Cover
Cover - shares | 3 Months Ended | |
Apr. 01, 2023 | Apr. 21, 2023 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Apr. 01, 2023 | |
Document Transition Report | false | |
Entity File Number | 001-38635 | |
Entity Registrant Name | Resideo Technologies, Inc. | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 82-5318796 | |
Entity Address, Address Line One | 16100 N. 71st Street | |
Entity Address, Address Line Two | Suite 550 | |
Entity Address, City or Town | Scottsdale | |
Entity Address, State or Province | AZ | |
Entity Address, Postal Zip Code | 85254 | |
City Area Code | 480 | |
Local Phone Number | 573-5340 | |
Title of 12(b) Security | Common Stock, par value $0.001 per share | |
Trading Symbol | REZI | |
Security Exchange Name | NYSE | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 147,114,150 | |
Amendment Flag | false | |
Document Fiscal Period Focus | Q1 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2023 | |
Entity Central Index Key | 0001740332 |
CONSOLIDATED BALANCE SHEETS (UN
CONSOLIDATED BALANCE SHEETS (UNAUDITED) - USD ($) $ in Millions | Apr. 01, 2023 | Dec. 31, 2022 |
Current assets: | ||
Cash and cash equivalents | $ 292 | $ 326 |
Accounts receivable, net | 985 | 1,002 |
Inventories, net | 1,008 | 975 |
Other current assets | 210 | 199 |
Total current assets | 2,495 | 2,502 |
Property, plant and equipment, net | 379 | 366 |
Goodwill | 2,736 | 2,724 |
Total intangible assets | 471 | 475 |
Other assets | 318 | 320 |
Total assets | 6,399 | 6,387 |
Current liabilities: | ||
Accounts payable | 894 | 894 |
Current portion of long-term debt | 12 | 12 |
Accrued liabilities | 563 | 640 |
Total current liabilities | 1,469 | 1,546 |
Long-term debt | 1,402 | 1,404 |
Obligations payable under Indemnification Agreements | 584 | 580 |
Other liabilities | 340 | 328 |
Total liabilities | 3,795 | 3,858 |
COMMITMENTS AND CONTINGENCIES | ||
Stockholders’ equity | ||
Common stock, $0.001 par value: 700 shares authorized, 150 and 147 shares issued and outstanding at April 1, 2023 and 148 and 146 shares issued and outstanding at December 31, 2022, respectively | 0 | 0 |
Additional paid-in capital | 2,191 | 2,176 |
Retained earnings | 657 | 600 |
Accumulated other comprehensive loss, net | (200) | (212) |
Treasury stock at cost | (44) | (35) |
Total stockholders’ equity | 2,604 | 2,529 |
Total liabilities and stockholders’ equity | $ 6,399 | $ 6,387 |
CONSOLIDATED BALANCE SHEETS (_2
CONSOLIDATED BALANCE SHEETS (UNAUDITED) (Parenthetical) - $ / shares | Apr. 01, 2023 | Dec. 31, 2022 |
Statement of Financial Position [Abstract] | ||
Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Common stock, shares authorized (in shares) | 700,000,000 | 700,000,000 |
Common stock, shares issued (in shares) | 150,000,000 | 148,000,000 |
Common stock, shares outstanding (in shares) | 147,000,000 | 146,000,000 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) - USD ($) shares in Millions, $ in Millions | 3 Months Ended | |
Apr. 01, 2023 | Apr. 02, 2022 | |
Income Statement [Abstract] | ||
Net revenue | $ 1,549 | $ 1,506 |
Cost of goods sold | 1,129 | 1,068 |
Gross profit | 420 | 438 |
Research and development expenses | 27 | 24 |
Selling, general and administrative expenses | 244 | 236 |
Intangible asset amortization | 9 | 6 |
Restructuring and impairment expenses | 2 | 0 |
Income from operations | 138 | 172 |
Other expenses, net | 39 | 40 |
Interest expense, net | 18 | 11 |
Income before taxes | 81 | 121 |
Provision for income taxes | 24 | 34 |
Net income | $ 57 | $ 87 |
Earnings Per Share | ||
Basic (in dollars per share) | $ 0.39 | $ 0.60 |
Diluted (in dollars per share) | $ 0.38 | $ 0.58 |
Weighted average number of shares outstanding: | ||
Basic (in dollars per share) | 147 | 145 |
Diluted (in dollars per share) | 149 | 149 |
CONSOLIDATED STATEMENTS OF COMP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED) - USD ($) $ in Millions | 3 Months Ended | |
Apr. 01, 2023 | Apr. 02, 2022 | |
Statement of Comprehensive Income [Abstract] | ||
Net income | $ 57 | $ 87 |
Other comprehensive income, net of tax: | ||
Foreign exchange translation gain (loss) | 16 | (9) |
Pension liability adjustments | 3 | 0 |
Changes in fair value of effective cash flow hedges | (7) | 23 |
Total other comprehensive income, net of tax | 12 | 14 |
Comprehensive income | $ 69 | $ 101 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) - USD ($) $ in Millions | 3 Months Ended | |
Apr. 01, 2023 | Apr. 02, 2022 | |
Cash Flows From Operating Activities: | ||
Net income | $ 57 | $ 87 |
Adjustments to reconcile net income to net cash used in operating activities: | ||
Depreciation and amortization | 24 | 20 |
Stock-based compensation expense | 12 | 11 |
Other, net | 2 | 2 |
Changes in assets and liabilities, net of acquired companies: | ||
Accounts receivable, net | 23 | (61) |
Inventories, net | (27) | (66) |
Other current assets | (8) | (12) |
Accounts payable | (12) | 17 |
Accrued liabilities | (86) | (66) |
Other, net | 11 | 9 |
Net cash used in operating activities | (4) | (59) |
Cash Flows From Investing Activities: | ||
Capital expenditures | (20) | (19) |
Acquisitions, net of cash acquired | (6) | (633) |
Other investing activities, net | 0 | (13) |
Net cash used in investing activities | (26) | (665) |
Cash Flows From Financing Activities: | ||
Proceeds from issuance of A&R Term B Facility | 0 | 200 |
Repayments of long-term debt | (3) | (3) |
Payment of debt facility issuance and modification costs | 0 | (4) |
Other financing activities, net | (6) | (4) |
Net cash (used in) provided by financing activities | (9) | 189 |
Effect of foreign exchange rate changes on cash, cash equivalents and restricted cash | 6 | 0 |
Net decrease in cash, cash equivalents and restricted cash | (33) | (535) |
Cash, cash equivalents and restricted cash at beginning of period | 329 | 779 |
Cash, cash equivalents and restricted cash at end of period | 296 | 244 |
Supplemental Cash Flow Information: | ||
Interest paid | 27 | 14 |
Taxes paid, net of refunds | 19 | 12 |
Capital expenditures in accounts payable | $ 15 | $ 13 |
CONSOLIDATED STATEMENTS OF STOC
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (UNAUDITED) - USD ($) $ in Millions | Total | Common Stock | Additional Paid-In Capital | Retained Earnings | Accumulated Other Comprehensive Loss | Treasury Stock |
Shares outstanding, beginning (in shares) at Dec. 31, 2021 | 144,808,000 | |||||
Beginning balance at Dec. 31, 2021 | $ 2,252 | $ 2,121 | $ 317 | $ (165) | $ (21) | |
Treasury stock, beginning (in shares) at Dec. 31, 2021 | 1,440,000 | |||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Net income | 87 | 87 | ||||
Other comprehensive loss, net of tax | 14 | 14 | ||||
Common stock issuance, net of shares withheld for taxes (in shares) | 564,000 | 256,000 | ||||
Common stock issuance, net of shares withheld for taxes | (3) | 3 | $ (6) | |||
Stock-based compensation expense | 11 | 11 | ||||
Shares outstanding, ending (in shares) at Apr. 02, 2022 | 145,372,000 | |||||
Treasury stock, ending (in shares) at Apr. 02, 2022 | 1,696,000 | |||||
Ending balance at Apr. 02, 2022 | 2,361 | 2,135 | 404 | (151) | $ (27) | |
Shares outstanding, beginning (in shares) at Dec. 31, 2022 | 146,222,000 | |||||
Beginning balance at Dec. 31, 2022 | 2,529 | 2,176 | 600 | (212) | $ (35) | |
Treasury stock, beginning (in shares) at Dec. 31, 2022 | 2,050,000 | |||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Net income | 57 | 57 | ||||
Other comprehensive loss, net of tax | 12 | 12 | ||||
Common stock issuance, net of shares withheld for taxes (in shares) | 862,000 | 497,000 | ||||
Common stock issuance, net of shares withheld for taxes | (6) | 3 | $ (9) | |||
Stock-based compensation expense | 12 | 12 | ||||
Shares outstanding, ending (in shares) at Apr. 01, 2023 | 147,084,000 | |||||
Treasury stock, ending (in shares) at Apr. 01, 2023 | 2,547,000 | |||||
Ending balance at Apr. 01, 2023 | $ 2,604 | $ 2,191 | $ 657 | $ (200) | $ (44) |
Nature of Operations and Basis
Nature of Operations and Basis of Presentation | 3 Months Ended |
Apr. 01, 2023 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Nature of Operations and Basis of Presentation | Nature of Operations and Basis of Presentation Nature of Operations Resideo Technologies, Inc. (“Resideo”, the “Company”, “we”, “us”, or “our”) is a leading manufacturer and developer of technology-driven products that provide critical comfort, energy, smoke and carbon monoxide detection home safety products, and security solutions to homes globally. We are also a leading wholesale distributor of low-voltage security products including access control, fire detection, fire suppression, security, and video products, and participate significantly in the broader related markets of audio, communications, data communications, networking, power, ProAV, smart home, and wire and cable. Our global footprint serves both commercial and residential end markets. Basis of Consolidation and Reporting The accompanying Unaudited Consolidated Financial Statements have been prepared in accordance with United States (“U.S.”) generally accepted accounting principles (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, the Unaudited Consolidated Financial Statements do not include all of the information and notes required by GAAP for complete financial statements. In the opinion of management, the Unaudited Consolidated Financial Statements included herein contain all adjustments, which consist of normal recurring adjustments, necessary to fairly present our financial position, results of operations and cash flows for the periods indicated. Operating results for the period from January 1, 2023 through April 1, 2023 are not necessarily indicative of the results that may be expected for the fiscal year ending December 31, 2023. For additional information, refer to the consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2022 (the “2022 Annual Report on Form 10-K”), filed with the United States Securities and Exchange Commission (the “SEC”) on February 21, 2023. Reporting Period |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 3 Months Ended |
Apr. 01, 2023 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | Summary of Significant Accounting Policies Our significant accounting policies are detailed in Note 2. Summary of Significant Accounting Policies of the Annual Report on Form 10-K for the year ended December 31, 2022. There have been no significant changes to these policies that have had a material impact on the Unaudited Consolidated Financial Statements and accompanying notes for three months ended April 1, 2023. We consider the applicability and impact of all recent accounting standards updates (“ASUs”) issued by the Financial Accounting Standards Board (“FASB”) and disclose only those that may have a material impact. Adopted Accounting Pronouncements In September 2022, the FASB issued ASU 2022-04, Liabilities-Supplier Finance Programs (Topic 405): Disclosure of Supplier Finance Program Obligations. This guidance enhances transparency of an entity’s use of supplier finance programs by requiring quarterly and annual disclosures about the key terms of the program, outstanding confirmed amounts as of the end of the period, a rollforward of such amounts annually, and a description of where in the financial statements outstanding amounts are presented. The guidance is effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years, except for the amendment on rollforward information, which is effective for fiscal years beginning after December 15, 2023. Effective January 1, 2023, we completed our assessment and adopted ASU 2022-04 concluding that it is not applicable to Resideo at this time as we currently have no supplier finance programs in place. Recent Accounting Pronouncements In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting, and subsequent amendment to the initial guidance: ASU 2021-01, Reference Rate Reform (Topic 848): Scope (collectively, “Topic 848”). Topic 848 provides optional expedients and exceptions for applying GAAP to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. The amendments apply only to contracts, hedging relationships, and other transactions that reference London Interbank Offered Rate (“LIBOR”) or another reference rate expected to be discontinued because of reference rate reform. In December 2022, the FASB issued ASU 2022-06, Reference Rate Reform (Topic 848): Deferral of the Sunset Date of Topic 848 . ASU 2022-06 defers the sunset date of Topic 848 from December 31, 2022 to December 31, 2024. This guidance may be applied prospectively to contract modifications made and hedging relationships entered into or evaluated on or before December 31, 2024. The A&R Senior Credit Facilities include a transition clause to a new reference rate in the event LIBOR is discontinued and the Swap Agreements will be amended to match the new reference rate. We have evaluated the potential impact of adopting this standard and do not expect it to have a material impact on our consolidated financial statements and related disclosures . Refer to Note 12. Long-Term Debt and Note 13. Derivative Financial Instruments |
Acquisitions
Acquisitions | 3 Months Ended |
Apr. 01, 2023 | |
Business Combination and Asset Acquisition [Abstract] | |
Acquisitions | Acquisitions Pro forma results of operations for the following acquisitions have not been presented, as the impact on our consolidated financial results was not material. 2023 Acquisitions BTX Technologies, Inc. —On January 23, 2023, we acquired 100% of the outstanding equity of BTX Technologies, Inc., (“BTX”) a leading distributor of professional audio, video, data communications, and broadcast equipment. We report BTX Technologies, Inc.’s results within the ADI Global Distribution segment. We have made a preliminary purchase price allocation that is subject to change as additional information is obtained. 2022 Acquisitions Teknique Limited —On December 23, 2022, we acquired 100% of the outstanding equity of Teknique Limited, a developer and producer of edge-based, artificial intelligence-enabled video camera solutions. We report Teknique Limited’s results within the Products and Solutions segment. Purchase consideration includes cash and a note payable with the former owner. We have made a preliminary purchase price allocation that is subject to change as additional information is obtained. Electronic Custom Distributors, Inc. —On July 5, 2022, we acquired 100% of the outstanding equity of Electronic Custom Distributors, Inc., a regional distributor of residential audio, video, automation, security, wire and telecommunication products. We report Electronic Customer Distributors, Inc.’s results within the ADI Global Distribution segment. We completed the accounting for the acquisition during the first quarter of 2023, which did not result in any adjustments. First Alert —On March 31, 2022, we acquired 100% of the outstanding equity of First Alert, Inc., a leading provider of home safety products. We report First Alert’s results within the Products and Solutions segment. We completed the accounting for the acquisition during the first quarter of 2023, which did not result in any adjustments. |
Segment Financial Data
Segment Financial Data | 3 Months Ended |
Apr. 01, 2023 | |
Segment Reporting [Abstract] | |
Segment Financial Data | Segment Financial Data We monitor our business operations through our two operating segments: Products and Solutions and ADI Global Distribution. These operating segments follow the same accounting policies used for the financial statements. We evaluate a segment’s performance on a GAAP basis, primarily operating income before corporate expenses. Corporate expenses include expenses related to the corporate office as well as supporting the operating segments, but do not relate directly to revenue-generating activities primarily including unallocated stock-based compensation expenses, unallocated pension expense, restructuring expenses, acquisition-related costs, and other expenses related to executive, legal, finance, tax, treasury, human resources, IT, strategy, communications, and corporate travel expenses. Additional unallocated amounts primarily include non-operating items such as Reimbursement Agreement expense, interest income, interest expense, and other income (expense). The Reimbursement Agreement is further described in Note 16. Commitments and Contingencies to the Unaudited Consolidated Financial Statements. Segment information is consistent with how management reviews the businesses, makes investing and resource allocation decisions, and assesses operating performance. The following table represents summary financial data attributable to the segments: Three Months Ended (in millions) April 1, 2023 April 2, 2022 Net revenue Products and Solutions $ 658 $ 619 ADI Global Distribution 891 887 Total net revenue $ 1,549 $ 1,506 Three Months Ended (in millions) April 1, 2023 April 2, 2022 Income from operations Products and Solutions $ 117 $ 153 ADI Global Distribution 72 80 Corporate (51) (61) Total income from operations $ 138 $ 172 The Company’s Chief Executive Officer, its Chief Operating Decision Maker, does not use segment assets information to allocate resources or to assess performance of the segments and therefore, total segment assets have not been reported. |
Revenue Recognition
Revenue Recognition | 3 Months Ended |
Apr. 01, 2023 | |
Revenue from Contract with Customer [Abstract] | |
Revenue Recognition | Revenue RecognitionWe have two operating segments, Products and Solutions and ADI Global Distribution. Disaggregated revenue information for Products and Solutions is presented by product grouping, while ADI Global Distribution is presented by region. The following table presents revenue by business line and geographic location, as we believe this presentation best depicts how the nature, amount, timing, and uncertainty of net revenue and cash flows are affected by economic factors: Three Months Ended (in millions) April 1, 2023 April 2, 2022 Products and Solutions Air $ 211 $ 214 Safety and Security 228 155 Energy 136 159 Water 83 91 Total Products and Solutions 658 619 ADI Global Distribution U.S. and Canada 768 752 EMEA (1) 123 126 APAC (2) — 9 Total ADI Global Distribution 891 887 Total net revenue $ 1,549 $ 1,506 (1) EMEA represents Europe, the Middle East and Africa. (2) APAC represents Asia and Pacific countries. |
Restructuring
Restructuring | 3 Months Ended |
Apr. 01, 2023 | |
Restructuring and Related Activities [Abstract] | |
Restructuring | Restructuring During 2022, we executed certain restructuring programs to lower costs, increase gross and operating margins and position us for growth (“2022 Plan”). We expect to fully execute our restructuring initiatives and programs over the next 12-24 months, and we may incur future additional restructuring expenses associated with these plans. We are unable at this time to make a good faith determination of cost estimates, or ranges of cost estimates, associated with future phases of the plans or the total costs we may incur in connection with these plans. Refer to Note 6. Restructuring Expenses in our 2022 Annual Report on Form 10-K for further discussion of our restructuring programs. The following table summarizes the status of our restructuring expenses included within accrued liabilities on the Unaudited Consolidated Balance Sheets. (in millions) April 1, 2023 December 31, 2022 Beginning of period $ 27 $ 9 Charges 2 26 Usage (1) (4) (5) Other (2) (3) End of period $ 23 $ 27 (1) Usage primarily relates to cash payments associated with employee termination costs. |
Pension Plans
Pension Plans | 3 Months Ended |
Apr. 01, 2023 | |
Retirement Benefits [Abstract] | |
Pension Plans | Pension PlansDuring the three months ended April 1, 2023, we recognized a pension settlement loss of $3 million related to our U.S qualified defined benefit pension plan. The non-cash pension settlement loss resulted from a voluntary lump sum window offering and the purchase of a group annuity contract that transferred a portion of the assets and liabilities to an insurance company. The corresponding remeasurement resulted in a decrease in both the U.S. qualified defined benefit pension plan assets and liabilities of $60 million. |
Stock-Based Compensation Plans
Stock-Based Compensation Plans | 3 Months Ended |
Apr. 01, 2023 | |
Share-Based Payment Arrangement [Abstract] | |
Stock-Based Compensation Plans | Stock-Based Compensation Plans The Stock Incentive Plan, which consists of the Amended and Restated 2018 Stock Incentive Plan of Resideo Technologies, Inc. and its Affiliates and the 2018 Stock Incentive Plan for Non-Employee Directors of Resideo Technologies, Inc., provides for the grant of stock options, stock appreciation rights, restricted stock units, restricted stock, and other stock-based awards. A summary of awards granted as part of our annual long-term compensation follows: Three Months Ended April 1, 2023 Three Months Ended April 2, 2022 Number of Stock Units Granted Weighted average grant date fair value per share Number of Stock Units Granted Weighted average grant date fair value per share Performance Stock Units (“PSUs”) 553,071 $ 29.89 672,453 $ 36.11 Restricted Stock Units (“RSUs”) 1,466,307 $ 19.03 808,919 $ 24.87 Annual awards to our key employees generally have a three-year service or performance period. Awards to our non-employee directors have a one-year service period. The fair value is determined at the grant date. PSUs granted in 2023 were issued with the shares awarded per unit being based on the difference in performance between the total stockholders’ return of our common stock against that of the S&P 600 Industrials Index. PSUs granted prior to 2023 were issued with the shares awarded per unit being based on the difference in performance between the total stockholders’ return of our common stock against that of the S&P 400 Industrials Index. Time-based RSUs issued in 2023 are subject to straight-line vesting over the service period, while those issued prior to 2023 are subject to graded vesting over the service period. Stock-based compensation expense, net of tax was $12 million and $11 million for the three months ended April 1, 2023 and April 2, 2022, respectively. |
Inventories, net
Inventories, net | 3 Months Ended |
Apr. 01, 2023 | |
Inventory Disclosure [Abstract] | |
Inventories, net | Inventories, net The following table summarizes the details of our inventories, net: (in millions) April 1, 2023 December 31, 2022 Raw materials $ 271 $ 251 Work in process 24 25 Finished products 713 699 Total inventories, net $ 1,008 $ 975 |
Goodwill and Intangible Assets,
Goodwill and Intangible Assets, net | 3 Months Ended |
Apr. 01, 2023 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill and Intangible Assets, net | Goodwill and Intangible Assets, net Our goodwill balance and changes in carrying value by segment are as follows: (in millions) Products and Solutions ADI Global Distribution Total Balance at December 31, 2022 $ 2,072 $ 652 $ 2,724 Acquisitions — 4 4 Impact of foreign currency translation 6 2 8 Balance at April 1, 2023 $ 2,078 $ 658 $ 2,736 The following table summarizes the net carrying amount of intangible assets: (in millions) April 1, 2023 December 31, 2022 Intangible assets subject to amortization $ 291 $ 295 Indefinite-lived intangible assets 180 180 Total intangible assets $ 471 $ 475 Intangible assets subject to amortization consisted of the following: April 1, 2023 December 31, 2022 (in millions) Gross Accumulated Net Gross Accumulated Net Patents and technology $ 65 $ (29) $ 36 $ 65 $ (28) $ 37 Customer relationships 315 (123) 192 313 (117) 196 Trademarks 14 (9) 5 14 (8) 6 Software 180 (122) 58 175 (119) 56 Total intangible assets $ 574 $ (283) $ 291 $ 567 $ (272) $ 295 |
Leases
Leases | 3 Months Ended |
Apr. 01, 2023 | |
Leases [Abstract] | |
Leases | Leases Total operating lease costs are as follows: Three Months Ended (in millions) April 1, 2023 April 2, 2022 Operating lease cost: Cost of goods sold $ 5 $ 3 Selling, general and administrative expenses 14 12 Total operating lease costs $ 19 $ 15 Total operating lease costs include variable lease costs of $6 million and $4 million for the three months ended April 1, 2023 and April 2, 2022, respectively. The following table summarizes the carrying amounts of our operating lease assets and liabilities: (in millions) Financial Statement Line Item April 1, 2023 December 31, 2022 Operating lease assets Other assets $ 192 $ 191 Operating lease liabilities - current Accrued liabilities $ 38 $ 37 Operating lease liabilities - non-current Other liabilities $ 166 $ 166 Supplemental cash flow information related to operating leases follows: Three Months Ended (in millions) April 1, 2023 April 2, 2022 Cash paid for operating lease liabilities $ 9 $ 8 Non-cash activities: operating lease assets obtained in exchange for new operating lease liabilities $ 7 $ 32 |
Long-Term Debt
Long-Term Debt | 3 Months Ended |
Apr. 01, 2023 | |
Debt Disclosure [Abstract] | |
Long-Term Debt | Long-Term Debt Long-term debt is comprised of the following: (in millions) April 1, 2023 December 31, 2022 4.000% Senior Notes due 2029 $ 300 $ 300 Variable rate A&R Term B Facility 1,128 1,131 Gross debt 1,428 1,431 Less: current portion of long-term debt (12) (12) Less: unamortized deferred financing costs (14) (15) Total long-term debt $ 1,402 $ 1,404 A&R Senior Credit Facilities 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”). The A&R Credit Agreement provides for an (i) initial seven - year senior secured Term B loan facility in an aggregate principal amount of $950 million, which was later amended to add $200 million in additional term loans (the “A&R Term B Facility”) and (ii) a five - year senior secured revolving credit facility in an aggregate principal amount of $500 million (the “A&R Revolving Credit Facility” and, together with the A&R Term B Facility, the “A&R Senior Credit Facilities”). At April 1, 2023 and December 31, 2022, the weighted average interest rate for the A&R Term B Facility was 7.13% and 6.78%, respectively, and there were no borrowings and no letters of credit issued under the A&R Revolving Credit Facility. As of April 1, 2023, we were in compliance with all covenants related to the A&R Senior Credit Facilities and Senior Notes due 2029. Senior Notes due 2029 On August 26, 2021, we issued $300 million in principal amount of 4.00% Senior Notes due 2029 (the “Senior Notes due 2029”). The Senior Notes due 2029 are senior unsecured obligations guaranteed by the Company’s existing and future domestic subsidiaries and rank equally with all senior unsecured debt and senior to all subordinated debt. We entered into certain interest rate swap agreements in 2021 and 2023 to effectively convert a portion of our variable-rate debt to fixed rate debt. Refer to Note 13. Derivative Financial Instruments for further discussion. Refer to Note 11. Long-Term Debt in our 2022 Annual Report on Form 10-K for further discussion. |
Derivative Financial Instrument
Derivative Financial Instruments | 3 Months Ended |
Apr. 01, 2023 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Derivative Financial Instruments | Derivative Financial Instruments 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. Under the Swap Agreements, we convert a portion of our variable interest rate obligations based on three-month LIBOR with a minimum rate of 0.50% per annum to a base fixed weighted average rate of 0.9289% over the remaining terms. We designated the Swap Agreements as cash flow hedges of the variability in expected cash outflows for interest payments. The Swap Agreements are adjusted to fair value on a quarterly basis. The fair value of the swap is presented within the Unaudited Consolidated Balance Sheets, and we recognize any changes in the fair value as an adjustment of accumulated other comprehensive loss within equity to the extent the swap is effective. As interest expense is accrued on the debt obligation, amounts in accumulated other comprehensive loss related to the Swap Agreements are reclassified into income resulting in a net interest expense on the hedged amount of the underlying debt obligation equal to the effective yield of the fixed rate of the swap. On March 31, 2023, we modified one of the eight Swap Agreements, with a notional value of $70 million that matures in May 2024 as follows:(i) the original swap was cancelled for no termination payment and (ii) we simultaneously entered into a new pay-fixed interest rate swap with a notional amount of $70 million, effectively blending the asset position of the original interest rate swap into a new swap and extending the term of our hedged position to February 2027. In connection with this transaction, no cash was exchanged between us and the counterparty. The new pay-fixed interest rate swap qualifies as a hybrid instrument in accordance with Accounting Standards Codification 815, Derivatives and Hedging , consisting of a financing component and an embedded at-market derivative that was designated as a cash flow hedge. As a result, the gain position remaining in accumulated other comprehensive loss for the modified Swap Agreements as of April 1, 2023 of $4 million is being amortized as a reduction to interest expense over the effective period of the original swap agreement. The financing component is accounted for at amortized cost over the life of the swap while the embedded at-market derivative is accounted for at fair value. The following table summarizes the fair value and presentation of derivative instruments in the Unaudited Consolidated Balance Sheets as well as the changes in fair value recorded in accumulated other comprehensive loss: Fair Value of Derivative Assets (in millions) Financial Statement Line Item April 1, 2023 December 31, 2022 Derivatives designated as hedging instruments: Interest rate swaps Other current assets $ 21 $ 23 Interest rate swaps Other assets 17 22 Total derivative assets designated as hedging instruments $ 38 $ 45 Unrealized gain Accumulated other comprehensive loss $ 35 $ 42 The following table summarizes the effect of derivative instruments designated as cash flow hedges in other comprehensive income and the Unaudited Consolidated Statements of Operations: (in millions) Financial Statement Line Item April 1, 2023 April 2, 2022 Gains recorded in accumulated other comprehensive loss, beginning of period: $ 42 $ 6 Current period (loss) gain recognized in other comprehensive income (7) 23 Gains recorded in accumulated other comprehensive loss, end of period $ 35 $ 29 |
Fair Value
Fair Value | 3 Months Ended |
Apr. 01, 2023 | |
Fair Value Disclosures [Abstract] | |
Fair Value | Fair Value The estimated fair value of our financial instruments held, and when applicable, issued to finance our operations, is summarized below. Certain estimates and judgments were required to develop the fair value amounts. The fair value amounts shown below are not necessarily indicative of the amounts that we would realize upon disposition nor do they indicate our intent or ability to dispose of the financial instrument. Assets and liabilities that are carried at fair value are required to be classified and disclosed in one of the following three categories: Level 1—quoted market prices in active markets for identical assets and liabilities Level 2—observable market-based inputs or unobservable inputs that are corroborated by market data Level 3—unobservable inputs that are not corroborated by market data Financial and non-financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. There were no changes in the methodologies used in our valuation practices as of April 1, 2023. The fair values of long-term debt instruments were determined using quoted market prices in inactive markets or discounted cash flows based upon current observable market interest rates and therefore were classified as Level 2 measurements in the fair value hierarchy. The following table provides a summary of the carrying amount and fair value of outstanding debt: April 1, 2023 December 31, 2022 (in millions) Carrying Value Fair Value Carrying Value Fair Value Debt: 4.000% Senior Notes due 2029 $ 300 $ 253 $ 300 $ 242 Variable rate A&R Term B Facility 1,128 1,124 1,131 1,125 Total debt $ 1,428 $ 1,377 $ 1,431 $ 1,367 Refer to Note 12. Long-Term Debt to the Unaudited Consolidated Financial Statements. Interest Rate Risk— We have exposure to movements in interest rates associated with cash and borrowings. We may have and may in the future enter into various interest rate protection agreements in order to limit the impact of movements in interest rates. The fair values of interest rate swaps have been determined based on market value equivalents at the balance sheet date, taking into account the current interest rate environment and therefore, were classified as Level 2 measurements in the fair value hierarchy. The following table provides a summary of the carrying amount and fair value of our interest rate swaps: April 1, 2023 December 31, 2022 (in millions) Carrying Value Fair Value Carrying Value Fair Value Assets: Interest rate swaps $ 38 $ 38 $ 45 $ 45 Refer to Note 13. Derivative Financial Instruments to the Unaudited Consolidated Financial Statements. |
Accrued Liabilities
Accrued Liabilities | 3 Months Ended |
Apr. 01, 2023 | |
Payables and Accruals [Abstract] | |
Accrued Liabilities | Accrued Liabilities Accrued liabilities consist of the following: (in millions) April 1, 2023 December 31, 2022 Obligations payable under Indemnification Agreements $ 140 $ 140 Compensation, benefit and other employee-related 79 108 Customer rebate reserve 75 98 Product warranties 24 40 Current operating lease liability 38 37 Taxes payable 46 38 Other (1) 161 179 Total accrued liabilities $ 563 $ 640 (1) Other includes accruals for advertising, legal and professional reserves, freight, royalties, interest, and other miscellaneous items. The Indemnification Agreements are further described in Note 16. Commitments and Contingencies to the Unaudited Consolidated Financial Statements . |
Commitments and Contingencies
Commitments and Contingencies | 3 Months Ended |
Apr. 01, 2023 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies Environmental Matters We are subject to various federal, state, local, and foreign government requirements relating to the protection of the environment and accrue costs related to environmental matters when it is probable that we have incurred a liability related to a contaminated site and the amount can be reasonably estimated. We believe that, as a general matter, our policies, practices and procedures are properly designed to prevent unreasonable risk of environmental damage and personal injury and that our handling, manufacture, use and disposal of hazardous substances are in accordance with environmental and safety laws and regulations. We have incurred remedial response and voluntary cleanup costs for site contamination and are a party to claims associated with environmental and safety matters, including products containing hazardous substances. Additional claims and costs involving environmental matters are likely to continue to arise in the future. Environment-related expenses for sites owned and operated by us are presented within cost of goods sold Obligations Payable Under Indemnification Agreements The Reimbursement Agreement and the Tax Matters Agreement (collectively, the “Indemnification Agreements”) are further described below. Reimbursement Agreement We separated from Honeywell on October 29, 2018, becoming an independent publicly traded company as a result of a pro rata distribution of our common stock to shareholders of Honeywell (the “Spin-off”). In connection with the Spin-Off, we entered into the Reimbursement Agreement, pursuant to which we have an obligation to make cash payments to Honeywell in amounts equal to 90% of payments for certain Honeywell environmental-liability payments, which include amounts billed (payments), less 90% of Honeywell’s net insurance receipts relating to such liabilities, and less 90% of the net proceeds received by Honeywell in connection with (i) affirmative claims relating to such liabilities, (ii) contributions by other parties relating to such liabilities and (iii) certain property sales (the recoveries). While the amount payable by us in respect of such liabilities arising in any given year is subject to a cap of $140 million under the Reimbursement Agreement, the estimated liability for resolution of pending and future environmental-related liabilities recorded on our balance sheet are calculated as if we were responsible for 100% of the environmental-liability payments associated with certain sites. Refer to Note 15. Commitments and Contingencies in our 2022 Annual Report on Form 10-K for further discussion. Tax Matters Agreement 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. In addition, the Tax Matters Agreement addresses the allocation of liability for taxes that are incurred as a result of restructuring activities undertaken to effectuate the Spin-Off. We are required to indemnify Honeywell for any taxes resulting from the failure of the Spin-Off and related internal transactions to qualify for their intended tax treatment under U.S. federal, state and local income tax law, as well as foreign tax law, where such taxes result from our action or omission not permitted by the Separation and Distribution Agreement between Honeywell and Resideo dated as of October 19, 2018 or the Tax Matters Agreement. The following table summarizes information concerning the Reimbursement and Tax Matter Agreements’ liabilities: (in millions) Reimbursement Agreement Tax Matters Agreement Total Balance as of December 31, 2022 $ 614 $ 106 $ 720 Accruals for liabilities deemed probable and reasonably estimable (1) 41 (2) 39 Payments to Honeywell (35) — (35) Balance as of April 1, 2023 $ 620 $ 104 $ 724 (1) Reimbursement Agreement liabilities 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. The liabilities related to the Reimbursement and Tax Matters Agreements are included in the following balance sheet accounts: (in millions) April 1, 2023 December 31, 2022 Accrued liabilities $ 140 $ 140 Obligations payable under Indemnification Agreements 584 580 Total indemnification liabilities $ 724 $ 720 For the three months ended April 1, 2023 and April 2, 2022, net expenses related to the Reimbursement Agreement were $41 million and are recorded in other expense, net. We do not currently possess sufficient information to reasonably estimate the amounts of indemnification liabilities to be recorded upon future completion of studies, litigation or settlements, and neither the timing nor the amount of the ultimate costs associated with such indemnification liability payments can be determined although they could be material to our consolidated results of operations and operating cash flows in the periods recognized or paid. Independent of our payments under the Reimbursement Agreement, we will have ongoing liability for certain environmental claims, which are part of our ongoing business. Trademark Agreement We entered into a 40-year Trademark Agreement with Honeywell that authorizes our use of certain licensed trademarks in the operation of our business for the advertising, sale and distribution of certain licensed products. In exchange, we will pay to Honeywell a royalty fee of 1.5% on net revenue related to such licensed products, which is recorded in selling, general and administrative expense on the Unaudited Consolidated Statements of Operations. For the three months ended April 1, 2023 and April 2, 2022, royalty fees were $4 million and $6 million, respectively. Other Matters We are subject to lawsuits, investigations and disputes arising out of the conduct of our business, including matters relating to commercial transactions, government contracts, product liability, prior acquisitions and divestitures, employee matters, intellectual property, and environmental, health, and safety matters. We recognize a liability for any contingency that is probable of occurrence and reasonably estimable. We continually assess the likelihood of adverse judgments or outcomes in these matters, as well as potential ranges of possible losses (taking into consideration any insurance recoveries), based on a careful analysis of each matter with the assistance of outside legal counsel and, if applicable, other experts. No such matters are material to our financial statements. Refer to Note 15. Commitments and Contingencies in our 2022 Annual Report on Form 10-K for further discussion of these matters. Certain current or former directors and officers were defendants in a consolidated derivative action, In re Resideo Technologies, Inc. Derivative Litigation (the “Consolidated Federal Derivative Action”), which was stayed pending entry of final judgment in the related securities litigation and Delaware Chancery derivative action. An additional suit was filed in the Court of Chancery of the State of Delaware in 2021 and not consolidated with the Consolidated Federal Derivative Action. On November 17, 2022, the parties executed a Confidential Term Sheet summarizing the agreed terms of a global settlement to resolve all of the pending lawsuits and derivative claims. Under the terms of the settlement, we agreed to implement or codify certain corporate governance reforms and reimburse the plaintiffs’ attorneys’ fees of up to $1.6 million. On February 3, 2023, the parties executed a definitive stipulation of settlement. The United States District Court for the District of Minnesota preliminarily approved the settlement and a fairness hearing will be held on June 7, 2023. The final settlement remains subject to, among other things, court approval. The settlement liability is included in the other accrued liabilities in the Unaudited Consolidated Balance Sheets, and the expected insurance recovery of approximately $0.6 million is included in accounts receivable, net. On September 16, 2022, Salvatore Badalamenti (“Plaintiff”) filed a putative class action lawsuit (the “Badalamenti Lawsuit”) in the U.S. District Court for the District of New Jersey against Honeywell International Inc. and the Company. Plaintiff alleges, among other things, that the Company violated certain consumer protection laws by falsely advertising the Company’s combination-listed single data-bus burglar and fire alarms system control units (the “Products”) as conforming to Underwriters Laboratories, Inc. (the “UL”) or the National Fire Protection Association (“NFPA”) standards and/or failing to disclose such nonconformance. Plaintiff further alleges that the Products are defective because they do not conform to the UL and NFPA industry standards. Plaintiff does not allege that he, or anyone else, has experienced any adverse event due to the alleged product defect or that the Products did not work. Plaintiff alleges causes of action for violation of the New Jersey Consumer Fraud Act, fraud, negligent misrepresentation, breach of express and implied warranties, violation of the Magnuson-Moss Warranty Act, unjust enrichment, and violation of the Truth-in-Consumer Contract, Warranty, and Notice Act. Plaintiff seeks to represent a putative class of other persons in the U.S. who purchased the Products. Plaintiff, on behalf of himself and the putative class, seeks damages in an unknown amount, which he describes as the cost to repair and/or replace the Products and/or the diminution in value of the Products. We believe we have strong defenses against the allegations and claims asserted in the Badalamenti Lawsuit and our motion to dismiss Plaintiff's complaint was fully briefed on March 3, 2023. We continue to defend the matter vigorously; however, there can be no assurance that we will be successful in such defense. In light of the early stage of the Badalamenti Lawsuit, we are unable to estimate the total costs to defend the matter or the potential liability to us in the event that we are not successful in our defense. Warranties and Guarantees In the normal course of business, we issue product warranties and product performance guarantees. We accrue for the estimated cost of product warranties and product performance guarantees based on contract terms and historical experience at the time of sale. Adjustments to initial obligations for warranties and guarantees are made as changes to the obligations become reasonably estimable. Product warranties and product performance guarantees are included in other accrued liabilities. The following table summarizes information concerning recorded obligations for product warranties and product performance guarantees: Three Months Ended (in millions) April 1, 2023 April 2, 2022 Beginning balance $ 48 $ 23 Accruals for warranties/guarantees issued during the year 5 6 Adjustment of pre-existing warranties/guarantees — (2) Settlement of warranty/guarantee claims (20) (5) Reserve of acquired company at date of acquisition — 8 Ending balance $ 33 $ 30 |
Income Taxes
Income Taxes | 3 Months Ended |
Apr. 01, 2023 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes For interim periods, income tax is equal to the total of (1) year-to-date pretax income multiplied by the forecasted effective tax rate plus (2) tax expense items specific to the period. In situations where we expect to report losses and where we do not expect to receive tax benefits, we apply separate forecast effective tax rates to those jurisdictions rather than including them in the consolidated forecast effective tax rate. For the three months ended April 1, 2023 and April 2, 2022, the net tax expense was $24 million and $34 million, respectively, and consists primarily of interim period tax expense based on year-to-date pretax income multiplied by our forecasted effective tax rate. In addition to items specific to the period, our income tax rate is impacted by the mix of earnings across the jurisdictions in which we operate, non-deductible expenses, and U.S. taxation of foreign earnings. |
Earnings Per Share
Earnings Per Share | 3 Months Ended |
Apr. 01, 2023 | |
Earnings Per Share [Abstract] | |
Earnings Per Share | Earnings Per Share The reconciliation of the numerator and denominator used for the computation of basic and diluted earnings per share follows: Three Months Ended (in millions, except per share data) April 1, 2023 April 2, 2022 Numerator for Basic and Diluted Earnings Per Share: Net income $ 57 $ 87 Denominator for Basic and Diluted Earnings Per Share: Weighted average basic number of common shares outstanding 147 145 Plus: dilutive effect of common stock equivalents 2 4 Weighted average diluted number of common shares outstanding 149 149 Earnings per share: Basic $ 0.39 $ 0.60 Diluted $ 0.38 $ 0.58 |
Organization, Consolidation and
Organization, Consolidation and Presentation of Financial Statements (Policies) | 3 Months Ended |
Apr. 01, 2023 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Consolidation and Reporting | Basis of Consolidation and Reporting The accompanying Unaudited Consolidated Financial Statements have been prepared in accordance with United States (“U.S.”) generally accepted accounting principles (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, the Unaudited Consolidated Financial Statements do not include all of the information and notes required by GAAP for complete financial statements. In the opinion of management, the Unaudited Consolidated Financial Statements included herein contain all adjustments, which consist of normal recurring adjustments, necessary to fairly present our financial position, results of operations and cash flows for the periods indicated. Operating results for the period from January 1, 2023 through April 1, 2023 are not necessarily indicative of the results that may be expected for the fiscal year ending December 31, 2023. For additional information, refer to the consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2022 (the “2022 Annual Report on Form 10-K”), filed with the United States Securities and Exchange Commission (the “SEC”) on February 21, 2023. Reporting Period |
Adopted Accounting Pronouncements | Our significant accounting policies are detailed in Note 2. Summary of Significant Accounting Policies of the Annual Report on Form 10-K for the year ended December 31, 2022. There have been no significant changes to these policies that have had a material impact on the Unaudited Consolidated Financial Statements and accompanying notes for three months ended April 1, 2023. We consider the applicability and impact of all recent accounting standards updates (“ASUs”) issued by the Financial Accounting Standards Board (“FASB”) and disclose only those that may have a material impact. Adopted Accounting Pronouncements In September 2022, the FASB issued ASU 2022-04, Liabilities-Supplier Finance Programs (Topic 405): Disclosure of Supplier Finance Program Obligations. This guidance enhances transparency of an entity’s use of supplier finance programs by requiring quarterly and annual disclosures about the key terms of the program, outstanding confirmed amounts as of the end of the period, a rollforward of such amounts annually, and a description of where in the financial statements outstanding amounts are presented. The guidance is effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years, except for the amendment on rollforward information, which is effective for fiscal years beginning after December 15, 2023. Effective January 1, 2023, we completed our assessment and adopted ASU 2022-04 concluding that it is not applicable to Resideo at this time as we currently have no supplier finance programs in place. Recent Accounting Pronouncements In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting, and subsequent amendment to the initial guidance: ASU 2021-01, Reference Rate Reform (Topic 848): Scope (collectively, “Topic 848”). Topic 848 provides optional expedients and exceptions for applying GAAP to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. The amendments apply only to contracts, hedging relationships, and other transactions that reference London Interbank Offered Rate (“LIBOR”) or another reference rate expected to be discontinued because of reference rate reform. In December 2022, the FASB issued ASU 2022-06, Reference Rate Reform (Topic 848): Deferral of the Sunset Date of Topic 848 . ASU 2022-06 defers the sunset date of Topic 848 from December 31, 2022 to December 31, 2024. This guidance may be applied prospectively to contract modifications made and hedging relationships entered into or evaluated on or before December 31, 2024. The A&R Senior Credit Facilities include a transition clause to a new reference rate in the event LIBOR is discontinued and the Swap Agreements will be amended to match the new reference rate. We have evaluated the potential impact of adopting this standard and do not expect it to have a material impact on our consolidated financial statements and related disclosures . Refer to Note 12. Long-Term Debt and Note 13. Derivative Financial Instruments |
Segment Financial Data (Tables)
Segment Financial Data (Tables) | 3 Months Ended |
Apr. 01, 2023 | |
Segment Reporting [Abstract] | |
Schedule of Segment Information | The following table represents summary financial data attributable to the segments: Three Months Ended (in millions) April 1, 2023 April 2, 2022 Net revenue Products and Solutions $ 658 $ 619 ADI Global Distribution 891 887 Total net revenue $ 1,549 $ 1,506 Three Months Ended (in millions) April 1, 2023 April 2, 2022 Income from operations Products and Solutions $ 117 $ 153 ADI Global Distribution 72 80 Corporate (51) (61) Total income from operations $ 138 $ 172 |
Revenue Recognition (Tables)
Revenue Recognition (Tables) | 3 Months Ended |
Apr. 01, 2023 | |
Revenue from Contract with Customer [Abstract] | |
Revenue By Business Line and Geographic Location | The following table presents revenue by business line and geographic location, as we believe this presentation best depicts how the nature, amount, timing, and uncertainty of net revenue and cash flows are affected by economic factors: Three Months Ended (in millions) April 1, 2023 April 2, 2022 Products and Solutions Air $ 211 $ 214 Safety and Security 228 155 Energy 136 159 Water 83 91 Total Products and Solutions 658 619 ADI Global Distribution U.S. and Canada 768 752 EMEA (1) 123 126 APAC (2) — 9 Total ADI Global Distribution 891 887 Total net revenue $ 1,549 $ 1,506 (1) EMEA represents Europe, the Middle East and Africa. (2) APAC represents Asia and Pacific countries. |
Restructuring (Tables)
Restructuring (Tables) | 3 Months Ended |
Apr. 01, 2023 | |
Restructuring and Related Activities [Abstract] | |
Summary of Restructuring Expenses | The following table summarizes the status of our restructuring expenses included within accrued liabilities on the Unaudited Consolidated Balance Sheets. (in millions) April 1, 2023 December 31, 2022 Beginning of period $ 27 $ 9 Charges 2 26 Usage (1) (4) (5) Other (2) (3) End of period $ 23 $ 27 (1) Usage primarily relates to cash payments associated with employee termination costs. |
Stock-Based Compensation Plans
Stock-Based Compensation Plans (Tables) | 3 Months Ended |
Apr. 01, 2023 | |
Share-Based Payment Arrangement [Abstract] | |
Summary of Stock Incentive Plan For Employees and Non-Employee Directors | A summary of awards granted as part of our annual long-term compensation follows: Three Months Ended April 1, 2023 Three Months Ended April 2, 2022 Number of Stock Units Granted Weighted average grant date fair value per share Number of Stock Units Granted Weighted average grant date fair value per share Performance Stock Units (“PSUs”) 553,071 $ 29.89 672,453 $ 36.11 Restricted Stock Units (“RSUs”) 1,466,307 $ 19.03 808,919 $ 24.87 |
Inventories, net (Tables)
Inventories, net (Tables) | 3 Months Ended |
Apr. 01, 2023 | |
Inventory Disclosure [Abstract] | |
Inventories | The following table summarizes the details of our inventories, net: (in millions) April 1, 2023 December 31, 2022 Raw materials $ 271 $ 251 Work in process 24 25 Finished products 713 699 Total inventories, net $ 1,008 $ 975 |
Goodwill and Other Intangible A
Goodwill and Other Intangible Assets, net (Tables) | 3 Months Ended |
Apr. 01, 2023 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Goodwill | Our goodwill balance and changes in carrying value by segment are as follows: (in millions) Products and Solutions ADI Global Distribution Total Balance at December 31, 2022 $ 2,072 $ 652 $ 2,724 Acquisitions — 4 4 Impact of foreign currency translation 6 2 8 Balance at April 1, 2023 $ 2,078 $ 658 $ 2,736 |
Schedule of Indefinite-Lived Intangible Assets | The following table summarizes the net carrying amount of intangible assets: (in millions) April 1, 2023 December 31, 2022 Intangible assets subject to amortization $ 291 $ 295 Indefinite-lived intangible assets 180 180 Total intangible assets $ 471 $ 475 |
Schedule of Intangible Assets With Finite Lives | The following table summarizes the net carrying amount of intangible assets: (in millions) April 1, 2023 December 31, 2022 Intangible assets subject to amortization $ 291 $ 295 Indefinite-lived intangible assets 180 180 Total intangible assets $ 471 $ 475 Intangible assets subject to amortization consisted of the following: April 1, 2023 December 31, 2022 (in millions) Gross Accumulated Net Gross Accumulated Net Patents and technology $ 65 $ (29) $ 36 $ 65 $ (28) $ 37 Customer relationships 315 (123) 192 313 (117) 196 Trademarks 14 (9) 5 14 (8) 6 Software 180 (122) 58 175 (119) 56 Total intangible assets $ 574 $ (283) $ 291 $ 567 $ (272) $ 295 |
Leases (Tables)
Leases (Tables) | 3 Months Ended |
Apr. 01, 2023 | |
Leases [Abstract] | |
Schedule of Operating Lease Expense | Total operating lease costs are as follows: Three Months Ended (in millions) April 1, 2023 April 2, 2022 Operating lease cost: Cost of goods sold $ 5 $ 3 Selling, general and administrative expenses 14 12 Total operating lease costs $ 19 $ 15 |
Summary of Carrying Amounts of Operating Leased Assets and Liabilities | The following table summarizes the carrying amounts of our operating lease assets and liabilities: (in millions) Financial Statement Line Item April 1, 2023 December 31, 2022 Operating lease assets Other assets $ 192 $ 191 Operating lease liabilities - current Accrued liabilities $ 38 $ 37 Operating lease liabilities - non-current Other liabilities $ 166 $ 166 |
Supplemental Cash Flow Information Related to Operating Leases | Supplemental cash flow information related to operating leases follows: Three Months Ended (in millions) April 1, 2023 April 2, 2022 Cash paid for operating lease liabilities $ 9 $ 8 Non-cash activities: operating lease assets obtained in exchange for new operating lease liabilities $ 7 $ 32 |
Long-Term Debt (Tables)
Long-Term Debt (Tables) | 3 Months Ended |
Apr. 01, 2023 | |
Debt Disclosure [Abstract] | |
Schedule of Long-Term Debt | Long-term debt is comprised of the following: (in millions) April 1, 2023 December 31, 2022 4.000% Senior Notes due 2029 $ 300 $ 300 Variable rate A&R Term B Facility 1,128 1,131 Gross debt 1,428 1,431 Less: current portion of long-term debt (12) (12) Less: unamortized deferred financing costs (14) (15) Total long-term debt $ 1,402 $ 1,404 |
Derivative Financial Instrume_2
Derivative Financial Instruments (Tables) | 3 Months Ended |
Apr. 01, 2023 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Schedule of Derivative Instruments in Consolidated Balance Sheets and Pre-Tax Gain (Loss) in Accumulated Other Comprehensive Loss | The following table summarizes the fair value and presentation of derivative instruments in the Unaudited Consolidated Balance Sheets as well as the changes in fair value recorded in accumulated other comprehensive loss: Fair Value of Derivative Assets (in millions) Financial Statement Line Item April 1, 2023 December 31, 2022 Derivatives designated as hedging instruments: Interest rate swaps Other current assets $ 21 $ 23 Interest rate swaps Other assets 17 22 Total derivative assets designated as hedging instruments $ 38 $ 45 Unrealized gain Accumulated other comprehensive loss $ 35 $ 42 |
Effect of Derivative Instruments Designated as Cash Flow Hedges | The following table summarizes the effect of derivative instruments designated as cash flow hedges in other comprehensive income and the Unaudited Consolidated Statements of Operations: (in millions) Financial Statement Line Item April 1, 2023 April 2, 2022 Gains recorded in accumulated other comprehensive loss, beginning of period: $ 42 $ 6 Current period (loss) gain recognized in other comprehensive income (7) 23 Gains recorded in accumulated other comprehensive loss, end of period $ 35 $ 29 |
Fair Value (Tables)
Fair Value (Tables) | 3 Months Ended |
Apr. 01, 2023 | |
Fair Value Disclosures [Abstract] | |
Schedule of Carrying Values and Estimated Fair Values of Debt Instruments | The following table provides a summary of the carrying amount and fair value of outstanding debt: April 1, 2023 December 31, 2022 (in millions) Carrying Value Fair Value Carrying Value Fair Value Debt: 4.000% Senior Notes due 2029 $ 300 $ 253 $ 300 $ 242 Variable rate A&R Term B Facility 1,128 1,124 1,131 1,125 Total debt $ 1,428 $ 1,377 $ 1,431 $ 1,367 |
Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis | The following table provides a summary of the carrying amount and fair value of our interest rate swaps: April 1, 2023 December 31, 2022 (in millions) Carrying Value Fair Value Carrying Value Fair Value Assets: Interest rate swaps $ 38 $ 38 $ 45 $ 45 |
Accrued Liabilities (Tables)
Accrued Liabilities (Tables) | 3 Months Ended |
Apr. 01, 2023 | |
Payables and Accruals [Abstract] | |
Summary of Accrued Liabilities | Accrued liabilities consist of the following: (in millions) April 1, 2023 December 31, 2022 Obligations payable under Indemnification Agreements $ 140 $ 140 Compensation, benefit and other employee-related 79 108 Customer rebate reserve 75 98 Product warranties 24 40 Current operating lease liability 38 37 Taxes payable 46 38 Other (1) 161 179 Total accrued liabilities $ 563 $ 640 (1) Other includes accruals for advertising, legal and professional reserves, freight, royalties, interest, and other miscellaneous items. |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 3 Months Ended |
Apr. 01, 2023 | |
Commitments and Contingencies Disclosure [Abstract] | |
Summary of Reimbursement Agreement Liabilities | The following table summarizes information concerning the Reimbursement and Tax Matter Agreements’ liabilities: (in millions) Reimbursement Agreement Tax Matters Agreement Total Balance as of December 31, 2022 $ 614 $ 106 $ 720 Accruals for liabilities deemed probable and reasonably estimable (1) 41 (2) 39 Payments to Honeywell (35) — (35) Balance as of April 1, 2023 $ 620 $ 104 $ 724 (1) Reimbursement Agreement liabilities 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. |
Summary of Reimbursement Agreement Liabilities Included in Balance Sheet Accounts | The liabilities related to the Reimbursement and Tax Matters Agreements are included in the following balance sheet accounts: (in millions) April 1, 2023 December 31, 2022 Accrued liabilities $ 140 $ 140 Obligations payable under Indemnification Agreements 584 580 Total indemnification liabilities $ 724 $ 720 |
Summary of Recorded Obligations for Product Warranties and Product Performance Guarantee | The following table summarizes information concerning recorded obligations for product warranties and product performance guarantees: Three Months Ended (in millions) April 1, 2023 April 2, 2022 Beginning balance $ 48 $ 23 Accruals for warranties/guarantees issued during the year 5 6 Adjustment of pre-existing warranties/guarantees — (2) Settlement of warranty/guarantee claims (20) (5) Reserve of acquired company at date of acquisition — 8 Ending balance $ 33 $ 30 |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 3 Months Ended |
Apr. 01, 2023 | |
Earnings Per Share [Abstract] | |
Schedule of Computation of Basic and Diluted Earnings Per Share | The reconciliation of the numerator and denominator used for the computation of basic and diluted earnings per share follows: Three Months Ended (in millions, except per share data) April 1, 2023 April 2, 2022 Numerator for Basic and Diluted Earnings Per Share: Net income $ 57 $ 87 Denominator for Basic and Diluted Earnings Per Share: Weighted average basic number of common shares outstanding 147 145 Plus: dilutive effect of common stock equivalents 2 4 Weighted average diluted number of common shares outstanding 149 149 Earnings per share: Basic $ 0.39 $ 0.60 Diluted $ 0.38 $ 0.58 |
Acquisitions - Additional Infor
Acquisitions - Additional Information (Details) | Jan. 23, 2023 | Dec. 23, 2022 | Jul. 05, 2022 | Mar. 31, 2022 |
BTX Technologies, Inc. | ||||
Business Acquisition [Line Items] | ||||
Percentage of capital stock acquired | 100% | |||
Teknique Limited | ||||
Business Acquisition [Line Items] | ||||
Percentage of capital stock acquired | 100% | |||
Electronic Customer Distributors, Inc. | ||||
Business Acquisition [Line Items] | ||||
Percentage of capital stock acquired | 100% | |||
First Alert | ||||
Business Acquisition [Line Items] | ||||
Percentage of capital stock acquired | 100% |
Segment Financial Data - Schedu
Segment Financial Data - Schedule of Segment Information (Details) - USD ($) $ in Millions | 3 Months Ended | |
Apr. 01, 2023 | Apr. 02, 2022 | |
Revenues [Abstract] | ||
Total net revenue | $ 1,549 | $ 1,506 |
Income from operations | ||
Total income from operations | 138 | 172 |
Products and Solutions | ||
Revenues [Abstract] | ||
Total net revenue | 658 | 619 |
Income from operations | ||
Total income from operations | 117 | 153 |
ADI Global Distribution | ||
Revenues [Abstract] | ||
Total net revenue | 891 | 887 |
Income from operations | ||
Total income from operations | 72 | 80 |
Corporate | ||
Income from operations | ||
Total income from operations | $ (51) | $ (61) |
Revenue Recognition - Additiona
Revenue Recognition - Additional Information (Details) | 3 Months Ended |
Apr. 01, 2023 Segment | |
Revenue from Contract with Customer [Abstract] | |
Number of operating segments | 2 |
Revenue Recognition - Revenue B
Revenue Recognition - Revenue By Business Line and Geographic Location (Details) - USD ($) $ in Millions | 3 Months Ended | |
Apr. 01, 2023 | Apr. 02, 2022 | |
Disaggregation Of Revenue [Line Items] | ||
Net revenue | $ 1,549 | $ 1,506 |
Products and Solutions | ||
Disaggregation Of Revenue [Line Items] | ||
Net revenue | 658 | 619 |
Products and Solutions | Air | ||
Disaggregation Of Revenue [Line Items] | ||
Net revenue | 211 | 214 |
Products and Solutions | Safety and Security | ||
Disaggregation Of Revenue [Line Items] | ||
Net revenue | 228 | 155 |
Products and Solutions | Energy | ||
Disaggregation Of Revenue [Line Items] | ||
Net revenue | 136 | 159 |
Products and Solutions | Water | ||
Disaggregation Of Revenue [Line Items] | ||
Net revenue | 83 | 91 |
ADI Global Distribution | ||
Disaggregation Of Revenue [Line Items] | ||
Net revenue | 891 | 887 |
ADI Global Distribution | U.S. and Canada | ||
Disaggregation Of Revenue [Line Items] | ||
Net revenue | 768 | 752 |
ADI Global Distribution | EMEA | ||
Disaggregation Of Revenue [Line Items] | ||
Net revenue | 123 | 126 |
ADI Global Distribution | APAC | ||
Disaggregation Of Revenue [Line Items] | ||
Net revenue | $ 0 | $ 9 |
Restructuring Expenses - Additi
Restructuring Expenses - Additional Information (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | |
Apr. 01, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Restructuring Cost And Reserve [Line Items] | |||
Charges | $ 2 | $ 26 | |
Minimum | |||
Restructuring Cost And Reserve [Line Items] | |||
Restructuring initiatives execution (in months) | 12 months | ||
Maximum | |||
Restructuring Cost And Reserve [Line Items] | |||
Restructuring initiatives execution (in months) | 24 months |
Restructuring Expenses - Summar
Restructuring Expenses - Summary of Restructuring Expenses (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended |
Apr. 01, 2023 | Dec. 31, 2021 | |
Restructuring Reserve [Roll Forward] | ||
Beginning of period | $ 27 | |
Charges | 2 | $ 26 |
Usage | (4) | (5) |
Other | (2) | (3) |
End of period | $ 23 | $ 9 |
Pension Plans - Additional Info
Pension Plans - Additional Information (Details) - Pension Plan $ in Millions | 3 Months Ended |
Apr. 01, 2023 USD ($) | |
Defined Benefit Plan Disclosure [Line Items] | |
Pension settlement loss | $ 3 |
Decrease in plan assets | (60) |
Decrease in plan liabilities | $ (60) |
Stock-Based Compensation Plan_2
Stock-Based Compensation Plans - Summarized RSU and PSU Activity Related to Stock Incentive Plan (Details) - $ / shares | 3 Months Ended | |
Apr. 01, 2023 | Apr. 02, 2022 | |
PSUs | ||
Share-Based Compensation Arrangement by Share-Based Payment Award, Additional General Disclosures [Abstract] | ||
Number of stock units granted (in shares) | 553,071 | 672,453 |
Share-Based Compensation Arrangement by Share-Based Payment Award, Options, Outstanding, Weighted Average Exercise Price [Abstract] | ||
Granted (in dollars per share) | $ 29.89 | $ 36.11 |
RSUs | ||
Share-Based Compensation Arrangement by Share-Based Payment Award, Additional General Disclosures [Abstract] | ||
Number of stock units granted (in shares) | 1,466,307 | 808,919 |
Share-Based Compensation Arrangement by Share-Based Payment Award, Options, Outstanding, Weighted Average Exercise Price [Abstract] | ||
Granted (in dollars per share) | $ 19.03 | $ 24.87 |
Stock-Based Compensation Plan_3
Stock-Based Compensation Plans - Additional Information (Details) - USD ($) $ in Millions | 3 Months Ended | |
Apr. 01, 2023 | Apr. 02, 2022 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Stock-based compensation expense, net of tax | $ 12 | $ 11 |
Key Employees | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Vesting period (in years) | 3 years | |
Non-Employee Directors | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Vesting period (in years) | 1 year |
Inventories, net (Details)
Inventories, net (Details) - USD ($) $ in Millions | Apr. 01, 2023 | Dec. 31, 2022 |
Inventory Disclosure [Abstract] | ||
Raw materials | $ 271 | $ 251 |
Work in process | 24 | 25 |
Finished products | 713 | 699 |
Inventories, net | $ 1,008 | $ 975 |
Goodwill and Intangible Asset_2
Goodwill and Intangible Assets, net - Schedule of Goodwill (Details) $ in Millions | 3 Months Ended |
Apr. 01, 2023 USD ($) | |
Goodwill [Roll Forward] | |
Goodwill, beginning balance | $ 2,724 |
Acquisitions | 4 |
Impact of foreign currency translation | 8 |
Goodwill, ending balance | 2,736 |
Products and Solutions | |
Goodwill [Roll Forward] | |
Goodwill, beginning balance | 2,072 |
Acquisitions | 0 |
Impact of foreign currency translation | 6 |
Goodwill, ending balance | 2,078 |
ADI Global Distribution | |
Goodwill [Roll Forward] | |
Goodwill, beginning balance | 652 |
Acquisitions | 4 |
Impact of foreign currency translation | 2 |
Goodwill, ending balance | $ 658 |
Goodwill and Intangible Asset_3
Goodwill and Intangible Assets, net - Summary of Intangible Assets (Details) - USD ($) $ in Millions | Apr. 01, 2023 | Dec. 31, 2022 |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Intangible assets subject to amortization | $ 291 | $ 295 |
Indefinite-lived intangible assets | 180 | 180 |
Total intangible assets | $ 471 | $ 475 |
Goodwill and Intangible Asset_4
Goodwill and Intangible Assets, net - Schedule of Other Intangible Assets With Finite Lives (Detail) - USD ($) $ in Millions | Apr. 01, 2023 | Dec. 31, 2022 |
Finite Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | $ 574 | $ 567 |
Accumulated Amortization | (283) | (272) |
Net Carrying Amount | 291 | 295 |
Patent and Technology | ||
Finite Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 65 | 65 |
Accumulated Amortization | (29) | (28) |
Net Carrying Amount | 36 | 37 |
Customer Relationships | ||
Finite Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 315 | 313 |
Accumulated Amortization | (123) | (117) |
Net Carrying Amount | 192 | 196 |
Trademarks | ||
Finite Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 14 | 14 |
Accumulated Amortization | (9) | (8) |
Net Carrying Amount | 5 | 6 |
Software | ||
Finite Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 180 | 175 |
Accumulated Amortization | (122) | (119) |
Net Carrying Amount | $ 58 | $ 56 |
Goodwill and Intangible Asset_5
Goodwill and Intangible Assets, net - Additional Information (Details) - USD ($) $ in Millions | 3 Months Ended | |
Apr. 01, 2023 | Apr. 02, 2022 | |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Intangible asset amortization | $ 9 | $ 6 |
Leases - Schedule of Operating
Leases - Schedule of Operating Lease Costs (Details) - USD ($) $ in Millions | 3 Months Ended | |
Apr. 01, 2023 | Apr. 02, 2022 | |
Lessee Lease Description [Line Items] | ||
Total operating lease costs | $ 19 | $ 15 |
Cost of goods sold | ||
Lessee Lease Description [Line Items] | ||
Total operating lease costs | 5 | 3 |
Selling, general and administrative expenses | ||
Lessee Lease Description [Line Items] | ||
Total operating lease costs | $ 14 | $ 12 |
Leases - Additional Information
Leases - Additional Information (Details) - USD ($) $ in Millions | 3 Months Ended | |
Apr. 01, 2023 | Apr. 02, 2022 | |
Leases [Abstract] | ||
Variable lease costs | $ 6 | $ 4 |
Leases - Summary of Lease Recog
Leases - Summary of Lease Recognized Related to Operating Leases (Details) - USD ($) $ in Millions | Apr. 01, 2023 | Dec. 31, 2022 |
Leases [Abstract] | ||
Operating lease assets | $ 192 | $ 191 |
Operating lease liabilities - current | 38 | 37 |
Operating lease liabilities - non-current | $ 166 | $ 166 |
Operating Lease, Right-of-Use Asset, Statement of Financial Position [Extensible List] | Other assets | Other assets |
Operating Lease, Liability, Current, Statement of Financial Position [Extensible List] | Accrued liabilities | Accrued liabilities |
Operating Lease, Liability, Noncurrent, Statement of Financial Position [Extensible List] | Other liabilities | Other liabilities |
Leases - Supplemental Cash Flow
Leases - Supplemental Cash Flow Information Related to Operating Leases (Details) - USD ($) $ in Millions | 3 Months Ended | |
Apr. 01, 2023 | Apr. 02, 2022 | |
Leases [Abstract] | ||
Cash paid for operating lease liabilities | $ 9 | $ 8 |
Non-cash activities: operating lease assets obtained in exchange for new operating lease liabilities | $ 7 | $ 32 |
Long-Term Debt - Schedule of Lo
Long-Term Debt - Schedule of Long-Term Debt (Details) - USD ($) $ in Millions | Apr. 01, 2023 | Dec. 31, 2022 |
Debt Instrument [Line Items] | ||
Gross debt | $ 1,428 | $ 1,431 |
Less: current portion of long-term debt | (12) | (12) |
Less: unamortized deferred financing costs | (14) | (15) |
Long-term debt | 1,402 | 1,404 |
4.000% senior notes due 2029 | ||
Debt Instrument [Line Items] | ||
Gross debt | 300 | 300 |
Variable rate A&R Term B Facility | ||
Debt Instrument [Line Items] | ||
Gross debt | $ 1,128 | $ 1,131 |
Long-Term Debt - Additional Inf
Long-Term Debt - Additional Information (Details) - USD ($) | 3 Months Ended | ||||
Apr. 01, 2023 | Dec. 31, 2022 | Apr. 02, 2022 | Mar. 28, 2022 | Aug. 26, 2021 | |
A&R Term B Facility | |||||
Debt Instrument [Line Items] | |||||
Interest rate | 7.13% | 6.78% | |||
A&R Credit Agreement | A&R Term B Facility | |||||
Debt Instrument [Line Items] | |||||
Credit facilities term (in years) | 7 years | ||||
Principal amount issued | $ 950,000,000 | $ 200,000,000 | |||
A&R Credit Agreement | A&R Revolving Credit Facility | |||||
Debt Instrument [Line Items] | |||||
Credit facilities term (in years) | 5 years | ||||
Principal amount issued | $ 500,000,000 | ||||
Senior Credit Facilities | A&R Revolving Credit Facility | |||||
Debt Instrument [Line Items] | |||||
Borrowings from credit facility | 0 | $ 0 | |||
Senior Credit Facilities | Letter of Credit | |||||
Debt Instrument [Line Items] | |||||
Borrowings from credit facility | $ 0 | $ 0 | |||
4.000% senior notes due 2029 | |||||
Debt Instrument [Line Items] | |||||
Principal amount issued | $ 300,000,000 | ||||
Interest rate | 4% | 4% |
Derivative Financial Instrume_3
Derivative Financial Instruments - Additional Information (Details) - Swap Agreements $ in Millions | 1 Months Ended | ||
Mar. 31, 2023 USD ($) agreement | Mar. 31, 2021 USD ($) agreement | Apr. 01, 2023 USD ($) | |
Derivative [Line Items] | |||
Number of interest rate swap | agreement | 8 | 8 | |
Notional value | $ 70 | $ 560 | |
Fixed weighted average rate | 0.50% | ||
Gain position remaining | $ 4 | ||
Maximum | |||
Derivative [Line Items] | |||
Fixed weighted average rate | 0.9289% |
Derivative Financial Instrume_4
Derivative Financial Instruments - Schedule of Derivative Instruments in Statement of Financial Position (Details) - USD ($) $ in Millions | Apr. 01, 2023 | Dec. 31, 2022 | Apr. 02, 2022 | Dec. 31, 2021 |
Derivative [Line Items] | ||||
Derivative asset designated as hedging instruments | $ 38 | $ 45 | ||
Unrealized gain | $ 2,604 | 2,529 | $ 2,361 | $ 2,252 |
Derivative Asset, Current, Statement of Financial Position [Extensible Enumeration] | Other current assets | |||
Derivative Asset, Statement of Financial Position [Extensible Enumeration] | Other assets | |||
Accumulated other comprehensive loss | ||||
Derivative [Line Items] | ||||
Unrealized gain | $ 35 | 42 | $ 29 | $ 6 |
Interest rate swaps | Other current assets | Designated as Hedging Instrument | ||||
Derivative [Line Items] | ||||
Derivative asset designated as hedging instruments | 21 | 23 | ||
Interest rate swaps | Other assets | Designated as Hedging Instrument | ||||
Derivative [Line Items] | ||||
Derivative asset designated as hedging instruments | $ 17 | $ 22 |
Derivative Financial Instrume_5
Derivative Financial Instruments - Summary of Effect of Derivative Instruments Designated As Cash Flow Hedges (Details) - USD ($) $ in Millions | 3 Months Ended | |
Apr. 01, 2023 | Apr. 02, 2022 | |
Derivatives used in Net Investment Hedge, Net of Tax [Roll Forward] | ||
Beginning balance | $ 2,529 | $ 2,252 |
Ending balance | 2,604 | 2,361 |
Accumulated other comprehensive loss | ||
Derivatives used in Net Investment Hedge, Net of Tax [Roll Forward] | ||
Beginning balance | 42 | 6 |
Current period (loss) gain recognized in other comprehensive income | (7) | 23 |
Ending balance | $ 35 | $ 29 |
Fair Value - Schedule of Carryi
Fair Value - Schedule of Carrying Values and Estimated Fair Value of Debt Instruments (Details) - USD ($) $ in Millions | Apr. 01, 2023 | Dec. 31, 2022 |
Debt Instrument [Line Items] | ||
Debt, carrying value | $ 1,428 | $ 1,431 |
Debt, fair value | 1,377 | 1,367 |
4.000% senior notes due 2029 | ||
Debt Instrument [Line Items] | ||
Debt, carrying value | 300 | 300 |
Debt, fair value | 253 | 242 |
Variable rate A&R Term B Facility | ||
Debt Instrument [Line Items] | ||
Debt, carrying value | 1,128 | 1,131 |
Debt, fair value | $ 1,124 | $ 1,125 |
Fair Value - Summary of the Car
Fair Value - Summary of the Carrying Amount and Fair Value of Interest Rate Swap (Details) - USD ($) $ in Millions | Apr. 01, 2023 | Dec. 31, 2022 |
Fair Value, Measured on Recurring Basis, Gain (Loss) Included in Earnings [Line Items] | ||
Carrying value, assets, interest rate swaps | $ 38 | $ 45 |
Fair value, assets, interest rate swaps | 38 | 45 |
Level 2 | Fair Value, Recurring | ||
Fair Value, Measured on Recurring Basis, Gain (Loss) Included in Earnings [Line Items] | ||
Fair value, assets, interest rate swaps | $ 38 | $ 45 |
Accrued Liabilities - Summary o
Accrued Liabilities - Summary of Accrued Liabilities (Details) - USD ($) $ in Millions | Apr. 01, 2023 | Dec. 31, 2022 |
Accrued Liabilities, Current [Abstract] | ||
Obligations payable under Indemnification Agreements | $ 140 | $ 140 |
Compensation, benefit and other employee-related | 79 | 108 |
Customer rebate reserve | 75 | 98 |
Product warranties | 24 | 40 |
Operating lease liabilities - current | 38 | 37 |
Taxes payable | 46 | 38 |
Other | 161 | 179 |
Total accrued liabilities | $ 563 | $ 640 |
Commitments and Contingencies -
Commitments and Contingencies - Additional Information (Details) - USD ($) | 3 Months Ended | |||||
Nov. 17, 2022 | Oct. 29, 2018 | Apr. 01, 2023 | Apr. 02, 2022 | Feb. 03, 2023 | Dec. 31, 2022 | |
Loss Contingencies [Line Items] | ||||||
Environmental liabilities | $ 22,000,000 | $ 22,000,000 | ||||
Trademark license agreement (in years) | 40 years | |||||
Claim settlement expense | $ 1,600,000 | |||||
Settlement liabilities | $ 600,000 | |||||
Environmental Loss Contingency, Statement of Financial Position [Extensible Enumeration] | Cost of goods sold | |||||
Other Expense | ||||||
Loss Contingencies [Line Items] | ||||||
Reimbursement Agreement expense | $ 41,000,000 | |||||
Indemnification Agreement | ||||||
Loss Contingencies [Line Items] | ||||||
Maximum annual reimbursement obligation amount | 25,000,000 | |||||
Honeywell | ||||||
Loss Contingencies [Line Items] | ||||||
Indemnity liability annual cap | $ 140,000,000 | |||||
Honeywell | Trademark Agreement | ||||||
Loss Contingencies [Line Items] | ||||||
Royalty fee on net revenue | 1.50% | |||||
Royalty expense | $ 4,000,000 | $ 6,000,000 | ||||
Honeywell | Indemnification Agreement | ||||||
Loss Contingencies [Line Items] | ||||||
Indemnification payable percentage of payments | 90% | |||||
Indemnification payable percentage of net insurance receipts | 90% | |||||
Indemnification payable percentage of net proceeds received | 90% | |||||
Honeywell | Indemnification Agreement | Maximum | ||||||
Loss Contingencies [Line Items] | ||||||
Indemnity liability annual cap | $ 140,000,000 |
Commitments and Contingencies_2
Commitments and Contingencies - Summary of Reimbursement Agreement Liabilities (Details) - Honeywell $ in Millions | 3 Months Ended |
Apr. 01, 2023 USD ($) | |
Accrual for Reimbursement Agreement | |
Beginning balance | $ 720 |
Accruals for liabilities deemed probable and reasonably estimable | 39 |
Payments to Honeywell | (35) |
Ending balance | 724 |
Reimbursement Agreement liabilities | $ 140 |
Reimbursement Agreement liabilities, late payment fee percentage | 5% |
Reimbursement Agreement | |
Accrual for Reimbursement Agreement | |
Beginning balance | $ 614 |
Accruals for liabilities deemed probable and reasonably estimable | 41 |
Payments to Honeywell | (35) |
Ending balance | 620 |
Tax Matters Agreement | |
Accrual for Reimbursement Agreement | |
Beginning balance | 106 |
Accruals for liabilities deemed probable and reasonably estimable | (2) |
Payments to Honeywell | 0 |
Ending balance | $ 104 |
Commitments and Contingencies_3
Commitments and Contingencies - Summary of Reimbursement Agreement Liabilities Included in Balance Sheet Accounts (Details) - Honeywell - USD ($) $ in Millions | Apr. 01, 2023 | Dec. 31, 2022 |
Loss Contingency, Classification of Accrual [Abstract] | ||
Total indemnification liabilities | $ 724 | $ 720 |
Accrued liabilities | ||
Loss Contingency, Classification of Accrual [Abstract] | ||
Accrued liabilities | 140 | 140 |
Obligations payable under Indemnification Agreements | ||
Loss Contingency, Classification of Accrual [Abstract] | ||
Obligations payable under Indemnification Agreements | $ 584 | $ 580 |
Commitments and Contingencies_4
Commitments and Contingencies - Summary of Recorded Obligations for Product Warranties and Product Performance Guarantee (Details) - USD ($) $ in Millions | 3 Months Ended | |
Apr. 01, 2023 | Apr. 02, 2022 | |
Product Warranties and Guarantees [Roll forward] | ||
Beginning balance | $ 48 | $ 23 |
Accruals for warranties/guarantees issued during the year | 5 | 6 |
Adjustment of pre-existing warranties/guarantees | 0 | (2) |
Settlement of warranty/guarantee claims | (20) | (5) |
Reserve of acquired company at date of acquisition | 0 | 8 |
Ending balance | $ 33 | $ 30 |
Income Taxes - Additional Infor
Income Taxes - Additional Information (Details) - USD ($) $ in Millions | 3 Months Ended | |
Apr. 01, 2023 | Apr. 02, 2022 | |
Income Tax Disclosure [Abstract] | ||
Provision for income taxes | $ 24 | $ 34 |
Earnings Per Share - Schedule o
Earnings Per Share - Schedule of Computation of Basic and Diluted Earnings Per Share (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions | 3 Months Ended | |
Apr. 01, 2023 | Apr. 02, 2022 | |
Earnings Per Share [Abstract] | ||
Net income | $ 57 | $ 87 |
Denominator for Basic and Diluted Earnings Per Share: | ||
Weighted average basic number of common shares outstanding (in shares) | 147 | 145 |
Plus: dilutive effect of common stock equivalents (in shares) | 2 | 4 |
Weighted average diluted number of common shares outstanding (in shares) | 149 | 149 |
Earnings per share: | ||
Basic (in dollars per share) | $ 0.39 | $ 0.60 |
Diluted (in dollars per share) | $ 0.38 | $ 0.58 |
Earnings Per Share - Additional
Earnings Per Share - Additional Information (Details) - shares | 3 Months Ended | |
Apr. 01, 2023 | Apr. 02, 2022 | |
Options and Other Rights | ||
Earnings Per Share [Line Items] | ||
Purchase of outstanding common stock were anti-dilutive (in shares) | 1,400,000 | 500,000 |
Performance Based Unit Awards | ||
Earnings Per Share [Line Items] | ||
Purchase of outstanding common stock were anti-dilutive (in shares) | 800,000 | 900,000 |