AUSTIN, Texas, Nov. 5,
2020 /PRNewswire/ -- Resideo Technologies, Inc. (NYSE: REZI),
a leading global provider of home comfort and security solutions,
today announced financial and operating results for the third
quarter ended Sept. 26, 2020.
Highlights
- Net revenue of $1.4 billion, up
11% from $1.2 billion in the third
quarter 2019
- Operating profit of $131 million,
compared to operating profit of $59
million in the third quarter 2019
- Net income of $75 million,
compared to net income of $8 million
in the third quarter 2019
- Adjusted EBITDA1 of $188
million, up 65% from $114
million in the third quarter 2019
- Cash provided by operating activities of $21 million in the third quarter 2020
Third Quarter 2020 Performance
Consolidated revenue of $1.4
billion in the third quarter 2020 increased 11% compared
with the prior year of $1.2 billion.
ADI Global Distribution segment revenue was $790 million, an increase of 11% compared with
revenue of $714 million in the prior
year primarily due to increased volume from project business.
Products & Solutions segment revenue was $572 million, an increase of 12% compared with
revenue of $512 million in the prior
year due to positive demand trends across each of Products &
Solutions' primary end markets.
Gross profit margin for the third quarter 2020 was 27.2%,
compared to 25.2% in the prior year. The increase was
attributed to higher revenue and sourcing and productivity
cost savings initiatives, partially offset by increased factory
costs related to COVID-19 safety measures and unfavorable sales mix
in both segments.
Resideo's operating profit of $131
million in the third quarter 2020 compared to a prior year
operating profit of $59 million. The
operating profit reflects the improved gross profit and reduced
SG&A expenses due to ongoing transformation and cost reduction
programs. Net income for the third quarter 2020 was $75 million, or $0.60 per diluted common share, compared with
$8 million, or $0.06 per diluted common share, in the prior
year.
Adjusted EBITDA for the third quarter 2020 was $188 million, representing an increase of 65%
compared with $114 million in the
prior year. ADI Global Distribution segment Adjusted EBITDA
increased from $48 million in the
prior year to $52 million in the
third quarter 2020, primarily due to higher revenue and cost
savings actions, partially offset by lower gross margin and
increased investment activity. Products & Solutions segment
Adjusted EBITDA increased from $66
million in the prior year to $136
million in the third quarter 2020. The increase was the
result of higher revenue, improved gross margin, transformation
savings and COVID-19 related cost management actions.
1 Previously presented as Adjusted EBITDA excluding
Honeywell reimbursement agreement cash payments (see Table 5 for
description of change)
Year-to-Date 2020 Performance
Consolidated revenue for the nine months ended Sept. 26, 2020 was $3.6
billion, down 3% compared with consolidated revenue for the
prior year of $3.7 billion. ADI
Global Distribution segment revenue for the nine months ended
Sept. 26, 2020 was $2.1 billion, an increase of 2% compared to the
prior year. Products & Solutions segment revenue for the nine
months ended Sept. 26, 2020 was
$1.4 billion, a decrease of 10%
compared with $1.6 billion for the
prior year.
Gross profit margin for the nine months ended Sept. 26, 2020 was 24.9%, compared to 26.2% for
the prior year. The decline in gross profit margin was the
result of impacts from lower revenue in the Products &
Solutions segment, unfavorable product mix across both segments and
increased factory costs related to COVID-19 safety measures. These
factors were partially offset by positive impacts from our ongoing
transformation and cost savings programs and sourcing and
productivity improvements.
Operating profit of $159 million
for the nine months ended Sept. 26,
2020 decreased 15% compared to operating profit of
$186 million for the prior year. For
the nine months ended Sept. 26, 2020,
the Company reported a net loss of $22
million, or negative $0.18 per
diluted common share.
Consolidated Adjusted EBITDA of $350
million for the nine months ended Sept. 26, 2020 declined $13 million, or 4%, as compared to $363 million for the prior year. ADI Global
Distribution segment Adjusted EBITDA for the nine months ended
Sept. 26, 2020 of $126 million, represented an 11% decline from
$141 million for the prior year. ADI
Global Distribution segment Adjusted EBITDA was negatively impacted
by lower volumes related to COVID-19 and unfavorable sales mix,
partially offset by cost reduction actions and transformation
programs. Products & Solutions segment Adjusted EBITDA for the
nine months ended Sept. 26, 2020 of
$224 million represented a 1%
increase from $222 million for the
prior year. Within the Products & Solutions segment, cost
savings from transformation programs and various cost reduction
initiatives offset lower revenue, unfavorable sales mix and
increased factory operating costs attributable to COVID-19 employee
safety measures.
Cash Flow and Liquidity
The Company reported net cash provided by operating activities
of $21 million for the third quarter
2020, an increase of $54 million from
the prior year. This improvement was primarily due to improved net
income and an increase in accrued liabilities. At Sept. 26, 2020, Resideo had cash and cash
equivalents of $260 million, total
outstanding debt of $1.3 billion, and
$200 million undrawn on a
$350 million revolving credit
facility.
On Oct. 30, 2020, the Company paid
the previously deferred April 30,
2020, $35 million Honeywell
Reimbursement Agreement payment and made the regularly scheduled
Reimbursement Agreement payment of $35
million.
Outlook
The Company expects fourth quarter 2020 revenue to be in the
range of $1.36 billion to
$1.41 billion, operating profit in
the range of $130 million to
$140 million and Adjusted EBITDA in
the range of $180 million to
$190 million.
Management Remarks
"In the third quarter we delivered meaningful sequential and
year-over-year revenue and profitability expansion across the
business," commented Jay Geldmacher,
Resideo's President and CEO. "Demand strengthened as the quarter
progressed at ADI and across our Products & Solutions
offerings. These results highlight Resideo's strong position in the
residential solutions market supported by the breadth of our
product portfolio and distribution reach, unmatched relationships
within the professional channel and leading positions in many of
the product categories we serve.
"Our revenue performance and the progress with our ongoing
transformation and cost reduction initiatives enabled us to
strengthen our liquidity position, and in late October we made all
outstanding Reimbursement Agreement payments to Honeywell. While we
are closely monitoring our operations and supply chain for impacts
related to the COVID-19 pandemic, we are encouraged by the strong
demand trends we are seeing across our end markets as we close out
2020."
Conference Call Details
The Company will hold a conference call with investors on
Nov. 5, 2020, at 8:30 a.m. EST. To join the conference call,
please dial 1-800-367-2403 (U.S., toll-free) or +1-334-777-6978
(international), with the conference title "Resideo Third Quarter
2020 Earnings" or the conference code 8408606. A replay of the
conference call will be available from 12:30
p.m. EST Nov. 5, 2020, by
dialing 1-888-203-1112 (U.S., toll-free) or +1-719-457-0820
(international). The access code for the replay is 8408606.
A real-time audio webcast of the earnings 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 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 professionals 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:
|
|
Investors:
|
Media:
|
Jason
Willey
|
Oliver
Clark
|
investorrelations@resideo.com
|
oliver.clark@resideo.com
|
Table 1: Summary
of Financial Results – Segment
($
millions)
|
|
|
3Q
2020
|
|
|
3Q
2019
|
|
|
%
Change
|
|
|
YTD
2020
|
|
|
YTD
2019
|
|
|
%
Change
|
|
Products &
Solutions
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
(1)
|
|
572
|
|
|
|
512
|
|
|
|
12
|
%
|
|
|
1,445
|
|
|
|
1,600
|
|
|
|
-10
|
%
|
Segment Adjusted
EBITDA
|
|
136
|
|
|
|
66
|
|
|
|
106
|
%
|
|
|
224
|
|
|
|
222
|
|
|
|
1
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ADI Global
Distribution
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
790
|
|
|
|
714
|
|
|
|
11
|
%
|
|
|
2,125
|
|
|
|
2,084
|
|
|
|
2
|
%
|
Segment Adjusted
EBITDA
|
|
52
|
|
|
|
48
|
|
|
|
8
|
%
|
|
|
126
|
|
|
|
141
|
|
|
|
-11
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
Company
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
1,362
|
|
|
|
1,226
|
|
|
|
11
|
%
|
|
|
3,570
|
|
|
|
3,684
|
|
|
|
-3
|
%
|
Adjusted EBITDA
(Non-GAAP) (2)(3)
|
|
188
|
|
|
|
114
|
|
|
|
65
|
%
|
|
|
350
|
|
|
|
363
|
|
|
|
-4
|
%
|
|
|
(1)
|
Represents Product
& Solutions revenue, excluding intersegment revenue of $102
million and $270 million for the three and nine months ended
September 26, 2020, respectively, and $83 million and $228 million
for the three and nine months ended September 28, 2019,
respectively. ADI Global Distribution does not have any
intersegment revenue.
|
|
|
(2)
|
Table 5 includes
reconciliations of Non-GAAP measures.
|
|
|
(3)
|
Adjusted EBITDA was
previously presented as Adjusted EBITDA excluding Honeywell
reimbursement agreement payments (Non-GAAP). See Table 5 for
description of change.
|
Table 2:
CONSOLIDATED INTERIM STATEMENTS OF OPERATIONS
(UNAUDITED)
|
|
|
|
Three Months
Ended
|
|
|
Nine Months
Ended
|
|
|
|
September
26,
|
|
|
September
28,
|
|
|
September
26,
|
|
|
September
28,
|
|
|
|
2020
|
|
|
2019
|
|
|
2020
|
|
|
2019
|
|
|
|
(Dollars in
millions except share and per share data)
|
|
Net
revenue
|
|
$
|
1,362
|
|
|
$
|
1,226
|
|
|
$
|
3,570
|
|
|
$
|
3,684
|
|
Cost of goods sold
(1)
|
|
|
992
|
|
|
|
917
|
|
|
|
2,680
|
|
|
|
2,720
|
|
Gross profit
(1)
|
|
|
370
|
|
|
|
309
|
|
|
|
890
|
|
|
|
964
|
|
Selling, general and
administrative expenses (1)
|
|
|
239
|
|
|
|
250
|
|
|
|
731
|
|
|
|
778
|
|
Operating
profit
|
|
|
131
|
|
|
|
59
|
|
|
|
159
|
|
|
|
186
|
|
Other expense,
net
|
|
|
35
|
|
|
|
35
|
|
|
|
106
|
|
|
|
54
|
|
Interest
expense
|
|
|
14
|
|
|
|
16
|
|
|
|
49
|
|
|
|
51
|
|
Income before
taxes
|
|
|
82
|
|
|
|
8
|
|
|
|
4
|
|
|
|
81
|
|
Tax
expense
|
|
|
7
|
|
|
|
-
|
|
|
|
26
|
|
|
|
36
|
|
Net income
(loss)
|
|
$
|
75
|
|
|
$
|
8
|
|
|
$
|
(22)
|
|
|
$
|
45
|
|
Weighted Average
Number of
Common Shares Outstanding
(in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
123,421
|
|
|
|
122,770
|
|
|
|
123,194
|
|
|
|
122,681
|
|
Diluted
|
|
|
125,235
|
|
|
|
123,244
|
|
|
|
123,194
|
|
|
|
123,404
|
|
Earnings (loss)
Per Share
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
0.61
|
|
|
$
|
0.07
|
|
|
$
|
(0.18)
|
|
|
$
|
0.37
|
|
Diluted
|
|
$
|
0.60
|
|
|
$
|
0.06
|
|
|
$
|
(0.18)
|
|
|
$
|
0.36
|
|
|
|
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 nine
months ended September 28, 2019 in the Consolidated Interim
Statement 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 $20 million and $66 million,
respectively. This reclassification had no effect on the
previously reported Net (loss) income or the Company's Consolidated
Interim Statements of Comprehensive (loss) income, Consolidated
Interim Statements of Cash Flows, or Consolidated Interim Balance
Sheets.
|
Table 3:
CONSOLIDATED INTERIM BALANCE SHEETS (UNAUDITED)
|
|
|
|
September
26,
|
|
|
December
31,
|
|
|
|
2020
|
|
|
2019
|
|
|
|
(Dollars in
millions, shares in thousands)
|
|
ASSETS
|
|
|
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
260
|
|
|
$
|
122
|
|
Accounts receivable
– net
|
|
|
884
|
|
|
|
817
|
|
Inventories
– net
|
|
|
618
|
|
|
|
671
|
|
Other current
assets
|
|
|
161
|
|
|
|
175
|
|
Total current
assets
|
|
|
1,923
|
|
|
|
1,785
|
|
Property, plant and
equipment – net
|
|
|
311
|
|
|
|
316
|
|
Goodwill
|
|
|
2,657
|
|
|
|
2,642
|
|
Other
assets
|
|
|
378
|
|
|
|
385
|
|
Total
assets
|
|
$
|
5,269
|
|
|
$
|
5,128
|
|
LIABILITIES
|
|
|
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
|
|
|
Accounts
payable
|
|
$
|
858
|
|
|
$
|
920
|
|
Current maturities of
debt
|
|
|
181
|
|
|
|
22
|
|
Accrued
liabilities
|
|
|
606
|
|
|
|
552
|
|
Total current
liabilities
|
|
|
1,645
|
|
|
|
1,494
|
|
Long-term
debt
|
|
|
1,141
|
|
|
|
1,158
|
|
Obligations payable
under Indemnification Agreements
|
|
|
586
|
|
|
|
594
|
|
Other
liabilities
|
|
|
292
|
|
|
|
280
|
|
EQUITY
|
|
|
|
|
|
|
|
|
Common stock, $0.001
par value, 700,000 shares authorized, 124,324 and 123,443 shares
issued and outstanding as of September 26, 2020, 123,488 and
122,873 shares issued and outstanding as of December 31, 2019,
respectively
|
|
|
-
|
|
|
|
-
|
|
Additional paid-in
capital
|
|
|
1,782
|
|
|
|
1,761
|
|
Treasury stock, at
cost
|
|
|
(5)
|
|
|
|
(3)
|
|
Retained
earnings
|
|
|
16
|
|
|
|
38
|
|
Accumulated other
comprehensive (loss)
|
|
|
(188)
|
|
|
|
(194)
|
|
Total
equity
|
|
|
1,605
|
|
|
|
1,602
|
|
Total liabilities and
equity
|
|
$
|
5,269
|
|
|
$
|
5,128
|
|
Table 4:
CONSOLIDATED INTERIM STATEMENTS OF CASH FLOWS
(UNAUDITED)
|
|
|
Nine Months
Ended
|
|
|
September
26,
|
|
|
September
28,
|
|
|
2020
|
|
|
2019
|
|
|
(Dollars in
millions)
|
|
Cash flows
provided by (used for) operating activities:
|
|
|
|
|
|
|
|
Net (loss)
income
|
$
|
(22)
|
|
|
$
|
45
|
|
Adjustments to
reconcile net (loss) income to net cash used for operating
activities:
|
|
|
|
|
|
|
|
Depreciation and
amortization
|
|
64
|
|
|
|
55
|
|
Restructuring charges,
net of payments
|
|
4
|
|
|
|
12
|
|
Stock compensation
expense
|
|
21
|
|
|
|
22
|
|
Other
|
|
20
|
|
|
|
10
|
|
Changes in assets and
liabilities:
|
|
|
|
|
|
|
|
Accounts
receivable
|
|
(64)
|
|
|
|
(27)
|
|
Inventories
– net
|
|
64
|
|
|
|
(109)
|
|
Other current
assets
|
|
15
|
|
|
|
(13)
|
|
Accounts
payable
|
|
(62)
|
|
|
|
(23)
|
|
Accrued
liabilities
|
|
48
|
|
|
|
(6)
|
|
Obligations payable
under Indemnification Agreements
|
|
(8)
|
|
|
|
(49)
|
|
Other
|
|
12
|
|
|
|
13
|
|
Net cash provided by
(used for) operating activities
|
|
92
|
|
|
|
(70)
|
|
Cash flows used
for investing activities:
|
|
|
|
|
|
|
|
Expenditures for
property, plant, equipment and other intangibles
|
|
(50)
|
|
|
|
(66)
|
|
Cash paid for
acquisitions, net of cash acquired
|
|
(35)
|
|
|
|
(17)
|
|
Net cash used for
investing activities
|
|
(85)
|
|
|
|
(83)
|
|
Cash flows
provided by financing activities:
|
|
|
|
|
|
|
|
Net proceeds from
revolving credit facility
|
|
150
|
|
|
|
60
|
|
Repayment of long-term
debt
|
|
(11)
|
|
|
|
(11)
|
|
Non-operating
obligations paid to Honeywell, net
|
|
(2)
|
|
|
|
(24)
|
|
Tax payments related
to stock vestings
|
|
(2)
|
|
|
|
(3)
|
|
Net cash provided by
financing activities
|
|
135
|
|
|
|
22
|
|
Effect of foreign
exchange rate changes on cash and cash equivalents
|
|
(4)
|
|
|
|
(2)
|
|
Net increase
(decrease) in cash and cash equivalents
|
|
138
|
|
|
|
(133)
|
|
Cash and cash
equivalents at beginning of period
|
|
122
|
|
|
|
265
|
|
Cash and cash
equivalents at end of period
|
$
|
260
|
|
|
$
|
132
|
|
Table 5:
RECONCILIATION OF NET (LOSS) INCOME (UNAUDITED) TO NON-GAAP
FINANCIAL MEASURES
|
|
|
|
Three Months
Ended
|
|
|
Nine Months
Ended
|
|
|
|
September
26,
|
|
|
September
28,
|
|
|
September
26,
|
|
|
September
28,
|
|
|
|
2020
|
|
|
2019
|
|
|
2020
|
|
|
2019
|
|
|
|
(Dollars in
millions except share and per share data)
|
|
Reconciliation of
Net income (loss) to Adjusted EBITDA (Non-GAAP)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
(loss)
|
|
$
|
75
|
|
|
$
|
8
|
|
|
$
|
(22)
|
|
|
$
|
45
|
|
Net interest
expense
|
|
|
14
|
|
|
|
16
|
|
|
|
48
|
|
|
|
49
|
|
Tax
expense
|
|
|
7
|
|
|
|
-
|
|
|
|
26
|
|
|
|
36
|
|
Depreciation and
amortization
|
|
|
22
|
|
|
|
19
|
|
|
|
64
|
|
|
|
55
|
|
Reimbursement
Agreement expense (1)
|
|
|
38
|
|
|
|
35
|
|
|
|
107
|
|
|
|
57
|
|
Stock compensation
expense (2)
|
|
|
7
|
|
|
|
8
|
|
|
|
21
|
|
|
|
22
|
|
Restructuring
charges
|
|
|
7
|
|
|
|
9
|
|
|
|
27
|
|
|
|
34
|
|
Other
(3)
|
|
|
18
|
|
|
|
19
|
|
|
|
79
|
|
|
|
65
|
|
Adjusted EBITDA
(Non-GAAP)(4)
|
|
$
|
188
|
|
|
$
|
114
|
|
|
$
|
350
|
|
|
$
|
363
|
|
|
|
(1)
|
Represents recorded
expenses / gains related to the Honeywell reimbursement agreement.
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 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
Honeywell reimbursement agreement for the three and nine months
ended September 26, 2020 are $35 and $70 million, respectively, and
for the three and nine months ended September 28, 2019 are $35
million and $105 million, respectively.
|
|
|
(2)
|
Stock compensation
expense adjustment includes only non-cash expenses.
|
|
|
(3)
|
For the three and
nine months ended September 26, 2020, Other represents $9 million
and $36 million of items related to the Spin-Off, $12 million and
$41 million of consulting and other fees related to transformation
programs, ($3) million and $1 of non-operating (income) expense
adjustment which excludes net interest (income), and $0 and $1
million acquisition-related expenses and $1 million and $1 million
of environmental expenses, respectively. For the three and nine
months ended September 28, 2019, Other represents $19 million and
$53 million of items related to the Spin-Off, $0 million and $13
million related to developments on legal claims that arose prior to
Spin-Off, and $0 and ($1) million in non-operating (income) expense
adjustment which excludes net interest (income).
|
|
|
(4)
|
Adjusted EBITDA
(Non-GAAP) was previously presented as Adjusted EBITDA excluding
Honeywell reimbursement agreement payments (Non-GAAP). The change
in presentation was made to more accurately reflect the underlying
performance indicators of the business in Adjusted net income and
Adjusted EBITDA. 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 are based on when such amounts become
probable and reasonably estimable, which will not align with the
significant variability in the timing of when the actual cash
payment is made.
|
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, (C)
the impact of potential facility closures and the modified working
conditions at our corporate offices, Product & Solutions
segment and ADI Global Distribution segment, including the timing
for our ability to reopen any facilities that have been or may be
closed and/or to ramp up operations at such facilities and meet
related customer demand, and (D) the impact of employee salary
reductions, furloughs and other actions we have taken or may take
in response to the COVID-19 pandemic, (2) our ability to continue
discussions and reach agreement with Honeywell with respect to
modifications to some of the agreements that govern our
relationship, and any potential disputes that have arisen or may
hereafter arise with Honeywell if we are unable to reach such
agreement, and (3) 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, 2019, our Quarterly Report on Form 10-Q for the
quarter ended September 26, 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
fourth quarter 2020, (ii) the impact of the COVID-19 pandemic on
our business and operations, (iii) the progress and results of, and
our ability to implement the opportunities identified in our
previously announced comprehensive financial and operational
review, including whether the implementation of the financial and
operational review will provide meaningful financial benefits in
2020, 2021, 2022 and beyond, (iv) 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 initiative for existing product
platforms, and enhance our product management capabilities, (v) our
ability to timely and adequately execute on anticipated new product
launches, including the Pro Series launch, and (vi) the impact of
the class action litigation and derivative shareholder litigation
commenced against Resideo and certain of its current and former
directors and executive officers. 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 which is not compliant
with generally accepted accounting principles in the United States (GAAP). The non-GAAP
financial measures are 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 provide
useful additional information relating to our operations and
financial condition. This metric should be considered in addition
to, and not as replacements for, the most comparable GAAP measure.
Refer to Table 5 above in this release for reconciliations of
non-GAAP financial measures to the most directly comparable GAAP
measures. We believe Adjusted EBITDA is a relevant indicator of
operating performance. It 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).
Adjusted EBITDA (Non-GAAP) was previously presented as Adjusted
EBITDA 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. 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
are based on when such amounts become probable and reasonably
estimable.
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SOURCE Resideo Technologies, Inc.