Resideo Technologies Inc.

11/05/2025 | Press release | Distributed by Public on 11/05/2025 16:07

Quarterly Report for Quarter Ending September 27, 2025 (Form 10-Q)

Management's Discussion and Analysis of Financial Condition and Results of Operations.
The following information should be read in conjunction with the Unaudited Consolidated Financial Statements included herein under "Item 1. Financial Statements." and the Audited Consolidated Financial Statements and the notes thereto and "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations" ("MD&A") included in our 2024 Annual Report on Form 10-K.
FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q ("Quarterly Report") contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements can be identified by the fact that they do not relate strictly to historical or current facts, but rather are based on current expectations, estimates, assumptions, and projections about our industries and our business and financial results. Forward-looking statements often include words such as "anticipates," "estimates," "expects," "projects," "forecasts," "intends," "plans," "continues," "believes," "may," "will," "goals," and words and terms of similar substance in connection with discussions of future operating or financial performance. This Quarterly Report includes industry and market data that we obtained from various third-party sources, including forecasts based upon such data; as with any projection or forecast, forward-looking statements are inherently susceptible to uncertainty and changes in circumstances. Our actual results may vary materially from those expressed or implied in our forward-looking statements. Accordingly, undue reliance should not be placed on any forward-looking statement made by us or on our behalf. Although we believe that the forward-looking statements contained in this Quarterly Report are based on reasonable assumptions, you should be aware that many factors could affect our actual financial results or results of operations and could cause actual results to differ materially from those in such forward-looking statements, including but not limited to:
•our ability to spin-off ADI Global Distribution, including the timeframe and process for the same;
•competition from other companies in our markets and segments, as well as in new markets and emerging markets;
•compatibility and ease of integration of our products and solutions with third-party products and services and our ability to control such third party integrations;
•the potential adverse impacts of tariffs, import/export restrictions, or other trade barriers on global economic conditions, financial markets and our business;
•the impact of potentially volatile global market and economic conditions and industry and end market cyclicality, including factors such as interest rates, inflation, energy costs, availability of financing, consumer spending habits and preferences, housing market changes, and employment rates;
•our ability to obtain additional future capital on favorable terms or at all;
•our ability to identify consumer preferences and industry standards, develop and protect intellectual property related thereto, and successfully market new technologies, products, and services to consumers;
•our reliance on independent integrators to sell and install our solutions;
•our reliance on certain suppliers;
•the impact of disruptions in our supply chain from third-party suppliers and manufacturers, including our inability to obtain necessary raw materials and product components, production equipment, or replacement parts;
•inability to consummate acquisitions on satisfactory terms or to integrate such acquisitions effectively;
•the impact of earthquakes, hurricanes, fires, power outages, floods, pandemics, epidemics, natural disasters, and other catastrophic events, or other public health emergencies;
•failure to achieve and maintain a high level of product and service quality, including the impact of warranty claims, product recalls, and product liability actions that may be brought against us;
•our ability to retain or expand relationships with significant customers;
•the significant failure or inability to comply with specifications and manufacturing requirements or delays or other problems with existing or new products or inability to meet price requirements;
•inability to successfully execute restructuring or transformation programs or to effectively manage our workforce;
•the failure to increase productivity through sustainable operational improvements;
•the failure to acquire, implement, maintain and upgrade business technology infrastructure systems, including Enterprise Resource Planning ("ERP") systems and the like;
•economic, political, regulatory, foreign exchange, and other risks of international operations;
•our dependence upon information technology infrastructure and network operations having adequate cyber-security functionality;
•risks associated with our relationships with Honeywell, including our reliance on Honeywell for the Honeywell Home trademark;
•regulations and societal actions to respond to global climate change;
• failure to comply with the broad range of current and future standards, laws, and regulations in the jurisdictions in which we operate;
•the impact of potential material litigation matters, government proceedings, and other contingencies and uncertainties;
•uncertainty in the development, deployment, and the use of artificial intelligence in our products and services, as well as our business interests more broadly;
•currency exchange rate, stock price, and effective tax rate fluctuations;
•the CD&R Stockholder's interest in and influence over us that may diverge from, or even conflict with, interests of the holders of our common stock, and the reduction in the relative voting power of holders of our common stock resulting from the issuance of preferred stock;
•our ability to maintain effective internal controls and deliver timely financial statements;
•impairment of goodwill, other intangible assets, and long-lived assets;
•being required to make significant cash contributions to our defined benefit pension plans; and
•other risks detailed under the caption "Risk Factors" in this Quarterly Report, in Part II, Item 1A, and certain factors discussed elsewhere in our 2024 Annual Report on Form 10-K, and other filings we make with the SEC.
Other than as set forth below in Part II, Item lA, captioned "Risk Factors", there have been no material changes to the risk factors described in our 2024 Annual Report on Form 10-K. These risks could cause actual results to differ materially from those implied by forward-looking statements in this Quarterly Report. Even if our results of operations, financial condition, and liquidity, and the development of the industries in which we operate are consistent with the forward-looking statements contained in this Quarterly Report, those results or developments may not be indicative of results or developments in subsequent periods.
Any forward-looking statements made by us in this Quarterly Report speak only as of the date on which they are made. We are under no obligation to and expressly disclaim any obligation to update or alter our forward-looking statements, whether as a result of new information, subsequent events, or otherwise.
Overview and Business Trends
We are a leading global manufacturer, developer, and distributor of technology-driven sensing and controls products and solutions that help homeowners and businesses stay connected and in control of their comfort, security, energy use, and smart living. We are a leader in key product markets including home heating, ventilation and air conditioning controls, smoke and carbon monoxide detection home safety and fire suppression, and security. Our global footprint serves residential and commercial end-markets. Our solutions and services can be found in over 150 million residential and commercial spaces globally, with tens of millions of new devices sold annually. We manage our business operations through two business segments, Products and Solutions and ADI Global Distribution.
Our Products and Solutions segment is a leading building products manufacturer focused on residential controls and sensing solutions. Our offerings include temperature and humidity control, water and air solutions, smoke and carbon monoxide detection home safety products, residential and small business security products, video cameras, other home-related lifestyle convenience solutions, cloud infrastructure, installation and maintenance tools, and related software. We also sell components to manufacturers of water heaters, heat pumps and boilers.
Our ADI Global Distribution segment is the leading global wholesale distributor of low-voltage products, including security and audio-visual solutions. With a portfolio of over 500,000 professionally installed products, ADI Global Distribution serves both the commercial and residential markets across key specialty categories including security, fire, audio-visual, access control, smart living, and data communications. This extensive offering is complemented by an expanding suite of proprietary technologies and services, under key exclusive brands such as Araknis Networks, Control4, OvrC, and WattBox.
Our financial performance is influenced by macroeconomic factors underlying end user demand such as repair and remodeling activity, residential and non-residential construction, new and existing home sales, employment rates, interest rates and bank lending standards, and supply chain dynamics that can be influenced by geopolitics. The ongoing uncertainty and volatility in the global macroeconomic environment have affected, and could continue to affect, our visibility toward future performance. Uncertainties remain including the global tariff environment, potential for changes in inflation and interest rates, increased labor costs, reduced consumer spending due to softening labor markets, elevated mortgage rates, shifts in energy policies, and potential market and other disruption from the ongoing conflict between Russia and Ukraine as well as the Middle East crisis.
Current Period Highlights
•Net revenue of $1.86 billion, up 2.0% from $1.83 billion in the third quarter of 2024
•Gross profit margin of 29.8%, compared to 28.7% in the third quarter of 2024
•Income from operations of $154 million, or 8.3% ofrevenue, compared to $126 million, or 6.9% of revenue in the thirdquarter of 2024
•Fully diluted earnings per common share of $0.85, compared to $0.07 diluted earnings per common share in the thirdquarter of 2024
Outlook
For the remainder of 2025, we anticipate executing our business operations against a highly dynamic global macroeconomic environment. The vast majority of costs associated with the building products that the Products and Solutions segment sells in the U.S. are incurred in Mexico. Most Products and Solutions products manufactured in Mexico, along with a significant portion of the ADI Global Distribution segment products sourced in Mexico, are currently exempt from tariffs under the United States-Mexico-Canada Agreement (USMCA). Additional tariff impact relates to products imported from China (and other Asian countries) and the European Union primarily by our ADI Global Distribution segment. We intend to take actions to essentially mitigate the cost impact of any tariffs that affect our business; however, rising prices and other macroeconomics factors may lead to lower purchase levels by our customers. We are monitoring these dynamics very closely and will make adjustments in our business operation execution, as appropriate. Based on the aforementioned, we reaffirm our 2025 revenue outlook to be up low double-digits year-over-year.
Results of Operations
The following table represents results of operations on a consolidated basis for the periods indicated:
Three Months Ended Nine Months Ended
(in millions, except per share data and percentages) September 27, 2025 September 28, 2024 September 27, 2025 September 28, 2024
Net revenue $ 1,864 $ 1,828 $ 5,577 $ 4,903
Cost of goods sold 1,308 1,304 3,941 3,532
Gross profit 556 524 1,636 1,371
Gross profit % 29.8 % 28.7 % 29.3 % 28.0 %
Operating expenses:
Research and development expenses 44 23 120 69
Selling, general and administrative expenses 324 317 949 828
Intangible asset amortization 31 29 91 51
Restructuring, impairment and extinguishment costs 3 29 9 47
Total operating expenses 402 398 1,169 995
Income from operations 154 126 467 376
Indemnification Agreement expense - 45 972 135
Other expenses, net 7 10 22 10
Interest expense, net 37 27 86 55
Net income (loss) before taxes 110 44 (613) 176
Provision (benefit) for income taxes (46) 24 50 83
Net income (loss) $ 156 $ 20 $ (663) $ 93
Earnings (loss) per common share:
Basic $ 0.88 $ 0.07 $ (4.62) $ 0.54
Diluted $ 0.85 $ 0.07 $ (4.62) $ 0.53
Net Revenue
Three months ended
Net revenue for the three months ended September 27, 2025 was $1,864 million, an increase of $36 million, or 2.0%, from the same period in 2024, primarily due to $50 million of revenue from favorable price and mix, and $13 million from favorable foreign currency exchange rates. The increase was partially offset by a $28 million decrease from lower sales volume.
Nine months ended
Net revenue for the nine months ended September 27, 2025 was $5,577 million, an increase of $674 million, or 13.7%, from the same period in 2024, primarily due to $446 million of revenue from the acquisition of Snap One, $134 million from favorable price and mix, $86 million from higher sales volume, and $11 million from favorable foreign currency exchange rates.
Gross Profit
Three months ended
The chart below presents the drivers of the gross profit variance from the three months ended September 28, 2024 to the three months ended September 27, 2025.
Gross profit for the three months ended September 27, 2025 was $556 million, an increase of $32 million, or 6.1%, as compared to the same period in 2024, as shown in the above waterfall.
Gross margin rate for the three months ended September 27, 2025 was 29.8%, an increase of 110 basis points ("bps"), as compared to the same period in 2024. The increase was primarily driven by favorable price and mix shift of 150 bps partially offset by lower margins on sales volumes of 30 bps, and higher manufacturing costs of 10 bps.
Nine months ended
The chart below presents the drivers of the gross profit variance from the nine months ended September 28, 2024to the nine months ended September 27, 2025.
Gross profit for the nine months ended September 27, 2025 was $1,636 million, an increase of $265 million, or 19.3%, as compared to the same period in 2024, as shown in the above waterfall.
Gross margin rate for the nine months ended September 27, 2025 was 29.3%, an increase of 130 bps as compared to the same period in 2024. The increase was primarily driven by favorable price and mix shift of 100 bps, and favorable impacts from the acquisition of Snap One of 70 bps. The increase was partially offset by lower margins on sales volumes of 30 bps.
Research and Development Expenses
Three months ended
Research and development expenses for the three months ended September 27, 2025 were $44 million, an increase of $21 million or 91.3% as compared to the same period in 2024. The increase was primarily driven by investments in both segments related to incremental headcount and third party services to develop and introduce new products into the market.
Nine months ended
Research and development expenses for the nine months ended September 27, 2025 were $120 million, an increase of $51 million, or 73.9%, as compared to the same period in 2024. The increase was primarily driven by investments in both segments related to incremental headcount and third party services to develop and introduce new products into the market.
Selling, General and Administrative Expenses
Three months ended
Selling, general and administrative expenses for the three months ended September 27, 2025 were $324 million, an increase of $7 million, or 2.2%, as compared to the same period in 2024. The increase was primarily driven by $6 million of incremental operating costs including payroll and benefits, rent and third party spend, and $4 million of expenses related to the announced future ADI Spin-Off. The increase was partially offset by a net reduction in bad debt expense of $5 million primarily driven by the Product and Solutions segment.
Nine months ended
Selling, general and administrative expenses for the nine months ended September 27, 2025 were $949 million, an increase of $121 million, or 14.6%, as compared to the same period in 2024. The increase was primarily driven by $82 million of higher costs versus prior year associated with the acquisition and integration of Snap One, $33 million of incremental operating costs including payroll and benefits, rent, marketing, IT, third party spend, and travel expense, and $4 million related to expenses incurred in connection with the announced future ADI Spin-Off.
Intangible Asset Amortization
Three months ended
Intangible asset amortization for the three months ended September 27, 2025 was $31 million, an increase of $2 million, or 6.9% as compared with the same period in 2024 primarily due to foreign currency impacts.
Nine months ended
Intangible asset amortization for the nine months ended September 27, 2025 was $91 million, an increase of $40 million, or 78.4% as compared with the same period in 2024. The increase was primarily due to additional amortization expense of $36 million associated with the new intangibles from the Snap One acquisition as well as foreign currency impacts.
Restructuring, Impairment and Extinguishment Costs
Three months ended
Restructuring, impairment and extinguishment costs for the three months ended September 27, 2025 were $3 million, a decrease of $26 million, or 89.7%, as compared to the same period in 2024. The decrease was primarily due to $28 million of restructuring costs incurred in the prior year for various restructuring actions, including capturing synergies from the Snap One acquisition, and pertains to employee termination costs. The decrease was partially offset by $3 million of debt extinguishment and modification costs incurred during the three months ended September 27, 2025.
Nine months ended
Restructuring, impairment and extinguishment costs for the nine months ended September 27, 2025 were $9 million, a decrease of $38 million, or 80.9%, as compared to the same period in 2024. The decrease was primarily due to $35 million of restructuring costs incurred in the prior year for various restructuring actions, including capturing synergies from the Snap One acquisition. In addition, we incurred $6 million of debt extinguishment costs as part of the Snap One acquisition, and $5 million in impairment expense related to an equity security in the prior year. The decrease was partially offset by $6 million in restructuring expenses related to the Products and Solutions and ADI Segments, and $3 million of debt extinguishment and modification costs related to Corporate incurred during the nine months ended September 27, 2025.
Indemnification Agreement Expense
Three months ended
We incurred no Indemnification Agreement expense for the three months ended September 27, 2025, a decrease of $45 million compared to the same period of 2024. The decrease was driven by the termination of the Indemnification Agreement with Honeywell on July 30, 2025.
Nine months ended
Indemnification Agreement expense for the nine months ended September 27, 2025 was $972 million, an increase of $837 million from the $135 million recorded in the same period of 2024. The increase was driven by the additional expense incurred in connection with the termination of the Indemnification Agreement with Honeywell.
Other Expenses, Net
Three months ended
Other expenses, net for the three months ended September 27, 2025 were $7 million, a decrease of $3 million as compared to the same period in 2024. The decrease was primarily driven by a $3 million loss on the sale of certain assets and related liabilities in the Products and Solutions segment in the prior year.
Nine months ended
Other expenses, net for the nine months ended September 27, 2025 were $22 million, an increase of $12 million as compared to the same period in 2024. The increase was primarily driven by $15 million in unfavorable foreign currency exchange rates, and a $4 million gain from the sale of an investment in the prior year. The increase was partially offset by a $8 million loss on sale of certain assets and related liabilities in the Products and Solutions segment in the prior year.
Interest Expense, Net
Three months ended
Interest expense, net for the three months ended September 27, 2025 was $37 million, an increase of $10 million, or 37.0%, as compared to the same period in 2024. The increase was due to additional long-term debt resulting in $7 million of higher interest expense, and a decrease of $4 million in interest rate derivative related receipts due to interest rate fluctuations and a lower aggregate notional amount of interest rate swaps due to maturities.
Nine months ended
Interest expense, net for the nine months ended September 27, 2025 was $86 million, an increase of $31 million, or 56.4%, as compared to the same period in 2024. The increase was due to additional long-term debt resulting in $15 million of higher interest expense, a decrease of $12 million in interest rate derivative related receipts due to interest rate fluctuations and a lower aggregate notional amount of interest rate swaps due to maturities, and lower interest income of $3 million as a result of lower interest rates and lower cash balances.
Tax (Benefit) Expense
Three months ended
The income tax benefit for the three months ended September 27, 2025 was $46 million compared to the income tax expense of $24 million in the same period in 2024. The decrease was primarily driven by an increase in income before taxes for the quarter and a change in projected income before taxes for the year. The effective income tax rate decreased from 54.5% to (41.8)%, primarily driven by the mix of earnings across the jurisdictions in which we operate, decreased income before taxes with relatively fixed non-deductible expenses and a large increase in the non-deductible Indemnification Agreement expense and U.S. taxation of foreign earnings.
Nine months ended
Income tax expense for the nine months ended September 27, 2025 was $50 million, a decrease of $33 million as compared to the same period in 2024. The decrease was primarily driven by a decrease in income before taxes and an increase in the non-deductible Indemnification Agreement expense. The effective income tax rate decreased from 47.2% to (8.2)%, primarily driven by the mix of earnings across the jurisdictions in which we operate, decreased income before taxes with relatively fixed non-deductible expenses and a large increase in the non-deductible Indemnification Agreement expense and U.S. taxation of foreign earnings.
Segment Results of Operations
Products and Solutions
Three months ended
The chart below presents net revenue and income from operations for the three months ended September 27, 2025 and September 28, 2024.
Products and Solutions net revenue for the three months ended September 27, 2025 was $661 million, an increase of $16 million, or 2.5%, as compared to the same period in 2024. The increase is primarily due to a $21 million favorable impact from price and mix, and $6 million from favorable foreign currency exchange rates. The increase was partially offset by $10 million from lower sales volumes.
Products and Solutions income from operations for the three months ended September 27, 2025 was $140 million, an increase of $12 million, or 9.4%, as compared to the same period in 2024. The increase is primarily due to favorable price and mix shift of $13 million, lower restructuring costs of $8 million, lower bad debt expense of $7 million, and lower material, freight, and other manufacturing costs of $3 million. The increase was partially offset by lower sales volumes of $9 million, and $11 million of incremental research and development expenses related to additional headcount and third party services to develop and introduce new products into the market.
Nine months ended
The chart below presents net revenue and income from operations for the nine months ended September 27, 2025 and September 28, 2024.
Products and Solutions net revenue for the nine months ended September 27, 2025 was $1,976 million, an increase of $81 million, or 4.3%, as compared to the same period in 2024. The increase is primarily due to a $95 million favorable impact from price and mix, and $3 million from favorable foreign currency exchange rates. The increase was partially offset by $16 million from lower sales volumes.
Products and Solutions income from operations for the nine months ended September 27, 2025 was $418 million, an increase of $48 million, or 13.0%, as compared to the same period in 2024. The increase is primarily due to a favorable price and mix shift of $55 million, lower restructuring costs of $12 million, lower bad debt expense of $6 million, and lower material, freight, and other manufacturing costs of $10 million. The increase was partially offset by $23 million of incremental research and development expenses related to additional headcount and third party services to develop and introduce new products into the market, and $10 million from lower sales volumes.
ADI Global Distribution
Three months ended
The chart below presents net revenue and income from operations for the three months ended September 27, 2025 and September 28, 2024.
ADI Global Distribution net revenue for the three months ended September 27, 2025, was $1,203 million, an increase of $20 million, or 1.7%, as compared to the same period in 2024. The increase was primarily driven by $30 million from
favorable price and mix shift, and $7 million from favorable foreign currency exchange rates. The increase was partially offset by $18 million from lower sales volumes due primarily to impacts from our ERP implementation.
ADI Global Distribution income from operations for the three months ended September 27, 2025 was $56 million, an increase of $20 million, or 55.6%, as compared to the same period in 2024. The increase was primarily driven by $30 million from net favorable price and mix shift, and $17 million lower restructuring expenses. This increase was partially offset by incremental research and development expenses of $11 million and a decrease in sales volumes of $4 million. In addition, operating expenses increased by $9 million, including payroll, freight, and duties, driven primarily by the one-time impacts from our ERP implementation.
Nine months ended
The chart below presents net revenue and income from operations for the nine months ended September 27, 2025 and September 28, 2024.
ADI Global Distribution net revenue for the nine months ended September 27, 2025 was $3,601 million, an increase of $593 million, or 19.7%, as compared to the same period in 2024. The increase was primarily driven by $446 million of revenue from the acquisition of Snap One, $102 million from higher sales volumes, $39 million from favorable price and mix shift, and $9 million from favorable foreign currency exchange rates.
ADI Global Distribution income from operations for the nine months ended September 27, 2025 was $161 million, an increase of $14 million, or 9.5%, as compared to the same period in 2024. The increase was primarily driven by $36 million from net favorable price and mix shift, $17 million from higher sales volumes, and $14 million from lower restructuring costs. This increase was partially offset by investment of $28 million in research and development costs. In addition, operating expenses increased by $29 million, including payroll and benefits, rent, bad debt, third party spend, and freight and duties.
Corporate
Three months ended
Corporate costs for the three months ended September 27, 2025 were $42 million, an increase of $4 million, or 10.5%, as compared to the same period in 2024. The increase was primarily driven by $4 million of expenses related to the announced future ADI Spin-Off.
Nine months ended
Corporate costs for the nine months ended September 27, 2025 were $112 million, a decrease of $29 million, or 20.6%, as compared to the same period in 2024. The decrease was primarily driven by $29 million of acquisition and integration costs incurred in the prior year, and lower restructuring, impairment and extinguishment costs of $11 million. The decrease was partially offset by incremental operating costs of $8 million including payroll and benefits and third party spend, and $4 million of expenses related to the announced future ADI Spin-Off.
Capital Resources and Liquidity
As of September 27, 2025, total cash and cash equivalents were $345 million, of which 50% were held by foreign subsidiaries. Our liquidity is primarily dependent on our ability to continue to generate positive cash flows from operations, supplemented by external sources of capital, as needed. Additional liquidity may also be provided through access to the capital markets and our A&R Revolving Credit Facility in an aggregate principal amount of $500 million.
In August 2025, subject to the terms and conditions of the Termination Agreement, we made a pre-tax, one-time cash payment of $1,590 million to Honeywell. This was partially financed in the amount of $1,225 million in incremental term loans under our A&R Credit Agreement, which mature in August 2032. The remainder of the payment to Honeywell was financed with our existing cash. Refer to Note 12. Long-Term Debtand Note 16. Commitments and Contingenciesto the Unaudited Consolidated Financial Statements for further discussion.
Liquidity
Our future capital requirements will depend on many factors, including acquisition or strategic transactions we may enter into such as the announced future ADI Spin-Off, the rate of sales growth, market acceptance of our products, the timing and extent of research and development projects, potential acquisitions of companies or technologies, and the expansion of our sales and marketing activities. While we may elect to seek additional funding at any time, we believe our existing cash, cash equivalents, and availability under our credit facilities are sufficient to meet our capital requirements for the foreseeable future.
We may from time to time take steps to reduce our debt or otherwise improve our financial position. These actions could include prepayments, liquidated damages, open market debt repurchases, negotiated repurchases, other redemptions or retirements of outstanding debt, opportunistic refinancing of debt, raising additional capital, or divesting certain assets. The amount of prepayments or the amount of debt that may be refinanced, repurchased, or otherwise retired, if any, will depend on market conditions, trading levels of our debt, our cash position, compliance with debt covenants, and other considerations.
A&R Credit Agreement and Senior Notes
As of September 27, 2025, we had $3,237 million of long-term debt, including $2,337 million outstanding under our A&R Credit Agreement, $300 million 4.000% Senior Notes due 2029, and $600 million 6.500% Senior Notes due 2032. We have $20 million in outstanding debt due in the next twelve months, and $48 million of unamortized deferred financing costs. The Senior Notes due 2029 and Senior Notes due 2032 are senior unsecured obligations of Resideo guaranteed by Resideo's existing and future domestic subsidiaries and rank equally with all of Resideo's senior unsecured debt and senior to all of Resideo's subordinated debt.
We have also entered into certain interest rate swap agreements based on Term SOFR. These interest rate swap agreements effectively convert a portion of our variable-rate debt to fixed rate debt. Additionally, we assumed an interest rate cap in 2024 which effectively caps the interest on a portion of our variable rate debt with a current notional amount of $343 million and a strike rate of 4.79%.
In August 2025, we issued $1,225 million in incremental term loans under our A&R Credit Agreement to partially finance our settlement of the Termination Agreement with Honeywell.
As of September 27, 2025, we were in compliance with all covenants related to the A&R Credit Agreement, Senior Notes due 2029, and Senior Notes due 2032.
Refer to Note 12. Long-Term Debtand Note 13. Derivative Financial Instrumentsto the Unaudited Consolidated Financial Statements for a description of our debt obligations and the timing of future principal and interest payments, including impacts from our interest rate derivatives.
Common Share Repurchase Program
In August 2023, we announced that our Board of Directors authorized a share repurchase program for the repurchase of up to $150 million of our common stock over an unlimited time period. During the three and nine months ended September 27, 2025, there were no common share repurchases. As of September 27, 2025, we had $108 million of authorized repurchases remaining under the Share Repurchase Program.
Cash Flow Summary for the Nine Months Ended September 27, 2025 and September 28, 2024
Our cash flows from operating, investing, and financing activities for the nine months ended September 27, 2025 and September 28, 2024, as reflected in the Unaudited Consolidated Financial Statements, are summarized as follows:
Nine Months Ended
(in millions) September 27, 2025 September 28, 2024 $ change
Cash provided by (used for):
Operating activities $ (1,436) $ 241 $ (1,677)
Investing activities (79) (1,386) 1,307
Financing activities 1,159 1,043 116
Effect of exchange rate changes on cash 9 (3) 12
Net decrease in cash, cash equivalents and restricted cash $ (347) $ (105) $ (242)
For the nine months ended September 27, 2025, net cash used for operating activities was $1,436 million, a decrease of $1,677 million as compared to the same period in 2024. During the nine months ended September 27, 2025, we recorded $972 million of expense related to the termination of the Indemnification Agreement, $86 million of interest expense and $22 million of other expenses. These expenses, offset by operating profit of $467 million, were the primary drivers of the net loss of $663 million. In addition to the decrease in net income of $756 million, there was a change of $923 million in
net assets and liabilities driven primarily by a $753 million decrease in the Indemnification Agreement liability and a $120 million decrease in accounts payable primarily due to the timing of payments for strategic buys.
Net cash used for investing activities for the nine months ended September 27, 2025 was $79 million, a decrease of $1,307 million, or 94%, as compared to the same period in 2024. The decrease was primarily driven by the prior year acquisition of Snap One for $1,334 million, partially offset by an increase in capital expenditures of $21 million in the current year.
Net cash provided by financing activities for the nine months ended September 27, 2025 was $1,159 million, an increase of $116 million, or 11%, as compared to the same period in 2024. This increase was primarily driven by a $599 million reduction in long-term debt repayments, partially offset by proceeds of $482 million related to the issuance of Preferred Stock in 2024.
Contractual Obligations and Probable Liability Payments
In addition to our long-term debt discussed above, our material cash requirements include the following contractual obligations.
Indemnification Agreement Payments
In connection with the Honeywell Spin-Off, we entered into the Indemnification Agreement with Honeywell. On July 30, 2025, we entered into the Termination Agreement with Honeywell to terminate the Indemnification Agreement. Subject to the terms and conditions of the Termination Agreement, we made a pre-tax, one-time cash payment of $1,590 million to Honeywell in August 2025 using proceeds from the incremental term loans issued under the A&R Credit Agreement, together with a portion of our cash on hand. We are no longer required to make any further payments to Honeywell under the Indemnification Agreement and the associated affirmative and negative covenants no longer apply. During the nine months ended September 27, 2025, we paid Honeywell $1,695 million under the Indemnification Agreement, which includes the impact of the Termination Agreement. Refer to Note 12. Long-Term Debt and Note 16. Commitments and Contingencies for further discussion.
Environmental Liability
We make environmental liability payments for sites which we own and operate. As of September 27, 2025, a liability of $22 million was deemed probable and reasonably estimable.
Operating Leases
We have operating lease arrangements for the majority of our manufacturing centers, distribution centers, branches, offices, engineering and lab sites, warehouses, automobiles, and certain equipment. As of September 27, 2025, we had operating lease payment obligations of $350 million, with $55 million payable within 12 months.
Other Matters
Litigation, Environmental Matters, and the Indemnification Agreement
Refer to Note 16. Commitments and Contingenciesfor further discussion.
Recent Accounting Pronouncements
Refer to Note 2. Summary of Significant Accounting Policiesfor further discussion.
Resideo Technologies Inc. published this content on November 05, 2025, and is solely responsible for the information contained herein. Distributed via Edgar on November 05, 2025 at 22:07 UTC. If you believe the information included in the content is inaccurate or outdated and requires editing or removal, please contact us at [email protected]