Resideo Technologies, Inc., a global provider of home comfort and security solutions, 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.
Resideo are closely monitoring pronouncements from governmental authorities in all jurisdictions
All of the ongoing operations are being managed consistent with health and safety guidelines and government recommended measures to ensure the well-being of the 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.
Resideo are closely monitoring pronouncements from governmental authorities in all jurisdictions and the impact on the ability to recommence commercial activity and ensure continued supply of products to customers.
Cash Flow Management Measures
Given the impact of the COVID-19 pandemic, Resideo has taken the following temporary actions:
- Postponed or reduced non-essential capital expenditures
- Optimized working capital
- Reduced salaries for certain senior executives
- Reduced salaries / implemented a furlough program for certain other company employees
- Eliminated board service fees for the Board of Directors for the first quarter of 2020 and
- Restricted new hiring activity
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.”
2020 Guidance Withdrawal and Earnings Conference Call
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. 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.
