Resideo Announces Fourth Quarter and Full Year 2020 Financial Results
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, up 15% 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, up 2% 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
1Previously 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 $1.5 billion in the fourth quarter 2020 increased 15% compared with the prior year of $1.3 billion. Products & Solutions segment revenue was $676 million, an increase of 18% compared with revenue of $575 million in the prior year due to positive demand trends across each of Products & Solutions' primary end markets and channels. ADI Global Distribution segment revenue was $825 million, an increase of 13% compared with revenue of $729 million in the prior year due to strength in products serving residential markets and growth in e-commerce sales.
Gross profit margin for the fourth quarter 2020 was 28.2%, compared to 24.0% in the prior year. The increase was attributable to higher revenue volumes within Products & Solutions, lower charges related to slow-moving and obsolete inventory and transformation program cost savings.
Resideo's operating profit of $152 million in the fourth quarter 2020 more than doubled compared to a prior year operating profit of $72 million. Products & Solutions segment operating profit of $166 million in the fourth quarter 2020 increased from $84 million in the prior year. The increase was the result of higher revenue, improved fixed cost absorption and transformation savings. ADI Global Distribution segment operating profit increased to $59 million in the fourth quarter 2020 from $52 million in the prior year, primarily due to higher revenue. Total Corporate costs were $73 million, up from $64 million in the prior year primarily due to increased bonus payouts, partially offset by impacts from transformation program cost savings.
Net income for the fourth quarter 2020 was $59 million, or $0.44 per diluted common share, compared with a net loss of $9 million, or a loss of $0.07 per diluted common share, in the prior year.
Full Year 2020 Performance
Consolidated revenue for the full year 2020 was $5.1 billion, up 2% compared with consolidated revenue for the prior year of $5.0 billion. Products & Solutions segment revenue was $2.1 billion, a decrease of 2% compared with $2.2 billion for the prior year. ADI Global Distribution segment revenue was $3.0 billion, an increase of 5% compared with $2.8 billion for the prior year.
Gross profit margin for the full year 2020 was 25.9%, compared to 25.6% for the prior year. The improvement in gross profit margin was the result of positive impacts from our ongoing transformation and cost savings programs. This was partially offset by unfavorable product mix across both segments, lower volumes in Products & Solutions and costs associated with COVID-19.
Operating profit of $311 million for the full year 2020 increased 21% compared to operating profit of $258 million for the prior year. Products & Solutions segment operating profit for the full year 2020 of $407 million represented a 24% increase from $327 million for the prior year. Within the Products & Solutions segment, operating profit was positively impacted by cost savings from transformation programs, sourcing productivity and reduced inventory reserve costs. These cost reductions more than offset the impact of lower revenue volumes, unfavorable sales mix and investments to support new product launches. ADI Global Distribution segment operating profit for the full year 2020 of $194 million, represented an 8% decline from $210 million for the prior year. ADI Global Distribution segment operating profit was negatively impacted by commercial investments, unfavorable sales mix and acquisition related costs. Corporate costs increased to $290 million from $279 million, up 4%, and were negatively impacted by expenses related to transformation projects and increased bonus payouts from improved performance. These impacts were partially offset by transformation program cost savings and reduced spin-off related costs.
For the full year 2020, the company reported net income of $37 million, or $0.29 per diluted common share. This compares to net income of $36 million, or $0.29 per diluted common share for the prior year.
Cash Flow and Liquidity
The company reported net cash provided by operating activities of $244 million for the full year 2020, an increase of $221 million from the prior year. This improvement was primarily due to higher operating profit and lower cash taxes paid. At Dec. 31, 2020, Resideo had cash and cash equivalents of $517 million and total outstanding debt of $1.2 billion.
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 $950 million 7-year term loan B maturing in 2028. The company also entered into a new 5-year, $500 million revolving credit facility. In addition, the company redeemed $140 million of its outstanding senior unsecured notes pursuant to the terms of the underlying indenture.
The company expects full year 2021 revenue to be in the range of $5.2 billion to $5.4 billion, gross profit margin in the range of 26% to 28% and operating profit in the range of $450 million to $500 million.
The company expects first quarter 2021 revenue to be in the range of $1.30 billion to $1.35 billion, gross profit margin in the range of 25% to 27% and operating profit in the range of $110 million to $120 million.
"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".
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.
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.
SOURCE Resideo Technologies, Inc.
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