Resideo Q1 2025 slides: Revenue jumps 19%, adjusted EPS surges 34%

Resideo Technologies Inc (NYSE:REZI) shares jumped 6.24% in after-hours trading following the release of its Q1 2025 earnings presentation on May 6, which revealed strong performance across all key metrics and segments.

Quarterly Performance Highlights

Resideo reported net revenue of $1.77 billion for the first quarter of 2025, representing a 19% increase compared to the same period last year. Adjusted EBITDA rose 23% year-over-year to $168 million, while adjusted earnings per share surged 34% to $0.63.

The company noted that all three financial metrics were at or above the high end of its previously provided outlook, driven by mid-single-digit organic revenue growth at both business segments and strong operational execution.

As shown in the following comprehensive financial summary, gross margin expanded significantly across the business:

"Strong operational execution drove gross margin expansion and growth in Adjusted EBITDA and Adjusted EPS," the company stated in its presentation, highlighting that the Snap One integration is progressing well with run-rate synergies achieved ahead of plan.

Segment Analysis

Resideo’s business is divided into two main segments: Products & Solutions and ADI Global Distribution. Both segments delivered solid performance in Q1 2025.

The Products & Solutions segment, which develops and manufactures air, energy, security, and water products, reported revenue of $649 million, up 5% year-over-year. This segment achieved its eighth consecutive quarter of year-over-year gross margin expansion, reaching 41.4% (+190 basis points). Adjusted EBITDA for this segment increased 13% to $158 million.

The ADI Global Distribution segment, which distributes security, fire, AV, and other low-voltage products, saw revenue increase 29% to $1.12 billion, largely driven by the Snap One acquisition. Organic net revenue grew 4% year-over-year, with organic average daily sales up 7% despite having two fewer selling days compared to the same period last year. Gross margin for this segment expanded significantly to 21.6% (+360 basis points), while Adjusted EBITDA increased 24% to $72 million.

The following chart breaks down the performance highlights by segment:

Tariff Mitigation Strategies

A key focus of the presentation was Resideo’s strategy to mitigate the impact of tariffs on its business. For the Products & Solutions segment, approximately 90% of cost of goods sold related to products sold in the United States comes from Mexico, with about 98% of those being USMCA compliant. Only about 4% comes from China.

The company outlined several mitigation strategies, including phased price increases, evaluating manufacturing relocation to areas with more favorable tariff profiles, and exploring alternative suppliers.

As illustrated in the following slide, Resideo has a clear understanding of its supply chain exposure and mitigation options:

For the ADI Distribution segment, the tariff exposure is more diversified. Of the approximately $3.0 billion in cost of goods sold related to products sold in the United States, 23% comes from Mexico (98% USMCA compliant), 21% from China, 16% from the United States, 8% from Vietnam, and 6% from Poland.

The company’s mitigation plans for this segment include phased price increases, strategic inventory purchases, and commercial actions with suppliers:

Financial Position and Cash Flow

Resideo ended the quarter with $577 million in cash and cash equivalents, down from $692 million at the end of 2024. Gross debt remained stable at $2,015 million. The company reported that cash used by operating activities was $65 million, primarily due to an increase in accounts receivable and cash outflows for accounts payable.

The condensed balance sheet shows the company’s financial position as of March 31, 2025:

Free cash flow, defined as cash provided by operating activities less capital expenditures, was negative $96 million in Q1 2025 compared to negative $19 million in Q1 2024. However, the company highlighted its durable annual free cash flow generation, noting that it achieved free cash flow conversion of over 100% of net income in both 2023 and 2024.

Forward-Looking Statements

Resideo provided a positive outlook for both Q2 2025 and the full year. For the second quarter, the company expects total net revenue between $1,805 million and $1,855 million, Adjusted EBITDA between $175 million and $195 million, and Adjusted EPS between $0.51 and $0.61.

For the full year 2025, Resideo forecasts total net revenue of $7,285 million to $7,485 million, Adjusted EBITDA of $725 million to $805 million, and Adjusted EPS of $2.23 to $2.47. The company also expects cash provided by operations to be between $345 million and $405 million.

The following slide details the company’s outlook and key modeling assumptions:

Resideo continues to position itself as a leader in technology-driven sensing and controls products, with a presence in over 150 million residential and commercial spaces. The company’s trusted brands, including FIRST ALERT, Honeywell (NASDAQ:HON) Home, ADI, Snap One, Control4, and Resideo, give it a strong market position.

As shown in the following overview, the company’s two segments generated combined revenue of $6.8 billion in fiscal year 2024:

With its strong Q1 2025 performance, clear tariff mitigation strategies, and positive outlook for the remainder of the year, Resideo appears well-positioned to continue its growth trajectory despite potential headwinds from tariffs and other macroeconomic factors.

Full presentation:

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