Resideo Technologies, Inc.

What they do

Resideo operates through two segments: Products and Solutions (P&S) and ADI Global Distribution. P&S designs and sells branded HVAC controls, smoke and carbon monoxide detectors, security products, and connected home solutions, primarily to professional contractors and installers. ADI Global Distribution is a global specialty distributor of low-voltage security and audio-visual products, selling to licensed professionals. The company separated from Honeywell in 2018 and has over 150 million residential and commercial spaces using its solutions.

Revenue drivers

• Products and Solutions (P&S) — Sells branded comfort, safety, and security products, including Honeywell Home, First Alert, and Resideo brands, to professional channels. In Q2 2026, P&S revenue grew 4% year-over-year.
• ADI Global Distribution — Distributes third-party and exclusive-brand low-voltage security and AV products to professional installers. In Q2 2026, ADI revenue grew 1% year-over-year, and it received approximately $20 million of tariff refunds in the quarter.
• Connected solutions and cloud services — Over 14 million connected customers use Resideo's connected home products and cloud infrastructure, generating recurring software and service revenue.

Recent performance

In the second quarter of 2026 (ended July 4, 2026), Resideo reported record revenue of $1.98 billion, up 2% year-over-year, with gross margin of 30.0% and net income of $97 million, compared to a net loss of $825 million in the prior-year quarter. Adjusted EBITDA rose 19% to $249 million, and adjusted EPS was $0.83, up 26% year-over-year. For fiscal year 2025, the company reported a net loss of $527 million on revenue of $7.47 billion, with operating cash flow of negative $1.14 billion. As of July 4, 2026, the company had $549 million in cash and $3.56 billion in long-term debt.

Strategy

Resideo intends to complete the tax-free spin-off of ADI Global Distribution, which was completed on August 3, 2026; going forward, the company will focus solely on the Products and Solutions segment as a standalone building technologies company. Management emphasizes leveraging competitive strengths in professional channels, driving product innovation in connected solutions, and expanding gross and operating margins. The company also aims to deliver profitable growth and enhance shareholder value through disciplined capital allocation.

Risks

• Spin-off execution and separation costs — The ADI spin-off involves significant operational, financial, and legal complexities, and the company may face unexpected costs or disruptions during the separation process.
• Competition and technology disruption — Resideo faces intense competition from global, national, and local providers, as well as new entrants with non-traditional models (e.g., cable, telecom, tech companies) that could erode market share.
• Tariff and trade policy exposure — Changes in tariffs, import/export restrictions, or trade barriers could harm margins and supply chain, as evidenced by the $27 million in tariff refunds received in Q2 2026.
• High debt and interest rate risk — With $3.56 billion in long-term debt, rising interest rates could increase interest expense; a 100bps rate increase would cost approximately $22 million annually (based on 2025 year-end position).

Outlook

Management initiated a standalone 2026 outlook that excludes ADI, focusing on the Products and Solutions segment. They expect continued revenue growth and gross margin expansion, underpinned by strong demand and a stronger margin profile post-spin. The company remains committed to delivering profitable growth, though forward-looking statements caution that actual results may differ materially due to various risks.