Shareholder Investigation of Resideo Technologies Inc.

Resideo (REZI) Accused of Overstating its Financials

According to the complaint for violations of the Securities and Exchange Act of 1934 between October 29, 2018 and October 22, 2019, Resideo (REZI), a spin-off of Honeyewell International Inc., began trading on the NYSE on October 29, 2018, opening at $28 per share. During the class period, Resideo repeatedly assured investors that it was poised to meet its 2018 guidance at the high end of its forecasted range and for 2019 would achieve 4%+ organic growth and ~13% adjusted EBITDA margin. As late as August 8, 2019, Resideo stated, “… our Q2 was strong, keeping us on track to hit our previously provided guidance for 2019.” The complaint contends that these representations were materially false and misleading because defendants failed to disclose the true extent of the negative operational effects of the spin-off, which negatively affected the company’s product sales, supply chain, and gross margins and called into question Resideo’s ability to make its FY19 guidance as claimed. The truth was revealed on October 22, 2019, when Resideo issued preliminary financial results for Q3 2019, announcing it had missed revenue and earnings targets and was lowering its recently reaffirmed outlook for FY19 by $80 million. On this news, Resideo’s stock declined more than 40% to close at $9.50 per share on October 23, 2019, and has yet to recover.

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