Resideo Technologies (NYSE:REZI) Fireside Chat November 18, 2025 08:00 AM ET Company ParticipantsMike Carlet - CFORob Aarnes - President of P&S and CEO of ADI Post SpinNeil Matalia - Catalyst Driven InvestmentsOperatorHello and welcome. Please note members of the Media and Press are not authorized to participate in this event and should disconnect from the call now. The content presented on this conference is proprietary to and/or subject to copyright subjects to 3rd parties. You may not generally record, t ...

Market Overview - Despite high tariffs and a 22% correction in the S&P 500 earlier this year, equities are near all-time highs entering Q4, supported by monetary policy easing [2] - The Federal Reserve cut short-term interest rates to 4.00%–4.25% on September 17, indicating progress on inflation and softer labor conditions [2] - Markets anticipate two more 25 basis point cuts by year-end, contingent on cooling core service and wage inflation [2] Inflation and Consumer Impact - The headline consumer price index (CPI) is up 2.9% year-over-year, with low-income consumers feeling strain while high-income consumers remain resilient [5] - Goods deflation and cheaper traded inputs have mitigated the impact of tariffs on everyday prices, with import prices remaining flat to down through mid-2025 [4] - Core PCE inflation is in the high-2s, with stickiness in services rather than tariff-exposed goods [4] Corporate Activity and M&A Trends - Corporate boardrooms are increasingly engaging in mergers and acquisitions, driven by easing funding costs and a pursuit of scale [6] - Valuations have re-accelerated despite mixed deal volumes, with expectations for continued M&A activity in AI-adjacent tech, infrastructure, and select industrials [6] Earnings and Valuation Insights - The S&P 500 is near all-time highs with a forward 12-month price-to-earnings ratio of 22–22.5x, above historical averages, limiting expansion of stock valuation multiples [7] - Continued profit growth and free cash flow durability are essential for the next leg up in the market [7] AI Infrastructure and Investment Dynamics - Corporate investment in AI is driving market dynamics, with capital expenditure extending beyond GPUs to the entire infrastructure stack [11] - OpenAI is central to this investment shift, leveraging its user base to influence the AI value chain [12] - OpenAI's partnerships and contracts, including a reported ~$300 billion deal with Oracle, indicate a shift towards debt-fueled funding in the AI sector [16] Company-Specific Insights: Ferguson Plc - Ferguson is the largest specialty distributor for North American plumbing, with a revenue split of ~51% residential and 49% non-residential [22] - Despite a 16% drop in shares post-earnings due to fears of commodity deflation, revenue held steady, indicating resilience in pricing power [23] - The company is expected to continue compounding growth through organic means and accretive M&A, benefiting from structural advantages in sourcing and efficiency [25] Company-Specific Insights: Broadcom - Broadcom has been a strong performer in the semiconductor sector, positioned as a key player in the AI market alongside Nvidia [27] - The company excels in custom AI chips and networking solutions, with significant revenue growth expected in its AI segment [29] - Broadcom's strategic M&A and strong balance sheet position it well for future growth, particularly in AI and networking [33]

Core Viewpoint - LKQ Inc. is currently experiencing a slight increase in stock price, but has seen a decline over the past month and year, raising questions about its valuation despite stable performance in the current session [1]. Group 1: Stock Performance - The current stock price of LKQ Inc. is $29.83, reflecting a 0.03% increase [1]. - Over the past month, the stock has decreased by 2.71% [1]. - In the past year, the stock has declined by 23.23% [1]. Group 2: P/E Ratio Analysis - The P/E ratio is a critical metric for evaluating LKQ's market performance against its historical earnings and industry averages [5]. - LKQ has a lower P/E ratio compared to the aggregate P/E of 149.44 for the Distributors industry, suggesting potential undervaluation [6]. - A low P/E ratio may indicate undervaluation but could also reflect weak growth prospects or financial instability [8]. Group 3: Investment Considerations - Investors should use the P/E ratio cautiously, as it is just one of many metrics to consider when assessing a company's financial health [8]. - A comprehensive approach that includes other financial ratios, industry trends, and qualitative factors is essential for making informed investment decisions [8].

Summary of J.P. Morgan's China Healthcare Sector Conference Call Industry Overview - The conference call focused on the **China Healthcare sector**, particularly the **biotech** and **pharmaceutical** subsectors, which have shown significant financial performance in the first half of 2025 (1H25) [1][4]. Key Financial Performance - The **MSCI China Healthcare Index** and **Hang Seng Healthcare Index** have rallied over **70%** and **100%** respectively year-to-date [1]. - Most companies in the China healthcare sector met or slightly exceeded financial expectations for 1H25, with biotech companies showing solid growth in both top-line and bottom-line metrics [1][4]. Subsector Insights - **Biotech**: Remains a strong performer with robust growth driven by out-licensing, efficiency improvements, and cost control. Companies like **Kelun Biotech**, **RemeGen**, and **Innovent** reported results that met or exceeded expectations, prompting raised price targets [4][5]. - **CXO**: Continued positive momentum with companies like **WuXi AppTec**, **WuXi Bio**, and **WuXi XDC** exceeding market expectations and raising FY25 guidance [6]. - **Pharma**: Experienced slight revenue pressure, potentially due to **volume-based procurement (VBP)**, but net profit showed mild recovery year-over-year (YoY) and quarter-over-quarter (QoQ) [5]. - **Medtech**: Reported mixed results with some companies experiencing revenue growth while others faced declines. The competitive landscape is shifting, with **United Imaging** gaining market share [6]. - **Diagnostics**: Faced overall pressure with significant sales declines for key players due to price reductions and policy changes [12]. Market Dynamics and Future Outlook - The Hang Seng Healthcare Index saw a **10%** surge in the last 30 days, indicating a search for broader catalysts to sustain growth [4]. - Upcoming events such as **WCLC'25** and **ESMO'25** are expected to be significant catalysts for the sector [4]. - The sector is also looking forward to outcomes from **NRDL negotiations** and the drug coverage list from commercial health insurance in late 2025 [4]. Company-Specific Highlights - **Innovent** is highlighted as a top pick due to its diversified and innovative pipeline [4]. - **Akeso** showed potential despite results falling short of expectations, with promising data from its **HARMONi-A** trial [4]. - **Hengrui** is pursuing an independent global expansion strategy, which may lead to increased licensing income in the future [5]. Risks and Challenges - The **pharmacy sector** is expected to see consolidation, with an anticipated **100,000 store closures** in 2025 and 2026 [6]. - **Consumer sentiment** remains weak, impacting medical services and growth for companies like **Topchoice** and **Aier** [6]. Conclusion - The China healthcare sector is poised for further growth, driven by innovation and upcoming catalysts, despite facing challenges in certain subsectors. The overall sentiment remains optimistic, particularly for biotech and CXO companies, while pharma and diagnostics may require strategic adjustments to navigate current pressures [1][4][6].

Core Insights - Grainger reported second quarter 2025 sales of $4.6 billion, reflecting a 5.6% increase year-over-year, or 5.1% on a daily, constant currency basis [2][5] - The company updated its full year 2025 guidance, adjusting the diluted EPS range to $38.50 to $40.25, down from the previous range of $39.00 to $41.50 [10][15] Financial Performance - Net sales for Q2 2025 were $4,554 million, up 5.6% from $4,312 million in Q2 2024 [4] - Gross profit was $1,755 million, a 3.6% increase from $1,694 million in the prior year [4] - Operating earnings reached $678 million, up 4.5% from $649 million in Q2 2024, with an operating margin of 14.9% [9][10] - Diluted earnings per share were $9.97, representing a 4.8% increase from $9.51 in Q2 2024 [11] Segment Performance - In the High-Touch Solutions - N.A. segment, sales increased by 2.5%, while the Endless Assortment segment saw a significant growth of 19.7% [6][31] - The gross profit margin for the High-Touch Solutions - N.A. segment was 41.0%, down 70 basis points year-over-year, while the Endless Assortment segment's margin improved by 30 basis points [7][8] Cash Flow and Shareholder Returns - The company generated $377 million in operating cash flow and returned $336 million to shareholders through dividends and share repurchases [10][13] - Free cash flow for Q2 2025 was $202 million, calculated as operating cash flow minus capital expenditures of $175 million [26][31] Guidance Update - The updated guidance for 2025 includes net sales projected between $17.9 billion and $18.2 billion, with sales growth revised to 4.4% to 5.9% [15] - The effective tax rate is expected to remain around 23.8% [15]