Stock to Keep Your Eyes on: Resideo Technologies, Inc. (NYSE: REZI)

On 17 May 2019, Resideo Technologies, Inc. (NYSE: REZI) negotiated 748,198 shares against it an average volume of 1,241,450 shares. The stock concluded the recent trade at $22.02 with upbeat/downbeat trend move of -4.14%. The daily trading range was observed between a day’s low price of $21.97 to a day’s high price of $22.83.

Resideo Technologies, Inc. (REZI) recently reported its fourth-quarter and full year earnings together with its long-term strategy for growth and margin expansion. The company stated net revenue of $1,266M for the fourth quarter of 2018, bringing full-year net revenue to $4,827M. Stated year-end revenue results were at the high end of the range, with EBITDA above the range.

Vision 2023 Strategy

Resideo spun off from Honeywell on Oct. 29, 2018, as a leading global provider of residential security and comfort solutions, and low-voltage and security distribution.

Through its Vision 2023 strategy, the company will expand its core capabilities and joint ventures to offer homeowners safer, more secure and healthier homes. Resideo is making $90M in new growth investments in 2019 to capitalize on its existing installed base of 150M homes and deepen ties with its network of 110,000 do-it-for-me professional contractors.

Over the year ahead, Resideo will roll out next generation platforms in both its security and comfort divisions. In security, Resideo’s Global Residential Intrusion Platform is extensible and brings improved software offerings. In comfort, Resideo is launching a pioneering platform with recurring services that integrate all dimensions of home wellness.

The final core components of Vision 2023 are Resideo’s ecosystem of homeowners and contractors, and the company’s ability to leverage its scale for accretive growth. An innovative new digital portal will connect Resideo’s community of consumers with do-it-for-me professional contractors, which the company expects to launch in the second half of 2019. Resideo also has established an ongoing planned initiative to identify and execute on tuck-in acquisitions and investments that accelerate recurring revenues, topline momentum and margin expansion.

Section Performance

Products and Solutions (P&S) revenue in the fourth quarter was $602M, up 4 percent on a stated basis and 5 percent on a constant currency basis. P&S section profit reduced 20 percent, influenced by one-time spin-related costs.

Full-year P&S revenue was $2,169M, up 6 percent on a stated basis and 5 percent on a constant currency basis. P&S section profit was $381M, representing an 8 percent raise on the previous year.

Global Distribution revenue in the fourth quarter was $664M, up 6 percent on stated basis and 7 percent on a constant currency basis. Global Distribution section profit was $35M, up 21 percent.

For the full year, Global Distribution delivered revenue of $2,658M, an raise of 7 percent on a stated basis and 6 percent on a constant currency basis. Global Distribution section profit was $148M, up 13 percent on the previous year.

Cash Flow Generation and 2019 Guidance
For the quarter, the company generated $87M of cash flow from operations and $120M in adjusted cash flow defined as adjusted EBITDA (including the Honeywell reimbursement contract payments) less Capex. This cash flow generation reduced net debt to $936M at year-end.

For the full year, the company generated $462M of cash flow from operations and $418M in adjusted cash flow defined as adjusted EBITDA (including the Honeywell reimbursement contract payments) less Capex. Uses of cash were primarily driven by new product development and working capital needs as a result of the spinoff.

In connection with the completion of the spin-off, the company incurred debt totaling $1,225M consisting of $825M of secured debt and $400M of senior unsecured notes during the fourth quarter of 2018. The company has a five-year senior secured first-lien revolving credit facility to be used for working capital and other cash needs from time to time in an aggregate principal amount of $350M.

The stock as of last trading session moved 25.11% up from its 52 week low and was -32.35% behind its 52 week high. REZI price switched up -1.98% 20-Days Simple Moving Average, added 5.22% from 50-Days Simple Moving Average and fell -1.05% from 200 Days Simple Moving Average.

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