REZI - Earnings call transcript Q4 2019 | Resideo Technologies, Inc.

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Operator

Welcome, everyone to Resideo Technologies Fourth Quarter Earnings Conference Call. Today’s call is being recorded. All participants will be in a listen-only mode until the formal question-and-answer portion of the call. [Operator Instructions]

I would now like to introduce Mr. and President Vice Giordano, Treasurer. Matt Mr. now Giordano you may begin.

Matt Giordano

Bob us morning. earnings quarter fourth Independent you Director. Nefkens conference our Andy joining Thank for for and Mike and have On call Resideo's joined Lead today's by Teich, Good call. we Ryder full year XXXX

presentation resideo.com. You a and our Investor the earnings of find on Relations can release copy materials page at

in forward-looking other this that the a and a Securities to morning’s uncertainties. filings Commission. may differ including presentation forward-looking with results constitute Statements remind The from call statements. factors, Exchange during made you or this in obligation no results company such as time a described and Actual guarantees any than like forward-looking number number those to Resideo’s not of facts We’d forward-looking historical statements. performance result update and are of statements of materially may the contains of those future risks from assumes involve and to statements time

during on identify be our results uncertainties the section can website. on Relations non-GAAP Form We Report Annual reconciliation found which to affect our both our SEC and other financial presentation, GAAP refer of the the our filings. of call information. non-GAAP to and certain risks accompanying today, in principal Additionally, Investor that performance XX-K included earnings press A in of company’s release we is will our and

Mike. over the turn now to call I’ll

Mike Nefkens

Thanks Matt and good everyone. morning

governance and close results questions. board for update financial And our and XXXX our operational will also at discuss Andy briefly will remarks will provide For opportunity. today's as start discuss Bob review on and the take initiatives. high a by our Andy call, we well we'll the few outlook and level XXXX. being as a a before an with business review our led with market of QX then

we go to as residential market over Now with XXX security comfort, billion. ADI voltage of Distribution, over an of Resideo turning in Solutions $XX distribution households segments, of XXXX security markets in and position low global and $X and established solutions, thermal Global well revenue addressable had to million as finished targeting Resideo and products. leadership are via business Slide the and products total Products two billion. We X,

and Products contractors, the delivering more equity had of and is than Home retailers unmatched innovative, history use, in value segment X,XXX deliver solutions Our retail our reliable, easy The to X,XXX easy Solutions solutions distributors significant online install under brand supported a to the by XXX,XXX OEMs, over Honeywell major home. what scale partners. for brand, and

partners year pro and system close our X.X million million customers. per to components Through and connected XX over have installed we

global a on ADI XX security installers. distributor security distribution connected We products. of focused leading is home ADI locations has and XXX is business over store countries. across ADI, number also operate which the pro global one

looking turning deeper to go is we're their a in and trusted for in install brand billion market. estimated deeper multi-category relationships, Products market addressable dollar our a homes. to Now markets segments served. robust base business our Solutions In two the bit in into the Slide leadership, they and we'll X, foundation, a recognition need people This that expand one solid stand critical a and presence fills growing $XX

three P&S serve our We markets primary business. in

leak temperature products, prevention controlled quality First solutions. thermostats, indoor comfort, on air focus we water where and

in billion, clear is us making market. Our leader this a for annual approximately $X.X revenue XXXX

furnace heater controls $XXX Second boiler and systems, Solutions, is systems. roughly primarily RTS, in a Residential business focused water XXXX, Thermal on million

software. security Lastly, panels, our million $XXX business, security approximately pro on and in annual revenue in with pro focused XXXX, peripherals

$XX industry an distribution leader On billion in market. expanding is an distribution the side, ADI

significant ADI reputation competitive of over products advantage. pros coupled a provides a services. XXX,XXX products, with around Herman provider announced of end, audio with service and retail the of ProAV, and contact globe, distributor that close the leading breadth integrated large To visual we the recently Our excellence and acquisition footprint for

We've years. And existing complements market acquisition been and our market platform successfully building this our of to past over couple to our go strengthens serve internal strategy. capabilities this the

margin For entry ADI our This greatly critical market. ADI and this allows the Herman of the growing in through space of one ProAV us accelerates one is the offerings. accretive preeminent companies component service offer to is segments of fastest acquisition our space. into

So with over turn Andy. that, now to I'll it

Andy Teich

everyone. morning, Thanks Mike and good

Resideo to position strong security residential thermal mentioned, distribution as competitive leading business. comfort, as has global X, Moving a and Slide a as in markets, Mike the well

of installed in history good Despite upon and to XXXX with across challenging brands solutions Our of the homes products technology reliable a our the with continued foundation of trusted is coupled strength ADI millions proved at delivering trusted performance and and a year. are be built brand which world.

making long-term to experienced The in related issues our these We we're with and and we're strategic on and issues management, our business, include creation. changes new needed performance. we investments drive management, improve Products new and address improvements and value and product believe including objectives engineering to value challenges, growth introductions, product engineering, will introductions. To Solutions product execution which focused value product

with Starting core of NPI, and we quality to margins, that we acceptance. deliver new customer the introductions certain our product prioritize business hardware categories improved or product development expect within

design of being with integration is rich process, gate a of and voice stage improved the value a the revamped process to NPI rigorous Our customer.

better engineering, market and selected leveraging well value our and are standardize our existing on customer needs. costs will our of supply products achieved by improving global be and we functionality components, chain to product terms In as for quality as focused aligning to This scale platforms. common lowering

underway have Additionally, reliability increased cost and improved positioning. identify competitive process a additional reductions, and to platforming analysis opportunities benchmarking we for

also systems achieved management, in sales, informed product and customers are inventory end operations we better is more serve link make Relative by organizational processes changes to making decisions. that new and part planning. This to and

and optimization station. lifecycle pricing invested also in management, tools other enable segment have to We analytics and product

done strategic in chain of aspect the and of strategic is optimization oversight to amount been excellence, business experts work a members. as newly drive Turning organizational X, an discuss being every and Together strategic the comprised of formed is Resideo's independent with we'll financial committee, which there Slide of operational which under of initiatives. board a four through result analyzing the supply will outside review, of our our leading operational and tremendous we've

in initiatives these up few the the Resideo more success. in impact efforts prioritize capabilities on to of structure with most to the business XXXX. for XXXX the our line to At a and meaningful long-term long-term moments. XXXX. and and We the same goals we achieve That sight in about will set have time, speak develop mid initiatives I'll the

decades Niccolo board with from Kushner having experience transformations, to and board, We're as board. a perspectives new to Brian's board. we has than committed of Independent December to fresh more the including in a Brian corporate CEO. the with assignments a appointment has welcome our executive a non-independent dozen Together De as transformational the spearheading of Brian resigned Masi a Director company

Products we his and Within December Sach many be the team Sankpal has forward. contributions Solutions in to of to look invaluable in our last segment, management President named an forward was Solutions addition Products Sach to and already and moving year. proven

Resideo, joined November. Ryder addition, following last Ragan's In interim was Joe departure Bob CFO

successor. And permanent for we for search also make ongoing on our to continue finally progress CFO. a an have Mike's We search

focus, operational and which review, let capital margin to Slide growth, has dig X, of and and our SG&A efficiency and management. into financial now gross areas working me structural three Turning revenue optimization

efficiencies To procurement enabling in process The first QX. we the by have and of and savings. some of of been focused indirect set implemented our purchasing high streamlining the phase already with a cutting internal executable profit processes, R&D rapidly we're gross SG&A organization, consists improve improving which of margins, initiatives, aligning direct are impact on NPI costs our

will areas one phase meaningful in most implementation. provide the These our of savings cost

predictive direct of part roughly and first drive analytics looked spend of our to suppliers XX% As to down we've pricing. our at the materials challenge use phase,

expect We effort. XXXX our from see improvements coming part work of value as to spec begin engineering our in to optimization margin

opportunities phases to beyond. supply with will underway further in in expect to value our of of future plans for and deliver product processes. these already complex our impact our at optimizing process platforming, initiatives engineering. That Many the forward the XXXX means chain benefits realizing NPI and we create move portfolio, and streamlining revamped are efficiency footprint, In looking improving more

expects year XXXX of to fiscal EBITDA the deliver XXXX. beyond. $XX and in Overall, transformation is million EBITDA XXXX of incremental and company XXX $XX for million to million The incremental million of the program greater fiscal $XXX expected to fiscal than million $XX year to drive year total in EBITDA

in dollars. We're gross practices in improving our increased strategic XXXX, rates and prioritizing spend longer growth and Moving targeting segments time selling our additional sales opportunities. driving new to improvement. drive revenue starting Slide some of and and areas attach our margin revenue term with By opportunities we're returns on marketing customer in confident focus we further belief let's and cross and customer taking advantage enhance focusing gains. can on tactical businesses, We're lifetime increase X, tools also value on security comfort

close we assess a gross policy portfolio, product are underperforming margin and the decided a we result, instituting our we to to certain On margin side, pricing Furthermore, products. as leakage. rationalize

and These the necessary In phases. several North flexibility. operational an initial for our US SG&A reduction be made but increased terms of were in changes a in organization will week. perspective, financial difficult last optimization, America from in We've implemented credentials focused workforce

our example, operations more units, allowed of into to business to other we've further to away come, individual critical North America simplify internal setup months further shifted of regions. move also processes will product functions capabilities efficient functions the support This an but create to such not In harness As functions. us further business Centers tools to regional to new previous and and scale we the functions gave the these business integrate our in from create Excellence. core closer the and only

real we strategic services benefits. indirect budgeting the longer procurement indirect optimal financial rigorous a a the process and in the and and have are In parallel, term operational to anticipate On XX% spend gone a total conducting company. our procurement in various which identify estate will reduction within footprint, zero-based we through for the side, provide supplies XXXX. of spending review In teams

working third Finally, our structural capital management. efficiency area to our and focus is improve

success. is while transformation, financial balance we positioning During imperative that the term near long-term it Resideo for benefits

effective and our processes of For development product optimizing process. product management example, for in we NPI refinement the through P&S, are

Similarly, quality reliability, there product while across experience opportunities better our that employees. multiple a products existing our of suggests user are to many delivering costs, lower value engineering analysis and improved

ADI On engagement the number us. side, an increasing of online their with our customers expanding we're seeing

provide As investing such, to costs our and further channel and improving better customer sales lower we're capabilities our ecommerce in digital experiences.

challenges address to operational tools with. and decisions managers To we're will quickly in quality effectively. give better performance, investing and we further improve ensure make to our data our This identify

improving on working bolstered management will focus Our for to by better be commercial inventory terms planning and and our tools and by capital use adjustments policies.

more advance look we forward As I initiatives, sharing with you. to these

that are slated Moving current the currently focus to under to processes appropriate systems based financial initiatives lower P&S. will review in X we're products and set XXXX executing business. XXXX. measures core initial costs phase Resideo's to The later and and improve of to development on and to improve and and execution one Slide initiatives Series the summarize, both are the phase taking of operational for is XXXX related and drive our changes two

will initiatives ahead. and improved operational We for foundation the performance years believe these in execution lay the

agreements from business. with investors on We intend and inquiries Honeywell get to and provide with also the to they engage We various the our Honeywell regarding constraints our agreements. opportunities periodically

of provided our have on the language available of agreements intended of of the presentation. agreements. website a materials to terms an to terms some the information replace are also summary of of in certain We've some more We the this These agreements. the detailed made on appendix not

the And the agreements language understanding looking for complete the actual we most themselves. read encourage to investors of

reimbursement provisions We have the Honeywell the effective to the have and relating fourth we dispute the became to turns with amended agreement. indemnification the in quarter whether corresponding in agreement that applied credit highlighted automatically

in appreciate aware our as to While can is to want hope comment dispute, ensure legal more limited. investors pending ability dispute detail the I on a are we of you

Thank long-term In external right committee, track. to continue advisors forward your but to There's time you to on for closing increase look operational progress. the work growth on the Resideo can say morning. still and we strategic confidently our management and work do, updating returns for We and this we're diligently to team more to our position sustainable best our shareholders. you

I'll over our to turn And the now to call Bob review financials.

Bob Ryder

XXXX. full financial my summarize XXXX results year the guidance In everyone. call morning, section Good and will provide the of I for fourth cover results briefly quarter

quarter management fourth growth at driving driven adjusted global ASI expansion. ongoing revenue profit and were results and are Our cost where by margin EBITDA robust trends strong disciplined execution

guidance Solutions. QX October in of the better ahead revised anticipated finished to We than and at issued we Products mix the

compared prior initiated full to review XXXX financial operational However, address was sub the year. QX underlying and performance. year issues unfavorably the the The to optimal and

at revenues XX. revenue performance strong by offset Let's QX erosion and X% constant basis Resideo best ADI Products XX% Slide finished growth excellent grew X% the was sales partially at Solutions. turn EBITDA fourth currency a year, in XXXX. ADI. the EBITDA and quarter to on declined on last basis. its This and delivered compared rates very flow through a GAAP of adjusted despite

All product strong the adjusted strong its ADI. margin XXXX and ADI growth. to adjusted results, the XX XX% delivered charge. Similar segment EBITDA quarters, to culture lines sales QX to Turning security executional revenues better surveillance is to or that at productivity geographies converted of was XX% and prior this improve grew performance to leading EBITDA reflective basis than Through in growth SG&A QX. able with points X.X% ADI and

and customers comfort see and Higher thermostat continued in revenues patterns negatively grew Products portfolio channel. RTS while warmer OEM Comfort Solutions RTS revenue erosion the X% security the top weather at line impacted revenue in and its in QX decreased fixed dampened growth. the revenue inventories Our brakes trade quarter, to declined.

Inventory and mix, offs in higher of business. fourth total lines lower write primarily the to in due offs, EBITDA Adjusted costs. $XX QX The million, quarter. year revenue to Solutions write offs Products comfort write at XX% total bringing and declined product in the and the million. production lower $XX These negative channel full inventory profitability and security were

mix the RTS margin normal sales the higher and were our than colder a non-connected overlap introduced discontinuation mix heavily winter thermostat. sales channel. Comfort OEM margin sales lower the in front, products On was margin towards weighted XXXX. security lower a XXXX towards sales of weighted new

currency strong finished Let's of and cost which turn growth financial XX% EBITDA revenue X% and We constant delivered GAAP XX. X% ADI adjusted currency a algorithm. billion delivered with growth. growth. reported the growth revenue disciplined growth revenues, with management $X XXXX Slide Again, constant an year X% X% excellent represents great revenue growth and and

growth adjusted X% it half At P&S constant EBITDA the P&S X% full and in sales X% grew flat a X%, up was was in on currency, and first down revenue where of whereas to year was to GAAP XX%. basis while revenue QX XXXX, to much stronger QX witnessed X% erosion.

grew down year For the robust X%, security RTS X%. business comfort while full and the X% down a was was

our EBITDA variances XXXX. to we adjusted As categorize XXXX

consolidated positive see a offset than benefits. $XXX You EBITDA in delivered million initiatives reduction. of negatives, that and volume by were more XX% resulting price We

profits lower mix new sales comfort However, margin RTS negative in from million. product lower sales in channel and reduced security product and and arising sales by channel margin $XXX

million offset had actions were SG&A of million pricing Material $XX specific and to in inventory more offs impact from and than write fixed sales the negative deleverage We by and upside. volume $XX reduce increased a labor inflation able factories to cost lower in XXXX. million cost $XX management and

also expanded made investments staff ecommerce and R&D We our sales and in platform.

we addition, place which off. in royalties new paid $XX connection In spin to the in million with arrangement in put was Honeywell a

Slide at look a take XX. Let's

mid-single growing and a digits to on flat For with low grow basis. Solutions single from digits X% and revenue to XXXX, ADI Resideo we X% expect Products GAAP

of strong to slow our and a expect half front We XXXX first be backend Solutions to due loaded growth revenue of primarily XXXX. half overlapping Products

to to EBITDA of XXXX, or million to million XX% in $XXX at XX%. For growth adjusted come expecting we're $XXX

bit guidance the operational and appropriate more the We transparency providing XXXX to and EBITDA financial categories for provide to review. bring attention in a two are

We'll EBITDA generated adjusted generated additional the provide and by through prior will and also business the We the growth between initiative. variants walk year-over-year by big base to drivers XXXX. you EBITDA review XXXX F&O F&O

and grow adjusted EBITDA business between to $XX $XX an million base From million. we our expect perspective,

the that In of we adjusted in will in million review be result $XX to F&O XXXX. $XX million XXXX. expect incremental one initiatives aspects new The of implemented the will addition, phase of various F&O throughout EBITDA

So indirect reduced year initiatives. realized staffing will XXXX. expected phase to benefit a savings The levels, procurement and savings one full not from be reduction COGS in are of come

phase basis, to expect million XXXX. savings an of in On XX drive million we these annualized XXX initiatives one to

begin over savings of we XXX As to F&O year full initiative. of one see phase and anticipate impacts the in from year two beyond, we and of full phase partial and results XXXX million initiatives

a have vet disciplined they appropriate the ensure for strategic we identify We initiatives F&O, process have the financial whereby and to returns. and

each assign cases its result our Resideo reaches case to quarterly is our will and When and forecast we return as case. calls. business create into execution and of appropriate determined part bake business update accountability probable, we investors management the financial We will the financial it

a for we bit driving tools, anticipate results revenue growth digital, ecommerce force and growth. XXXX. label effectiveness talk branches Let's new private acceleration, growth from about sales telesales expected and segment At ADI,

year to another higher of the see channels. to due of spending expect sales growth margin margin at adjusted and EBITDA ADI, We expansion discipline continued

XXXX For for Solutions, will business. RTS XXXX we regulatory growth Resideo anticipate two new Products thermostats OEM of in flat releases XXXX. overlap the single XXXX offset change security be price by impact the growth overlapping to and later the low group and somewhat for non-connected increases, product launch of digit our US

of to the variances let's to presentation at discuss XX Now, XXXX Resideo. of over drivers big turn investor Page XXXX

again volume positive and XXXX in we reduced pricing anticipate reduction positive of offs impact in For mix inventory year. upsides for drivers, a staff our XXXX anticipate a drive to write adjusted We EBITDA full initiative XXXX.

and production increased are costs from labor. drivers growth direct EBITDA these material offsetting Somewhat higher

our invest We functions and R&D difficulty] commercial digital in [technical our capabilities. continue and strengthen to

of performance These $XX do generally guidance million. initiative. We our XXXX million XXX our guidance. positive the range our not phase of $XXX F&O XXXX see million from $XX one indicators EBITDA $XXX you addition, quarterly million impact In bring us million to adjusted to to of provide

expect performance. However, to be QX year XXXX reflective do of not full our

digits For down to down QX, XX% low XXXX. revenue single be expect to EBITDA XX% adjusted be Resideo we and versus

We revenue face anticipate warmer patterns. below to a adjusted we and we as strong categories expect have overlap year QX we revenue all a ADI and products previous EBITDA, of solutions and have softness to XXXX and channel solid the of some quarter weather but

mix lower sales results the QX impact and at factory negatively revenue, negative EBITDA, adjusted QX Our XXXX costs P&S. higher

a continues and We're high sales, expansion. with its level margin industry ADI its to at financial better expanding perform its summary, investing very platform, it than a Within footprint, force focus. in In tools time Many bit digital expanding improvement. its physical and growth financial completely take continued significant is these we sales metrics, to expect but effectiveness and significant improvements label issues Products private ready, to will Solutions our segment. making its of of

a weaker have The XXXX. first base half to XXXX, of the business will first of half relative

hold, stronger and XXXX. significant year will and these impact and half The begin to beyond, effect more in overlap F&O have of be programs our to a back initiatives XXXX begin two have deliver expect implemented. the we as as programs F&O a issues initiatives phase much As to much full we phase one take a the

comments. to some back it Andy turn me closing Let for

Andy Teich

Bob. Thanks

With levels. changes a scale installer while the product disappointing board large of and foundation turn commitment the the making improved Let's year globally the we community initiatives enter to directors executed number Slide of strong Today and be many XXXX to said, recognized and level. trusted strengthened on challenges also had a with growing brands, governance its management results. professional a financial We at XXXX connections that in with operating driving categories. to deep clear global business, with loyal and to proved and XX. Resideo

and upon are impact the outlook the provided base foundation. on We as strong first today well business, we reflects building review. financial phase The our our focused our improvements in XXXX as of of operational

accelerated business and and strengthen in in deliver expect improved position to XXXX Resideo We performance for profitability XXXX and our beyond. further

call up now the Thanks Operator your for time your open today will to questions.

Operator

[Operator Go now We can ahead. first you. our question. Thank Instructions] take

John Lovallo

Bank Lovallo John for is guys, Thanks call. Hi, this taking America. of from my

how is the maybe the on CFO completing experience the you that Can product search. just are close kind you describe question to of The building the CEO, profile and first you're interviewing, candidates level of this? of

Andy Teich

John, Sure is speaking. this Andy

centric seeing process weight for demonstrated performance, product Associates communicating the is helping and us that candidates. process. we've putting that a we're good underway. certainly the a something delivering improvement hired focused. happens operating candidates have that an there. candidates is certainly have of looking it additional base value. track we to is Reynolds thus we as flow well talk shareholder So have about with And and soon that Russell on industrial our track that We've record We're as well hardware pool to organization process margin of the good, turnaround, We're seen forward the proven of record far underway, look of looks definitive And to the candidates shareholder as segment, more

John Lovallo

much of of seems, your And Okay, Maybe what outlook the is thanks. XX that cadence it while margins. imply seems to seems EBITDA adjusted your question, encouraging, high Products hanging is your how end And and aggressive, at and And Solutions XXXX it's ish fruit? is confidence roughly pretty range? realization next percent EBITDA then, level low of the of the low what expected? this

Andy Teich

it's high a add that a are here in improvement and of commentary done the the have Bob I'll issue half quickly certainly implement other year. come comments. the P&S of on us. realized in it want changes. have fairly hanging time by flip F&O a But of do second actionable to is The takes for and timing. that light But that the to on issues of can will that? for advisors another a obviously, there Bob, Because to be that by some to the those result actions work number to these level it couple you fair committees So there bigger amount light first, the I'll brought address over been here on that and comment that fruit generally this low is couple to margin

Bob Ryder

seriously and discussions guidance. it Obviously, we We provide the board. long with take

So we to the range provided we deliver. expect

margin, P&S number that addressed offline. much to probably the sense doesn't me. The better Regarding make that's you quote

there's of moving So a lot parts.

if Matt general call we you there. probably So trends offline, can give a discuss

John Lovallo

Okay.

great. the part. Finally, the that's is Execution plans hard in place

internally measurability curious externally. of this plan I'm assigning and of So internally And progress done? you and accountability both for are about how the the it getting of this kind

Andy Teich

have to So an with in systems responsible role there's a that that the a initiative detailed business who plan that responsibility rich process has history are initiatives. comments. each his the contained We've a has a are the that accountability the very is leader place is leader. the data to also initiative responsible assigned behind assigned business sole and and link executing for leaders And is Officer in and we in the overseeing Chief individual that Transformation that to that's

I connection accountability realized be will think there's good and from that process.

John Lovallo

much, very thanks guys. Alright,

Andy Teich

Thank you.

Operator

Thank you. next our along [Operator to move question. Instructions] We'll then

ahead. open go caller. line is Please Your

Jeff Kessler

with again. to at Kessler want Capital. I Andy, say, it's you to Jeff Hi, talk And hi is this good just Imperial

Andy Teich

Yeah. to as well. you Nice speaking

Jeff Kessler

Yeah. I've a couple questions here.

going is latter that of the ADI, with the competitor with sold there, – dealt do over. took – by what in distribution ADI levels ADI is inventory the from midyear, major until companies than is will with First your the are going deal by integration to dealt of in business on lower midyear is was they benefiting a settled, those to on and and competitor ADI that were you – There's expecting. part them of will it Did year another could which had obviously during they company there? annexed one have had – be couple they your on

Andy Teich

invested the are those that. benefit I standpoint plan in kind result think from well that I well it's we other combination a that that and is extremely short-term under a there's a market so, executing very very for share a investments It's historically. comes disruption ADI players the has for been because think run I business business, always in Jeff a in Yeah, managed this But year well, have some mean, ADI. in of situations always industry from business like said,

specific So we're previous results. ADI force been think going areas improve also ecommerce some most business our to the the have opportunity importantly, of in section commentary our the I sales Q&A And to improve target the in should and effectiveness to mentioned call. drive that good

M&A set think a the are together to and environment are year. both us that advantageous those of combination for I So up ADI for on good initiatives things going business relative with

Jeff Kessler

Okay.

you with product either to getting comment older products seen the on to who going what's were in past lost. some development company. product there development slightly I've from was come newer they've this the in were talked It the of I've who in of Honeywell. now perhaps the lack From regard in of people getting you when of products terms critical question, and over the some people or seen did the Can like sounds Second of that on what one place the we've gotten what developing coming problems from Honeywell in you've folks year place? some then replenished were encountered the company people folks selling that not over and

Andy Teich

you, manifested with product an was agree that of the Jeff, opportunity for talent areas I development XXXX. P&S, posting in improvement of in lack some there in and So our that that of results was

So we've with Sankpal, history new hired Solutions now front in got segments. Products Sach a the problems he's are Honeywell a identified President, and the and of

I going But operator, priorities, consuming is generate good well have Sach a an right number in I'm one regard. It's priorities it's of we're the the that from what the working He's on. thing right a motivate experienced instantly. for good job not that that got that the talent. you And something and get important results focus happens and process. most to a is think standpoint. in eye that And them lot positions talent the for players R&D there. and good to he So And on this point. is correct important that's focused properly a he's and that's talent This most direct and time knows and right he's confident on the managed selected them to that's at well

Jeff Kessler

you was XX cash seems related on Okay, the numbers for It's Bob at note differential number – Honeywell million. is, there, $XX that was measures months you one explain a your maybe final Can reimbursement reimbursement and in $XX million There to question question. on agreement be your a another that you – ended though financial financial Honeywell to there. payments million. onto in December assume that? expense the $XX three the agreement There's

Bob Ryder

Yeah. Sure, Jeff.

So can the see the free cash it that is, relatively number P&L you say how same than cash is is kind calculated. P&L the complicated, number, And different in thing full year you flows flow statement. it's amount statement. through the of for the I'd the where see what flow the hits The

If a some assuming and documents, will the pretty you the be is we're a what XXX of been cash year move it around P&L bit. much look will the at as little has

things decades valuations or [technical if every it's that, looking now or So like assume at you're million difficulty]. I deductible the would right non-tax year that's outflow $XXX

Jeff Kessler

further no have questions. I great, Alright,

of you got lot offline. You've on a stuff

appreciate you taking question. So thank you my and I

Andy Teich

Thanks, Jeff.

Operator

you. Thank

Andy Teich

in like there Looks queue. are the questions no more

Operator

Instructions] [Operator

Andy Teich

today. call questions more With put your in I no queue, can

Operator

go Please ahead.

Unidentified Analyst

morning. good Can Yes, hear you me?

Andy Teich

can. we Yes,

Unidentified Analyst

that, costs? but what implementation apologize I but this, of cash interested to you you've timing get cost the of if program? was in the Sure. said related If mostly the the

Andy Teich

– program We don't for this we haven't as the We'll not yet. cost. estimate the additional information on that we're at the program released of but program the full have yet cash progresses, releasing point have costs

Unidentified Analyst

being required of speak, a it just large can you component, less or you it will to As see be covenant magnitude specific? that something without significant is relief roughly

Andy Teich

the commentary this. Bob if got on any you've

Bob Ryder

covenant So our will banks. cause any project we're at the under issues to redundant any covenant not worried costs

We which will – look costs so at the of the will tables every quarters, EBITDA be obviously, adjusted quarter. there's update not onetime we program, if will items, the will them we update you and generally in in reconciliation include

So come them as historical we disclosing will the out. be the certainly XX-Q perspective in

Unidentified Analyst

of the on trajectory inventory and and color to Got noise the thermal it, given you underlying had lastly, on channel, channel? some sell residential helpful speak or in then the any can solutions thermostats that you the non-connected through

Andy Teich

the data, had products specifically connected products we've think that that other a section be enhancements that that back we bringing released sales products understand I specific include product. addressing you in are into the challenges development segment go are couple the of said, don't making can that the behind in a of popular to we And product on of some discontinued unit well. level was rationale that to So – and surrounding one in got that that. thermostat segment year we as this will But

to market challenges safe that it's that think affected thermostat addressing the I So say we're non-connected segment. the

Unidentified Analyst

luck. thank you and Alright, good

Andy Teich

you. Thank

Operator

At session. the will concluding Thank Q&A the or speakers for I today's to time, concludes any back remarks. turn this conference That additional you.

Mike Nefkens

participating Thanks quarter. everybody you call see for today's next in and

Operator

now That disconnect. gentlemen, concludes call. and you Ladies may today's conference

Resideo (REZI) 27 Feb 202019 Q4 Earnings call transcript