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What changed in RESIDEO TECHNOLOGIES, INC.'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of RESIDEO TECHNOLOGIES, INC.'s 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+291 added−276 removedSource: 10-K (2025-02-20) vs 10-K (2024-02-14)

Top changes in RESIDEO TECHNOLOGIES, INC.'s 2024 10-K

291 paragraphs added · 276 removed · 200 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

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Biggest changeWe continue to assess the needs of the business and identify diverse organizations to partner with that promote a pipeline of diverse talent. Our diversity outreach includes contacting various categories of diversity job boards and diverse partnerships, such as Society of Women Engineers (“SWE”) and 5 Table of Contents Resideo Technologies, Inc. National Society of Black Engineers (“NSBE”).
Biggest changeOur diversity outreach includes contacting various categories of diversity job boards and diverse partnerships, such as Society of Women Engineers (“SWE”) and National Society of Black Engineers (“NSBE”). Additionally, we refreshed our diverse slate guidelines for professional roles requiring that interview slates include female and/or racially/ethnically diverse candidates, except in rare circumstances.
Competition Our industries and markets are highly competitive in both our Products and Solutions and ADI Global Distribution segments, where we compete with global, national, regional and local providers for our products, services and solutions, including manufacturers, distributors, service providers, retailers and online commerce providers, as well as newer entrants to the market with non-traditional business and customer service models or disruptive technologies and products, including cable, telecommunications, large technology companies competing in the connected home space and smaller market entrants that offer control capabilities among their products, applications and services and have ongoing development efforts to address the broader connected home market.
Competition Our industries and markets are highly competitive in both our Products and Solutions and ADI Global Distribution business segments, where we compete with global, national, regional, and local providers for our products, services and solutions, including manufacturers, distributors, service providers, retailers, and online commerce providers, as well as newer entrants to the market with non-traditional business and customer service models or disruptive technologies and products, including cable, telecommunications, and large technology companies competing in the connected home space as well as smaller market entrants that offer control capabilities among their products, applications, and services and have ongoing development efforts to address the broader connected home market.
We make capital expenditures to design and upgrade our products to comply with or exceed standards applicable to the industries in which they compete. Our ongoing environmental compliance programs also result in capital expenditures.
We make capital expenditures to design, maintain, and upgrade our products to comply with or exceed standards applicable to the industries in which they compete. Our ongoing environmental compliance programs also result in capital expenditures.
Our deep domain expertise, proprietary technology and brands are protected by a combination of patents, trademarks, copyrights, trade secrets, non-disclosure agreements, and contractual provisions. We own approximately 2,800 worldwide active patents and pending patent applications to protect our research and development investments in new products and services.
Our deep domain expertise, proprietary technology and brands are protected by a combination of patents, trademarks, copyrights, trade secrets, non-disclosure agreements and contractual provisions. We own approximately 2,900 worldwide active patents and pending patent applications to protect our research and development investments in new products and services.
As of December 31, 2023, we have recorded a liability for environmental investigation and remediation of approximately $22 million related to sites owned and operated by Resideo. Regulatory and environmental considerations are a part of all significant capital expenditure decisions; however, expenditures in 2023 related solely to regulatory compliance were not material.
As of December 31, 2024, we have recorded a liability for environmental investigation and remediation of approximately $22 million related to sites owned and operated by Resideo. Regulatory and environmental considerations are a part of all significant capital expenditure decisions; however, expenditures in 2024 related solely to regulatory compliance were not material.
The effects of climate change, such as extreme weather conditions and events and water scarcity, may exacerbate fluctuations in typical weather patterns, creating financial risks to our business. In addition, the dynamic global and macro-economic conditions may further disrupt these seasonal patterns.
The effects of climate change, such as extreme weather conditions and events and water scarcity, may exacerbate fluctuations in typical weather patterns, creating financial risks to our business. In addition, the dynamic global and macro-economic conditions and regulatory changes may further disrupt these seasonal patterns.
Products and Solutions : Our products and solutions for comfort, energy management, safety and security benefit from the trusted, well-established key branded offerings such as Honeywell Home, First Alert, Resideo, Braukmann, BRK, and others.
Products and Solutions : Our products and solutions for comfort, energy management, safety, and security benefit from trusted, well-established branded offerings such as Honeywell Home, First Alert, Resideo, Braukmann, BRK, and others.
We believe that the interests of employees must be aligned with our stockholders. We provide comprehensive, competitive and contemporary benefits that recognize the diversity of our workforce and are designed to meet the varying needs of our employees and promote choice. Our package includes paid time off, flexible work schedules, education assistance programs, and more.
We believe that the interests of employees must be aligned with our stockholders. We provide comprehensive and competitive benefits that are designed to meet the varying needs of our employees and promote choice. Our package includes paid time off, flexible work schedules, education assistance programs and more.
Culture : In 2023, we continued to reinforce our four Core Values: • Start with the Customer: We understand our customers’ needs and pride ourselves on delivering exceptional experiences; • Act as One Team: We work together toward common goals, engaging from a place of humility and respect; • Pioneer the Future: We embrace change, boldly step into the unknown, and relentlessly foster innovation to fuel our growth; and • Make a Difference: We care about the long-lasting, positive impact we make on each other, our customers, our communities, and the planet.
Culture : In 2024, we continued to reinforce our four Core Values: • Start with the Customer: We understand our customers’ needs and pride ourselves on delivering exceptional experiences; • Act as One Team: We work together toward common goals, engaging from a place of humility and respect; • Pioneer the Future: We embrace change, boldly step into the unknown, and relentlessly foster innovation to fuel our growth; and 5 Table of Contents Resideo Technologies, Inc. • Make a Difference: We care about the long-lasting, positive impact we make on each other, our customers, our communities, and the planet.
We believe the increased desire for critical comfort, energy management, and actionable safety and security solutions in the home, combined with the long-term impacts of energy transitions, are driving investment in the types of products and solutions we provide.
We believe the increased desire for critical comfort, energy management, and actionable safety and security solutions in residential and commercial spaces, combined with the long-term impacts of energy transitions, are driving investment in the types of products and solutions we provide.
ADI Global Distribution : Our ADI Global Distribution segment is a leading wholesale distributor of low-voltage security products including security, fire, access control and video products, and participates significantly in the broader related markets of smart home, access control, power, audio, ProAV, networking, communications, wire and cable, enterprise connectivity, and structured wiring products.
ADI Global Distribution : Our ADI Global Distribution segment is a leading wholesale distributor of low-voltage products including security, fire, and access control, and participates significantly in the broader related markets of smart home, residential audio-visual, professional audio-visual, power management, networking, data communications, wire and cable, enterprise connectivity, and structured wiring products.
The Company’s News Page (https://www.Resideo.com/news) The Company’s Facebook Page (www.facebook.com/Resideo) The Company’s Twitter Feed (https://twitter.com/Resideo) The Company’s LinkedIn Feed (https://www.linkedin.com/company/Resideo1/) References to our website and other social media channels are made as inactive textual references and information contained on them is not incorporated by reference into this Form 10-K. 7 Table of Contents Resideo Technologies, Inc.
The Company’s News Page (https://www.Resideo.com/news) The Company’s Facebook Page (www.facebook.com/Resideo) The Company’s X Feed (https://www.X.com/Resideo) The Company’s LinkedIn Feed (https://www.linkedin.com/company/Resideo1/) References to our website and other social media channels are made as inactive textual references and information contained on them is not incorporated by reference into this Form 10-K.
Human Capital As of December 31, 2023, we employed approximately 14,000 employees in 32 countries, of which about 3,100 employees were located in the U.S. and 7,000 in Mexico. Approximately 4% of Resideo’s U.S. employees and 8% non-U.S. employees are covered under collective bargaining agreements. We believe relations with our workforce are good.
Human Capital As of December 31, 2024, we employed approximately 14,600 employees in 36 countries, of which about 4,100 employees were located in the U.S. and 6,500 in Mexico. Approximately 2% of Resideo’s U.S. employees and 8% non-U.S. employees are covered under collective bargaining agreements. We believe relations with our workforce are good.
Our comprehensive product suite has also allowed us to develop and sustain long-standing partnerships with professionals who have relied on our selection and availability of products and configured solutions to help them succeed. Connectivity has created a large and fast-growing connected home market.
Our comprehensive product suite has also allowed us to develop and sustain long-standing partnerships with professionals who have relied on our selection and availability of products and configured solutions to help them succeed.
Through our whole home presence on the wall and behind the wall, we are an enabler of home connectivity with approximately 11.6 million connected customers. Our connected solutions harness data to provide control, visibility, insights, and alerts to the end user.
Through our whole home presence, we are an enabler of home connectivity with over 12.8 million connected customers. Our connected solutions harness data to provide control, visibility, insights, and alerts to the end user.
Information contained on, or connected to, our website does not and will not constitute part of this Form 10-K. We are a Delaware corporation incorporated on April 24, 2018. Our principal executive offices are located at 16100 N. 71st Street Suite 550, Scottsdale, Arizona 85254. Our telephone number is (480) 573-5340. Our website address is www.Resideo.com.
We are a Delaware corporation incorporated on April 24, 2018. Our principal executive offices are located at 16100 N. 71st Street Suite 550, Scottsdale, Arizona 85254. Our telephone number is (480) 573-5340. Our website address is www.Resideo.com.
Sales activity is generally highest in the fall and early winter months, reflecting increased customer purchases of heating related products with the 6 Table of Contents Resideo Technologies, Inc. highest sales at the end of the third quarter and throughout the fourth quarter in the majority of our geographical markets.
Seasonality Our Products and Solutions business typically experiences a moderate level of seasonality. Sales activity is generally highest in the fall and early winter months, reflecting increased customer purchases of heating related products with the highest sales at the end of the third quarter and throughout the fourth quarter in the majority of our geographical markets.
Other Information Our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and any amendments to those reports are available free of charge on our website (www.Resideo.com) under the heading Investors (see SEC Filings) immediately after they are filed with, or furnished to, the Securities and Exchange Commission (“SEC”).
Other Information Our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and any amendments to those reports are available free of charge on our website (www.Resideo.com) under the heading Investors (see SEC 6 Table of Contents Resideo Technologies, Inc.
All of the reports that we file or furnish with the SEC are also available on the SEC’s website (www.sec.gov). In addition, in this Form 10-K, we incorporate by reference certain information from parts of our Proxy Statement for the 2024 Annual Meeting of Shareholders, which will also be available free of charge on our website.
In addition, in this Form 10-K, we incorporate by reference certain information from parts of our Proxy Statement for the 2025 Annual Meeting of Shareholders, which will also be available free of charge on our website. Information contained on, or connected to, our website does not and will not constitute part of this Form 10-K.
Further, we believe our customers derive great value from the advice and recommendations of our knowledgeable design specialists, allowing our customers to better meet the technical and systems integration expertise requirements to install and service professional security systems.
Further, we believe our customers derive great value from our omnichannel shopping experience, the expertise of our knowledgeable design and support specialists allowing our customers to better meet the technical and systems requirements of installs, and our support services offerings designed to support our professional installers’ efficiency and profitability.
To continue driving a culture in alignment with our values, we developed and deployed a new onboarding offering called Ready, Set, Resideo to help integrate our new hires into our values from Day 1. The course provides an overview of our company, our brand promise, and our culture.
We provide an onboarding offering called Ready, Set, Resideo to help integrate our new hires into our values from the first day on the job. The course provides an overview of our company, our brand promise, and our culture. We received feedback that the course is welcoming, interactive, interesting, and informative.
In 2023, we focused on executing our DEIB strategy, which includes (1) attract, develop, and retain a diverse workforce, (2) foster a winning culture and (3) be identified as a company of choice by our customers and the communities we serve.
Our model includes (1) attract, develop, and retain a diverse workforce, (2) foster a winning culture, and (3) be identified as a company of choice by our customers and the communities we serve. We continue to assess the needs of the business and identify diverse organizations to partner with that promote a pipeline of diverse talent.
Research and Development and Intellectual Property We have major product design centers in the U.S., Europe, Asia, and Latin America and software centers of excellence in Bengaluru, India and Melville, New York. In addition, our laboratories are certified to meet various industry standards, such as FCC and UL, enabling us to test and certify products internally.
Research and Development and Intellectual Property We have major product design centers in the U.S., Europe, Asia, and Latin America and software centers of excellence in Bengaluru, India; Belgrade, Serbia; and Melville, New York.
At the end of 2023 our global Total Case Incident Rate or “TCIR” (the number of occupational injuries and illnesses per 100 employees) was 0.37. We monitor our safety through a balanced scorecard of key performance indicators.
Our global Total Case Incident Rate (TCIR), which tracks the number of occupational injuries and illnesses per 100 employees, was 0.24 at the close of 2024. This reflects our continued focus on proactive safety measures. We monitor our health and safety performance through a balanced scorecard of key performance indicators (KPIs), encompassing both reactive incident management and proactive safety measures.
Our offerings include temperature and humidity control, thermal and combustion solutions, water and indoor air quality solutions, smoke and carbon monoxide detection home safety products and fire suppression products, security panels, sensors, peripherals, communications devices, video cameras, other home-related lifestyle convenience solutions, cloud infrastructure, installation and maintenance tools, and related software.
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.
With respect to our ADI Global Distribution business, we rely on third-party manufacturers to supply both third-party branded and ADI Global Distribution exclusive branded products. Backlog We include in backlog accepted product purchase orders from customers and worldwide distributor stocking orders.
With respect to our ADI Global Distribution business, we rely on third-party manufacturers to supply both third-party branded and exclusive branded products. A significant percentage of our exclusive branded products are sourced with manufacturers located in Asia.
Through nearly 200 stocking locations in 13 countries, ADI Global Distribution distributes more than 450 thousand products from over one thousand manufacturers to a customer base of approximately 100 thousand professionals and is recognized for superior customer service. We believe this global footprint gives us distinct scale and network advantages in our core products over our competitors.
With over 200 stocking locations in 17 countries (including third-party logistics), ADI Global Distribution distributes more than 500 thousand products from over one thousand manufacturers to a customer base of more than 100 thousand 3 Table of Contents Resideo Technologies, Inc. professionals and is recognized for superior customer service.
Our global scale, breadth of product offerings, innovation heritage, and differentiated service and support has enabled our trusted relationship with professional installers and has been a key driver of our success. We operate in large markets that sit at the intersection of multiple secular growth trends.
Our global scale, breadth of product offerings, innovation heritage, and differentiated service and support has enabled our trusted relationship with professionals and has been a key driver of our success. We manage our business operations through two business segments, Products and Solutions and ADI Global Distribution.
Item 1. Business General As used herein, unless the context otherwise dictates, the term “Resideo”, the “Company”, “we”, “us” or “our” means Resideo Technologies, Inc. and its consolidated subsidiaries. We separated from Honeywell International Inc. (“Honeywell”), becoming an independent publicly traded company as a result of a pro rata distribution of our common stock to stockholders of Honeywell (“the Spin-Off”).
Item 1. Business General As used herein, unless the context otherwise dictates, the term “Resideo”, the “Company”, “we”, “us”, or “our” means Resideo Technologies, Inc. and its consolidated subsidiaries. Our common stock began trading under the ticker symbol “REZI” on the New York Stock Exchange (“NYSE”) on October 29, 2018.
Our employee Net Promoter Score (“NPS”) was 31, a decrease of 2 points over last year, on a scale ranging from -100 to +100 (based on industry standards for employee NPS, any score above 10 is considered good). Each sub-organization is tasked with creating an action plan based on feedback received.
In 2024, we made enhancements to provide action group owners a deeper understanding of the scores in their groups across various categories. Our employee Net Promoter Score (“NPS”) was 33, on a scale ranging from -100 to +100 (based on industry standards for employee NPS, any score above 10 is considered good).
Additionally, we maintained our diverse slate guidelines for career level 5+ roles requiring that interview slates include female and/or racially/ethnically diverse candidates, except in rare circumstances. Talent Acquisition, Management and Development : We have a robust recruiting model to attract all levels of talent across the regions where we operate.
Talent Acquisition, Management and Development : We have a robust recruiting model to attract all levels of talent across the regions where we operate, and diversity is one of our core components.
In addition to reactive incident management investigation and root cause analysis indicators, we measure and analyze the data generated from our hazard observation, designated health and safety inspections by line managers and internal audit programs by accredited health and safety lead auditors to provide insights and intelligence that help us proactively mitigate issues before they result in incidents.
In addition to thorough incident investigations and root cause analysis, we leverage data from hazard observations, regular health and safety inspections conducted by line managers and internal audits led by accredited health and safety auditors. These insights enable us to identify and address potential risks before they lead to incidents, reinforcing our ongoing commitment to the well-being of our workforce.
We continue to provide value-added services including presales system design, 24/7 order pick-up, and the selective introduction of new product categories. 3 Table of Contents Resideo Technologies, Inc.
We continue to expand our third-party and exclusive product offering while bolstering our value-added services including presales system design, proposal and design development solutions, and 24/7 order pick-up.
Health and Safety : Our commitment to providing a safe and healthy workplace for all employees continued throughout 2023 demonstrated by progress towards full ISO 14001:2015 and ISO 45001:2018 certification with a total of 10 manufacturing locations now certified to ISO 14001:2015, 8 manufacturing locations certified to ISO 45001:2018, and 4 manufacturing sites certified to ISO 50001:2018.
Health and Safety: In 2024, we reaffirmed our commitment to maintaining a safe and healthy workplace for all employees, advancing toward our goal of full certification across key international standards. We successfully achieved certification at 10 manufacturing locations for ISO 14001:2015 (Environmental Management Systems) and 9 locations for ISO 45001:2018 (Occupational Health and Safety Management Systems).
One example of how we executed our DEIB strategy is through the continued support and evolution of our six employee resource groups (“ERGs”): Women, LGBTQIA+, Black, Latino, Veterans, and People with Differing Abilities.
Each sub-organization is tasked with creating an action plan based on feedback received to help increase engagement. In 2024, we continued to support and evolve our six employee resource groups: Women, LGBTQIA+, Black, Latino, Veterans, and People with Differing Abilities.
In 2023, our average time to fill open roles was 41 days, and we hired 4,350 employees, of which approximately 3,400 were production workers. Internally, strategic talent reviews and succession planning occur on an annual basis, globally and across all business areas. In 2023, we continued our annual cycle of our Employee Voice Survey.
Internally, strategic talent reviews and succession planning occur on an annual basis, globally and across all business areas. In addition, we provide regular trainings to our people managers. Our annual Employee Voice Survey allows each function in our company to better understand engagement across the organization.
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Our common stock began trading “regular way” under the ticker symbol “REZI” on the NYSE on October 29, 2018. Description of Business Resideo is a leading global manufacturer and developer of technology-driven products and solutions that provide critical comfort, energy management, water management, and safety and security solutions to over 150 million homes globally.
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Description of Business 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.
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We are also a leading wholesale distributor of low-voltage security and life safety products for commercial and residential markets and serve a variety of adjacent product categories including audio visual, networking, wire and cable, and smart home solutions.
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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.
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We deliver value to our customers via two business segments, Products and Solutions and ADI Global Distribution, which respectively contributed 42.8% and 57.2% of our net revenue for the year ended December 31, 2023. Our primary focus is on the professional channel where we are a trusted partner to approximately 100 thousand professionals.
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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 operate in large markets that sit at the intersection of multiple secular growth trends.
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We believe a significant opportunity exists to provide products, solutions and services to professionals and consumers that integrate the disparate sensors, systems and controls inside the home, and enable differentiated insight. Our significant presence in the home, both on the wall and behind the wall, positions us well for the value and convenience consumers expect out of the connected home.
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Our primary focus is on the professional channel where we are a trusted partner to over 100 thousand professional contractors, installers, dealers, and integrators in the HVAC, security, fire, electrical, and home comfort markets (“professionals”).
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Product orders in our backlog are subject to changes in delivery schedules or cancellation at the option of the purchaser typically without penalty. Our backlog may fluctuate significantly depending upon customer order patterns which may, in turn, vary considerably based on rapidly changing business circumstances.
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In the second quarter of 2024, we expanded the business through the acquisition of Snap One, which has been incorporated into the ADI Global Distribution business segment. The acquisition expands our distribution into and reach with smart-living products, services, and software.
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Accordingly, we do not believe that our backlog at any time is necessarily representative of actual sales for any succeeding period.
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ADI Global Distribution and Products and Solutions contributed approximately 62% and 38% of our net revenue, respectively, for the year ended December 31, 2024. We separated from Honeywell International Inc. (“Honeywell”) in 2018, becoming an independent publicly traded company as a result of a pro rata distribution of our common stock to stockholders of Honeywell (“the Spin-Off”).
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Diversity, Equity, Inclusion and Belonging (“DEIB”) : We are committed to creating a diverse, equitable and inclusive working environment where individuals feel a sense of belonging. Last year, we expanded our Diversity, Equity, Inclusion narrative to include “belonging” to ensure we not only have a diverse and inclusive culture, but our people feel connected to our organization.
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In addition, ADI Global Distribution partners with a network of contract manufacturers and joint-development suppliers to produce a full range of proprietary smart-home technology products and solutions under our own exclusive brands. These products may be found in residential and commercial settings and utilize proprietary software platforms such as Control4 and OvrC for project commissioning and remote monitoring.
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Each ERG is sponsored and supported by a senior leader of the company and have held conversations with our executive leadership to discuss ideas for improving our culture of inclusion and belonging. Our corporate functions and business units continue to track progress with respect to our diversity and inclusion initiatives. Diversity is a core component of our recruiting strategy.
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We believe this global footprint gives us distinct scale and network advantages in our core products over our competitors.
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This survey allows each function in our company to see its ratings across three levers: Motivation, Ability, and Knowledge of Expectations. Our overall engagement score for the 2023 cycle was 7.8 on a 10-point scale, a 0.1-point decrease over last year.
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We also eliminated degree requirements from the majority of our professional roles to increase the breadth of our applicant talent pool unless required by local legislation. In 2024, our average time to fill open roles was 32 days, and we hired approximately 3,600 employees, of which approximately 2,700 were production workers.
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We continue to provide regular trainings to our people managers. In 2023, we continued the People Leadership Seminar with an increased focus on bringing strategy and respect for others to life across the organization. Managers and their team members continued to participate in tri-annual “Pulse” conversations to set performance expectations and monitor and evaluate performance.
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We conduct three performance review discussions throughout the year and refer to them as the “Pulse.” In 2024, we introduced performance ratings as part of the final “Pulse” conversation. The purpose of the rating is to drive accountability, strengthen our succession planning process and establish “pay-for-performance” standards.
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People managers at Resideo are strongly encouraged to give frequent, informal feedback so that employees are always clear on their performance level.
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In addition, our laboratories are certified to meet various industry standards, such as Federal Communications Commission and Underwriters Laboratories, enabling us to test and certify products internally. As of December 31, 2024, we employed approximately 1,200 engineers.
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To better support the development of our employees, we continue to offer a mentorship platform that makes more effective pairings, provides developmental resources for both mentors and mentees, and facilitates a natural progression of a mentoring relationship through detailed session agendas.
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Filings) immediately after they are filed with, or furnished to, the Securities and Exchange Commission (“SEC”). All of the reports that we file with or furnish to the SEC are also available on the SEC’s website (www.sec.gov).
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New for 2023, we designed and implemented a new internal certification program called Talent Builder, to help educate our mentors on expectations in mentoring relationships while also creating a more consistent experience for mentees. To date, we have certified more than 100 mentors as Resideo Talent Builders.
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We believe that making investments in our future leaders will improve our succession capabilities. Our focus on developing future leaders is supported by the Resideo Leadership Program (“RLP”). Up and coming leaders are chosen to participate in this program. This year, we completely revamped the program into a longitudinal leadership transformation program.
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Participants went on a journey to discover new depths of leadership capacity and character development.
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In addition to reinforcing our Core Values and expanding our commitment and attention to building a positive culture, we broadened the role of our VP of DEIB and increased the scope to include culture and learning and development, changing the title to VP of Culture and Talent Excellence.
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Of those who completed a course completion survey, 85% agree that this new onboarding offering is better than any onboarding course they have attended at previous companies.
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We also explored additional opportunities to push nudges to managers to help with change management efforts across the company and conducted listening sessions with employees to understand what is needed to create potential culture ambassadors across the company in the future. Seasonality Our Products and Solutions business typically experiences a moderate level of seasonality.
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We also have a user experience design group that consists of researchers and product and user experience designers aligned with development sites with the primary studios in Golden Valley, Minnesota. As of December 31, 2023, we employed approximately 898 engineers.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeOur future results in our Products and Solutions segment depends upon a number of factors, including our ability to (i) identify consumer preferences and emerging technological trends and broader trends, such as decarbonization and electrification efforts in response to climate change, (ii) develop and maintain competitive products, in part by adding innovative features that differentiate our products from those of our competitors and prevent commoditization of our products, as well as through the use of intellectual property protections such as patents and trade secrets, (iii) grow our market share, (iv) develop, manufacture and bring compelling new products to market quickly and cost-effectively, (v) find and effectively partner with and continue to partner with home connected device platforms and (vi) attract, develop and retain individuals with the requisite technical expertise and understanding of customers’ needs to develop new technologies and introduce new products.
Biggest changeOur future results will depend upon a number of factors, including our ability to (i) identify consumer and installer preferences, emerging technological and broader trends, (ii) develop and maintain competitive, innovative products that differentiate our products from those of our competitors as well as protect our products through the use of intellectual property protections, (iii) grow our market share, (iv) develop, manufacture, and bring compelling new products to market quickly and cost-effectively, (v) source and manage independent contract manufacturers, (vi) effectively partner with connected device manufacturers and (vii) attract, develop, and retain individuals with the requisite technical expertise and understanding of customers’ needs to develop new technologies and introduce new products.
Geopolitical, social and economic conditions could result in increased volatility in worldwide financial markets and economies that could harm our sales. Similarly, slowing of the housing market may result in reduced demand for our products and services.
Geopolitical, social, and economic conditions could result in increased volatility in worldwide financial markets and economies that could harm our sales. Similarly, the slowing of the housing market may result in reduced demand for our products and services.
We review other intangible assets and long-lived assets for impairment whenever events or circumstances indicate that the carrying amount of the assets may not be recoverable. The estimates and assumptions about future results of operations and cash flows made in connection with the impairment testing could differ from future actual results of operations and cash flows.
We review other intangible assets and long-lived assets for impairment whenever events or circumstances indicate that the carrying amount of the assets may not be recoverable. The estimates and assumptions about future results of operations and cash flows made in connection with the impairment testing could differ from future actual results.
Extreme weather, natural disasters, power outages, global health crises or other unexpected events have in the past and could in the future disrupt our operations by impacting the availability and cost of materials needed for manufacturing, causing physical damage and partial or complete closure of our manufacturing sites or distribution centers, loss of human capital, and disruption in the manufacturing and supply of products and services to customers.
Extreme weather, natural disasters, power outages, global health crises, or other unexpected catastrophic events have in the past and could in the future disrupt our operations by impacting the availability and cost of materials needed for manufacturing, causing physical damage and partial or complete closure of our manufacturing sites or distribution centers, loss of human capital, and disruption in the manufacturing and supply of products and services to customers.
Risks related to the Spin-Off and our relationships with Honeywell In connection with the Spin-Off, we entered into the Tax Matters Agreement with Honeywell, pursuant to which we are responsible and will indemnify Honeywell for certain taxes, including certain income taxes, sales taxes, VAT and payroll taxes, relating to the business for all periods, including periods prior to the consummation of the Spin-Off (“Tax Matters Agreement”).
Risks related to the Spin-Off, our agreements and our relationships with Honeywell In connection with the Spin-Off, we entered into the Tax Matters Agreement with Honeywell, pursuant to which we are responsible and will indemnify Honeywell for certain taxes, including certain income taxes, sales taxes, VAT, and payroll taxes, relating to the business for all periods, including periods prior to the consummation of the Spin-Off (“Tax Matters Agreement”).
We have received allegations of patent infringement from third parties, including both operating companies and non-practicing entity patent holders, as well as communications from customers requesting indemnification for allegations brought by third parties. These allegations have resulted in ongoing patent litigation relating to certain of our products and may continue to result in new litigation.
We have received allegations of patent infringement from third parties, including both operating companies and non-practicing entity patent holders, as well as communications from customers requesting indemnification for allegations brought by third parties. These allegations have resulted in patent litigation relating to certain of our products and may continue to result in new litigation.
Each of our business segments depends on third parties for the supply of certain materials and components for products we manufacture and those manufactured on our behalf, or sold through our ADI Global Distribution business, some of which are supplied by single or limited source suppliers/manufacturers.
Each of our business segments depends on third parties for the supply of certain materials, components, and services for products we manufacture and those manufactured on our behalf, or sold through our ADI Global Distribution business, some of which are supplied by single or limited source suppliers/manufacturers.
In addition, we seek productivity and cost savings benefits through our ongoing transformation, restructuring and other programs, such as consolidation and outsourcing of manufacturing operations or facilities, reductions in manufacturing shifts, transitions to cost-competitive regions, workforce optimizations, product line rationalizations and divestitures, and other cost-saving initiatives.
We seek productivity and cost savings benefits through our ongoing transformation, restructuring, and other programs, such as consolidation and outsourcing of manufacturing operations or facilities, reductions in manufacturing shifts, transitions to cost-competitive regions, workforce optimizations, product line rationalizations and divestitures, and other cost-saving initiatives.
The efficient operation of our business requires substantial investment in technology infrastructure systems, including enterprise resource planning (“ERP”) systems, information systems, supply chain management systems, digital commerce systems and connected solutions platforms and network operations and systems.
The efficient operation of our business requires substantial investment in technology infrastructure systems, including enterprise resource planning systems, information systems, supply chain management systems, digital commerce systems, and connected solutions platforms and network operations and systems.
A significant failure or an inability to comply with customer specifications and manufacturing requirements or delays or other problems with existing or new products or inability to meet price requirements could result in financial penalties, cancelled orders, increased costs, loss of sales, market share shift, loss of customers or potential breaches of customer contracts, which have had and could in the future have an adverse effect on our profitability and results of operations.
A significant failure or an inability to comply with customer specifications and manufacturing requirements or delays or other problems with existing or new products or inability to meet price requirements could result in cancelled orders, increased costs, loss of sales, market share shift, loss of customers or potential breaches of contracts, which have had and could in the future have an adverse effect on our profitability and results of operations.
These and other provisions of our governing documents and Delaware law may discourage, delay or prevent certain types of transactions involving an actual or a threatened acquisition or change in control of our Company, including unsolicited takeover attempts, even though the transaction may offer our stockholders the opportunity to sell their shares of our common stock at a price above the prevailing market price.
These and other provisions of our governing documents and Delaware law may discourage, delay, or prevent certain types of transactions involving an acquisition or change in control of our Company, including unsolicited takeover attempts, even though the transaction may offer our stockholders the opportunity to sell their shares of our common stock at a price above the prevailing market price.
Claims or lawsuits related to cybersecurity, advertising, marketing, data protection or data privacy initiated by governmental bodies, customers or other third parties, whether meritorious or not, could be time consuming, result in costly regulatory proceedings, litigation, penalties and fines, or require us to change our business practices, sometimes in expensive ways, or other potential liabilities.
Claims or lawsuits related to cybersecurity, advertising, marketing, data protection or data privacy initiated by governmental bodies, customers, or other third parties, whether meritorious or not, could be time consuming, result in costly regulatory proceedings, litigation, fines and other liabilities, or require us to change our business practices, sometimes in expensive ways.
With regard to cash pension contributions, funding requirements for our pension plans are largely dependent upon interest rates, actual investment returns on pension assets and the impact of legislative or regulatory changes related to pension funding obligations. Our pension plan contributions may be material and could adversely impact our financial condition, cash flows, and results of operations.
With regard to cash pension contributions, funding requirements for our pension plans are largely dependent upon interest rates, actual investment returns on pension assets, and the impact of legislative or regulatory changes related to pension funding obligations. Our future required pension plan contributions may be material and could adversely impact our financial condition, cash flows, and results of operations.
The failure to acquire, implement, maintain and upgrade as required, these systems may impact our ability to respond effectively to changing customer expectations, manage our business, scale our solutions effectively or impact our customer service levels, which may put us at a competitive disadvantage and negatively impact our business, results of operations, financial condition and cash flows.
The failure to acquire, implement, maintain, and upgrade these systems may impact our ability to respond effectively to changing customer expectations, manage our business, scale our solutions effectively, or impact our customer service levels, which may put us at a competitive disadvantage and negatively impact our business, results of operations, financial condition, and cash flows.
Our business, results of operations, financial condition and cash flows have been and could continue to be adversely affected by disruptions in supply from our third-party suppliers and manufacturers, whether due to work stoppages, cyberattacks, component failures, natural disasters, pandemics, economic, political, financial or labor concerns, weather conditions affecting products or shipments or transportation disruptions or other reasons, or if suppliers lack sufficient quality control or if there are significant changes in their financial or business condition or otherwise.
Our business, results of operations, financial condition and cash flows have in the past been and could in the future continue to be adversely affected by disruptions in supply from our third-party suppliers and manufacturers, whether due to work stoppages, cyberattacks, component failures, natural disasters, pandemics, economic, political, financial or labor concerns, weather conditions affecting products or shipments or transportation disruptions or other reasons, or if suppliers lack sufficient quality control or if there are significant changes in their financial or business condition or otherwise.
There were no material impairment expenses taken during the years ended December 31, 2023, 2022, and 2021. We may be required to make significant cash contributions to our defined benefit pension plans. We sponsor defined benefit pension plans under which certain eligible employees will earn pension benefits.
There were no material impairment expenses taken during the years ended December 31, 2024, 2023, and 2022. We may be required to make significant cash contributions to our defined benefit pension plans. We sponsor defined benefit pension plans under which certain eligible employees will earn pension benefits.
With respect to our ADI Global Distribution business, if retail outlets, including online commerce or big box stores increase their participation in wholesale distribution markets, or if buying patterns for our products become more retail or e-commerce based through these outlets than they currently are, our ADI Global Distribution business may not be able to effectively compete, which could have an adverse effect on our business, financial condition, results of operations and cash flows.
With respect to our ADI Global Distribution business, if retail outlets, including online commerce, increase their participation in wholesale distribution markets, or if buying patterns for our products become more retail or e-commerce based through these outlets than they currently are, our ADI Global Distribution business may not be able to effectively compete, which could have an adverse effect on our business, financial condition, results of operations and cash flows.
The following risk factors are not necessarily presented in order of relative importance and should not be considered to represent a complete set of all potential risks that could affect us. Risks Relating to Our Business We operate in highly competitive markets.
The following risk factors are not necessarily presented in order of relative importance and should not be considered to represent a complete set of all potential risks that could affect us. Risks Relating to Our Business We operate in highly competitive markets that are rapidly changing.
These requirements may negatively affect our ability to maintain, develop, sell and advertise our products and our services, may limit our ability to derive revenue from data, may require us to disclose product and services data to our competitors, may cause us to incur additional expense in obtaining mandatory certifications and may restrict our ability to transfer data internationally.
These requirements may negatively affect our ability to maintain, develop, sell and advertise our products and our services, may limit our ability to derive revenue from data, may require us to disclose product and services data to our competitors, may cause us to incur additional expense in obtaining mandatory or quasi-mandatory certifications, and may restrict our ability to transfer data internationally.
The potential consequences to any of our connected solutions platforms, data centers, or network operations and systems resulting from a material cyber or other security incident such as a successful ransomware attack or malicious publication of confidential information, trade secrets or personal data include financial loss, reputational and brand impact, negative media coverage, loss of stockholder value, loss of customers, litigation with third parties, including class-action litigation, regulatory investigations, audits or other enforcement actions, theft of intellectual property, fines, diminution in the value of our investment in research, development and engineering, regulatory reporting for data breaches, and increased cyber and other security protection and remediation costs due to the increasing sophistication and proliferation of threats, which in turn could adversely affect our competitiveness, business, financial condition, results of operations, and cash flows.
The potential consequences to any of our connected solutions platforms, data centers, or network operations and systems resulting from a material cyber or other security incident such as a successful ransomware attack or malicious publication of confidential information, trade secrets, or personal data include financial loss, reputational and brand impact, negative media coverage, loss of stockholder value, loss of customers, litigation with third parties, including class-action litigation, regulatory investigations, audits, or other enforcement actions, theft of intellectual property, fines, regulatory reporting for data breaches, and increased cyber and other security protection and remediation costs due to the increasing sophistication and proliferation of threats, which in turn could adversely affect our competitiveness, business, financial condition, results of operations, and cash flows.
Our markets are sensitive to changes in the regions in which we operate and are also influenced by cyclical factors such as interest rates, inflation, energy costs, availability of financing, consumer spending habits and preferences, housing market demand, employment rates and other macroeconomic factors over which we have no control, and which could adversely affect our business, financial condition, results of operations and cash flows.
Our markets are sensitive to changes in the regions in which we operate and are also influenced by cyclical factors such as interest rates, inflation, energy costs, availability of financing, consumer spending habits and preferences, new and resale housing market supply and demand, employment rates, and other macroeconomic factors over which we have no control, and which could adversely affect our business, financial condition, results of operations, and cash flows.
We operate in a highly competitive, quickly changing environment in each of our Products and Solutions and ADI Global Distribution segments and compete directly with global, national, regional, and local providers of our products, services and solutions including manufacturers, distributors, service and software providers, retailers, and online commerce providers.
We operate in a highly competitive, rapidly changing environment in each of our Products and Solutions and ADI Global Distribution segments, and we compete directly with global, national, regional, and local providers of our products, services, and solutions, including manufacturers, distributors, service and software providers, retailers, and online commerce providers.
The impact of climate change may increase these risks due to changes in weather patterns, such as increases in storm intensity and frequency, sea-level rise, melting of permafrost and temperature extremes in areas where we conduct our business.
The impact of climate change may increase these risks due to changes in weather patterns, such as increases in storm intensity and frequency, sea-level rise, and temperature extremes in areas where we conduct our business.
Various laws and regulations as well as contracts we have entered into with third parties and our public notices apply to the collection, processing, transfer, disposal, disclosure and security of personal data and other types of regulated data, including obligations concerning clear, accurate and transparent data use practices and advertising that is not misleading.
Various laws and regulations as well as contracts we have entered into with third parties apply to the collection, processing, transfer, disposal, disclosure, and security of personal data and other types of regulated data, including obligations concerning clear, accurate, and transparent data use practices and advertising that is not misleading.
Although we will have access to information regarding these liabilities as we may reasonably request for certain purposes, 14 Table of Contents Resideo Technologies, Inc. as well as the ability to participate in periodic standing meetings with Honeywell’s remediation management team responsible for management of the underlying claims, the payment obligations under the Reimbursement Agreement relate to legal proceedings, costs and remediation efforts that we will not control, and we accordingly do not expect to be able to make definitive decisions regarding settlements or other outcomes that could influence our potential related exposure.
Although we will have access to information regarding these liabilities as we may reasonably request for certain purposes, as well as the ability to participate in periodic standing meetings with Honeywell’s remediation management team responsible for management of the underlying claims, the payment obligations under the Reimbursement Agreement relate to legal proceedings, costs, and remediation efforts that we will not control, and we accordingly do not expect to be able to make definitive decisions regarding settlements or other outcomes that could influence our potential related exposure.
Our international geographic footprint subjects us to many risks including: exchange control regulations; wage and price controls; antitrust/competition and environmental regulations; employment regulations; foreign investment laws; monetary and fiscal policies and protectionist measures that may prohibit acquisitions or joint ventures, establish local content requirements, or impact trade volumes; import, export and other trade restrictions (such as embargoes); tariffs; violations by our employees of anti-corruption laws (despite our efforts to mitigate these risks); changes in regulations regarding transactions with state-owned enterprises; nationalization of private enterprises; natural and man-made disasters, hazards and losses; backlash from foreign labor organizations related to our restructuring actions; violence; civil and labor unrest; acts of terrorism; and our ability to hire and maintain qualified staff and maintain the safety of our employees in these regions.
Our international geographic footprint subjects us to many risks including but not limited to: exchange control regulations; wage and price controls; antitrust/competition and environmental regulations; employment regulations; foreign investment laws; monetary and fiscal policies and protectionist measures that may prohibit acquisitions or joint ventures, establish local content requirements, or impact trade volumes; import, export and other trade restrictions (such as embargoes); tariffs; violations by our employees of anti-corruption laws (despite our efforts to mitigate these risks); changes in regulations regarding transactions with state-owned enterprises; nationalization of private enterprises; natural and man 12 Table of Contents Resideo Technologies, Inc. made disasters, hazards and losses; backlash from foreign labor organizations related to our restructuring actions; violence; civil and labor unrest; acts of terrorism; and our ability to hire and maintain qualified staff and maintain the safety of our employees in these regions.
Our ability to keep our business operating is highly dependent on the proper and efficient operation of our data centers, networks, and data backup systems.
Our ability to keep our business operating is highly dependent on the proper and efficient operation of our and third party data centers, networks, and data backup systems.
Some of our competitors may also be able to deliver their service solutions more quickly to market than we can by capitalizing on technology developed in connection with their substantial existing service models.
Some of our competitors, including large technology companies, may also be able to deliver their service solutions more quickly to market than we can by capitalizing on technology developed in connection with their substantial existing service models.
In addition, a significant portion of our employees are engaged in remote or hybrid work from their homes, which further exposes our information technology (“IT”) systems to potential cyber interference and disruption of work activities based on availability and performance of internet access in the regions in which our employees reside.
In addition, a significant portion of our employees are engaged in remote or hybrid work from their homes, which further exposes our IT systems to potential cyber interference and disruption of work activities based on availability and performance of internet access in the regions in which our employees reside.
To the extent that we do not meet changing customer preferences or demands or other market changes, or if one or more of our competitors introduces new products or services, becomes more successful with private label products, online offerings or establishes exclusive supply relationships, our ability to attract and retain customers could be adversely affected, which could adversely affect our business, financial condition, results of operations and cash flows.
To the extent that we do not meet changing customer preferences or demands or other market changes, or if one or more of our competitors introduces new technologies, products or services, becomes more successful with private label products, online offerings or establishes 7 Table of Contents Resideo Technologies, Inc. exclusive supply relationships, our ability to attract and retain customers could be adversely affected, which could adversely affect our business, financial condition, results of operations and cash flows.
We and Honeywell also have had and may in the future have disputes under the agreements and related exhibits entered into in connection with the Spin-Off. In addition, because of their former positions with Honeywell, certain of our executive officers and directors, including the Chairman of the Board, own equity interests in Honeywell.
We and Honeywell also have had and may in the future have disputes under the agreements and related exhibits entered into in connection with the Spin-Off. In addition, because of their former positions with Honeywell, certain of our executive officers, own equity interests in Honeywell.
We have in the past and in the future may not be able to obtain indemnity or reimbursement from our suppliers or other third parties for the warranty costs or liabilities associated with our products and there can be no assurance that we will have adequate reserves to cover any recalls and repair and replacement costs.
We have had instances in the past and may in the future be unable to obtain indemnity or reimbursement from our suppliers or other third parties for the warranty costs or liabilities associated with our products and there can be no assurance that we will have adequate reserves to cover any recalls and repair and replacement costs.
If our offerings do not meet applicable legal and safety standards or our customers’ expectations regarding safety or quality, or if our products are improperly designed, manufactured, packaged, or labeled, or are otherwise alleged to cause harm or injury, we may need to recall those items, experience increased warranty costs or lost sales and increased costs and exposure to legal, financial and reputational risks including litigation and government enforcement action, as well as product liability claims.
If our offerings do not meet applicable legal and safety standards or our customers’ expectations regarding safety or quality, or if our products are improperly designed, manufactured, packaged, or labeled, or are otherwise alleged to cause harm or injury, we may need to recall those items, experience increased warranty costs or lost 11 Table of Contents Resideo Technologies, Inc. sales, and increased costs and exposure to legal, financial, and reputational risks including litigation and government enforcement action, as well as product liability claims.
As a result, we have experienced and may in the future be subject to systems interruption, data corruption, data loss and service and product failures, not only resulting from the failures of our products or services but also from the failures of third-party service providers, natural disasters, power shortages or terrorist attacks, and cyber or other security threats.
As a result, we have experienced and may in the future be subject to systems interruption, data corruption, data loss, and service and product failures, not only resulting from the failures of our products or services but also from the failures of 13 Table of Contents Resideo Technologies, Inc. third-party service providers, natural disasters, power shortages or terrorist attacks, and cyber or other security threats.
Conflicts of interest may or have arisen with Honeywell in a number of areas relating to our past and ongoing relationships, including: • tax, employee benefit, indemnification and other matters arising from our separation from Honeywell; • intellectual property matters; • interpretations of contractual arrangements; and • business combinations involving our Company.
In addition, conflicts of interest have arisen in the past and may in the future arise with Honeywell in a number of areas relating to our past and ongoing relationships, including: tax, employee benefit, indemnification, and other matters arising from our separation from Honeywell; intellectual property matters; interpretations of contractual arrangements; and business combinations involving our Company.
Maquiladora status is subject to various restrictions and requirements, including compliance with the terms of the Maquiladora program and other local regulations, which have 12 Table of Contents Resideo Technologies, Inc. become stricter in recent years. In addition, if the Mexican government adopts additional adverse changes to the program, including nationalization, our manufacturing costs in Mexico would increase.
Maquiladora status is subject to various restrictions and requirements, including compliance with the terms of the Maquiladora program and other local regulations, which have become stricter in recent years. In addition, if the Mexican government adopts additional adverse changes to the program, including nationalization, our manufacturing costs in Mexico would increase.
To remain competitive, we will need to invest continually in product and services development, marketing, customer service and support, manufacturing and our distribution networks.
To remain competitive, we will need to invest continually in product and services development, marketing, custom installer service and support, manufacturing, and our distribution networks.
We are subject to the economic, political, regulatory, foreign exchange and other risks of international operations. Our international revenue represented approximately 24% of our net revenue for the year ended December 31, 2023.
We are subject to the economic, political, regulatory, foreign exchange, and other risks of international operations. Our international revenue represented approximately 23% of our net revenue for the year ended December 31, 2024.
In addition, our Amended and Restated Certificate of Incorporation (“our Certificate”) authorizes us to issue, without the approval of our stockholders, one or more classes or series of preferred stock, which may have preferences over our common stock with respect to dividends and distributions, as our Board may determine.
In addition, our Amended and Restated Certificate of Incorporation (“our Certificate”) authorizes us to issue, without the approval of our stockholders, one or more classes or series of preferred stock, which may have preferences over our 18 Table of Contents Resideo Technologies, Inc. common stock with respect to dividends and distributions, as our Board may determine.
We presently have, and in the future may have, disputes with Honeywell regarding the allocation of tax related liabilities between us and Honeywell under the Tax Matters Agreement.
We may have disputes with Honeywell regarding the allocation of tax related liabilities between us and Honeywell under the Tax Matters Agreement.
In addition to current competitive factors, there have been, and in the future, there may be new market entrants with non-traditional business, new business and customer service models or disruptive technologies and products, resulting in increased competition and changing business dynamics.
In addition to current competitive factors, there have been, and in the future there may be, new market entrants with nontraditional businesses, new business, distribution and customer service models or disruptive technologies and products, resulting in increased competition and changing business dynamics.
If we are found to be in violation of these laws and regulations, we may be subject to substantial fines, criminal sanctions, trade 16 Table of Contents Resideo Technologies, Inc. restrictions, product recalls, public exposure and be required to install costly equipment or make operational changes to achieve compliance with such laws and regulations.
If we are found to be in violation of these laws and regulations, we may be subject to substantial fines, criminal sanctions, trade restrictions, product recalls, public exposure, and be required to install costly equipment or make operational changes to achieve compliance with such laws and regulations.
We may not be able to achieve the operational synergies or savings nor any growth targets identified in acquisition diligence.
We may not be able to achieve expected operational synergies or savings, or any growth targets identified in acquisition diligence.
In addition, the provisions of the Trademark Agreement in respect of a change of control of Resideo or the sale of any interests in any subsidiary of Resideo may impact our ability to enter into transactions that are otherwise in the best interests of our stockholders.
In addition, the provisions of the Trademark Agreement in respect of a change of 17 Table of Contents Resideo Technologies, Inc. control of Resideo or the sale of any interests in any subsidiary of Resideo may impact our ability to enter into transactions that are otherwise in the best interests of our stockholders.
Any such new laws or regulations, any changes to existing laws and regulations and any such interpretation may affect demand for our products and services, impact our ability to effectively transfer data across borders 15 Table of Contents Resideo Technologies, Inc. or advertise our products and services in support of our business operations, or increase the cost of providing our products and services.
Any such new laws or regulations, any changes to existing laws and regulations, and any such interpretation may affect demand for our products and services, impact our ability to effectively transfer data across borders or advertise our products and services in support of our business operations, or increase the cost of providing our products and services.
Consequently, fluctuations in the value of the U.S. dollar compared to other currencies may have a material impact on the value of these items in our Consolidated Financial Statements, even if their value has not changed in their original currency.
Consequently, fluctuations in the value of the U.S. dollar compared to other currencies may have a material impact on the value of these items in our Consolidated Financial Statements, even if their value has not changed in their original currency. 20 Table of Contents Resideo Technologies, Inc.
Although unlikely, our ability to manage inventory and meet delivery requirements could be constrained by our suppliers’ inability to scale production and adjust delivery of long lead-time products during times of volatile demand. Our inability to fill our supply needs would jeopardize our ability to fulfill our contractual obligations.
Our ability to manage inventory and meet delivery requirements have in the past and could in the future be constrained by our suppliers’ inability to scale production and adjust delivery of long lead-time products during times of volatile demand. Our inability to fill our supply needs would jeopardize our ability to fulfill our contractual obligations.
We are subject to risks associated with the Reimbursement Agreement, pursuant to which we are required to make substantial cash payments to Honeywell, measured in substantial part by reference to estimates by Honeywell of certain of its liabilities.
We are subject to risks associated with the Reimbursement Agreement, pursuant to which we are required to make substantial cash payments to Honeywell, measured in substantial part by reference to estimates by Honeywell of certain of its liabilities. 14 Table of Contents Resideo Technologies, Inc.
We may require additional capital in the future to finance our growth and development, upgrade and improve our manufacturing capabilities, implement further marketing and sales activities, fund ongoing research and development activities, satisfy regulatory and environmental compliance obligations and national approvals requirements, satisfy obligations under the Reimbursement Agreement, fund acquisitions and meet general working capital needs.
We may require additional capital in the future to finance our growth and development, upgrade and improve our manufacturing capabilities, implement further marketing and sales activities, fund ongoing research and development activities, satisfy regulatory and environmental compliance obligations and national approvals requirements, satisfy obligations under the Reimbursement Agreement, fund acquisitions, pay preferred stock dividends to the extent we choose to settle these dividends in cash, and meet general working capital needs.
With respect to our Products and Solutions segment, we operate seven factories in northern Mexico. Approximately 45% of our finished products are manufactured in Mexico, a country that periodically experiences heightened civil unrest or may experience trade disputes with the U.S., both of which could cause a disruption of the supply of products to or from these facilities.
With respect to our Products and Solutions segment, we operate six manufacturing facilities in northern Mexico, a country that periodically experiences heightened civil unrest or may experience trade disputes with the U.S., both of which could cause a disruption of the supply of products to or from these facilities.
These standards, laws, or regulations may further impact our costs of operation, the sourcing of raw materials, and the manufacture, design, re-design and distribution of our products and place restrictions and other requirements or impediments on the products and solutions we can sell in certain geographical locations.
These standards, laws, or regulations may further impact our costs of operation, the sourcing of raw materials, and the manufacture, design, redesign, and distribution of our products and place restrictions and other requirements on the products and solutions we can sell.
Continuing ownership of Honeywell stock and equity awards could appear to create potential conflicts of interest if our Company and Honeywell face decisions that could have implications for both our Company and Honeywell. 17 Table of Contents Resideo Technologies, Inc.
Continuing ownership of Honeywell stock and equity awards could appear to create potential conflicts of interest if our Company and Honeywell face decisions that could have implications for both our Company and Honeywell.
Additionally, we might not have, or be able to obtain, sufficient funds to make these accelerated payments, and lenders could then proceed against any collateral. Any subsequent replacement of the agreements governing such indebtedness, or any new indebtedness could have similar or greater restrictions.
Additionally, we might not have, or be able to obtain, sufficient funds to make these accelerated payments, and lenders could then proceed against any collateral. Any new indebtedness could have similar or greater restrictions.
These provisions include, among others, that our stockholders are not permitted to act by written consent; advance notice requirements for stockholder nominations and proposals; limitations on the persons who may call special meetings of stockholders and limitations on our ability to enter into business combination transactions.
These provisions include: our stockholders are not permitted to act by written consent; advance notice requirements for stockholder nominations and proposals; limitations on the persons who may call special meetings of stockholders and limitations on our ability to enter into business combination transactions. 19 Table of Contents Resideo Technologies, Inc.
In addition, damages, fines and claims arising from such incidents may not be covered by, or may exceed the amount of any insurance available or may not be insurable. 13 Table of Contents Resideo Technologies, Inc. Enhanced tariff, import/export restrictions, or other trade barriers may have an adverse impact on global economic conditions, financial markets and our business.
In addition, damages, fines and claims arising from such incidents may not be covered by, or may exceed the amount of any insurance available or may not be insurable. Enhanced tariff, import/export restrictions, or other trade barriers may have an adverse impact on global economic conditions.
In addition, aggressive pricing actions by competitors may affect our ability to manage the price/cost relationship to achieve desired revenue growth and profitability levels.
In addition, aggressive pricing actions by competitors may affect our ability to achieve desired revenue growth and profitability levels.
In addition, in order to successfully compete, our products often need to integrate with the platforms of our competitors, who may be able to focus more on their own solutions versus ours, which may make it difficult to compete for the consumer market.
In addition, in order to successfully compete, our products often need to integrate with the platforms of our competitors, which may be able to focus more on their own solutions versus ours, which may make it difficult to compete for the consumer market. A portion of our net sales derives from subscription-based solutions.
A significant natural disaster, such as an earthquake, hurricane, tornado, fire, flood, or a public health pandemic, such as COVID-19, or a significant power outage could harm our business, financial condition, cash flows and results of 10 Table of Contents Resideo Technologies, Inc. operations.
A significant natural disaster, such as an earthquake, hurricane, tornado, fire, flood, or a public health pandemic, or a significant power outage could harm our business, financial condition, cash flows, and results of operations.
In addition, the U.S. federal government has imposed certain restrictions on the licensing, use and import of certain surveillance, telecommunications and other equipment manufactured by certain of our suppliers based in China for our ADI Global Distribution business, which may require us to find additional sources of end-user products and result in higher costs.
In addition, the U.S. federal government, as well as other governments including the United Kingdom and European Union, have imposed certain restrictions on the licensing, use and import, and export of certain surveillance, networking, telecommunications, and other equipment manufactured by certain of our suppliers based in China for our ADI Global Distribution business, which may require us to find additional sources of end-user products and result in higher costs.
We are subject to and in the future may be subject to various claims, including legal claims arising in the normal course of business.
We have in the past been subject to and in the future may be subject to various claims, including legal and regulatory claims arising in the normal course of business.
Repeated or prolonged interruptions of service, due to cyber threats or problems with our systems or third-party technologies, whether or not in our control, could have a significant negative impact on our reputation and our ability to sell products and services.
Repeated or prolonged interruptions of service, due to cyber threats or problems with our systems or third-party technologies, such as that experienced globally by virtue of the CrowdStrike outage, whether or not in our control, could have a significant negative impact on our reputation and our ability to sell products and services.
With respect to our Products and Solutions segment, we operate seven factories in Mexico and rely on third-party manufacturing partners with manufacturing capabilities in Mexico. Approximately 45% of our finished products are manufactured in Mexican sites, several of which operate in water stressed environments.
With respect to our Products and Solutions segment, we operate six manufacturing facilities in Mexico and rely on third-party manufacturing partners with manufacturing capabilities in Mexico. A significant portion of our finished products are manufactured in Mexican sites, several of which operate in water stressed environments.
If market changes, economic downturns, or other negative events occur, our ability to comply with these covenants may be impaired and waivers from our lenders may not be provided.
If market changes, economic downturns, or other negative events occur, our ability to comply with these covenants may be impaired.
We may not have sufficient resources to continue to make such investments and we may be unable to maintain our competitive position including due to the fact that our competitors and potential competitors may have greater brand recognition, resources, access to capital, including greater research and development or sales and marketing funds, more customers, lower costs and more advanced technology platforms, particularly with our connected products and services and in energy management services, as well as in new geographic regions.
We may not have sufficient resources to continue to make such investments and we may be unable to maintain our competitive position including due to the fact that our competitors and potential competitors may have greater brand recognition, resources, access to capital, including greater research and development or sales and marketing funds, more customers, lower costs, and more advanced technology platforms.
The laws and regulations impacting us impose complex, stringent and costly compliance activities, including but not limited to environmental, health, and safety protection standards and permitting, labeling and other requirements regarding, among other things, electronic and wireless communications, air emissions, wastewater discharges, the use, handling, and disposal of hazardous or toxic materials, remediation of environmental contamination, data security, data protection and data privacy, consumer protection and working conditions, and benefits for and compensation of our employees.
Applicable laws and regulations impose complex, stringent, and costly compliance activities, including but not limited to environmental, health, and safety protection standards and permitting, labeling and other requirements regarding, among other things, electronic and wireless communications, air emissions, wastewater discharges, the use, handling, and disposal of hazardous or toxic materials, remediation of environmental contamination, anti-money-laundering and anti-corruption, 15 Table of Contents Resideo Technologies, Inc. antitrust and competition law concerns, data security, data protection and data privacy, consumer protection and working conditions, and benefits for and compensation of our employees.
This could result in more intense competition as distributors strive to secure distribution rights with these manufacturers, which could have an adverse impact on our ADI Global Distribution business, financial condition, results of operations and cash flows.
This could result in more intense competition, which could have an adverse impact on our ADI Global Distribution business, financial condition, results of operations, and cash flows.
It is possible that competitive pressures resulting from consolidation, including customers taking manufacturing or distribution in house, purchasing directly from a manufacturer instead of from ADI Global Distribution, moving to a competitor, partnering with third parties and consolidation amongst our customers, could affect our growth and profit margins.
It is possible that competitive pressures resulting from customer or competitor consolidations, including customers taking manufacturing or distribution in house, or purchasing from a manufacturer instead of from ADI Global Distribution, could affect our growth and profit margins.
We are also subject to various lawsuits, investigations and disputes arising out of the conduct of our business, including matters relating to public disclosure and reporting, commercial transactions, government contracts, product liability, prior acquisitions and divestitures, labor and employment matters, employee benefit plans, intellectual property, and environmental, health and safety matters.
We have in the past and may in the future be subject to various lawsuits, investigations, or disputes arising out of the conduct of our business, including matters relating to public disclosure and reporting, commercial transactions, government contracts, product liability, prior acquisitions and divestitures, labor and employment matters, employee benefit plans, intellectual property, and environmental, health and safety matters. 16 Table of Contents Resideo Technologies, Inc.
Growth of the retail markets and greater electronic retail distribution alternatives relative to the professional installation markets may negatively impact our sales and margins, which could have an adverse effect on our business, financial condition and results of operations and cash flows.
Growth of the retail markets, adoption of simple do-it-yourself solutions rather than adopting professionally installed do-it-for-me solutions, and greater electronic retail distribution alternatives relative to the professional installation markets may negatively impact our sales and margins, which could have an adverse effect on our business, financial condition and results of operations and cash flows.
We operate in many diverse regions that require modifications to our products based on local building codes, regulations, standards, certifications and other factors, which may impact our cost to serve and profitability as we continue our penetration into these regions.
We operate in many diverse regions that require modifications to our products based on local building codes, regulations, standards, certifications, and other factors, which may impact our cost to serve and profitability as we continue our penetration into these regions. We rely on a dependable information technology (“IT”) infrastructure and network operations that have adequate cybersecurity functionality.
We may need to make pension plan contributions in future periods sufficient to satisfy funding requirements.
We may need to make pension plan contributions in future periods sufficient to satisfy funding requirements. Item 1B. Unresolved Staff Comments None.
The net revenue and margins of our business are directly impacted by government regulations, including safety, performance and product certification regulations, particularly those driven by customer demands and national approvals, as well as changes in trade agreements, tariffs, and environmental and energy efficiency standards. We may develop unexpected legal contingencies or matters that exceed, or are excluded from, insurance coverage.
The net revenue and margins of our business are directly impacted by government regulations, including safety, performance, and product certification regulations, particularly those driven by customer demands, as well as changes in trade agreements, tariffs, and environmental and energy efficiency standards.
Our tax expense includes estimates of tax reserves and reflects other estimates and assumptions, including assessments of our future earnings which could impact the valuation of our deferred tax assets.
Our tax expense includes estimates of tax reserves and reflects other estimates and assumptions, including assessments of our future earnings which could impact the valuation of our deferred tax assets. Changes in tax laws or regulations may adversely impact our provision for income taxes.
Although a third-party technology provider is typically obligated to indemnify us if the provided technology infringes on another party’s intellectual property rights, such indemnification is often limited in amount and may be worthless if the provider becomes insolvent. 9 Table of Contents Resideo Technologies, Inc.
We could also be subjected to claims of infringement regardless of our lack of involvement in the development of the licensed technology. Although a third-party technology provider is typically obligated to indemnify us if the provided technology infringes on another party’s intellectual property rights, such indemnification is often limited in amount and may be worthless if the provider becomes insolvent.
The loss of key employees, our inability to attract new qualified employees or adequately train employees, or the delay in hiring key personnel could negatively affect our business, financial condition, results of operations and cash flows.
The loss of key employees, our inability to attract new qualified employees or adequately train employees, or the delay in hiring key personnel could negatively affect our business, financial condition, results of operations and cash flows. In 2024 our CEO announced his intention to retire from the Company in 2025 and we are currently engaged in succession planning.
Due to the complex nature of our business, our future performance is highly dependent upon the continued services of our employees and management who have significant industry expertise, including our engineering and design personnel and trained sales force.
Our future performance is highly dependent upon the continued services of our employees and management who have significant industry expertise, including our engineering and design personnel and trained sales force. Our performance is also dependent on the development of additional personnel and the hiring of new qualified personnel for our operations.
Although we are committed to these strategies and targets, we may be unable to achieve them due to impacts on resources, operational costs, regulatory changes and technological advancements.
We have periodically communicated our strategies, commitments, and targets related to ESG matters through the issuance of an ESG report. Although we are committed to these strategies and targets, we may be unable to achieve them due to impacts on resources, operational costs, regulatory changes, and technological advancements.
Similarly, regulations to drive higher fuel efficiency and requirements to support varying fuel mix could shift business away from us if we fail to adapt our solutions to address these needs in a timely manner. We have periodically communicated our strategies, commitments and targets related to environmental, social and governance (“ESG”) matters through the issuance of an ESG report.
Similarly, regulations to drive higher fuel efficiency and requirements to support varying fuel mix could shift business away from us if we fail to adapt our solutions to address these needs in a timely manner. Addressing stakeholder expectations and regulatory requirements relating to environmental, social and governance (“ESG”) matters requires an investment of time, money, and other resources.
We may not be successful in effectively identifying all risks of an acquired business, integrating the acquired business or technology into our existing business or realizing the benefits expected at acquisition.
The success of the acquisition will depend on our ability to integrate the business into our ADI Global Distribution segment and also manage these additional risks. We may not be successful in effectively identifying all risks of an acquired business, integrating the acquired business or technology into our existing business, or realizing the benefits expected at acquisition.
We expect that the growth of our business may depend on our development of new technologies in response to legislation and regulations related to efficiency standards, safety, data privacy and cybersecurity, and environmental concerns.
We expect that the growth of our business may depend on our development of new technologies in response to such regulations and laws.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

5 edited+0 added−1 removed15 unchanged
Biggest changeThe Board and the committees of the Board oversee our risk profile and exposures relating to matters within the scope of their authority.
Biggest changeThe security compliance team within the CISO’s organization actively reviews and assesses the third party’s responses and takes appropriate actions based on the responses. The Board and the committees of the Board oversee our risk profile and exposures relating to matters within the scope of their authority.
We have identified various 20 Table of Contents Resideo Technologies, Inc. cybersecurity risks that could adversely affect our business, results of operations and financial condition, including violation of privacy laws; intellectual property theft; fraud; business interruption or ransomware; harm to customers or employees; and other legal and reputational risks.
We have identified various cybersecurity risks that could adversely affect our business, results of operations, and financial condition, including violation of privacy laws; intellectual property theft; fraud; business interruption or ransomware; harm to customers or employees; and other legal and reputational risks. 21 Table of Contents Resideo Technologies, Inc.
The CISO’s reports to the committees and the Board include insights on operations, business cyber risks, emerging threats and key strategic 21 Table of Contents Resideo Technologies, Inc. initiatives driving improved security capabilities, and special topics around what the Company is doing to strengthen Resideo’s security posture.
The CISO’s reports to the committees and the Board include insights on operations, business cyber risks, emerging threats and key strategic initiatives driving improved security capabilities, and special topics around what the Company is doing to strengthen Resideo’s security posture. 22 Table of Contents Resideo Technologies, Inc.
The Audit Committee and Information and Technology Committee, together with the CISO, provide the full Board with visibility into the risks that impact us and the plans to mitigate them.
The Audit Committee, together with the CISO, provide the full Board with visibility into the risks that impact us and the plans to mitigate them.
Cybersecurity review with the CISO is a regular standing calendar item of the Audit Committee in connection with its overall ERM program oversight. In addition, our Information and Technology Committee coordinates with Audit Committee on the oversight of our product technology and software cybersecurity program.
Cybersecurity review with the CISO is a regular standing calendar item of the Audit Committee in connection with its overall ERM program oversight. In addition, our Audit Committee provides oversight of our product technology and software cybersecurity program.
Removed
The security compliance team within the CISO’s organization actively reviews and assesses the third party’s responses and takes appropriate actions based on the responses. We continue to evaluate and enhance our systems, controls, and processes where possible, including in response to actual or perceived threats specific to us or experienced by other companies.

Item 2. Properties

Properties — owned and leased real estate

2 edited+2 added−2 removed0 unchanged
Biggest changeThere is 1 warehouse and 55 other sites owned or leased by both the Products and Solutions and ADI Global Distribution segments, including offices and engineering, and lab sites used by the Products and Solutions segment.
Biggest changeThe following table shows the types of sites owned or leased by business segment: Products and Solutions ADI Global Distribution Corporate Total Manufacturing 17 — — 17 Distribution centers 4 24 — 28 Branches — 198 — 198 Other 37 27 3 67 Totals 58 249 3 310 Other sites owned or leased include offices, engineering, lab, and storage sites used by the one or more of the business segments.
Item 2. Properties Our corporate headquarters is located in Scottsdale, Arizona. The Products and Solutions segment owns or leases 20 manufacturing sites and 3 warehouses. The ADI Global Distribution segment owns or leases 169 stocking locations and 5 warehouses. The Corporate segment leases 3 sites.
Item 2. Properties Our corporate headquarters is located in Scottsdale, Arizona.
Removed
The following table shows the regional distribution of these sites: Americas Asia Pacific EMEA Sites 166 9 81 We also sublease 1 site that includes office and engineering space from Honeywell, which is included above. In addition, 27 warehouses are operated by third parties.
Added
The following table shows the regional distribution of these sites: Americas Asia Pacific EMEA Sites 218 12 80 With respect to our Products and Solutions segment, we operate six manufacturing facilities in Mexico and rely on third-party manufacturing partners with manufacturing capabilities in Mexico.
Removed
Honeywell also leases or subleases 4 manufacturing sites and other sites, with office and warehouse space, from us. We believe our properties are adequate and suitable for our business as presently conducted and are adequately maintained.
Added
In addition to the above sites, we partner with third-party logistics that operate warehousing and transportation sites for some of our ADI Global Distribution products. We believe our properties are adequate and suitable for our business as presently conducted and are adequately maintained.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

1 edited+0 added−0 removed2 unchanged
Biggest changeWe do not currently believe that such matters are material to our results of operations. Refer to Note 15. Commitments and Contingencies to Consolidated Financial Statements.
Biggest changeWe do not currently believe that such matters are material to our results of operations. Refer to Note 15. Commitments and Contingencies to Consolidated Financial Statements. Item 4. Mine Safety Disclosures Not applicable. 23 Table of Contents Resideo Technologies, Inc. PART II.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

5 edited+1 added−3 removed2 unchanged
Biggest changeWe currently expect to retain any future earnings to fund the operation and expansion of our business, pay back debt obligations or to repurchase our common stock.
Biggest changeHowever, we are required to make preferred dividend payments under the terms of our Preferred Stock in cash or in-kind. We currently expect to retain any future earnings to fund the operation and expansion of our business, pay back debt obligations, or to repurchase our common stock.
Stock Performance The following graph shows a comparison through December 31, 2023 of the cumulative total returns for (i) our common stock, (ii) the S&P Small Cap 600 Total Return Index and (iii) the S&P 400 Industrials assuming an initial investment of $100 in the stock or the index on December 31, 2018 and reinvestment of all dividends.
Stock Performance The following graph shows a comparison through December 31, 2024 of the cumulative total returns for (i) our common stock, (ii) the S&P Small Cap 600 Index, and (iii) the S&P 400 Industrials assuming an initial investment of $100 in the stock or the index on December 31, 2019 and reinvestment of all dividends.
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Our common stock is traded on the New York Stock Exchange under the symbol “REZI.” On February 2, 2024, there were 34,908 holders of record of our common stock and the closing price of our common stock on the New York Stock Exchange was $17.10 per share.
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Our common stock is traded on the New York Stock Exchange under the symbol “REZI.” On February 12, 2025, there were 32,149 holders of record of our common stock and the closing price of our common stock on the New York Stock Exchange was $21.34 per share.
This graph covers the period from December 31, 2018 through December 31, 2023. The returns in the graph are not intended to forecast or be indicative of possible future performance of our common stock. 23 Table of Contents Resideo Technologies, Inc.
This graph covers the period from December 31, 2019 through December 31, 2024. The returns in the graph are not intended to forecast or be indicative of possible future performance of our common stock. Item 6. [RESERVED] 24 Table of Contents Resideo Technologies, Inc.
As of February 2, 2024, approximately 145 million shares of our common stock were outstanding. Dividends We have never declared or paid any cash dividends on our common stock and we currently do not intend to pay cash dividends.
As of February 12, 2025, approximately 148 million shares of our common stock and 0.5 million shares of our preferred stock were outstanding. Dividends We have never declared or paid any cash dividends on our common stock and we currently do not intend to pay cash dividends on our common stock.
Removed
Issuer Purchases of Equity Securities The following table summarizes information with respect to the purchase of our common stock during the three months ended December 31, 2023.
Added
Issuer Purchases of Equity Securities During the three months ended December 31, 2024, we did not make any common share repurchases. As of December 31, 2024, we had approximately $108 million of authorized repurchases remaining under our share repurchase program.
Removed
Share Repurchases (1) Period Total Number of Shares Purchased (thousands) (2) Average Price Paid per Share Excluding Commissions Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (thousands) Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (millions) October 1, 2023 to October 28, 2023 12 $ 15.72 12 $ 120 October 29, 2023 to November 25, 2023 550 $ 16.03 550 $ 111 November 26, 2023 to December 31, 2023 157 $ 16.36 157 $ 109 Total 719 $ 16.15 719 (1) This table does not include the value of equity awards surrendered to satisfy tax withholding obligations or forfeitures of equity awards.
Removed
(2) Refer to Note 20. Stockholders’ Equity to the Consolidated Financial Statements for information about the share repurchase program.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

51 edited+34 added−30 removed17 unchanged
Biggest changeAlthough we believe that the forward-looking statements contained in this Form 10-K 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: • competition from other companies in our markets and segments, as well as in new markets and emerging markets; • 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 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; • the impact of potentially volatile global market and economic conditions and industry and end market cyclicality, including factors such as interest rates, inflation, availability of financing, consumer spending habits and preferences, housing market changes, and employment rates ; • 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 transformation programs or to effectively manage our workforce; • the failure to increase productivity through sustainable operational improvements; • economic, political, regulatory, foreign exchange and other risks of international operations; • our dependence upon IT infrastructure and network operations having adequate cyber-security functionality; • the potential adverse impacts of enhanced tariff, import/export restrictions, or other trade barriers on global economic conditions, financial markets and our business; • 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; • risks associated with the Reimbursement Agreement, the other agreements we entered into with Honeywell in connection with the Spin-Off, and our relationships with Honeywell, including our reliance on Honeywell for the Honeywell Home trademark and potential material environmental liabilities; • the impact of potential material litigation matters, government proceedings, and other contingencies and uncertainties; 35 Table of Contents Resideo Technologies, Inc. • our ability to borrow funds and access capital markets in light of the terms of our debt documents or otherwise; • our ability to recruit and retain qualified personnel; • currency exchange rate fluctuations; and • certain factors discussed elsewhere in this Form 10-K.
Biggest changeAlthough we believe that the forward-looking statements contained in this Annual 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: • 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; • 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; • 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; • 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 transformation programs or to effectively manage our workforce; • the failure to increase productivity through sustainable operational improvements; • 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; • the potential adverse impacts of enhanced tariff, import/export restrictions, or other trade barriers on global economic conditions, financial markets, and our business; • risks associated with the Reimbursement Agreement, the other agreements we entered into with Honeywell in connection with the Spin-Off, and 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; • our ability to borrow funds and access capital markets in light of the terms of our debt documents or otherwise; • provisions in our governing documents discouraging takeovers; • our ability to recruit and retain qualified personnel and to recruit a new CEO given the announced intended retirement of our current CEO; • 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 event 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, deliver timely financial statements, and avoid the financial statements to become impaired and damage public opinion; 35 Table of Contents Resideo Technologies, Inc. • impairment of other intangible assets and long-lived assets; • being required to make significant cash contributions to our defined benefit pension plans; • other risks detailed under the caption “Risk Factors” in this Annual Report, in Part I, Item 1A; and • certain factors discussed elsewhere in this Form 10-K.
During the year ended December 31, 2023, we paid Honeywell $140 million under this agreement. For further discussion on the Reimbursement Agreement refer to Note 15. Commitments and Contingencies to Consolidated Financial Statements. Environmental Liability We make environmental liability payments for sites which we own and are directly responsible for.
During the year ended December 31, 2024, we paid Honeywell $140 million under this agreement. For further discussion on the Reimbursement Agreement refer to Note 15. Commitments and Contingencies to Consolidated Financial Statements. Environmental Liability We make environmental liability payments for sites which we own and are directly responsible for.
Management’s Discussion and Analysis of Financial Condition and Results of Operations (In millions, except per share amounts) The following Management’s Discussion and Analysis of Financial Condition and Results of Operations is intended to help you understand the results of our operations and financial condition for the three years ended December 31, 2023, and should be read in conjunction with the Consolidated Financial Statements and the notes thereto contained elsewhere in this Form 10-K.
Management’s Discussion and Analysis of Financial Condition and Results of Operations (In millions, except per share amounts) The following Management’s Discussion and Analysis of Financial Condition and Results of Operations is intended to help readers understand the results of our operations and financial condition for the three years ended December 31, 2024, and should be read in conjunction with the Consolidated Financial Statements and the notes thereto contained elsewhere in this Form 10-K.
Segment Results of Operations Products and Solutions The chart below presents net revenue and income from operations for the years ended December 31, 2023 and 2022.
Segment Results of Operations Products and Solutions The chart below presents net revenue and income from operations for the years ended December 31, 2024 and 2023.
Share Repurchase Program On August 3, 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.
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.
Other Matters Litigation, Environmental Matters and the Reimbursement Agreement Refer to Note 15. Commitments and Contingencies to Consolidated Financial Statements. Recent Accounting Pronouncements Refer to Note 2. Summary of Significant Accounting Policies to Consolidated Financial Statements.
Other Matters Litigation, Environmental Matters and the Reimbursement Agreement Refer to Note 15 . Commitments and Contingencies to Consolidated Financial Statements for further discussion. Recent Accounting Pronouncements Refer to Note 2 . Summary of Significant Accounting Policies to Consolidated Financial Statements.
We continually assess the likelihood and amount of potential adjustments and adjust the income tax provision, the current tax liability and deferred taxes in the period in which the facts that give rise to a change in estimate become known. Refer to Note 17. Income Taxes to Consolidated Financial Statements. 34 Table of Contents Resideo Technologies, Inc.
We continually assess the likelihood and amount of potential adjustments and adjust the income tax provision, the current tax liability, and deferred taxes in the period in which the facts that give rise to a change in estimate become known. Refer to Note 17. Income Taxes to Consolidated Financial Statements.
Overview and Business Trends We are a leading global manufacturer and distributor of technology-driven products and solutions that help homeowners and businesses stay connected and in control of their comfort, security and energy use.
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.
As of December 31, 2023, a liability of $652 million was deemed probable and reasonably estimable; however, it is possible we could pay $140 million per year (exclusive of any late payment fees up to 5% per annum) until the earlier of: (1) December 31, 2043; or (2) December 31, of the third consecutive year during which the annual reimbursement obligation (including in respect of 32 Table of Contents Resideo Technologies, Inc. deferred payment amounts) has been less than $25 million.
As of December 31, 2024, a liability of $723 million was deemed probable and reasonably estimable; however, it is possible we could pay $140 million per year (exclusive of any late payment fees up to 5% per annum) until the earlier of: (1) December 31, 2043; or (2) December 31, of the third consecutive year during which the annual reimbursement obligation (including in respect of deferred payment amounts) has been less than $25 million.
Warranties and Guarantees Expected warranty costs for products sold are recognized based on an estimate of the amount that eventually will be required to settle such obligations. These accruals are based on factors such as past experience, length of the warranty and various other considerations.
Goodwill and Other Intangible Assets, net to Consolidated Financial Statements. Warranties and Guarantees Expected warranty costs for products sold are recognized based on an estimate of the amount that eventually will be required to settle such obligations. These accruals are based on factors such as past experience, length of the warranty, and various other considerations.
Cash discounts, volume rebates and other customer incentive programs are based upon certain percentages agreed upon with various customers, which are typically earned by the customer over an annual period. Revenue is adjusted for variable consideration, which includes customer volume rebates and prompt payment discounts.
Cash discounts, volume 33 Table of Contents Resideo Technologies, Inc. rebates and other customer incentive programs are based upon certain percentages agreed upon with various customers, which are typically earned by the customer over an annual period. Revenue is adjusted for variable consideration, which includes customer volume rebates and prompt payment discounts.
If the carrying value of a reporting unit exceeds its fair value, we record a goodwill impairment loss as the amount by which the carrying amount of a reporting unit exceeds its fair value, not to exceed the total amount of goodwill allocated to that reporting unit. Refer to Note 9. Goodwill and Intangible Assets, net to Consolidated Financial Statements.
If the carrying value of a reporting unit exceeds its fair value, we record a goodwill impairment loss as the amount by which the carrying amount of a reporting unit exceeds its fair value, not to exceed the total amount of goodwill allocated to that reporting unit. Refer to Note 9.
Our Products and Solutions operating segment offerings include temperature and humidity control, energy products and solutions, water and air solutions, smoke and carbon monoxide detection home safety products, security panels, sensors, peripherals, communications devices, video cameras, other home-related lifestyle convenience solutions, cloud infrastructure, installation and maintenance tools, and related software.
Our Products and Solutions segment 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.
While we believe supply chain and logistics will continue to normalize over 2024, customer demand continues to moderate as inventories rebalance over the period and uncertainties remain including the potential for changes in inflation and interest rates, increased labor costs, reduced consumer spending due to softening labor markets, elevated mortgage rates, unfavorable foreign currency impacts from a stronger U.S. dollar, and potential market and other disruption from the ongoing conflict between Russia and Ukraine as well as the Middle East crisis between Hamas and Israel.
While supply chain and logistics continued to normalize over 2024, uncertainties remain including the potential for changes in inflation and interest rates, tariffs, increased labor costs, reduced consumer spending due to softening labor markets, elevated mortgage rates, unfavorable foreign currency impacts from a stronger U.S. dollar, 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.
Tax Expense Income tax expense of $103 million for the year ended December 31, 2023, includes $16 million of discrete tax benefit. The effective tax rate for the year ended December 31, 2023, excluding discrete tax benefits of $16 million, was 37.9% versus 33.7% for the same period in 2022, which excluded a discrete tax benefit of $6 million.
Tax Expense Income tax expense of $105 million for the year ended December 31, 2024, includes $1 million of discrete tax benefit. The effective tax rate for the year ended December 31, 2024, excluding discrete tax benefits of $1 million, was 47.8% versus 37.9% for the same period in 2023, which excluded a discrete tax benefit of $16 million.
Income tax expense decreased for the year ended December 31, 2023, primarily due to a decrease in pre-tax earnings and a change in the tax basis of foreign assets. The increase in the overall effective tax rate was primarily driven by non-deductible indemnification costs, other non-deductible expenses, and U.S. taxation of foreign earnings. 29 Table of Contents Resideo Technologies, Inc.
Income tax expense increased for the year ended December 31, 2024, primarily due to an increase in non-deductible expenses. The increase in the overall effective tax rate was primarily driven by non-deductible indemnification costs, other non-deductible expenses, and U.S. taxation of foreign earnings. 28 Table of Contents Resideo Technologies, Inc.
Our ADI Global Distribution business is a leading wholesale distributor of low-voltage products including access control, fire detection, security, and video products and participates significantly in the broader related markets of audio, communications, data communications, networking, power, ProAV, smart home, and wire and cable.
Our ADI Global Distribution segment is a leading wholesale distributor of low-voltage products including security, fire, and access control, and participates significantly in the broader related markets of smart home, residential audio-visual, professional audio-visual, power management, networking, data communications, wire and cable, enterprise connectivity, and structured wiring products.
Purchase Obligations We enter into purchase obligations with various vendors in the normal course of business. As of December 31, 2023, we had purchase obligations of $342 million, with $142 million payable within 12 months.
As of December 31, 2024, we had operating lease payment obligations of $263 million, with $51 million payable within 12 months. Purchase Obligations We enter into purchase obligations with various vendors in the normal course of business. As of December 31, 2024, we had purchase obligations of $358 million, with $177 million payable within 12 months.
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.
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,” 34 Table of Contents Resideo Technologies, Inc.
For certain products, it is industry practice that customers take title to products upon delivery, at which time revenue is then recognized. Allowances for cash discounts, volume rebates and other customer incentive programs, as well as gross customer returns, among others, are recorded as a reduction of sales at the time of sale based upon the estimated future outcome.
Allowances for cash discounts, volume rebates, and other customer incentive programs, as well as gross customer returns, among others, are recorded as a reduction of sales at the time of sale based upon the estimated future outcome.
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. Our affiliates may also purchase our debt from time to time through open market purchases or other transactions.
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. 30 Table of Contents Resideo Technologies, Inc.
Cash Flow Summary for the Years Ended December 31, 2023 and 2022 Our cash flows from operating, investing and financing activities for the years ended December 31, 2023 and 2022, as reflected in the audited Consolidated Financial Statements are summarized as follows: Years Ended December 31, 2023 2022 $ change Cash provided by (used for) operating activities: Operating activities $ 440 $ 152 $ 288 Investing activities (44) (764) 720 Financing activities (64) 170 (234) Effect of exchange rate changes on cash (24) (8) (16) Net increase (decrease) in cash, cash equivalents and restricted cash $ 308 $ (450) $ 758 2023 compared with 2022 Net cash provided by operating activities for the year ended December 31, 2023, was $440 million.
Cash Flow Summary for the Years Ended December 31, 2024 and 2023 Our cash flows from operating, investing, and financing activities for the years ended December 31, 2024 and 2023, as reflected in the audited Consolidated Financial Statements are summarized as follows: Years Ended December 31, 2024 2023 $ change Cash provided by (used for): Operating activities $ 444 $ 440 $ 4 Investing activities (1,409) (44) (1,365) Financing activities 1,031 (64) 1,095 Effect of exchange rate changes on cash (10) (24) 14 Net increase in cash, cash equivalents and restricted cash $ 56 $ 308 $ (252) 2024 compared with 2023 Net cash provided by operating activities for the year ended December 31, 2024 was $444 million, an increase of $4 million compared to the prior year.
As of December 31, 2023, $22 million was deemed probable and reasonably estimable. Operating Leases We have operating lease arrangements for the majority of our manufacturing sites, offices, engineering and lab sites, stocking locations, warehouses, automobiles, and certain equipment. As of December 31, 2023, we had operating lease payment obligations of $205 million, with $39 million payable within 12 months.
As of December 31, 2024, $22 million was deemed probable and reasonably estimable. 32 Table of Contents Resideo Technologies, Inc. Operating Leases We have operating lease arrangements for the majority of our manufacturing sites, offices, engineering and lab sites, stocking locations, warehouses, automobiles, and certain equipment.
Discussions of fiscal 2021 items and year-over-year comparisons between fiscal 2022 and fiscal 2021 that are not included in this Form 10-K can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 in the Company’s 2022 Annual Report on Form 10-K filed February 21, 2023.
Discussions of fiscal 2022 items and year-over-year comparisons between fiscal 2023 and fiscal 2022 that are not included in this Form 10-K can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 in the Company’s 2023 Annual Report on Form 10-K filed February 14, 2024 as reclassified in our Current Report on Form 8-K filed on June 4, 2024 to reflect the impacts of certain corporate functions being decentralized to align with the business strategy.
During the twelve months ended December 31, 2023, we repurchased 2.6 million shares of common stock in the open market at a total cost of $41 million. As of December 31, 2023, we had approximately $109 million of authorized repurchases remaining under the share repurchase program.
During the twelve months ended December 31, 2024 and 2023, we repurchased 0.1 million and 2.6 million shares of common stock in the open market at a total cost of $1 million and $41 million, respectively.
Goodwill We review the carrying values of goodwill and identifiable intangibles whenever events or changes in circumstances indicate that such carrying values may not be recoverable and annually, on the first day of the fourth quarter.
Actual results could differ from our estimates and assumptions. Refer to Note 2. Summary of Significant Accounting Policies to Consolidated Financial Statements. Goodwill We review the carrying values of goodwill and identifiable intangibles whenever events or changes in circumstances indicate that such carrying values may not be recoverable and annually, on the first day of the fourth quarter.
We are a leader in the home heating, ventilation and air conditioning controls markets, smoke and carbon monoxide detection home safety and fire suppression products, and security markets. We have a global footprint serving commercial and residential end-markets. We manage our business operations through two operating segments, Products and Solutions and ADI Global Distribution.
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.
Additional liquidity may also be provided through access to the capital markets and our five - year senior secured revolving credit facility in an aggregate principal amount of $500 million (the “A&R Revolving Credit Facility”).
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 senior secured revolving credit facility in an aggregate principal amount of $500 million (the “A&R Revolving Credit Facility”).
We periodically adjust these 33 Table of Contents Resideo Technologies, Inc. provisions to reflect actual experience and other facts and circumstances that impact the status of existing claims. Refer to Note 15. Commitments and Contingencies for additional information.
We periodically adjust these provisions to reflect actual experience and other facts and circumstances that impact the status of existing claims. Refer to Note 15. Commitments and Contingencies for additional information. Revenue Revenue is measured as the amount of consideration expected to be received in exchange for our products.
The Senior Notes due 2029 are senior unsecured obligations of Resideo guaranteed by our existing and future domestic subsidiaries, rank equally with all of our senior unsecured debt, and are senior to all of our subordinated debt. 31 Table of Contents Resideo Technologies, Inc.
The Senior Notes due 2029 are senior unsecured obligations of Resideo guaranteed by our existing and future domestic subsidiaries, rank equally with all of our senior unsecured debt, and are senior to all of our subordinated debt. In July 2024, we issued $600 million in aggregate principal of 6.500% Senior Notes due 2032 (the “Senior Notes due 2032”).
Credit Agreement On February 12, 2021, we entered into an Amendment and Restatement Agreement with JP Morgan Chase Bank N.A. as administrative agent (the “A&R Credit Agreement”). This agreement effectively replaced our previous senior secured credit facilities.
Credit Agreement In February 2021, we entered into an Amendment and Restatement Agreement with JP Morgan Chase Bank N.A. as administrative agent (the “A&R Credit Agreement”). In March 2022, we amended the A&R Credit Agreement adding $200 million in additional term loans.
As of December 31, 2023, we had $1,419 million of long-term debt outstanding under our A&R Credit Agreement and Senior Notes due 2029, of which $12 million is due in the next 12 months. Refer to Note 11 . Long-Term Debt to Consolidated Financial Statements.
In December 2024, the A&R Term B Facility was further amended to reduce the interest rate margin from 2.00% to 1.75%. As of December 31, 2024, we had $2,015 million of long-term debt outstanding under our A&R Credit Agreement, Senior Notes due 2029, and Senior Notes due 2032, of which $6 million is due in the next 12 months.
The following table represents results of operations on a consolidated basis for the periods indicated: Years Ended December 31, (in millions, except per share data and percentages) 2023 2022 $ change % change Net revenue $ 6,242 $ 6,370 $ (128) (2.0) % Cost of goods sold 4,546 4,604 (58) (1.3) % Gross profit 1,696 1,766 (70) (4.0) % Gross Profit % 27.2 % 27.7 % (50) bps Operating expenses: Research and development expenses 109 111 (2) (1.8) % Selling, general and administrative expenses 960 974 (14) (1.4) % Intangible asset amortization 38 35 3 8.6 % Restructuring and impairment expenses 42 35 7 20.0 % Total operating expenses 1,149 1,155 (6) (0.5) % Income from operations 547 611 (64) (10.5) % Other expenses, net 169 139 30 21.6 % Interest expense, net 65 54 11 20.4 % Income before taxes 313 418 (105) (25.1) % Provision for income taxes 103 135 (32) (23.7) % Net income 210 283 (73) (25.8) % Earnings per share: Basic $ 1.43 $ 1.94 $ (0.52) (26.5) % Diluted $ 1.42 $ 1.90 $ (0.49) (25.5) % Net Revenue Net revenue for the year ended December 31, 2023 was $6,242 million, a decrease of $128 million, or 2.0%, from the prior year, driven primarily by lower volume of $414 million and unfavorable foreign exchange fluctuations of $10 million.
The following table represents results of operations on a consolidated basis for the periods indicated: Years Ended December 31, (in millions, except per share data and percentages) 2024 2023 $ change % change Net revenue $ 6,761 $ 6,242 $ 519 8.3 % Cost of goods sold 4,860 4,546 314 6.9 % Gross profit 1,901 1,696 205 12.1 % Gross Profit % 28.1 % 27.2 % 90 bps Operating expenses: Research and development expenses 111 109 2 1.8 % Selling, general and administrative expenses 1,138 960 178 18.5 % Intangible asset amortization 80 38 42 110.5 % Restructuring, impairment and extinguishment costs 52 42 10 23.8 % Total operating expenses 1,381 1,149 232 20.2 % Income from operations 520 547 (27) (4.9) % Other expenses, net 218 169 49 29.0 % Interest expense, net 81 65 16 24.6 % Income before taxes 221 313 (92) (29.4) % Provision for income taxes 105 103 2 1.9 % Net income $ 116 $ 210 $ (94) (44.8) % Earnings per common share: Basic $ 0.62 $ 1.43 $ (0.81) (56.6) % Diluted $ 0.61 $ 1.42 $ (0.81) (57.0) % Net Revenue Net revenue for the year ended December 31, 2024 was $6,761 million, an increase of $519 million, or 8.3%, from the prior year, primarily due to $553 million of revenue from the acquisition of Snap One and higher sales volume of $74 million driven by the ADI Global Distribution segment.
Refer to Note 11. Long-Term Debt and Note 12. Derivative Financial Instruments to the Consolidated Financial Statements for a description of our debt obligations and the timing of future principal and interest payments, including impacts from our Swap Agreements.
Derivative Financial Instruments to Consolidated Financial Statements for a description of our debt obligations and the timing of future principal and interest payments, including impacts from our Swap Agreements. Senior Notes In August 2021, we issued $300 million in principal amount of 4.000% Senior Notes due in 2029 (“the Senior Notes due 2029”).
On March 28, 2022, we entered into a First Amendment, which amended the A&R Credit Agreement to include an additional aggregate principal amount of $200 million in loans. On June 30, 2023, we entered into a Second Amendment, which amended the A&R Credit Agreement to replace the interest rate reference rate of LIBOR with the secured overnight financing rate (“SOFR”).
In June 2023, we amended the A&R Credit Agreement to replace the interest rate reference rate of LIBOR with the secured overnight financing rate (“SOFR”).
Partially offsetting the unfavorable impacts to income from operations were $97 million of lower manufacturing input costs, primarily material and freight, due to the inflationary environment stabilizing and $20 million from the First Alert, Inc. acquisition. ADI Global Distribution The chart below presents net revenue and income from operations for the years ended December 31, 2023 and 2022.
Partially offsetting the favorable impacts to income from operations were net unfavorable price and mix shift of $30 million, lower volumes of $20 million, and the impact from the divestiture of the Genesis business of $13 million. ADI Global Distribution The chart below presents net revenue and income from operations for the years ended December 31, 2024 and 2023.
During the fourth quarter of 2023, we also received $86 million in proceeds from the sale of Genesis. These amounts were offset by a decrease in capital expenditures of $20 million from 2022 to 2023.
These amounts were partially offset by a decrease in capital expenditures of $25 million from 2023 to 2024.
Current Period Highlights • Net revenue of $6.24 billion in 2023, down 2% from $6.37 billion in 2022 • Gross profit margin of 27.2%, compared to 27.7% in the prior year comparable period • Income from operations of $547 million , or 8.8% of revenue, compared to $611 million , or 9.6% of revenue in 2022, including restructuring and impairment expenses o f $42 million and $35 million in 2023 and 2022, respectively • Fully diluted earnings per share of $1.42, compared to $1.90 per share in the same period last year • Cash Flow From Operations was $440 million in 2023 as compared to $152 million in 2022 Outlook Expectations for key macro trends expected to impact our business in 2024 include residential repair and remodel activity flat to down low-single-digits year-over-year, residential new construction starts expected to grow low to mid-single digits.
Current Period Highlights • Net revenue of $6.76 billion in 2024, up 8% from $6.24 billion in 2023 • Gross profit margin of 28.1%, compared to 27.2% in the prior year comparable period • Income from operations of $520 million , or 7.7% of revenue, compared to $547 million , or 8.8% of revenue in 2023 • Fully diluted earnings per common share of $0.61, compared to $1.42 per common share in the same period last year • Cash Flow From Operations was $444 million in 2024 as compared to $440 million in 2023 Outlook For 2025, we anticipate executing our business against a global macro-economic environment that continues to be mixed.
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.
This Annual 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.
Our financial performance is influenced by macroeconomic factors such as repair and remodeling activity, residential and non-residential construction, employment rates, interest rates and bank lending standards, supply chain dynamics, and the overall macroeconomic environment. The ongoing uncertainty and volatility in the global macroeconomic conditions have affected and could continue to affect our visibility toward future performance.
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.
For further information refer to Note 9. Goodwill and Intangible Assets, net to Consolidated Financial Statements. Other Expenses, Net Other expenses, net increased $30 million for the year ended December 31, 2023, as compared to the same period in 2022 due to increased Reimbursement Agreement expenses as noted in Note 15. Commitments and Contingencies .
Other Expenses, Net Other expenses, net increased $49 million for the year ended December 31, 2024, as compared to the same period in 2023. The increase was driven by $33 million of additional expense related to the Reimbursement Agreement as noted in Note 15.
Critical Accounting Estimates Our Consolidated Financial Statements are prepared in accordance with U.S. GAAP, which require us to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the periods presented. We review our critical accounting policies throughout the year.
Critical Accounting Policies and Significant Estimates Our Consolidated Financial Statements are prepared in accordance with U.S. GAAP and pursuant to the regulations of the U.S. Securities and Exchange Commission (“SEC”) and is based in part on the application of significant accounting policies, many of which require us to make estimates and assumptions.
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 10-K includes industry and market data that we obtained from various third-party sources, including forecasts based upon such data.
“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.
Selling, General and Administrative Expenses Selling, general and administrative expenses for the year ended December 31, 2023, were $960 million, a decrease of $14 million, or 1.4%, as compared to the same period in 2022.
Key drivers of the lower spend relate to optimization efforts and a realignment of IT resources towards maintenance projects within the Products and Solutions segment. Selling, General and Administrative Expenses Selling, general and administrative expenses for the year ended December 31, 2024, were $1,138 million, an increase of $178 million, or 18.5%, as compared to the same period in 2023.
Products and Solutions revenue decreased $111 million, or 4%, mainly due to lower sales volume of $307 million and unfavorable foreign exchange fluctuations of $5 million, partially offset by price increases of $102 million and $99 million of revenue from First Alert, Inc.
Products and Solutions revenue decreased $108 million, or 4.0%, as compared to the same period in 2023, due to $105 million from the divestiture of the Genesis business, lower sales volume of $24 million and unfavorable foreign currency fluctuations of $10 million. The decrease was partially offset by price increases of $31 million.
Research and Development Expenses Research and development expenses for the year ended December 31, 2023, were $109 million, a decrease of $2 million as compared to the same period in 2022.
Research and Development Expenses Research and development expenses for the year ended December 31, 2024, were $111 million, an increase of $2 million as compared to the same period in 2023. The increase was primarily driven by $17 million from the acquisition of Snap One, which was partially offset by $15 million from lower third-party spend and personnel costs.
Contractual Obligations and Probable Liability Payments In addition to our long-term debt discussed above, our material cash requirements include the following contractual obligations. Reimbursement Agreement Payments In connection with the Spin-Off, we entered into the Reimbursement Agreement with Honeywell.
This increase was partially offset by an increase in debt repayments of $593 million as well as a decrease in common stock repurchases of $40 million. Contractual Obligations and Probable Liability Payments In addition to our long-term debt discussed above, our material cash requirements include the following contractual obligations.
Income from operations decreased $43 million, or 14%, due to $23 million of higher input costs, primarily material, $17 million of lower sales volume, and $12 million of restructuring expenses, slightly offset by other favorable impacts of $7 million. 30 Table of Contents Resideo Technologies, Inc.
Income from operations decreased $43 million, or 18.1%, as compared to the same period in 2023, primarily due to an unfavorable sales mix and deflationary impact of $31 million, higher operational costs including freight and other costs of $27 million, Snap One acquisition and integration costs of $12 million, and higher restructuring expenses of $7 million. 29 Table of Contents Resideo Technologies, Inc.
Interest Expense, Net Interest expense, net increased $11 million for the year ended December 31, 2023 as compared to the same period in 2022, due to higher interest rates in 2023 compared to 2022 and additional borrowings of $200 million in March 2022 under A&R Credit Agreement.
Interest Expense, Net Interest expense, net increased $16 million for the year ended December 31, 2024 as compared to the same period in 2023, primarily due to an increase in our long-term debt resulting in $22 million of higher interest expense which was partially offset by $6 million of higher interest income as a result of effectively investing excess cash.
Net cash used for investing activities for the year ended December 31, 2023 was $44 million, a decrease of $720 million compared to the prior year, primarily due to a decrease in acquisitions of $649 million resulting from the First Alert, Inc acquisition occurring in the prior year.
Net cash used for investing activities for the year ended December 31, 2024 was $1,409 million, an increase of $1,365 million, compared to the prior year, primarily driven by acquiring Snap One for $1,337 million and lower net proceeds from the sale of business, acquisitions and investments of $85 million.
Restructuring and impairment expenses were allocated among our segments as follows: December 31, (in millions) 2023 2022 Products and Solutions $ 27 $ 29 ADI Global Distribution 12 2 Corporate 3 4 Restructuring and impairment expenses $ 42 $ 35 Intangible Asset Amortization Intangible asset amortization increased $3 million for the year ended December 31, 2023, as compared to the same period in 2022 due to the increased amortization costs primarily due to intangibles obtained through acquisition activities.
Intangible Asset Amortization Intangible asset amortization increased $42 million for the year ended December 31, 2024, as compared to the same period in 2023. The increase was primarily due to additional amortization expense of $41 million associated with the new intangibles from the Snap One acquisition.
Removed
The Products and Solutions operating segment, consistent with our industry, has a higher gross and operating profit profile in comparison to the ADI Global Distribution operating segment.
Added
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.
Removed
Our ADI Global Distribution strategy is focused on growth in our omni-channel presence, expansion into adjacent markets, and continued enhancements to our value-add services to support our professional installers’ efficiency and profitability.
Added
In the second quarter of 2024, we expanded the business through the acquisition of Snap One, which has been incorporated into the ADI Global Distribution business segment. The acquisition expands our distribution into and reach with smart-living products, services, and software.
Removed
We expect ADI’s key commercial markets to grow low-single-digits with continued headwinds in the residential security business. We expect these trends to support our 2024 year-over-year revenue outlook of flat to down low single-digits. 25 Table of Contents Resideo Technologies, Inc.
Added
In addition, ADI Global Distribution partners with a network of contract manufacturers and joint-development suppliers to produce a full range of proprietary smart-home technology products and solutions under our own exclusive brands. These products may be found in residential and commercial settings and utilize proprietary software platforms such as Control4 and OvrC for project commissioning and remote monitoring.
Removed
Recent Developments On January 23, 2023, we acquired 100% of the outstanding equity of BTX Technologies, Inc., a leading distributor of professional audio, video, data communications and broadcast equipment. This acquisition will allow ADI to further expand our ProAV and private brand offerings across North America.
Added
The ongoing uncertainty and volatility in the global macroeconomic environment have affected, and could continue to affect, our visibility toward future performance.
Removed
During the third quarter of 2023, we announced a restructuring program to align our cost structure with market conditions. For the twelve months ended December 31, 2023, we recognized restructuring and impairment expenses of $42 million. These expenses primarily related to workforce reductions.
Added
Despite some signals that new U.S. residential home building is back to normal levels and the outlook for U.S. repair and 25 Table of Contents Resideo Technologies, Inc. remodeling has reverted to modest low-single digit percentage growth, U.S. mortgage rates remain high, the existing U.S. home re-sale market is still soft, and inflation remains persistent globally.
Removed
On August 3, 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 twelve months ended December 31, 2023, we repurchased 2.6 million shares of common stock in the open market at a total cost of $41 million.
Added
We expect these trends to support our 2025 year-over-year revenue outlook of up low-to-mid single-digits. Basis of Presentation and Reclassifications Refer to Note 1. Nature of Operations and Basis of Presentation to Consolidated Financial Statements. Results of Operations This section of the Form 10-K discusses fiscal 2024 and fiscal 2023 items and year-over-year comparisons of these periods.
Removed
On August 9, 2023, we acquired 100% of the outstanding equity of Sfty SA, a developer of cloud-based services providing alerts to multifamily homes and property managers with smoke, carbon monoxide and water leak detection products. This acquisition will allow us to further expand our safety and security service offerings in the Products and Solutions business segment.
Added
Refer to Note 4. Segment Financial Data for additional information.
Removed
On October 16, 2023, we sold the Genesis Cable business in a cash transaction for $86 million, subject to working capital and other closing adjustments. We recognized a pre-tax gain of $18 million in other expenses, net in our Consolidated Statements of Operations, which includes $5 million of divestiture related costs.
Added
The increase was partially offset by $105 million of lower sales from the divestiture of the Genesis business in 2023, and $6 million of unfavorable foreign currency fluctuations. The price increases at Product and Solutions were offset by the decreases at ADI Global Distribution, resulting in minimal impact from price on net revenue. 26 Table of Contents Resideo Technologies, Inc.
Removed
The divested business did not represent a strategic shift that has a major effect on our operations and financial results, and, as such, it was not presented as discontinued operations. 26 Table of Contents Resideo Technologies, Inc. Results of Operations This section of the Form 10-K discusses fiscal 2023 and fiscal 2022 items and year-over-year comparisons of these periods.
Added
Gross Profit The chart below presents the drivers of the gross profit variance from the years ended December 31, 2023 to December 31, 2024. (1) Includes only the Snap One acquisition and Genesis divestiture Gross profit of $1,901 million increased $205 million and gross margin of 28.1% was up 90 basis points (“bps”) from the prior year.
Removed
Partially offsetting these decreases were $153 million from acquisitions and higher selling prices of $143 million across both segments. 27 Table of Contents Resideo Technologies, Inc. Gross Profit The chart below presents the drivers of the gross profit variance from the year ended December 31, 2022 to December 31, 2023.
Added
The increase in gross margin was primarily driven by lower manufacturing costs of 140 bps, favorable impacts from the acquisition of Snap One, net of Genesis divestiture of 80 bps, which was partially offset by net unfavorable price and mix shift of 90 bps and the impact from lower volumes of 30 bps.
Removed
Gross profit dollars decreased in 2023 as noted in the chart above. Gross margin of 27.2% was 50 bps lower when compared to 27.7% in the prior year primarily due to lower unit volume and unfavorable product mix.
Added
The increase was driven by $141 million of incremental operating expenses from the Snap One acquisition, and $45 million of acquisition and integration costs. The increase was partially offset by lower expenses of $8 million from the divestiture of the Genesis business in 2023. 27 Table of Contents Resideo Technologies, Inc.
Removed
The decrease was primarily driven by net cost savings of $5 million offset by additional research and development costs of $3 million from the acquisition of First Alert, Inc. in first quarter of 2022.
Added
Restructuring, Impairment and Extinguishment Costs Restructuring, impairment and extinguishment costs increased $10 million for the year ended December 31, 2024, as compared to the same period in 2023. The increase was primarily due to debt extinguishments and related costs associated with multiple credit agreement amendments throughout the year.
Removed
The decrease was driven by cost savings from restructuring actions of $42 million that more than offset $18 million in costs related to the inclusion of First Alert, Inc. and $10 million of transaction costs incurred in the first quarter of 2022. 28 Table of Contents Resideo Technologies, Inc.
Added
Commitments and Contingencies, and a net gain on sale of assets and divestiture of $22 million, which was partially offset by $6 million of other costs including pension and foreign currency impacts.
Removed
Restructuring and Impairment Expenses In the fourth quarter of 2022, and throughout 2023, we have taken actions to lower costs, increase margins and position us for growth resulting in restructuring and impairment expenses of $35 million and $42 million, respectively. We expect to fully execute our restructuring initiatives and programs over the next 12 to 24 months.
Added
Income from operations increased $57 million, or 12.8%, from the same period in 2023, primarily due to lower material, freight and other manufacturing costs of $101 million, lower restructuring expenses of $13 million, lower selling, general and administrative expenses of $5 million, and lower research and development expenses of $1 million.
Removed
Other expenses, net includes $18 million gain recorded in connection with the sale of the Genesis Cable business.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

6 edited+2 added−4 removed1 unchanged
Biggest changeUnder the amended Swap Agreements, we convert a portion of our variable interest rate obligations based on Term SOFR with a minimum rate of 0.39% per annum to a base fixed weighted average rate of 1.13% over the remaining terms. For more information on the Swap Agreements, refer to Note 12. Derivative Financial Instruments to Consolidated Financial Statements.
Biggest changeInterest Rate Risk As of December 31, 2024, the Swap Agreements, with a notional value of $560 million, effectively convert a portion of our $1,115 million long-term variable rate A&R Term B Facility to a rate based on Term SOFR with a minimum rate of 0.39% per annum to a base fixed weighted average rate of 1.13% over the remaining terms.
Commodity Price Risk While we are exposed to commodity price risk, we attempt to pass through significant changes in component and raw material costs to our customers based on the contractual terms of our arrangements. In limited situations, we may not be fully compensated for such changes in costs. 36 Table of Contents
As of December 31, 2024, we have no outstanding foreign currency hedging arrangements. Commodity Price Risk While we are exposed to commodity price risk, we attempt to pass through significant changes in component and raw material costs to our customers based on the contractual terms of our arrangements.
We manage our exposure to these market risks through our regular operating and financing activities and, when appropriate, through the use of derivative financial instruments. Interest Rate Risk As of December 31, 2023, $1,119 million of our $1,419 million outstanding debt, excluding unamortized deferred financing costs, and carried variable interest rates.
We manage our exposure to these market risks through our regular operating and financing activities and, when appropriate, through the use of derivative financial instruments.
These exposures may impact total assets, liabilities, future earnings and/or operating cash flows. Our exposure to market risk for changes in foreign currency exchange rates arises from transactions arising from international trade, foreign currency denominated monetary assets and liabilities, and international financing activities between subsidiaries.
Our exposure to market risk for changes in foreign currency exchange rates emerges from transactions arising from international trade, foreign currency denominated monetary assets and liabilities, and international financing activities between subsidiaries. We rely primarily on natural offsets to address our exposures and may supplement this approach from time to time by entering into forward and option hedging contracts.
Foreign Currency Exchange Rate Risk We are exposed to market risks from changes in currency exchange rates. While we primarily transact with customers and suppliers in the U.S. dollar, we also transact in foreign currencies, primarily including the Euro, Mexican Peso, British Pound, Canadian Dollar, Indian Rupee, and Polish Zloty.
While we primarily transact with customers and suppliers in the U.S. dollar, we also transact in foreign currencies, primarily including the British Pound, Canadian Dollar, Euro, Mexican Peso, Indian Rupee, and Czech Koruna. These exposures may impact total assets, liabilities, future earnings and/or operating cash flows.
The fair market value of our fixed-rate financial instruments and Swap Agreements are sensitive to changes in interest rates. As of December 31, 2023, an increase in interest rate by 100 basis points would have an approximate $6 million impact on our annual interest expense.
In connection with our acquisition of Snap One in 2024, we assumed an interest rate cap agreement with a current notional of $344 million and a strike rate of 4.79%. As of December 31, 2024, an increase in interest rates by 100 bps would have an approximately $2 million impact on our annual interest expense.
Removed
In March 2021, we entered into eight interest rate swap agreements (“Swap Agreements”) with several financial institutions for a combined notional value of $560 million. The Swap Agreements were entered into to reduce the consolidated interest rate risk associated with variable rate, long-term debt.
Added
For more information on the Swap Agreements and assumed interest rate cap, refer to Note 12 . Derivative Financial Instruments to Consolidated Financial Statements. Foreign Currency Exchange Rate Risk We are exposed to market risks from changes in currency exchange rates.
Removed
In March and April 2023, we modified two of the eight Swap Agreements, each with a notional value of $70 million that matures in May 2024 as follows: (i) the original interest rate swap agreements were cancelled for no termination payment and (ii) we simultaneously entered into new pay-fixed interest rate swap agreements with a notional amount of $70 million each, effectively blending the asset positions of the original interest rate swap agreements into new pay-fixed interest rate swap agreements and extending the term of our hedged positions to February 2027.
Added
In limited situations, we may not be fully compensated for such changes in costs. 36 Table of Contents
Removed
In connection with these transactions, no cash was exchanged between us and the counterparty. On June 23, 2023, we amended the Swap Agreements to transition from a hedge of LIBOR-based cash flows to a hedge of SOFR-based cash flows.
Removed
We rely primarily on natural offsets to address our exposures and may supplement this approach from time to time by entering into forward and option hedging contracts. As of December 31, 2023, we have no outstanding foreign currency hedging arrangements.

Other REZI 10-K year-over-year comparisons