AUSTIN, Texas, Feb. 26, 2020 /PRNewswire/ -- Resideo
Technologies, Inc. (NYSE: REZI), a leading global provider
of home comfort and security solutions, today reported
fourth-quarter and full-year 2019 financial results for the period
ended Dec. 31, 2019.
"While our full-year 2019 results were impacted by a number of
challenges in our Products & Solutions business, we are taking
proactive steps to drive improved performance," said Mike Nefkens, president and CEO of Resideo. "Our
fourth quarter results were driven by ongoing strong execution in
our ADI Global Distribution business, where robust global revenue
trends and disciplined cost management are driving adjusted EBITDA
growth and profit margin expansion. We also experienced better than
anticipated business mix and cost performance in our Products &
Solutions business during the fourth quarter."
Andy Teich, lead independent
director of Resideo, continued, "We understand the issues that
impacted our Products & Solutions business in the second half
of 2019, and we are actively working to improve performance. In
particular, under the leadership of Sach
Sankpal, who became the president of the Products &
Solutions business in Jan. 2020, we
are in the process of redesigning our new product introduction
process, focusing on our value engineering initiatives to lower
product costs for our existing platforms and enhancing our product
management capabilities. We are confident that these initiatives,
taken together with the opportunities identified to date in our
comprehensive financial and operational review, will help us drive
long-term and sustainable shareholder value."
Financial and Operational Review Update
"During the fourth quarter of 2019, Resideo's board of directors
formed a strategic and operational committee tasked with
spearheading a comprehensive financial and operational review of
the entire business," said Teich, the chairman of the committee.
"We are today announcing a comprehensive, multi-year, multi-phase
program with three areas of focus to drive value in the
long-term:
- Revenue and Gross Margin Growth;
- Selling, General & Administrative (SG&A) Optimization;
and,
- Structural Efficiency and Working Capital Management.
We have identified specific opportunities and developed a
detailed implementation plan for the first phase, which largely
includes SG&A cost savings and direct and indirect spend
reductions." Teich continued, "We believe that the initiatives
announced today will lay a foundation to deliver improved
performance as the company renews its focus on its core
competencies and implements the first phase of these executable and
impactful initiatives. We are poised to further develop and begin
executing the second phase of our multi-year plan, which we believe
will position Resideo for sustainable success."
The company expects this program to deliver $30 - $40 million
of incremental adjusted EBITDA for 2020 and $80 - $120 million
of incremental adjusted EBITDA in 2021. Overall, the total program
is expected to drive greater than $200
million of incremental adjusted EBITDA in 2022 and
beyond.
Teich concluded, "Moving forward, we have an industry-leading
global distribution business and an attractive Products &
Solutions portfolio with strong relationships and brand equity
among professional installers. While the execution of our financial
and operational review is in the early stages, there are clearly
significant opportunities for improvement, particularly in the
Products & Solutions business. We are building momentum and
expect the opportunities we have identified and actions we are
taking will provide meaningful financial benefits, expand over
time, strengthen our long-term growth profile and best position
Resideo to deliver increased returns to our shareholders."
Fourth-Quarter Performance
Consolidated revenue increased 3% on a GAAP basis and 4% on a
constant currency basis year-over-year. GAAP performance was driven
by robust 10% growth in ADI partially offset by a 4% reduction in
Products & Solutions. Adjusted EBITDA declined $34 million, or 25% year-over-year, driven by a
28% reduction in Products & Solutions partially offset by an
18% increase in ADI.
ADI Global Distribution revenue increased by 10% on both
a GAAP and constant currency basis year-over-year. Segment
performance was driven by solid growth across multiple key product
lines and a stronger product mix driven by security and video
surveillance product lines. Segment adjusted EBITDA increased
year-over-year by 18% as SG&A costs grew at a lower rate than
revenue.
Products & Solutions revenue decreased by 4% on a
GAAP basis and 3% on a constant currency basis year-over-year,
driven by declines in the Comfort and Residential Thermal Solutions
(RTS) businesses. Segment adjusted EBITDA for the fourth quarter
decreased year-over-year by 28% mainly due to negative product and
channel mix, inventory write-offs, revenue declines and
higher-than-expected production costs.
Full-Year 2019 Performance
Full-year consolidated revenue increased 3% on a GAAP basis and
5% on a constant currency basis. GAAP performance was driven by ADI
revenue growth of 6% and flat revenues for Products &
Solutions. Adjusted EBITDA declined $137
million, or 27%, driven by a 32% reduction in Products &
Solutions partially offset by a 15% increase in ADI.
ADI delivered consistently strong performance during 2019. The
Products & Solutions business experienced a number of
challenges during the year, particularly in the third and fourth
quarters, that negatively impacted performance across its product
lines.
ADI Global Distribution full-year revenue increased by 6%
on a GAAP basis and 7% on a constant currency basis. Segment
revenue performance in 2019 was driven by continued growth in
security, fire and life safety and professional audio-visual
systems product lines. Segment adjusted EBITDA increased by 15%.
Performance for the full year was largely driven by increased
volume and productivity, net of inflation.
Products & Solutions full-year revenue was flat on a
GAAP basis and increased by 2% on a constant currency basis, driven
by increases in the Security business and the first-quarter launch
of a new residential security platform, offset by declines in the
Comfort and RTS businesses. Segment adjusted EBITDA for the full
year decreased 32% due to unfavorable product mix, inventory
write-offs, production cost increases, product rebates and the
license fee paid to Honeywell associated with the Trademark License
Agreement, which was only reflected in the 2018 results for the
post-spin-off period.
Full-Year Guidance
For full-year 2020, Resideo currently expects to generate
revenue growth of 2% - 4%, driven by mid-single-digit percentage
growth in ADI and flat to low-single-digit percentage growth in
Products & Solutions.
Full-year 2020 adjusted EBITDA is currently expected to be in
the range of $420 - $450 million. This adjusted EBITDA guidance
reflects improved performance in Resideo's base business and
$30 - $40
million of benefits as outlined above from the actions taken
during the first phase of the financial and operational review.
Conference Call
Resideo will hold a conference call with investors on
Feb. 27, 2020, at 8:30 a.m. EST. To join the conference call,
please dial 888-599-8688 (domestic) or +1 323-994-2135
(international) approximately 10 minutes before it starts. Please
mention to the operator that you are dialing in for Resideo's
fourth-quarter 2019 earnings call or provide the conference code
841154. A replay of the conference call will be available from
12:30 p.m. EST Feb. 27, 2020, until 12:30
p.m. EST March 5, 2020, by
dialing 888-203-1112 (domestic) or +1-719-457-0820 (international).
The access code is 8157361.
A real-time audio webcast of the presentation will be accessible
at https://investor.resideo.com, where related materials will be
posted before the webcast, and a replay of the webcast will be
available for 30 days following the presentation.
About Resideo
Resideo is a leading global provider of critical comfort,
residential thermal solutions and security solutions primarily in
residential environments. Building on a 130-year heritage, Resideo
has a presence in more than 150 million homes, with 15 million
systems installed in homes each year. We continue to serve more
than 110,000 contractors through leading distributors, including
our ADI Global Distribution business, which exports to more than
100 countries from more than 200 stocking locations around the
world. For more information about Resideo, please visit
www.resideo.com.
Contacts:
|
|
Media:
|
Investors:
|
Annalise
Helms
|
Matt
Giordano
|
(763)
777-4334
|
(516)
577-7932
|
annalise.helms@resideo.com
|
investorrelations@resideo.com
|
Table 1: SUMMARY
OF FINANCIAL RESULTS - SEGMENT
|
|
|
|
|
|
|
|
|
|
|
($
millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4Q
2019
|
|
4Q
2018
|
|
%
Change
|
|
YTD
2019
|
|
YTD
2018
|
|
%
Change
|
Products &
Solutions
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
(1)
|
|
575
|
|
602
|
|
-4%
|
|
2,175
|
|
2,169
|
|
0%
|
Constant Currency
(Non-GAAP)
|
|
|
|
|
|
-3%
|
|
|
|
|
|
2%
|
Segment
Adjusted EBITDA (2)
|
|
92
|
|
127
|
|
-28%
|
|
314
|
|
460
|
|
-32%
|
ADI Global
Distribution
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
729
|
|
664
|
|
10%
|
|
2,813
|
|
2,658
|
|
6%
|
Constant Currency
(Non-GAAP)
|
|
|
|
|
|
10%
|
|
|
|
|
|
7%
|
Segment
Adjusted EBITDA (2)
|
|
47
|
|
40
|
|
18%
|
|
188
|
|
164
|
|
15%
|
Total
Company
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
1,304
|
|
1,266
|
|
3%
|
|
4,988
|
|
4,827
|
|
3%
|
Constant Currency
(Non-GAAP)
|
|
|
|
|
|
4%
|
|
|
|
|
|
5%
|
Adjusted EBITDA
(Non-GAAP) (3)
|
|
104
|
|
138
|
|
-25%
|
|
362
|
|
499
|
|
-27%
|
|
(1)
|
Represents Product
& Solutions revenue, net of intersegment revenue of $84 million
and $312 million for the three and twelve months ended
December 31, 2019 and $69 million and $305 million for the three
and twelve months ended December 31, 2018, respectively. ADI Global
Distribution
does not have any intersegment revenue.
|
(2)
|
Excludes $6 million
and $15 million of estimated stand-alone costs for the three months
ended December 31, 2018 and the twelve months ended
December 31, 2018, respectively, which is included in Adjusted
EBITDA (Non-GAAP).
|
(3)
|
Table 5 includes a
Reconciliation of Net Income to Non-GAAP measures.
|
Table 2:
CONSOLIDATED AND COMBINED STATEMENT OF OPERATIONS
(UNAUDITED)
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
Twelve Months
Ended
|
|
|
December
31,
|
|
December
31,
|
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
|
(Dollars in
millions except share and per share data)
|
|
|
|
Net
revenue
|
|
$
1,304
|
|
$
1,266
|
|
$
4,988
|
|
$
4,827
|
Cost of goods
sold
|
|
1,012
|
|
936
|
|
3,798
|
|
3,461
|
Gross
Profit
|
|
292
|
|
330
|
|
1,190
|
|
1,366
|
Selling, general and
administrative expenses
|
|
220
|
|
225
|
|
932
|
|
873
|
Operating
profit
|
|
72
|
|
105
|
|
258
|
|
493
|
Other expense,
net
|
|
64
|
|
49
|
|
118
|
|
369
|
Interest
expense
|
|
18
|
|
18
|
|
69
|
|
20
|
Income (loss) before
taxes
|
|
(10)
|
|
38
|
|
71
|
|
104
|
Tax (benefit)
expense
|
|
(1)
|
|
22
|
|
35
|
|
(301)
|
Net (loss)
income
|
|
$
(9)
|
|
$
16
|
|
$
36
|
|
$
405
|
|
|
|
|
|
|
|
|
|
Weighted Average
Number of Common Shares
Outstanding (in thousands)
|
|
|
|
|
|
|
|
|
Basic
|
|
122,843
|
|
122,499
|
|
122,722
|
|
122,499
|
Diluted
|
|
122,843
|
|
122,999
|
|
123,238
|
|
122,624
|
(Loss) Earnings
Per Share
|
|
|
|
|
|
|
|
|
Basic
|
|
$
(0.07)
|
|
$
0.13
|
|
$
0.29
|
|
$
3.31
|
Diluted
|
|
$
(0.07)
|
|
$
0.13
|
|
$
0.29
|
|
$
3.30
|
Table 3:
CONSOLIDATED BALANCE SHEET (UNAUDITED)
|
|
|
|
|
|
|
|
|
December
31,
|
|
|
2019
|
|
2018
|
|
|
(Dollars in
millions, shares in
thousands)
|
ASSETS
|
|
|
|
|
Current
assets:
|
|
|
|
|
Cash and cash
equivalents
|
|
$
122
|
|
$
265
|
Accounts receivables
– net
|
|
817
|
|
821
|
Inventories –
net
|
|
671
|
|
628
|
Other current
assets
|
|
175
|
|
95
|
Total current
assets
|
|
1,785
|
|
1,809
|
Property, plant and
equipment – net
|
|
316
|
|
300
|
Goodwill
|
|
2,642
|
|
2,634
|
Other intangible
assets – net
|
|
127
|
|
133
|
Other
assets
|
|
258
|
|
96
|
Total
assets
|
|
$
5,128
|
|
$
4,972
|
LIABILITIES
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
Accounts
payable
|
|
$
920
|
|
$
964
|
Current maturities of
long-term debt
|
|
22
|
|
22
|
Accrued
liabilities
|
|
552
|
|
503
|
Total current
liabilities
|
|
1,494
|
|
1,489
|
Long-term
debt
|
|
1,158
|
|
1,179
|
Obligations payable
to Honeywell
|
|
594
|
|
629
|
Other
liabilities
|
|
280
|
|
142
|
EQUITY
|
|
|
|
|
Common stock, $0.001
par value, 700,000 shares authorized, 123,488 and 122,873 shares
issued and outstanding as of
December 31, 2019, 122,967 and 122,499 shares issued and
outstanding as of December 31, 2018, respectively
|
|
-
|
|
-
|
|
|
|
|
|
Additional paid-in
capital
|
|
1,761
|
|
1,720
|
Treasury stock, at
cost
|
|
(3)
|
|
-
|
Retained
earnings
|
|
38
|
|
2
|
Accumulated other
comprehensive loss
|
|
(194)
|
|
(189)
|
Total
equity
|
|
1,602
|
|
1,533
|
Total liabilities and
equity
|
|
$
5,128
|
|
$
4,972
|
Table 4:
CONSOLIDATED AND COMBINED STATEMENT OF CASH FLOWS
(UNAUDITED)
|
|
|
|
|
|
|
Twelve Months
Ended
|
|
December
31,
|
|
2019
|
|
2018
|
|
|
Cash flows from
operating activities:
|
|
|
|
Net Income
|
$
36
|
|
$
405
|
Adjustments to
reconcile net income to net cash provided by operating
activities:
|
|
|
|
Depreciation and
amortization
|
80
|
|
66
|
Restructuring
charges, net of payments
|
6
|
|
(4)
|
Stock compensation
expense
|
25
|
|
20
|
Deferred income
taxes
|
(25)
|
|
(323)
|
Other
|
18
|
|
22
|
Changes in assets and
liabilities:
|
|
|
|
Accounts
receivables
|
7
|
|
(62)
|
Inventories –
net
|
(44)
|
|
(172)
|
Other current
assets
|
(53)
|
|
(27)
|
Other
assets
|
(15)
|
|
(4)
|
Accounts
payable
|
(38)
|
|
231
|
Accrued
liabilities
|
22
|
|
65
|
Obligations payable
to Honeywell
|
(35)
|
|
24
|
Other
liabilities
|
39
|
|
221
|
Net cash provided by
operating activities
|
23
|
|
462
|
Cash flows (used
for) investing activities:
|
|
|
|
Expenditures for
property, plant and equipment and software
|
(95)
|
|
(81)
|
Cash paid for
acquisitions, net of cash acquired
|
(17)
|
|
-
|
Other
|
-
|
|
7
|
Net cash used for
investing activities
|
(112)
|
|
(74)
|
Cash flows (used
for) financing activities:
|
|
|
|
Proceeds from
long-term debt
|
-
|
|
1,225
|
Payment of debt
facility issuance and modification costs
|
(4)
|
|
(29)
|
Repayment of
long-term debt
|
(22)
|
|
-
|
Distribution to
Honeywell in connection with Spin-Off
|
-
|
|
(1,415)
|
Net increase in
invested equity
|
-
|
|
39
|
Non-operating
obligations from Honeywell, net
|
(24)
|
|
26
|
Other
|
(3)
|
|
(13)
|
Net cash (used for)
financing activities
|
(53)
|
|
(167)
|
Effect of foreign
exchange rate changes on cash and cash equivalents
|
(1)
|
|
(12)
|
Net (decrease)
increase in cash and cash equivalents
|
(143)
|
|
209
|
Cash and cash
equivalents at beginning of period
|
265
|
|
56
|
Cash and cash
equivalents at end of period
|
$
122
|
|
$
265
|
Supplemental cash
flow information:
|
|
|
|
Interest
paid
|
$
72
|
|
$
-
|
Income taxes paid
(net of refunds)
|
$
86
|
|
$
28
|
Capital expenditures
in accounts payable
|
$
16
|
|
$
23
|
Table 5:
RECONCILIATION OF NET INCOME (LOSS) (UNAUDITED) TO NON-GAAP
FINANCIAL MEASURES (UNAUDITED)
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
Twelve Months
Ended
|
|
|
December
31,
|
|
December
31,
|
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
|
(Dollars in
millions except share and per share data)
|
Reconciliation of
Net income to Adjusted net income (non-GAAP)
|
|
Net (loss)
income
|
|
$
(9)
|
|
$
16
|
|
$
36
|
|
$
405
|
Environmental expense
(1)
|
|
2
|
|
18
|
|
2
|
|
340
|
Honeywell
reimbursement agreement expense (2)
|
|
51
|
|
49
|
|
108
|
|
49
|
Estimated stand-alone
costs (3)
|
|
-
|
|
5
|
|
-
|
|
9
|
Stock compensation
expense (4)
|
|
3
|
|
5
|
|
25
|
|
20
|
Restructuring
charges
|
|
3
|
|
-
|
|
37
|
|
5
|
Other
(5)
|
|
48
|
|
26
|
|
113
|
|
27
|
Income tax
adjustments (6)
|
|
(15)
|
|
3
|
|
(46)
|
|
(412)
|
Adjusted net
income excluding Honeywell reimbursement
agreement payments (Non-GAAP)
|
|
83
|
|
122
|
|
275
|
|
443
|
Assumed cash payments
related to Honeywell reimbursement
agreement (7)
|
|
(35)
|
|
(35)
|
|
(140)
|
|
(140)
|
Adjusted net
income (Non-GAAP)
|
|
$
48
|
|
$
87
|
|
$
135
|
|
$
303
|
Adjusted earnings
per share (Non-GAAP)
|
|
|
|
|
|
|
|
|
Basic adjusted
earnings per share (Non-GAAP)
|
|
$
0.39
|
|
$
0.71
|
|
$
1.10
|
|
$
2.47
|
Diluted adjusted
earnings per share (Non-GAAP)
|
|
$
0.39
|
|
$
0.71
|
|
$
1.10
|
|
$
2.47
|
|
|
|
|
|
|
|
|
|
Reconciliation of
Net income to Adjusted EBITDA (non-GAAP)
|
|
|
Net (loss)
income
|
|
$
(9)
|
|
$
16
|
|
$
36
|
|
$
405
|
Net interest
expense
|
|
17
|
|
14
|
|
66
|
|
13
|
Tax (benefit)
expense
|
|
(1)
|
|
22
|
|
35
|
|
(301)
|
Depreciation and
amortization
|
|
25
|
|
17
|
|
80
|
|
66
|
Environmental expense
(1)
|
|
2
|
|
18
|
|
2
|
|
340
|
Honeywell
reimbursement agreement expense (2)
|
|
51
|
|
49
|
|
108
|
|
49
|
Estimated stand-alone
costs (3)
|
|
-
|
|
6
|
|
-
|
|
15
|
Stock compensation
expense (4)
|
|
3
|
|
5
|
|
25
|
|
20
|
Restructuring
charges
|
|
3
|
|
-
|
|
37
|
|
5
|
Other
(5)
|
|
48
|
|
26
|
|
113
|
|
27
|
Adjusted EBITDA
excluding Honeywell reimbursement agreement
payments (Non-GAAP)
|
|
139
|
|
173
|
|
502
|
|
639
|
Assumed cash payments
related to Honeywell reimbursement agreement
(7)
|
|
(35)
|
|
(35)
|
|
(140)
|
|
(140)
|
Adjusted EBITDA
(Non-GAAP)
|
|
$
104
|
|
$
138
|
|
$
362
|
|
$
499
|
|
(1)
|
Represents historical
environmental expenses as reported under 100% carryover
basis.
|
(2)
|
Represents recorded
expenses related to the Honeywell reimbursement
agreement.
|
(3)
|
Represents the
difference between our estimate of selling, general and
administrative costs as a stand-alone company and historical
allocated
costs.
|
(4)
|
Stock compensation
expense adjustment includes only non-cash expenses.
|
(5)
|
For the three and
twelve months ended December 31, 2019, Other represents $26 million
and $80 million of items directly 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, $14 million and $13 million of non-operating expense
adjustment which excludes net interest (income), respectively. For
the
three and twelve months ended December 31, 2018, Other represents
$23 million and $23 million in cost directly related to the
Spin-Off
and $3 and $4 million in other non-operating expense,
respectively.
|
(6)
|
Represents the tax
effect of pre-tax items excluded from Adjusted Net Income and the
removal of discrete tax items, including the income
tax impacts of the Tax Act. The tax effect of pre-tax items
excluded from Adjusted Net Income is computed by adjusting the tax
rate to exclude
the pre-tax non-GAAP adjustments noted above. The Income Tax
Adjustment for the three months ended December 31, 2018 has been
revised
to use this methodology, rather than statutory tax rates. This
change in methodology decreased the Income Tax Adjustment and
increased
Adjusted Net Income by $49 million for the three months ended
December 31, 2018. The change in methodology had no impact on
the Income
Tax Adjustment or Adjusted Net Income for the twelve months ended
December 31, 2018.
|
(7)
|
Pursuant to the
Honeywell 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 will be 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).
|
Table 6:
RECONCILIATION OF CONSTANT CURRENCY REVENUE % CHANGE
|
|
|
|
Three Months
Ended
|
|
Twelve Months
Ended
|
|
|
December
31,
|
|
December
31,
|
|
|
2019
|
|
2019
|
|
|
(Dollars in
millions)
|
Products &
Solutions revenue (decline) growth
|
|
|
|
|
Net Products &
Solutions revenue (decline) growth
|
$
(27)
|
|
$
6
|
|
% Change
|
-4%
|
|
0%
|
|
Exclude: Foreign
currency translation
|
-1%
|
|
-2%
|
|
Constant currency
(decline) growth (Non-GAAP)
|
-3%
|
|
2%
|
|
|
|
|
|
|
|
|
|
|
ADI Global
Distribution revenue growth
|
|
|
|
|
Net ADI Global
Distribution revenue growth
|
$
65
|
|
$
155
|
|
% Change
|
10%
|
|
6%
|
|
Exclude: Foreign
currency translation
|
0%
|
|
-1%
|
|
Constant currency
growth (Non-GAAP)
|
10%
|
|
7%
|
|
|
|
|
|
Total revenue
growth
|
|
|
|
|
Total revenue
growth
|
$
38
|
|
$
161
|
|
% Change
|
3%
|
|
3%
|
|
Exclude: Foreign
currency translation
|
-1%
|
|
-2%
|
|
Constant currency
growth (Non-GAAP)
|
4%
|
|
5%
|
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 that the
forward-looking statements contained in this press release 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 Reports on
Form 10-K for the years ended December 31,
2018 and December 31, 2019 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) guidance regarding 2020, (ii) the progress and results of, and
our ability to implement the opportunities identified in, the
comprehensive operational and financial review (F&O Review),
including whether the implementation of the F&O Review will
provide meaningful financial benefits in 2020, 2021, 2022 and
beyond, which will be impacted by our ability to execute on the
revenue and gross margin opportunities identified in the F&O
Review, to reduce our selling, general and administrative expenses,
and to realize further cost savings by driving structural
efficiencies and working capital management, (iii) our ability to
address issues that impacted our performance in 2019, including our
ability to redesign our product introduction process, enhance our
value engineering and cost reduction initiatives for existing
product platforms, and enhance our product management capabilities,
(iv) whether we can expeditiously conclude our ongoing chief
executive officer and chief financial officer searches and retain
talented individuals for these roles, (v) our ability to timely and
adequately execute on anticipated new product launches, including
GRIP and non-connected product launches, (vi) the impact of the
purported class action litigation commenced against Resideo and
certain of its current and former executive officers, and (vii) our
ability to address any disputes that we may have with Honeywell
from time to time, including the dispute regarding the
Indemnification and Reimbursement Agreement, 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. Except as required by law,
we undertake no obligation to update such statements to reflect
events or circumstances arising after the date of this
presentation, and we caution investors not to place undue reliance
on any such forward-looking statements.
Non-GAAP Financial Measures
This release includes Adjusted EBITDA, Adjusted EBITDA excluding
Honeywell reimbursement agreement payments, Adjusted Net Income,
Adjusted Net Income excluding Honeywell reimbursement agreement
payments, adjusted basic and diluted earnings per share, constant
currency (decline) growth, and other financial measures not
compliant with generally accepted accounting principles in
the United States (GAAP). The
non-GAAP financial measures are adjusted for certain items 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, these measures are useful to
investors and management in understanding our ongoing operations
and in analysis of ongoing operating trends and provide useful
additional information relating to our operations and financial
condition. These metrics should be considered in addition to, and
not as replacements for, the most comparable GAAP measure. We
believe Adjusted EBITDA excluding Honeywell reimbursement agreement
payments, Adjusted Net Income, Adjusted Net Income excluding
Honeywell reimbursement agreement payments, adjusted basic and
diluted earnings per share, and constant currency (decline) growth
are important indicators of operating performance. For
reconciliations of these measures to the most directly comparable
GAAP financial measures to the extent that they are available
without unreasonable effort, please refer to the tables above. They
should be read in connection with our financial statements
presented in accordance with GAAP.
A reconciliation of Adjusted EBITDA to the corresponding GAAP
measure is not available on a forward-looking basis without
unreasonable efforts due to the impact and timing on future
operating results arising from items excluded from these measures,
particularly environmental expense, Honeywell reimbursement
agreement expense, stock compensation expense, restructuring
expense and other non-operating expense (income).
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SOURCE Resideo Technologies, Inc.