Resideo Announces Fourth Quarter and Full Year 2020 Financial Results
Resideo Technologies, Inc. (NYSE: REZI) reported strong financial results for Q4 2020, with net revenue of $1.5 billion, a 15% year-over-year increase. Operating profit surged to $152 million from $72 million, and net income reached $59 million, recovering from a $9 million loss in the prior year. For FY 2020, revenue was $5.1 billion, up 2%, while operating profit improved to $311 million. The company anticipates 2021 revenue between $5.2 billion and $5.4 billion, with a gross profit margin of 26% to 28%. Management highlighted robust demand in residential markets and ongoing transformation initiatives.
- Q4 2020 net revenue increased by 15% to $1.5 billion.
- Operating profit rose to $152 million, doubling from the previous year's $72 million.
- Fourth quarter net income reached $59 million versus a net loss of $9 million in the prior year.
- FY 2020 cash provided by operating activities improved significantly to $244 million from $23 million.
- 2021 revenue guidance of $5.2 billion to $5.4 billion suggests growth.
- FY 2020 revenue for the Products & Solutions segment decreased by 2%.
- ADI Global Distribution segment operating profit declined 8% to $194 million from $210 million.
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 , up15% 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 , up2% 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
Gross profit margin for the fourth quarter 2020 was
Resideo's operating profit of
Net income for the fourth quarter 2020 was
Full Year 2020 Performance
Consolidated revenue for the full year 2020 was
Gross profit margin for the full year 2020 was
Operating profit of
For the full year 2020, the company reported net income of
Cash Flow and Liquidity
The company reported net cash provided by operating activities of
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
Outlook
The company expects full year 2021 revenue to be in the range of
The company expects first quarter 2021 revenue to be in the range of
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 |
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 | $ | 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 | $ | 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 |
(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 | 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 | ||||||||||||||||
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 |
Table 3: CONSOLIDATED BALANCE SHEETS (UNAUDITED) | ||||||||
December 31, | December 31, | |||||||
2020 | 2019 | |||||||
(In millions, except number of | ||||||||
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, | - | - | ||||||
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 | ||||||||
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 | 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 | ||||||||||||||||
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 |
(2) | Stock compensation expense adjustment includes only non-cash expenses. |
(3) | For the three and twelve months ended December 31, 2020, Other represents |
(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.
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