AUSTIN, Texas, Oct. 22, 2019 /PRNewswire/ -- Resideo
Technologies, Inc. (NYSE: REZI), a leading global provider of home
comfort and security solutions, today announced that its adjusted
EBITDA (non-GAAP) for the third quarter of 2019 is estimated to be
approximately $77 million to
$79 million. Revenue for the third
quarter is anticipated to be $1.226
billion, representing a 2% growth rate year-over-year.
In the third quarter, the ADI Global Distribution business
continued to grow as planned. The Products & Solutions segment
experienced revenue decline in certain product families of the
Comfort business and in its Residential Thermal Solutions (RTS) gas
combustion business. We believe the RTS slowdown was driven by
certain recent regulatory changes and a general slowdown across
large OEM customers in the sector.
The Comfort business declines were primarily due to lower sales
volumes in non-connected thermostats. We believe a poor pre-spin
cutover from the prior generation of non-connected thermostats to
the T-Series line impacted the adoption of mid-level T-Series
thermostats. The cutover effects became markedly more pronounced in
the third quarter after the prior generation of non-connected
thermostats were discontinued. The company is working with its
channel partners to enhance and better position the T-Series and
expects significant improvement in 2020.
The company expects these headwinds to continue into the peak
winter demand period, which is expected to reduce previously
anticipated full-year 2019 Products & Solutions segment revenue
by approximately $110 million.
Approximately $66 million of this
expected shortfall is from Comfort and $22
million from RTS, with the related gross margin and adjusted
EBITDA impacts. While the Security business continues to grow, a
single large new customer delayed the start date of its purchases
beyond the fourth quarter, resulting in an expected negative impact
on fourth-quarter revenue of approximately $22 million.
The company's new generation security products and connected
thermostats have experienced solid growth. However, with the
transition, these products have yet to benefit from lifecycle value
engineering, adversely impacting full-year 2019 Products &
Solutions segment gross margins. The company is actively investing
in its value engineering team and expects meaningful improvement to
gross margins over the next 18 months.
As a result, the company is updating its full-year 2019 adjusted
EBITDA guidance to be in the range of $330
million to $350 million,
compared to previously expected $410
million to $430 million. The
company also is updating its full-year 2019 guidance for revenue
growth to 2% to 4%, as compared to previously expected 2% to
5%.
Operational and Financial Review
Resideo has begun a comprehensive operational and financial
review, focused on improving gross margins and optimizing its
organizational footprint. The aim of the review is to simplify
internal processes that will enable Resideo to be more agile in
responding to changing customer and marketplace dynamics. The
company has retained industry-recognized experts in supply chain
optimization and organizational excellence to assist in the
review.
The review will build upon the previously announced cost
optimization program, which is on track to achieve approximately
$15 million in realized savings in
2019 and $50 million in run-rate
savings by the end of 2020. The new operational and financial
review is expected to capture incremental gross margin and
operating expense savings in 2020. We believe significant gross
margin opportunity exists in Comfort and Security products through
value engineering cost reductions. Resideo plans to provide a
detailed report of planned actions, anticipated timelines, and
progress made to date in conjunction with the announcement of its
fourth-quarter and full-year 2019 financial results, expected in
February 2020.
"While I am disappointed in our preliminary results for the
third quarter, we remain confident in the fundamentals of our
business," said Mike Nefkens,
president and CEO of Resideo. "The issues impacting our second-half
2019 results underscore the urgency to simplify our operations,
reduce our cost structure, increase agility throughout the
organization and drive adoption of our products in the
professional, do-it-for-me channel where Resideo is a market
leader. We are aggressively addressing challenges through a
comprehensive operational and financial review of the company, with
a particular focus on the Products & Solutions segment. We are
targeting areas to drive improved financial performance and are
confident we are pursuing the necessary changes to deliver superior
shareholder value."
Earnings Conference Call
The company expects to announce third quarter 2019 results on
Wednesday, Nov. 6, and host a
conference call and webcast with investors on Thursday, Nov. 7. Conference call and webcast
details will be provided approximately one week prior to
earnings.
About Resideo
Resideo is a leading global provider of critical comfort and
security solutions primarily in residential environments, and
distributor of low-voltage electronic and security products.
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 contractors
through leading distributors, including our ADI Global Distribution
business, which exports to more than 100 countries from more than
200 stocking locations around the world. Resideo is a $4.8 billion company with approximately 13,000
global employees. For more information about Resideo, please visit
www.resideo.com.
Contacts:
|
|
Media:
|
Investors:
|
Trent
Perrotto
|
Michael
Mercieca
|
(512)
726-3512
|
(512)
779-8646
|
trent.perrotto@resideo.com
|
michael.mercieca@resideo.com
|
|
investorrelations@resideo.com
|
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, those 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 Dec. 31,
2018, and our other periodic reports filed with the
Securities and Exchange Commission ("SEC"). You are cautioned not
to place undue reliance on these forward-looking statements, such
as guidance regarding full-year 2019, our ability to realize cost
reductions over the lifecycle of our products and realize related
gross margin opportunity, the commencement, progress and results of
the comprehensive operational and financial review, including our
ability to improve gross margins, optimize our organizational
footprint, and simplify our internal processes, our cost
optimization program and our ability to achieve $15 million of realized savings in 2019 and
$50 million of run-rate savings by
the end of 2020, and our ability to work with our professional
partners to better position the T-Series and the related expected
significant sales improvement in 2020, each of which speak only as
of the date of this release. 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.
The company has not yet closed and finalized its financial
statement review process for the third quarter and full year of
2019. As a result, the information in this release is preliminary
and based upon information available to the company as of the date
of this release, and thus remains subject to the completion of the
normal quarter-end accounting procedures and adjustments. During
the course of the company's review process, items may be identified
that would require the company to make adjustments, which could
result in changes to its preliminary selected financial information
above. As a result, the preliminary selected financial information
above is forward-looking information and subject to risks and
uncertainties, including possible adjustments to such information,
as further described above.
Non-GAAP Financial Measures
This release includes adjusted EBITDA which is not a metric that
is compliant with generally accepted accounting principles in
the United States (GAAP). This
non-GAAP financial measure is adjusted for certain items (including
environmental expense, the Honeywell reimbursement agreement
expense, stock-based compensation, repositioning costs,
spin-related and other expenses) 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 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. The company is unable to provide
preliminary results for the comparable GAAP measure of adjusted
EBITDA for the third quarter and full-year 2019 results without
unreasonable efforts because the exact amount of certain items
added to the comparable GAAP measure to determine adjusted EBITDA
is not currently determinable until the closing procedures for the
quarter and full-year 2019 are complete. Accordingly, the company
is unable to provide reconciliations from GAAP to non-GAAP for
adjusted EBITDA without unreasonable effort. It is important to
note that the items that are added to the comparable GAAP measure
to determine adjusted EBITDA may be material to the company's third
quarter and full-year 2019 results in accordance with GAAP.
View original content to download
multimedia:http://www.prnewswire.com/news-releases/resideo-announces-selected-preliminary-third-quarter-revenue-and-adjusted-ebitda-results-revises-guidance-for-full-year-2019-300943456.html
SOURCE Resideo