Resideo Q2 2025 presentation: 22% revenue growth, plans to split into two companies

Introduction & Market Context

Resideo Technologies Inc (NYSE:REZI) delivered strong second-quarter results on August 5, 2025, reporting significant revenue growth and announcing plans to separate into two independent public companies. The stock responded positively, rising 1.82% during regular trading hours and gaining an additional 2.64% in aftermarket trading to reach $26.44.

The company’s Q2 performance builds on its momentum from the first quarter, when it exceeded earnings expectations with an adjusted EPS of $0.63 against a forecast of $0.28. The continued strong performance in Q2 reflects robust demand across both business segments and successful integration of recent acquisitions.

Quarterly Performance Highlights

Resideo reported record high net revenue of $1.94 billion in Q2 2025, representing a 22% year-over-year increase. Adjusted EBITDA grew 20% to $210 million, while adjusted EPS increased 6% to $0.66 compared to the same period last year.

As shown in the following comprehensive financial summary:

The company’s performance was driven by 8% organic revenue growth, with ADI Global Distribution growing 10% organically and Products & Solutions increasing 5%. However, the company reported a net loss of $825 million due to an $882 million expense related to the Honeywell (NASDAQ:HON) Indemnification Agreement.

Both business segments demonstrated strong performance in the quarter. The Products & Solutions segment, which focuses on residential controls and sensing solutions, achieved its ninth consecutive quarter of year-over-year gross margin expansion, reaching 42.9% (+160 bps YoY).

The segment breakdown reveals impressive margin improvements across both businesses:

ADI Global Distribution, which will become a separate company under the announced restructuring plan, showed particularly strong growth with revenue up 33% year-over-year to $1.3 billion. This growth was driven by both organic expansion and the contribution from the Snap One acquisition, which management reported is progressing well with integration efforts.

The quarterly financial trends demonstrate consistent growth across key metrics:

Cash flow generation also showed significant improvement, with cash provided by operations reaching $200 million in Q2 2025, compared to $80 million in the same period last year:

Strategic Initiatives

The most significant announcement in Resideo’s presentation was its plan to undertake two major strategic initiatives aimed at creating shareholder value.

First, the company has entered into a definitive agreement with Honeywell to terminate the Indemnification Agreement that has been in place since Resideo’s spin-off in 2018. Under the agreement, Resideo will make a one-time payment of $1.59 billion to Honeywell in Q3 2025, eliminating all future payment obligations that were previously scheduled to continue until 2043.

Second, Resideo plans to separate into two independent public companies, with each focusing on its core business areas:

The separation aims to create two focused entities with distinct value propositions and growth strategies. Resideo will become a leading manufacturer of building products focused on residential controls and sensing solutions, while ADI will operate as a global wholesale distributor of low-voltage products.

Management outlined several strategic benefits expected from the separation:

Forward-Looking Statements

Following the strong Q2 performance, Resideo raised its full-year 2025 outlook. The company now expects:

For the third quarter of 2025, Resideo projects total net revenue between $1,850 million and $1,900 million, Adjusted EBITDA between $220 million and $240 million, and Adjusted EPS between $0.70 and $0.76.

These projections represent continued growth from both Q1 and Q2 results, suggesting management’s confidence in the company’s trajectory despite macroeconomic uncertainties.

Tariff Mitigation Plans

Resideo also addressed its approach to mitigating potential tariff impacts on its business. For the Products & Solutions segment, approximately 90% of cost of goods sold related to products sold in the U.S. comes from Mexico, with 98% of those being USMCA compliant. Only about 4% comes from China, limiting direct exposure to U.S.-China tariffs.

For the ADI Distribution segment, the sourcing is more diversified, with Mexico representing 23%, China 21%, USA 16%, Vietnam 8%, and Poland 6% of cost of goods sold for products sold in the U.S.

The company outlined several strategies to address tariff challenges, including evaluating manufacturing relocation, sourcing from alternative suppliers, implementing phased price increases, and leveraging supplier geographic diversity.

Conclusion

Resideo’s Q2 2025 results demonstrate strong operational execution across both business segments, with record revenue and continued margin expansion. The strategic initiatives to eliminate the Honeywell Indemnification Agreement and separate into two independent companies represent significant steps in the company’s evolution.

With a raised outlook for the full year and clear plans to address potential tariff impacts, Resideo appears well-positioned to continue its growth trajectory. The market’s positive reaction to the earnings and strategic announcements suggests investor confidence in management’s vision for unlocking shareholder value through these transformative initiatives.

Full presentation:

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