On Tuesday, Resideo Technologies (NYSE:REZI) discussed first-quarter financial results during its earnings call. The full transcript is provided below.
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Access the full call at https://events.q4inc.com/attendee/442306909
Summary
Resideo Technologies Inc exceeded its Q1 2026 financial targets with total net revenue of $1.9 billion (8% growth) and adjusted EBITDA of $215 million (20% growth).
The company plans to raise prices in Q2 to combat inflation, with customer collaboration expected to mitigate increased costs.
Resideo reaffirmed its 2026 outlook, anticipating steady execution despite macroeconomic uncertainties, with a focus on product innovation and operational efficiencies.
The separation of the ADI business is on track, with key milestones achieved, including a public filing of ADI’s Form 10, and an expected spinoff completion between Q3 and Q4 2026.
Management highlighted the continued strong performance of the Products and Solutions segment, while ADI’s growth was impacted by a soft residential market but showed strength in security products.
Full Transcript
OPERATOR
Hello everyone. Thank you for joining us and welcome to the Resideo first quarter 2026 earnings conference call. After today’s prepared remarks, we will host a question and answer session. If you would like to ask a question, please press star one to raise your hand. To withdraw your question, press Star one again. I will now hand the conference over to Chris Lee, Global Head of Strategic Finance. Please go ahead.
Chris Lee (Global Head of Strategic Finance)
Thank you and good afternoon everyone. Thank you for joining us for Resideo’s first quarter 2026 earnings call. On today’s call is Jay Geldmacher, Resideo’s Chief Executive Officer Mike Carlet, Chief Financial Officer Rob Arnus, President of Resideo’s ADI Global Distribution Business and Tom Saran, President of Resideo’s Products and Solutions business. We would like to remind you that this afternoon’s call contains forward looking statements. Statements other than historical facts made during this call may constitute forward looking statements and are not guarantees of future performance or results and involve a number of risks and uncertainties. Actual results may differ materially from those in the forward looking statements. As a result of a number of factors, including those described from time to time in Residio’s filings with the securities and Exchange Commission, the Company assumes no obligation to update any such forward looking statements. We identify the principal risks and uncertainties that affect our performance in our annual report on Form 10K and other SEC filings. In addition, we will discuss non GAAP financial measures on today’s call. These non GAAP financial measures, which can sometimes be identified by the use of adjusted in the description of the measure, should be considered in addition to, not as a substitute for or in isolation from our GAAP results. A reconciliation of GAAP to non GAAP financial measures is included in the Financial Data Workbook which is accessible on the Investor Relations page of our website@investor. Unless stated otherwise, all numbers and results discussed on today’s call other than revenue are on a non GAAP basis. With that, I will now turn the call over to Jay.
Jay Geldmacher (Chief Executive Officer)
Thank you Chris and thanks to everyone for joining us today. I’m very pleased with the continued execution demonstrated by the entire team. Resideo exceeded the high end of the first quarter outlook ranges for all metrics. Total net revenue grew 8% year over year to over 1.9 billion. Total adjusted EBITDA grew 20% year over year to 215 million. Total adjusted earnings per share grew 3% year over year to $0.65. Our first quarter results reflect the solid health of our operating fundamentals. Our Products and solutions segment reported 9% net revenue growth year over year driven primarily by increases in both price and volume across most sales channels. Our adi segment report 8% net revenue growth year over year primarily from strength in our security business, partially offset by declines in our residential AV business. The strength of our combined operations coupled with the elimination of the indemnification agreement results in strong bottom line results. Resideo’s execution continues to be steady in an uncertain global macroeconomic environment and with end markets still soft. I would like to make two important points on recent macro events that are relevant to Resideo. First, on inflationary cost dynamics. We have largely absorbed cost inflation, primarily related to higher costs for freight. In our reported first quarter results. We intend to raise prices later in the second quarter to combat increasing costs. There is broad understanding from our customers for the need to share the inflationary pressures and we expect to work collaboratively with our customers as we have historically. Second, on the impact of cost inflation on customer behavior. Macroeconomic conditions have generally had an impact on consumer confidence and affordability. While the high end residential audio visual market has been softening, Resideo remains well positioned with its existing products, its upcoming new product introductions and its exceptional distribution footprint to take advantage of the markets we serve. Notwithstanding these macroeconomic conditions, as a result of our outperformance in the first quarter and other actions we are taking, Resideo is reaffirming its 2026 outlook. We believe our solid execution and proactive mitigation tactics will enable Resideo to manage through the uncertain environment for the rest of the year. Mike will speak more about this in his comments. Before I hand over the call to Tom to discuss the performance of the products and solutions business segment, let me give you an update on our separation activities. We’ve achieved key milestones in our business separation process including yesterday’s public filing of ADI’s Form 10. I’m very pleased with the high caliber management team and board of directors that Adi will have as a standalone company, which is a testament to Rob and the entire ADI team for the business they have built and for Resideo. Tom has built a world class team within products and solutions that will carry the business forward. We have accomplished a tremendous amount of work to get us to this point and we have done so while continuing our strong business execution including providing high level products and services to our customers. Additional details will be shared at a later date, but we plan to hold Investor Day events for Resideo and ADI in New York during mid July where we will introduce the full leadership teams and discuss each company’s go forward business strategy and value creation model. As we noted in our announcement yesterday, we expect the spinoff to be complete between the middle of the third quarter and the middle of the fourth quarter. I’m very pleased with the focus, discipline, dedication and leadership demonstrated in the first quarter by the entire team. Now let me hand the call over to Tom.
Tom Saran (President of Products and Solutions)
Thanks Jay. The Products and Solutions team continued its strong operational execution resulting in another quarter of year over year organic net revenue growth and the 12th consecutive quarter of year over year gross margin expansion. Products and Solutions reported Net revenue growth of 9% year over year, including an approximate 200 basis point favorable impact from currency. The impact of having an extra four days in the first quarter on net revenue growth was approximately 300 basis points. Net revenue grew substantially across all our sales channels and product families due to both price and volume driven by customer demand. Let me walk through our activities in each of our primary sales channels as our products can be sold through multiple channels in the retail channel Strong year over year net revenue growth was primarily driven by volume. There was an uptick in demand for our safety and thermostat products available in the retail channel driven by both weather and regulatory changes. Point of sales volumes at our key accounts continue to be strong and supported by healthy levels of channel inventory. Sales of First Alert products including the First Alert SC5 Connected Smoke and carbon monoxide detectors showed increasing adoption which we believe contributed to market share gain in safety products. The OEM channel posted its sixth consecutive quarter of healthy year over year net revenue growth driven almost equally by price and volume. Weather was a tailwind with notably stronger than expected demand in EMEA for our higher priced and more profitable units. The electrical distribution channel had another quarter of year over year net revenue growth driven by volume. We saw continued demand for our BRK branded non connected safety products primarily in the MRO and the manufactured housing markets. Net revenue from the security channel grew year over year driven primarily by price increases on our existing products. Security sales to a large customer were in line with our expectations. We are receiving positive market signals for our new integrated Security platform scheduled for general market Release in the second half of 2026. Concluding our channel walk on a high note. Net revenue from the H vac channel was down only 1% year over year. Volume declines were partially offset by higher prices related to new products during the quarter. We saw conditions in the residential H Vac market stabilize. As we indicated several quarters ago, we saw a material reduction in the channel inventory held by our large H Vac distribution partners over the past three quarters which we do not expect to continue going forward. While we saw improved market conditions at the end of Q1 during the quarter, there was a modest volume decline that was partially offset by weather driven demand increased adoption of our new products, including continued strong demand for the Honeywell Home Elite Pro Premium Smart Thermostat. Gross margin was 41.8% up 40 basis points year over year, driven primarily by continued improvements in factory utilization partially offset by product sales mix. We achieved the 12th consecutive quarter of year over year gross margin expansion despite absorbing higher fuel costs. We increased investments in R and D to support new product launches and speed to market. Adjusted EBITDA grew 12% year over year due to continued gross margin efficiency which led to operating leverage. We intend to intend to continue driving operational efficiencies during 2026 and beyond. Looking forward, we’re excited to capitalize on the profitable growth momentum from our continued new product introduction cadence and with that let’s turn the call over to Rob.
Rob Arnus (President of ADI Global Distribution Business)
Thanks Tom. ADI reported net revenue growth of 8% year over year after accounting for 4 extra sales days in the quarter. Average daily sales growth was 1% year over year. Both growth metrics include a favorable impact from currency of approximately 1%. Net revenue growth was driven by demand in the Security, professional, audio, visual and data communications categories, partially offset by the residential …
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