Resideo Technologies, Inc. · NYSE:REZI

Resideo Technologies — Investor Presentation (March 2021)

64 slides from Resideo Technologies's investor presentation, March 2021

Slide 1: Investor Presentation March 2021
resideo INVESTOR PRESENTATION MARCH 2021
Slide 2: Presenters and Topics
Presenter Topic Time Jay Geldmacher, Resideo Overview 10 min President and Chief Executive Officer Rob Aarnes ADI Global Distribution 15 min President, ADI Global Distribution Phil Theodore Products & Solutions 20 min President, Products & Solutions Jeff Frank Product Innovation 15 min Senior Vice P
Slide 3: Forward-Looking Statements
Forward-Looking Statements This presentation contains “forward-looking statements.” All statements, other than statements of fact, that address activities, events or developments that we or our management intend, expect, project, believe or anticipate will or may occur in the future are forward-look
Slide 5: Leading distribution platform with focused investment in digital and adjacent markets
Leading distribution platform with focused Right team and structure in place to leverage investment in digital and adjacent markets to broad portfolio, channel reach and Pro drive continued growth and profit expansion relationship to drive long-term growth Bringing focus to team with rich history of
Slide 6: Products & Solutions and ADI Global Distribution
Products & Solutions A leading global provider of home air, Leading global wholesale distributor of water, security and energy products and security, fire and low-voltage products solutions 2020 Revenue Presence in 2020 Operating Income (1) For Security and Low-Voltage Products (2) Homes 2020 Operat
Slide 7: Addressable Market
ADDRESSABLE MARKET ADDRESSABLE MARKET ~$9B ~$25B ~$11B ~$2B +$60B ~$3B +$25B ADDRESSABLE MARKET +$85B ADDRESSABLE MARKET GROWING MID-TO-HIGH SINGLE DIGITS GROWING LOW-TO-MID SINGLE DIGITS Source: IHS Markit; CE Pro; InfoComm; AVIXA; BSRIA; BRG; IDC; Resideo management estimates 6 © 2021 Resideo Tech
Slide 8: 1,200+ OEMs; Resideo Wins When the Pro Wins
Trusted product partner Broad product offering Omnichannel 1,200+ OEMs Service and support Many professional and OEM relationships extend Longstanding reliability Supporting professionals’ growth and profitability Trusted brands Resideo Wins When the Pro Wins 7 © 2021 Resideo Technologies, Inc. All
Slide 9: Focus, Accelerate and Execute
→ • Historically siloed • Get right team and • Realigned organizational structure for execution Products & Solutions organization structure and growth product lines and R&D • Reinvigorate innovation • Breaking down silos across Resideo • Underinvestment and and R&D agility • Building executive level
Slide 10: Strategic priorities
Position for long- Build on ADI’s Better leverage Strengthen position Invest in Focus P&S on where term connected leading platform within existing ADI and P&S in core markets innovation we have right to win home opportunity and adjacent markets relationship 9 © 2021 Resideo Technologies, Inc. All Ri
Slide 11: Long-term targets by segment
Revenue (1) $5,071M ~6% CAGR 6% to 8% CAGR 4% to 6% CAGR Gross Margin 25.9% 30% to 32% 19% to 20% 46% to 48% Operating Margin 6.1% 13% to 15% 9% to 10% 28% to 30% (1) CAGR for 2020 through 2024T period Long-term targets represent our goals and are not projections of future performance 10 © 2021 Resi
Slide 12: Key takeaways
Attractive Product and Transformation Targeted Compelling markets with channel underway to investment financial model multiple secular leadership with reduce costs, across both with top line growth trends unique focus on build scalable businesses to growth, margin professional organization and drive
Slide 14: ADI Revenue
in Low Voltage Security Products (1) 6%+ CAGR $3.0B $2.7B $2.8B $2.4B $2.5B $2.2B served through ADI 2015 2016 2017 2018 2019 2020 ADI Revenue (1) Source: Market data from IHS Markit 13 © 2021 Resideo Technologies, Inc. All Rights Reserved.
Slide 15: 2020 ADI Global Distribution Snapshot
2020 ADI Global Distribution Snapshot Sales by Sales by Product Category Geography Physical locations, e-commerce and in- Omnichannel person consultative sales support EMEA 16% India Other Geographic 2% Local product availability in 195 markets 30% Footprint Security 70% Americas 82% Products & Wide
Slide 16: ADI Product Categories and Addressable Markets
Physical Security Residential A/V Professional A/V Data Communications Security and life safety devices Home automation, control, audio- Audio and visual products Cabling, associated accessories and professionally installed in visual, networking and smart professionally installed in networking hardw
Slide 17: How Professionals Buy from ADI
1 Business or homeowner 2 Pro contacts ADI to 3 Pro purchases products 4 Pro completes installation desires to add or upgrade understand available “by-the-job” shortly before of the new system for the a physical security system solutions, which often installation, often picking business or homeowner
Slide 18: ADI Distribution Model and Customers
PRODUCTS & SOLUTIONS SUPPLIER PARTNERS PRIVATE BRANDS • Leverage Best Practices • Rapidly Launch NPI • Market & Customer Insights Vast global Browse, shop and Account Improves customer distribution purchase products management profitability and network with to ship or same-day ensures broad efficien
Slide 19: Global E-Commerce Penetration
$364M FY 2020 Global E-Commerce Penetration Online-to-Branch Order Pickup +25% YoY +24% YoY +27% YoY A scalable global platform with Leveraging multi-channel Enhanced visibility and further growth potential marketing tools consistency across channels ✓ 17 country e-commerce sites ✓ Online quote requ
Slide 20: Omnichannel buying and technology
1 Omnichannel buying +25% 3x 46% More volume from Of e-commerce convenience Growth in website shopping multichannel customers vs. customers used pick up cart revenue single channel in Branch options Redeploy sales team 28% 50,000+ 950+ 2 bandwidth to Of total order volume A.I. cross-selling Customer
Slide 21: Business Intelligence and A.I. tools
Improving decision-making with Using A.I./Machine Learning technology Creating more bandwidth for salespeople Annual Revenue per Sales Employee Business Intelligence (BI) tools across to recommend the next best action for to service more customers and perform our value chain salespeople higher-value
Slide 22: Enhancing the ADI platform
• Enhance customer experience • Expand product technology offerings • Broaden market coverage • Website & App • Residential & Pro • Inside Account • CRM and Data • Drive sales force • Omnichannel AV Management Analytics effectiveness Integration • Data • Location Growth • AI/Machine Communications L
Slide 23: ADI Global Distribution takeaways
Global market Growth culture Adjacent Investing in Proven track leader in a with deeply loyal category the customer record of fragmented professional opportunities experience and delivering growth industry contractor more than double sales effectiveness and operating relationships addressable with d
Slide 26: Products & Solutions Key Products and Addressable Markets
• Energy management / demand response • Equipment predictive maintenance • IAQ data insights • Remote monitoring and automation • Thermostats / Temp • Residential Intrusion • Potable Water Controls • Furnaces Key Products • Air Quality Systems – Pro / DIY • Backflow Prevention • Water Heaters • De-/
Slide 27: 2020 Products & Solutions Snapshot
2020 Products & Solutions Snapshot Sales by Sales by Product Category Geography Whole Home Extensive product depth and Security Provider breadth Air EMEA Energy Americas APAC Quality and 130+ years of experience Water Innovation Sales by Channel Other Deep Network of Pro Installers, OEM Distribution
Slide 30: Air, Security, Water product portfolio
AIR SECURITY WATER ENERGY WiFi Ductless Controller SERVICES WiFi Security Camera Smart Motion Smart Room Detection Camera Sensor Smart Room Sensor HD WiFi Outdoor WiFi Security Video Camera Two-Way Wireless All-In-One Wireless Smoke & Camera CO Detector Glassbreak Detector Security Panel Smart Therm
Slide 32: Homeowner Pull and Pro Contractor Push
Homeowner Pull Pro Contractor Push • Needs systems • Installs or fixes installed • Offers custom • Requires maintenance solutions • Wants more features • Continuous service • And more… and maintenance Source: NAHB; U.S. Energy Department; U.S. Environmental Protection Agency; Parks Associates 31 © 2
Slide 33: Channel strategy
Products sold through 3,000+ Distributors • Central to all our channels • Critical to new home construction and Partnerships with 1,200+ OEMs remodeling • Customers of our distribution partners Utility and Insurance product rebate programs • Increasing Pro sales at Retail • Drives repeat business wi
Slide 34: Protect the base and reposition for growth
Product Development Execution • Delivering on core product commitments Protect the Base Supercharging our Sales Force • Account level strategies and relationship management tools Business 360° View of the Customer • Improving customer experience and support Customer- Centric in All Driving Channel L
Slide 35: Products & Solutions takeaways
New leadership Legacy of Unparalleled Diversified Deep with track record of innovation portfolio in large channel connection operational combined with growing markets strategy with with Pro driving execution and rebuilt and with differentiated significant runway sticky long-term transformation redes
Slide 37: History of industry firsts and intellectual property
• History of industry firsts • Depth and span of intellectual property • Breadth of product portfolio • Unique understanding of building science • Team with deep industry experience 36 © 2021 Resideo Technologies, Inc. All Rights Reserved.
Slide 38: Product innovation history
Software Hardware • Alarm transport service with recurring monthly revenue • Adding video to remote security monitoring • Voice-controlled thermostat, migrated to Amazon Mechanical and Electrical Alexa in security system Component • Home security system with Alexa built in Control System • Geofence
Slide 39: Customer Pain Points
Keeping the most critical 1 systems of the home running 2 Many solutions; no complete solutions Customer Multiple applications; Pain 3 hard to install and use Points 4 Professional help; who to trust and how to navigate 5 Affordability and data privacy 38 © 2021 Resideo Technologies, Inc. All Rights
Slide 40: Proactive homes and seamless user experience
• Proactive homes • Seamless user experience • Systems working together as an ecosystem • Homeowner driven insights • Data privacy and protection 39 © 2021 Resideo Technologies, Inc. All Rights Reserved.
Slide 41: Platform architecture
Apps Homeowner Service Pro Operational Intelligence Cloud Situational Awareness HVAC Security Water Pool Solar Irrigation Appliances … …… Home / Building Hub Behind The Wall Hub On The Counter Resideo 3rd Party Device Device Device Device 40 © 2021 Resideo Technologies, Inc. All Rights Reserved.
Slide 42: Reducing complexity of building systems
• Provide peace of mind around comfort, • Empowering to be proactive, less reactive security and efficiency • Providing more touch points with customers • Migrating from management by crisis that enable trusted relationships • Data privacy • Increasing efficiency in their business (fewer truck rolls
Slide 43: Core foundation, hardware and firmware
• Core foundation • Resideo • Tie everything • Hardware and differentiation together firmware • Knowing what • Use intelligence to • On-the-wall, makes a home create customer behind-the-wall, in- comfortable, value the-wall or on a efficient and safe • Provide actionable desktop • Leads to great dat
Slide 44: Protecting our planet's resources
• Reduce complexity for our • Protecting our planet’s stakeholders resources • Enable powerful technology • Focus on energy, air and that is transparent to end user water quality 43 © 2021 Resideo Technologies, Inc. All Rights Reserved.
Slide 45: Innovation priorities
Aligning and rebalancing product portfolios Expanding analytics and data competencies Creating unified ecosystem team Increasing role of customers – professionals and homeowners – in our innovation processes Consolidating building science knowledge Prioritizing platforms – Partnering with adjacent h
Slide 46: Innovation focus areas
Interoperability Focus on fewer, Accelerated Partner to grow Simplicity with across Resideo more targeted decisions and our ecosystem and products that offerings offerings NPI velocity third-party deliver more value integrations to homeowners and professionals 45 © 2021 Resideo Technologies, Inc. Al
Slide 48: 2020 financial highlights
$M Revenue $M Gross Profit 6,000 1,400 1,200 • H2 2020 performance highlights 5,000 +27% 4,000 +13% 1,000 earnings and cash flow power 800 3,000 600 • Improved market conditions and 2,000 400 1,000 business execution 200 0 2019 2020 H2 2019 H2 2020 0 2019 2020 H2 2019 H2 2020 • Structural changes po
Slide 49: Cash flow, liquidity and net leverage
• $279M net proceeds from equity offering $244M $645M Net Debt (1) • Refinanced credit facilities • No significant amortization requirements until 2026 2020 Operating Cash Flow ~$1B Available Liquidity (2) • Upsized revolver has improved liquidity • Recent ratings actions reflect 1.1x Net Leverage (
Slide 50: Financial priorities
Invest in targeted, high return initiatives and Expand gross margin through manufacturing growth markets where we have competitive and supply chain efficiency, pricing advantage and a right to win optimization and leveraging fixed cost base Grow operating margin through continued High level of conve
Slide 51: Scalable operations, higher margins, faster growth
Opportunities for growth, savings and efficiency • Scalable operations Work with businesses to identify ideas Outline processes and support day-to-day • Higher margins execution Prioritize and • Faster growth accelerate high Track performance return projects and drive accountability 50 © 2021 Reside
Slide 52: Corporate costs and SG&A as % of revenue
Corporate Costs as % of Resideo SG&A as % of Revenue (1) Revenue • Simplify organization and build scalable foundation 7% % Rev 25% % Rev 5.7% 20% • Efficient spending – eliminate what 6% 20% % Rev is not creating value < 17% 5% % Rev • Increasing accountability – every < 4.0% 4% 15% dollar has an o
Slide 53: Gross margin expansion actions
ADI Gross Margin (1) Resideo Gross Margin (1) 25.0% 19.5% 17.0% • Annual supply chain savings target 20.0% 35% ~31% 15.0% • Manufacturing footprint 30% 10.0% optimization 25.9% 5.0% 25% 0.0% • Value engineering and scalable 2020 2021E 2024T design 20% P&S Gross Margin (1) • Profitability management
Slide 54: Investment in processes and innovation
ADI Global Products & • Creation of Innovation Distribution Solutions organization • Revamped NPI process • Expand e-commerce • Reposition for growth • Digital transformation • ADI digital tools rollouts • Category expansion • One Resideo platform • M&A capabilities • Geographic • New product innova
Slide 55: High return investment to accelerate strategy
ADI Global Products & • Expect capital expenditures of ~$90M in 2021 Distribution Solutions • Targeted investment to drive future growth; • Bolt-on M&A • Accelerate growth in +$40M of incremental activity in 2021 attractive categories • Adjacent categories • Systems upgrades to support expected grow
Slide 56: Long-term targets
Revenue (1) ~6% CAGR 6% to 8% CAGR 4% to 6% CAGR Gross Margin 30% to 32% 19% to 20% 46% to 48% Operating Margin 13% to 15% 9% to 10% 28% to 30% Corporate Cost Under 4% of total revenue Operating Cash Flow Operating cash flow of >$600 million (1) CAGR for 2020 through 2024T period Long-term targets r
Slide 57: 2021 outlook and 2024 targets
$M 2020 2021E (1) 2024T (2) Revenue 5,071 5,200 - 5,400 6,425 • Cash payment to Honeywell of ADI Segment Revenue 2,950 - 3,850 $140M annually related to P&S Segment Revenue 2,121 - 2,575 indemnity agreement – limited tax deductibility Gross Margin 25.9% 26% - 28% 31% ADI Segment Gross Margin 17.0% -
Slide 58: Priorities by segment
ADI Global Products & Corporate Distribution Solutions • Outgrow in our core market • Grow share in attractive • Create scalable systems markets (IAQ, Smart Water, and processes across • Expand into adjacencies Comprehensive Security) corporate cost functions • Increase digital and e- • Defend base
Slide 59: Solid foundation and scalability
Solid Foundation + Scalability & Operating Accelerated Top Line Gross Margin Efficiency Margin Cash Growth Expansion + Leverage Generation Thoughtful Capital Allocation 58 © 2021 Resideo Technologies, Inc. All Rights Reserved.
Slide 61: www.resideo.com
www.resideo.com
Slide 62: Appendix
APPENDIX ADD TITLE HERE
Slide 63: Summary of Financial Results (Unaudited)
SUMMARY OF FINANCIAL RESULTS (UNAUDITED) Twelve Months Ended December 31, December 31, 2020 2019 ($ in millions) Products & Solutions Revenue (1) $ 2,121 $ 2,175 Gross profit 821 786 Gross margin 38.7% 36.1% ADI Global Distribution Revenue $ 2,950 $ 2,813 Gross profit 501 499 Gross margin 17.0% 17.7
Slide 64: Reconciliation of Non-GAAP Financial Measures
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES Twelve Months Ended December 31, December 31, 2020 2019 ($ in millions) Total debt $ 1,162 $ 1,180 Less: Cash 517 122 Net debt $ 645 $ 1,058 Reconciliation of Net income to Adjusted EBITDA (Non-GAAP) Net income $ 37 $ 36 Net interest expense 61 66 Tax ex

Resideo Technologies — Investor Presentation (March 2021) on 6ix

Resideo Technologies — Investor Presentation (March 2021)

Slide 1: Investor Presentation March 2021

Slide 2: Presenters and Topics

Slide 3: Forward-Looking Statements

Slide 4: Jay Geldmacher, Chief Executive Officer

Slide 5: Leading distribution platform with focused investment in digital and adjacent markets

Slide 6: Products & Solutions and ADI Global Distribution

Slide 7: Addressable Market

Slide 8: 1,200+ OEMs; Resideo Wins When the Pro Wins

Slide 9: Focus, Accelerate and Execute

Slide 10: Strategic priorities

Slide 11: Long-term targets by segment

Slide 12: Key takeaways

Slide 13: Rob Aarnes, President ADI Global Distribution

Slide 14: ADI Revenue

Slide 15: 2020 ADI Global Distribution Snapshot

Slide 16: ADI Product Categories and Addressable Markets

Slide 17: How Professionals Buy from ADI

Slide 18: ADI Distribution Model and Customers

Slide 19: Global E-Commerce Penetration

Slide 20: Omnichannel buying and technology

Slide 21: Business Intelligence and A.I. tools

Slide 22: Enhancing the ADI platform

Slide 23: ADI Global Distribution takeaways

Slide 24: Phil Theodore, President Products & Solutions

Slide 25: © 2021 Resideo Technologies, Inc. All Rights Reserved.

Slide 26: Products & Solutions Key Products and Addressable Markets

Slide 27: 2020 Products & Solutions Snapshot

Slide 28: © 2021 Resideo Technologies, Inc. All Rights Reserved.

Slide 29: © 2021 Resideo Technologies, Inc. All Rights Reserved.

Slide 30: Air, Security, Water product portfolio

Slide 31: Garage door, appliances, lock, lighting

Slide 32: Homeowner Pull and Pro Contractor Push

Slide 33: Channel strategy

Slide 34: Protect the base and reposition for growth

Slide 35: Products & Solutions takeaways

Slide 36: Jeff Frank, SVP Product Innovation

Slide 37: History of industry firsts and intellectual property

Slide 38: Product innovation history

Slide 39: Customer Pain Points

Slide 40: Proactive homes and seamless user experience

Slide 41: Platform architecture

Slide 42: Reducing complexity of building systems

Slide 43: Core foundation, hardware and firmware

Slide 44: Protecting our planet's resources

Slide 45: Innovation priorities

Slide 46: Innovation focus areas

Slide 47: Tony Trunzo, Chief Financial Officer

Slide 48: 2020 financial highlights

Slide 49: Cash flow, liquidity and net leverage

Slide 50: Financial priorities

Slide 51: Scalable operations, higher margins, faster growth

Slide 52: Corporate costs and SG&A as % of revenue

Slide 53: Gross margin expansion actions

Slide 54: Investment in processes and innovation

Slide 55: High return investment to accelerate strategy

Slide 56: Long-term targets

Slide 57: 2021 outlook and 2024 targets

Slide 58: Priorities by segment

Slide 59: Solid foundation and scalability

Slide 60: © 2021 Resideo Technologies, Inc. All Rights Reserved.

Slide 61: www.resideo.com

Slide 62: Appendix

Slide 63: Summary of Financial Results (Unaudited)

Slide 64: Reconciliation of Non-GAAP Financial Measures