Financial Data and Key Metrics Changes - Resideo achieved record high net revenue of $1.94 billion, up 22% year over year, and 8% on an organic basis, excluding the impact of the SnapOne acquisition and a 1% favorable impact from currency [22][24] - Adjusted EBITDA reached a record $210 million, up 20% year over year, exceeding the high end of the outlook range [24] - Total company gross margin was 29.3%, up 120 basis points year over year, driven by margin-accretive activities at ADI and operational efficiencies at Products and Solutions [23] Business Line Data and Key Metrics Changes - Products and Solutions (P&S) reported net revenue growth of 6% year over year and 5% organic growth, with gross margin at 42.9%, up 160 basis points year over year [11][14] - ADI achieved 33% year over year growth in reported net revenue and 10% organic growth, with organic average daily sales also growing 10% year over year [16][22] - The integration of SnapOne is progressing well, contributing positively to Resideo's performance [20] Market Data and Key Metrics Changes - Demand for new products, including Honeywell Home Focus Pro thermostats and First Alert smoke detectors, remains strong across various sales channels [7][12] - The electrical distribution channel led revenue growth, while the HVAC channel experienced flat to slightly down revenue due to macroeconomic conditions [12][13] - The security channel saw a year-over-year decline primarily due to decreased sales from a large private label customer [13] Company Strategy and Development Direction - Resideo is raising its 2025 outlook, expecting total company net revenue to be in the range of $7.45 billion to $7.55 billion and adjusted EBITDA to be between $845 million and $885 million [27] - The company plans to introduce additional new products in air and comfort, security, and water categories to capitalize on current momentum [14] - Resideo announced plans to spin off its ADI business segment as an independent company, aiming to create significant value and refine strategic focus [29] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism regarding the market outlook, citing effective tariff mitigation actions and strong customer relationships despite price increases [8][9] - The company remains agile and well-prepared to react to new developments in a dynamic macroeconomic environment [9] - Management is confident in the continued execution and growth potential, supported by a strong pipeline of new products [6][10] Other Important Information - The company recorded a current liabilities balance of $1.625 billion related to the expected termination of the Honeywell Indemnification Agreement, resulting in a reported GAAP net loss [23] - The termination of the indemnification agreement is expected to benefit adjusted EBITDA by $35 million in the third and fourth quarters [26] Q&A Session Summary Question: Can you help us understand the organic growth in ADI? - Management indicated that 2% of the 10% organic growth in ADI was attributed to price increases due to tariffs, with strong demand across various categories [35][36] Question: What is the status of the SnapOne business? - Management stated that the SnapOne business is holding flat compared to the rest of ADI, with benefits from integration and scaling of exclusive brand products [38][40] Question: How are margins expected to evolve in P&S? - Management expects continued improvement in margins, aiming for a range of 45% to 50% over the long term, driven by new product introductions and operational efficiencies [58][59] Question: How is the company managing tariff impacts? - Management confirmed successful mitigation of tariff impacts through favorable supplier terms and dynamic pricing strategies [63] Question: What is the outlook for M&A? - Management remains open to M&A opportunities, particularly in adjacent categories and technology enhancements, while focusing on the integration of SnapOne [66][68]

Financial Data and Key Metrics Changes - Resideo reported record high net revenue of $1.94 billion, up 22% year over year and 8% on an organic basis, excluding the SnapOne acquisition impact [22][24] - Adjusted EBITDA reached a record $210 million, up 20% year over year, exceeding the high end of the outlook range [24] - Total company gross margin was 29.3%, up 120 basis points year over year, driven by margin-accretive activities at ADI and operational efficiencies at Products and Solutions [23] Business Line Data and Key Metrics Changes - The Products and Solutions segment achieved net revenue growth of 6% year over year and 5% organic growth, with gross margin at 42.9%, up 160 basis points year over year [11][14] - ADI reported 33% year over year growth in reported net revenue and 10% organic growth, with organic average daily sales also growing 10% year over year [16][22] - Exclusive Brands within ADI saw organic net revenue increase of 32% year over year, driven by successful cross-selling [19] Market Data and Key Metrics Changes - Demand for new products, such as Honeywell Home Focus Pro thermostats and First Alert SC5 detectors, remained strong across various sales channels [6][12] - The HVAC channel experienced flat to slightly down revenue due to macroeconomic softness and regulatory changes [13] - The security channel saw a year-over-year revenue decline primarily due to decreased sales from a large private label customer [13] Company Strategy and Development Direction - Resideo plans to spin off its ADI business segment as an independent company, aiming to create significant value and refine strategic focus [28] - The company is focused on introducing new products in air and comfort, security, and water categories to capitalize on current demand [14] - The integration of SnapOne is progressing well and is expected to enhance Resideo's product offerings and market position [20] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism regarding the market outlook, citing effective tariff mitigation actions and strong customer relationships despite price increases [8][10] - The company raised its 2025 outlook for total net revenue to a range of $7.45 billion to $7.55 billion and adjusted EBITDA to $845 million to $885 million [26] - Management highlighted the importance of maintaining operational agility to respond to dynamic market conditions [10] Other Important Information - The company recorded a current liabilities balance of $1.625 billion related to the termination of the Honeywell Indemnification Agreement, resulting in a reported GAAP net loss [23] - The company expects adjusted EBITDA to benefit from the removal of the $35 million quarterly payment to Honeywell following the termination of the indemnification agreement [24][25] Q&A Session Summary Question: Can you explain the organic growth performance from ADI? - Management indicated that 2% of the 10% organic growth was attributed to price increases due to tariffs, with strong demand in commercial security and other categories [34][35] Question: What is the status of the SnapOne business? - Management stated that SnapOne's performance is holding flat compared to the rest of the ADI business, with benefits from integration being realized [36][39] Question: How are you addressing headwinds in the security market? - Management acknowledged challenges with a large private label customer but emphasized ongoing engagement and potential for future growth [41][46] Question: What will happen to the legacy Control4 platform post-spin? - Management confirmed that the Control4 platform will remain with ADI, with plans to enhance the user experience and product offerings [50] Question: What are the future margin expectations for Products and Solutions? - Management indicated that margins could reach 45% to 50% over a longer period, driven by product value and operational efficiencies [56][57] Question: How is the company approaching M&A opportunities? - Management noted that M&A remains a strategic focus, particularly in adjacent categories and technology opportunities [64][66]