Resideo Technologies, Inc. · NYSE:REZI
Resideo Technologies — Investor Day (October 2018)
56 slides from Resideo Technologies's investor day presentation, Oct 10, 2018
Slide 1: Investor Showcase and Technology Demonstration
Investor Showcase and Technology Demonstration Wednesday, October 10 | New York Exhibit 99.1
Slide 2: Additional Information
Additional Information For additional information with respect to Resideo Technologies, Inc. and the proposed spin-off, please refer to the Form 10 Registration Statement, as it may be further amended, on file with the Securities and Exchange Commission (“Form 10”). The spin-off is subject to custom
Slide 3: Executive Overview
Mike Nefkens | President and CEO Executive Overview
Slide 4: Today's Presenters
Today’s Presenters Previously president, Honeywell Security Products Americas Responsible for overall strategy for Products and Distribution Engineer by training, with Honeywell since 2010 ADI North America leader for 6 years 30 years of logistics and distribution experience Began career in the U.S.
Slide 5: Resideo Snapshot
RESIDEO | Snapshot 1 Pro Forma (PF) Adjusted EBITDA including environmental indemnification payments is PF Adjusted EBITDA adjusted for payment pursuant to Indemnification and Reimbursement Agreement (“Reimbursement Agreement”). PF Adjusted EBITDA represents EBITDA adjusted for the Trademark License
Slide 6: Business Overview: Positioned to Win
RESIDEO | Business Overview Positioned to Win Industry Leadership Products Comfort & Care Security & Safety Distribution Americas EMEA India Select Customers ADT A.O. Smith The Home Depot Net Sales1 Segment Overview (2017 Actual) Geography Overview Channel Overview Leading global provider of critica
Slide 7: Broadest Portfolio Supported by Leading Distribution Business
Broadest Portfolio Supported by Leading Distribution Business 1 2 3 4 8 7 6 5 2 9 *Most Active SKUs RESIDEO | End-to-End Customer Experience
Slide 8: Multi-Channel Strategy Provides Stability and Customer Diversification
Multi-Channel Strategy Provides Stability and Customer Diversification RESIDEO | Honeywell Home and ADI: Creating a Better Experience Contractors: Deep relationships, many of which extend over 20 years OEMs: Long-standing relationships over 25 years, with some over 40 years Other: E-commerce, homebu
Slide 9: Professional Expertise Key to Simplifying Connected Home for Consumers
Electrical Contractors Professional Expertise Key to Simplifying Connected Home for Consumers RESIDEO | Modernizing Pro Channels to Deliver Connected Home Experience HVAC Contractors HVAC/ Energy Management Security & Safety Home Categories Professional Channels Electrical & Lighting Security Dealer
Slide 10: Our Position in Professional Installation is Our Strategic Advantage
ADI Distribution RemainCo Honeywell ~$305M Resideo ~$390M Other Third Parties ~$1,780M Source: 2017 Company data Homeowners and Other End Users Our Position in Professional Installation is Our Strategic Advantage RESIDEO | Go-To-Market Channels Products and Solutions Factory Direct ~$140M OEM ~$650M
Slide 11: Strong Market Positions in Addressable Markets
Source: IHS Markit (IHS), Navigant Consulting (Navigant), Building Services Research and Information Association (BSRIA) and management estimates Note: Net sales includes $337M intercompany sales in 2017. 1 Industry leadership per management estimates. Security & Safety Select Products Resideo’s Ind
Slide 12: Strong Industry Outlook Driven by Favorable Macro Trends
Source: Research and Management Estimates 1According to the US Census Bureau. Long-term median represents data from 1960 – 2017. ²According to the Bureau of Economic Analysis (BEA). 3According to Gartner Inc. Increasingly Connected Consumers Growing Demand for Comfort, Efficiency and Security Growin
Slide 13: Leadership Team
Rob Aarnes President ADI Distribution Drove above market growth, enhanced customer experience, built e-commerce presence Jennifer Bonuso VPGM Consumer Products Strong consumer marketing, product knowledge, sales Michael Flink VP Marketing and Sales Pricing management, global experience, developing a
Slide 14: Strong Momentum Heading into Spin
9%+ 1H 2017 – 1H 2018 NET SALES GROWTH 165 BPS 1H 2018 SEGMENT MARGIN CHANGE (YoY) KEY WINS CONNECTED DEVICE GROWTH1 25%+ CAGR 2013 – 2018E Strong Momentum Heading into Spin 6%+ 2017A – 2018E SALES GROWTH 1Connected is defined as any device with the capability to be monitored or controlled from a re
Slide 15: Segment Overview: Products
Mike Nefkens | President and CEO Segment Overview: Products
Slide 16: Products Segment Overview
PRODUCTS | Segment Overview Comfort & Care Security & Safety Temperature and Humidity Telehealth Water Air Panels Peripherals Sensors Cameras Communication Devices Awareness Sales by Geography2 Sales by Product Category Connected / Non-Connected3 Software Solutions 1Total Products sales includes int
Slide 17: History and Future Innovation
PRODUCTS | History and Future Innovation 130+ Years of Experience Providing Proven, Trusted and Tested Solutions SCOT – Adaptive Combustion Control 1885 1950 1960 1970 1990 2000 2009 2014 2016 2017 2018 Q1 2018 Q2 2018 Q4 Planned Introduction of New Products Honeywell Founding Thermostat Damper Flap
Slide 18: Major Player in Connected Home Software Solutions
Key Partnerships PRODUCTS | Major Player in Connected Home Software Solutions Expanding Developer Ecosystem
Slide 19: Software that Creates Recurring Revenue and Long Term Customers
Software that Creates Recurring Revenue and Long Term Customers PRODUCTS | Software Ties It All Together Software that unlocks new recurring revenue business models for contractors Recurring revenue with developers and participation in key smart home ecosystems Seamless control across connected prod
Slide 20: Honeywell Home App
PRODUCTS | Honeywell Home App
Slide 21: Deep Engineering Capabilities and Strong Intellectual Property
PRODUCTS | Deep Engineering Capabilities and Strong Intellectual Property Innovative Solutions Protected by Robust Intellectual Property Portfolio Global Engineering and Design Footprint Robust Patent Portfolio and IP Strategy Proven Global IP Strategy State-of-the art management and docketing syste
Slide 22: Manufacturing Footprint
PRODUCTS | Manufacturing Footprint Localized, Integrated Supply Chain to Support Products Business Globally Products Distribution Center (Owned) Resideo Manufacturing Site Products Distribution Center (3PL Operated) 14 3PL-Operated Distribution Centers 15 Countries 18 Manufacturing Sites 3 Owned Dis
Slide 23: Connected Home and Software
Scott Harkins | Vice President, General Manager, Connected Home Connected Home and Software
Slide 24: Connected Home Business Overview
Software that Creates Recurring Revenue and Long Term Customers CONNECTED HOME | Business Overview Positioned to Win Business Model Launched 1st cloud services in 1980s Large installed base of connected devices and consumers Participate in categories with proven SaaS revenue models Recurring revenue
Slide 25: Software Ties It All Together
Software that Creates Recurring Revenue and Long Term Customers CONNECTED HOME | Software Ties It All Together Software that unlocks new recurring revenue business models for contractors Recurring revenue with developers and participation in key smart home ecosystems Seamless control across connecte
Slide 26: Solutions and Growth Highlights
CONNECTED HOME | Solutions and Growth Highlights Key Products and Solutions Key Growth Initiatives Simplified user experiences for contractors, developers and consumers Expand recurring revenues via new software offerings Converge platforms and expand geographically AlarmNet Connected Home Total Con
Slide 27: Focused on End-to-End Customer Experience
Our Business Aligns to Customer Needs | Software Brings It All Together 86% ENERGY EFFICIENCY 77% INCREASED CONVENIENCE Source: PwC Survey 2016, US Non-Owners of Connected Home Devices 81% HOME SECURITY 73% GREATER CONTROL Consumer Motivating Factors Influencing Smart Home Device Purchase Contractor
Slide 28: Segment Overview: Distribution
Rob Aarnes | President, ADI Global Distribution Segment Overview: Distribution
Slide 29: ADI Distribution Segment Overview
ADI DISTRIBUTION | Segment Overview
Slide 30: ADI Distribution Segment Overview
ADI DISTRIBUTION | Segment Overview Product Categories Growth Culture $2.2B $2.5B 2015 2017 $2.6B $141M Sales by Geography Sales by Product Category 2017 Actual 6.5%+ CAGR Intrusion Networking Fire Comms Video Surveillance Central Vacuum Access Control Tools & Hardware Power Wire & Cable Audio/Video
Slide 31: ADI Distribution Geographic Footprint
ADI DISTRIBUTION | Geographic Footprint 350K Products 200+ Stocking Locations 19 Distribution Centers 1,300 Suppliers Sales in 100+ countries Countries with stocking locations North America Office locations within US and Canada 108 branches 9 distribution centers India 16 branches 3 distribution cen
Slide 32: Service Excellence as a Competitive Advantage
Products and Services Helping Our Customers Be More Productive, Knowledgeable, and Profitable ADI DISTRIBUTION | Service Excellence as a Competitive Advantage Product Trainings and Showcase Systems Design 24/7 Order Pickup Programming, Testing, Configuration Total Supply Chain Management Project Reg
Slide 33: ADI Distribution Growth Initiatives
Direct Lens into Industry Trends for Professional Channel ADI DISTRIBUTION | Growth Initiatives Enhance Digital Experience Expand Product Categories Expand Sales Footprint Key Growth Drivers More Products Through Existing Channels Private Label New Product Introduction ADI Website & Mobile App Engag
Slide 34: Growth Strategy
Inder Reddy | Vice President, Corporate Strategy Growth Strategy
Slide 35: Driving Growth Across Five Areas
Double Down on the Pro Channel and Grow Connected Categories GROWTH STRATEGY | Driving Growth Across Five Areas Innovative Solutions Software & Connectivity Professional Channels New Channels & Geographies Customer Service & New Categories Products and Solutions Distribution 1 2 3 4 5
Slide 36: Winning with Design, Technology and Connectivity
Grow Software and Connected Solutions GROWTH STRATEGY | Winning with Design, Technology and Connectivity 1 INNOVATIVE SOLUTIONS to Solve Customers’ Critical Needs 2 SOFTWARE & CONNECTIVITY for Value and Convenience Design Focus Designing for everyday life and critical home operations Core Technology
Slide 37: Growing with Pro Services and Channel Expansion
Pro-First Approach to Deliver Connected Home Solutions GROWTH STRATEGY | Growing with Pro Services and Channel Expansion 3 PROFESSIONAL CHANNELS to Strengthen Core and Grow 4 NEW CHANNELS and GEOGRAPHIES to Expand Presence Training & Support Marketing & Demand Generation Learning & Networking Events
Slide 38: ADI Distribution Growth Priorities
Distribution Partner of Choice for Connected Home Solutions GROWTH STRATEGY | ADI Distribution Growth Priorities 5 DISTRIBUTION EXCELLENCE To Support Professional Channel Field sales & tele-sales teams Selected new geographies Professional AV and connectivity ADI private label products Expanding Sal
Slide 39: The Resideo Advantage
Double Down on the Pro Channel and Grow Connected Categories GROWTH STRATEGY | The Resideo Advantage Resideo Competitors Knowledge & Expertise Global Leader – Trusted, Tested, Proven; >150M Homes Niche competency Breadth of Solutions On the Wall, Behind the Wall, Exterior, and In the Cloud Point pro
Slide 40: Financial Overview
Joe Ragan | Executive Vice President and CFO Financial Overview
Slide 41: Adjusted EBITDA and Margin
Adj. EBITDA margin (post-indemnity payment) Adj. EBITDA margin (pre-indemnity payment) Indemnity payment of $140M PF Adjusted EBITDA² $605 - $615 / $465 - $475³ $554 / $414³ Note: 2018E margins calculated based off the midpoint of the estimated ranges. See Appendix for Adjusted EBITDA reconciliation
Slide 42: Attractive Financial Profile: Net Sales Bridge
Attractive Financial Profile 2015 – 2018 Net Sales Bridge | (US$ in Millions)
Slide 43: Profitable Growth: EBITDA Bridge
Profitable Growth 2015 – 2017 EBITDA Bridge | (US$ in Millions) Note: Adjusted EBITDA including environmental indemnification payments is Adjusted EBITDA adjusted for an indemnity payment of $140M. Adjusted EBITDA adjusted for standalone costs, environmental expense, non-operating (income) expense,
Slide 44: Accelerating EBITDA
Accelerating EBITDA 2017 – 2018 EBITDA Bridge | (US$ in Millions) Note: PF Adjusted EBITDA represents PF EBITDA adjusted for the impact of the Trademark License Agreement, standalone costs, environmental expense, non-operating (income) expense, stock compensation expense and repositioning charges. 1
Slide 45: Investments that Reinforce Capabilities and Grow Market Position
Investments that Reinforce Capabilities and Grow Market Position (US$ in Millions) Capital Expenditure Priorities Modest capex needs Ample capacity for growth Continuous improvement in manufacturing processes driven by operating principles Capital Expenditures Capex (as % of Sales) Research and Deve
Slide 46: Strong Capital Structure and Liquidity Position to Drive Growth
Strong Capital Structure and Liquidity Position to Drive Growth (US$ in Millions) 1 2015 – 2017 organic growth 2 PF Adjusted EBITDA including environmental indemnification payments is PF Adjusted EBITDA adjusted for an indemnity payment of $140M. PF Adjusted EBITDA represents EBITDA adjusted for the
Slide 47: Indemnification and Reimbursement Overview and Impact
Indemnification and Reimbursement Overview and Impact Agreement for 25 years with maximum cash payment capped at $140M in respect of any year (exclusive of any late payment fees up to 5% per annum) plus any deferred amounts Financial relationship with Honeywell; not a contingent liability for Reside
Slide 48: Long-Term Financial Goals
Organic Growth 4%+ ~13% excl. environmental indemnification payments1 / ~10% incl. environmental indemnification payments2 Adjusted EBITDA Margin Capital Expenditures / Research & Development Capital Expenditures at ~1% of sales / Research and Development Expenses of ~$125M Tax Rate ~27% Marginal Ta
Slide 49: Conclusion
Mike Nefkens | President and CEO Conclusion
Slide 50: Positioned to Drive Shareholder Value Well Into the Future
Positioned to Drive Shareholder Value Well Into the Future RESIDEO | We are Winning and Have Momentum With Resideo: We believe your home will anticipate and deliver your comfort and efficiency needs through our innovative smart home solutions installed by our professional channel partners We Have: W
Slide 51: Q&A
resideo Q&A
Slide 52: Appendix: Supplementary Materials
Appendix Supplementary Materials
Slide 53: Indemnification and Reimbursement Overview and Impact
Cash Reimbursement Payments to Honeywell Capped at $140M in Respect of Any Year Indemnification and Reimbursement Overview and Impact Background Honeywell is responsible for the environmental remediation of ~230 sites or groups of sites currently undergoing environmental remediation On the effective
Slide 54: Net Loss to EBITDA Reconciliation
Note: Margins calculated as % of net sales. 1 Assumed cash paid for the environmental obligations subject to the cap of $140M in respect of a year in accordance with the terms of the Indemnification and Reimbursement Agreement. Independent of the Indemnification and Reimbursement Agreement, Resideo
Slide 55: Pro Forma Net Loss to EBITDA Reconciliation
Source: Management Estimates Note: Assumes transaction close at 31-Dec-2018. Margin calculated as % of net sales. 1 Assumed cash paid for the environmental obligations subject to the cap of $140M in respect of a year in accordance with the terms of the Indemnification and Reimbursement Agreement. In
Slide 56: Segment Profit Reconciliation
Note: Segment profit margin calculated as % of total sales. Products Segment Profit Calculation H1 2017 H1 2018 LTM Q2 2018 Total Sales $1,116 $1,200 $ 2,463 Less Intersegment Sales (174) (159) (322) External Sales $942 $1,041 $ 2,141 Cost of Products and Services Sold (528) (584) (1,205) Selling Ge