AUSTIN, Texas, Feb. 25,
2021 /PRNewswire/ -- Resideo Technologies, Inc. (NYSE: REZI),
a leading global provider of home comfort and security solutions,
today announced financial and operating results for the fourth
quarter and full year ended Dec. 31,
2020.
Fourth Quarter 2020 Highlights
- Net revenue of $1.5 billion, up
15% from $1.3 billion in the prior
year
- Operating profit of $152 million,
compared to operating profit of $72
million in the prior year
- Net income of $59 million,
compared to a net loss of $9 million
in the prior year
- Adjusted EBITDA1 (Non-GAAP) of $212 million, compared to Adjusted
EBITDA1 (Non-GAAP) of $139
million in the prior year
- Cash provided by operating activities of $152 million, compared to cash provided by
operating activities of $93 million
in the prior year
Full Year 2020 Highlights
- Net revenue of $5.1 billion, up
2% from $5.0 billion in the prior
year
- Operating profit of $311 million,
compared to operating profit of $258
million in the prior year
- Net income of $37 million,
compared to net income of $36 million
in the prior year
- Adjusted EBITDA1 (Non-GAAP) of $562 million, compared to Adjusted
EBITDA1 (Non-GAAP) of $502
million in the prior year
- Cash provided by operating activities of $244 million, compared to cash provided by
operating activities of $23 million
in the prior year
|
1
|
Previously presented
as Adjusted EBITDA (Non-GAAP) excluding Honeywell reimbursement
agreement payments (see Table 5 for description of
change)
|
Fourth Quarter 2020 Performance
Consolidated revenue
of $1.5 billion in the fourth quarter
2020 increased 15% compared with the prior year of $1.3 billion. Products & Solutions segment
revenue was $676 million, an increase
of 18% compared with revenue of $575
million in the prior year due to positive demand trends
across each of Products & Solutions' primary end markets and
channels. ADI Global Distribution segment revenue was $825 million, an increase of 13% compared with
revenue of $729 million in the prior
year due to strength in products serving residential markets and
growth in e-commerce sales.
Gross profit margin for the fourth quarter 2020 was 28.2%,
compared to 24.0% in the prior year. The increase was
attributable to higher revenue volumes within Products &
Solutions, lower charges related to slow-moving and obsolete
inventory and transformation program cost savings.
Resideo's operating profit of $152
million in the fourth quarter 2020 more than doubled
compared to a prior year operating profit of $72 million. Products & Solutions segment
operating profit of $166 million in
the fourth quarter 2020 increased from $84
million in the prior year. The increase was the result of
higher revenue, improved fixed cost absorption and transformation
savings. ADI Global Distribution segment operating profit increased
to $59 million in the fourth quarter
2020 from $52 million in the prior
year, primarily due to higher revenue. Total Corporate costs were
$73 million, up from $64 million in the prior year primarily due to
increased bonus payouts, partially offset by impacts from
transformation program cost savings.
Net income for the fourth quarter 2020 was $59 million, or $0.44 per diluted common share, compared with a
net loss of $9 million, or a loss of
$0.07 per diluted common share, in
the prior year.
Full Year 2020 Performance
Consolidated revenue for
the full year 2020 was $5.1 billion,
up 2% compared with consolidated revenue for the prior year of
$5.0 billion. Products &
Solutions segment revenue was $2.1
billion, a decrease of 2% compared with $2.2 billion for the prior year. ADI Global
Distribution segment revenue was $3.0
billion, an increase of 5% compared with $2.8 billion for the prior year.
Gross profit margin for the full year 2020 was 25.9%, compared
to 25.6% for the prior year. The improvement in gross profit
margin was the result of positive impacts from our ongoing
transformation and cost savings programs. This was partially offset
by unfavorable product mix across both segments, lower volumes in
Products & Solutions and costs associated with COVID-19.
Operating profit of $311 million
for the full year 2020 increased 21% compared to operating profit
of $258 million for the prior year.
Products & Solutions segment operating profit for the full year
2020 of $407 million represented a
24% increase from $327 million for
the prior year. Within the Products & Solutions segment,
operating profit was positively impacted by cost savings from
transformation programs, sourcing productivity and reduced
inventory reserve costs. These cost reductions more than offset the
impact of lower revenue volumes, unfavorable sales mix and
investments to support new product launches. ADI Global
Distribution segment operating profit for the full year 2020 of
$194 million, represented an 8%
decline from $210 million for the
prior year. ADI Global Distribution segment operating profit was
negatively impacted by commercial investments, unfavorable sales
mix and acquisition related costs. Corporate costs increased to
$290 million from $279 million, up 4%, and were negatively impacted
by expenses related to transformation projects and increased bonus
payouts from improved performance. These impacts were partially
offset by transformation program cost savings and reduced spin-off
related costs.
For the full year 2020, the company reported net income of
$37 million, or $0.29 per diluted common share. This compares to
net income of $36 million, or
$0.29 per diluted common share for
the prior year.
Cash Flow and Liquidity
The company reported net cash
provided by operating activities of $244
million for the full year 2020, an increase of $221 million from the prior year. This
improvement was primarily due to higher operating profit and lower
cash taxes paid. At Dec. 31, 2020,
Resideo had cash and cash equivalents of $517 million and total outstanding debt of
$1.2 billion.
On Feb. 12, 2021, the company
completed the refinancing of its senior secured credit facilities.
This included refinancing the outstanding senior secured term loan
A and term loan B with the net proceeds of a new $950 million 7-year term loan B maturing in 2028.
The company also entered into a new 5-year, $500 million revolving credit facility. In
addition, the company redeemed $140
million of its outstanding senior unsecured notes pursuant
to the terms of the underlying indenture.
Outlook
The company expects full year 2021 revenue to
be in the range of $5.2 billion to
$5.4 billion, gross profit margin in
the range of 26% to 28% and operating profit in the range of
$450 million to $500 million.
The company expects first quarter 2021 revenue to be in the
range of $1.30 billion to
$1.35 billion, gross profit margin in
the range of 25% to 27% and operating profit in the range of
$110 million to $120 million.
Management Remarks
"We closed 2020 with strong
performance across Products & Solutions and ADI, producing
results that highlight the profit and cash generation potential of
Resideo," commented Jay Geldmacher,
Resideo's President and CEO. "Demand remained robust across
residential markets as interest in home investment and professional
security solutions remains elevated. ADI built upon its long track
record of execution, delivering growth ahead of the overall
low-voltage security distribution market for the quarter and full
year."
"I am proud of how the Resideo team responded to the challenges
brought on by COVID-19 and the meaningful organizational changes we
undertook over the past year. We continue to execute on our
transformation initiatives, both in rightsizing our cost structure
and in building a product innovation engine that will enable
Resideo to continue to be a leader in its markets. As we look to
2021, we see solid demand trends and we plan to accelerate targeted
investments to ensure Resideo is well positioned for long-term
growth and profitability expansion."
Conference Call and Webcast Details
Resideo will hold
a conference call with investors on Feb. 25,
2021, at 8:30 a.m. EST. A
real-time audio webcast of the call will be accessible at
https://investor.resideo.com, where related materials will be
posted before the call. A replay of the webcast will be available
following the presentation. To join the conference call, please
dial 833-972-2949 (U.S., toll-free) or 1-236-714-2869
(international), with the conference title "Resideo Fourth Quarter
2020 Earnings".
About Resideo
Resideo is a leading global manufacturer
and distributor of technology-driven products and solutions that
provide comfort, security, energy efficiency and control to
customers worldwide. Building on a 130-year heritage, Resideo has a
presence in more than 150 million homes, with 15 million systems
installed in homes each year. We continue to serve more than
110,000 professionals through leading distributors, including
our ADI Global Distribution business, which exports to
more than 100 countries from nearly 200 stocking locations around
the world. For more information about Resideo, please visit
www.resideo.com.
|
Contacts:
|
|
|
Investors:
|
Media:
|
|
Jason
Willey
|
Oliver
Clark
|
|
investorrelations@resideo.com
|
oliver.clark@resideo.com
|
|
Table 1: SUMMARY
OF FINANCIAL RESULTS (UNAUDITED)
(in
millions)
|
|
|
|
Q4
2020
|
|
|
Q4
2019
|
|
|
%
Change
|
|
|
YTD
2020
|
|
|
YTD
2019
|
|
|
%
Change
|
|
|
Products &
Solutions
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
(1)
|
|
$
|
676
|
|
|
$
|
575
|
|
|
|
18
|
%
|
|
$
|
2,121
|
|
|
$
|
2,175
|
|
|
|
-2
|
%
|
|
Gross
profit
|
|
|
283
|
|
|
|
189
|
|
|
|
50
|
%
|
|
|
821
|
|
|
|
786
|
|
|
|
4
|
%
|
|
Operating
profit
|
|
|
166
|
|
|
|
84
|
|
|
|
98
|
%
|
|
|
407
|
|
|
|
327
|
|
|
|
24
|
%
|
|
Segment Adjusted
EBITDA
(Non-GAAP)(2)
|
|
$
|
154
|
|
|
$
|
92
|
|
|
|
67
|
%
|
|
$
|
378
|
|
|
$
|
314
|
|
|
|
20
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ADI Global
Distribution
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
$
|
825
|
|
|
$
|
729
|
|
|
|
13
|
%
|
|
$
|
2,950
|
|
|
$
|
2,813
|
|
|
|
5
|
%
|
|
Gross
profit
|
|
|
144
|
|
|
|
127
|
|
|
|
13
|
%
|
|
|
501
|
|
|
|
499
|
|
|
|
0
|
%
|
|
Operating
profit
|
|
|
59
|
|
|
|
52
|
|
|
|
13
|
%
|
|
|
194
|
|
|
|
210
|
|
|
|
-8
|
%
|
|
Segment Adjusted
EBITDA
(Non-GAAP)(2)
|
|
$
|
58
|
|
|
$
|
47
|
|
|
|
23
|
%
|
|
$
|
184
|
|
|
$
|
188
|
|
|
|
-2
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
Company
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
$
|
1,501
|
|
|
$
|
1,304
|
|
|
|
15
|
%
|
|
$
|
5,071
|
|
|
$
|
4,988
|
|
|
|
2
|
%
|
|
Gross
profit
|
|
|
423
|
|
|
|
313
|
|
|
|
35
|
%
|
|
|
1,313
|
|
|
|
1,277
|
|
|
|
3
|
%
|
|
Operating
profit
|
|
|
152
|
|
|
|
72
|
|
|
|
111
|
%
|
|
|
311
|
|
|
|
258
|
|
|
|
21
|
%
|
|
Adjusted EBITDA
(Non-GAAP) (2)(3)
|
|
$
|
212
|
|
|
$
|
139
|
|
|
|
53
|
%
|
|
$
|
562
|
|
|
$
|
502
|
|
|
|
12
|
%
|
|
|
|
(1)
|
Represents Product
& Solutions revenue, excluding intersegment revenue of $97
million and $367 million for the three and twelve months ended
December 31, 2020 and $84 million and $312 million for the three
and twelve months ended December 31, 2019. ADI Global Distribution
does not have any intersegment revenue.
|
|
|
|
(2)
|
Table 5 includes
reconciliations of Non-GAAP measures.
|
|
|
|
(3)
|
Adjusted EBITDA
(Non-GAAP) was previously presented as Adjusted EBITDA (Non-GAAP)
excluding Honeywell reimbursement agreement payments. See Table 5
for description of change.
|
|
Table 2:
CONSOLIDATED INTERIM STATEMENTS OF OPERATIONS
(UNAUDITED)
|
|
|
|
Three Months
Ended
|
|
|
Twelve Months
Ended
|
|
|
|
December 31,
|
|
|
December 31,
|
|
|
December 31,
|
|
|
December 31,
|
|
|
|
2020
|
|
|
2019
|
|
|
2020
|
|
|
2019
|
|
|
|
(In millions
except share and per share data)
|
|
|
Net
revenue
|
|
$
|
1,501
|
|
|
$
|
1,304
|
|
|
$
|
5,071
|
|
|
$
|
4,988
|
|
|
Cost of goods sold
(1)
|
|
|
1,078
|
|
|
|
991
|
|
|
|
3,758
|
|
|
|
3,711
|
|
|
Gross profit
(1)
|
|
|
423
|
|
|
|
313
|
|
|
|
1,313
|
|
|
|
1,277
|
|
|
Selling, general and
administrative
expenses (1)
|
|
|
271
|
|
|
|
241
|
|
|
|
1,002
|
|
|
|
1,019
|
|
|
Operating
profit
|
|
|
152
|
|
|
|
72
|
|
|
|
311
|
|
|
|
258
|
|
|
Other expense,
net
|
|
|
41
|
|
|
|
64
|
|
|
|
147
|
|
|
|
118
|
|
|
Interest
expense
|
|
|
14
|
|
|
|
18
|
|
|
|
63
|
|
|
|
69
|
|
|
Income (loss) before
taxes
|
|
|
97
|
|
|
|
(10)
|
|
|
|
101
|
|
|
|
71
|
|
|
Tax expense
(benefit)
|
|
|
38
|
|
|
|
(1)
|
|
|
|
64
|
|
|
|
35
|
|
|
Net income
(loss)
|
|
$
|
59
|
|
|
$
|
(9)
|
|
|
$
|
37
|
|
|
$
|
36
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted Average
Number of
Common Shares Outstanding (in
thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
131,406
|
|
|
|
122,843
|
|
|
|
125,348
|
|
|
|
122,722
|
|
|
Diluted
|
|
|
134,424
|
|
|
|
122,843
|
|
|
|
126,324
|
|
|
|
123,238
|
|
|
Earnings (loss)
Per Share
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
0.45
|
|
|
$
|
(0.07)
|
|
|
$
|
0.30
|
|
|
$
|
0.29
|
|
|
Diluted
|
|
$
|
0.44
|
|
|
$
|
(0.07)
|
|
|
$
|
0.29
|
|
|
$
|
0.29
|
|
|
|
|
1)
|
On January 1, 2020,
the Company changed its classification of research and development
expenses in the Consolidated Interim Statements of Operations from
Cost of goods sold to Selling, general and administrative expenses,
such that research and development expenses are excluded from the
calculation of Gross profit. The impact on the three and twelve
months ended December 31, 2019 Consolidated Interim Statements of
Operations is a reduction of Cost of goods sold, an increase in
Gross profit and an increase in Selling, general and administrative
expenses of $21 million and $87 million, respectively. This
reclassification had no effect on the previously reported Net
income (loss) or the Company's Consolidated Interim Statements of
Comprehensive Income (Loss), Cash Flows, or Balance
Sheets.
|
|
Table 3:
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December
31,
|
|
|
December
31,
|
|
|
|
2020
|
|
|
2019
|
|
|
|
(In millions,
except number of
shares which are reflected in
thousands and par value)
|
|
|
ASSETS
|
|
|
|
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
517
|
|
|
$
|
122
|
|
|
Accounts receivables
– net
|
|
|
863
|
|
|
|
817
|
|
|
Inventories
– net
|
|
|
672
|
|
|
|
671
|
|
|
Other current
assets
|
|
|
173
|
|
|
|
175
|
|
|
Total current
assets
|
|
|
2,225
|
|
|
|
1,785
|
|
|
Property, plant and
equipment – net
|
|
|
318
|
|
|
|
316
|
|
|
Goodwill
|
|
|
2,691
|
|
|
|
2,642
|
|
|
Other
assets
|
|
|
376
|
|
|
|
385
|
|
|
Total
assets
|
|
$
|
5,610
|
|
|
$
|
5,128
|
|
|
LIABILITIES
|
|
|
|
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
|
|
|
|
Accounts
payable
|
|
$
|
936
|
|
|
$
|
920
|
|
|
Current maturities of
long-term debt
|
|
|
7
|
|
|
|
22
|
|
|
Accrued
liabilities
|
|
|
595
|
|
|
|
552
|
|
|
Total current
liabilities
|
|
|
1,538
|
|
|
|
1,494
|
|
|
Long-term
debt
|
|
|
1,155
|
|
|
|
1,158
|
|
|
Obligations payable
under Indemnification Agreements
|
|
|
590
|
|
|
|
594
|
|
|
Other
liabilities
|
|
|
334
|
|
|
|
280
|
|
|
EQUITY
|
|
|
|
|
|
|
|
|
|
Common stock, $0.001
par value, 700,000 shares authorized,
143,959 and 143,059 shares issued and outstanding as of
December
31, 2020, 123,488 and 122,873 shares issued and outstanding as
of
December 31, 2019, respectively
|
|
|
-
|
|
|
|
-
|
|
|
Additional paid-in
capital
|
|
|
2,070
|
|
|
|
1,761
|
|
|
Treasury stock, at
cost
|
|
|
(6)
|
|
|
|
(3)
|
|
|
Retained
earnings
|
|
|
75
|
|
|
|
38
|
|
|
Accumulated other
comprehensive loss
|
|
|
(146)
|
|
|
|
(194)
|
|
|
Total
equity
|
|
|
1,993
|
|
|
|
1,602
|
|
|
Total liabilities and
equity
|
|
$
|
5,610
|
|
|
$
|
5,128
|
|
|
Table 4:
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
|
|
|
|
Twelve Months
Ended
|
|
|
|
December
31,
|
|
|
|
2020
|
|
|
2019
|
|
|
|
(In
millions)
|
|
|
Cash flows from
operating activities:
|
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
37
|
|
|
$
|
36
|
|
|
Adjustments to
reconcile net income to net cash provided by
operating activities:
|
|
|
|
|
|
|
|
|
|
Depreciation and
amortization
|
|
|
86
|
|
|
|
80
|
|
|
Stock compensation
expense
|
|
|
29
|
|
|
|
25
|
|
|
Deferred income
taxes
|
|
|
22
|
|
|
|
(25)
|
|
|
Other
|
|
|
21
|
|
|
|
18
|
|
|
Changes in assets and
liabilities, net of acquired companies:
|
|
|
|
|
|
|
|
|
|
Accounts
receivables
|
|
|
(27)
|
|
|
|
7
|
|
|
Inventories
– net
|
|
|
19
|
|
|
|
(44)
|
|
|
Other current
assets
|
|
|
5
|
|
|
|
(53)
|
|
|
Other
assets
|
|
|
-
|
|
|
|
(15)
|
|
|
Accounts
payable
|
|
|
(1)
|
|
|
|
(38)
|
|
|
Accrued
liabilities
|
|
|
31
|
|
|
|
28
|
|
|
Obligations payable
under Indemnification Agreements
|
|
|
(4)
|
|
|
|
(35)
|
|
|
Other
liabilities
|
|
|
26
|
|
|
|
39
|
|
|
Net cash provided by
operating activities
|
|
|
244
|
|
|
|
23
|
|
|
Cash flows (used
for) provided by investing activities:
|
|
|
|
|
|
|
|
|
|
Expenditures for
property, plant and equipment and software
|
|
|
(70)
|
|
|
|
(95)
|
|
|
Cash paid for
acquisitions, net of cash acquired
|
|
|
(35)
|
|
|
|
(17)
|
|
|
Other
|
|
|
2
|
|
|
|
-
|
|
|
Net cash used for
investing activities
|
|
|
(103)
|
|
|
|
(112)
|
|
|
Cash flows
provided by (used for) financing activities:
|
|
|
|
|
|
|
|
|
|
Issuance of common
stock through public offering, net of issuance
cost
|
|
|
279
|
|
|
|
-
|
|
|
Payment of debt
facility issuance and modification costs
|
|
|
-
|
|
|
|
(4)
|
|
|
Repayment of long-term
debt
|
|
|
(22)
|
|
|
|
(22)
|
|
|
Non-operating
obligations from Honeywell, net
|
|
|
(2)
|
|
|
|
(24)
|
|
|
Other
|
|
|
(2)
|
|
|
|
(3)
|
|
|
Net cash provided by
(used for) financing activities
|
|
|
253
|
|
|
|
(53)
|
|
|
Effect of foreign
exchange rate changes on cash and cash equivalents
|
|
|
1
|
|
|
|
(1)
|
|
|
Net increase
(decrease) in cash and cash equivalents
|
|
|
395
|
|
|
|
(143)
|
|
|
Cash and cash
equivalents at beginning of period
|
|
|
122
|
|
|
|
265
|
|
|
Cash and cash
equivalents at end of period
|
|
$
|
517
|
|
|
$
|
122
|
|
|
Table 5:
RECONCILIATION OF NET INCOME (LOSS) (UNAUDITED) TO NON-GAAP
FINANCIAL MEASURES
|
|
|
|
Three Months
Ended
|
|
|
Twelve Months
Ended
|
|
|
|
December 31,
|
|
|
December 31,
|
|
|
December 31,
|
|
|
December 31,
|
|
|
|
2020
|
|
|
2019
|
|
|
2020
|
|
|
2019
|
|
|
|
(In
millions)
|
|
|
Reconciliation of
Net income (loss) to
Adjusted EBITDA (Non-GAAP)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
(loss)
|
|
$
|
59
|
|
|
$
|
(9)
|
|
|
$
|
37
|
|
|
$
|
36
|
|
|
Net interest
expense
|
|
|
13
|
|
|
|
17
|
|
|
|
61
|
|
|
|
66
|
|
|
Tax expense
(benefit)
|
|
|
38
|
|
|
|
(1)
|
|
|
|
64
|
|
|
|
35
|
|
|
Depreciation and
amortization
|
|
|
22
|
|
|
|
25
|
|
|
|
86
|
|
|
|
80
|
|
|
Reimbursement
Agreement expense (1)
|
|
|
39
|
|
|
|
51
|
|
|
|
146
|
|
|
|
108
|
|
|
Stock compensation
expense (2)
|
|
|
8
|
|
|
|
3
|
|
|
|
29
|
|
|
|
25
|
|
|
Restructuring
charges
|
|
|
13
|
|
|
|
3
|
|
|
|
40
|
|
|
|
37
|
|
|
Other
(3)
|
|
|
20
|
|
|
|
50
|
|
|
|
99
|
|
|
|
115
|
|
|
Adjusted EBITDA
(Non-GAAP)(4)
|
|
$
|
212
|
|
|
$
|
139
|
|
|
$
|
562
|
|
|
$
|
502
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment Adjusted
EBITDA (Non-GAAP)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Products and
Solutions
|
|
$
|
154
|
|
|
$
|
92
|
|
|
$
|
378
|
|
|
$
|
314
|
|
|
ADI Global
Distribution
|
|
|
58
|
|
|
|
47
|
|
|
|
184
|
|
|
|
188
|
|
|
Adjusted EBITDA
(Non-GAAP)
|
|
$
|
212
|
|
|
$
|
139
|
|
|
$
|
562
|
|
|
$
|
502
|
|
|
|
|
(1)
|
Represents recorded
expenses / gains related to the Reimbursement Agreement with
Honeywell. Pursuant to the Reimbursement Agreement, we are
responsible to indemnify Honeywell in amounts equal to 90% of
payments, which include amounts billed, with respect to certain
environmental claims, remediation and, to the extent arising after
the Spin-Off, hazardous exposure or toxic tort claims, in each case
including consequential damages in respect of specified properties
contaminated through historical business operations, including the
legal and other costs of defending and resolving such liabilities,
less 90% of Honeywell's net insurance receipts relating to such
liabilities, and less 90% of the net proceeds received by Honeywell
in connection with (i) affirmative claims relating to such
liabilities, (ii) contributions by other parties relating to such
liabilities and (iii) certain property sales; such payments are
subject to a cap of $140 million in respect of liabilities arising
in any given year (exclusive of any late payment fees up to 5% per
annum). Such amounts are recorded in net income when they are
probable and reasonably estimable. The cash payments under the
Reimbursement Agreement for the three and twelve months ended
December 31, 2020 are $70 and $140 million, respectively, and for
the three and twelve months ended December 31, 2019 are $35 million
and $140 million, respectively.
|
|
|
|
(2)
|
Stock compensation
expense adjustment includes only non-cash expenses.
|
|
|
|
(3)
|
For the three and
twelve months ended December 31, 2020, Other represents $11 million
and $46 million of items related to the Spin-Off, $6 million and
$48 million of consulting and other fees related to transformation
programs, and $3 million and $3 million of other expenses,
respectively. For the three and twelve months ended December 31,
2019, Other represents $26 million and $80 million of items related
to the Spin-Off, $8 million and $20 million of consulting fees
related to restructuring programs and developments on legal claims
that arose prior to Spin-Off, $2 million and $2 million of
environmental expense for Resideo's owned sites as well as
pre-Spin-Off historical environmental expenses as reported under
100% carryover basis for sites now covered under the Reimbursement
Agreement, and $14 million and $13 million of non-operating expense
adjustment which excludes net interest (income),
respectively.
|
|
|
|
(4)
|
Adjusted EBITDA
(Non-GAAP) was previously presented as Adjusted EBITDA (Non-GAAP)
excluding Reimbursement Agreement payments (Non-GAAP). The change
in presentation was made beginning with our first quarter 2020
results to more accurately reflect the underlying performance
indicators of the business in Adjusted EBITDA (Non-GAAP). The
Reimbursement Agreement cash payments are a liquidity measure and
will be included within the cash flow and liquidity discussions.
Management believes that this presentation more clearly presents
underlying operations as the amounts related to the Reimbursement
Agreement are recorded in Net income (loss) are based on when such
amounts become probable and reasonably estimable.
|
|
Table 6:
RECONCILIATION OF QUARTERLY FINANCIAL RESULTS (UNAUDITED) –
SEGMENT
(in
millions)
|
|
|
|
Q1
2020
|
|
|
Q2
2020
|
|
|
Q3
2020
|
|
|
Q4
2020
|
|
|
YTD
2020
|
|
|
Products &
Solutions
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
$
|
475
|
|
|
$
|
397
|
|
|
$
|
573
|
|
|
$
|
676
|
|
|
$
|
2,121
|
|
|
Gross
profit
|
|
|
161
|
|
|
|
135
|
|
|
|
242
|
|
|
|
283
|
|
|
|
821
|
|
|
Operating
profit
|
|
|
58
|
|
|
|
42
|
|
|
|
141
|
|
|
|
166
|
|
|
|
407
|
|
|
Segment Adjusted
EBITDA (Non-GAAP)(1)
|
|
$
|
53
|
|
|
$
|
35
|
|
|
$
|
136
|
|
|
$
|
154
|
|
|
$
|
378
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ADI Global
Distribution
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
$
|
704
|
|
|
$
|
632
|
|
|
$
|
789
|
|
|
$
|
825
|
|
|
$
|
2,950
|
|
|
Gross
profit
|
|
|
126
|
|
|
|
101
|
|
|
|
130
|
|
|
|
144
|
|
|
|
501
|
|
|
Operating
profit
|
|
|
48
|
|
|
|
31
|
|
|
|
56
|
|
|
|
59
|
|
|
|
194
|
|
|
Segment Adjusted
EBITDA (Non-GAAP)(1)
|
|
$
|
46
|
|
|
$
|
28
|
|
|
$
|
52
|
|
|
$
|
58
|
|
|
$
|
184
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate
Costs
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross loss
|
|
$
|
(3)
|
|
|
$
|
-
|
|
|
$
|
(2)
|
|
|
$
|
(4)
|
|
|
$
|
(9)
|
|
|
Operating
loss
|
|
$
|
(72)
|
|
|
$
|
(79)
|
|
|
$
|
(66)
|
|
|
$
|
(73)
|
|
|
$
|
(290)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
Company
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
$
|
1,179
|
|
|
$
|
1,029
|
|
|
$
|
1,362
|
|
|
$
|
1,501
|
|
|
$
|
5,071
|
|
|
Gross
profit
|
|
|
284
|
|
|
|
236
|
|
|
|
370
|
|
|
|
423
|
|
|
|
1,313
|
|
|
Operating profit
(loss)
|
|
|
34
|
|
|
|
(6)
|
|
|
|
131
|
|
|
|
152
|
|
|
|
311
|
|
|
Adjusted EBITDA
(Non-GAAP)
|
|
$
|
99
|
|
|
$
|
63
|
|
|
$
|
188
|
|
|
$
|
212
|
|
|
$
|
562
|
|
|
|
|
(1)
|
Segment Adjusted
EBITDA (Non-GAAP) for the Products & Solutions and ADI Global
Distribution segments contain allocations of Corporate costs to be
consistent with historical presentation.
|
Forward-Looking Statements
This release contains
"forward-looking statements." All statements, other than statements
of fact, that address activities, events or developments that we or
our management intend, expect, project, believe or anticipate will
or may occur in the future are forward-looking statements. Although
we believe forward-looking statements are based upon reasonable
assumptions, such statements involve known and unknown risks,
uncertainties, and other factors, which may cause the actual
results or performance of the Company to be materially different
from any future results or performance expressed or implied by such
forward-looking statements. Such risks and uncertainties include,
but are not limited to, (1) the duration and severity of the
COVID-19 pandemic and the disruption to our business and the global
economy caused by it, including (A) its effect on the demand for
our products and services, (B) its effect on our and our business
partners' supply chains, workforce, liquidity, spending and timing
for payments and disbursements, and (C) the impact of potential
facility closures and the modified working conditions at our
corporate offices, Product & Solutions segment and ADI Global
Distribution segment, (2) the amount of our obligations and nature
of our contractual restrictions pursuant to, and disputes that have
or may hereafter arise under, the agreements we entered into with
Honeywell in connection with our spin-off, (3) the likelihood of
continued success of our transformation programs and initiatives,
and (4) the other risks described under the headings "Risk Factors"
and "Cautionary Statement Concerning Forward-Looking Statements" in
our Annual Report on Form 10-K for the year ended December 31, 2020
and other periodic filings we make from time to time with the
Securities and Exchange Commission (SEC). You are cautioned not to
place undue reliance on these forward-looking statements, such as
(i) the outlook regarding first quarter 2021 and full year 2021 and
(ii) the impact of the COVID-19 pandemic on our business and
operations. Forward-looking statements are not guarantees of future
performance, and actual results, developments, and business
decisions may differ from those envisaged by our forward-looking
statements. Except as required by law, we undertake no obligation
to update such statements to reflect events or circumstances
arising after the date of this press release, and we caution
investors not to place undue reliance on any such forward-looking
statements.
Non-GAAP Financial Measures
This release includes
Adjusted EBITDA (Non-GAAP) and Segment Adjusted EBITDA (Non-GAAP)
for each of our Product and Solutions and ADI Global Distribution
segments, which are not compliant with generally accepted
accounting principles in the United
States (GAAP). Adjusted EBITDA (Non-GAAP) is adjusted for
certain items as reflected in Table 5 above and may not be directly
comparable to similar measures used by other companies in our
industry, as other companies may define such measures differently.
Management believes that, when considered together with reported
amounts, this measure is useful to investors and management in
understanding our ongoing operations and in analysis of ongoing
operating trends and provides useful additional information
relating to our operations and financial condition. This metric
should be considered in addition to, and not as a replacement for,
the most comparable GAAP measure. Refer to Table 5 above in this
release for a reconciliation of Non-GAAP financial measures to the
most directly comparable GAAP measure. It should be read in
connection with our financial statements presented in accordance
with GAAP.
Adjusted EBITDA (Non-GAAP) was previously presented as Adjusted
EBITDA (Non-GAAP) excluding Honeywell reimbursement agreement
payments (Non-GAAP). The change in presentation was made beginning
with our first quarter 2020 results to more accurately reflect the
underlying performance indicators of the business in Adjusted
EBITDA (Non-GAAP). The Honeywell reimbursement agreement cash
payments are a liquidity measure and will be included within the
cash flow and liquidity discussions. Management believes that this
presentation more clearly presents underlying operations as the
amounts related to the Honeywell reimbursement agreement are
recorded in net income (loss) are based on when such amounts become
probable and reasonably estimable.
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SOURCE Resideo Technologies, Inc.