UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.
20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
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Date of Report (Date of earliest event reported):
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April 21, 2020
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RESIDEO TECHNOLOGIES, INC.
(Exact name of registrant as specified in its charter)
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Delaware
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001-38635
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82-5318796
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(State or other
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(Commission File
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(IRS Employer
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jurisdiction of
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Number)
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Identification No.)
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incorporation)
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901 East 6th Street
Austin, Texas
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78702
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(Address of principal executive offices)
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(Zip Code)
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Registrant's telephone number, including area code:
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(763) 954-5204
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Registrant's Former Name or Address, if changed since last report:
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N/A
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Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2.
below):
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☐
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Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
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Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of
1934 (§240.12b-2 of this chapter).
Securities registered pursuant to Section 12(b) of the Act:
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Title of each class
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Trading Symbol(s)
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Name of each exchange on which registered
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Common Stock, $0.001 Par Value
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REZI
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New York Stock Exchange
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Emerging Growth Company ☐
If an emerging growth company, indicate by check mark if
the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 1.01 Entry into a Material Definitive Agreement
On April 21, 2020, Resideo Intermediate Holding Inc. (“Resideo Intermediate”), a wholly-owned subsidiary of
Resideo Technologies, Inc. (the “Company” or “Resideo”), entered into a First Amendment to Indemnification and Reimbursement (the “Reimbursement Agreement Amendment” and the underlying
Indemnification and Reimbursement Agreement being referred to herein as the “Reimbursement Agreement”), dated as of October 14, 2018 between Resideo Intermediate and Honeywell International Inc.
(“Honeywell”). Pursuant to the Reimbursement Agreement Amendment, certain covenants in Exhibit G of the Reimbursement Agreement were modified to conform, if applicable, to the amended covenants included in the First
Amendment to Credit Agreement dated as of November 26, 2019, by and among the Company, certain subsidiaries thereof, the lenders and issuing banks party thereto, and JPMorgan Chase Bank, N.A., as administrative agent (the “Credit Agreement
Amendment”). The modified covenants include the leverage ratio, which, consistent with the Credit Agreement Amendment, increased the levels of the maximum consolidated total leverage ratio to not greater than 5.25 to 1.00 for the
fiscal quarter ending December 31, 2019, with step-downs to 4.75 to 1.00 starting in the fiscal quarter ending December 31, 2020, 4.25 to 1.00 starting in the fiscal quarter ending December 31, 2021, and 3.75 to 1.00 starting in the fiscal quarter
ending December 31, 2022. In addition, under the Reimbursement Agreement Amendment, the parties agreed to defer until no later than July 30, 2020 the $35 million quarterly payment otherwise payable to Honeywell on April 30, 2020.
In addition, on April 21, 2020, Resideo and Honeywell entered into a First Amendment to Trademark License Agreement (the
“Trademark License Amendment” and the underlying Trademark License Agreement being referred to herein as the “Trademark License Agreement”), dated as of October 19, 2018 between Resideo and Honeywell.
Pursuant to the Trademark License Amendment, the parties agreed to defer until no later than July 30, 2020 the approximately $7 million royalty payment otherwise payable to Honeywell within 60 days of the end of the quarter ended March 31, 2020.
The Reimbursement Agreement Amendment and the Trademark License Amendment each expressly reserves all rights of the parties
thereto and their respective affiliates in respect of the Reimbursement Agreement, the Trademark License Agreement and each other contract or agreement between such parties or their affiliates (the “Other Agreements”), and
provides that the execution of each such amendment does not constitute a waiver of any claims, rights, remedies, defenses, arguments, interpretations or obligations of such parties or their affiliates under or related to the Reimbursement Agreement,
the Trademark License Agreement or any Other Agreement.
The foregoing descriptions of the Reimbursement Agreement Amendment and the Trademark License
Amendment are qualified in their entirety by reference to the Reimbursement Agreement Amendment and Trademark License Amendment, copies of which are filed herewith as Exhibits 2.1 and 2.7, respectively, and incorporated herein by reference.
2.02 Results of Operations and Financial Condition.
On April 23, 2020, the Company issued a press release reporting, among other things, that it expects first quarter sales and adjusted EBITDA to generally be in line with the expectations communicated on its
fourth quarter and full-year earnings call held on February 26, 2020. The press release is furnished as Exhibit 99.1.
The information contained in Item 2.02 of this report, including Exhibit 99.1 hereto, is being furnished and shall not be deemed to be “filed” with the Securities and Exchange Commission (the
“SEC”) for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) or otherwise subject to the liabilities of that section and is not incorporated by reference into any filing
of the Company under the Securities Act of 1933, as amended (the “Securities Act”), or the Exchange Act, whether made before or after the date hereof, except as shall be expressly set forth by specific reference in such a filing
Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment
of Certain Officers; Compensatory Arrangements of Certain Officers.
On April 23, 2020, the Company announced that, in response to the
COVID-19 pandemic, its named executive officers will be taking a temporary reduction in base salary.
Item 8.01 Other Events
On April 23, 2020, Resideo issued a press release that, among other things, provided an update on actions the Company is taking to
confront the COVID-19 pandemic (including cost reduction and cash flow management measures). In the press release and in light of the rapidly evolving operating conditions related to the COVID-19 pandemic, the Company also announced the
withdrawal of its 2020 guidance. A copy of the press release is furnished herewith as Exhibit 99.1.
The information contained in Item 8.01 of this
report shall not be deemed to be “filed” with the SEC for the purposes of Section 18 of the Exchange Act or otherwise subject to the liabilities of that section and is not incorporated by reference into any filing of the Company
under the Securities Act or the Exchange Act, whether made before or after the date hereof, except as shall be expressly set forth by specific reference in such a filing.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned hereunto duly authorized.
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RESIDEO TECHNOLOGIES, INC.
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By:
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/s/ Jeannine J. Lane
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Name:
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Jeannine J. Lane
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Title:
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Executive Vice President, General Counsel, Corporate Secretary and Chief Compliance Officer
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Date: April 23, 2020
Exhibit 2.1
FIRST AMENDMENT
TO
INDEMNIFICATION AND REIMBURSEMENT AGREEMENT
This First Amendment to INDEMNIFICATION AND REIMBURSEMENT AGREEMENT (this “Amendment”), dated as of April 21, 2020, by and between (i) Honeywell
International Inc., a corporation organized under the Laws of the State of Delaware (“Indemnitee” or “Honeywell”), and (ii) Resideo Intermediate Holding Inc., a corporation organized under
the Laws of the State of Delaware (“Indemnitor”), amends that certain Indemnification and Reimbursement Agreement, dated October 14, 2018, by and between (i) Honeywell and (ii) New HAPI Inc., a corporation organized
under the Laws of the State of Delaware (subsequently assigned to Indemnitor) (as amended, the “Indemnification and Reimbursement Agreement”). Capitalized terms used herein but not otherwise defined herein shall have the
meanings assigned to such terms in the Indemnification and Reimbursement Agreement or, if not defined therein, in the Current Credit Agreement (as amended by an amendment of the Current Credit Agreement, publicly filed by Resideo Technologies, Inc.
on a Current Report on Form 8-K, dated November 26, 2019 (the “First Amendment to the Credit Agreement”)).
WITNESSETH:
WHEREAS, pursuant to Section 4.13 of
the Indemnification and Reimbursement Agreement, the Indemnification and Reimbursement Agreement may be amended, supplemented or modified only by an instrument in writing specifically designated as an amendment signed on behalf of each Party;
provided that such amendment does not result in the increase of the late payment fee set forth in Section 2.5(b) of the Indemnification and Reimbursement Agreement;
WHEREAS, the amendments to the Indemnification and Reimbursement Agreement contemplated herein do not include any such amendment of the late payment fee set forth in Section
2.5(b) of the Indemnification and Reimbursement Agreement;
WHEREAS, the Parties desire to amend the Indemnification and
Reimbursement Agreement in the manner set forth herein; and
WHEREAS, Indemnitor, Homes, the Homes Borrower and certain
of its Affiliates and Subsidiaries that are members of the Homes Group have entered into the First Amendment to the Credit Agreement.
NOW, THEREFORE, in accordance with Section 4.13 of the Indemnification and Reimbursement Agreement, the Parties agree as follows:
ARTICLE I
AMENDMENTS
1.1 Subject to the terms of this Amendment, including
Section 1.3 hereof, Exhibit G of the Indemnification and Reimbursement Agreement is amended as set forth in Annex A.
1.2 Notwithstanding anything contained in the Indemnification and Reimbursement
Agreement to the contrary, (a) no Quarterly Payment shall be made by Indemnitor on April 30, 2020 pursuant to the Indemnification and Reimbursement Agreement (such Quarterly Payment, the “Deferred Payment”), and (b)
subject to the terms and conditions set forth in the Indemnification and Reimbursement Agreement, the Deferred Payment shall be paid by Indemnitor to Indemnitee no later than July 30, 2020. For the avoidance of doubt, (i) no interest or late fees
shall accrue or be payable in respect of the Deferred Payment as a result of Indemnitor’s failure to make the Deferred Payment on April 30, 2020, (ii) the Deferred Payment shall be (A) deemed a Quarterly Payment for all purposes of the
Indemnification and Reimbursement Agreement and otherwise, with a Quarterly Payment Date of the earlier of (x) the date on which Indemnitor elects to make such Deferred Payment and (y) July 30, 2020, and (B) in addition to any other Quarterly
Payment payable on such Quarterly Payment Date pursuant to the Indemnification and Reimbursement Agreement, and (iii) no breach of or Default under the Indemnification and Reimbursement Agreement shall arise or result from the failure to make the
Deferred Payment on April 30, 2020.
1.3 Notwithstanding anything contained in this Amendment to the contrary,
neither the execution of this Amendment nor anything herein contained (including in any exhibit, annex or schedule hereto) is intended to be, nor shall it be deemed to be, nor shall any Party assert it to be (or allow any Affiliate or Representative
thereof to assert it to be) or use it for the purpose of (including in any litigation, arbitration, proceeding or other dispute related to the Indemnification and Reimbursement Agreement, any other contract or agreement between any of the Parties or
any Affiliates thereof (collectively, the “Other Agreements”) or otherwise): (A) an admission or concession of any Default, breach or non-compliance under the Indemnification and Reimbursement Agreement or any Other
Agreement, (B) an admission or concession as to any matters relating to the Indemnification and Reimbursement Agreement, any Other Agreement or any terms or provisions thereof, or (C) a waiver of any claims, rights, remedies, defenses, arguments,
interpretations or obligations of the Parties or any of their Affiliates under or related to the Indemnification and Reimbursement Agreement or any Other Agreement; provided, that, any Party may use this Amendment to seek to enforce the terms of the
Indemnification and Reimbursement Agreement (as amended herein).
1.4 Section 4.8 of the Indemnification and
Reimbursement Agreement is amended and restated in its entirety to read as follows:
(a) if to Indemnitor:
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Resideo Intermediate Holding Inc.
2 Corporate Center Dr #100
Melville, NY 11747
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Attention:
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Jeannine J. Lane, General Counsel
Ann Marie Geddes, Controller
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Email:
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Jeannine.Lane@Resideo.com
AnnMarie.Geddes@Resideo.com
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with a copy of any such notice sent to:
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Willkie Farr & Gallagher LLP
787 Seventh Avenue
New York, NY 10019
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Attention:
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Russell L. Leaf
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Email:
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Email: rleaf@willkie.com
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(b) if to
Indemnitee,
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Honeywell International Inc.
300 South Tryon Street
Charlotte, NC 28202
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Attention:
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Anne T. Madden, Senior Vice President and General Counsel
Jim Colby, Vice President and Treasurer
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Email:
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Anne.Madden@Honeywell.com
Jim.Colby@Honeywell.com
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with a copy of any such notice sent to:
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Cleary Gottlieb Steen & Hamilton LLP
One Liberty Plaza
New York, NY 10006
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Attention:
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Craig B. Brod
Kimberly R. Spoerri
Fax: (212) 225‑3999
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Email:
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cbrod@cgsh.com
kspoerri@cgsh.com
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ARTICLE II
MISCELLANEOUS
2.1 References. Each reference in the Indemnification and Reimbursement Agreement shall, unless the context otherwise requires, mean the Indemnification and Reimbursement Agreement
as amended by this Amendment.
2.2 No Other Amendments; Continuing Effect. The amendments set forth herein
are limited precisely as written and will not be deemed to be an amendment to any other term or condition of the Indemnification and Reimbursement Agreement or any of the documents referred to therein or be deemed to consent to any amendment of any
other term or condition of the Current Credit Agreement (as amended by the First Amendment to the Credit Agreement) or any other Principal Credit Agreement or any of the documents referred to therein. Except as expressly amended hereby and subject
to the terms set forth in Section 1.3 hereof, the terms and conditions of the Indemnification and Reimbursement Agreement shall continue in full force and effect.
2.3 Representations and Warranties; No Defaults; No Waivers. The representations and warranties contained in Sections 4.2 (a), (b) and (c) of the Indemnification and Reimbursement
Agreement are hereby restated by each Party and incorporated herein by reference. Indemnitor represents and warrants that as of the date hereof, after giving effect to this Amendment, no default or event of default has occurred and is continuing
under any of the Indemnification and Reimbursement Agreement, the Current Credit Agreement (as amended by the First Amendment to the Credit Agreement) or any other Loan Document, or any other Indebtedness of the Indemnitor or any of its
subsidiaries. This Amendment is not a waiver of, or consent to, any default or event of default now existing or hereafter arising under the Indemnification and Reimbursement Agreement (as amended by this Amendment), the Current Credit Agreement (as
amended by the First Amendment to the Credit Agreement), any other Loan Document or any other Indebtedness of the Indemnitor or any of its subsidiaries.
2.4 Dispute Resolution; Governing Law; Jurisdiction; WAIVER OF JURY TRIAL; Interpretation, Etc. The provisions of Section 4.3 (“Dispute Resolution”), Section 4.4
(“Governing Law; Jurisdiction”), Section 4.5 (“Waiver of Jury Trial”), Section 4.6 (“Court-Ordered Interim Relief”) and Section 4.14 (“Interpretation”) of the Indemnification and Reimbursement
Agreement are hereby incorporated herein by reference and shall apply mutatis mutandis.
2.5
Successors. This Amendment shall be binding upon and shall inure to the benefit of the Parties and their respective successors and permitted assigns.
2.6 Counterparts. This Amendment may be executed in two or more counterparts, all of which shall be considered one and the same instrument and shall become effective when one or more
counterparts have been signed by each of the Parties and delivered to the other Parties.
[The remainder of this page is intentionally left
blank.]
IN WITNESS WHEREOF, the Parties have caused this Amendment to be executed as of the date
first written above by their respective officers thereunto duly authorized.
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HONEYWELL INTERNATIONAL INC.
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By: /s/ Anne T.
Madden
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Name: Anne T. Madden
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Title: Senior Vice President and General Counsel
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RESIDEO INTERMEDIATE HOLDING INC.
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By: /s/ Jeannine J.
Lane
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Name: Jeannine J. Lane
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Title: EVP and General Counsel
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[Signature Page First Amendment to Indemnification and Reimbursement
Agreement]
Annex A
Subject to the
terms of the Amendment to which this Annex A is attached, including Section 1.3 thereof, the Parties hereby agree that Exhibit G, dated as of the Distribution Date (“Exhibit G”), shall be amended to read as follows.
Section 1.1 Section 1.1 of Exhibit G shall be amended and restated in its entirety to read as follows:
“Section 1.1 Defined Terms.
(a) Notwithstanding anything to the contrary in this Agreement, capitalized terms used in this Exhibit G and not otherwise defined herein have the meanings specified in
the Current Credit Agreement (as in effect on November 26, 2019 (the “First Amendment Date”)).”
Section 1.2 The first two definitions of Section 1.2 of Exhibit G shall be amended and restated in their entirety to read as follows:
““Credit Default” shall mean an “Event of Default” under and as defined in the
Current Credit Agreement (as in effect on the First Amendment Date).
“Debt-Related Guarantee”
shall have the meaning of “Guarantee” set forth in the Current Credit Agreement (as in effect on the First Amendment Date).”
Section 1.3 Section 3.01(xx)(A)(2)(x) of Exhibit G shall be amended and restated in its entirety to read as follows:
“the Consolidated Total Leverage Ratio is no greater than 3.30 to 1.00”.
Section 1.4 Section 3.08(b) of Exhibit G shall be amended and restated in its entirety to read as
follows:
“(b) Neither Indemnitor nor the Borrower will, nor will they permit any Indemnitor Group Restricted
Subsidiary to, prepay, redeem, purchase or otherwise satisfy any Indebtedness that is subordinated in right of payment to the Obligations (excluding, for the avoidance of doubt, any subordinated obligations owing to Indemnitor or any Indemnitor
Group Restricted Subsidiary) except for:
(i) regularly scheduled interest and principal payments as and when due in
respect of any such Indebtedness, other than payments in respect of such Indebtedness prohibited by the subordination provisions thereof;
(ii) refinancings of Indebtedness with the proceeds of other Indebtedness permitted under Section 3.1; and
(iii) prepayments of subordinated obligations owed to the
Borrower or any Indemnitor Group Restricted Subsidiary or any Refinancing Indebtedness with the proceeds of other subordinated Indebtedness.”
Section 1.5 Section 3.13 of Exhibit G shall be amended and restated in its entirety to read as follows:
“Section 3.13 Consolidated Total Leverage Ratio. Indemnitor will not, and will cause its Subsidiaries not to, permit
the Consolidated Total Leverage Ratio for any period of four consecutive fiscal quarters of Holdings ending on or about any date during any period set forth below, to exceed the ratio set forth below opposite such period:
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Fiscal Quarter Ending
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Consolidated Total Leverage Ratio
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December 31, 2019
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5.25 to 1.00
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March 31, 2020
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5.25 to 1.00
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June 30, 2020
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5.25 to 1.00
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September 30, 2020
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5.25 to 1.00
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December 31, 2020
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4.75 to 1.00
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March 31, 2021
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4.75 to 1.00
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June 30, 2021
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4.75 to 1.00
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September 30, 2021
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4.75 to 1.00
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December 31, 2021
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4.25 to 1.00
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March 31, 2022
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4.25 to 1.00
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June 30, 2022
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4.25 to 1.00
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September 30, 2022
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4.25 to 1.00
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December 31, 2022 and thereafter
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3.75 to 1.00
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Exhibit 2.7
FIRST AMENDMENT
TO
TRADEMARK LICENSE AGREEMENT
This First Amendment to TRADEMARK LICENSE AGREEMENT (this “Amendment”), dated as of April 21, 2020, by and between (i) Honeywell International
Inc., a corporation organized under the Laws of the State of Delaware (“Licensor” or “Honeywell”), and (ii) Resideo Technologies Inc., a corporation organized under the Laws of the State of
Delaware (“Licensee”), amends that Trademark License Agreement, dated October 19, 2018, by and between (i) Honeywell and (ii) Licensee (as amended, the “Trademark License Agreement”).
Capitalized terms used herein but not otherwise defined herein shall have the meanings assigned to such terms in the Trademark License Agreement.
WITNESSETH:
WHEREAS, pursuant to Section 18.13
of the Trademark License Agreement, the Trademark License Agreement may be waived, amended, supplemented or modified by a writing that is signed by an authorized representative of each Party; and
WHEREAS, the Parties desire to amend the Trademark License Agreement in the manner set forth herein.
NOW, THEREFORE, in accordance with Section 18.13 of the Trademark License Agreement, the Parties agree as follows:
ARTICLE I
AMENDMENTS
1.1 Notwithstanding anything contained in the Trademark License Agreement to the contrary, (a) no Royalty payment shall be made by
Licensee within sixty (60) days after the end of the calendar quarter ended March 31, 2020 (such Royalty payment, the “Deferred Payment”), and (b) subject to the terms and conditions set forth in the Trademark License
Agreement, the Deferred Payment shall be paid by Licensee to Licensor no later than July 30, 2020. For the avoidance of doubt, (i) no interest or late fees shall accrue or be payable in respect of the Deferred Payment as a result of Licensee’s
failure to make the Deferred Payment within sixty (60) days after the end of the calendar quarter ended March 31, 2020, (ii) no breach of or default under the Trademark License Agreement shall arise or result from the failure to make such Deferred
Payment within sixty (60) days after the end of the calendar quarter ended March 31, 2020, (iii) the failure to make such Royalty payment within sixty (60) days after the end of the calendar quarter ended March 31, 2020 shall not be deemed a late
payment for any purpose, including Section 9.1(c) of the Trademark License Agreement and (iv) this Amendment will not affect the timing of any Royalty payments other than the Deferred Payment, including the Royalties incurred between April 1, 2020
and the end of the calendar quarter ended June 30, 2020, which will be due as provided in the Trademark License Agreement, namely within sixty (60) days after June 30, 2020.
1.2 Notwithstanding anything contained in this Amendment to the contrary, neither the execution of this Amendment nor anything herein is intended to
be, nor shall it be deemed to be, nor shall any Party assert it to be (or allow any Affiliate or Representative thereof to assert it to be) or use it for the purpose of (including in any litigation, arbitration, proceeding or other dispute related
to the Trademark License Agreement, any other contract or agreement between any of the Parties or any Affiliates thereof (collectively, the “Other Agreements”) or otherwise): (A) an admission or concession of any
default, breach or non-compliance under the Trademark License Agreement or any Other Agreement, (B) an admission or concession as to any matters relating to the Trademark License Agreement, any Other Agreement or any terms or provisions thereof, or
(C) a waiver of any claims, rights, remedies, defenses, arguments, interpretations or obligations of the Parties hereto or any of their Affiliates under or related to the Trademark License Agreement or any Other Agreement; provided, that, any Party
may use this Amendment to seek to enforce the terms of the Trademark License Agreement (as amended herein).
ARTICLE
II
MISCELLANEOUS
2.1 References. Each reference in the Trademark License Agreement shall, unless the context otherwise requires, mean the Trademark License Agreement as amended by this Amendment.
2.2 No Other Amendments; Continuing Effect. The amendments set forth herein are limited precisely as
written and will not be deemed to be an amendment to any other term or condition of the Trademark License Agreement or any of the documents referred to therein. Except as expressly amended hereby and subject to the terms set forth in Section 1.2
hereof, the terms and conditions of the Trademark License Agreement shall continue in full force and effect.
2.3
Dispute Resolution; Governing Law; Jurisdiction; WAIVER OF JURY TRIAL; Interpretation, Etc. The provisions of Article 10 (“Termination on Breach After Cure Period”), Article 11 (“Remedies and Limitations of
Liability”), Section 18.5 (“Governing Law; Jurisdiction”), Section 18.6 (“Waiver of Jury Trial”), Section 18.7 (“Specific Performance”), and Section 18.14 (“Joint Preparation and Drafting”) of
the Trademark License Agreement are hereby incorporated herein by reference and shall apply mutatis mutandis.
2.4 Successors. This Amendment shall be binding upon and shall inure to the benefit of the Parties and their respective successors and permitted assigns.
2.5 Counterparts. This Amendment may be executed in two or more counterparts, all of which shall be considered
one and the same instrument and shall become effective when one or more counterparts have been signed by each of the Parties and delivered to the other Parties.
[The remainder of this page is intentionally left blank.]
IN WITNESS WHEREOF, the Parties have caused this Amendment to be executed as of the date
first written above by their respective officers thereunto duly authorized.
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HONEYWELL INTERNATIONAL INC
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By: /s/ Anne T.
Madden
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Name: Anne T. Madden
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Title: Senior Vice President and General Counsel
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RESIDEO TECHNOLOGIES INC.
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By: /s/ Jeannine J.
Lane
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Name: Jeannine J. Lane
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Title: EVP and General Counsel
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Exhibit 99.1
RESIDEO
PROVIDES UPDATE ON COVID-19 IMPACT
AUSTIN, Texas, April 23, 2020 – Resideo Technologies, Inc. (NYSE: REZI), a leading
global provider of home comfort and security solutions, today provided an update on actions the company is taking to confront the COVID-19 pandemic.
Andy Teich, lead independent director of Resideo, stated, “Our top priority is the safety and well-being of our employees, professional installers, customers and communities in which we operate. While
the operating environment is challenging, we are taking decisive actions to manage the business through the COVID-19 pandemic. We drew down all funds available under our $350 million revolving credit facility as a conservative measure to bolster our
cash position and implemented additional cost reduction and cash flow management measures. Although the pandemic has created significant business disruption, we remain confident in our strategy and intend to continue to take steps to preserve the
long-term value of the business.”
Protective Measures for Employees and Customers
Resideo plays an essential role in protecting public health and keeping people safe through its water heater, furnace and potable water controls, as well as its security products and services, which have been
deemed ‘essential’ by the United States, Canada and certain other governments globally.
All of our ongoing operations are being
managed consistent with health and safety guidelines and government recommended measures to ensure the well-being of our employees and customers. To that end, in certain locations around the world, including Mexico, Resideo has suspended operations
to support local government initiatives or immediate healthcare concerns. We are closely monitoring pronouncements from governmental authorities in all jurisdictions and the impact on our ability to recommence commercial activity and ensure
continued supply of products to customers.
Cost Reduction and Cash Flow Management Measures
Given the impact of the COVID-19 pandemic, Resideo has taken the following temporary actions:
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Postponed or reduced non-essential capital expenditures;
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Optimized working capital;
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Reduced salaries for certain senior executives;
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Reduced salaries / implemented a furlough program for certain other company employees;
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Eliminated board service fees for the Board of Directors for the first quarter of 2020; and
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Restricted new hiring activity.
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Honeywell Payment Deferral
Resideo and Honeywell have
agreed to defer until July 30, 2020 approximately $42 million in payments otherwise due to Honeywell in the second quarter, including the $35 million payment due April 30, 2020 under the environmental reimbursement agreement. This agreement has also
been revised to incorporate the leverage ratio included in the credit agreement amendment entered into during the fourth quarter of 2019. Resideo was in compliance with this leverage ratio for the quarter ended March 31, 2020. Bob Ryder, interim
chief financial officer, commented, “These arrangements were agreed with Honeywell as part of our ongoing dialogue regarding the overall relationship, and we expect to continue these productive discussions in the second quarter.”
Withdrawal of 2020 Guidance
Resideo expects first quarter sales and adjusted EBITDA to
generally be in line with the expectations communicated on its fourth quarter and full-year earnings call held on February 26, 2020. However, given the rapidly evolving operating conditions related to the COVID-19 pandemic, the company believes it
is too early to estimate accurately the effects on Resideo’s full-year 2020 performance and financial results. Accordingly, the company is withdrawing its previously issued 2020 guidance. The company will provide further business updates when
it reports first quarter 2020 results in May.
Earnings Conference Call
The company
expects to announce first quarter 2020 results on Wednesday, May 6, and host a conference call and webcast with investors on Thursday, May 7. Conference call and webcast details will be provided approximately one week prior to earnings.
About Resideo
Resideo is a leading global provider of critical comfort, residential thermal
solutions and security solutions primarily in residential environments. Building on a 130-year heritage, Resideo has a presence in more than 150 million homes, with 15 million systems installed in homes each year. We continue to serve more than
110,000 contractors through leading distributors, including our ADI Global Distribution business, which exports to more than 100 countries from more than 200 stocking locations around the world. For more information about Resideo, please visit
www.resideo.com.
Contacts
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Media:
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Investors:
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Annalise Helms
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Page Portas
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(763) 777-4334
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(512) 726-3799
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annalise.helms@resideo.com
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investorrelations@resideo.com
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Forward Looking Statements
This release 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-looking
statements. Although we believe that the forward-looking statements contained in this press release are based upon reasonable assumptions, such statements involve known and unknown risks, uncertainties, and other factors, which may cause the actual
results or performance of the Company to be materially different from any future results or performance expressed or implied by such forward-looking statements. Such risks and uncertainties include, but are not limited to, (1) the duration and
severity of the COVID-19 pandemic and the disruption to our business and the global economy caused by it, including (A) its effect on the demand for our products and services, (B) its effect on our and our business partners’ supply chains,
workforce, liquidity, spending and timing for payments and disbursements, (C) the impact of our facility closures and the modified working conditions at our corporate offices, Product & Solutions segment and ADI business segment, including the
timing for our ability to reopen any facilities that have been closed and/or to ramp up operations at such facilities and meet related customer demand, and (D) the impact of employee salary reductions, furloughs and other actions we have taken or
may take in response to the COVID-19 outbreak, (2) our ability to continue productive discussions and reach agreement with Honeywell with respect to modifications to some of the agreements that govern our relationship, and any potential disputes
that have arisen or may hereafter arise with Honeywell if we are unable to reach such agreement, and (3) the other risks described under the headings "Risk Factors" and "Cautionary Statement Concerning Forward-Looking Statements" in our Annual
Reports on Form 10-K for the year ended December 31, 2019 and other periodic filings we make from time to time with the Securities and Exchange Commission (SEC). You are cautioned not to place undue reliance on these forward-looking statements,
which speak only as of the date of this release. Forward-looking statements are not guarantees of future performance, and actual results, developments and business decisions may differ from those envisaged by our forward-looking
statements. Except as required by law, we undertake no obligation to update such statements to reflect events or circumstances arising after the date of this presentation, and we caution investors not to place undue reliance on any such
forward-looking statements.
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