#United States #Honeywell #Scottsdale #Resideo Technologies #ADI Global

Resideo Technologies Accelerates Payment Agreement with Honeywell

Resideo Technologies, Inc., a prominent player in the manufacturing and development of technology-driven sensing and control solutions, has announced a landmark agreement with Honeywell International Inc. This agreement aims to accelerate and clear all future monetary obligations tied to their 2018 Indemnification and Reimbursement Agreement established during Resideo’s spin-off from Honeywell.

Overview of the Agreement

Under this new agreement, Resideo will make a significant one-time cash payment of $1.59 billion to Honeywell in the third quarter of 2025. This move will not only fulfill Resideo's indemnification obligations but will also terminate the existing agreement that required annual payments of up to $140 million until the end of 2043. This strategic move is expected to enhance Resideo's earnings per share and free cash flow immediately following the deal’s closure. Furthermore, the dissolution of the indemnification agreement removes the previously binding affirmative and negative covenants, simplifying Resideo's financial obligations.

Jay Geldmacher, President and CEO of Resideo, expressed optimism about this transformative agreement, highlighting its potential to positively impact Resideo's profitability and cash flow. He stated, “This agreement with Honeywell marks a significant turning point for Resideo and exemplifies the constructive relationship we have forged with Honeywell.” The agreement underscores Resideo's focus on strengthening its strategic and financial flexibility, making it easier to attract investors.

Funding and Future Prospects

To facilitate this substantial payment, Resideo plans to utilize a mix of around $400 million in cash reserves and new senior secured debt financing, which has already been committed by financial institutions like J.P. Morgan and Wells Fargo. This strategic funding approach is crucial for Resideo as it looks to bolster its financial foundation and pursue growth opportunities without the weight of ongoing payments to Honeywell.

In addition to this agreement, Resideo has announced plans to separate its ADI Global Distribution business by executing a tax-free spin-off to Resideo shareholders. This separation is poised to create two distinct public companies, thereby allowing each entity to focus on its core competencies and unique market strategies.

Updated Financial Expectations

Resideo has also set expectations for its second quarter financial results of 2025, projecting net revenue between $1.805 billion to $1.855 billion and a Non-GAAP Adjusted EBITDA of $175 million to $195 million. With a total cash reserve anticipated to reach $750 million by the end of June 2025, analysts anticipate that Resideo will surpass its previously set financial outlook.

Upcoming Financial Communication

Details surrounding these developments will be shared during a conference call with investors on July 30, 2025. The audio of this call will be available through the investor relations section of Resideo’s website, where supporting materials will also be accessible.

Conclusion

With this agreement, Resideo is poised to enhance its financial stature and operational clarity. The strategic elimination of future payment obligations marks a bold move towards increased profitability and investor appeal, setting the stage for a promising future as it seeks to optimize the synergies between its product lines. With its established reputation in home safety and control solutions, Resideo is gearing up for a transformative phase that could redefine its role in the technological landscape.