Resideo Technologies, Inc. · NYSE:REZI
Resideo Technologies — Investor Presentation (November 2018)
39 slides from Resideo Technologies's investor presentation, Nov 8, 2018
Slide 1: November 2018 Investor Presentation
November 2018 Investor Presentation Exhibit 99.1
Slide 2: Non-GAAP Financial Measures and Forward Looking Statements
Non-GAAP Financial Measures This presentation includes Adjusted EBITDA, Adjusted EBITDA including environmental indemnification payments, Adjusted EBITDA Margin, Segment Profit, Segment Profit Margin and other financial measures not compliant with generally accepted accounting principles in the Unit
Slide 3: Business Overview
Business Overview Joe Ragan − Chief Financial Officer Inder Reddy − Vice President of Corporate Strategy
Slide 4: Resideo: Business Overview
Source: Company Data, Management Estimates, IHS Markit Note: Sales does not include eliminations or corporate assessments. Pie Charts represent 2017 information. 1 Products operating at or below 24 volts. 2 Pie chart shows split between total net sales of $4,856M. Products Net Sales includes interco
Slide 5: Broadest Presence Supported by Leading Distribution Business
Broadest Presence Supported by Leading Distribution Business 1 5 6 9 Video Surveillance, Intrusion, Access Control Fire and Life Safety, and Other Products, Including Wire, Networking and Audio Visual Systems ADI Global Distribution 10 1 4 2 3 2 8 7 6 5 Exterior Camera, Outdoor Video, Motion Viewer,
Slide 6: Resideo: Go-To-Market Channels
Source: Company data Note: Shows 2017 information. Multi-Channel Go-To-Market Strategy with Focus on Professional Installation Distribution Products z Homeowners and Other End Users Retail / Etail / Utilities Factory Direct OEM Suppliers Other Third Parties RemainCo Honeywell Professional Installati
Slide 7: Overview Historical Financials
Source: Company financials, Management guidance 1 Pie Charts represent 2017 information. Net sales include intercompany sales of $337mm. 2 Net sales includes intercompany sales of $322M, $337M, $371M, $372M in LTM Q2 2018, 2017, 2016, and 2015, respectively. 3 Segment profit is combined income from
Slide 8: Differentiated End-to-End Solutions Focused on Professional Installation
Source: Company Filings Note: Net sales includes $337M intercompany sales in 2017. Products Category Overview Differentiated End-to-End Solutions Focused on Professional Installation Comfort & Care Overview Security & Safety Overview Temperature & Humidity Control Solutions: air conditioners & heati
Slide 9: Products Segment: History of Innovation
Products Segment: History of Innovation 100+ 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 Flapp
Slide 10: Distribution Segment: Overview
Source: Company financials, Management guidance Note: Pie Charts represent 2017 external sales. ¹ Products operating at or below 24 volts. ² Other principally represents India. ³ Other includes fire and life safety, wire, networking and professional audio visual systems. 4 Segment profit is combined
Slide 11: Distribution Segment: The ADI Model
Source: Company Data, Management Estimates Note: Shows 2017 information. Multi-Channel Strategy Enhancing End-Consumer Reach End Users Resideo Products Honeywell Products Other Third Parties Products Suppliers Other Professional System Integrators Security Dealers Fire Video Access Wire Intrusion Pr
Slide 12: Industry Overview
Industry Overview
Slide 13: Strong Market Positions in Addressable Markets
Source: IHS Markit (IHS), Navigant Consulting (Navigant), Building Services Research and Information Association (BSRIA) and Management Estimates 1 Industry leadership as per Management Estimates. Strong Market Positions in Addressable Markets Security & Safety Select Products Resideo’s Industry Lea
Slide 14: Strong Industry Outlook Driven by Favorable Macro Trends
Source: Research and Management Estimates 1 According to the US Census Bureau. Long-term median represents data from 1960 – 2017. 2 According to the Bureau of Economic Analysis (BEA). 3 According to Gartner Inc. Strong Industry Outlook Driven by Favorable Macro Trends Increasingly Connected Consumer
Slide 15: Connected Home: Focused on End-to-End Customer Experience
Connected Home: 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
Slide 16: Key Investment Highlights
Key Investment Highlights
Slide 17: Resideo Key Investment Highlights
Resideo Key Investment Highlights Leader in Home Comfort, Security, and Low Voltage Distribution Markets with the Broadest Portfolio of End-to-End Solutions Iconic Brand with Unparalleled Presence in the Home Mature, Integrated Supply Chain with Continued Application of Best-in-Class Honeywell Opera
Slide 18: Leader in Home Comfort and Security
Leader Residential Security Products Thermostats Leader 150M Installed Base 15M Solutions Installed Annually 1 Source: Management Estimates 1 Product net sales includes intercompany sales of $337M in 2017 Leveraging the Honeywell Home Brand and Existing Presence in Homes Leader in Home Comfort and S
Slide 19: Unique Scale and Superior Services Resulting in Customer Stickiness
Source: Management Estimates, 1 Per IHS Unique Scale and Superior Services Resulting in Customer Stickiness The Leading Global Distributor of Security and Other Low Voltage Solutions 1 #1 Global Distributor of Security Products1 Customer base of >100K customers, >1,000 highly trained sales represent
Slide 20: Iconic Brand with Unparalleled Presence in the Home
Comprehensive Portfolio With Iconic Brand Providing End-to-End Residential Solutions 2 Iconic Brand with Unparalleled Presence in the Home 1 9 6 7 8 3 2 5 4 Extensive Pipeline of New Products Adaptive Combustion Control Remote Appliance Monitoring Smart Vents 1 2 3 4 5 6 7 8 9 Co Global Intrusion Pl
Slide 21: Integrated Operating System Enabling Cost Efficiency and Innovation
Source: Company Data 1 Resideo will not be using the term HOS Gold going forward. Integrated Operating System Enabling Cost Efficiency and Innovation HOS Gold Impact on Resideo Honeywell Operating System ingrained within organization and will continue after the Spin-Off1 Founded on the lean and six
Slide 22: Multi-Channel Strategy Provides Stability and Customer Diversification
4 Source: Company Data Note: Customers within each channel not limited to names listed. Multi-Channel Strategy Provides Stability and Customer Diversification Security & Safety Customers Comfort & Care Customers Selected Products Channel Description Contractors Includes professional contractors, ins
Slide 23: Leverage Connected Expertise to Grow Software and Services Revenue
Source: Company Data, Management Estimates 1 Products net sales includes intercompany sales of $337M in 2017. Leverage Connected Expertise to Grow Software and Services Revenue Platform agnostic systems seamlessly integrate with partners, including Amazon Alexa®, Apple HomeKit®, Google Home® Among f
Slide 24: Software that Creates Recurring Revenue and Long Term Customers
Software that Creates Recurring Revenue and Long Term Customers 5 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 product categ
Slide 25: Alarmnet Solutions and Growth Highlights
5 Alarmnet Solutions and Growth Highlights Key Products and Solutions Alarmnet Alarmnet Key Growth Initiatives Total Connect Application Cloud Platform Total Connect Comfort Application Honeywell Home Predictive Maintenance HVAC Monitoring Auto-Replenishment Remote Patient Monitoring Whole House Mon
Slide 26: Summary Financial Overview
Summary Financial Overview
Slide 27: 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 / $414³ Note: 2018E margins calculated based off the midpoint of the estimated ranges. See Appendix for Adjusted EBITDA reconciliation
Slide 28: Attractive Financial Profile: 2015-2018 Net Sales Bridge
Attractive Financial Profile 2015 – 2018 Net Sales Bridge | (US$ in Millions)
Slide 29: Profitable Growth: 2015-2017 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 $140M. Adjusted EBITDA adjusted for standalone costs, environmental expense, non-operating (income) expense,
Slide 30: Accelerating EBITDA: 2017-2018 EBITDA Bridge
Accelerating EBITDA 2017 – 2018 EBITDA Bridge | (US$ 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 31: 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 32: 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 33: 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 34: 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 35: Appendix Supplementary Materials
Appendix Supplementary Materials
Slide 36: Cash Reimbursement Payments to Honeywell Capped at $140M
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 37: 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 38: PF Adjusted 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 39: 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
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