Resideo at Oppenheimer Conference: Strategic Moves Unveiled

On Monday, 11 August 2025, Resideo Technologies Inc. (NYSE:REZI) participated in the Oppenheimer 28th Annual Technology, Internet & Communications Conference. The company outlined strategic changes that promise to reshape its business landscape. Highlighted by the separation of its ADI distribution business and Products and Solutions (P&S) segment, the announcements were met with optimism, though challenges remain in executing these ambitious plans.

Key Takeaways

• Resideo plans to separate ADI and P&S to enhance shareholder value and pursue independent strategies.
• Strong Q2 results led to an increase in adjusted EBITDA guidance by $100 million.
• The integration of SnapOne has exceeded synergy targets, boosting ADI’s offerings.
• The company aims to focus on deleveraging and maintaining a strong balance sheet.
• Resideo is transitioning ADI to a new ERP system, unlocking further capabilities.

Financial Results

• Resideo reported strong Q2 performance, with ADI and P&S both showing robust execution.
• P&S achieved its ninth consecutive quarter of gross margin expansion.
• Adjusted EBITDA guidance for the year was increased by $100 million, attributed mainly to ceasing payments to Honeywell and Q2 outperformance.

Operational Updates

ADI:

• The SnapOne acquisition integration is progressing well, with synergies exceeding the $75 million target.
• ADI launched 400 new products under exclusive brands this year.
• A new ERP system is being implemented in the Americas after 40 years, expected to enhance operational capabilities.

P&S:

• Focus on New Product Innovation (NPI) and expanding the home ecosystem.
• Revitalization of the air product line is underway, with plans to consolidate 117 platforms into a single platform.

Future Outlook

• The separation of ADI and P&S will allow both entities to pursue independent capital strategies.
• Resideo aims for a near investment-grade credit rating with a target leverage level of around two times.
• Both ADI and P&S will have sufficient financial resources to succeed independently.

Q&A Highlights

ADI Strategy:

• ADI focuses on becoming the preferred partner for customers and suppliers through innovation and technology convergence.
• The transition to a new ERP system is anticipated to unlock additional capabilities.

P&S Strategy:

• P&S aims to lead in residential control and sensing by developing differentiated solutions for comfort and savings.
• A system of systems approach is being implemented to enhance product offerings.

Conclusion

For a detailed understanding of Resideo’s strategic plans and financial performance, refer to the full transcript below.

Full transcript - Oppenheimer 28th Annual Technology, Internet & Communications Conference:

Unidentified speaker, Conference Call Host, Oppenheimer: Hi. Good morning, everybody. Thank you for joining the Oppenheimer Technology Conference. We have a fireside chat today with Resideo. We have an outperform rating on them.

We just upgraded the stock based on several very exciting announcements. And with me today is Jay Gellmacher, the company’s CEO Rob Arnes, the president of ADI Tom Surin, the president of products P and S and then also Chris Lee, who is the global head of strategic finance and industrial relations. So with that, guys, thank you very much for joining us.

Jay Gellmacher, CEO, Resideo: Thank you. We’re excited about being here with you guys.

Unidentified speaker, Conference Call Host, Oppenheimer: Alright. Well well well, Jay, maybe we kick it off with you. You know, been a pretty exciting time for you guys recently. Maybe walk through, you know, the two big events that, you know, just occurred and basically what it means to Resideo.

Jay Gellmacher, CEO, Resideo: I think exciting times is an is a understatement. It’s a super exciting time. I mean, these announcements that we made really gives us an opportunity to to do a lot of new things with the company, very transformational. As you might guess, we’ve worked on some of this for a lot for quite a period of time. I’ll just start with, you know, the one of the first big announcements was the agreement with Honeywell.

And as you might guess, that’s something that we’ve been working on with them, and it’s not you know, it didn’t happen overnight. And we’ve really we really and we were asked some questions after you know, during some of the q and a after our various announcements about, you know, how how did this all transpire. But, you know, as I said, it wasn’t it wasn’t something that was done in twenty four hours. We spent a lot of time with our relationships with Honeywell. You’re gonna hear from Rob and Tom today, but Rob’s business, they’re one of the larger distributors for Honeywell in the commercial fire security area, and so that that business has grown.

And Rob has great relationships with that part of Honeywell. Tom sells a lot of products to Honeywell, and same thing, a very strong commercial relationship. Mike has taken in in the time that Mike’s been with the company, which has been over a year now, he is has developed nice relationships with his counterparts at Honeywell. You know, I’ve been here now for over five and a half years and had a relationship with Darius. But Vimal and I, when Vimal took over, we spent quite a bit of time together.

And with all these different things as part of the the the strengthening and developing the relationships, I think we came to a point where we thought it was the right time for both companies. And as you know, there’s some transformational things going on in Honeywell. So we were very pleased to reach an agreement. It is the the Honeywell agreement, know, unleashes us, takes constraints away of transformational capabilities that we were somewhat restricted on when that when when the Honeywell agreement was still in place. So now with this, it it is you know, it takes the shackles off.

So that that was a that’s a big part of these announcements that we’ve made over the last couple weeks. The other big announcement we made was the intention to separate ADI. You know, we’ve had questions over the years since I’ve been here about you know, we have a distribution a very successful distribution business. We have a products and solutions engineering manufacturing business unit. And so the question always been raised was whether or not, you know, those should be separated or not.

And and the two the two businesses have worked very well together and will continue even after separation, but there are two distinct different types of businesses. As I said, one’s a big commercial distribution company, also with a piece and a a portion of the business in residential, especially now after they bought the Snap as they bought Snap last year. And then you got products and solutions, which is the total home ecosystem with the product with brands that I think you’re all familiar with, the Honeywell Home brand, the b the the First Alert brand, the BRK brand. It’s a house of brands. And so it helps This separation will really help both these businesses perform well on their own, but also, you know, get it with with their own individual capital allocation strategies, and it just frees them up to do even more even be more successful as we separate the two companies.

So those are two big you know, and it’s a it’s a big value creator too. I don’t wanna miss that for both these announcements in terms of value creation for our shareholders as we as we’ve acted upon these, and and we’re taking actions upon these. The other piece of this was, you know, we also announced the a very good strong q two, and we did that last week. And, you know, as I said in my prepared remarks when we did earnings last last week, you know, really proud of the team. Great con continued great execution by both those divisions, by both the business units.

In the case of products and solutions, you know, it was the ninth consecutive quarter of gross margin expansion, which is really exciting. And Tom can talk a little bit more about that when he speaks today. I’ve been at every earnings call for probably at least last year or so. Know, I’ve I’ve explained to all our our investors about this NPI velocity really increasing. And, again, Tom will talk more about that, but, you know, bringing a lot more new products to market and and expanding our our total home ecosystem, which is really, you know, making a difference for us in the marketplace.

And on the ADI side, you know, we it’s been now over a year for the Snap acquisition, and that integration is going real well as we’ve been reporting. And, you know, Rob will talk about, you know, their success even though we are we’re playing in in in in tough macroeconomic or uncertain macroeconomic environments, the Rob’s business in the commercial side of things has been has been very positive. And I I’ll say one other thing before I I I kinda wrap up my section unless you have another question for me, and is that on the PNS side, you know, between MPI, be be them taking some share in the marketplace, they’ve been they’ve been doing a good job in in in markets that are have, you know, a level of uncertainty because of the macros that are out there. So, know, it was an exciting two weeks to say the least.

Unidentified speaker, Conference Call Host, Oppenheimer: Yes. It’s certainly, and thanks for that color. And I guess, you know, just maybe as a follow-up, could you maybe talk about something that you weren’t able to do because of either the indemnification payment or the fact that these two businesses were still together that you might have done, you know, if you were allowed to? So, basically, what was

Jay Gellmacher, CEO, Resideo: Yeah. The indemnification agreement had a lot of constraints in terms of things that that did not allow us to do trans some of the transformational type things that we would have liked to have done. But it’s obvious as soon as we announced the the indemnify you know, solving for the indemnification agreement at the same time, we we announced the intention to separate ADI. And as I said, even though the two businesses do a you know, one thing I didn’t mention, but I think I mentioned it maybe during the earnings call, but the you know, Tom is one of of Tom’s products going to ADI. ADI is one of Tom’s biggest distributors.

So that that interrelationship has has always been good, and the and the two businesses have grown together. And even as a separation, they’ll continue you know, they’ll they’ll definitely still have that. But as I said, you know, this just really frees us up to do a lot more things that we couldn’t do before. And that that that is you know, you’ll hear we’ll do more you know, the intention to separate the businesses is one of the big things, but it also and and by doing that, you know, we’re gonna be able to look at both businesses from the standpoint of what’s the what’s the optimal capital allocation strategy, which is a big deal. There won’t be pulling, you know, between the two because we had to make decisions as being overall Resideo that the both those businesses are part of us.

Right? But now as we separate, they’ll be able to manage their own individual capital allocation strategies, their strategic direction, their strategic plans where, you know, prior to that, there was some restrictions there. So it really frees us up to do a lot of different things that you know, and we’ll share those as we as we move forward in in in the the in the months ahead leading up to the separation. And I believe Rob and Tom will talk about that a little bit in terms of them as stand alone businesses as we go through the materials today.

Unidentified speaker, Conference Call Host, Oppenheimer: Thank you. You know, Rob, let’s kinda turn it over to to you. Maybe walk us through, you know, some of the high level strategy ADI ADI is gonna have as a stand alone company and maybe what you weren’t able to do then and that you’re now gonna be able to do going forward.

Rob Arnes, President of ADI, Resideo: Yeah. Great question. I I would say from a just a strategy perspective, not a whole lot, you know, would change between what we’re doing today versus what our focus will be for the first few years coming out of the transaction. But to answer your first question, a high level strategy is really rooted on a mission of becoming the indispensable partner of choice for our customers and our suppliers really by delivering on five key strategic pillars. Number one, delivering the, you know, best in class world’s leading omnichannel experience for our 100,000 plus customers.

And we do that with a very robust ecom offering, which is one of the fastest growing parts of the business, as well as, the store experiences that we provide across the, across the globe and all the areas that we play in. We’ve got over 200 locations where our customers wanna come in and shop, pick up inventory. And also just kind of all the things that go behind that with regards to upgrading our entire enterprise stack across the board. We just went through a pretty significant ERP transition in The Americas business a couple of weeks ago. That’s going very, very well.

We had a forty year old system that held us back across a number of fronts, but that now will unleash a lot more capabilities for us versus having to rely on older technology, the ability to deploy AI across the entire business, master data management, WMS, TMS, some of those things, digital tools for our salespeople, all in an effort to create that best in class experience for our customers. Number two, innovation. Really, you know, doubling down on our MPI engine, and that includes both branded products as well as our exclusive brands line. You know, we got 500,000 plus, products available to our customers, about 50,000 of which we skew I’m sorry, we stock every single day and about 3,000 of which are exclusive brands, which offer they obviously offer significant margin upside, and a benefit to our customers. We want to continue to ramp up and be that kind of source for new technology for our customers.

Number three is services, and I would I would divide that into two halves. One, value added services that we offer for free that help our customers compete at the end user level. Everything from staging, kitting, same day delivery, twenty four hour access to products through our stores, to kind of services that that we actually charge for. You know, services for, you know, installation, post installation services, tech support, in some cases, nice little growing RMR part of the business. That’s number three.

And number four, continue to capitalize on the kind of the technology convergence that’s happening in the, in the industry, specifically in the commercial security, ProAV, and datacom spaces where a lot of the integrators today play across all three of those versus in the past, maybe just focusing on one. We are in a great position to help our integrators to play across all those categories win. I mean, commercial security, ProAV, Datacom, as I mentioned, as well as helping kind of our customers grow internationally if they want to do so. And then number five is really just execution. That is our namesake.

We’re a very high performance focused business. It holds our teams accountable for continuing to grow year over year and execute at a high level, ultimately culminating in being able to provide that great experience for our customers, being the easiest to do business with and helping our customers grow faster than they would had they been dealing with another distributor. So that’s the high level strategy. And and I would say, to answer your last question around some of the things that maybe we could move faster on, the first thing that comes to mind is really just strategic m and a. You know, you heard Jay talk about, you know, kind of capital allocation.

I mean, with two big businesses as part of one company, you know, there’s things that I’ve wanted to do. There’s things that Tom have wanted to do, and we’ve kinda had to balance, you know, exactly what’s the priority at the time, what were we capable of doing today versus, maybe helping the other part of the business. And, you know, we’d like to think that in an environment where the businesses were split, you know, we’d we’d at least have a little more of an unconstrained viewpoint in terms of what we needed to do and be able to strategically prioritize those things without necessarily weighing other parts of the business as to whether we could do this or have to wait, some other time in the future.

Unidentified speaker, Conference Call Host, Oppenheimer: Okay. Thanks. That’s helpful. And then, can you maybe just talk about specific product, categories that are really the ones that are growing the best and kind of what’s really driving that, you know, in terms? And then maybe also the opportunities in those categories as well.

Thanks.

Rob Arnes, President of ADI, Resideo: Yeah. I would first start by saying, I mean, let’s just look at really, if I look at q two, q one, and even q four of last year, I mean, on the organic growth side, I mean, they’ve been great stories. And they have been what’s what’s the the primary driver of that organic growth is our commercial security business. And when I say security, right, I mean video surveillance, fire and life safety, and access control. And that represents the majority, the largest mix of the business.

It’s when I think about our top 20 customers that are out there, this is where they play for the most part. And so as I look at the last three quarters and I I kind of measure that organic growth, I mean, those are the big categories that are driving it, meaning leading with security, the ones I just mentioned. And then a a close second and third, you could even say for ProAV and Datacom, the actual growth rates have been higher. Now the mix of those product categories is not nearly what you would see on the security side, but we’ve only been in those place we’ve only been in those categories for, you know, I’d say roughly five years. And we and we really had to grow at least the first few years, organically.

And then in recent years, two or three years, we’ve been able to actually execute some nice little tuck in m and a’s to really fortify, our presence in those two categories. So, you know, when I look at everywhere we play commercially, those have been the drivers. And in terms of upside, I mean, look, security, I think there’s still a tremendous amount of upside there. I mean, Datacom and ProAV, as I mentioned, those are very large TAMs, you know, 20,000,000,000 in size, and we’re running a great clip there. So, I mean, I would say the really, the ceiling there has has yet to be reached and nor will we reach it anytime soon.

So plenty of opportunity to keep growing, in those two, what I would call, adjacent space categories. And then as I think maybe one level further, it’s what’s going on in our ecom business. And, you know, we have seen a a seismic shift is the term term I keep using in the way our customers want to buy no matter where you play, whether you’re on the commercial side, whether you’re on the residential side, and all the categories in between. I mean, we continue to see very robust growth in our ecom business, and and that’s not by accident. For the last five years, we’ve doubled down on the user experience.

I would put our website experience, the content, what we’re able to deliver to our customers. I put that experience against really anybody out there across industrial distribution. It’s really, really, solid, and those investments are now really, really paying off for us. And and I expect them to continue to do so, not just an effort to generate revenue, by the way, but also as an indication of the business’ operational excellence and the signal that we’re a high performing business. I mean, the more you can the more you can move transactional revenue to online, the more time it frees up for your existing team to spend time with the customers that need them the most.

So all that goes hand in hand, but I think we’ve got great upside to continue growth both to finish out this year as well as any point in time after the separation.

Unidentified speaker, Conference Call Host, Oppenheimer: All right. Thanks. And then maybe also give us an update on SnapOne. I know, Jay, you talked a little bit about SnapOne. But you know, Rob, talk a little bit more about that and, you know, how the integration of it, and then maybe just some of the drivers of its solid performance.

Rob Arnes, President of ADI, Resideo: Yeah. I I I gotta tell you. I mean, we we hadn’t done an we hadn’t done an acquisition this big and, well, never ever. This is the biggest one by far we’ve ever done in the history of the business. And, and so, you know, we assembled a great team.

And and I gotta tell you, I’m thrilled with where we are at the the one year point. I mean, the teams have we had a mantra of bringing these teams together to become what we call even better together. Half of my leadership team is former Snap executives, and we can kinda that looks the same as we go multiple layers down into the organization. I figured that was the only way we could really bring the best of these two organizations together, but also move as fast as we needed to boo move to drive synergies versus tipping the scales one way or the other. And in my opinion, it’s been a terrific success in terms of the way the teams have delivered on synergies.

Right? The fact that while we committed to $75,000,000 we said on the, I think, earnings call before this went after we got done with q one that we are now in a position to deliver, you know, north of that $75,000,000 number. And that speaks to just the the team’s ability to execute. We’re seeing both, we’re seeing those synergies come from the OpEx side, as you can imagine, but we’re also seeing incredible success on the cross selling side, specifically Snap’s exclusive brand portfolio, which that was really the gem in this whole thing, and we really wanted to get my hands on that piece and scaling that to our existing ADI customers. That’s where we’re seeing some significant upside because a lot of these exclusive brands that Snap sell, which were primarily reserved for the residential AV integrator, have real kind of commercial, what I would say, SMB applications, specifically with you know, power and wire and networking that where we’ve seen a lot of traction there.

So that’s a that’s been a a terrific success for us, and we’re only in the kind of the early innings there. I would say third or fourth inning in terms of really scaling that product line. And then just getting the MPI engine that Snap has. I mean, we’ll launch 400 new products this year or over that, just in exclusive brands. And being able to stretch that now into some of our commercial categories where Snap wasn’t playing before, but now has some, you know, JDM horsepower to be able to deliver products into those categories.

So sorry about that. And so we’re in a great position to continue to grow, and I’m very happy with where we are right now with SNHU.

Unidentified speaker, Conference Call Host, Oppenheimer: Thank you. And then when I just think about the brands that you guys have, you know, and adding them under SnapOne, I know they had a lot. You know, how’s how’s that helping you? How’s that process been going?

Rob Arnes, President of ADI, Resideo: I am significantly sorry about that. It had a little disruption. Can you ask that one more time?

Unidentified speaker, Conference Call Host, Oppenheimer: Yeah. Absolutely. I just wanna basically talk about your ex exclusive brands, you know, how getting a bunch of those from SnapOne has helped you, and where has it effectively helped you?

Rob Arnes, President of ADI, Resideo: Yep. So I I I mentioned earlier the fact that we have those SnapOne, SnapOne exclusive brands that we’ve been able to scale to our existing ADI customers is driving a lot of revenue synergies from a from a cross sell perspective. And that, obviously, with those particular products being two, two and a half x the margin of our base products, the more of those products we can get into our customers’ hands, right, and understanding where they play and where they probably can’t play. Look. You know, are we gonna have exclusive brands that play in the at the enterprise video surveillance level?

You know? No. But there are a lot of applications, you know, mounts, wire, things like that, products like that that scale across really all the categories that we play in. And so there’s real upside there as we continue to introduce the Snap existing product line to our 100,000 plus existing ADI customers. You know, look, it’s it’s we’ve we’ve kinda gone out there and said, we think that at some point, this could be a billion dollar category for us.

When you look at the legacy ADA exclusive brands plus what we picked up in Snap, you know, that is well within our reach within the next few years. So, you know, any the more of those we can sell, obviously, that’s a greater, you know, margin upside for us. Being mindful always that we got to make sure we protect our branded products branded product suppliers as well. But we’ve been doing a good job balancing the two thus far.

Unidentified speaker, Conference Call Host, Oppenheimer: Okay. And then last question, and I’ll let you off the hook here. Maybe talk about tariffs, the tariff impact. You know, what are you doing to to mitigate any of the, you know, incremental cost you might be facing or or issue?

Rob Arnes, President of ADI, Resideo: Great question. For us as a distributor, it’s pretty simple, right? Not as complex, I know, as what our manufacturing partners have to deal with. But we simply pass you know, pass those price increases right through. So they’re you know, from a from any kind of, you know, margin effect on us, it would not happen, especially on the third product third party product side, where, again, we pass those right through.

We are able to leverage some of our favorable terms with our suppliers. In many cases, with our large suppliers, you know, we’re required to be given thirty days notice for any kind of price increases. So while tariffs may take effect, you know, we with based on those terms, you know, have made might have fifteen, thirty days before they take effect in the channel, allowing us to maybe buy some more inventory to lower its average cost, take advantage of that. Now that’s a temporary, right, margin upside, but it’s something we do. And then on the exclusive brand side, we just make sure that, you know, when we do get price increases from our JDMs or our CMs, first thing we do is go back and see if we can get them to actually, take on some of those price increases.

We’ve been very successful there. And then when we finally get our when we get our products to the channel, very, very, very diligent about making sure that, yes, we have to raise prices for our exclusive brands, but making sure we’re never in a position at the SKU level where our exclusive brands would be higher priced than, say, a third party brand that’s right next to it. You know, we would just we would spread that spread that around a little bit so that we are never in a position where we’re not competitive in the channel from a price perspective, but we’re also not eating any of the tariff impact.

Unidentified speaker, Conference Call Host, Oppenheimer: And then, Tom, thanks for being patient while I interrogated Rob, but it’s your turn now. You know, Tom, maybe walk us through the high level strategy for P and S you know, as it moves to basically stand alone business?

Tom Surin, President of Products P and S, Resideo: Yeah. And similar to Rob, our strategy doesn’t change. In fact, that’s the fact that these two businesses have very distinct strategies, very distinct markets, very distinct execution. For us, the strategy we’ve been executing over the past year and a half plus doesn’t shift at all. And that strategy is to become the leader in residential control and sensing.

And we’re gonna do that by accelerating the development of differentiate differentiated solutions to provide our customers comfort, protection, and savings. And we’re gonna do it through leveraging the scale we have to provide superior value to our customers. We’re gonna expand geographically, and we’re gonna do this by focusing on the pros. So that’s the top level strategy, and that does not shift one iota.

Unidentified speaker, Conference Call Host, Oppenheimer: Okay. And then maybe help us understand how you think about the business, the different business lines inside P and S. Help us with, like, what are they? You know, how large are they? Mhmm.

And, you know, what are the opportunities both near term and longer term?

Tom Surin, President of Products P and S, Resideo: Okay. So think about because we’re focused on residential controls and sensing, the the home or house is basically a system of systems. Okay? And so there’s a huge interdependency on each of those systems. You can fix one thing, but if you’re deficient in the other, you don’t have that optimization of that comfort, safety, and savings.

Right? And so those are those things that you have to kinda have that holistic view. And in those major systems on the control and sensing, you have air, HVAC, mechanical, you can call it by many names, but it’s really that environment air. You have the safety, and there’s two pieces to the safety. There’s what we call this safety, which is typically fire smoke.

Okay? And that’s just basically triggering there, but you also have security systems, and we’ll talk about a little bit about what those represent. You have your water systems that are in the home, the plumbing systems, and then you have the energy. And so each of those, they’re distinct markets. They’re distinct product categories.

But underlying all of those is the systems and platforms. We could talk about that as an ecosystem. Now we have first focused on the product piece, and we’re developing that ecosystem at the same point in time. But the manifestation or the market seeing what we’re doing there will come. So let’s just talk about air.

It’s a kind of a legacy business for Honeywell Home. You know, we invented the thermostat. What had happened over time through maybe a lower investment maybe in the business as other new businesses were explored. But it’s a fantastic business, and we have a really significant share. I’m not gonna quote it to numbers because the legal would be all over me on the exact numbers, but it is a large market.

And in The US, we have a strong share. We had drawn dropped into kind of the middle market, which is always the largest share of the market, but we don’t wanna fall into that trip or trap. You know, Clayton Christensen describes it as in Vendor’s Dilemma, what have you. We wanna control the corners. We wanna make sure that we have products across the entire price point so that we can’t be disrupted from someone kinda coming in as the entry price point, you know, disrupting from that side or we don’t lose the technology leadership we have.

And so by doing that, that’s the first thing. And you see us revitalizing the product line in air. We can go further into that if you wanna talk about exactly with that. We’ve introduced the new low end product. It’s crushing it.

It’s doing fantastic. It’s doing exactly what we want. We’re about to release the high end product. We’re really excited about what that’ll do, and then we’ll bring it into the middle in that. But as I said, what in the strategy, we’re doing all this by, again, scale.

So when we create these new product lines and all of these things, we’re making sure we’re taking advantage of the scale we have in these businesses to provide even more value. And so, for instance, there were a 117 different platforms in our air. We’re dropping to one platform. And now they have different little tweaks and everything in order to provide different levels of value and cost and benefits, but that gives us a huge advantage when you leverage our scale. So that’s all new coming out of it.

And there’s new technologies. Right? So we’re getting into the world where you’re having variable refrigerant flows and all of these things. We wanna make sure we’re on the cutting edge of all that working with all the partners to do it. So those are the big things in air.

That that that’s one critical system, just the environment. Let’s go to safety. Safety is one of those products, and this will be true for air, but I’ll talk about it in safety. There’s a lot of advancements. So the first products we’ve we came out with we were just kinda staying with what’s required for UL certification.

There’s really two very large companies in the market, Kida and ourselves. We have different distribution partners, but we also gained strength through construction, residential new construction, the MRO market. We’re making sure we’re penetrating all those places that we can. We wanna be bring a superior offering to our customers again through the scale that we have. The the numbers are quite large here in this market, and we wanna advance it.

So we’ve got some products we’re very excited about that we’ll introduce early next year, that will take us even further in terms of the level of performance beyond where, you know, we’re gonna skip kinda hop skips a generation there. And it’s gonna have, again, that by focusing more on that scale, it’s gonna provide a superior value to our customers. And it’s also the platform for our future because it allows us to do geographic expansion. So when we talked about air in here, and I’m gonna bring it up in safety, we’ve been super strong in The US market. Very strong.

Still room to grow, still room to make it better, but we’ve been less penetrated, lower share in some of the European markets in those two two places. And we wanna make sure that we have the products that can become international products. We may make manufacture them in our international facility, but the same design, same fundamental platform will be a world platform. And so we’re doing that with this next generation smoke detector series. In security, again, through the the Honeywell legacy, we were one of, they say, two initial security companies.

And we’ve manufactured, you know, security systems for many, many years. But what we had focused on was classic intrusion. So that’s door contacts, breaks, things where there’s this some form of detection of a penetration into the environment. Right? That’s intrusion.

But the world has kinda moved past that. You know, when you think about a modern security system, you think about it integrating into other things like video to have awareness or analytics to understand how things are changing in the environment. And we’ll talk even more about that. But there, we wanna make that move from a pure intrusion play into a full security system. Again, the goal is to provide the protection or that safety for our end users.

It’s not just to have an intrusion. And how can we just make sure that they feel safe in their their environment, in their home? So that’s what we’re doing in security. It’s our share of it. It’s a very large overall market.

We had been just participating in just the intrusion. So there’s quite a bit of room for us to go as we go more into the SMB. We add video. We add access control and make a complete solution. Then there’s water.

Water is, again, one of the critical control systems in a home. Everyone uses it every day in their home. But, you know, the idea is that it’s also where most of the damage occurs in homes. So water damage is the number one, insurance claim, and it the numbers are staggering how much. And, again, if you wanna protect that home, make it safe, make people, you know, have savings, you gotta keep the home safe, and you gotta be very aware of how your water’s going.

Now there’s two pieces to water. There’s what we call the potable water systems, which is, you know, the drinking and the showering and that. And then there’s a hydronic, which in many markets is coupled to that environment control. So it’s related to the air. So we have connections between all of those.

It’s an extension. Again, remember, the system of systems. They’re all interlinked. So we have both of those going on in water. We’re gonna be entering more into the detection marketplace.

We’ve got a number of new technologies we’re bringing forward to being able to control the water in various ways intelligently. Can’t I don’t wanna go too far into some of the things that we’ve got queued up there, but you’ll be seeing them over the next year coming out. And then lastly, we have an OEM business. We call it energy, and that is where we sell our products to manufacturers typically of systems, boilers, water heaters, furnaces, and various levels. Sometimes it’s, you know, gas combustion control systems, Venturi systems.

It can be some of our hydraulic valves. It can be many things. And that’s a business that we have, worked to improve just the fundamentals of and then made sure that we’ve have the right relationships with our customers that it can be long term successful for both parties. And we’ve worked a lot over the past year and a half making sure it’s set up for that. But that’s what’s those are the products and the categories.

Unidentified speaker, Conference Call Host, Oppenheimer: That that that’s very helpful. And then we’ll turn it over to Chris. Maybe give us an outlook on 2025, talk about capital allocation priorities, any potential for m and a, and kind of what the environment looks like. They get on mute.

Chris Lee, Global Head of Strategic Finance and Industrial Relations, Resideo: Yeah. Thanks. Thanks, Ian. So, before we go to you to answer your question, let me just remind the audience that we provided a raised outlook last week on August 5, and we raised our guidance to reflect the outperformance in the year thus far as well as removing the payment to Honeywell. So for example, adjusted EBITDA was raised by a 100,000,000 from the old midpoint to the new midpoint.

And of that 170,000,000 relates to ceasing paying Honeywell 35,000,000 a quarter, as well as the remaining 30,000,000 is the outperformance in the second quarter. When we think about our priorities going forward around capital allocation, it remains focused on deleveraging as as I believe the audience knows, but I’ll remind you, we are very cash flow generative, and we look to build cash on the balance sheet as part of this deleveraging exercise. And so, you know, I think when you when you take that into account, you know, look, we’re we’re always gonna keep an eye out on the market, especially for m and a that, you know, we think could be especially attractive, but, you know, has to reach a a high internal hurdle for us to pursue. That being said, we also have a lot of on our plate already with integrating SnapOne and separating ADI.

Unidentified speaker, Conference Call Host, Oppenheimer: Okay. And then, you know, as you know, quickly, and then we’ll kinda turn it over to Jay. Maybe the capital structure you could talk about of the two spins?

Chris Lee, Global Head of Strategic Finance and Industrial Relations, Resideo: Yeah. I I think we’re still early as we’re just announced the separation. But as Jay said, you know, we’ll provide more details as we near the effective date of each spin. But I think what I’d encourage the audience to remember is that the same philosophy we utilize today, we very likely will extend out to each company standalone. And and what we said is, you know, we wanna operate the business at a near investment grade credit rating, which implies, you know, a target leverage level of something at or around two times.

I that being said, I we also believe we wanna make sure that each ADI and P and S have enough financial firepower to succeed on a standalone basis.

Unidentified speaker, Conference Call Host, Oppenheimer: Yeah. Thanks. And then, Jay, we’ll we’ll kinda turn it over to you for some final, you know, comments on, you know, the business and what you’re doing, anything else you wanna leave the audience with.

Jay Gellmacher, CEO, Resideo: Great. I think that’s a great way to wrap up because I saw we only have about a minute left. I’ll I’ll try to make it short and and succinct. So I and I’ve been thinking about that because I knew we were leading into this. So the the the I think one of the punch lines is this.

These these announcements really, really everyone’s super excited about within the company. I I know a bunch of our investors already and our shareholders, and this is providing us with the transformational flexibility to unlock, you know, shareholder value and the ability to increase shareholder value. And as Chris said and I said earlier, we’re gonna be excited to share with our our all of you as we move forward as part of this, the types of things that we’re talking about tied to that. The separation of the two businesses is a is a big piece of it, but there’s then when you dig down into this, these are the things we’ll share with you as we move forward. So, you know, we’re we’re excited, you know, for for all the things I mentioned.

And I know our customers and our suppliers who have given us feedback so far on a very, very positive thumbs up. So it’s an exciting time for the company, and we thank all of you and your support who are out there. We look forward to talking to you more in the in the months in ahead of us.

Unidentified speaker, Conference Call Host, Oppenheimer: Alright. Thanks, guys. We’re out of time, and good luck with your one on ones today.

Jay Gellmacher, CEO, Resideo: Thank you. Thank you. Take care.

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