Market Overview

Resideo Technologies Continues Growth Momentum In Second Quarter 2019


AUSTIN, Texas, Aug. 7, 2019 /PRNewswire/ -- Resideo Technologies, Inc. (NYSE:REZI) reported second-quarter financial results for the quarter ended June 30, 2019. The company reported Net Revenue of $1,242 million, Adjusted EBITDA of $81 million and adjusted basic and diluted earnings per share of $0.19.

Honeywell Announces Resideo as corporate name for Honeywell Homes and ADI Global Distribution businesses when they spin later this year. (PRNewsfoto/Honeywell)

"Our momentum continues with strong top-line growth during the second quarter, spread evenly across our ADI Global Distribution and Products & Solutions businesses," said Mike Nefkens, president and CEO of Resideo. "In the first half of the year, we launched several new products including the T9 and T10 smart thermostats and an industry-leading universal defrost control for heat pumps. We also completed acquisitions of LifeWhere and technology from Whisker Labs. Our three acquisitions to date, including Buoy Labs, put us at the forefront of whole home monitoring across the physical home networks of air, water, energy and security. The Resideo team is focused on executing our organic and inorganic growth strategies, as well as our cost reduction programs, as we continue to drive growth and long-term value creation for shareholders."

Second-Quarter Performance

Net revenue for the second quarter was up 4% on a GAAP basis and up 6% on a Non-GAAP constant currency basis year over year. GAAP Net Income was down during the second quarter with a Net Loss of $11 million, while Adjusted Net Income was $23 million, and $58 million excluding the Honeywell reimbursement agreement payments. Adjusted EBITDA was $81 million, or $116 million excluding the Honeywell reimbursement agreement payments.

ADI Global Distribution revenue for the quarter increased by 4% on a GAAP basis, and 6% on a Non-GAAP constant currency basis year over year. Segment performance was driven by solid organic revenue growth in the Americas and EMEA regions. Segment Adjusted EBITDA increased by 12%, primarily driven by higher sales volumes and productivity. Growth in the quarter was driven by the Security and Life Safety product categories, as well as through continued expansion of its Professional A/V growth initiative. The ADI business also added to its product offering, notably announcing a distribution agreement with Samsung Pro. ADI continues to win high-value new business among security integrators throughout North America.

ADI's leadership best practices were highlighted in Security Systems News and recognized by various industry publications, including being listed as the top Distributor Used by SDM magazine's SDM 100.

Products & Solutions revenue increased by 4% on a GAAP basis, and 6% on a Non-GAAP constant currency basis year over year. Segment growth was driven by performance from the Security business with the migration to the new next-generation Pro Series security platform. Segment EBITDA was down 36% as a result of unfavorable product mix, production cost increases, and the impact of acquisition expenses. Negative impacts were partially offset by profit from increased volume, selling prices and raw material productivity.

In May, Resideo acquired innovative energy efficiency technology from Whisker Labs and hired the team behind it. The solutions pioneered by Whisker Labs provide analytics that work with Wi-Fi thermostats to intelligently control the cooling and heating of homes. The technology creates a thermodynamic model of a home to accurately predict home heating and air conditioning run time and energy use. This helps a homeowner use less energy and control comfort more efficiently.

In June, Resideo announced the acquisition of LifeWhere, marking its third acquisition since the spinoff. The LifeWhere technology uses machine learning and analytics to predict potential failure on critical home appliances, such as water heaters, furnaces and air conditioners. This service provides the detailed analytics required for professional contractors to dispatch technicians with the right skills to quickly repair the appliance before it causes a catastrophic failure.

Guidance and cash flow generation

The company reported a use of cash from operations of $27 million for the quarter, driven largely by a planned inventory build and payments related to the Honeywell reimbursement agreement. Cash usage in the quarter was in-line with our budgeted expectations for 2019.

Total debt decreased to $1,191 million, and liquidity is supported by a $350 million revolving credit facility, under which no amounts were outstanding as of the quarter end.

The company reiterates full-year 2019 guidance of Revenue growth of 2 - 5% and the upper end of the Adjusted EBITDA range of $410 - $430 million.

"As we continue investing in our business to generate sustainable growth, our balance sheet remains strong, and we continue to be disciplined in our cash management approach," said Joe Ragan, executive vice president and chief financial officer. "Looking ahead, we expect third quarter revenue growth to be modest, driven by typical seasonality. We remain committed to our previously announced EBITDA guidance, supported by our cost reduction program, which is on track to yield $50 million in annualized savings by 2020."

Table 1: Summary of Financial Results - Segment

($ millions)  

 2Q 2018 

 2Q 2019 

 % Change 

Products & Solutions

Revenue (1)




Constant Currency (Non-GAAP)


 Segment Adjusted EBITDA (2)(3)




ADI Global Distribution





Constant Currency (Non-GAAP)


 Segment Adjusted EBITDA (2)(3)




Total Company





Constant Currency (Non-GAAP)


Adjusted EBITDA (Non-GAAP) (4)




1) Represents Product & Solutions revenue, net of intersegment revenue of $74 million and $145 million for the three and six months ended June 30, 2019 and $80 million and $159 million for the three and six months ended June 30, 2018, respectively. ADI Global Distribution does not have any intersegment revenue. 

2) Excludes $4 million and $7 million of estimated stand-alone costs for the three and six months ended June 30, 2018 which is included in adjusted EBITDA (Non-GAAP).

3) Table 7 includes a Reconciliation of Segment Adjusted EBITDA (non-GAAP) to (loss) Income before taxes. 

4) Table 6 includes a Reconciliation of Net (loss) income to Adjusted EBITDA (non-GAAP). 

Conference Call
Resideo will hold a conference call with investors on Aug. 8, 2019, at 8:30 a.m. EDT. To participate in 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 second quarter 2019 earnings call or provide the conference code 288276. A replay of the conference call will be available from 12:30 p.m. EDT Aug. 8, until 12:30 p.m. EDT Aug. 15, by dialing 888-203-1112 (domestic) or +1 719-457-0820 (international). The access code is 3164853.

A real-time audio webcast of the presentation can be accessed at, where related materials will be posted prior to th

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