Shares of Resideo Technologies (REZI -0.97%) traded up more than 23% on Thursday after the company reported better-than-expected fourth-quarter results and detailed a cost-savings plan.
Resideo, a maker of smart home and security products, which was spun off from Honeywell International in 2018, reported fourth-quarter adjusted earnings of $0.39 per share on revenue of $1.3 billion, beating analyst expectations of $0.28 per share in earnings on sales of $1.28 billion. The results were a rare bit of good news for Resideo, which has seen its shares fall 63% since the Honeywell spinoff.
In October, the company cut guidance and said it was initiating a comprehensive operational and financial review because the transition to the company's new generation of security products and connected thermostats will take longer than expected.
In a statement, CEO Mike Nefkens said that the fourth-quarter results were driven by better execution and strength in its distribution business. "While our full-year 2019 results were impacted by a number of challenges in our Products & Solutions business, we are taking proactive steps to drive improved performance," Nefkens said.
The company also detailed the results of the review announced last fall. Resideo said it has identified a number of areas for cost reductions and expects to deliver $30 million to $40 million in adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) improvements in 2020, and $80 million to $120 million in 2021.
Resideo expects to generate full-year 2020 revenue growth of 2% to 4% and full-year adjusted EBITDA of between $420 million and $450 million. That's compared to net revenue of $5 billion and adjusted EBITDA of $362 million in 2019.
It's been a tough road for Resideo as an independent, and it's going to take time for the company to win back investor trust. But if Thursday's stock reaction is any indication, fourth-quarter results are a big step in the right direction.