rezi-20230930

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2023

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ______ to _____

Commission File Number 001-38635

Resideo Technologies, Inc.

(Exact name of registrant as specified in its charter)


Delaware						82-5318796
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)

16100 N. 71st Street, Suite 550 Scottsdale, Arizona						85254
(Address of principal executive offices)						(Zip Code)

(480) 573-5340
(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class:

Trading Symbol:

Name of each exchange on which registered:

Common Stock, par value $0.001 per share

REZI

New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

The number of shares outstanding of the registrant’s common stock, par value $0.001 per share, as of October 20, 2023 was 146,087,992 shares.

TABLE OF CONTENTS


Part I - Financial Information
Item 1.	Unaudited Consolidated Financial Statements	3
	Unaudited Consolidated Balance Sheets as of September 30 , 2023 and December 31, 2022	3
	Unaudited Consolidated Statements of Operations for the Three and Nine Months Ended September 30 , 2023 and October 1 , 2022	4
	Unaudited Consolidated Statements of Comprehensive Income for the Three and Nine Months Ended September 30 , 2023 and October 1 , 2022	5
	Unaudited Consolidated Statements of Cash Flows for the Nin e Months Ended September 30 , 2023 and October 1 , 2022	6
	Unaudited Consolidated Statements of Stockholders’ Equity for the Three and Nin e Months Ended September 30 , 2023 and Oc tober 1 , 2022	7
	Notes to Unaudited Consolidated Financial Statements	8
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	24
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	38
Item 4.	Controls and Procedures	39
Part II - Other Information
Item 1.	Legal Proceedings	39
Item 1A.	Risk Factors	39
Item 2.	Unregistered Sales of Equity Securities, Use of Proceeds, and Issuer Purchases of Equity Securities	39
Item 5.	Other Information	40
Item 6.	Exhibits	41
	Signatures	42

Part I. Financial Information

Item 1. Unaudited Consolidated Financial Statements.

Resideo Technologies, Inc.

Consolidated Balance Sheets

(Unaudited)


(in millions, except par value)	September 30, 2023		December 31, 2022
ASSETS
Current assets:
Cash and cash equivalents	$	368	$	326
Accounts receivable, net	988		1,002
Inventories, net	970		975
Other current assets	289		199

Total current assets	2,615		2,502

Property, plant and equipment, net	380		366
Goodwill	2,687		2,724
Intangible assets, net	456		475
Other assets	321		320

Total assets	$	6,459	$	6,387

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	863	$	894
Current portion of long-term debt	12		12
Accrued liabilities	592		640

Total current liabilities	1,467		1,546

Long-term debt	1,397		1,404
Obligations payable under Indemnification Agreements	599		580
Other liabilities	351		328

Total liabilities	3,814		3,858

COMMITMENTS AND CONTINGENCIES

Stockholders’ equity

Common stock, $0.001 par value: 700 shares authorized, 151 and 146 shares issued and outstanding at September 30, 2023, respectively, and 148 and 146 shares issued and outstanding at December 31, 2022, respectively	—		—
Additional paid-in capital	2,219		2,176
Retained earnings	728		600
Accumulated other comprehensive loss, net	(221)		(212)
Treasury stock at cost	(81)		(35)
Total stockholders’ equity	2,645		2,529
Total liabilities and stockholders’ equity	$	6,459	$	6,387

Refer to accompanying Notes to the Unaudited Consolidated Financial Statements.

Resideo Technologies, Inc.

Consolidated Statements of Operations

(Unaudited)


	Three Months Ended				Nine Months Ended
(in millions, except per share data)	September 30, 2023		October 1, 2022		September 30, 2023		October 1, 2022
Net revenue	$	1,554	$	1,618	$	4,705	$	4,810
Cost of goods sold	1,137		1,188		3,432		3,475
Gross profit	417		430		1,273		1,335
Operating expenses:
Research and development expenses	28		29		84		81
Selling, general and administrative expenses	233		236		719		716
Intangible asset amortization	9		10		28		25
Restructuring and impairment expenses	38		—		42		—
Total operating expenses	308		275		873		822
Income from operations	109		155		400		513
Other expenses, net	56		44		138		126
Interest expense, net	16		15		50		39
Income before taxes	37		96		212		348
Provision for income taxes	16		33		84		104


Net income	$	21	$	63	$	128	$	244





Earnings per share:
Basic	$	0.14	$	0.43	$	0.87	$	1.68




Diluted	$	0.14	$	0.42	$	0.86	$	1.64

Weighted average number of shares outstanding:
Basic	147		146		147		145
Diluted	148		149		149		149

Refer to accompanying Notes to the Unaudited Consolidated Financial Statements.

Resideo Technologies, Inc.

Consolidated Statements of Comprehensive Income (Loss)

(Unaudited)


	Three Months Ended				Nine Months Ended
(in millions)	September 30, 2023		October 1, 2022		September 30, 2023		October 1, 2022
Comprehensive income (loss):
Net income	$	21	$	63	$	128	$	244
Other comprehensive loss, net of tax:
Foreign exchange translation loss	(37)		(86)		(11)		(165)





Pension liability adjustments	2		—		6		—



Changes in fair value of effective cash flow hedges	(2)		14		(4)		38
Total other comprehensive loss, net of tax	(37)		(72)		(9)		(127)
Comprehensive income (loss)	$	(16)	$	(9)	$	119	$	117

Refer to accompanying Notes to the Unaudited Consolidated Financial Statements.

Resideo Technologies, Inc.

Consolidated Statements of Cash Flows

(Unaudited)


	Nine Months Ended
(in millions)	September 30, 2023		October 1, 2022
Cash Flows From Operating Activities:
Net income	$	128	$	244
Adjustments to reconcile net income to net cash in operating activities:

Depreciation and amortization	71		69
Restructuring and impairment expenses	42		—
Stock-based compensation expense	36		36

Other, net	2		8

Changes in assets and liabilities, net of acquired companies:
Accounts receivable, net	(9)		(142)
Inventories, net	(4)		(129)
Other current assets	(5)		(38)

Accounts payable	(14)		5
Accrued liabilities	(114)		(25)
Other, net	44		(15)


Net cash provided by operating activities	177		13
Cash Flows From Investing Activities:
Capital expenditures	(74)		(34)
Acquisitions, net of cash acquired	(16)		(660)
Other investing activities, net	—		(13)


Net cash used in investing activities	(90)		(707)
Cash Flows From Financing Activities:
Common stock repurchases	(28)		—
Proceeds from issuance of A&R Term B Facility	—		200
Repayments of long-term debt	(9)		(9)

Other financing activities, net	(10)		(9)



Net cash (used in) provided by financing activities	(47)		182
Effect of foreign exchange rate changes on cash, cash equivalents and restricted cash	1		(12)
Net increase (decrease) in cash, cash equivalents and restricted cash	41		(524)
Cash, cash equivalents and restricted cash at beginning of period	329		779
Cash, cash equivalents and restricted cash at end of period	$	370	$	255

Supplemental Cash Flow Information:
Interest paid	$	81	$	38
Taxes paid, net of refunds	$	104	$	129
Capital expenditures in accounts payable	$	19	$	18

Refer to accompanying Notes to the Unaudited Consolidated Financial Statements.

Resideo Technologies, Inc.

Consolidated Statements of Stockholders’ Equity

(Unaudited)


Fiscal Quarters	Common Stock							Accumulated Other Comprehensive Loss		Treasury Stock
(in millions, except shares in thousands)	Shares	Amount		Additional Paid-In Capital		Retained Earnings				Shares	Amount		Total Stockholders’ Equity
Balance at July 2, 2023	147,649	$	—	$	2,204	$	707	$	(184)	2,902	$	(50)	$	2,677
Net income	—	—		—		21		—		—	—		21
Other comprehensive loss, net of tax	—	—		—

SEC Form 10-Q filed by Resideo Technologies Inc.