Q4 2019 Earnings Call
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For todays conference call.
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Technologies fourth quarter earnings conference call.
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Mr. Much.
Vice President Treasurer, Mr., George you know controlled yourself you like.
Good morning, Thank you for joining the studios fourth quarter into 2017 earnings Conference call.
On today's call like Neptunes involved lighter joined diabetes.
Yes.
You can find a copy of earnings news and presentations journalism Investor Relations page.
Tom.
But to remind you that this mornings presentation contains forward looking statements statements other than historical facts new during this call constitute forward looking statements in the softer in key strategic before engines, which involve a number boost and uncertainties actual results may differ materially the news and so.
As a result of a number of factors, including those described from time to time using those filings the students machine to machine.
Company assumes no obligation to something in such forward looking statements.
Additionally, during our call today in search of certain non-GAAP <unk>.
A reconciliation of those jobs to non-GAAP results include incumbents and specimens.
He teaching both of which can be found one investor relations section so much like.
He identified the principal risk uncertainties could affect Teleperformance annual report on form 10-K, and other benches and sometimes.
I'll now turn calls before that you.
Good morning, everyone on today's call will start with a review of our business at a high level and also briefly discuss our market opportunity.
Andy will then provide an update on the financial and operational review being led by the board as well as our government initiatives.
Bob will discuss our Q4 in 2019 results and outlook for 2020, Andy will close with a few remarks before we take questions.
Now turning to slide three didn't you haven't established global leadership position or residential comfort thermal security solutions as well as the distribution of security and low voltage products.
Video products right over 150 million households, and we've seen its 2019 with revenues of $5 billion.
We go to market via two business segments cost institutions in 80, I global distribution.
Targeting a total addressable markets of over $39 billion.
Our product and solutions segment have significant brand equity under the Honeywell home brands and a history of delivering innovative reliable easy to use if he wants to all solution sort of home value. Our solutions deliver is supported by our unmatched scale over 100000 contractors 3000 distributors and more than 1000.
200, Oems major retailers like online retail partners.
Well pro partners in the install close to 15 year old system components per year and have all the 6.7 million connected customers.
We also operate a leading global distribution business 80 hours, which has over 200 store locations across 17 countries.
He is focused on pro security connected home installers VDI is the number one global distributor of security products.
Now turning to slide four will go a bit deeper into the two business segments in the markets. They served.
In part of distinctions are multi category leadership.
Deeper relationships robust installed base and trusted brand recognition sent a solid foundation as we look to expand our presence in estimated 17 billion dollar addressable market. This is a growing market in one that fills a critical need for people in their homes.
So its three primary markets and Rpms business first comfort, where we focus on thermostats temperature control products indoor air quality and what are the prevention solutions or even revenue for 2019 is approximately $1.1 billion, making this a clear leader in this market second is Rts residential thermal solutions.
A roughly 600 million dollar business in 2019 focus primarily on boarding systems water heater controls and thermal systems.
Lastly, upload security business with approximately $800 million, an annual revenue of 29 team focused on pro security panels peripherals and software.
On the distribution side 80, I used to be either in them expand 22 billion dollar distribution market, our breadth of products large retail footprint in close contact with over 100000 pros around the globe coupled with Navy yard reputation for service excellence provides a significant competitive advantage to that end.
Recently announced the acquisition of from employee.
Leading provider in distributor integrated audio people products and services.
He's done successfully building our internal capabilities to serve this market over the past couple of years in this acquisition strengthens our existing platform complements or go to market strategies for 80 I. This space is margin accretive and allows us to offer critical service component to our offerings.
That is one of the pre eminent companies and deployed in space.
This acquisition greatly accelerates our entry into one of the fastest growing segments of the market.
With that I'll now turn it over to Andy.
Thanks, Mike Good morning, everyone.
Slide five that's not good shouldn't Presidio has a strong consider decision.
Thanks for thermal and security markets as well as a leading global distribution business.
She was based upon a history of delivering trust and reliable products and technology was trusted brands, we're trying to solve in millions of homes across the world.
Despite the strength of our solutions and brand coupled with good continued performance baby.
2019 proved to be challenging year.
We experienced issues with our products and solutions business.
Interest related to product need extra value engineering, and new product introductions.
To address these challenges, we're making changes and investments needed to improve execution and performance.
The strategic objectives. We're focused on include improvements in our new product introductions value engineering and product management, which we believe will drive long term growth and value creation.
[noise], starting a few products.
Reductions or.
Hi, its development of certain hardware product categories within our core business.
Back to deliver improved margins quality customer acceptance.
Our empty I processes being refinanced with a rigorous stage gate process.
Three design to value, it's been a rich integration of the voice of the customer.
In terms of engineering, we're focused on lowering your product costs and improving quality and functionality for.
Existing platforms.
This will be achieved by leveraging our global supply chain scale to standardize common components.
Well, it's better aligning our products to customer and market needs.
Additionally, we have a benchmarking and platforming analysis process underway to identify additional opportunities for cost reductions increased reliability improved competitive positioning.
[noise] relative to product management, we're also making organizational changes to better serve customers and make more informed decisions.
Yes, and achieved incurred by new systems and processes like sales inventory in operations, placing.
We also invested in analytics and other tools to enable product lifecycle management pricing optimization and segmentation.
Turning to slide six asphalt discussed there's a tremendous amount of work being done under the oversight of the newly formed strategic and operational Committee, which is comprised of Affordable Studios independent Board members.
Together with leading outside experts in supply chain optimization density organizational strategic exports.
Utilizing every aspect of our business through a financial and operational review.
Multiple which will drive our strategic initiatives.
We prioritize the initiatives with the most meaningful impact on the business in 2020.
The same time, we have line of sight to the mid to long term initiatives 2021 and 2022.
Developed destructuring capabilities to achieve our goals instead of Presidio for long term success I'll speak more about these efforts in a few moments.
[noise], we're committed to having a board with fresh perspectives, having December we welcome Brian cushion or that's a new independent director to our board.
Ryan has decades of experience spearheading corporate transformation, including more than a dozen assignments as transformational CEO.
The other with brands appointment to the board equals Demosky and non independent executive of the company has resigned from the board.
We shouldn't be in or trying to get our product and solutions segment. So I. Just think panel was named President in December of last year.
She has already proven to be an invaluable addition to the products and solutions team and you look forward to because many contributions moving forward.
In addition, he bought brighter joining research shows interim CFO following Joe Reagan's departure last November.
On an ongoing search for permanent CFO.
And finally, we also continue to make progress on our search for mix successor.
Turning now to slide seven let me dig into our financial operational review, which has three areas of focus gross margin and revenue growth that's usually organization.
Structural efficiency in working capital mother nature.
The first phase to the process consists of a set of rapidly executable high impact initiatives, some of which have already been implemented in Q1.
Improve our gross profit margins were focused on direct purchasing efficiencies.
We're cutting are extremely cost by streamlining the organization improving internal processes aligning R&D with <unk>.
And then they blame indirect procurement savings <unk>.
These areas will provide the most meaningful cost savings in phase one of her implementation.
As part of the first phase we've looked at roughly 70% of our direct material spend and use predictive analytics to challenge our suppliers to drives on pricing.
We expect to begin to see margin improvements coming from our spec optimization work in 2020 as part of our value engineering effort.
In future phases will move forward with plans to create efficiency for more complex processes.
Got you need streamlining our product portfolio looking at opportunities in platforming, optimizing our supply chain and footprint realizing the benefits of our return after <unk> process and further improving value engineering. Many of these initiatives are already underway to deliver the impact we expect a 22.
Anyone and beyond.
The company expects the transformation to deliver $30 million to $40 million supposed to be incremental EBITDA for fiscal year 2020.
$80 million to $120 million. So can you just in fiscal year 2021.
Overall, the total program is expected to drive greater than 200 million incremental EBITDA in fiscal year 2022 and beyond.
Moving to slide eight let's can see additional time on longer term. So this areas starting with revenue growth in gross margin improved.
We're focusing on improving sales tools and practices and driving increased returns on our marketing dollars. We're also targeting new customer segments, and taking advantage of strategic cross selling opportunities.
By prioritizing tactical opportunities in 2020, we're confident in our belief we can increase attach rates in our comfort and security businesses enhanced customer lifetime value and further drive revenue you change.
On the gross margin side, we assessed our product portfolio and as a result, we decided to rationalize certain underperforming products. Furthermore, we are instituting a pricing policy to close margin leakage.
In terms of SJ optimization from an organization perspective, the changes will be implemented several phases.
We've made a difficult but necessary reduction in our U.S. worse force last week. These initial changes we're focused in North America to create increased financial and operational flexibility. I think example, we've shifted away from the previous regional set up of support functions and moves such functions closer to.
Individual business functions.
That's not only allowed us to further integrate these critical capabilities into the core product business units, but also just scale to our functions to further creates centers of excellence.
Just a column, we will further simplify our internal processes and harness new tools to create more efficient business operations in North America into other regions.
On the indirect procurement side the teams had gone through rigorous zero based budgeting process to identify the optimal spend for various services and supplies within the company.
In parallel we are conducting a strategic review of our real estate footprint, which will provide longer term financial and operational benefits.
Total, we'd anticipate a 15% reduction indirect procurement spending than 2020.
Finally, our third focus area is to improve our structural efficiency in working capital management.
During the transformation. It is imperative that we pallets near term financial benefits, while positioning civeo for long term success.
For example, yes, we are optimizing processes for product development and affected product management through the refining that never npis process.
Similarly, our value engineering analysis suggests that there are multiple opportunities the lower product costs improve quality and reliability, while delivering a better user experience across many of our existing product families.
On the E side, we're seeing an increasing number of our customers expanding their online engagement with us as such we're investing in our digital capabilities and further improving our E commerce channel to lower sales costs and provide better customer experiences.
To further improve our operational performance, we're investing in tools to give our managers better quality data to make decisions with.
This will ensure we identify and address challenges quickly and effectively.
Our focus on improving working capital use will be bolstered by better tools for inventory planning and management and adjustments to our commercial terms and Paul cities.
She's initiatives I look forward to sharing mortgage you.
Moving to slide nine to summarize we're executing the initial set of changes based on the financial and operational review.
And are taking appropriate measures to improve presidio its business.
Current focus is to drive 2020 phase one initiatives that will both lower costs and improve processes and systems related to our core products Npls.
A series of Phase two initiatives are currently under development and slated for execution later in 2020 and 2021.
We believe these initiatives will lay the foundation for improved execution operational performance in years ahead. We also intend to engage with Honeywell on our agreements. We periodically you get inquiries from investors regarding our various agreements with Honeywell and the constraints and opportunities they provide to the business.
We have provided information on some of the terms of the agreements in an appendix to this presentation.
We've also made available on our website a more detailed summary of certain terms of some of your agreements.
These materials are not intended to replace the language of the agreements and we encourage investors looking for the most complete understanding to read the language of the actual agreements themselves.
We have highlighted the dispute we track with Honeywell relating to weather the amended credit agreement trends that became effective in the fourth quarter automatically applied to the corresponding provisions in the indemnification and reimbursement agreement.
Well, we want to ensure investors are aware of the dispute as I hope you can appreciate our ability to comment in more detail on a pending legal dispute is limited.
In closing the strategic and operational community, our management team and our external advisors continue to work diligently to best purchases from Brazil for long term sustainable growth and increased returns to shareholders.
There's more work to do.
But we can confidently say, we're on the right track, we look forward to updating you on our progress.
Thank you for your time this morning, I'll now turn the call over to Bob to review our financials. Good morning, everyone.
My section to the call I will cover fourth quarter financial results. Let me summarize 2019 will yield results and provide guidance for 2020.
Our fourth quarter results were driven by ongoing strong execution that 80 odd were robust global revenue trends and disciplined cost management are driving adjusted EBITDA growth and profit margin expansion.
It seems to poor ahead of the revised guidance we've seen good October.
Better than anticipated mix at products and solutions, However, keep score and full year 2019, compared unfavorably to the prior year.
The financial and operational review was initiated to address Nielsen's underlines the sub optimal performance.
Let's turn to slide 11.
Q4 revenues grew 20% on a GAAP basis, and 4% on a constant currency basis.
Hi seems to be very strong lubricants best revenue growth rates in 2019. This performance was partially offset by sales erosion at products and solutions.
Video adjusted EBITDA declined 25% compared to the fourth quarter last year, despite excellent EBITDA flow through that.
Turning to Q4 segment results.
Any I do revenue was 10% and converted back to 18 cents adjusted EBITDA growth.
Similar to prior quarters. This is reflective of the strong performance Executional culture at 80 Oh.
All geographies delivered strong sales growth the security and surveillance product lines charge.
Who asked you need productivity easy I was able to improve its adjusted EBITDA margin to 6.5% or 40 basis points better than 2018 in Q4.
Our products and solutions for revenue decreased 4% in the quarter.
All security revenue grew comfort and Rts revenues declined.
Comfort continued to see erosion in its still understaffed portfolio and warmer weather patterns dampened the revenue in the break fix trade channel.
Higher inventories at OEM customers negatively impacted our T.S. topline growth.
Adjusted EBITDA products and solutions declined 20% before quarter lower profitability due to negative product and channel mix inventory write offs lower revenue and higher production costs.
Inventory write offs into four totaled $25 million, bringing the full year totaled $46 million. These write offs were primarily in the comfort and security lines of business.
On the sales mix Ron.
Security sales were heavily weighted towards lower margin new products introduced in 2019 comfort sales overlap colder than normal 2018 in Germany, and the discontinuation of a higher margin non captive thermostat.
Rts sales mix, maybe towards the lower margin OEM channel.
Let's turn to slide 12.
We finished 2019 was $5 million of revenues, which represents 3% GAAP revenue growth and 5% constant currency growth.
We are delivered a great year, with 6% reported revenue growth and 7% constant currency growth.
Hi, Good said, if you adjusted EBITDAR growth.
Yeah strong revenue growth disciplined cost management delivered excellent financial algorithm.
At PNM <unk> full year revenue was flat on a GAAP basis and up 2% in constant currency, while adjusted EBITDA was down 32%.
CNS revenue growth much stronger in first half 2019, where grew 25%.
Yes, Q3 in Q4 witnessed 3% to 4% sales rose.
For the full year security business grew a robust 9% Archie EPS was down 4% comfort was down 1%.
As we categorize our 2019 adjusted EBITDA variances to 2018.
I see that positive initiatives were more than offset by negatives, resulting in a 27% consolidated EBITDA reduction.
The delivered $105 million of volume and price benefits. However.
Negative channel and product sales mix arising from lower margin product sales in comfort and security.
And lower margin channel sales in our key has reduced profits by $100 million.
[noise] material and labor inflation in factories and fixed cost leverage from lower sales had a $70 million negative impact and $40 million increased inventory write offs more than offset volume and pricing upside.
We were able to reduce yes, you need costs by $15 million to specific management actions in 2019.
Also made investments in sales staff and R&D and expanded our E commerce platform.
In addition, we pay $24 million in royalties to Honeywell, which is more arrangement commonplace in connection with the spin off.
Let's take a look at slide 14.
For 2020, we expect with video revenue to grow 2% to 4% with 80 I growing mid single digits.
In products and solutions flat to low single digits on a GAAP basis.
We expect our revenue growth to be backend loaded due primarily to products and solutions slow first half of 2020 overlapping a small but half of 2019.
For 2020, we're expecting adjusted EBITDA to come in at 420 $450 million with growth of 16, 24%.
We are providing EBITDA guidance into categories for 2020 to provide a bit more transparency and bring the appropriate attention to the financial and operational review.
We will provide adjusted EBITDA growth generated by the base business prior to the ethanol review and additional EBITDA generated by the ethanol initiatives.
Also walk you through a big year over year variance drivers between 2020 and 2019.
From an adjusted EBITDA perspective, we expect our base business grow between 30 and $50 million.
In addition, we expected the ethanol with your initiatives will result in $30 million to $40 million of incremental adjusted EBITDA in 2020.
The various aspects of phase one of the ethanol review will be implemented throughout 2020, so a full year benefit will not be realized in 2020.
The phase one savings are expected to come from reduced staffing levels.
Indirect procurement savings and Cogs reduction initiatives.
On an annualized basis, we expect these phase one initiatives to drive 80 to 120 million of savings in 2021.
As we begin to see full year, a phase one and partial and full year impacts a phase two initiatives results in 2022 and beyond we anticipate over 200 million of savings from the ethanol initiatives.
We have a disciplined process for the after no whereby we identified and vet initiatives to assure they have the a problem appropriate strategic and financial returns, we create business cases, and assign radio management accountability to each case.
When the business case reaches the appropriate return and its execution is determined probable you're baking into our financial forecast and we will update investors as part of our quarterly financial result calls.
Let's talk a bit about expected segment results for 2020.
At 80, I, we anticipate driving revenue growth from digital E Commerce, and tele sales growth acceleration salesforce effectiveness tools, new branches and private label growth.
We expect to see another year of adjusted EBITDA margin expansion at 80, I due to continued spending discipline and the growth of higher margin sales channels.
For products and solutions, we anticipate flat to low single digit growth for 2020.
Residual impact of 2019 price increases new product releases for non connected thermostats and Rts growth related to overlapping the 2019 regulatory change would be somewhat offset by the overlap of our 2019 OEM with launch U.S. security business.
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Now, let's turn to page 15 of the Investor presentation to discuss big drivers of 2020 over 2019 variances that resilient.
The positive adjusted EBITDA drivers, we anticipate volume price and mix to drive upside again in 2020.
We anticipate reduced inventory write offs in 2020 in a positive impact of our 2019 staff reduction initiative for full year.
Somewhat offsetting these EBITDA growth drivers are increased production costs from higher direct material and labor.
We continue to invest in our commercial functions and strengthen our R&D and digital capabilities. In addition, we see the $30 million to $40 million positive impact of our phase one ethanol initiatives.
These performance indicator Britain is from our $362 million 2019, adjusted EBITDA to our 2020 guidance range 420 $450 million.
We generally do not provide quarterly guidance. However, do not expect Q1 to be reflective of our full year 2020 performance.
For Q1, we expect their video revenue to be down low single digits, and adjusted EBITDA to be down 40% to 45% versus 2019.
We expect 80, I'd have a solid quarter of revenue and adjusted EBITDA, but we anticipate all products and solutions categories to have revenue would be low previous here as we overlap a strong Q1 of 2019, and we face some channel softness and warmer weather patterns.
For adjusted EBITDA, Lower Q1, 2020 revenue negative sales mix and higher factory costs negatively impact Q1 results at pianists.
In summary, he continues to perform at a very high level with better than industry sales growth and continued margin expansion.
Within its financial metrics. It is investing in its digital platform expanding its physical footprint expanding its salesforce effectiveness tools and its private label focus.
We're making significant improvements to our products and solutions like many of these issues, we'll take a bit of time to completely rowdy, where we expect significant financial improvement.
The base business will have a weaker first half of 2020 relative to the first half of 2019.
The overlap these issues and as our ethanol initiatives begin to take hold we expect to deliver a much stronger back half of 2020.
The ethanol initiatives will have a much more significant impact in 2021 and beyond as the phase one programs have a full year effect and the phase two programs begin to be implemented.
Let me turn it back to Andy for some closing comments.
Bob Let's turn to slide 16.
Today versus has a strong foundation to its business globally recognized and trusted brands deep and loyal connections with the professional installer community and global scale, given large and growing product categories.
Any 19 proved to be a disappointing year with challenges on many levels with that said, we enter 2020 with a clear commitment to driving improved financial and operating results.
We executed a number of governance initiatives and strength being the board of directors, while also making changes at the management level.
We are focused on building upon our strong foundation.
The 2020 outlook, we provided today reflects improvements in our base business as wells the impact of the first phase of our financial and operational review.
Back to deliver improved profitability in 2020, and further strengthen our business and position were scenario for accelerated performance in 2020, <unk> and beyond.
Thanks for your time today, we'll now open up the call to your questions operator.
Thank you.
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You can now take our first question.
Go ahead.
Hi, guys, it's John Lovallo from Bank of America, Thanks for taking my call.
The first question is on the CEO CFO search can you just described kind of the profile of the candidates that your interviewing and maybe the level of building products experience and how close you are to completing this.
Sure. John This is Andy speaking so the process is well underway Weve hired Russell Reynolds associates as far were.
Organization that is helping us with the process.
We're seeing good flow candidates and certainly we're looking for candidates.
Demonstrated track record.
Operating.
Industrial product segment.
Your centric focus.
We're certainly putting additional weight on candidates would have proven track record of turnaround performance margin improvement and delivering shareholder value.
And I happen to cool candidates that we've seen thus far look good.
The process is well underway and we look forward to communicating war for the shareholder base as soon as we had something definitive to talk about there.
Okay. Thanks, and then next question your 2020 outlook seems to imply roughly 17% products and solutions adjusted EBITDA margins, Let's seems you know well.
Encouraging it seems pretty aggressive how much of this is low hanging fruit.
What does the cadence of the realization expected and what is your level of confidence at the high and low end up your EBITDA range.
Well for all gets a couple of high global shoes, I guess first of all local flipping over to Bob for a couple of calls.
Generally on the low hanging fruit comment there, it's a fair amount here, but its actionable and.
Those would be brought to light bye.
Buys recently ethanol getting hit them for us.
The bigger issue on that as timing.
Because obviously it takes some time to implement these changes.
There there are number.
Actually that they can come to light fairly quickly here that will result in margin improvement pms it can be realized.
By the second half a year.
You want to add another commentary to that.
Obviously, we provide guidance would take it seriously long discussions with the board. So range, we provided a we expect to deliver.
Regarding the TNS margin Thats, probably better addressed offline.
The number you quote doesn't doesn't make that much sensitive so.
There's a lot of moving parts. So if you give dramatic call offline, we can probably.
Discuss general trends there.
Okay. Finally, you know the plans in place that's that's great execution, so hard part so.
I'm curious about the Measurability of this plan and the progress of it both internally and externally and how are you assigning accountability internally what kind of getting this done.
So there's a very detailed process.
So is that are in place.
Initiatives and each initiative have a leader and accountability assigned to that leader.
Weve also find chief transformation officer role on the business that we haven't individual rich history with the business that is overseeing that and it sold responsibility is to like the data. That's contained in the initiative plan to the responsible leaders that are responsible for executing.
Thats, good connection and accountability will be.
Yes.
Hi, Thanks very much at.
Thank you.
Okay.
Thank you as a reminder, signed that star one topic questions. They will then move along to our next question.
And is open caller. Please go ahead.
Hi, This is Jeff Kessler at Imperial capital.
And I just want to say hi, Andy its good good to talk with you again.
Yes, yes, or no secret life.
Yes.
I've I've a couple of questions here, a first is [noise].
Excuse my voice on on 80.
During the during the latter part of the year one of your your major come to your major competitor.
Distribution business was what was sold to another company took them over there is obviously integration going on there a couple of the company's do do dealt with that with your competitor have dealt with it had to deal with us lower inventory levels than they were expecting.
Did Haiti and really the until that is settled with could be by mid year and by the mid year Lady is.
Benefiting from what is going on it had an extra.
Yes, Jeff So you know I mean, both situations I think.
Our always you know can result in short term benefit or other players in the industry pro market share standpoint, because they're so there's always some disruption, but the control the combination.
Like that.
But that said.
Hi, guys expects security extremely well, it's a very well on business it very well managed business and.
We have a plan for investments this year in 80.
It's a goodwill I think has been under invested in historically, so we're going to target some specific areas that have been mentioned, but in the commentary.
Previously sexual assault and most importantly, I think the opportunity to improve our E commerce business and also improve our sales force affecting us Lady I should drive. Good result, so yeah, I think the combination of those initiatives together with.
Consider going on business environment relative to M&A or or both.
Okay just radio.
Thank you.
Okay second question with regard to one of the problems that the company encountered this past year was the lack of.
Product development people, who were in who are critical in developing or some of the newer now perhaps slightly older products that.
You folks who are selling did not come over from Honeywell.
From what I've seen in what I've talked to a where we've seen the company.
It sounds like they've either got some people coming over from Honeywell or your replenished some of the product development folks who are lost.
Can you comment on you know what's going on there in terms of getting the people in place and then getting the products in place.
So I agree with adjusted post spin up there was an opportunity for talent improvement in product development areas of Pms city and some of the lack of that manifested in our results in 2019. So the problems identified we hired a new.
Product and solution its president Soc site Powell, He's got a history with Honeywell and in some of these segments. So he knows a lot of players there and he's got a good I propel and that's the most important variances to get the right right because they're facing properly motivate them and.
Direct them to focus on the right burden from the R&D standpoint, and that's going to job number one percentage point.
You can experience operator and.
But it's going to generate good results in that regard it at the time could say processes is not something that happens instantly, but I think its most important that you had good talent that as well selected well managed and working on the correct priorities and that's what we're focused on.
Okay.
One final question, it's a numbers question.
Maybe for Bob and that is.
On the on your financial I'm sure. Your financial measures you note that the for the Honeywell reimbursement Fine agreement expense in the three months ended up at December 31 was $51 million.
Theres another number in there, though you assume cash payments related to Honeywell reimbursement agreement was at $35 million.
There seems to be a $16 million.
Differential there can you explain a can you can you explain that.
Yeah sure Jeff. So this is the same thing flows through for full year. When you see you know number you can kind of human cash flow statement dependable email number is different than the free cash flows today and what I'd say is the amount that hits. The PML is relatively complicated how it's calculated if you look at some of the documents.
What we're assuming is pretty much the cash will be a 114 year.
As it as it has been in the personnel will move around.
So you know if you're looking at valuations are things like that I would assume it's a 140 million dollar non tax deductible.
Outflow every year or no decades, that's right now.
Yes.
Alright, great.
Hi.
I have no further questions you have you've got a lot of stuff you on offline. So.
Thank you and I appreciate you taking my question.
Thanks, Jeff.
Thank you might look operations and the tourism.
But as a final reminder, states star one to ask a question. Thank you.
With no more questions, we'll tell you that ultimately.
Please go ahead.
Oh, yes. Good morning can you hear me.
Yes, we can.
Oh sure I apologize if it said this but what was the cost to the implementation of the program.
Hey, good timing related to that but mostly interested in the cash costs.
We haven't released forecast costs of the program yet.
Additional information on that it's a program progresses, but at this point we don't.
We're not yet the leasing.
For the full run cost.
And he can you give a roughly it will it be.
A large component or something that.
Required to you that covenant relief or is it.
Less significant magnitude.
Without being Bob if you pick.
Materials.
So you know, we're we're not worried.
Any project costs will cause any covenant issues under our under our we've done a covenant deal with the banks, we will update obviously, if you look at the.
You look at the quarters, we will update the costs of the program, which will generally be in a onetime items. We will not include them in adjusted EBITDA and there's a reconciliation tables every quarter, so certainly be disclosing them.
In the historical perspective, as the 10 keeps going up.
That's helpful. And then lastly, I can you speak to any color on the sell through where are the underlying trajectory on noncash connected.
Thermostats and residential or promote solutions given some of the noise that you had in the Uh huh.
Channel inventory channel.
Well, we don't go into specific.
Segment level unit sales data.
You can understand the rationale behind that but that said we are specifically addressing challenges that we had.
Like the parents that.
Section a check bringing back.
One of the discontinued products.
Popular product in that segment and making enhancements.
Two other products surrounding that product and we've got a couple of products that are in development.
For sure as well so.
It's safe to say that we're addressing the challenges that affected the market like the third and stuff.
Good segment.
Thank you and good luck.
Thank you.
That concludes today's <unk> session.
Sign I will turn the conference back to the speakers for any additional.
Thank you.
Thanks, everybody for participating in today's call.
This quarter.
Okay Today's conference call me.
Disconnects.
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