Investigation of Resideo Technologies, Inc.

Resideo Technologies, Inc. (REZI) Significantly Misses Earnings Estimates

Leading up to its spin-off, Resideo touted its “bright future” and strong competitive position.  Additionally, Honeywell touted that following the spin-off Resideo would be the market leader in home heating, air conditioning controls, and security markets. In connection with the Spin-Off, over 65 million Resideo shares were sold for over $1.4 billion. Despite auspicious projections, in March 2019, Resideo significantly reduced its 2019 financial guidance and revealed a 20% decrease in profit in its Product & Solutions segment. The disappointing financials continued into August 2019 when Resideo revealed a 36% drop in its EBITDA, citing “margin pressures due to product mix headwinds” among other things. Finally, on October 22, 2019, Resideo surprised investors by announcing preliminary financial results for the third quarter that revealed earnings that significantly missed estimates as well as the replacement of its CFO. On this news, the price of Resideo stock fell $5.73 per share, a decline of over 37%. Only a few weeks later, on December 2, 2019, Resideo announced that its CEO would be resigning from his position. The stock has yet to recover.

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