Group 1 - The event is a webinar hosted by Jefferies featuring Resideo's management team, including the President of P&S, the CFO, and the Head of Investor Relations [2][3] - The agenda includes a discussion on the background of P&S, financials of the company, and a deep dive into P&S operations, with a Q&A session planned at the end [3]

Resideo Technologies (NYSE:REZI) FY Conference Summary Company Overview - Resideo Technologies was spun out of Honeywell in 2018, combining residential products and a commercial distribution business [3][4] - The company has a current valuation of approximately $7.5 billion with an adjusted EBITDA of about 10.5% [5] - Resideo operates in two segments: Products and Solutions (P&S) focused on residential products, and ADI, a wholesaler of low voltage products [5][7] Key Business Segments Products and Solutions (P&S) - Focuses on building products related to HVAC, fire safety, and security systems [6] - Generates over $2.5 billion in EBITDA on an LTM basis with mid-single digit growth [6] ADI Business - A leading global wholesaler with over $4.5 billion in revenue, primarily selling security and audio-visual products [8] - Approximately 20% of sales come from exclusive brand products [7][80] Financial Performance and Guidance - The company faced challenges in Q3 due to an ERP system transition, resulting in a $15 million EBITDA impact, which is expected to continue into Q4 [16][20] - The HVAC segment experienced a 13% year-over-year decrease in air products business, attributed to inventory issues in the distribution channel [20] - Despite these challenges, other segments like energy, security, and water businesses showed growth [44] Market Dynamics - The company is navigating tariff impacts, particularly with manufacturing in Mexico and some products sourced from China [11][12] - The HVAC market is undergoing a transition due to refrigerant changes, affecting inventory levels and purchasing behavior [18][19] Strategic Initiatives Separation Efforts - Resideo is in the process of separating its two business segments to enhance operational focus and market clarity [48][49] - The separation planning phase has been completed, and operational execution is underway, with a target completion in the second half of next year [55] Product Innovation - Recent product launches include a new thermostat line and a connected smoke and carbon monoxide detector in collaboration with Google [82] - The company is focusing on enhancing existing product categories rather than entering new markets [83] Future Outlook - Resideo aims for mid-single digit growth across both business segments with potential for margin expansion [75] - The company is optimistic about recovering from current headwinds in the HVAC market by the end of Q1 next year [21][20] Conclusion - Resideo Technologies is strategically positioned to enhance its operational focus through the separation of its business segments while navigating current market challenges and pursuing product innovation to drive future growth [60][64]

Core Insights - Resideo Technologies, Inc. is scheduled to participate in multiple investor events, including virtual fireside chats focused on its Products & Solutions and ADI Global Distribution segments [2][3][4] - The company is a leading global manufacturer and distributor of technology-driven sensing and controls products for residential and commercial markets, with a significant presence in home heating, ventilation, air conditioning controls, and safety products [5] Event Participation - A virtual fireside chat on Products & Solutions is set for November 14, 2025, featuring CFO Mike Carlet and President Tom Surran [2] - Another virtual fireside chat on ADI Global Distribution will take place on November 18, 2025, with CFO Mike Carlet and President Rob Aarnes [3] - Resideo is also participating in the Baird 55th Annual Global Industrial Conference on November 12, 2025, with a fireside chat led by CFO Michael Carlet [4] Company Overview - Resideo operates in the home heating, ventilation, air conditioning controls, smoke and carbon monoxide detection, and security products markets [5] - The company’s solutions are utilized in over 150 million residential and commercial spaces globally, with tens of millions of new devices sold annually [5]

Core Viewpoint - Resideo Technologies (REZI) shares have declined by nearly 25% following mixed quarterly results, yet they remain up 20% from August levels, indicating resilience in the stock despite recent volatility [1]. Financial Performance - The quarterly results of Resideo Technologies were mixed, leading to a significant sell-off in shares [1]. Market Reaction - The stock price drop of nearly a quarter reflects investor reaction to the earnings report, but the overall increase of 20% since August suggests a recovery trend [1].

Core Insights - Resideo Technologies experienced a significant stock decline of nearly 24% following its earnings report, contrasting sharply with the S&P 500's decrease of only 1.1% on the same day [1] Financial Performance - The company reported net revenue exceeding $1.86 billion, marking a 2% year-over-year improvement [3] - Non-GAAP net income surged by 56% to $137 million, equating to $0.89 per share, outperforming analyst expectations of $0.72 per share [4] Business Segments - Resideo attributed its revenue growth to organic growth and improved margins in its wholesale distribution business, ADI, and its products and solutions offerings [5] Future Guidance - Management's guidance for future performance indicated expected net revenue between $7.43 billion and $7.47 billion, with adjusted net profit projected at $2.57 to $2.67 per share, both figures falling short of analyst estimates [6]

Financial Performance - Resideo Technologies reported adjusted earnings per share (EPS) of $0.89, exceeding the forecast of $0.69 [2] - The company's revenue for the third quarter was $1.86 billion, slightly below the expected $1.87 billion [2] - For the fourth quarter, Resideo guided revenue of $1.87 billion, which is lower than analysts' estimates of $1.92 billion [2] - Management lowered its full-year adjusted EPS guidance by 6.8% to $2.62 at the midpoint [2] Market Reaction - Shares of Resideo fell 23.6% in the morning session following the mixed financial results [1] - The significant stock price decline indicates that investors were more concerned about the revenue shortfall and weak guidance than the positive earnings surprise [2] - Resideo's shares have shown volatility, with 15 moves greater than 5% over the last year, highlighting the impact of this news on market perception [4] Economic Context - The political stalemate in Washington is causing delays in the release of crucial economic data, affecting investor confidence [5] - Chief Economist at Moody's Analytics warned that 22 states are showing signs of recession, indicating a precarious position for the broader U.S. economy [6] - Rising short-term inflation expectations and deteriorating labor market outlook from consumers are likely to impact discretionary spending [6]

Core Insights - Resideo Technologies reported revenue of $1.86 billion for the quarter ended September 2025, reflecting a 2% increase year-over-year [1] - The company's EPS was $0.89, up from $0.58 in the same quarter last year, indicating a significant improvement [1] - Revenue fell slightly short of the Zacks Consensus Estimate of $1.87 billion, resulting in a surprise of -0.55%, while the EPS exceeded expectations by 25.35% [1] Financial Performance Metrics - Net Revenue from Products & Solutions was $661 million, slightly below the average estimate of $670.8 million, marking a 2.5% year-over-year increase [4] - Net Revenue from ADI Global Distribution was $1.2 billion, matching analyst estimates and showing a 1.7% increase compared to the previous year [4] - The company reported a loss from operations in the Corporate segment of $-42 million, better than the estimated loss of $-49.85 million [4] - Income from operations for ADI Global Distribution was $56 million, below the average estimate of $66.19 million, while Products and Solutions reported $140 million, exceeding the estimate of $137.85 million [4] Stock Performance - Resideo Technologies' shares have returned -0.6% over the past month, contrasting with the Zacks S&P 500 composite's +1% change [3] - The stock currently holds a Zacks Rank 1 (Strong Buy), suggesting potential for outperformance in the near term [3]

Core Insights - Resideo Technologies reported quarterly earnings of $0.89 per share, exceeding the Zacks Consensus Estimate of $0.71 per share, and up from $0.58 per share a year ago [1] - The earnings surprise was +25.35%, with the company having surpassed consensus EPS estimates three times in the last four quarters [2] - The company posted revenues of $1.86 billion for the quarter, slightly missing the Zacks Consensus Estimate by 0.55%, but up from $1.83 billion year-over-year [3] Earnings Performance - The earnings surprise of +25.35% indicates strong performance relative to expectations [2] - Resideo Technologies has consistently outperformed EPS estimates, achieving this in three out of the last four quarters [2] Revenue Analysis - The reported revenue of $1.86 billion was a slight miss compared to the consensus estimate, but it still reflects growth from the previous year's revenue [3] - The company has also topped revenue estimates three times in the last four quarters, indicating a positive trend in revenue performance [3] Stock Performance - Resideo Technologies shares have increased approximately 79.7% since the beginning of the year, significantly outperforming the S&P 500's gain of 15.1% [4] - The stock's future price movement will depend on management's commentary during the earnings call and the sustainability of earnings expectations [4] Future Outlook - The current consensus EPS estimate for the upcoming quarter is $0.77, with expected revenues of $1.92 billion, and for the current fiscal year, the estimate is $2.78 on $7.5 billion in revenues [8] - The favorable trend in estimate revisions prior to the earnings release has resulted in a Zacks Rank 1 (Strong Buy) for the stock, suggesting expected outperformance in the near future [7] Industry Context - Resideo Technologies operates within the Zacks Security and Safety Services industry, which is currently ranked in the top 16% of over 250 Zacks industries [9] - The performance of the stock may be influenced by the overall outlook for the industry, with research indicating that the top 50% of Zacks-ranked industries outperform the bottom 50% by more than 2 to 1 [9]

Financial Data and Key Metrics Changes - Adjusted EBITDA reached a record high, with net revenue of $1.86 billion, up 2% year over year, including a 1% favorable impact from currency [18][19] - Gross margin increased to 29.8%, up 110 basis points year over year, driven by margin-accretive activities at ADI and operational efficiencies at P&S [18][19] - Adjusted earnings per share was $0.89, exceeding the high end of the outlook range and up from $0.59 in the prior period [19] Business Line Data and Key Metrics Changes - Products and Solutions (P&S) segment net revenue grew 2% year over year, with a 1% favorable impact from currency, marking the 10th consecutive quarter of gross margin expansion [8][12] - ADI reported 2% net revenue growth and average daily sales growth of 3%, with most product categories growing low single digits year over year [13][18] - The HVAC channel experienced a low double-digit percentage decline year over year due to a softer residential HVAC market [10][12] Market Data and Key Metrics Changes - Demand for new products, such as the First Alert combined smoke and CO connected detectors, remains strong, contributing to growth across various sales channels [5][8] - The OEM channel posted low double-digit percentage revenue growth year over year, while the retail channel experienced strong point-of-sales volumes [9][10] - The residential housing market remains soft, impacting the HVAC channel, but conditions are expected to normalize in the near future [10][11] Company Strategy and Development Direction - The company is focused on introducing differentiated new products across its connected home product portfolio, anticipating profitable growth opportunities [12] - Ongoing separation activities are on track to be completed in the second half of 2026, with leadership roles defined for the separate companies [7] - The integration of Snap One continues to progress well, with expectations to exceed the $75 million run rate synergies [16] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to navigate macroeconomic challenges, including inflation and tariff volatility, with no material impacts from recent events like the U.S. government shutdown [6][7] - The company anticipates a rebound in cash provided from operations in the fourth quarter, following the completion of the ERP implementation [19][20] - The outlook for 2026 is positive, with expectations for year-over-year growth in organic revenue and adjusted EBITDA above current analyst estimates [22] Other Important Information - Total reported cash used by operating activities was $1.571 billion, primarily due to the termination payment made to Honeywell [19] - The company is raising its outlook for total cash from operations, excluding the Honeywell termination payment, to $410 million-$450 million [21] Q&A Session Summary Question: Can you quantify the impact of the HVAC regulatory change? - Management indicated that both HVAC and ERP headwinds were transitory and caught them by surprise, but they expect to see improvements moving forward [24][25] Question: Will these headwinds bleed into 2026? - Management believes the ERP issues will be resolved by the end of the year, while HVAC impacts may slightly extend into 2026 but are expected to be minimal [26][27] Question: What growth would P&S have seen without HVAC headwinds? - Management refrained from providing specific growth figures but emphasized strong performance in other areas such as retail and OEM [28][30] Question: Why are HVAC headwinds considered transitory? - Management explained that excess inventory in the market due to regulatory changes is causing temporary disruptions, but demand for HVAC systems will remain strong in the long term [36][37] Question: What are the expectations for operating margins in the future? - Management targets double-digit operating margins for ADI and anticipates 300-500 basis points of operating margin expansion for P&S over the next three to five years [44][46] Question: What factors should be considered for the 2026 outlook? - Management highlighted the $70 million step up in EBITDA from the Honeywell indemnity and ongoing product launches as key factors for the 2026 outlook [60][61]

Financial Data and Key Metrics Changes - Adjusted EBITDA reached a record high, with net revenue of $1.86 billion, up 2% year-over-year, including a 1% favorable impact from currency [18][19] - Gross margin increased to 29.8%, up 110 basis points year-over-year, driven by margin-accretive activities at ADI and operational efficiencies at P&S [18][19] - Adjusted earnings per share was $0.89, exceeding the high end of the outlook range and up from $0.59 in the prior period [19] Business Line Data and Key Metrics Changes - Products and Solutions (P&S) net revenue grew 2% year-over-year, with a 1% favorable impact from currency, marking the 10th consecutive quarter of gross margin expansion [8][12] - ADI reported 2% net revenue growth and average daily sales growth of 3%, with most product categories growing low single-digit percentages year-over-year [13][18] - HVAC channel revenue declined by a low double-digit percentage year-over-year due to a softer residential HVAC market [10][12] Market Data and Key Metrics Changes - Demand for new products, such as the First Alert combined smoke and CO detectors, remains strong, contributing to growth across various sales channels [5][8] - The residential housing market continues to be soft, impacting the HVAC channel, but broader industry health appears to be improving [10][11] - E-commerce revenue grew 3% year-over-year, highlighting the effectiveness of the omnichannel experience [14] Company Strategy and Development Direction - The company is focused on introducing differentiated new products across its connected home product portfolio to capitalize on profitable growth opportunities [12] - Ongoing separation activities are on track to be completed in the second half of 2026, with leadership roles defined for the separate companies [7] - The integration of Snap One is progressing well, with expectations to exceed the $75 million run rate synergies [16] Management's Comments on Operating Environment and Future Outlook - Management believes current macroeconomic headwinds are transitory, with confidence in the guidance provided for the upcoming quarters [25][26] - The company anticipates a rebound in cash provided from operations in the fourth quarter following the completion of the ERP implementation [19][20] - The outlook for 2026 is positive, with expectations for year-over-year growth in organic revenue and adjusted EBITDA above current analyst estimates [22][48] Other Important Information - The company experienced a one-time tax benefit from terminating the Honeywell indemnification agreement, contributing to higher net income [19] - Adjusted cash provided by operating activities was $19 million, lower than anticipated due to timing of payments and lower cash collections at ADI [19] Q&A Session Summary Question: Can you quantify the impact of the HVAC regulatory change? - Management indicated that both HVAC and ERP headwinds were transitory and caught them by surprise, but they feel confident about future guidance [24][25] Question: Will these headwinds continue into 2026? - Management expects the ERP issues to be resolved by the end of the year, while HVAC impacts may slightly bleed into next year but are also expected to be transitory [26][27] Question: What growth would P&S have seen without HVAC headwinds? - Management refrained from quantifying specific growth figures but expressed excitement about new product introductions and overall market positioning [28][30] Question: Why are HVAC headwinds considered transitory? - Management explained that excess inventory in the market due to regulatory changes is causing temporary disruptions, but demand for HVAC systems will remain strong long-term [36][37] Question: What are the expectations for operating margins in the future? - Management targets double-digit operating margins for ADI and anticipates 300-500 basis points of operating margin expansion for P&S over the next three to five years [44][46] Question: What factors should be considered for 2026 guidance? - Management highlighted the $70 million step up in EBITDA from the Honeywell indemnity and other initiatives driving performance as key factors for 2026 [60][61]