Resideo Announces Third Quarter 2024 Financial Results

⁽¹⁾ This press release includes certain "non-GAAP financial measures" as defined under the Securities Exchange Act of 1934. Resideo management believes the use of such non-GAAP financial measures, specifically Adjusted EBITDA and Adjusted EPS, assists investors in understanding the ongoing operating performance of Resideo by presenting the financial results between periods on a more comparable basis. See reconciliations of U.S. GAAP results to adjusted results in the accompanying tables.

($ in millions, except per share data)

Q4 2024

2024

Non-GAAP Adjusted EBITDA

$170 - $185

$672 - $687

Non-GAAP Adjusted Earnings per share

$0.51 - $0.61

$2.18 - $2.28

Full Year Cash Provided by Operating Activities

 At least $375

Contacts:

Investors:

Media:

Jason Willey

Garrett Terry

Vice President, Investor Relations

Corporate Communications Manager

investorrelations@resideo.com

garrett.terry@resideo.com

Q3 2024 ⁽¹⁾

YTD 2024 ⁽¹⁾

(in millions)

Products
and
Solutions

ADI Global
Distribution

Corporate

Total
Company

Products
and
Solutions

ADI Global
Distribution

Corporate

Total
Company

Net revenue

$      645

$    1,183

$        —

$   1,828

$   1,895

$    3,008

$       —

$   4,903

Cost of goods sold

373

931

—

1,304

1,118

2,414

—

3,532

Gross profit

272

252

—

524

777

594

—

1,371

Research and development expenses

23

—

—

23

69

—

—

69

Selling, general and administrative expenses

107

177

33

317

307

397

124

828

Intangible asset amortization

6

22

1

29

18

31

2

51

Restructuring, impairment and extinguishment costs, net ⁽²⁾

8

17

4

29

13

19

15

47

Income (loss) from operations

$      128

$         36

$      (38)

$      126

$      370

$        147

$   (141)

$      376

Q3 2023 ⁽¹⁾

YTD 2023 ⁽¹⁾

(in millions)

Products
and
Solutions

ADI Global
Distribution

Corporate

Total
Company

Products
and
Solutions

ADI Global
Distribution

Corporate

Total
Company

Net revenue

$      654

$       900

$        —

$   1,554

$   1,989

$    2,716

$        —

$   4,705

Cost of goods sold

401

735

1

1,137

1,227

2,202

3

3,432

Gross profit (loss)

253

165

(1)

417

762

514

(3)

1,273

Research and development expenses

28

—

—

28

82

—

2

84

Selling, general and administrative expenses

100

101

32

233

322

307

90

719

Intangible asset amortization

6

2

1

9

17

8

3

28

Restructuring and impairment expenses

25

10

3

38

27

12

3

42

Income (loss) from operations

$         94

$         52

$      (37)

$      109

$      314

$       187

$    (101)

$      400

Q3 2024 % change compared with prior period

YTD 2024 % change compared with prior period

Products
and
Solutions

ADI Global
Distribution

Corporate

Total
Company

Products
and
Solutions

ADI Global
Distribution

Corporate

Total
Company

Net revenue

(1) %

31 %

N/A

18 %

(5) %

11 %

N/A

4 %

Cost of goods sold

(7) %

27 %

N/A

15 %

(9) %

10 %

N/A

3 %

Gross profit

8 %

53 %

N/A

26 %

2 %

16 %

N/A

8 %

Research and development expenses

(18) %

N/A

N/A

(18) %

(16) %

N/A

N/A

(18) %

Selling, general and administrative expenses

7 %

75 %

3 %

36 %

(5) %

29 %

38 %

15 %

Intangible asset amortization

— %

1000 %

— %

222 %

6 %

288 %

(33) %

82 %

Restructuring, impairment and extinguishment costs, net

(68) %

70 %

33 %

(24) %

(52) %

58 %

400 %

12 %

Income (loss) from operations

36 %

(31) %

3 %

16 %

18 %

(21) %

40 %

(6) %

⁽¹⁾

On January 1, 2024, certain corporate functions were decentralized into the operating segments aligning with the business strategy. Functional expenses related to information technology, finance, tax, business development, and research and development are now recorded within the Products and Solutions and ADI Global Distribution segments. For the three and nine months ended September 30, 2023, $13 million and $38 million of corporate expenses have been reclassified into the Products and Solutions while $8 million and $24 million of corporate expenses have been reclassified into the ADI Global Distribution segments, respectively, decreasing reported Income from Operations to conform to the current year presentation.

⁽²⁾

Includes $1 million and $7 million of debt extinguishment expense for corporate for the three and nine months ended September 28, 2024.

Three Months Ended

Nine Months Ended

(in millions, except per share data)

September 28,
2024

September 30,
2023

September 28,
2024

September 30,
2023

Net revenue

$               1,828

$                1,554

$                4,903

$               4,705

Cost of goods sold

1,304

1,137

3,532

3,432

Gross profit

524

417

1,371

1,273

Operating expenses:

Research and development expenses

23

28

69

84

Selling, general and administrative expenses

317

233

828

719

Intangible asset amortization

29

9

51

28

Restructuring, impairment and extinguishment costs, net

29

38

47

42

Total operating expenses

398

308

995

873

Income from operations

126

109

376

400

Reimbursement Agreement expense ⁽¹⁾

45

43

135

128

Other expenses, net

10

13

10

10

Interest expense, net

27

16

55

50

Income before taxes

44

37

176

212

Provision for income taxes

24

16

83

84

Net income

$                     20

$                     21

$                      93

$                  128

Less: preferred stock dividends

8

—

10

—

Less: undistributed income allocated to preferred stockholders

1

—

4

—

Net income available to common stockholders

$                     11

$                     21

$                      79

$                  128

Earnings per common share:

Basic

$                 0.07

$                  0.14

$                   0.54

$                 0.87

Diluted

$                 0.07

$                  0.14

$                   0.53

$                 0.86

Weighted average common shares outstanding:

Basic

147

147

146

147

Diluted

149

148

149

149

⁽¹⁾

Represents the expense incurred pursuant to the Reimbursement Agreement, which has an annual cash payment cap of $140 million. The following table summarizes information concerning the Reimbursement Agreement:

Three Months Ended

Nine Months Ended

(in millions)

September 28,
2024

September 30,
2023

September 28,
2024

September 30,
2023

Accrual for Reimbursement Agreement liabilities deemed

probable and reasonably estimable

$                     45

$                     43

$                   135

$                   128

Cash payments made to Honeywell

(35)

(35)

(105)

(105)

Accrual increase, non-cash component in period

$                     10

$                       8

$                     30

$                     23

(in millions, except par value)

September 28,
2024

December 31,
2023

ASSETS

Current assets:

Cash and cash equivalents

$                    531

$                    636

Accounts receivable, net

1,103

973

Inventories, net

1,197

941

Other current assets

206

193

Total current assets

3,037

2,743

Property, plant and equipment, net

423

390

Goodwill

3,119

2,705

Intangible assets, net

1,197

461

Other assets

359

346

Total assets

$                8,135

$                6,645

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:

Accounts payable

$                1,021

$                    905

Current portion of long-term debt

6

12

Accrued liabilities

645

608

Total current liabilities

1,672

1,525

Long-term debt

1,983

1,396

Obligations payable under Indemnification Agreements

635

609

Other liabilities

491

366

Total liabilities

4,781

3,896

Stockholders' equity

Preferred stock, $0.001 par value: 100 shares authorized, 0.5 shares issued and

outstanding at September 28, 2024 and no shares issued and outstanding at

December 31, 2023, respectively

482

—

Common stock, $0.001 par value: 700 shares authorized, 153 and 147 shares

issued and outstanding at September 28, 2024, respectively, and 151 and 145

shares issued and outstanding at December 31, 2023, respectively 

—

—

Additional paid-in capital

2,294

2,226

Retained earnings

893

810

Accumulated other comprehensive loss, net

(207)

(194)

Treasury stock at cost

(108)

(93)

Total stockholders' equity

3,354

2,749

Total liabilities and stockholders' equity

$                8,135

$                6,645

Three Months Ended

Nine Months Ended

(in millions)

September 28,
2024

September 30,
2023

September 28,
2024

September 30,
2023

Cash Flows From Operating Activities:

Net income

$                      20

$                       21

$                      93

$                    128

Adjustments to reconcile net income to net cash in operating activities:

Depreciation and amortization

46

22

98

71

Restructuring, impairment and extinguishment costs, net

29

38

47

42

Stock-based compensation expense

15

11

44

36

Other, net

6

—

5

2

Changes in assets and liabilities, net of acquired companies:

Accounts receivable, net

(22)

26

(79)

(9)

Inventories, net

(9)

11

(13)

(4)

Other current assets

6

(8)

15

(5)

Accounts payable

31

(58)

62

(14)

Accrued liabilities

13

(20)

(65)

(114)

Other, net

12

17

34

44

Net cash provided by operating activities

147

60

241

177

Cash Flows From Investing Activities:

Acquisitions, net of cash acquired

—

(10)

(1,334)

(16)

Capital expenditures

(22)

(25)

(58)

(74)

Other investing activities, net

—

—

6

—

Net cash used in investing activities

(22)

(35)

(1,386)

(90)

Cash Flows From Financing Activities:

Proceeds from issuance of long-term debt, net

594

—

1,176

—

Proceeds from issuance of preferred stock, net of issuance costs

—

—

482

—

Repayments of long-term debt

(596)

(3)

(602)

(9)

Common stock repurchases

—

(28)

(1)

(28)

Other financing activities, net

(7)

2

(12)

(10)

Net cash provided by (used in) financing activities

(9)

(29)

1,043

(47)

Effect of foreign exchange rate changes on cash, cash equivalents and restricted cash

2

(9)

(3)

1

Net (decrease) increase in cash, cash equivalents and restricted cash

118

(13)

(105)

41

Cash, cash equivalents and restricted cash at beginning of period

414

383

637

329

Cash, cash equivalents and restricted cash at end of period

$                    532

$                    370

$                    532

$                    370

NON-GAAP FINANCIAL MEASURES AND RECONCILIATIONS

ADJUSTED NET INCOME PER DILUTED COMMON SHARE AND

NET INCOME COMPARISON

(Unaudited)

RESIDEO TECHNOLOGIES, INC.

Three Months Ended

Nine Months Ended

(in millions, except per share data)

September 28,
2024

September 30,
2023

September 28,
2024

September 30,
2023

GAAP Net income

$                     20

$                    21

$                     93

$                   128

Less: preferred stock dividends

8

—

10

—

Less: undistributed income allocated to preferred stockholders

1

—

4

—

GAAP Net income available to common stockholders

11

21

79

128

Restructuring, impairment and extinguishment costs, net

29

38

47

42

Intangible asset amortization

29

9

51

28

Stock-based compensation expense

15

11

44

36

Reimbursement Agreement accrual increase, non-cash component ⁽¹⁾

10

8

30

23

Acquisition and integration costs

3

1

37

1

Other ⁽²⁾

16

14

17

5

Tax effect of applicable non-GAAP adjustments ⁽³⁾

(26)

(21)

(56)

(34)

Non-GAAP Adjusted net income available to common stockholders

$                     87

$                    81

$                   249

$                   229

Three Months Ended

Nine Months Ended

September 28,
2024

September 30,
2023

September 28,
2024

September 30,
2023

GAAP Net income per diluted common share

$                 0.07

$                 0.14

$                  0.53

$                  0.86

Restructuring, impairment and extinguishment costs, net

0.19

0.26

0.32

0.28

Intangible asset amortization

0.19

0.06

0.34

0.19

Stock-based compensation expense

0.10

0.07

0.30

0.24

Reimbursement Agreement accrual increase, non-cash component ⁽¹⁾

0.07

0.05

0.20

0.15

Acquisition and integration costs

0.02

0.01

0.25

0.01

Other ⁽²⁾

0.11

0.10

0.11

0.03

Tax effect of applicable non-GAAP adjustments ⁽³⁾

(0.17)

(0.14)

(0.38)

(0.22)

Non-GAAP Adjusted net income per diluted common share

$                 0.58

$                 0.55

$                  1.67

$                  1.54

⁽¹⁾

Refer to the Unaudited Consolidated Statements of Operations herein.

⁽²⁾

For 2023 periods, other includes Tax Matters Agreement gain, foreign exchange transaction loss (income), and pension costs. For 2024 periods, other includes loss on sale of assets, foreign exchange transaction loss (income), gain on sale of investments, litigation settlements, and an inventory step-up related to the Snap One acquisition.

⁽³⁾

We calculated the tax effect of non-GAAP adjustments by applying a flat statutory tax rate of 25% for the three months ended September 28, 2024 and September 30, 2023.

NON-GAAP FINANCIAL MEASURES AND RECONCILIATIONS

ADJUSTED EBITDA AND NET INCOME COMPARISON

(Unaudited)

RESIDEO TECHNOLOGIES, INC.

Three Months Ended

Nine Months Ended

(in millions)

September 28,
2024

September 30,
2023

September 28,
2024

September 30,
2023

Net revenue

$              1,828

$            1,554

$            4,903

$            4,705

GAAP Net income

$                   20

$                 21

$                 93

$               128

GAAP Net income as a % of net revenue

1.1 %

1.4 %

1.9 %

2.7 %

Provision for income taxes

24

16

83

84

GAAP Income before taxes

44

37

176

212

Depreciation and amortization

46

22

98

71

Restructuring, impairment and extinguishment costs, net

29

38

47

42

Interest expense, net

27

16

55

50

Stock-based compensation expense

15

11

44

36

Reimbursement Agreement accrual increase, non-cash component ⁽¹⁾

10

8

30

23

Acquisition and integration costs

3

1

37

1

Other ⁽²⁾

16

14

17

5

Non-GAAP Adjusted EBITDA

$                 190

$               147

$               504

$               440

Non-GAAP Adjusted EBITDA as a % of net revenue

10.4 %

9.5 %

10.3 %

9.4 %

⁽¹⁾

Refer to the Unaudited Consolidated Statements of Operations herein.

⁽²⁾

For 2023 periods, other includes Tax Matters Agreement gain, foreign exchange transaction loss (income), and pension costs. For 2024 periods, other includes loss on sale of assets, foreign exchange transaction loss (income), gain on sale of investments, litigation settlements, and an inventory step-up adjustment related to the Snap One acquisition.

NON-GAAP FINANCIAL MEASURES AND RECONCILIATIONS

(Unaudited)

PRODUCTS AND SOLUTIONS SEGMENT

Three Months Ended

Nine Months Ended

(in millions)

September 28,
2024

September 30,
2023

September 28,
2024

September 30,
2023

Net revenue

$               645

$               654

$           1,895

$           1,989

GAAP Income from operations

$               128

$                 94

$               370

$               314

GAAP Income from operations as a % of net revenue

19.8 %

14.4 %

19.5 %

15.8 %

Restructuring and impairment expense

8

25

13

30

Stock-based compensation expense

5

4

15

13

Other ⁽¹⁾

—

1

4

1

Non-GAAP Adjusted Income from Operations

$               141

$               124

$               402

$               358

Depreciation and amortization

16

16

51

51

Non-GAAP Adjusted EBITDA

$               157

$               140

$               453

$               409

Non-GAAP Adjusted EBITDA as a % of net revenue

24.3 %

21.4 %

23.9 %

20.6 %

⁽¹⁾

Other includes litigation settlements and acquisition costs.

ADI GLOBAL DISTRIBUTION SEGMENT

Three Months Ended

Nine Months Ended

(in millions)

September 28,
2024

September 30,
2023

September 28,
2024

September 30,
2023

Net revenue

$           1,183

$               900

$           3,008

$           2,716

GAAP Income from operations

$                 36

$                 52

$               147

$               187

GAAP Income from operations as a % of net revenue

3.0 %

5.8 %

4.9 %

6.9 %

Restructuring and impairment expense

17

10

19

17

Stock-based compensation expense

4

2

9

5

Acquisition and integration costs

2

—

6

—

Other ⁽¹⁾

5

—

5

—

Non-GAAP Adjusted Income from Operations

$                 64

$                 64

$               186

$               209

Depreciation and amortization

28

5

41

13

Non-GAAP Adjusted EBITDA

$                 92

$                 69

$               227

$               222

Non-GAAP Adjusted EBITDA as a % of net revenue

7.8 %

7.7 %

7.5 %

8.2 %

⁽¹⁾

Other includes inventory adjustment related to the Snap One acquisition.