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    REZI
    Earnings call· Dec 2025(Q4 FY25)

    RESIDEO TECHNOLOGIES Q4 FY25 earnings call REZI

    Feb 24, 2026 Source

    Executive summary

    Resideo Q4 FY25 — Exceeds Outlook with Strong P&S Growth and ADI Operational Stabilization

    Resideo concluded Q4 FY25 exceeding its financial outlook, driven by robust performance in Products & Solutions and the successful stabilization of ADI's operations post-ERP implementation. The company achieved record full-year results in revenue, adjusted EBITDA, and adjusted EPS, positioning it for a planned business separation in H2 2026. Management remains cautiously optimistic about 2026, anticipating continued growth despite macroeconomic uncertainties.

    Highlights

    5

    • Net revenue of $1.895 billion, up 2% year-over-year, exceeded the high end of the outlook range.

    • Adjusted EBITDA of $226 million, up 21% year-over-year, was above the high end of the outlook range.

    • Products & Solutions (P&S) net revenue grew 6% year-over-year, achieving its 11th consecutive quarter of gross margin expansion.

    • ADI Global Distribution achieved full operational stabilization post-ERP system implementation, with e-commerce revenue growing 3% year-over-year.

    • Full-year 2025 saw record highs in net revenue ($7.5 billion, up 11%), adjusted EBITDA ($833 million, up 20%), and adjusted EPS ($2.68, up 17%).

    Concerns

    4

    • Adjusted EPS of $0.50 was down from $0.59 in the prior year period, primarily due to higher interest expense of approximately $20 million.

    • ADI Global Distribution reported a small year-over-year decline of 50 basis points in net revenue, mainly due to a decline in the video surveillance category.

    • HVAC channel revenue for P&S was down by a low to mid-single-digit percentage year-over-year.

    • Increased SG&A costs related to ERP implementation and ongoing investments in real estate and digital at ADI offset gross profit gains, leading to a small decline in adjusted EBITDA for the segment.

    Guidance & targets

    13
    CategoryTargetConfidence
    Full-year 2026 Net Revenue
    $7.8 billion to $7.9 billion
    high materiality
    High
    Full-year 2026 Adjusted EBITDA
    $935 million to $985 million
    high materiality
    High
    Full-year 2026 Diluted Earnings Per Share
    $3.00 to $3.20
    high materiality
    High
    Q1 2026 Net Revenue
    $1.866 billion to $1.890 billion
    medium materiality
    High
    Q1 2026 Adjusted EBITDA
    $193 million to $207 million
    medium materiality
    High
    Q1 2026 Diluted Earnings Per Share
    $0.58 to $0.62
    medium materiality
    High
    2026 Cash Provided by Operations (excluding separation-related payments)
    Similar to last year
    medium materiality
    Medium
    ADI Growth Rate
    Higher than Products & Solutions
    medium materiality
    Medium
    Total Company Gross Margin
    Very modest expansion
    medium materiality
    Medium
    Products & Solutions Gross Margin
    Greater expansion than ADI
    medium materiality
    Medium
    Total Company R&D Expenses
    Similar percentage of revenue to the second half of 2025's run rate
    low materiality
    Medium
    Revenue Linearity
    Slightly higher revenue in the second half versus the first half
    low materiality
    Medium
    Business Separation
    Anticipated to occur in the second half of 2026
    high materiality
    High

    Segment performance

    2
    SegmentRevenueYoYQoQMargin
    Products & Solutions
    Revenue growth driven by volume and price across multiple product families and sales channels, offsetting soft HVAC. Strong retail channel with record high revenue. Electrical distribution channel saw very strong revenue growth and record annual revenue in 2025. OEM channel posted fifth consecutive quarter of YoY revenue growth. Security channel revenue down modestly YoY. HVAC channel revenue down low to mid-single-digit percentage YoY, but better than anticipated with normalizing channel inventory.
    Currency impact: ~1% favorableGross margin expansion: 20 bps YoY (11th consecutive quarter)Adjusted EBITDA growth: 6% YoYOrganic net revenue (FY25): 4% YoYGross margin expansion (FY25): 110 bps YoY
    		Grew 6%6%—41%
    ADI Global Distribution
    Small year-over-year decline in net revenue and average daily sales. Growth in commercial security and professional audio visual product categories was offset by a decline in video surveillance. Fully operational on new ERP system, leading to increased customer confidence and improved operational metrics. Gross margin expansion driven by favorable price and mix. SG&A costs related to ERP implementation and investments offset gross profit gains.
    Average daily sales decline: 50 bps YoYCurrency impact: ~80 bps favorableGross margin expansion: 110 bps YoY (7th consecutive quarter)Adjusted EBITDA: small decline YoYOrganic net revenue (FY25): 3% YoYOrganic average daily sales (FY25): 4% YoYGross margin expansion (FY25): 200 bps YoYE-commerce net revenue growth: 3% YoYE-commerce average daily sales growth: 3% YoYExclusive brands net revenue growth: 2% YoY
    		Declined 50 bps-0.5%—22.7%

    Operational metrics

    14
    Net Revenue
    $7.5BUp 11%
    FY25

    Company-wide net revenue for the full year 2025.

    Adjusted EBITDA
    $833MUp 20%
    FY25

    Company-wide adjusted EBITDA for the full year 2025.

    Adjusted EPS
    $2.68Up 17%
    FY25

    Company-wide adjusted EPS for the full year 2025.

    Adjusted Cash Provided by Operations
    $453MUp 2%
    FY25

    Company-wide adjusted cash provided by operations for the full year 2025.

    Total Net Revenue
    $1.895BUp 2%
    Q4 FY25

    Company-wide net revenue for the fourth quarter 2025.

    Total Gross Margin
    29.6%Up 110 bps
    Q4 FY25

    Company-wide gross margin for the fourth quarter 2025.

    Adjusted EPS
    $0.50Down from $0.59
    Q4 FY25

    Company-wide adjusted EPS for the fourth quarter 2025. Decrease primarily due to higher interest expense.

    Adjusted EBITDA
    $226MUp 21%
    Q4 FY25

    Company-wide adjusted EBITDA for the fourth quarter 2025.

    Interest Expense
    ~$20MHigher YoY
    Q4 FY25

    Increase in interest expense related to incremental debt incurred to terminate the Honeywell Indemnification agreement, impacting Q4 EPS.

    Net Operating Cash Benefit
    ~$40MYoY
    Q4 FY25

    Benefit received from the Honeywell Indemnification agreement in Q4.

    Reported Cash Provided by Operating Activities
    $299M
    Q4 FY25

    Company-wide reported cash provided by operating activities for the fourth quarter 2025.

    Snap One Synergies
    $75M
    2025

    Synergies achieved from the Snap One acquisition.

    Selling Days
    4 extra daysvs Q1 FY25
    Q1 FY26

    Impact of the 4-4-5 fiscal calendar on Q1 2026.

    Selling Days
    4 less daysvs Q4 FY25
    Q4 FY26

    Impact of the 4-4-5 fiscal calendar on Q4 2026.

    Industry KPIs

    3
    MetricValueDetails
    Price costProactive steps similar to last year
    Organic operating leverageGreater operating leverage
    Orders bookings growth by verticalVery strong (retail), very strong (electrical distribution), fifth consecutive quarter of year-over-year (OEM), down modestly (security), low to mid-single-digit percentage decline (HVAC)

    Product announcements

    5
    ProductTypeDetails
    First Alert SC5 connected smoke and carbon monoxide detectorlaunch
    Honeywell Home ElitePRO Thermostatlaunch
    Honeywell Home Focus Pro Thermostatlaunch
    Control4 X4 operating systemlaunch
    Episode business music linelaunch

    Deals & partnerships

    1
    Snap OneIntegration of Snap One into ADI Global Distribution

    Integration progressing well. Focus on combining under one common platform, real estate/footprint optimization, and leveraging R&D firepower for light commercial NPIs. Despite soft resi AV macro, greater potential seen beyond that.

    Risks & headwinds

    10
    Global macroeconomic environment uncertainty2026

    Cautious outlook

    Geopolitical landscape uncertainty2026

    Cautious outlook

    Tariff-related changes2026

    Potential impact

    Mitigation: Assumption that USMCA and certain electronic goods exemptions will continue. Resideo will continue to take proactive steps similar to last year to mitigate costs. Agile and prepared to react to potential changes.

    U.S. residential housing market growth2026

    Little growth

    Mitigation: Focus on broader penetration of product portfolio with residential homebuilders and MRO market strength.

    Persistent shortage of housing supply2026

    Persistent

    Commercial market GDP growth2026

    Low single-digit

    Mitigation: Acknowledging mixed signals across industry verticals and potential negative impacts from tariff/fiscal policy uncertainty and societal dynamics.

    HVAC channel softnessQ4 FY25, expected to improve by end of Q1 FY26

    Low to mid-single-digit percentage decline YoY (Q4 FY25)

    Mitigation: Normalization of channel inventory levels with large customers. Increased user demand as weather turned colder helped Q4 performance.

    Video surveillance category declineQ4 FY25, returning to growth in near term

    Decline in Q4 FY25

    Mitigation: Pipeline is refilling nicely for products with multi-month sales cycles. ADI's operational stabilization allows refocus on customer service and taking share.

    Higher interest expenseQ4 FY25

    ~$20 million YoY increase

    Mitigation: Impacted Q4 EPS, related to incremental debt for Honeywell Indemnification agreement termination.

    Increased SG&A costs at ADIQ4 FY25

    Offset gross profit gains

    Mitigation: Related to completing ERP implementation and ongoing investments in real estate and digital. Expected to normalize as ERP is fully operational.

    What to watch in Q1 FY26

    5

    ADI Video Surveillance Category Growth

    Near term (Q1 FY26)
    CurrentDeclined in Q4 FY25
    TargetReturning to growth

    Why it matters

    This category's recovery is crucial for ADI to achieve its targeted mid-to-high single-digit revenue growth and overall segment performance.

    We anticipate video surveillance returning to growth in the near term as the pipeline is refilling nicely for products that have a multi-month sales cycle.

    Q&A highlights

    9

    Can you provide more detail on the status of HVAC inventory and ERP upgrades, specifically what issues are fully behind you and what might still impact the 2026 outlook?

    Jay Geldmacher confirmed the ADI ERP system implementation is fully behind them and operating well. Tom Surran stated that HVAC inventory adjustments by large distributors are mostly complete, with channel inventory levels normalizing, and the market is expected to improve by the end of Q1. Rob Aarnes emphasized ADI's full operational stability post-ERP, allowing the team to refocus on customer service and market share.

    “From an ADI perspective, the ERP system is done. It's running. It's up there, all is well. And so that implementation is fully behind us.”

    asked by Erik Woodring · answered by Jay Geldmacher

    2 min read5 chapters

    Detailed Narrative

    01

    Q4 FY25 Performance Exceeds Expectations

    Resideo concluded 2025 with strong financial results, surpassing its Q4 outlook for net revenue, adjusted EBITDA, and adjusted EPS. The company reported total net revenue of $1.895 billion, a 2% year-over-year increase, and adjusted EBITDA of $226 million, up 21% year-over-year. These results contributed to record annual highs for 2025, with net revenue reaching approximately $7.5 billion (up 11%), adjusted EBITDA $833 million (up 20%), and adjusted EPS $2.68 (up 17%).

    02

    Products & Solutions Drives Growth Amidst Market Shifts

    The Products & Solutions (P&S) segment delivered robust performance in Q4, with net revenue growing 6% year-over-year, including a 1% favorable currency impact🌐. This growth was fueled by strong activity in retail and electrical distribution channels, alongside stabilization in the OEM market. P&S achieved its 11th consecutive quarter of year-over-year gross margin expansion, reaching 41% in Q4, despite a challenging HVAC market which saw revenue decline by a low to mid-single-digit percentage. New product introductions, such as the First Alert SC5 and Honeywell Home ElitePRO Thermostat, are gaining positive customer reception.

    03

    ADI Global Distribution Achieves Operational Stability

    ADI Global Distribution reported a slight 50 basis point year-over-year decline in net revenue for Q4, primarily due to a downturn in the video surveillance category. However, the segment successfully completed its ERP system implementation, achieving full operational stabilization. This milestone is expected to restore customer confidence and refocus the team on market share gains. ADI also demonstrated strong gross margin expansion, up 110 basis points to 22.7% in Q4, marking its seventh consecutive quarter of year-over-year growth, driven by favorable price and mix.

    04

    Strategic Separation Progresses Towards H2 2026

    Resideo's planned business separation into two independent, publicly traded companies is advancing according to schedule, with an anticipated completion in the second half of 2026. Management expressed confidence that this separation will unlock significant shareholder value. The company plans to host Investor Day events prior to the effective separation date to provide detailed insights into the go-forward strategies, financial frameworks, and capital structures for each entity.

    05

    Cautious 2026 Outlook Amidst Macroeconomic Uncertainty

    For 2026, Resideo provided a cautious financial outlook, projecting total net revenue between $7.8 billion and $7.9 billion and adjusted EBITDA between $935 million and $985 million. The outlook assumes little growth in the U.S. residential housing market, low single-digit growth in repair and remodel, and low single-digit U.S. GDP growth, alongside continued tariff exemptions. The company anticipates ADI's growth rate to be higher than P&S, with modest overall gross margin expansion.

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