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    REZI
    Earnings call· Jun 2026(Q2 FY26)

    RESIDEO TECHNOLOGIES Q2 FY26 earnings call REZI

    Aug 12, 2026 Source

    Executive summary

    Resideo Q2 FY26 — Strong Q2 Performance Exceeds Outlook, ADI Spin-off Completed, Stand-alone Outlook Initiated

    Resideo delivered strong Q2 FY26 results, exceeding outlook across key metrics, driven by robust performance in its Products & Solutions segment and the successful spin-off of ADI Global Distribution. The company initiated its stand-alone outlook for the remainder of FY26, focusing on its pure-play building technologies mission and leveraging new product introductions and operational optimizations, despite anticipated headwinds in the OEM security channel and inflationary input costs.

    Highlights

    5

    • Total revenue grew 2% year-over-year to just under $2 billion, a new quarterly record.

    • Total adjusted EBITDA grew 19% year-over-year to $249 million, a new quarterly record.

    • Total adjusted earnings per share grew 26% year-over-year to $0.83.

    • Products & Solutions (P&S) segment revenue grew 4% year-over-year, with its 13th consecutive quarter of gross margin expansion.

    • P&S gross margin percentage was 43.6%, up 70 basis points year-over-year and 100 basis points sequentially.

    Concerns

    3

    • Operating cash flow decreased year-over-year by $52 million, driven primarily by $45 million in payments for nonrecurring business separation activities and $20 million higher cash interest paid.

    • OEM security channel revenue is expected to be $40 million to $50 million less in the second half of 2026 versus the prior year due to reduced volumes with a large customer.

    • A slight headwind to gross margin is anticipated in the second half of 2026 due to higher input costs (memory, metals, PCBs, semiconductors, shipping) increasing faster than expected.

    Guidance & targets

    11
    CategoryTargetConfidence
    Full-year 2026 Stand-alone Revenue
    $2.9 billion to $2.95 billion
    high materiality
    High
    Full-year 2026 Stand-alone Adjusted EBITDA
    $605 million to $625 million
    high materiality
    High
    Q3 2026 Stand-alone Revenue
    $705 million to $730 million
    medium materiality
    High
    Q3 2026 Stand-alone Adjusted EBITDA
    $145 million to $155 million
    medium materiality
    High
    Full-year 2026 Sales to ADI
    approximately $175 million
    medium materiality
    High
    OEM Security Channel Revenue Impact
    $40 million to $50 million less
    medium materiality
    High
    Corporate Costs Allocated to Stand-alone Resideo
    approximately $80 million
    low materiality
    High
    Material Tariff Refunds
    no material tariff refunds
    low materiality
    High
    Material Tariff Cost Increases
    no material cost increases
    low materiality
    High
    Revenue Growth Across Channels (excluding OEM security)
    continued demand for our products and year-over-year revenue growth
    medium materiality
    High
    Term Loan B Repayment
    approximately $200 million
    medium materiality
    High

    Segment performance

    1
    SegmentRevenueYoYQoQMargin
    Products & Solutions
    Favorable 35 basis point impact from currency. Revenue grew across substantially all sales channels and product families, driven primarily by volume from customer demand. Retail channel saw strong YoY revenue growth from higher-value products (smoke/CO detectors, new thermostats). OEM combustion channel (energy category) posted 7th consecutive quarter of YoY growth, driven by higher-priced products in EMEA. HVAC distribution channel returned to YoY growth, driven by volume and adoption of Honeywell Home Elite Pro thermostat, dehumidification, and water filtration products. Electrical distribution channel had YoY revenue growth driven by volume, demand for BRK branded nonconnected safety products. Security distribution channel flat YoY due to soft market for security installs. OEM security sales down slightly YoY due to reduced volumes with a large OEM security customer, in line with strategy to focus on higher-margin branded business. Gross margin expansion driven by volume increases, favorable manufacturing and supply chain variances, and tariff refunds, partially offset by product sales mix. Incurred inflationary input costs, partially offset by price actions. Operating expenses increased due to higher legal settlement costs.
    13th consecutive quarter of year-over-year gross margin expansionR&D as % of total segmented revenue: approximately 5%Gross margin percentage change YoY: +70 bpsGross margin percentage change sequentially: +100 bpsAdjusted EBITDA growth YoY: 6%
    		4% year-over-year growth4%—Gross margin percentage was 43.6%

    Operational metrics

    18
    Adjusted EBITDA
    $249 millionup 19% year-over-year
    Q2 FY26

    New quarterly record. Includes favorable impact of $27 million of tariff refunds, primarily received by ADI.

    Adjusted EPS
    $0.83up 26% year-over-year
    Q2 FY26
    Debt repayment
    $900 million
    Q3 FY26

    Paid down outstanding principal under Term Loan B credit facility as part of deleveraging post-spin.

    Debt repayment
    approximately $200 million
    Q3 FY26

    Expected additional repayment on Term Loan B credit facility in Q3 following completion of the post-closing cash adjustment under the separation agreement with ADI.

    R&D as % of revenue
    approximately 5%
    Q2 FY26

    Investing behind new product launches and speed to market.

    Corporate costs allocated to stand-alone Resideo
    approximately $80 million
    FY26

    Full year corporate costs allocated to stand-alone Resideo for outlook purposes.

    Sales to ADI
    approximately $175 million
    FY26

    Anticipated full year sales to ADI as an external customer for stand-alone Resideo.

    OEM security revenue impact
    $40 million to $50 million lessvs. same period prior year
    H2 FY26

    Expected due to reduced volumes with a large OEM security customer. This impact is baked into medium-term financial targets.

    Favorable currency impact
    35 basis points
    Q2 FY26

    Favorable impact from currency on revenue growth.

    Gross margin expansion streak
    13th consecutive quarteryear-over-year
    Q2 FY26

    Refers to year-over-year gross margin expansion.

    Channel inventory
    healthy and increased modestlyfrom the prior quarter
    Q2 FY26

    Conditions in the residential HVAC market remained stable.

    Content per new residential built home
    stablequarter-over-quarter
    Q2 FY26

    Amidst a continued soft market for new home builds.

    Extra day in accounting calendar
    one extra dayversus same period last year
    Q3 FY26

    Due to corporate accounting calendar.

    Fewer days in accounting calendar
    4 fewer daysversus same period last year
    Q4 FY26

    Due to corporate accounting calendar.

    Tariff refunds
    $27 million
    Q2 FY26

    Favorable impact on adjusted EBITDA, primarily received by ADI.

    Tariff refunds
    no material tariff refunds
    remainder of 2026

    Anticipated for the remainder of 2026.

    Tariff cost increases
    no material cost increases
    after July 24

    Anticipated related to recent trade actions announced by the U.S. administration on July 24.

    Input cost inflation
    increase at a pace greater than originally expected
    H2 FY26

    Due to dynamic global conditions, creating a slight headwind to gross margin anticipated in H2.

    Industry KPIs

    2
    MetricValueDetails
    Price costnot a contributor
    Orders bookings growth by vertical4%%

    Product announcements

    5
    ProductTypeDetails
    New Smoke and CO Detector Platformlaunch
    New Video Surveillance and Intrusion Security Productslaunch
    Fortic Platformroadmap
    Honeywell Home Elite Proupdate
    New Dehumidification and Water Filtration Productsupdate

    Deals & partnerships

    1
    ADI Global DistributionSpin-off of the ADI Global Distribution business from Resideo.

    The spin-off was completed on August 3, 2026. Starting in Q3 FY26, ADI will be classified as discontinued operations for all periods. ADI will remain an important partner to Resideo.

    Capital programs

    2
    Tianjin facility closurecompleted

    Benefit: optimize operations, reduce product costs

    Part of a long-term plan to review manufacturing footprint and optimize costs.

    Latrobe facility closurecompleted

    Benefit: optimize operations, reduce product costs

    Part of a long-term plan to review manufacturing footprint and optimize costs.

    Risks & headwinds

    4
    OEM security channel weaknessH2 2026

    $40 million to $50 million less revenue in the second half of 2026 versus the same period in the prior year

    Mitigation: Focus on higher-margin branded business; impact already baked into medium-term financial targets. The relationship with the customer is healthy, but they are pursuing vertical integration.

    Inflationary input costsH2 2026

    slight headwind to gross margin

    Mitigation: Proactively instituted price increases during Q2; cost reduction efforts. Management believes these are temporary and will unwind as capacity becomes available.

    Soft residential macroeconomic environmentongoing

    persistently soft; not seeing much change in sales of existing homes or improvement in new home construction levels

    Mitigation: Company aims to out-execute the market through new product introductions and operational efficiency.

    Higher legal settlement costsQ2 FY26

    higher legal settlement costs

    What to watch in Q3 FY26

    5

    Stand-alone Adjusted EPS and Cash from Operations Outlook

    Q3 earnings call
    Currentnot provided this quarter
    Targetoutlook to be provided

    Why it matters

    These are key financial metrics for stand-alone Resideo, and their reintroduction will provide a more complete financial picture post-spin.

    During this short transition period, the stand-alone outlook we are providing is for revenue and adjusted EBITDA only. We intend to provide our outlook for adjusted earnings per share and cash from operations upon completion of certain activity including the post-closing cash adjustment under the separation agreement with ADI that is to be calculated in the coming weeks. We intend to once again provide outlook on these metrics starting with our third quarter earnings call.

    Q&A highlights

    6

    Analyst noted a perceived downgrade in P&S revenue growth guidance from 5% YoY (last quarter) to 2% YoY (new stand-alone guide) for FY26, despite Q2 beat. Asked for clarification on the math and reasons for the change.

    Tom Surran clarified the analyst's math was 'a little bit off,' stating the projected P&S growth is closer to 3% for the year, which is in line with expectations. He attributed any change to the OEM security issue that emerged mid-year. Chris Lee added that Q2 P&S outperformed expectations and growth is still anticipated in H2 across most channels, excluding OEM security.

    “So the math is a little bit off. So I'd have to go through exactly how you did your calculations. But no, the assumption what we said was that the things with the 2 segments would have similar growth for the year. We did not specify that it was P&S coming up in its revenue growth versus ADI coming down. But the projection that we have for P&S, A, the growth is higher than the number of 2% that you've stated. So overall for the year, it's almost 3%.”

    asked by Erik Woodring · answered by Thomas Surran

    2 min read6 chapters

    Detailed Narrative

    01

    ADI Spin-off and Financial Reporting Transition

    Resideo successfully completed the spin-off of ADI Global Distribution on August 3, 2026. For Q2 FY26, results are presented on a consolidated basis, but starting Q3 FY26, ADI will be classified as discontinued operations. The company has provided stand-alone results for Products & Solutions (P&S), including adjustments for corporate costs and sales to ADI as an external customer, to reflect the new structure and ensure comparability.

    02

    Leadership Changes

    Tom Surran assumed the CEO role, succeeding Jay Geldmacher, who led the company for six years through significant acquisitions and market dynamics. Shane Harrison was announced as the new CFO, joining on September 1. Mr. Harrison brings prior experience working with Mr. Surran at FLIR, and is expected to contribute strong financial and strategic capabilities to Resideo.

    03

    Products & Solutions Segment Performance

    The P&S segment demonstrated strong operational execution, achieving 4% year-over-year revenue growth and its 13th consecutive quarter of gross margin expansion, reaching 43.6%. This growth was primarily driven by increased volumes across most sales channels and product families, including retail, OEM combustion, HVAC distribution, and electrical distribution, despite soft housing trends and inflationary input costs.

    04

    Market Dynamics and Headwinds

    While most channels showed growth, the OEM security channel is expected to face significant headwinds, with an anticipated $40 million to $50 million reduction in H2 2026 revenue due to a large customer's strategic shift towards vertical integration. Input costs for memory, metals, PCBs, semiconductors, and shipping are increasing faster than expected, creating a slight gross margin headwind in H2, partially offset by proactive price actions.

    05

    New Product Introductions and Strategy

    Resideo is focused on its mission as a pure-play building technologies company, with significant market momentum from new product introductions. Key launches in H2 2026 include a new smoke and CO detector platform and new video surveillance and intrusion security products, which are expected to fuel near- and medium-term financial targets and drive profitable growth. The company is also rolling out its Fortic platform across products.

    06

    Operational Optimization Initiatives

    The company is actively reviewing and optimizing its manufacturing footprint and operations worldwide to reduce product costs and improve margins. This includes actions like the previously announced closures of the Tianjin and Latrobe facilities and optimizing product manufacturing. These efforts are part of a long-term plan to materially impact the company's efficiency over the next five years, aiming for improved gross and operating margins.

    AI-generated summary of the company’s earnings call. Not investment advice.