agreement, refer to Note 16. Commitments and Contingencies to the Unaudited Consolidated Financial Statements.
Previous wording
We make environmental liability payments for sites which we own and are directly responsible. As of March 30, 2024, a payment of $22 million was deemed probable and reasonably estimable.
Current wording
We make environmental liability payments for sites which we own and are directly responsible. As of June 29, 2024, a liability of $22 million was deemed probable and reasonably estimable.
Previous wording
We have operating lease arrangements for the majority of our manufacturing sites, offices, engineering and lab sites, stocking locations, warehouses, automobiles, and certain equipment. As of March 30, 2024, we had operating lease payment obligations of $197 million, with $38 million payable within 12 months.
Current wording
We have operating lease arrangements for the majority of our manufacturing sites, offices, engineering and lab sites, stocking locations, warehouses, automobiles, and certain equipment. As of June 29, 2024, we had operating lease payment obligations of $248 million, with $52 million payable within 12 months.
Rearranged current paragraphs (5)
Current report — wording carried from elsewhere
The chart below presents the drivers of the gross profit variance from thesix months ended July 1, 2023 to thesix months ended June 29, 2024.
Current report — wording carried from elsewhere
Other expenses, net consists primarily of Reimbursement Agreement expenses in the amount of $90 million for the six months ended June 29, 2024 as compared to $85 million of Reimbursement Agreement expenses for the six months ended July 1, 2023.
Current report — wording carried from elsewhere
Interest expense, net decreased $6 million for the six months ended June 29, 2024 as compared to the same period in 2023, due to higher interest income as a result of effectively investing excess cash.
Current report — wording carried from elsewhere
Income tax expense decreased by $9 million for the six months ended June 29, 2024 compared to the same period in 2023. The effective income tax rate increased by 580 bps for the six months ended June 29, 2024 compared to the same period in 2023. The changes are primarily driven by lower income before taxes, the mix of earnings across the jurisdictions in which we operate, relatively fixed non-deductible expenses, and U.S. taxation of foreign earnings.
Current report — wording carried from elsewhere
Income from opera tions increased $15 million, or 13%, from the same period in 2023, primarily due to lower material, freight and other manufacturing costs of $29 million, favorable pricing impact of $8 million and lower selling, general and administrative expenses of $7 million. Partially offsetting the favorable impacts to income from operations was unfavorable mix of $21 million from mix shifts to lower priced products, lower volumes of $4 million and $5 million from the divestiture of the Genesis business during the fourth quarter of 2023.