Snap One Holdings Corp. expects to continue with acquisitions and significant investments in research and development in 2022 after a strong year in which it beat analysts’ expectations.
CEO John Heyman this week called 2021 “a banner year for Snap One” on the company’s earnings call for the fourth quarter and full year of 2021.
“We became a $1 billion company, generating just over $1 billion in net sales, an increase of 24% from the prior year,” he told analysts on the call. “Our attractive business model delivered record profitability, with adjusted EBITDA of $111 million, an increase of 17%.”
Snap One (NASDAQ: SNPO), founded in 2005, manufactures home and business audio-visual equipment, security, control, networking and remote management products, which it distributes through about 16,000 professional technology installers. It also distributes third-party products to its network to make for a “one-stop shop” for installers through its e-commerce website and 30 brick-and-mortar branches in the U.S. and Canada.
Sales should increase in 2022, even without acquisitions, said Chief Financial Officer Michael Carlet. While the company is experiencing some of the same supply-chain issues plaguing almost every industry in the wake of the Covid-19 pandemic, Snap One has largely gotten ahead of rising costs with price increases it implemented in August and February.
“We continue to see strong demand for smart living solutions,” he told analysts. “We expect our net sales to range between $1.14 billion and $1.17 billion, an increase of 13% to 16% compared to the prior fiscal year.”
Charlotte-based Snap One, formerly Snap AV, went public in July with a $250 million initial public offering.
The company reported a net loss in the fourth quarter of $7.8 million, or 11 cents per share, on revenue totaling $273.5 million. That compares with a net loss of $4.1 million, or 7 cents per share, the prior year, when revenue totaled $226.1 million.
But excluding one-time items, Snap One says it had adjusted fourth-quarter net income of $13.9 million in 2021. Snap One does not reported adjusted earnings per share. But based on the earnings and average weighted shares it reported, the adjusted earnings per share would total 19 cents.
That is better than the 18 cents per share that analysts had, on average, estimated for the quarter. And its revenue exceeded the $263.2 million analysts had estimated.
For the full year, the company reported a net loss of $36.5 million, or 56 cents per share, on revenue totaling $1.01 billion. That compares with a net loss of $25.9 million, or 42 cents per share, on revenue totaling $814.1 million in 2020.
Excluding one-time items, the adjusted net income for 2021 was $28.3 million, the company says. That would equal adjusted earnings per share of 82 cents, exceeding analysts’ average expectation of 81 cents for adjusted earnings per share for the full year.
The company’s strategy is based on the expectation that people and businesses will continue to demand additional technology. They will increasingly turn to professional installers and system integrators to make the new technology work.
“Our growth strategy is rooted … in five key pillars: one, increase our wallet share with existing integrators; two, expand our global integrator network; three, innovate with new products, software and technology-enabled workflow solutions; four, develop new software services and revenue models; and finally, fifth, executing against strategic M&A,” Heyman said on the earnings call.
Research and development will be a particular focus, he told analysts.
“I think where you would see the biggest increase in investment in the business is actually on the ... R&D side of the business. Now that we've integrated the different platforms, we're now moving on to what I'll call true innovation,” he said. “The industry and homeowners and business owners will see a significant amount of new product launches across many of our categories I would point to, what we call, the more connected categories, the smart categories more than anything.”
Recent acquisitions include California-based Access Networks in 2021 and Staub Electronics, based in Canada, earlier this year.
“We expect to continue to pursue disciplined, accretive acquisitions that enhance our products, software and workflow solutions and expand into adjacent markets and geographies that allow us to best serve our integrated base,” Heyman told analysts.
