Document And Entity Information
Document And Entity Information - shares | 9 Months Ended | |
Sep. 30, 2019 | Nov. 01, 2019 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2019 | |
Document Fiscal Year Focus | 2019 | |
Document Fiscal Period Focus | Q3 | |
Amendment Flag | false | |
Trading Symbol | REZI | |
Entity Registrant Name | Resideo Technologies, Inc. | |
Entity Central Index Key | 0001740332 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Common Stock, Shares Outstanding | 122,818,158 | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Shell Company | false | |
Title of 12(b) Security | Common Stock | |
Security Exchange Name | NYSE | |
Entity File Number | 001-38635 | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 82-5318796 | |
Entity Address, Address Line One | 901 E 6th Street | |
Entity Address, City or Town | Austin | |
Entity Address, State or Province | TX | |
Entity Address, Postal Zip Code | 78702 | |
City Area Code | 763 | |
Local Phone Number | 954-5204 | |
Document Quarterly Report | true | |
Document Transition Report | false |
CONSOLIDATED AND COMBINED INTER
CONSOLIDATED AND COMBINED INTERIM STATEMENT OF OPERATIONS (Unaudited) - USD ($) shares in Thousands, $ in Millions | 3 Months Ended | 9 Months Ended | ||||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |||
Income Statement [Abstract] | ||||||
Net revenue | $ 1,226 | $ 1,200 | [1] | $ 3,684 | $ 3,561 | [1] |
Cost of goods sold | 937 | 853 | 2,786 | 2,525 | ||
Gross profit | 289 | 347 | 898 | 1,036 | ||
Selling, general and administrative expenses | 230 | 219 | 712 | 648 | ||
Operating profit | 59 | 128 | 186 | 388 | ||
Other expense, net | 35 | 144 | 54 | 320 | ||
Interest expense | 16 | 2 | 51 | 2 | ||
Income (loss) before taxes | 8 | (18) | 81 | 66 | ||
Tax expense (benefit) | (329) | 36 | (323) | |||
Net income | $ 8 | $ 311 | $ 45 | $ 389 | ||
Weighted Average Number of Common Shares Outstanding (in thousands) | ||||||
Basic | 122,770 | 122,967 | 122,681 | 122,967 | ||
Diluted | 123,244 | 122,967 | 123,404 | 122,967 | ||
Earnings Per Share | ||||||
Basic | $ 0.07 | $ 2.53 | $ 0.37 | $ 3.16 | ||
Diluted | $ 0.06 | $ 2.53 | $ 0.36 | $ 3.16 | ||
[1] | The unaudited disaggregated revenue disclosure for the three and nine month periods ended September 30, 2018 contained misallocated revenue between the ADI Global Distribution geographies U.S. and Canada and India. Correcting this allocation increased U.S. and Canada revenue and reduced India revenue for the three and nine month periods ended September 30, 2018 by $30 million and $35 million, respectively. There is no other impact to the unaudited Consolidated and Combined Interim Financial Statements for the three and nine month periods ended September 30, 2018. |
CONSOLIDATED AND COMBINED INT_2
CONSOLIDATED AND COMBINED INTERIM STATEMENT OF COMPREHENSIVE (LOSS) INCOME (Unaudited) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Statement Of Income And Comprehensive Income [Abstract] | ||||
Net income | $ 8 | $ 311 | $ 45 | $ 389 |
Other comprehensive (loss), net of tax | ||||
Foreign exchange translation adjustment | (35) | (5) | (33) | (23) |
Changes in fair value of effective cash flow hedges | (1) | |||
Total other comprehensive (loss), net of tax | (35) | (5) | (33) | (24) |
Comprehensive (loss) income | $ (27) | $ 306 | $ 12 | $ 365 |
CONSOLIDATED INTERIM BALANCE SH
CONSOLIDATED INTERIM BALANCE SHEET (Unaudited) - USD ($) $ in Millions | Sep. 30, 2019 | Dec. 31, 2018 |
Current assets: | ||
Cash and cash equivalents | $ 132 | $ 265 |
Accounts receivable | 845 | 821 |
Inventories | 729 | 628 |
Other current assets | 134 | 95 |
Total current assets | 1,840 | 1,809 |
Property, plant and equipment – net | 306 | 300 |
Goodwill | 2,632 | 2,634 |
Other intangible assets – net | 125 | 133 |
Other assets | 230 | 96 |
Total assets | 5,133 | 4,972 |
Current liabilities: | ||
Accounts payable | 932 | 964 |
Short-term portion of debt | 88 | 22 |
Accrued liabilities | 531 | 503 |
Total current liabilities | 1,551 | 1,489 |
Long-term debt | 1,165 | 1,179 |
Obligations payable to Honeywell | 580 | 629 |
Other liabilities | 264 | 142 |
COMMITMENTS AND CONTINGENCIES (Note 15) | ||
EQUITY | ||
Common stock, $0.001 par value, 700,000 shares authorized, 123,382 and 122,967 shares issued and 122,786 and 122,499 shares outstanding as of September 30, 2019 and December 31, 2018, respectively | 0 | 0 |
Additional paid-in capital | 1,751 | 1,720 |
Treasury stock, at cost | (3) | |
Retained earnings | 47 | 2 |
Accumulated other comprehensive loss | (222) | (189) |
Total equity | 1,573 | 1,533 |
Total liabilities and equity | $ 5,133 | $ 4,972 |
CONSOLIDATED INTERIM BALANCE _2
CONSOLIDATED INTERIM BALANCE SHEET (Unaudited) (Parenthetical) - $ / shares | Sep. 30, 2019 | Dec. 31, 2018 |
Statement Of Financial Position [Abstract] | ||
Common stock, par value | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 700,000,000 | 700,000,000 |
Common stock, shares issued | 123,382,000 | 122,967,000 |
Common stock, shares outstanding | 122,786,000 | 122,499,000 |
CONSOLIDATED and COMBINED INT_3
CONSOLIDATED and COMBINED INTERIM STATEMENT OF CASH FLOWS (Unaudited) - USD ($) $ in Millions | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | ||
Cash flows (used for) provided by operating activities: | |||
Net income | $ 45 | $ 389 | |
Adjustments to reconcile net income to net cash (used for) provided by operating activities: | |||
Depreciation and amortization | 55 | 49 | |
Repositioning charges, net of payments | 12 | (4) | |
Stock compensation expense | [1] | 22 | 15 |
Deferred income taxes | (3) | (275) | |
Other noncash expense | 13 | 17 | |
Changes in assets and liabilities: | |||
Accounts, notes and other receivables | (27) | (11) | |
Inventories | (109) | (142) | |
Other current assets | (13) | (4) | |
Other assets | (6) | (6) | |
Accounts payable | (23) | 151 | |
Accrued liabilities | (6) | (15) | |
Obligations payable to Honeywell | (49) | ||
Other liabilities | 19 | 211 | |
Net cash (used for) provided by operating activities | (70) | 375 | |
Cash flows used for investing activities: | |||
Expenditures for property, plant, equipment and software | (66) | (63) | |
Cash paid for acquisitions, net of cash acquired | (17) | ||
Proceeds received related to amounts due from related parties | 7 | ||
Net cash used for investing activities | (83) | (56) | |
Cash flows provided by (used for) financing activities: | |||
Net proceeds from revolving credit facility | 60 | ||
Repayment of long-term debt | (11) | ||
Non-operating obligations paid to Honeywell, net | (24) | ||
Payments related to amounts due to related parties, net | (1) | ||
Tax payments related to stock vestings | (3) | ||
Net decrease in invested equity | (300) | ||
Cashflow provided by cash pooling | 115 | ||
Net cash provided by (used for) financing activities | 22 | (186) | |
Effect of foreign exchange rate changes on cash and cash equivalents | (2) | (5) | |
Net (decrease) increase in cash and cash equivalents | (133) | 128 | |
Cash and cash equivalents at beginning of period | 265 | 56 | |
Cash and cash equivalents at end of period | $ 132 | $ 184 | |
[1] | Stock compensation expense adjustment includes only non-cash expenses. |
CONSOLIDATED AND COMBINED INT_4
CONSOLIDATED AND COMBINED INTERIM STATEMENT OF EQUITY (Unaudited) - USD ($) $ in Millions | Total | Common Stock | Treasury Shares | Additional Paid-In Capital | Retained Earnings | Invested Equity | Accumulated Other Comprehensive Loss |
Beginning Balance at Dec. 31, 2017 | $ 2,603 | $ 2,703 | $ (100) | ||||
Net income (loss) | 45 | 45 | |||||
Other comprehensive income (loss), net of tax | 30 | 30 | |||||
Change in invested equity | (89) | (89) | |||||
Ending Balance at Mar. 31, 2018 | 2,589 | 2,659 | (70) | ||||
Beginning Balance at Dec. 31, 2017 | 2,603 | 2,703 | (100) | ||||
Net income (loss) | 389 | ||||||
Ending Balance at Sep. 30, 2018 | 2,685 | 2,809 | (124) | ||||
Beginning Balance at Mar. 31, 2018 | 2,589 | 2,659 | (70) | ||||
Net income (loss) | 33 | 33 | |||||
Other comprehensive income (loss), net of tax | (49) | (49) | |||||
Change in invested equity | (93) | (93) | |||||
Ending Balance at Jun. 30, 2018 | 2,480 | 2,599 | (119) | ||||
Net income (loss) | 311 | 311 | |||||
Other comprehensive income (loss), net of tax | (5) | (5) | |||||
Change in invested equity | (101) | (101) | |||||
Ending Balance at Sep. 30, 2018 | 2,685 | $ 2,809 | (124) | ||||
Beginning Balance at Dec. 31, 2018 | 1,533 | $ 1,720 | $ 2 | (189) | |||
Beginning Balance, Shares at Dec. 31, 2018 | 122,499,000 | 468,000 | |||||
Net income (loss) | 48 | 48 | |||||
Other comprehensive income (loss), net of tax | 6 | 6 | |||||
Shares issued for employee stock plans, Shares | 271,000 | ||||||
Stock-based compensation | 7 | 7 | |||||
Shares withheld for employees' taxes | (2) | $ (2) | |||||
Shares withheld for employees' taxes, Shares | (84,000) | 84,000 | |||||
Ending Balance at Mar. 31, 2019 | 1,592 | $ (2) | 1,727 | 50 | (183) | ||
Ending Balance, Shares at Mar. 31, 2019 | 122,686,000 | 552,000 | |||||
Beginning Balance at Dec. 31, 2018 | 1,533 | 1,720 | 2 | (189) | |||
Beginning Balance, Shares at Dec. 31, 2018 | 122,499,000 | 468,000 | |||||
Net income (loss) | 45 | ||||||
Ending Balance at Sep. 30, 2019 | 1,573 | $ (3) | 1,751 | 47 | (222) | ||
Ending Balance, Shares at Sep. 30, 2019 | 122,786,000 | 596,000 | |||||
Beginning Balance at Mar. 31, 2019 | 1,592 | $ (2) | 1,727 | 50 | (183) | ||
Beginning Balance, Shares at Mar. 31, 2019 | 122,686,000 | 552,000 | |||||
Net income (loss) | (11) | (11) | |||||
Other comprehensive income (loss), net of tax | (4) | (4) | |||||
Shares issued for employee stock plans, Shares | 30,000 | ||||||
Stock-based compensation | 7 | 7 | |||||
Shares withheld for employees' taxes, Shares | (6,000) | 6,000 | |||||
Adjustments due to the Spin-Off | 9 | 9 | |||||
Ending Balance at Jun. 30, 2019 | 1,593 | $ (2) | 1,743 | 39 | (187) | ||
Ending Balance, Shares at Jun. 30, 2019 | 122,710,000 | 558,000 | |||||
Net income (loss) | 8 | 8 | |||||
Other comprehensive income (loss), net of tax | (35) | (35) | |||||
Shares issued for employee stock plans, Shares | 114,000 | ||||||
Stock-based compensation | 8 | 8 | |||||
Shares withheld for employees' taxes | (1) | $ (1) | |||||
Shares withheld for employees' taxes, Shares | (38,000) | 38,000 | |||||
Ending Balance at Sep. 30, 2019 | $ 1,573 | $ (3) | $ 1,751 | $ 47 | $ (222) | ||
Ending Balance, Shares at Sep. 30, 2019 | 122,786,000 | 596,000 |
Organization, Consolidation and
Organization, Consolidation and Presentation of Financial Statements | 9 Months Ended |
Sep. 30, 2019 | |
Organization Consolidation And Presentation Of Financial Statements [Abstract] | |
Organization, Operations and Basis of Presentation | Business Description Resideo Technologies, Inc. (“Resideo” or “the Company”), is a global provider of products, software, solutions and technologies that help homeowners stay connected and in control of their comfort, security and energy use. The Company is a leader in the home heating, ventilation and air conditioning controls and security markets, and a leading global distributor of low-voltage electronic and security products. Separation from Honeywell The Company was incorporated in Delaware on April 24, 2018. The Company separated from Honeywell International Inc. (“Honeywell”) on October 29, 2018, becoming an independent publicly traded company as a result of a pro rata distribution of the Company’s common stock to shareholders of Honeywell (the “Spin-Off”). On October 3, 2018, Exhibit 99.1 to Amendment No. 2 to the Company’s Registration Statement on Form 10 as filed with the Securities and Exchange Commission (“SEC”) on October 2, 2018 was declared effective by the SEC. On October 29, 2018, Honeywell’s shareholders of record as of October 16, 2018 (“Record Date”) received one share of the Company’s common stock, par value $0.001 per share, for every six shares of Honeywell’s common stock, par value $1.00 per share, held as of the Record Date, and cash for any fractional shares of the Company’s common stock. The Company began trading “regular way” under the ticker symbol “REZI” on the New York Stock Exchange on October 29, 2018. In connection with the separation, Resideo and Honeywell entered into a Honeywell Reimbursement Agreement (as defined in Note 15. Commitments and Contingencies), a Separation and Distribution Agreement, an Employee Matters Agreement, a Tax Matters Agreement, a Transition Services Agreement, a Trademark License Agreement and a Patent Cross-License Agreement. The agreements govern the relationship between Resideo and Honeywell following the separation and provide for the allocation of various assets, liabilities, rights and obligations. These agreements also include arrangements for transition services to be provided by Honeywell to Resideo and by Resideo to Honeywell. Basis of Presentation Prior to the Spin-Off on October 29, 2018, the Company’s historical financial statements were prepared on a stand-alone combined basis and were derived from the consolidated financial statements and accounting records of Honeywell. Accordingly, for periods prior to October 29, 2018, these financial statements are presented on a combined basis and for the periods subsequent to October 29, 2018 are presented on a consolidated basis (collectively, the historical financial statements for all periods presented are referred to as “Consolidated and Combined Interim Financial Statements”). The Consolidated and Combined Interim Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). The Consolidated and Combined Interim Financial Statements are unaudited; however, in the opinion of management, they contain all the adjustments (consisting of those of a normal recurring nature) considered necessary to state fairly the financial position, results of operations and cash flows for the periods presented in conformity with U.S. GAAP applicable to interim periods. All intracompany transactions have been eliminated for all periods presented. As described in “Note 5. Related Party Transactions with Honeywell” of Notes to unaudited Consolidated and Combined Interim Financial Statements of this Form 10-Q Prior to the Spin-Off, transactions between the Company and Honeywell were reflected in the Combined Balance Sheet as Due from related parties, current or Due to related parties, current. In the unaudited Combined Interim Statement of Cash Flows, the cash flows related to related party notes receivables presented in the Combined Balance Sheet in Due from related parties, current are reflected as investing activities since these balances represent amounts loaned to Honeywell. The cash flows related to related party notes payables presented in the Combined Balance Sheet in Due to related parties, current are reflected as financing activities since these balances represent amounts financed by Honeywell. While the Company was owned by Honeywell, a centralized approach to cash management and financing was used. Prior to the consummation of the Spin-Off, the majority of the Company’s cash was transferred to Honeywell daily and Honeywell funded the Company’s operating and investing activities as needed. Cash transfers to and from Honeywell’s cash management accounts are reflected in the Combined Balance Sheet as Due to and Due from related parties, current and in the unaudited Combined Interim Statement of Cash Flows as net financing activities. The unaudited Combined Interim Financial Statements prior to the Spin-Off include certain assets and liabilities that have historically been held at the Honeywell corporate level but were specifically identifiable or otherwise attributable to the Company. The cash and cash equivalents held by Honeywell at the corporate level were not specifically identifiable to the Company and therefore were not attributed for any of the periods presented. Honeywell third-party debt and the related interest expense were not allocated for any of the periods presented as Honeywell’s borrowings were not directly attributable to the Company. In periods subsequent to the Spin-Off, we may have made and may continue to make adjustments to balances transferred at the Spin-Off, including adjustments to the classification of assets or liabilities transferred. Any such adjustments are recorded directly to equity in Adjustments due to the Spin-Off and are considered immaterial. Prior to the Spin-Off, Honeywell provided certain services, such as legal, accounting, information technology, human resources and other infrastructure support, on behalf of the Company. The cost of these services has been allocated to the Company on the basis of the proportion of net revenue. The Company and Honeywell consider these allocations to be a reasonable reflection of the benefits received by the Company. However, the financial information presented in these unaudited Consolidated and Combined Interim Financial Statements may not reflect the consolidated and combined financial position, operating results and cash flows of the Company had the Company been a separate stand-alone entity during the periods presented. Actual costs that would have been incurred if the Company had been a stand-alone company would depend on multiple factors, including organizational structure and strategic decisions made in various areas, including information technology and infrastructure. Both Resideo and Honeywell consider the basis on which the expenses have been allocated to be a reasonable reflection of the utilization of services provided to or the benefits received by the Company during the periods presented. After the Spin-Off, a number of the above services have continued under a Transition Services Agreement with Honeywell, which the Company expenses as incurred based on the contractual pricing terms. The Company reports its quarterly financial information using a calendar convention; the first, second and third quarters are consistently reported as ending on March 31, June 30 and September 30. It is the Company’s practice to establish actual quarterly closing dates using a predetermined fiscal calendar, which requires its businesses to close their books on the last Saturday of the month in order to minimize the potentially disruptive effects of quarterly closing on business processes. The effects of this practice are generally not significant to reported results for any quarter and only exist within a reporting year. In the event that differences in actual closing dates are material to year-over-year comparisons of quarterly or year-to-date results, the Company will provide appropriate disclosures. Actual closing dates for the three and nine months ended September 30, 2019 and 2018 were September 28, 2019 and September 29, 2018, respectively. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2019 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | Note 2. Summary of Significant Accounting Policies The Company’s accounting policies are set forth in “Note 2. Summary of Significant Accounting Policies” of the Company’s Notes to Consolidated and Combined Financial Statements included in the 2018 Annual Report on Form 10-K. Included herein are certain updates to those policies. Leases —Effective January 1, 2019, arrangements containing leases are evaluated as an operating or finance lease at lease inception. For operating leases, the Company recognizes an operating right-of-use asset and operating lease liability at lease commencement based on the present value of lease payments over the lease term. Since an implicit rate of return is not readily determinable for the Company's leases, an incremental borrowing rate is used in determining the present value of lease payments, and is calculated based on information available at the lease commencement date. The incremental borrowing rate is determined using a portfolio approach based on the rate of interest the Company would have to pay to borrow funds on a collateralized basis over a similar term. The Company references a market yield curve consistent with the Company's credit rating which is risk-adjusted to approximate a collateralized rate in the currency of the lease. These rates are updated on a quarterly basis for measurement of new lease obligations. Recent Accounting Pronouncements —The Company considers the applicability and impact of all recent accounting standards updates (“ASUs”) issued by the Financial Accounting Standards Board (“FASB”). ASUs not listed below were assessed and determined to be either not applicable or are expected to have an immaterial impact on the consolidated and combined financial position or results of operations. The Company adopted ASU No. 2016-02, Leases (Topic 842), effective January 1, 2019, and applied the changes prospectively, recognizing a cumulative-effect adjustment to the beginning balance of retained earnings as of the adoption date. As permitted by the new guidance, the Company elected the package of practical expedients, which among other things, allowed historical lease classification to be carried forward. Upon adoption of ASU No. 2016-02, the Company recognized an aggregate lease liability of $115 million, calculated based on the present value of the remaining minimum lease payments for qualifying leases as of January 1, 2019, with a corresponding right-of-use asset of $112 million. The cumulative-effect adjustment recognized to opening retained earnings was not material. The adoption of the new guidance did not impact the Company’s unaudited consolidated interim statement of operations or cash flows. In February 2018, the FASB issued guidance that allows for an entity to elect to reclassify the income tax effects on items within accumulated other comprehensive income resulting from the U.S. Tax Cuts and Jobs Act (“U.S. Tax Reform”) to retained earnings. The guidance is effective for fiscal years beginning after December 15, 2018 with early adoption permitted, including interim periods within those years. The Company adopted the standard on January 1, 2019 and has not reclassified the income tax effects of U.S. Tax Reform from accumulated other comprehensive income to retained earnings. The Company has adopted the aggregate portfolio accounting policy for recognizing the disproportionate income tax effects in accumulated other comprehensive income. On June 16, 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326), which provides guidance designed to provide financial statement users with more information about the expected credit losses on financial instruments and other commitments to extend credit held by a reporting entity at each reporting date. From November 2018 to May 2019, amendments to Topic 326 were issued to clarify numerous accounting topics. When determining such expected credit losses, the guidance requires companies to apply a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. The amendment is effective on a modified retrospective basis for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years. Early adoption is permitted for fiscal years and interim periods beginning after December 15, 2018. The Company does not expect adoption of this pronouncement to have a material financial statement impact. In August 2018, the FASB issued guidance that amends the current disclosure requirements regarding defined benefit pensions and other post retirement plans and allows for the removal of certain disclosures, while adding certain new disclosure requirements. This standard is effective for fiscal years beginning after December 15, 2020 and allows for early adoption. The Company does not expect this new standard to have a significant impact to its disclosures. |
Earnings Per Share
Earnings Per Share | 9 Months Ended |
Sep. 30, 2019 | |
Earnings Per Share [Abstract] | |
Earnings Per Share | Note 3. Earnings Per Share On October 29, 2018, the date of consummation of the Spin-Off, 122,498,794 The details of the earnings per share calculations for the three and nine months ended September 30, 2019 and 2018 are as follows: Three Months Ended Nine Months Ended September 30, September 30, Basic: 2019 2018 2019 2018 Net income $ 8 $ 311 $ 45 $ 389 Weighted average common shares outstanding (in thousands) 122,770 122,967 122,681 122,967 Earnings per share - Basic $ 0.07 $ 2.53 $ 0.37 $ 3.16 Three Months Ended Nine Months Ended September 30, September 30, Diluted: 2019 2018 2019 2018 Net income $ 8 $ 311 $ 45 $ 389 Weighted average common shares outstanding - Basic (in thousands) 122,770 122,967 122,681 122,967 Dilutive effect of common stock equivalents 474 - 723 - Weighted average common shares outstanding - Diluted (in thousands) 123,244 122,967 123,404 122,967 Earnings per share - Diluted $ 0.06 $ 2.53 $ 0.36 $ 3.16 Diluted earnings per share is computed based upon the weighted average number of common shares outstanding for the period plus the dilutive effect of common stock equivalents using the treasury stock method and the average market price of our common stock for the three and nine months ended September 30, 2019. In periods where the Company has a net loss, no dilutive common shares are included in the calculation for diluted shares as they are considered anti-dilutive. |
Acquisitions
Acquisitions | 9 Months Ended |
Sep. 30, 2019 | |
Business Combinations [Abstract] | |
Acquisitions | Note 4. Acquisitions On March 28, 2019, the Company acquired all of the capital stock of Buoy Labs, for $6 million, which has been integrated into our Products & Solutions segment. Buoy Labs provides innovative Wi-Fi enabled solutions that track the amount of water used in a home, integrating smart software and hardware that can help consumers identify potential leaks and allow consumers to act to prevent them through its subscription-based app services. In connection with the acquisition, the Company recognized preliminary goodwill and intangible assets of $6 million. The acquisition agreement includes deferred payments for certain individuals that are contingent upon employment as well as financial performance. The Company determined that these deferred payments are accounted for as compensation expense over the requisite service period. The Company is still assessing the final allocation of the purchase price to the assets and liabilities of the business. On May 21, 2019, the Company acquired certain assets relating to innovative energy efficiency from Whisker Labs, for $5 million, which has been integrated into our Products & Solutions segment. The acquired technology creates a thermodynamic model of a home to accurately predict home heating and air conditioning run time and energy use to enable a homeowner to use less energy while maintaining comfort. In connection with the acquisition, the Company recognized preliminary goodwill and intangible assets of $5 million. The Company is still assessing the final allocation of the purchase price to the assets and liabilities of the business. On June 27, 2019, the Company acquired all of the membership interests of LifeWhere for $6 million, which has been integrated into our Products & Solutions segment. LifeWhere 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. In connection with the acquisition, the Company recognized preliminary goodwill and intangible assets of $6 million. The Company is still assessing the final allocation of the purchase price to the assets and liabilities of the business. These acquisitions have an immaterial financial statement impact on both an individual basis and when considered in the aggregate. |
Related Party Transactions with
Related Party Transactions with Honeywell | 9 Months Ended |
Sep. 30, 2019 | |
Related Party Transactions [Abstract] | |
Related Party Transactions with Honeywell | Note 5. Related Party Transactions with Honeywell Prior to the Spin-Off, the unaudited Combined Interim Financial Statements were derived from the unaudited Consolidated Interim Financial Statements and accounting records of Honeywell. Prior to the Spin-Off, Company Company Company During the three and nine months ended September 30, 2018 , the Company the Company All significant intercompany transactions between the Company unaudited were $5 million and $18 million, respectively. Purchases from Honeywell during the three and nine months ended September 30, 2018 were $32 million and $149 million, respectively. While the Company was owned by Honeywell, a centralized approach to cash management and financing of operations was used. Prior to consummation of the Spin-Off, the Company’s cash was transferred to Honeywell daily and Honeywell funded the Company’s operating and investing activities as needed. Subsequent to the Spin-Off on October 29, 2018, transactions with Honeywell were not considered related party transactions. Accordingly, no related party transactions with Honeywell were recorded for the three and nine months ended September 30, 2019. |
Repositioning and Other Charges
Repositioning and Other Charges | 9 Months Ended |
Sep. 30, 2019 | |
Restructuring And Related Activities [Abstract] | |
Repositioning and Other Charges | Note 6. Repositioning and Other Charges During the second quarter of 2019, management began a repositioning plan to reduce operating costs and better align the Company’s workforce with the needs of the business going forward. Repositioning and related expenses were $9 million and $34 million for the three and nine months ended September 30, 2019, respectively, and primarily related to severance. A summary of repositioning charges follows: Three Months Ended Nine Months Ended September 30, September 30, 2019 2018 2019 2018 Severance $ 9 $ - $ 35 $ 4 Asset impairments - - - 1 Reserve adjustments - - (1 ) - Total net repositioning charges $ 9 $ - $ 34 $ 5 The following table summarizes the pretax distribution of total net repositioning charges by unaudited Consolidated and Combined Statement of Operations classification: Three Months Ended Nine Months Ended September 30, September 30, 2019 2018 2019 2018 Cost of goods sold $ 5 $ - $ 18 $ 4 Selling, general and administrative expenses 4 - 16 1 $ 9 $ - $ 34 $ 5 The following table summarizes the pretax impact of total net repositioning charges by segment: Three Months Ended Nine Months Ended September 30, September 30, 2019 2018 2019 2018 Products & Solutions $ 9 $ - $ 28 $ 5 ADI Global Distribution - - 6 - $ 9 $ - $ 34 $ 5 The following table summarizes the status of total repositioning reserves related to severance cost included in Accrued liabilities in the unaudited Consolidated Balance Sheet: Nine Months Ended September 30, 2019 Beginning of period $ 13 Charges 35 Usage – cash (22 ) Adjustments (1 ) End of period $ 25 |
Revenue Recognition
Revenue Recognition | 9 Months Ended |
Sep. 30, 2019 | |
Revenue From Contract With Customer [Abstract] | |
Revenue Recognition | Note 7. Revenue Recognition Disaggregated Revenue Revenues by channel are as follows: Three Months Ended Nine Months Ended September 30, September 30, 2019 2018 (3) 2019 2018 (3) U.S. and Canada $ 590 $ 555 $ 1,705 $ 1,614 EMEA (1) 109 107 336 338 India 15 12 43 42 ADI Global Distribution 714 674 2,084 1,994 Comfort 256 271 799 787 Security 128 119 397 358 RTS 128 136 404 422 Products & Solutions (2) 512 526 1,600 1,567 Net revenue $ 1,226 $ 1,200 $ 3,684 $ 3,561 (1) EMEA represents Europe, the Middle East and Africa. (2) Products & Solutions sales channel naming convention changed from what was disclosed in our quarterly report for the quarter ended September 30, 2018 (3) The unaudited disaggregated revenue disclosure for the three and nine month periods ended September 30, 2018 contained misallocated revenue between the ADI Global Distribution geographies U.S. and Canada and India. Correcting this allocation increased U.S. and Canada revenue and reduced India revenue for the three and nine month periods ended September 30, 2018 by $30 million and $35 million, respectively. There is no other impact to the unaudited Consolidated and Combined Interim Financial Statements for the three and nine month periods ended September 30, 2018. The Company recognizes the majority of its revenue from performance obligations outlined in contracts with its customers that are satisfied at a point in time. Less than 2% of the Company’s revenue is satisfied over time. As of September 30, 2019, contract assets and liabilities are not material. |
Income Taxes
Income Taxes | 9 Months Ended |
Sep. 30, 2019 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Note 8. Income Taxes The Company recorded a tax benefit of $329 million for the three months ended September 30, 2018 as compared to nil for the three months ended September 30, 2019. The decrease in the tax benefit is primarily the result of tax benefits generated in 2018 related to the internal restructuring of Resideo’s business in advance of its anticipated Spin-Off, currency impacts on withholding taxes on undistributed foreign earnings, and adjustments to the provisional tax amount related to U.S. Tax Reform. The effective tax rate for the three months ended September 30, 2019 was lower than the U.S. federal statutory rate of 21% primarily due to a decrease in the forecast of full-year non-deductible expenses and a decrease in the forecast of full-year U.S. taxation of foreign earnings. The effective tax rate for the nine months ended September 30, 2019 was higher than the U.S. federal statutory rate of 21% primarily attributable to non-deductible expenses and U.S. taxation of foreign earnings. The effective tax rate for the three months ended September 30, 2018 was higher than the U.S. federal statutory rate of 21% primarily due to tax benefits related to the internal restructuring of Resideo’s business in advance of its anticipated Spin-Off, currency impacts on withholding taxes on undistributed foreign earnings, and adjustments to the provisional tax amount related to U.S. Tax Reform. The combined effect of the tax benefits recorded in the quarter ended September 30, 2018 resulted in a tax benefit (negative tax expense). As a result of the tax benefits and in conjunction with a net loss in the quarter ended September 30, 2018, the effective tax rate for the quarter is a positive percentage and significantly more than the US statutory rate. The effective tax rate for the nine months ended September 30, 2018 was lower than the U.S. federal statutory rate of 21% primarily from tax benefits related to the internal restructuring of Resideo’s business in advance of its anticipated Spin-Off, currency impacts on withholding taxes on undistributed foreign earnings and adjustments to the provisional tax amount related to U.S. Tax Reform. |
Inventories
Inventories | 9 Months Ended |
Sep. 30, 2019 | |
Inventory Disclosure [Abstract] | |
Inventories | Note 9. Inventories September 30, December 31, 2019 2018 Raw materials $ 143 $ 167 Work in process 19 34 Finished products 567 427 $ 729 $ 628 |
Accrued Liabilities
Accrued Liabilities | 9 Months Ended |
Sep. 30, 2019 | |
Payables And Accruals [Abstract] | |
Accrued Liabilities | Note 10. Accrued Liabilities September 30, December 31, 2019 2018 Obligations payable to Honeywell $ 140 $ 140 Taxes payable 41 76 Compensation, benefit and other employee related 73 73 Other 277 214 $ 531 $ 503 Refer to “Note 15. Commitments and Contingencies” of this Form 10-Q for further details on Obligations payable to Honeywell. |
Long-term Debt and Credit Agree
Long-term Debt and Credit Agreement | 9 Months Ended |
Sep. 30, 2019 | |
Debt Disclosure [Abstract] | |
Long-term Debt and Credit Agreement | Note 11. Long-term Debt and Credit Agreement The Company’s debt at September 30, 2019 and December 31, 2018 consisted of the following: September 30, December 31, 2019 2018 6.125% notes due 2026 $ 400 $ 400 Five-year variable rate term loan A due 2023 341 350 Seven-year variable rate term loan B due 2025 473 475 Revolving Credit Facility 60 - Unamortized debt issuance costs (21 ) (24 ) Total outstanding indebtedness 1,253 1,201 Less: amounts due within one year 88 22 Total long-term debt due after one year $ 1,165 $ 1,179 In October of 2018, the Company issued $400 million in principal amount of its 6.125% senior unsecured notes (the “Senior Notes”), entered into term loan facilities in the form of a seven-year LIBOR plus 2.00% senior secured first-lien term B loan facility in an aggregate principal amount of $475 million and a five-year LIBOR plus 2.00% senior secured first-lien term A loan facility in an aggregate principal amount of $350 million (the “Term Loans”) and established a five-year senior secured first-lien revolving credit facility in an aggregate principal amount of $350 million (the "Revolving Credit Facility") As of September 30, 2019, there were $60 million of borrowings and no of letters of credit issued under the $350 million Revolving Credit Facility. The Company assessed the amount recorded under the Term Loans, the Senior Notes, and the Revolving Credit Facility and determined the Term Loans and the Revolving Credit Facility approximated fair value, and the Senior Notes’ fair value is approximately $422 million. The fair values of the debt are based on the quoted inactive prices and are therefore classified as Level 2 within the valuation hierarchy. At September 30, 2019, the interest rate for the Term Loans was 4.11% and the weighted average interest rate for the Revolving Credit Facility was 4.09%. The interest expense Revolving Credit Facility, Term Loans and during the three and nine months ended September 30, 2019 was $16 million and $51 million, respectively . For more information, please refer to “Note 15. Long-term Debt” in our 2018 Annual Report on Form 10-K. |
Leases
Leases | 9 Months Ended |
Sep. 30, 2019 | |
Leases [Abstract] | |
Leases | Note 12. Leases As discussed in Note 2, the Company adopted ASU No. 2016-02, Leases (Topic 842), effective January 1, 2019. The Company is party to operating leases for the majority of its manufacturing sites, offices, engineering and lab sites, stocking locations, warehouses, automobiles, and certain equipment. The Company’s operating lease costs for the three and nine months ended September 30, 2019 consisted of the following: Three Months Ended Nine Months Ended September 30, September 30, 2019 2019 Operating Lease Costs Selling, general & administrative $ 10 $ 27 Cost of goods sold 4 12 Total operating lease costs $ 14 $ 39 Total operating lease costs include variable lease costs of $3 million and $8 million for the three and nine months ended September 30, 2019 The Company recognized the following related to its operating leases: Financial Statement Line Item At September 30, 2019 Operating right-of-use assets Other assets $ 130 Operating lease liabilities - current Accrued liabilities $ 29 Operating lease liabilities - noncurrent Other liabilities $ 106 Maturities of the Company’s operating lease liabilities were as follows: At September 30, 2019 2019 $ 9 2020 35 2021 32 2022 27 2023 20 Thereafter 36 Total lease payments 159 Less: imputed interest 24 Present value of operating lease liabilities $ 135 Weighted-average remaining lease term (years) 5.64 Weighted-average incremental borrowing rate 6.00 % Future minimum lease payments under operating leases having initial or remaining non-cancellable lease terms in excess of one year as of December 31, 2018 were as follows: At December 31, 2018 2019 $ 39 2020 33 2021 28 2022 22 2023 15 Thereafter 17 $ 154 Supplemental cash flow information related to the Company’s operating leases was as follows: Nine Months Ended September 30, 2019 Operating cash outflows $ 28 Operating right-of-use assets obtained in exchange for operating lease liabilities $ 47 As of September 30, 2019, the Company has additional operating leases that have not yet commenced. Obligations under these leases are not material. Additionally, as a lessor, the Company leases all or a portion of certain owned properties. Rental income for the three and nine months ended September 30, 2019 was not material. |
Accumulated Other Comprehensive
Accumulated Other Comprehensive Loss | 9 Months Ended |
Sep. 30, 2019 | |
Accumulated Other Comprehensive Income Loss Net Of Tax [Abstract] | |
Accumulated Other Comprehensive Loss | Note 13. Accumulated Other Comprehensive Loss The changes in Accumulated other comprehensive loss are provided in the tables below. Changes in Accumulated Other Comprehensive Loss by Component Foreign Exchange Translation Adjustment Pension Adjustments Changes in Fair Value of Effective Cash Flow Hedges Accumulated Other Comprehensive Loss Balance at December 31, 2017 $ (100 ) $ - $ - $ (100 ) Other comprehensive income before reclassifications 31 - - 31 Amounts reclassified from accumulated other comprehensive income - - (1 ) (1 ) Net current period other comprehensive income 31 - (1 ) 30 Balance at March 31, 2018 $ (69 ) $ - $ (1 ) $ (70 ) Other comprehensive loss before reclassifications (49 ) - - (49 ) Balance at June 30, 2018 $ (118 ) $ - $ (1 ) $ (119 ) Other comprehensive loss before reclassifications (5 ) - (2 ) (7 ) Amounts reclassified from accumulated other comprehensive income - - $ 2 $ 2 Balance at September 30, 2018 $ (123 ) $ - $ (1 ) $ (124 ) Balance at December 31, 2018 $ (177 ) $ (12 ) $ - $ (189 ) Other comprehensive income before reclassifications 6 - - 6 Balance at March 31, 2019 $ (171 ) $ (12 ) $ - $ (183 ) Other comprehensive loss before reclassifications (4 ) - - (4 ) Balance at June 30, 2019 $ (175 ) $ (12 ) $ - $ (187 ) Other comprehensive loss before reclassifications (35 ) - - (35 ) Balance at September 30, 2019 $ (210 ) $ (12 ) $ - $ (222 ) |
Stock-Based Compensation Plans
Stock-Based Compensation Plans | 9 Months Ended |
Sep. 30, 2019 | |
Compensation Related Costs [Abstract] | |
Stock-Based Compensation Plans | Note 14. Stock-Based Compensation Plans Restricted Stock Units (“RSUs”) During the nine months ended September 30, 2019, as part of the Company’s annual long-term compensation under the 2018 Stock Incentive Plan of Resideo Technologies, Inc. and its Affiliates (the “Stock Incentive Plan”), it granted 319,771 performance-based RSUs and 1,255,440 time-based RSUs to eligible employees. The weighted average grant date fair value per share for these shares was $22.06. Stock Options During the nine months ended September 30, 2019, as part of the Company’s annual long-term compensation under the Stock Incentive Plan, 1,155,566 stock options were granted to eligible employees at a weighted average exercise price per share of $24.37 and weighted average grant date fair value per share of $6.71. |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2019 | |
Commitments And Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Note 15. Commitments and Contingencies Environmental Matters The Company is subject to various federal, state, local and foreign government requirements relating to the protection of the environment and accrues costs related to environmental matters when it is probable that it has incurred a liability related to a contaminated site and the amount can be reasonably estimated. Environmental-related expenses are presented within Cost of goods sold for operating sites, which are the Company’s owned sites. For the three and nine months ended September 30, 2019 and September 30, 2018, environmental expenses related to these operating sites were not material. On October 29, 2018, upon consummation of the Spin-Off, certain environmental liabilities became subject to the Honeywell Reimbursement Agreement (defined below) and were reclassified to Obligations payable to Honeywell. The expenses related to these sites were recorded within Other expense, net in the unaudited Consolidated and Combined Interim Statement of Operations. For the three and nine months ended September 30, 2018, environmental expense within Other expense, net was $146 million and $322 million, respectively. Liabilities for environmental cost were $21 million and $735 million as of September 30, 2019 and September 30, 2018, respectively. For additional information, see Honeywell Reimbursement Agreement below. The Company does not currently possess sufficient information to reasonably estimate the amounts of environmental liabilities to be recorded upon future completion of studies, litigation or settlements, and neither the timing nor the amount of the ultimate costs associated with environmental matters can be determined although they could be material to our unaudited consolidated and combined results of operations and operating cash flows in the periods recognized or paid. Honeywell Reimbursement Agreement On October 29, 2018, in connection with the Spin-Off, the Company entered into an indemnification and reimbursement agreement with Honeywell (the “Honeywell Reimbursement Agreement”) Payments in respect of the liabilities arising in a given year will be made quarterly throughout such year on the basis of an estimate of the liabilities and recoveries provided by Honeywell. Following the end of any such year, Honeywell will provide the Company with a calculation of the amount of payments and the recoveries actually received. Payment amounts under the Honeywell Reimbursement Agreement will be deferred to the extent that a specified event of default has occurred and is continuing under certain indebtedness, including under the Company’s principal credit agreement, or the payment thereof causes the Company to not be compliant with certain financial covenants in certain indebtedness, including the Company’s principal credit agreement on a pro forma basis, including the maximum total leverage ratio (ratio of consolidated debt to consolidated EBITDA, which excludes any amounts owed to Honeywell under the Honeywell Reimbursement Agreement), and the minimum interest coverage ratio. A 5% late payment fee will accrue on all amounts that are not otherwise entitled to be deferred under the terms of the Honeywell Reimbursement Agreement, without prejudice to any other rights that Honeywell may have for late payments. The obligations under the Honeywell Reimbursement Agreement will continue until the earlier of: (1) December 31, 2043; or (2) December 31 of the third consecutive year during which the annual reimbursement obligation (including in respect of deferred payment amounts) has been less than $25 million. The following table summarizes information concerning our Honeywell Reimbursement Agreement liabilities: Nine Months Ended September 30, 2019 Beginning of period $ 616 Accruals for indemnification liabilities deemed probable and reasonably estimable 138 Reduction (1) (81 ) Indemnification payment (105 ) End of period $ 568 (1) Reduction in indemnification liabilities relates to a provision in the Honeywell Reimbursement Agreement that reduces the obligation due to Honeywell for any proceeds received by Honeywell from a property sale of a site under the agreement. For the three and nine months ended September 30, 2019, expenses related to the Honeywell Reimbursement Agreement were $35 million and $57 million, respectively and are recorded in Other expense, net. Honeywell Reimbursement Agreement liabilities are included in the following balance sheet accounts: September 30, 2019 Accrued liabilities $ 140 Obligations payable to Honeywell 428 $ 568 The Company does not currently possess sufficient information to reasonably estimate the amounts of indemnification liabilities to be recorded upon future completion of studies, litigation or settlements, and neither the timing nor the amount of the ultimate costs associated with environmental matters can be determined although they could be material to our unaudited consolidated and combined results of operations and operating cash flows in the periods recognized or paid. Tax Matters Agreement In connection with the Spin-Off, the Company entered into a tax matters agreement (the “Tax Matters Agreement”) with Honeywell pursuant to which it is responsible and will indemnify Honeywell for all taxes, including income taxes, sales taxes, VAT and payroll taxes, relating to the business for all periods, including periods prior to the consummation of the Spin-Off. As of September 30, 2019, the Company has indemnified Honeywell for $152 million, which is included in Obligations payable to Honeywell. Trademark Agreements The Company and Honeywell entered into a 40-year Trademark License Agreement (the “Trademark Agreement”) that authorizes the Company’s use of certain licensed trademarks in the operation of Resideo’s business for the advertising, sale and distribution of certain licensed products. In exchange, the Company will pay a royalty fee of 1.5% on net revenue to Honeywell related to such licensed products which is recorded in Selling, general and administrative expense on the unaudited Consolidated and Combined Interim Statement of Operations. For the three and nine months ended September 30, 2019, royalty fees were $6 million and $20 million, respectively. Other Matters The Company is subject to other lawsuits, investigations and disputes arising out of the conduct of its business, including matters relating to commercial transactions, settlement agreements, government contracts, product liability, prior acquisitions and divestitures, employee matters, intellectual property, antitrust and environmental, health and safety matters. The Company recognizes a liability for any contingency that is probable of occurrence and reasonably estimable. The Company continually assesses the likelihood of adverse judgments of outcomes in these matters, as well as potential ranges of possible losses (taking into consideration any insurance recoveries), based on a careful Warranties and Guarantees In the normal course of business, the Company issues product warranties and product performance guarantees. It accrues for the estimated cost of product warranties and performance guarantees based on contract terms and historical experience at the time of sale. Adjustments to initial obligations for warranties and guarantees are made as changes to the obligations become reasonably estimable. Product warranties and product performance guarantees are included in Accrued liabilities. The following table summarizes information concerning recorded obligations for product warranties and product performance guarantees: Nine Months Ended September 30, 2019 2018 Beginning of period $ 26 $ 17 Accruals for warranties/guarantees issued during the year 10 12 Adjustment of pre-existing warranties/guarantees (1 ) (2 ) Settlement of warranty/guarantee claims (12 ) (12 ) End of period $ 23 $ 15 |
Pension
Pension | 9 Months Ended |
Sep. 30, 2019 | |
Compensation And Retirement Disclosure [Abstract] | |
Pension | Note 16. Pension Prior to the Spin-Off, certain of Resideo’s employees participated in multiple U.S. and non-U.S. defined benefit pension plans (the “Shared Plans”) sponsored by Honeywell which includes participants from other Honeywell subsidiaries and operations. The Company accounted for participation in the Shared Plans as a multiemployer benefit plan. Accordingly, it did not record an asset or liability to recognize the funded status of the Shared Plans. The related pension expense was allocated based on annual service cost of active participants and reported within Costs of goods sold and Selling, general and administrative expenses in the unaudited Combined Interim Statement of Operations. The pension expense related to participation in the Shared Plan for the three and nine months ended September 30, 2018 was $3 million and $10 million, respectively. As of the date of separation from Honeywell, these employees’ and certain former Honeywell employees’ entitlement to benefits in Honeywell’s plans were transferred to Resideo sponsored plans. The Resideo defined benefit pension plans have substantially similar benefit formulas as the Honeywell defined benefit pension plans. Moreover, vesting service, benefit accrual service and compensation credited under the Honeywell defined benefit pension plans apply to the determination of pension benefits under the Resideo defined benefit pension plan. The Company sponsors multiple funded and unfunded U.S. and non-U.S. defined benefit pension plans. Pension benefits for many of its U.S. employees are provided through non-contributory, qualified and non-qualified defined benefit plans. It also sponsors defined benefit pension plans which cover non-U.S. employees who are not U.S. citizens, in certain jurisdictions, principally Germany, Austria, Belgium, Switzerland, and the Netherlands. The components of net periodic benefit costs other than the service cost are included in Other expense, net in the unaudited Consolidated and Combined Interim Statement of Operations for the three and nine months ended September 30, 2019 and 2018. |
Segment Financial Data
Segment Financial Data | 9 Months Ended |
Sep. 30, 2019 | |
Segment Reporting [Abstract] | |
Segment Financial Data | Note 17. Segment Financial Data The Company globally manages its business operations through two reportable operating segments, Products & Solutions Products & Solutions —The Products & Solutions business is a leading global provider of products, software solutions and technologies that help homeowners stay connected and in control of their comfort, security and energy use. ADI Global Distribution —The ADI Global Distribution business is a leading global distributor of low-voltage electronic and security products. Segment information is consistent with how management reviews the businesses, makes investing and resource allocation decisions and assesses operating performance. Prior to the first quarter of 2019, the Company’s Chief Operating Decision Maker (“CODM”) managed and evaluated its segment performance based on segment profit defined as segment income (loss) before taxes excluding Other expense, net (primarily environmental cost now subject to the Honeywell Reimbursement Agreement), interest expense, pension expense, environmental expense related to Resideo’s owned sites and repositioning charges. Beginning in the first quarter of 2019, the Company’s CODM changed the way segment performance is evaluated by making financial decisions and allocating resources Three Months Ended Nine Months Ended September 30, September 30, 2019 2018 2019 2018 Revenue Total Products & Solutions revenue $ 595 $ 603 $ 1,828 $ 1,803 Less: Intersegment revenue 83 77 228 236 External Products & Solutions revenue 512 526 1,600 1,567 External ADI Global Distribution revenue 714 674 2,084 1,994 Total revenue $ 1,226 $ 1,200 $ 3,684 $ 3,561 Three Months Ended Nine Months Ended September 30, September 30, 2019 2018 2019 2018 Segment adjusted EBITDA Products & Solutions $ 66 $ 107 $ 222 $ 333 ADI Global Distribution 48 43 141 124 Segment Adjusted EBITDA $ 114 $ 150 $ 363 $ 457 The table below provides a reconciliation of net income to Segment Adjusted EBITDA: Three Months Ended Nine Months Ended September 30, September 30, 2019 2018 2019 2018 Net income $ 8 $ 311 $ 45 $ 389 Net interest expense (income) 16 - 49 (1 ) Tax expense (benefit) - (329 ) 36 (323 ) Depreciation and amortization 19 16 55 49 Environmental expense (1) - 146 - 322 Honeywell reimbursement agreement expense (2) 35 - 57 - Stock compensation expense (3) 8 6 22 15 Repositioning charges 9 - 34 5 Other (4) 19 - 65 1 Segment Adjusted EBITDA $ 114 $ 150 $ 363 $ 457 (1) Represents historical environmental expenses as reported under 100% carryover basis. (2) Represents recorded expenses related to the Honeywell Reimbursement Agreement. ( 3 ) Stock compensation expense adjustment includes only non-cash expenses. ( 4 ) Represents $19 million and $53 million in costs directly related to the Spin-Off, $0 million and $13 million related to developments on legal claims that arose prior to the Spin-Off, and ($0) million and ($1) million in non-operating (income) expense adjustment which excludes net interest (income) for the three and nine months ended September 30, 2019, respectively. For the three and nine months ended September 30, 2018 Other represents other non-operating (income) expense. The Company’s CODM does not use segment assets information to allocate resources or to assess performance of the segments and therefore, total segment assets have not been disclosed. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2019 | |
Accounting Policies [Abstract] | |
Leases | Leases —Effective January 1, 2019, arrangements containing leases are evaluated as an operating or finance lease at lease inception. For operating leases, the Company recognizes an operating right-of-use asset and operating lease liability at lease commencement based on the present value of lease payments over the lease term. Since an implicit rate of return is not readily determinable for the Company's leases, an incremental borrowing rate is used in determining the present value of lease payments, and is calculated based on information available at the lease commencement date. The incremental borrowing rate is determined using a portfolio approach based on the rate of interest the Company would have to pay to borrow funds on a collateralized basis over a similar term. The Company references a market yield curve consistent with the Company's credit rating which is risk-adjusted to approximate a collateralized rate in the currency of the lease. These rates are updated on a quarterly basis for measurement of new lease obligations. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements —The Company considers the applicability and impact of all recent accounting standards updates (“ASUs”) issued by the Financial Accounting Standards Board (“FASB”). ASUs not listed below were assessed and determined to be either not applicable or are expected to have an immaterial impact on the consolidated and combined financial position or results of operations. The Company adopted ASU No. 2016-02, Leases (Topic 842), effective January 1, 2019, and applied the changes prospectively, recognizing a cumulative-effect adjustment to the beginning balance of retained earnings as of the adoption date. As permitted by the new guidance, the Company elected the package of practical expedients, which among other things, allowed historical lease classification to be carried forward. Upon adoption of ASU No. 2016-02, the Company recognized an aggregate lease liability of $115 million, calculated based on the present value of the remaining minimum lease payments for qualifying leases as of January 1, 2019, with a corresponding right-of-use asset of $112 million. The cumulative-effect adjustment recognized to opening retained earnings was not material. The adoption of the new guidance did not impact the Company’s unaudited consolidated interim statement of operations or cash flows. In February 2018, the FASB issued guidance that allows for an entity to elect to reclassify the income tax effects on items within accumulated other comprehensive income resulting from the U.S. Tax Cuts and Jobs Act (“U.S. Tax Reform”) to retained earnings. The guidance is effective for fiscal years beginning after December 15, 2018 with early adoption permitted, including interim periods within those years. The Company adopted the standard on January 1, 2019 and has not reclassified the income tax effects of U.S. Tax Reform from accumulated other comprehensive income to retained earnings. The Company has adopted the aggregate portfolio accounting policy for recognizing the disproportionate income tax effects in accumulated other comprehensive income. On June 16, 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326), which provides guidance designed to provide financial statement users with more information about the expected credit losses on financial instruments and other commitments to extend credit held by a reporting entity at each reporting date. From November 2018 to May 2019, amendments to Topic 326 were issued to clarify numerous accounting topics. When determining such expected credit losses, the guidance requires companies to apply a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. The amendment is effective on a modified retrospective basis for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years. Early adoption is permitted for fiscal years and interim periods beginning after December 15, 2018. The Company does not expect adoption of this pronouncement to have a material financial statement impact. In August 2018, the FASB issued guidance that amends the current disclosure requirements regarding defined benefit pensions and other post retirement plans and allows for the removal of certain disclosures, while adding certain new disclosure requirements. This standard is effective for fiscal years beginning after December 15, 2020 and allows for early adoption. The Company does not expect this new standard to have a significant impact to its disclosures. |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Earnings Per Share [Abstract] | |
Schedule of Earnings Per Share | The details of the earnings per share calculations for the three and nine months ended September 30, 2019 and 2018 are as follows: Three Months Ended Nine Months Ended September 30, September 30, Basic: 2019 2018 2019 2018 Net income $ 8 $ 311 $ 45 $ 389 Weighted average common shares outstanding (in thousands) 122,770 122,967 122,681 122,967 Earnings per share - Basic $ 0.07 $ 2.53 $ 0.37 $ 3.16 Three Months Ended Nine Months Ended September 30, September 30, Diluted: 2019 2018 2019 2018 Net income $ 8 $ 311 $ 45 $ 389 Weighted average common shares outstanding - Basic (in thousands) 122,770 122,967 122,681 122,967 Dilutive effect of common stock equivalents 474 - 723 - Weighted average common shares outstanding - Diluted (in thousands) 123,244 122,967 123,404 122,967 Earnings per share - Diluted $ 0.06 $ 2.53 $ 0.36 $ 3.16 |
Repositioning and Other Charg_2
Repositioning and Other Charges (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Restructuring And Related Activities [Abstract] | |
Summary of Repositioning Charges | During the second quarter of 2019, management began a repositioning plan to reduce operating costs and better align the Company’s workforce with the needs of the business going forward. Repositioning and related expenses were $9 million and $34 million for the three and nine months ended September 30, 2019, respectively, and primarily related to severance. A summary of repositioning charges follows: Three Months Ended Nine Months Ended September 30, September 30, 2019 2018 2019 2018 Severance $ 9 $ - $ 35 $ 4 Asset impairments - - - 1 Reserve adjustments - - (1 ) - Total net repositioning charges $ 9 $ - $ 34 $ 5 |
Summary of Pretax Distribution of Total Net Repositioning Charges by Unaudited Consolidated and Combined Statement of Operations Classification | The following table summarizes the pretax distribution of total net repositioning charges by unaudited Consolidated and Combined Statement of Operations classification: Three Months Ended Nine Months Ended September 30, September 30, 2019 2018 2019 2018 Cost of goods sold $ 5 $ - $ 18 $ 4 Selling, general and administrative expenses 4 - 16 1 $ 9 $ - $ 34 $ 5 |
Summary of Pretax Impact of Total Net Repositioning Charges by Segment | The following table summarizes the pretax impact of total net repositioning charges by segment: Three Months Ended Nine Months Ended September 30, September 30, 2019 2018 2019 2018 Products & Solutions $ 9 $ - $ 28 $ 5 ADI Global Distribution - - 6 - $ 9 $ - $ 34 $ 5 |
Summary of Status of Total Repositioning Reserves Related to Severance Cost Included in Accrued Liabilities | The following table summarizes the status of total repositioning reserves related to severance cost included in Accrued liabilities in the unaudited Consolidated Balance Sheet: Nine Months Ended September 30, 2019 Beginning of period $ 13 Charges 35 Usage – cash (22 ) Adjustments (1 ) End of period $ 25 |
Revenue Recognition (Tables)
Revenue Recognition (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Revenue From Contract With Customer [Abstract] | |
Schedule of Disaggregated Revenue | Revenues by channel are as follows: Three Months Ended Nine Months Ended September 30, September 30, 2019 2018 (3) 2019 2018 (3) U.S. and Canada $ 590 $ 555 $ 1,705 $ 1,614 EMEA (1) 109 107 336 338 India 15 12 43 42 ADI Global Distribution 714 674 2,084 1,994 Comfort 256 271 799 787 Security 128 119 397 358 RTS 128 136 404 422 Products & Solutions (2) 512 526 1,600 1,567 Net revenue $ 1,226 $ 1,200 $ 3,684 $ 3,561 (1) EMEA represents Europe, the Middle East and Africa. (2) Products & Solutions sales channel naming convention changed from what was disclosed in our quarterly report for the quarter ended September 30, 2018 (3) The unaudited disaggregated revenue disclosure for the three and nine month periods ended September 30, 2018 contained misallocated revenue between the ADI Global Distribution geographies U.S. and Canada and India. Correcting this allocation increased U.S. and Canada revenue and reduced India revenue for the three and nine month periods ended September 30, 2018 by $30 million and $35 million, respectively. There is no other impact to the unaudited Consolidated and Combined Interim Financial Statements for the three and nine month periods ended September 30, 2018. |
Inventories (Tables)
Inventories (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Inventory Disclosure [Abstract] | |
Inventories | September 30, December 31, 2019 2018 Raw materials $ 143 $ 167 Work in process 19 34 Finished products 567 427 $ 729 $ 628 |
Accrued Liabilities (Tables)
Accrued Liabilities (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Payables And Accruals [Abstract] | |
Summary of Accrued Liabilities | September 30, December 31, 2019 2018 Obligations payable to Honeywell $ 140 $ 140 Taxes payable 41 76 Compensation, benefit and other employee related 73 73 Other 277 214 $ 531 $ 503 |
Long-term Debt and Credit Agr_2
Long-term Debt and Credit Agreement (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Debt Disclosure [Abstract] | |
Schedule of Debt | The Company’s debt at September 30, 2019 and December 31, 2018 consisted of the following: September 30, December 31, 2019 2018 6.125% notes due 2026 $ 400 $ 400 Five-year variable rate term loan A due 2023 341 350 Seven-year variable rate term loan B due 2025 473 475 Revolving Credit Facility 60 - Unamortized debt issuance costs (21 ) (24 ) Total outstanding indebtedness 1,253 1,201 Less: amounts due within one year 88 22 Total long-term debt due after one year $ 1,165 $ 1,179 |
Leases (Tables)
Leases (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Leases [Abstract] | |
Schedule of Operating Lease Costs | The Company’s operating lease costs for the three and nine months ended September 30, 2019 consisted of the following: Three Months Ended Nine Months Ended September 30, September 30, 2019 2019 Operating Lease Costs Selling, general & administrative $ 10 $ 27 Cost of goods sold 4 12 Total operating lease costs $ 14 $ 39 |
Summary of Lease Recognized Related to Operating Leases | The Company recognized the following related to its operating leases: Financial Statement Line Item At September 30, 2019 Operating right-of-use assets Other assets $ 130 Operating lease liabilities - current Accrued liabilities $ 29 Operating lease liabilities - noncurrent Other liabilities $ 106 |
Maturities of Operating Lease Liabilities | Maturities of the Company’s operating lease liabilities were as follows: At September 30, 2019 2019 $ 9 2020 35 2021 32 2022 27 2023 20 Thereafter 36 Total lease payments 159 Less: imputed interest 24 Present value of operating lease liabilities $ 135 Weighted-average remaining lease term (years) 5.64 Weighted-average incremental borrowing rate 6.00 % |
Schedule of Future Minimum Lease Payments under Operating Leases | Future minimum lease payments under operating leases having initial or remaining non-cancellable lease terms in excess of one year as of December 31, 2018 were as follows: At December 31, 2018 2019 $ 39 2020 33 2021 28 2022 22 2023 15 Thereafter 17 $ 154 |
Supplemental Cash Flow Information Related to Operating Leases | Supplemental cash flow information related to the Company’s operating leases was as follows: Nine Months Ended September 30, 2019 Operating cash outflows $ 28 Operating right-of-use assets obtained in exchange for operating lease liabilities $ 47 |
Accumulated Other Comprehensi_2
Accumulated Other Comprehensive Loss (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Accumulated Other Comprehensive Income Loss Net Of Tax [Abstract] | |
Summary of Changes in Accumulated Other Comprehensive Loss by Component | Changes in Accumulated Other Comprehensive Loss by Component Foreign Exchange Translation Adjustment Pension Adjustments Changes in Fair Value of Effective Cash Flow Hedges Accumulated Other Comprehensive Loss Balance at December 31, 2017 $ (100 ) $ - $ - $ (100 ) Other comprehensive income before reclassifications 31 - - 31 Amounts reclassified from accumulated other comprehensive income - - (1 ) (1 ) Net current period other comprehensive income 31 - (1 ) 30 Balance at March 31, 2018 $ (69 ) $ - $ (1 ) $ (70 ) Other comprehensive loss before reclassifications (49 ) - - (49 ) Balance at June 30, 2018 $ (118 ) $ - $ (1 ) $ (119 ) Other comprehensive loss before reclassifications (5 ) - (2 ) (7 ) Amounts reclassified from accumulated other comprehensive income - - $ 2 $ 2 Balance at September 30, 2018 $ (123 ) $ - $ (1 ) $ (124 ) Balance at December 31, 2018 $ (177 ) $ (12 ) $ - $ (189 ) Other comprehensive income before reclassifications 6 - - 6 Balance at March 31, 2019 $ (171 ) $ (12 ) $ - $ (183 ) Other comprehensive loss before reclassifications (4 ) - - (4 ) Balance at June 30, 2019 $ (175 ) $ (12 ) $ - $ (187 ) Other comprehensive loss before reclassifications (35 ) - - (35 ) Balance at September 30, 2019 $ (210 ) $ (12 ) $ - $ (222 ) |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Loss Contingencies [Line Items] | |
Summary of Recorded Obligations for Product Warranties and Product Performance Guarantee | The following table summarizes information concerning recorded obligations for product warranties and product performance guarantees: Nine Months Ended September 30, 2019 2018 Beginning of period $ 26 $ 17 Accruals for warranties/guarantees issued during the year 10 12 Adjustment of pre-existing warranties/guarantees (1 ) (2 ) Settlement of warranty/guarantee claims (12 ) (12 ) End of period $ 23 $ 15 |
Honeywell | |
Loss Contingencies [Line Items] | |
Summary of Honeywell Reimbursement Agreement Liabilities | Nine Months Ended September 30, 2019 Beginning of period $ 616 Accruals for indemnification liabilities deemed probable and reasonably estimable 138 Reduction (1) (81 ) Indemnification payment (105 ) End of period $ 568 (1) Reduction in indemnification liabilities relates to a provision in the Honeywell Reimbursement Agreement that reduces the obligation due to Honeywell for any proceeds received by Honeywell from a property sale of a site under the agreement. |
Summary of Honeywell Reimbursement Agreement Liabilities Included in Balance Sheet Accounts | For the three and nine months ended September 30, 2019, expenses related to the Honeywell Reimbursement Agreement were $35 million and $57 million, respectively and are recorded in Other expense, net. Honeywell Reimbursement Agreement liabilities are included in the following balance sheet accounts: September 30, 2019 Accrued liabilities $ 140 Obligations payable to Honeywell 428 $ 568 |
Segment Financial Data (Tables)
Segment Financial Data (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Segment Reporting [Abstract] | |
Schedule of Segment Information | Segment information is consistent with how management reviews the businesses, makes investing and resource allocation decisions and assesses operating performance. Prior to the first quarter of 2019, the Company’s Chief Operating Decision Maker (“CODM”) managed and evaluated its segment performance based on segment profit defined as segment income (loss) before taxes excluding Other expense, net (primarily environmental cost now subject to the Honeywell Reimbursement Agreement), interest expense, pension expense, environmental expense related to Resideo’s owned sites and repositioning charges. Beginning in the first quarter of 2019, the Company’s CODM changed the way segment performance is evaluated by making financial decisions and allocating resources Three Months Ended Nine Months Ended September 30, September 30, 2019 2018 2019 2018 Revenue Total Products & Solutions revenue $ 595 $ 603 $ 1,828 $ 1,803 Less: Intersegment revenue 83 77 228 236 External Products & Solutions revenue 512 526 1,600 1,567 External ADI Global Distribution revenue 714 674 2,084 1,994 Total revenue $ 1,226 $ 1,200 $ 3,684 $ 3,561 Three Months Ended Nine Months Ended September 30, September 30, 2019 2018 2019 2018 Segment adjusted EBITDA Products & Solutions $ 66 $ 107 $ 222 $ 333 ADI Global Distribution 48 43 141 124 Segment Adjusted EBITDA $ 114 $ 150 $ 363 $ 457 |
Schedule of Reconciliation of Adjusted EBITDA | The table below provides a reconciliation of net income to Segment Adjusted EBITDA: Three Months Ended Nine Months Ended September 30, September 30, 2019 2018 2019 2018 Net income $ 8 $ 311 $ 45 $ 389 Net interest expense (income) 16 - 49 (1 ) Tax expense (benefit) - (329 ) 36 (323 ) Depreciation and amortization 19 16 55 49 Environmental expense (1) - 146 - 322 Honeywell reimbursement agreement expense (2) 35 - 57 - Stock compensation expense (3) 8 6 22 15 Repositioning charges 9 - 34 5 Other (4) 19 - 65 1 Segment Adjusted EBITDA $ 114 $ 150 $ 363 $ 457 (1) Represents historical environmental expenses as reported under 100% carryover basis. (2) Represents recorded expenses related to the Honeywell Reimbursement Agreement. ( 3 ) Stock compensation expense adjustment includes only non-cash expenses. ( 4 ) Represents $19 million and $53 million in costs directly related to the Spin-Off, $0 million and $13 million related to developments on legal claims that arose prior to the Spin-Off, and ($0) million and ($1) million in non-operating (income) expense adjustment which excludes net interest (income) for the three and nine months ended September 30, 2019, respectively. For the three and nine months ended September 30, 2018 Other represents other non-operating (income) expense. |
Organization, Operations and Ba
Organization, Operations and Basis of Presentation - Additional Information (Details) - $ / shares | Oct. 29, 2018 | Oct. 16, 2018 | Sep. 30, 2019 | Dec. 31, 2018 |
Spin-off transaction, common stock share conversion | one share | six shares | ||
Spin-off transaction, common stock conversion of par value per share | $ 0.001 | $ 0.001 | $ 0.001 | |
Spin-off transaction record date | Oct. 16, 2018 | |||
Date of business spin-off | Oct. 29, 2018 | |||
Spin-off common stock, description | On October 29, 2018, Honeywell’s shareholders of record as of October 16, 2018 (“Record Date”) received one share of the Company’s common stock, par value $0.001 per share, for every six shares of Honeywell’s common stock, par value $1.00 per share, held as of the Record Date, and cash for any fractional shares of the Company’s common stock. | |||
Rezi | ||||
Spin-off transaction, common stock conversion of par value per share | $ 0.001 | |||
Honeywell | ||||
Spin-off transaction, common stock conversion of par value per share | $ 1 |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies - Additional Information (Details) - USD ($) $ in Millions | Sep. 30, 2019 | Jan. 01, 2019 |
Accounting Policies [Abstract] | ||
Aggregate lease, liability | $ 135 | $ 115 |
Right-of-use asset | $ 130 | $ 112 |
Earnings Per Share - Addtional
Earnings Per Share - Addtional Information (Details) - $ / shares | Oct. 29, 2018 | Oct. 16, 2018 | Sep. 30, 2019 | Sep. 30, 2019 | Dec. 31, 2018 | Oct. 28, 2018 | Sep. 30, 2018 |
Earnings Per Share [Line Items] | |||||||
Spin-off transaction, common stock par value per share | $ 0.001 | $ 0.001 | $ 0.001 | $ 0.001 | |||
Common stock, shares outstanding | 122,786,000 | 122,786,000 | 122,499,000 | 0 | |||
Purchase of outstanding common stock were anti-dilutive | 0 | ||||||
Options and Other Rights | |||||||
Earnings Per Share [Line Items] | |||||||
Purchase of outstanding common stock were anti-dilutive | 3,800,000 | 1,500,000 | |||||
Performance Based Unit Awards | |||||||
Earnings Per Share [Line Items] | |||||||
Purchase of outstanding common stock were anti-dilutive | 300,000 | 300,000 | |||||
Honeywell | Spin-Off | |||||||
Earnings Per Share [Line Items] | |||||||
Shares issued | 122,498,794 | ||||||
Distribution made at spin-off date of record | Oct. 16, 2018 | ||||||
Treasury shares excluded from earnings per share calculation | 596,300 | 596,300 | 467,764 |
Earnings Per Share - Schedule o
Earnings Per Share - Schedule of Earnings Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Basic: | ||||
Net income | $ 8 | $ 311 | $ 45 | $ 389 |
Weighted average common shares outstanding (in thousands) | 122,770 | 122,967 | 122,681 | 122,967 |
Earnings per share - Basic | $ 0.07 | $ 2.53 | $ 0.37 | $ 3.16 |
Diluted: | ||||
Dilutive effect of common stock equivalents | 474 | 723 | ||
Weighted average common shares outstanding - Diluted (in thousands) | 123,244 | 122,967 | 123,404 | 122,967 |
Earnings per share - Diluted | $ 0.06 | $ 2.53 | $ 0.36 | $ 3.16 |
Acquisitions - Additional Infor
Acquisitions - Additional Information (Details) - USD ($) $ in Millions | Jun. 27, 2019 | May 21, 2019 | Mar. 28, 2019 | Sep. 30, 2019 |
Business Acquisition [Line Items] | ||||
Business acquisition | $ 17 | |||
Buoy Labs | Products & Solutions | ||||
Business Acquisition [Line Items] | ||||
Business acquisition | $ 6 | |||
Business acquisition, goodwill and intangible assets acquired | $ 6 | |||
Whisker Labs | Products & Solutions | ||||
Business Acquisition [Line Items] | ||||
Business acquisition | $ 5 | |||
Business acquisition, goodwill and intangible assets acquired | $ 5 | |||
LifeWhere | Products & Solutions | ||||
Business Acquisition [Line Items] | ||||
Business acquisition | $ 6 | |||
Business acquisition, goodwill and intangible assets acquired | $ 6 |
Related Party Transactions wi_2
Related Party Transactions with Honeywell - Additional Information (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended |
Sep. 30, 2018 | Sep. 30, 2018 | |
Honeywell | ||
Related Party Transaction [Line Items] | ||
Sales to related party | $ 8 | $ 23 |
Costs of goods sold to related party | 5 | 18 |
Purchases from related party | 32 | 149 |
Selling, General and Administrative Expenses | ||
Related Party Transaction [Line Items] | ||
General corporate expenses incurred | $ 66 | $ 203 |
Repositioning and Other Charg_3
Repositioning and Other Charges - Additional Information (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | |
Sep. 30, 2019 | Sep. 30, 2019 | Sep. 30, 2018 | |
Restructuring Cost And Reserve [Line Items] | |||
Repositioning and related expenses | $ 9 | $ 34 | $ 5 |
Severance | |||
Restructuring Cost And Reserve [Line Items] | |||
Repositioning and related expenses | $ 9 | $ 34 |
Repositioning and Other Charg_4
Repositioning and Other Charges - Summary of Repositioning Charges (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | |
Sep. 30, 2019 | Sep. 30, 2019 | Sep. 30, 2018 | |
Restructuring And Related Activities [Abstract] | |||
Severance | $ 9 | $ 35 | $ 4 |
Asset impairments | 1 | ||
Reserve adjustments | (1) | ||
Total net repositioning charges | $ 9 | $ 34 | $ 5 |
Repositioning and Other Charg_5
Repositioning and Other Charges - Summary of Pretax Distribution of Total Net Repositioning Charges by Unaudited Consolidated and Combined Statement of Operations (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | |
Sep. 30, 2019 | Sep. 30, 2019 | Sep. 30, 2018 | |
Restructuring Cost And Reserve [Line Items] | |||
Repositioning and related expenses | $ 9 | $ 34 | $ 5 |
Cost of Goods Sold | |||
Restructuring Cost And Reserve [Line Items] | |||
Repositioning and related expenses | 5 | 18 | 4 |
Selling, General and Administrative Expenses | |||
Restructuring Cost And Reserve [Line Items] | |||
Repositioning and related expenses | $ 4 | $ 16 | $ 1 |
Repositioning and Other Charg_6
Repositioning and Other Charges - Summary of Pretax Impact of Total Net Repositioning Charges by Segment (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | |
Sep. 30, 2019 | Sep. 30, 2019 | Sep. 30, 2018 | |
Restructuring Cost And Reserve [Line Items] | |||
Repositioning charges | $ 9 | $ 34 | $ 5 |
Products & Solutions | |||
Restructuring Cost And Reserve [Line Items] | |||
Repositioning charges | $ 9 | 28 | $ 5 |
ADI Global Distribution | |||
Restructuring Cost And Reserve [Line Items] | |||
Repositioning charges | $ 6 |
Repositioning and Other Charg_7
Repositioning and Other Charges - Summary of Status of Total Repositioning Reserves Related to Severance Cost Included in Accrued Liabilities (Details) $ in Millions | 9 Months Ended |
Sep. 30, 2019USD ($) | |
Restructuring And Related Activities [Abstract] | |
Beginning of period | $ 13 |
Charges | 35 |
Usage – cash | (22) |
Adjustments | (1) |
End of period | $ 25 |
Revenue Recognition - Schedule
Revenue Recognition - Schedule of Disaggregated Revenue (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | |||||
Sep. 30, 2019 | Sep. 30, 2018 | [1] | Sep. 30, 2019 | Sep. 30, 2018 | [1] | ||
Disaggregation Of Revenue [Line Items] | |||||||
Revenue | $ 1,226 | $ 1,200 | $ 3,684 | $ 3,561 | |||
ADI Global Distribution | |||||||
Disaggregation Of Revenue [Line Items] | |||||||
Revenue | 714 | 674 | 2,084 | 1,994 | |||
ADI Global Distribution | U.S. and Canada | |||||||
Disaggregation Of Revenue [Line Items] | |||||||
Revenue | 590 | 555 | 1,705 | 1,614 | |||
ADI Global Distribution | EMEA | |||||||
Disaggregation Of Revenue [Line Items] | |||||||
Revenue | [2] | 109 | 107 | 336 | 338 | ||
ADI Global Distribution | India | |||||||
Disaggregation Of Revenue [Line Items] | |||||||
Revenue | 15 | 12 | 43 | 42 | |||
Products & Solutions | |||||||
Disaggregation Of Revenue [Line Items] | |||||||
Revenue | [3] | 512 | 526 | 1,600 | 1,567 | ||
Products & Solutions | Comfort | |||||||
Disaggregation Of Revenue [Line Items] | |||||||
Revenue | 256 | 271 | 799 | 787 | |||
Products & Solutions | Security | |||||||
Disaggregation Of Revenue [Line Items] | |||||||
Revenue | 128 | 119 | 397 | 358 | |||
Products & Solutions | RTS | |||||||
Disaggregation Of Revenue [Line Items] | |||||||
Revenue | $ 128 | $ 136 | $ 404 | $ 422 | |||
[1] | The unaudited disaggregated revenue disclosure for the three and nine month periods ended September 30, 2018 contained misallocated revenue between the ADI Global Distribution geographies U.S. and Canada and India. Correcting this allocation increased U.S. and Canada revenue and reduced India revenue for the three and nine month periods ended September 30, 2018 by $30 million and $35 million, respectively. There is no other impact to the unaudited Consolidated and Combined Interim Financial Statements for the three and nine month periods ended September 30, 2018. | ||||||
[2] | EMEA represents Europe, the Middle East and Africa. | ||||||
[3] | Products & Solutions sales channel naming convention changed from what was disclosed in our quarterly report for the quarter ended September 30, 2018. Comfort & Care was broken out into Comfort and Residential Thermal Solutions (“RTS”) |
Revenue Recognition - Schedul_2
Revenue Recognition - Schedule of Disaggregated Revenue (Parenthetical) (Details) - ADI Global Distribution - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended |
Sep. 30, 2018 | Sep. 30, 2018 | |
U.S. and Canada | ||
Disaggregation Of Revenue [Line Items] | ||
Increase in revenue | $ 30 | $ 35 |
India | ||
Disaggregation Of Revenue [Line Items] | ||
Decrease in revenue | $ 30 | $ 35 |
Revenue Recognition - Additiona
Revenue Recognition - Additional Information (Details) | Sep. 30, 2019 |
Maximum | |
Disaggregation Of Revenue [Line Items] | |
Percentage of revenue satisfied over time | 2.00% |
Income Taxes - Additional Infor
Income Taxes - Additional Information (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Income Tax Disclosure [Abstract] | ||||
Tax expense (benefit) | $ (329) | $ 36 | $ (323) | |
U.S. federal statutory rate | 21.00% | 21.00% | 21.00% | 21.00% |
Inventories (Details)
Inventories (Details) - USD ($) $ in Millions | Sep. 30, 2019 | Dec. 31, 2018 |
Inventory Disclosure [Abstract] | ||
Raw materials | $ 143 | $ 167 |
Work in process | 19 | 34 |
Finished products | 567 | 427 |
Inventory, Net | $ 729 | $ 628 |
Accrued Liabilities - Summary o
Accrued Liabilities - Summary of Accrued Liabilities (Details) - USD ($) $ in Millions | Sep. 30, 2019 | Dec. 31, 2018 |
Accrued Liabilities, Current [Abstract] | ||
Obligations payable to Honeywell | $ 140 | $ 140 |
Taxes payable | 41 | 76 |
Compensation, benefit and other employee related | 73 | 73 |
Other | 277 | 214 |
Total accrued liabilities | $ 531 | $ 503 |
Long-term Debt and Credit Agr_3
Long-term Debt and Credit Agreement - Schedule of Debt (Details) - USD ($) $ in Millions | Sep. 30, 2019 | Dec. 31, 2018 |
Debt Instrument [Line Items] | ||
Unamortized debt issuance costs | $ (21) | $ (24) |
Total outstanding indebtedness | 1,253 | 1,201 |
Less: amounts due within one year | 88 | 22 |
Total long-term debt due after one year | 1,165 | 1,179 |
Revolving Credit Facility | ||
Debt Instrument [Line Items] | ||
Revolving Credit Facility | 60 | |
6.125% notes due 2026 | ||
Debt Instrument [Line Items] | ||
Long-term debt, gross | 400 | 400 |
Five Year Variable Rate Term Loan A Due 2023 | ||
Debt Instrument [Line Items] | ||
Long-term debt, gross | 341 | 350 |
Seven Year Variable Rate Term Loan B Due 2025 | ||
Debt Instrument [Line Items] | ||
Long-term debt, gross | $ 473 | $ 475 |
Long-term Debt and Credit Agr_4
Long-term Debt and Credit Agreement - Schedule of Debt (Parenthetical) (Details) | 9 Months Ended | |
Sep. 30, 2019 | Oct. 30, 2018 | |
6.125% notes due 2026 | ||
Debt Instrument [Line Items] | ||
Interest rate | 6.125% | 6.125% |
Debt instrument maturity year | 2026 | |
Five Year Variable Rate Term Loan A Due 2023 | ||
Debt Instrument [Line Items] | ||
Debt instrument maturity year | 2023 | |
Seven Year Variable Rate Term Loan B Due 2025 | ||
Debt Instrument [Line Items] | ||
Debt instrument maturity year | 2025 |
Long-term Debt and Credit Agr_5
Long-term Debt and Credit Agreement - Additional Information (Details) - USD ($) $ in Millions | Oct. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2019 |
Debt Instrument [Line Items] | |||
Interest expense, debt | $ 16 | $ 51 | |
Revolving Credit Facility | |||
Debt Instrument [Line Items] | |||
Borrowings from credit facility | $ 60 | $ 60 | |
6.125% notes due 2026 | |||
Debt Instrument [Line Items] | |||
Principal amount issued | $ 400 | ||
Interest rate | 6.125% | 6.125% | 6.125% |
Credit Agreement | Term B Loan Facility | |||
Debt Instrument [Line Items] | |||
Principal amount issued | $ 475 | ||
Credit facilities term | 7 years | ||
Debt instrument, basis spread on variable rate | 2.00% | ||
Credit Agreement | Term A Loan Facility | |||
Debt Instrument [Line Items] | |||
Principal amount issued | $ 350 | ||
Credit facilities term | 5 years | ||
Debt instrument, basis spread on variable rate | 2.00% | ||
Credit Agreement | Revolving Credit Facility | |||
Debt Instrument [Line Items] | |||
Credit facilities term | 5 years | ||
Credit facility, maximum borrowing amount | $ 350 | $ 350 | $ 350 |
Borrowings from credit facility | $ 60 | $ 60 | |
Weighted average interest rate | 4.09% | 4.09% | |
Credit Agreement | Revolving Credit Facility | Federal Funds Effective Rate and Overnight Bank Funding Rate | |||
Debt Instrument [Line Items] | |||
Debt instrument, basis spread on variable rate | 0.50% | ||
Credit Agreement | Revolving Credit Facility | London Interbank Offered Rate (LIBOR) | |||
Debt Instrument [Line Items] | |||
Debt instrument, basis spread on variable rate | 1.00% | ||
Credit Agreement | Letter of Credit | |||
Debt Instrument [Line Items] | |||
Borrowings from credit facility | $ 0 | $ 0 | |
Credit Agreement | Term Loan Facilities | |||
Debt Instrument [Line Items] | |||
Interest rate | 4.11% | 4.11% | |
Senior Notes | |||
Debt Instrument [Line Items] | |||
Debt Instrument fair value | $ 422 | $ 422 |
Leases - Schedule of Operating
Leases - Schedule of Operating Lease Costs (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended |
Sep. 30, 2019 | Sep. 30, 2019 | |
Operating Lease Costs | ||
Total operating lease costs | $ 14 | $ 39 |
Selling, General and Administrative Expenses | ||
Operating Lease Costs | ||
Total operating lease costs | 10 | 27 |
Cost of Goods Sold | ||
Operating Lease Costs | ||
Total operating lease costs | $ 4 | $ 12 |
Leases - Additional Information
Leases - Additional Information (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended |
Sep. 30, 2019 | Sep. 30, 2019 | |
Leases [Abstract] | ||
Variable lease costs | $ 3 | $ 8 |
Leases - Summary of Lease Recog
Leases - Summary of Lease Recognized Related to Operating Leases (Details) - USD ($) $ in Millions | Sep. 30, 2019 | Jan. 01, 2019 |
Leases [Abstract] | ||
Operating right-of-use assets | $ 130 | $ 112 |
Operating Lease, Right-of-Use Asset, Statement of Financial Position [Extensible List] | us-gaap:OtherAssets | |
Operating lease liabilities - current | $ 29 | |
Operating Lease, Liability, Current, Statement of Financial Position [Extensible List] | us-gaap:AccruedLiabilitiesCurrent | |
Operating lease liabilities - noncurrent | $ 106 | |
Operating Lease, Liability, Noncurrent, Statement of Financial Position [Extensible List] | us-gaap:OtherLiabilitiesNoncurrent |
Leases - Maturities of Operatin
Leases - Maturities of Operating Lease Liabilities (Details) - USD ($) $ in Millions | Sep. 30, 2019 | Jan. 01, 2019 |
Leases [Abstract] | ||
2019 | $ 9 | |
2020 | 35 | |
2021 | 32 | |
2022 | 27 | |
2023 | 20 | |
Thereafter | 36 | |
Total lease payments | 159 | |
Less: imputed interest | 24 | |
Present value of operating lease liabilities | $ 135 | $ 115 |
Weighted-average remaining lease term (years) | 5 years 7 months 20 days | |
Weighted-average incremental borrowing rate | 6.00% |
Leases - Schedule of Future Min
Leases - Schedule of Future Minimum Lease Payments under Operating Leases (Details) $ in Millions | Dec. 31, 2018USD ($) |
Leases [Abstract] | |
2019 | $ 39 |
2020 | 33 |
2021 | 28 |
2022 | 22 |
2023 | 15 |
Thereafter | 17 |
Total future minimum lease payments | $ 154 |
Leases - Supplemental Cash Flow
Leases - Supplemental Cash Flow Information Related to Operating Leases (Details) $ in Millions | 9 Months Ended |
Sep. 30, 2019USD ($) | |
Leases [Abstract] | |
Operating cash outflows | $ 28 |
Operating right-of-use assets obtained in exchange for operating lease liabilities | $ 47 |
Accumulated Other Comprehensi_3
Accumulated Other Comprehensive Loss - Summary of Changes in Accumulated Other Comprehensive Loss by Component (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||||||
Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Accumulated Other Comprehensive Income Loss [Line Items] | ||||||||
Beginning Balance | $ 1,593 | $ 1,592 | $ 1,533 | $ 2,480 | $ 2,589 | $ 2,603 | $ 1,533 | $ 2,603 |
Other comprehensive income (loss) before reclassifications | (35) | (4) | 6 | (7) | (49) | 31 | ||
Amounts reclassified from accumulated other comprehensive income | 2 | (1) | ||||||
Total other comprehensive (loss), net of tax | (35) | (5) | 30 | (33) | (24) | |||
Ending Balance | 1,573 | 1,593 | 1,592 | 2,685 | 2,480 | 2,589 | 1,573 | 2,685 |
Foreign Exchange Translation Adjustment | ||||||||
Accumulated Other Comprehensive Income Loss [Line Items] | ||||||||
Beginning Balance | (175) | (171) | (177) | (118) | (69) | (100) | (177) | (100) |
Other comprehensive income (loss) before reclassifications | (35) | (4) | 6 | (5) | (49) | 31 | ||
Total other comprehensive (loss), net of tax | 31 | |||||||
Ending Balance | (210) | (175) | (171) | (123) | (118) | (69) | (210) | (123) |
Pension Adjusments | ||||||||
Accumulated Other Comprehensive Income Loss [Line Items] | ||||||||
Beginning Balance | (12) | (12) | (12) | (12) | ||||
Ending Balance | (12) | (12) | (12) | (12) | ||||
Changes in Fair Value of Effective Cash Flow Hedges | ||||||||
Accumulated Other Comprehensive Income Loss [Line Items] | ||||||||
Beginning Balance | (1) | (1) | ||||||
Other comprehensive income (loss) before reclassifications | (2) | |||||||
Amounts reclassified from accumulated other comprehensive income | 2 | (1) | ||||||
Total other comprehensive (loss), net of tax | (1) | |||||||
Ending Balance | (1) | (1) | (1) | (1) | ||||
Accumulated Other Comprehensive Loss | ||||||||
Accumulated Other Comprehensive Income Loss [Line Items] | ||||||||
Beginning Balance | (187) | (183) | (189) | (119) | (70) | (100) | (189) | (100) |
Ending Balance | $ (222) | $ (187) | $ (183) | $ (124) | $ (119) | $ (70) | $ (222) | $ (124) |
Stock-Based Compensation Plans
Stock-Based Compensation Plans - Additional Information (Details) - 2018 Stock Incentive Plan | 9 Months Ended |
Sep. 30, 2019$ / sharesshares | |
Performance-Based Restricted Stock Units | Employees | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Awards granted | shares | 319,771 |
Time Based Restricted Stock Units | Employees | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Awards granted | shares | 1,255,440 |
Performance-Based and Service Based Restricted Stock Units | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Weighted average grant date fair value | $ / shares | $ 22.06 |
Stock Options | Employees | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Awards granted | shares | 1,155,566 |
Weighted average exercise price per share | $ / shares | $ 24.37 |
Weighted average grant date fair value per share | $ / shares | $ 6.71 |
Commitments and Contingencies -
Commitments and Contingencies - Additional Information (Details) | Oct. 29, 2018USD ($)Site | Sep. 30, 2019USD ($) | Sep. 30, 2018USD ($) | Sep. 30, 2019USD ($) | Sep. 30, 2018USD ($) | Dec. 31, 2018USD ($) | |
Loss Contingencies [Line Items] | |||||||
Environmental expense | [1] | $ 146,000,000 | $ 322,000,000 | ||||
Environmental liabilities | $ 21,000,000 | 735,000,000 | $ 21,000,000 | 735,000,000 | |||
Honeywell reimbursement agreement expense | [2] | 35,000,000 | $ 57,000,000 | ||||
Trademark license agreement | 40 years | ||||||
Legal expenses | 1,000,000 | $ 20,000,000 | |||||
Legal reserve | 18,000,000 | $ 18,000,000 | $ 7,000,000 | ||||
Indemnification Agreement | |||||||
Loss Contingencies [Line Items] | |||||||
Indemnification payable, late payment fee percentage | 5.00% | ||||||
Site contingency, number of sites | Site | 230 | ||||||
Indemnification agreement description | On October 29, 2018, in connection with the Spin-Off, the Company entered into an indemnification and reimbursement agreement with Honeywell (the “Honeywell Reimbursement Agreement”) pursuant to which the Company has an obligation to make cash payments to Honeywell in amounts equal to 90% of payments for certain Honeywell environmental-liability payments, which include amounts billed (“payments”), less 90% of Honeywell’s net insurance receipts relating to such liabilities, and less 90% of the net proceeds received by Honeywell in connection with (i) affirmative claims relating to such liabilities, (ii) contributions by other parties relating to such liabilities and (iii) certain property sales (the “recoveries”). The amount payable by the Company in respect of such liabilities arising in respect of any given year will be subject to a cap of $140 million (exclusive of any late payment fees up to 5% per annum). The scope of the Company’s current environmental remediation obligations subject to the Honeywell Reimbursement Agreement relates to approximately 230 sites or groups of sites that are undergoing environmental remediation under U.S. federal or state law and agency oversight for contamination associated with Honeywell legacy business operations. The ongoing environmental remediation is designed to address contaminants at upland and sediment sites, which include, among others, metals, organic compounds and polychlorinated biphenyls, through a variety of methods, which include, among others, excavation, capping, in-situ stabilization, groundwater treatment and dredging. In addition, the Company obligations subject to the Honeywell Reimbursement Agreement will include certain liabilities with respect to (i) hazardous exposure or toxic tort claims associated with the specified sites that arise after the Spin-Off, if any, (ii) currently unidentified releases of hazardous substances at or associated with the specified sites, (iii) other environmental claims associated with the specified sites and (iv) consequential damages. | ||||||
Maximum annual reimbursement obligation amount | 25,000,000 | $ 25,000,000 | |||||
Indemnification Agreement | Maximum | |||||||
Loss Contingencies [Line Items] | |||||||
Indemnity liability annual cap | $ 140,000,000 | ||||||
Tax Matters Agreement | |||||||
Loss Contingencies [Line Items] | |||||||
Indemnified amount | $ 152,000,000 | $ 152,000,000 | |||||
Honeywell | Trademark Agreement | |||||||
Loss Contingencies [Line Items] | |||||||
Royalty fee on net revenue | 1.50% | 1.50% | |||||
Royalty Expense | $ 6,000,000 | $ 20,000,000 | |||||
Honeywell | Indemnification Agreement | |||||||
Loss Contingencies [Line Items] | |||||||
Indemnification Payable Percentage of Payments | 90.00% | ||||||
Indemnification payable percentage of net insurance receipts | 90.00% | ||||||
Indemnification payable percentage of net proceeds received | 90.00% | ||||||
Other Expenses | |||||||
Loss Contingencies [Line Items] | |||||||
Environmental expense | $ 146,000,000 | $ 322,000,000 | |||||
Honeywell reimbursement agreement expense | $ 35,000,000 | $ 57,000,000 | |||||
[1] | Represents historical environmental expenses as reported under 100% carryover basis. | ||||||
[2] | Represents recorded expenses related to the Honeywell Reimbursement Agreement. |
Commitments and Contingencies_2
Commitments and Contingencies - Summary of Honeywell Reimbursement Agreement Liabilities (Details) - Honeywell $ in Millions | 9 Months Ended |
Sep. 30, 2019USD ($) | |
Accrual for Honeywell Reimbursement Agreement | |
Beginning of period | $ 616 |
Accruals for indemnification liabilities deemed probable and reasonably estimable | 138 |
Reduction (1) | (81) |
Indemnification payment | (105) |
End of period | $ 568 |
Commitments and Contingencies_3
Commitments and Contingencies - Summary of Honeywell Reimbursement Agreement Liabilities Included in Balance Sheet Accounts (Details) - Honeywell - USD ($) $ in Millions | Sep. 30, 2019 | Dec. 31, 2018 |
Loss Contingency, Classification of Accrual [Abstract] | ||
Honeywell Reimbursement Agreement liabilities | $ 568 | $ 616 |
Accrued Liabilities | ||
Loss Contingency, Classification of Accrual [Abstract] | ||
Honeywell Reimbursement agreement current portion | 140 | |
Obligations Payable to Honeywell | ||
Loss Contingency, Classification of Accrual [Abstract] | ||
Honeywell Reimbursement Agreement Long Term Portion | $ 428 |
Commitments and Contingencies_4
Commitments and Contingencies - Summary of Recorded Obligations for Product Warranties and Product Performance Guarantee (Details) - USD ($) $ in Millions | 9 Months Ended | |
Sep. 30, 2019 | Sep. 30, 2018 | |
Product Warranties and Guarantees [Roll forward] | ||
Beginning of period | $ 26 | $ 17 |
Accruals for warranties/guarantees issued during the year | 10 | 12 |
Adjustment of pre-existing warranties/guarantees | (1) | (2) |
Settlement of warranty/guarantee claims | (12) | (12) |
End of period | $ 23 | $ 15 |
Pension - Additional Informatio
Pension - Additional Information (Details) - Pension Plans - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | Dec. 31, 2018 | |
Defined Benefit Plan Disclosure [Line Items] | |||||
Pension expense | $ 3 | $ 10 | |||
Pension obligations | $ 93 | $ 93 | $ 88 | ||
Net periodic benefit cost | $ 2 | $ 5 |
Segment Financial Data - Additi
Segment Financial Data - Additional Information (Details) | 9 Months Ended |
Sep. 30, 2019Segment | |
Segment Reporting [Abstract] | |
Number of operating segments | 2 |
Segment Financial Data - Schedu
Segment Financial Data - Schedule of Segment Information (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | |||||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | ||||
Revenue | |||||||
Total revenue | $ 1,226 | $ 1,200 | [1] | $ 3,684 | $ 3,561 | [1] | |
Segment adjusted EBITDA | |||||||
Total | 59 | 128 | 186 | 388 | |||
Segment Adjusted EBITDA | 114 | 150 | 363 | 457 | |||
Products & Solutions | |||||||
Revenue | |||||||
Total revenue | [2] | 512 | 526 | [1] | 1,600 | 1,567 | [1] |
Segment adjusted EBITDA | |||||||
Total | 66 | 107 | 222 | 333 | |||
ADI Global Distribution | |||||||
Revenue | |||||||
Total revenue | 714 | 674 | [1] | 2,084 | 1,994 | [1] | |
Segment adjusted EBITDA | |||||||
Total | 48 | 43 | 141 | 124 | |||
Operating Segments | Products & Solutions | |||||||
Revenue | |||||||
Total revenue | 595 | 603 | 1,828 | 1,803 | |||
Intersegment Revenue Eliminations | Products & Solutions | |||||||
Revenue | |||||||
Total revenue | $ (83) | $ (77) | $ (228) | $ (236) | |||
[1] | The unaudited disaggregated revenue disclosure for the three and nine month periods ended September 30, 2018 contained misallocated revenue between the ADI Global Distribution geographies U.S. and Canada and India. Correcting this allocation increased U.S. and Canada revenue and reduced India revenue for the three and nine month periods ended September 30, 2018 by $30 million and $35 million, respectively. There is no other impact to the unaudited Consolidated and Combined Interim Financial Statements for the three and nine month periods ended September 30, 2018. | ||||||
[2] | Products & Solutions sales channel naming convention changed from what was disclosed in our quarterly report for the quarter ended September 30, 2018. Comfort & Care was broken out into Comfort and Residential Thermal Solutions (“RTS”) |
Segment Financial Data - Sche_2
Segment Financial Data - Schedule of Reconciliation of Segment Adjusted EBITDA (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | ||
Segment Reporting [Abstract] | |||||
Net income | $ 8 | $ 311 | $ 45 | $ 389 | |
Net interest expense (income) | 16 | 49 | (1) | ||
Tax expense (benefit) | (329) | 36 | (323) | ||
Depreciation and amortization | 19 | 16 | 55 | 49 | |
Environmental expense | [1] | 146 | 322 | ||
Honeywell reimbursement agreement expense | [2] | 35 | 57 | ||
Stock compensation expense | [3] | 8 | 6 | 22 | 15 |
Repositioning charges | 9 | 34 | 5 | ||
Other | [4] | 19 | 65 | 1 | |
Segment Adjusted EBITDA | $ 114 | $ 150 | $ 363 | $ 457 | |
[1] | Represents historical environmental expenses as reported under 100% carryover basis. | ||||
[2] | Represents recorded expenses related to the Honeywell Reimbursement Agreement. | ||||
[3] | Stock compensation expense adjustment includes only non-cash expenses. | ||||
[4] | Represents $19 million and $53 million in costs directly related to the Spin-Off, $0 million and $13 million related to developments on legal claims that arose prior to the Spin-Off, and ($0) million and ($1) million in non-operating (income) expense adjustment which excludes net interest (income) for the three and nine months ended September 30, 2019, respectively. For the three and nine months ended September 30, 2018 Other represents other non-operating (income) expense. |
Segment Financial Data - Sche_3
Segment Financial Data - Schedule of Reconciliation of Segment Adjusted EBITDA (Parenthetical) (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | |
Sep. 30, 2019 | Sep. 30, 2019 | Sep. 30, 2018 | |
Loss Contingencies [Line Items] | |||
Spin-off costs | $ 9 | $ 34 | $ 5 |
Developments on legal claims prior to spin-off | 0 | 13 | |
Non-operating (income) expense adjustment | 0 | (1) | |
Honeywell | |||
Loss Contingencies [Line Items] | |||
Spin-off costs | $ 19 | $ 53 |