Resideo Technologies Q1 Earnings Call Highlights

Key Points

• Resideo beat first-quarter expectations, with net revenue up 8% year over year to more than $1.9 billion and adjusted EPS of $0.65. The company reaffirmed its full-year 2026 guidance despite soft end markets and inflationary pressure.
• Both main segments posted growth: Products and Solutions rose 9% on broad-based demand and continued margin expansion, while ADI Global Distribution grew 8% on strength in security, pro AV and data communications. ADI’s residential audiovisual business remained weak due to a soft U.S. housing market.
• Resideo is preparing to split into two companies, with the ADI Form 10 already filed and the spin-off expected between mid-Q3 and mid-Q4 2026. Management said the separation should create more focused businesses with greater financial flexibility and deleveraging goals.

Resideo Technologies NYSE: REZI reported first-quarter 2026 results above its outlook ranges and reaffirmed its full-year guidance, as executives cited solid execution across both its Products and Solutions and ADI Global Distribution businesses despite inflationary pressures and soft end markets.

Chief Executive Officer Jay Geldmacher said total net revenue rose 8% year over year to more than $1.9 billion. Total adjusted EBITDA was $215 million, and adjusted earnings per share were $0.65. Chief Financial Officer Mike Carlet said revenue exceeded the high end of the company’s outlook range, while adjusted EPS rose from $0.63 in the prior-year period.

“Resideo’s execution continues to be steady in an uncertain global macroeconomic environment and with end markets still soft,” Geldmacher said.

Products and Solutions posts broad growth

Tom Surran, president of Products and Solutions, said the segment delivered 9% year-over-year net revenue growth, including an approximately 200-basis-point favorable currency impact. The quarter also included four extra days, which added about 300 basis points to net revenue growth.

Surran said revenue grew across substantially all sales channels and product families, supported by both price and volume. In retail, growth was driven primarily by volume, with stronger demand for safety and thermostat products due to weather and regulatory changes. He said First Alert products, including the First Alert SC5 connected smoke and carbon monoxide detectors, showed increasing adoption.

The OEM channel posted its sixth consecutive quarter of year-over-year revenue growth, driven by both price and volume, while electrical distribution revenue rose on demand for BRK-branded non-connected safety products. Security channel revenue also increased, primarily from price increases on existing products.

The HVAC channel was down 1% year over year, with volume declines partially offset by higher prices tied to new products. Surran said residential HVAC conditions stabilized during the quarter, and the company saw reduced channel inventory at large HVAC distribution partners over the past three quarters.

Products and Solutions gross margin was 41.8%, up 40 basis points from a year earlier, marking the segment’s 12th consecutive quarter of year-over-year gross margin expansion. Surran said the increase was driven by factory utilization improvements, partially offset by product mix and higher fuel costs. Adjusted EBITDA rose 12% year over year.

ADI revenue rises as residential AV remains soft

Rob Aarnes, president of ADI Global Distribution, said ADI net revenue increased 8% year over year. Adjusted for four extra sales days, average daily sales rose 1%. Both measures included about a 1% favorable currency impact.

Aarnes said ADI’s growth was led by security, professional audiovisual and data communications categories, partially offset by weakness in residential audiovisual tied to a soft U.S. residential market. He highlighted sequential growth in security categories, including an expected rebound in video surveillance, and stronger contributions from large accounts.

E-commerce remained a focus area for ADI, with revenue up 12% year over year and average daily sales up 5%. Exclusive brands revenue increased 7%, while generating 13% more gross margin dollars. Aarnes said ADI added approximately 60 SKUs in the quarter, including new Luma security cameras, Triad premium residential sound products and Araknis networking products.

ADI gross margin was 21.2%, down 40 basis points year over year, primarily due to higher fuel costs for freight. Operating expenses rose because of variable costs tied to the extra sales days and duplicate costs related to store and distribution center optimization. ADI income from operations was flat, while adjusted EBITDA declined by $6 million.

Inflation, pricing actions and supply chain

Executives said higher freight and fuel costs affected both business segments in the first quarter. Geldmacher said Resideo has largely absorbed cost inflation in its reported results and intends to raise prices later in the second quarter to address increasing costs.

Carlet said the company expects higher fuel and freight costs during 2026 but does not anticipate material cost increases from new Section 232 tariffs or memory chips. He said pricing actions are intended to fully mitigate the increasing costs, though the timing could create a slight gross margin headwind in the second quarter.

During the question-and-answer session, Surran said Products and Solutions had worked with suppliers since last year to secure memory allocation commitments for 2026. He said only a minority of the segment’s products use memory, and those products generally use smaller-capacity memory rather than the higher-demand products used in data centers.

Separation plans advance

Resideo also provided an update on its planned business separation. Geldmacher said the company achieved key milestones, including the public filing of ADI’s Form 10. He said Resideo and ADI plan to hold investor day events in New York in mid-July to introduce leadership teams and discuss each company’s strategy and value creation model.

The company expects the spin-off to be completed between the middle of the third quarter and the middle of the fourth quarter. Geldmacher said the separation is expected to create two pure-play companies with sharper strategic focus and greater financial flexibility.

Carlet said both companies are expected to focus on deleveraging, with a gross leverage target of 3 times for each business, though he said more specific details would come closer to investor day.

Outlook reaffirmed

Resideo reaffirmed its full-year 2026 outlook. Carlet said the remainder of the year is now more weighted toward the second half, primarily because of a shift across fiscal quarters for ADI. The company continues to expect both business segments to deliver year-over-year revenue growth in 2026, with ADI and Products and Solutions now forecast to grow at approximately the same rate.

For the second quarter of 2026, Resideo guided for total company net revenue of $1.916 billion to $1.940 billion, adjusted EBITDA of $216 million to $230 million and fully diluted adjusted earnings per share of $0.71 to $0.75. Carlet noted the second quarter has one fewer day than the same period last year.

“Based upon what we can see today, we feel real good about how we’re thinking about the full year,” Carlet said.

About Resideo Technologies NYSE: REZI

Resideo Technologies, Inc, headquartered in Austin, Texas, is a global provider of home comfort, security and energy management solutions. Formed as an independent company in 2018 following its spin-off from Honeywell, Resideo leverages decades of engineering experience to deliver connected products and services to residential and light commercial customers.

The company’s core offerings include smart thermostats, security systems, video doorbells, water leak and freeze detection devices, and indoor air quality monitors.

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