管理層發言
Hello, everyone. Thank you for joining us, and welcome to the Resideo Second Quarter 2026 Earnings Conference Call. Operator provided instructions to participants. I will now hand the conference over to Chris Lee, Global Head of Strategic Finance. Please go ahead.
Thank you, and good afternoon, everyone. Thank you for joining us for Resideo's second quarter 2026 earnings call. Joining me on today's call is Tom Surran, Resideo's Chief Executive Officer. 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 Resideo'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 10-K 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 and 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 at investor.resideo.com. 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 turn the call over to Tom.
Thank you, Chris, and thanks to everyone for joining us today. Before I speak about the quarter, the entire team would like to thank Jay Geldmacher for his service as CEO over the last six years. During his tenure, Jay applied his operational and technical expertise to help Resideo get where we are today, both strategically and operationally. Jay led us through two major acquisitions, the recent spin and provided a steady hand through a dynamic market condition. Jay's interactions with customers, partners and employees have created a tremendous company culture and strong enduring relationships and will benefit Resideo for a long time. Also earlier today, we announced Shane Harrison as Resideo's next CFO. I had the opportunity to work with Shane during our time together at FLIR. So I know firsthand the kind of leader we are bringing into Resideo. Shane is highly capable, dedicated and execution-oriented. He consistently took on challenging assignments, delivered exceptional results and was a major contributor to FLIR's success. He combines strong financial and strategic capabilities with sound judgment, a willingness to dig into details and a focus on getting things done. I also know him to be a person of high integrity and someone who works extremely well with others. Shane will be joining us on September 1. As you are aware, we completed the ADI Global Distribution spin-off on August 3. As in prior releases, our discussion of the second quarter results, however, will be at times on a consolidated basis, as the Products & Solutions and ADI business segments both operated under Resideo in the second fiscal quarter of 2026. As usual, we will also discuss the results of each segment on a segmented accounting basis. As has been the case in the past, these segmented results do not include a full allocation of corporate costs borne by the business as a whole. Finally, there is also information in our earnings material that refers to Resideo's stand-alone results, which are presented as if the ADI spin-off was completed on January 1, 2026, and include adjustments to certain financial line items to reflect management's estimates of what our results would have been. We have provided a bridge from P&S segmented results to Resideo's stand-alone results in our earnings release. Starting with our third quarter financial statements, we will classify ADI as discontinued operations for that quarter and all prior periods. I will discuss Resideo's consolidated second quarter results before I hand the call over to Chris to speak about the balance sheet, cash flow and ADI. Chris will then hand the call back to me to speak about the Products & Solutions segment results and Resideo's 2026 stand-alone outlook. In the second quarter, we were pleased with the continued execution demonstrated by the entire team as we exceeded the high end of the second quarter outlook ranges for all metrics, both the consolidated and business segment level. Total revenue grew 2% year-over-year to just under $2 billion, a new quarterly record. Total adjusted EBITDA grew 19% year-over-year to $249 million, another new quarterly record. Adjusted EBITDA includes the favorable impact of $27 million of tariff refunds during the quarter, primarily received by ADI. Total adjusted earnings per share grew 26% year-over-year to $0.83. Overall, we are pleased with both the top and bottom line performance for Resideo in the second quarter. Now let me hand the call over to Chris to discuss the balance sheet, cash flow and ADI.
Thanks, Tom. Total reported cash provided by operating activities in the second quarter was $148 million versus the $200 million generated in the same period last year. The year-over-year decrease was driven primarily by approximately $45 million in payments for nonrecurring business separation activities and settlements including the termination of the Honeywell Tax Matters Agreement. There was also a $20 million use of cash for higher cash interest paid. The decrease was partially offset by higher net income and less cash taxes paid. Consistent with our Investor Day messaging, Resideo started deleveraging on August 3, paying down $900 million of outstanding principal under the Term Loan B credit facility. We expect to make an additional repayment of approximately $200 million on the Term Loan B credit facility in the third quarter following completion of the post-closing cash adjustment under the separation agreement with ADI. With respect to the ADI segment, we have provided its second quarter segment results in our press release. ADI has announced that it will be hosting its second quarter earnings call tomorrow morning, and we'll speak about its results and outlook in more detail on its earnings call. ADI will present its results derived from Resideo's accounting records and presented on a carve-out accounting basis. On behalf of the entire Resideo management team, we would like to congratulate Rob and the ADI team on the completion of the spin and their new life as a stand-alone public company. They will remain an important partner to Resideo. Let me hand the call back over to Tom to discuss the Products & Solutions segment results and Resideo's 2026 outlook on a stand-alone basis.
Thanks, Chris. The Products & Solutions segment continued its strong operational execution despite soft housing trends and inflationary input costs. The team achieved another quarter of year-over-year revenue growth and the 13th consecutive quarter of year-over-year gross margin expansion. Products & Solutions reported revenue growth of 4% year-over-year, including an approximate 35 basis point favorable impact from currency. Revenue grew across substantially all of our sales channels and product families, driven primarily by volume from customer demand. Let me walk through our performance by primary sales channel. First, in the retail channel, we experienced another quarter of strong year-over-year revenue growth driven primarily by increased volumes for higher-value products. Adoption of our combination smoke and CO detectors and our new thermostats continues to be strong and ahead of our expectations. Our point-of-sale volumes at our key accounts continue to be strong and are supported by healthy levels of channel inventory. In the OEM combustion channel, also reported as energy category, we posted its seventh consecutive quarter of year-over-year revenue growth against a tough comparison. Growth was driven primarily by continued demand for higher-priced products, primarily in EMEA. In the HVAC distribution channel, revenue returned to year-over-year growth. Revenue growth was driven primarily by volume led by another quarter of strong customer adoption of the Honeywell Home Elite Pro, our new premium smart thermostat. Demand continues to exceed our expectations and has resulted in our increased presence in the high-end connected segment of the market. In addition, our new dehumidification and water filtration products increase our category penetration and continue the positive momentum generated from the execution of our strategy. Conditions in the residential HVAC market remained stable versus last quarter. Our channel inventory remained healthy and increased modestly from the prior quarter. The electrical distribution channel had another quarter of year-over-year revenue growth driven primarily by volume. We saw continued demand for our BRK branded nonconnected safety products primarily in the maintenance, repair and operations market, but also in the manufactured housing market. Our content per new residential built home remained stable quarter-over-quarter amidst a continued soft market for new home builds. Revenue from the security distribution channel was flat year-over-year given the continued soft market for security installs related to the resale of existing homes. OEM security sales were down slightly year-over-year due to reduced volumes with a large OEM security customer. This was in line with our expectations for the quarter and with our strategy to focus on higher-margin branded business. Moving on to profitability. Our gross margin percentage was 43.6%, up 70 basis points year-over-year and up 100 basis points sequentially. Gross margin expansion was driven by volume increases, favorable manufacturing and supply chain variances and tariff refunds, partially offset by product sales mix. We also incurred inflationary input costs, which we do not believe are permanent but are only partially offset by the price actions we announced last quarter. P&S segmented adjusted EBITDA grew 6% year-over-year due primarily to higher gross profit dollars. As discussed at our recent Investor Day, R&D continues to be approximately 5% of total segmented revenue as we invest behind new product launches and speed to market. Operating expenses increased due primarily to higher legal settlement costs. Before I provide our full year 2026 and third quarter financial outlook for stand-alone Resideo, let me walk you through some of our current market perspectives and assumptions. First, we believe Resideo can continue with steady execution through a residential macroeconomic environment that is persistently soft. We also anticipate continued demand for our products and year-over-year revenue growth across all channels other than OEM security during the second half of 2026. We anticipate some continued weakness in the OEM security channel. Our current outlook reflects lower volumes from a large OEM security customer which we expect will result in $40 million to $50 million less revenue in the second half of 2026 versus the same period in the prior year. Input costs such as memory, metals, printed circuit boards, semiconductors and shipping continue to increase at a pace greater than originally expected due to dynamic global conditions. While we proactively instituted price increases during the second quarter, our outlook incorporates a slight headwind to gross margin due to higher input costs anticipated in the second half of the year compared to the most recent quarter. We do not anticipate material cost increases related to tariffs after conducting our assessment on the recent trade actions announced by the U.S. administration on July 24. We also do not anticipate receiving any material tariff refunds for the remainder of 2026. Due to our corporate accounting calendar, there is one extra day in the third quarter of 2026 and four fewer days in the fourth quarter of 2026, both versus the same period last year. Now as to our outlook. We are initiating our outlook for Resideo on a stand-alone basis. Starting in the third quarter of 2026, Resideo will no longer consolidate its former ADI Global Distribution segment and results for that segment for all periods prior to the ADI spin-off date will be reflected as discontinued operations. Our outlook is presented as if we had operated as a stand-alone company for the first half of '26, coupled with our stand-alone outlook for the remainder of the year. This outlook includes sales to ADI as an external customer and approximately $80 million of full year corporate costs allocated to stand-alone Resideo. The full year of sales to ADI are anticipated to be approximately $175 million. In our earnings press release, earnings presentation and financial data workbook all of which can be found on our website, we have included a revenue and EBITDA bridge from reported segment results to a stand-alone basis. During this short transition period, the stand-alone outlook we are providing is for revenue and adjusted EBITDA only. We intend to provide our outlook for adjusted earnings per share and cash from operations upon completion of certain activity including the post-closing cash adjustment under the separation agreement with ADI that is to be calculated in the coming weeks. We intend to once again provide outlook on these metrics starting with our third quarter earnings call. With that, our stand-alone outlook for 2026 is as follows: revenue in the range of $2.9 billion to $2.95 billion; adjusted EBITDA in the range of $605 million to $625 million. And our stand-alone outlook for the third quarter of 2026 is as follows: revenue in the range of $705 million to $730 million. And adjusted EBITDA in the range of $145 million to $155 million. Looking forward, I'd like to reiterate some of our key themes from our recent Investor Day. The new Resideo is focused on its mission as a pure-play building technologies company. We believe we have tremendous market momentum from the recent introduction of new differentiated products that strengthen our customer value proposition and in turn, will fuel the near- and medium-term financial targets we laid out today and at our Investor Day. Those targets reflect a business with higher gross and operating margins than the historical Resideo, coupled with continued strong cash flow generation. We're very excited about the launch of new products in the second half of 2026, including our new smoke and CO detector platform and our new video surveillance and intrusion security products, to name a few. And as we discussed at length during our Investor Day, we have several levers we are pulling that are intended to strategically optimize our operations throughout the remainder of this year and beyond. With our track record of execution, our stellar team and our focused go-forward strategy, I am extremely confident in our profitable growth path ahead. Now let's open the call for questions. Operator?
分析師問答
Operator provided instructions to participants. The first question comes from the line of Erik Woodring with Morgan Stanley.
And congrats again on the spin. Tom, I just want to make sure we're doing kind-for-like comparison here. So if I go back to last quarter, the guide for Resideo Holdco 2026 revenue growth was 5% year-over-year at the midpoint. There were remarks that P&S and ADI revenue would grow at roughly the same rates, again, call it around 5% year-over-year. I think if I take your new stand-alone P&S revenue guidance of $2.925 billion at the midpoint and compare it to stand-alone revenues in 2025, we're now getting to P&S revenue growth of 2% year-over-year in 2026. So first, can you just comment, is that math correct? And then if so, why are we guiding down relative to 90 days ago after just beating the second quarter? Kind of what is changing about the second half? And then a quick follow-up, please.
Okay. So the math is a little bit off. I'd have to go through exactly how you did your calculations. But no, the assumption we said was that the two segments would have similar growth for the year. We did not specify that it was P&S coming up in its revenue growth versus ADI coming down. The projection that we have for P&S, the growth is higher than the number of 2% that you've stated. So overall for the year, it's almost 3%. Now in terms of the second half of the year, we do have the issues that we described about OEM security, which were something that came about in the mid part of the year. It's a business we've talked about before. It's one that's determined by a third party and so we have to respond to that.
Erik, it's Chris. One other thing I'd like to add is if you look at the first half performance for Products & Solutions at the segment level, we outperformed our expectations given growth across most channels. And we still anticipate growth in the second half of the year across many of our channels with the exception of the OEM security channel like Tom just mentioned.
Okay. All right. We can do the math offline, but I appreciate all that color, guys. And then just a quick follow-up, Tom or Chris. Just can you maybe help us better understand how to think about the linearity of gross margins over the next six months or two quarters? There's a number of moving pieces when we think about seasonality, input cost inflation, pricing, mix, end market softness, NPI. Any way you can help us understand that trajectory would be super helpful.
Yes. So because of the input costs that we've talked about, the biggest challenge for us is Q3. We've always said it was never going to be linear and it's going to be step functions. I think in Q3 we're going to see most of these temporary input costs increase before all of the pricing catches up to it. So it's probably going to hit us most in Q3. But we're not talking net here. Most of this is going to be recovered by pricing, but there will be some impact. I'm not sure that we will get gross profit expansion for a 14th consecutive quarter; it's well within the possibility, but it's not something we're focused on right now just because of those activities.
And one other thing to mention, Erik, remember last quarter when we talked about the price increase that we were implementing in Q2, we did implement that price increase, but we also said it would have a lag impact because of certain customer provisions that we have with certain customers in terms of a notice period. So while we have increased pricing and as Tom said, the price increase is helping to offset some of the inflationary costs. It's not a dollar-for-dollar offset.
Okay. Awesome. I really appreciate the color.
Operator provided instructions to participants. The next question comes from the line of Dan Stratemeier with Jefferies.
Congratulations again, Tom, congratulations on your first call as CEO. Let me follow up on Erik's question and ask it a little bit differently, but maybe tie it back in. Tom, can you help us understand the cadence and sort of the number — actually not the exact number, but looking at your NPIs that are going to be coming out over the next 18 months, it's obviously a big part of your growth and your gross margin expansion. How would you compare what you have upcoming over the next 12 to 18 months to what you rolled out over the last 18 months, and maybe the magnitude of what's coming versus what already came out? And then to Erik's question, I think someone also asked us at the Investor Day, when you had your buildup to your five-year CAGRs in your projections at the Investor Day, you only had 1% to 1.5% pricing. Seemingly there's a lot of inflationary pressures and it seems like 1% to 1.5% seems low, especially with the mix of new products coming in. Can you help us understand the pricing philosophy and how you came to that 1% to 1.5% number? And then I have a follow-up.
Sure. So let's deal with the NPIs. We're pretty excited about the second half of the year. For instance, our smoke and CO detector platform that we're introducing will first go into the American market, replacing the eighth edition UL products that are out there. It has a better cost profile to it. It will have a better margin profile to it. We think it performs well and will continue to drive revenue growth. More importantly, it's about creating that global platform that allows us to build further out. Second, we're introducing the Fortic platform to the marketplace and bringing that across all of our products. That's going to be very important. It's a major effort. It doesn't necessarily in and of itself drive revenue immediately, but long term it's a very key part of our strategy. Some of the security products that will be built out or brought to the market will help drive revenue. But the best thing to think about overall is excluding OEM security products, we are expecting revenue growth across all of the other product areas. In terms of cadence of the NPI, we are seeing momentum. We are continuing to see more products coming out with shorter development cycles and we have a very healthy pipeline thereafter. Regarding pricing, you're right that we've experienced conditions recently — memory costs increasing several-fold, metal costs rising significantly, and shortages affecting printed circuit boards. These are significant cost pressures. They can be offset by pricing and other efforts to reduce product cost, but they do have an impact. That said, we do not believe these will be long-term cost increases. Some of it will stick, but long term we expect these pressures to unwind as capacity comes online and competition enters the market. Metals and fuel are shocks from global events and can impact the short term, but over a five-year term they shouldn't be considered a persistent trend.
All right. Great. You threw one line in there at the end that caught my attention, which was "strategically optimize our operations throughout the remainder of the year." What does that mean? What's the magnitude of it? Can you help us understand the drivers of that?
Yes. In terms of sensitivities around discussing specifics, there's certain limits, but we've always reviewed our manufacturing footprint and our costs to see how we can optimize those to reduce product costs and improve margins. That's something we're actively doing. We're looking at all of our operations worldwide to take actions that will benefit the company long term.
Is this above and beyond what you've already been doing?
Yes. This is part of a long-term plan over the next five years and thereafter. We have specific actions we want to take that will make a material impact, and we are executing. We talked about the closing of the Tianjin facility and the closing of Latrobe. We're reviewing our manufacturing footprint and optimizing product manufacturing and execution in all of our factories.
Yes. And then just to add, this is thematic to the replatforming we've talked about, moving from many product variants down to one to a handful by product line. These are all levers under our control and tie back into what Tom said — part of the long-term plan.
Those actions improve the efficiency of our operations. We talked about platform and other actions related to operational efficiency.
Operator provided instructions to participants. The next question comes from the line of Ian Zaffino with Oppenheimer & Co.
Just wanted to drill down a little bit on Air and HVAC. Maybe help us understand the environment you saw in the second quarter and how to think about the rest of the year? I know we had some softness last year, so what sort of magnitude of comp benefit should we expect and what is the timing? Also, what happened in the second quarter?
In the second quarter we were relatively flat year-over-year. We believe the general market was down, so our volumes represented increased unit demand but flat revenue dollars. We believe we did well in the marketplace and maintained our position. Last year, there was a transition related to gases and refrigerants and inventory built up in the channel that caused shocks. We don't see anything like that happening this year. We expect more normalization in the market and don't expect large growth right now in HVAC because fundamental drivers remain muted. It's on us to create value products to increase volumes and share.
As Tom mentioned in his prepared remarks, adoption of our new products — the thermostat, dehumidification product, water filtration product — continues to be positive. Combined with healthy channel inventory, we believe we're well positioned.
Okay. Can you talk about comps going into the back half of the year and your confidence in that? Also, can you give broader discussion on price versus volume? You mentioned most of the gains in the quarter were volume, and there are references to price benefits on gross margin. Trying to understand what's actually going on.
You were asking about second-half comps versus prior year. We expect growth in the second half of the year in our HVAC market, in summary. Regarding price and volume, to correct the perception that improvement in gross profitability was due to pricing: that would not be a correct assumption. If you look at the prior quarter, price was not a contributor to margin at all. The improvement came from volume and operational execution.
Okay. And then just on the HVAC again, is this a benefit in the third quarter and the fourth quarter? Maybe can you quantify it for us?
Ian, we provided guidance in totality. We don't provide product- or channel-level guidance. Q3 of last year numbers are available and you can set your estimates, but the market remains muted.
Operator provided instructions to participants. The next question comes from the line of Tomohiko Sano with JPMorgan.
Tom, Chris, congrats on the spin. Could you talk about P&S gross margin again? If we look at the 70 basis points year-over-year, could you break down a little more color on contributions from volume, manufacturing, supply chain execution, productivity, mix and pricing? What did you do better than expected?
We haven't gone into that level of granular detail publicly. I did disclose that pricing was not the contributor. The primary contributors were volume and execution and efficiency in the operation — conversion cost and conversion efficiency drove gross profit improvement. In the period there were inflationary costs offset by tariff refunds and other factors, so net-net things offset each other and we saw an improvement driven by operational efficiency.
A follow-up on Pro Channel Health. Can you talk about second quarter performance and second half expectations? Any color on active product retention or install time reductions would be appreciated.
The Pro channel buys through all of the channels and our revenue is driven by professionals. We expect growth in distribution and continued performance in retail in the second half. The channel we highlighted with headwinds is the OEM security channel.
Operator provided instructions to participants. The next question comes from the line of Jay Goldberg with D2D Advisory.
I want to follow up on comments you made about end markets. I understand OEM security is not good, but it sounds like some of the other end markets are looking more positive. Can you talk about those?
We think the market is a continuation of what we've seen to date. We're not expecting a rising tide to drive our performance; we will execute to drive performance. We're not seeing much change in sales of existing homes or new home construction. Both HVAC and security markets are fairly muted. Our goal is to out-execute the market, which we expect to do in the second half, again with the exception of the OEM security situation related to a large customer.
Operator provided instructions to participants. The next question comes from the line of Dan Stratemeier with Jefferies.
Just a question on the OEM customer. Is this like a one-off? What's the overall relationship like with that customer going forward?
The relationship with the customer is healthy. They have a different direction and are pursuing vertical integration. The products we offer are still well accepted. They are trying to do something different with their business model. This will have some impact in Q3 and more in Q4; by Q1 next year it should normalize somewhat and by Q2 we would expect a plateau. Long term, this is not strategic for us — it is lower-margin and not our branded business, so it's separate from our branded growth strategy. We are under contractual obligations to execute and will continue to provide great products; the relationship is positive.
Just to clarify, this activity is already baked into our medium-term financial targets that we presented at Investor Day.
That's helpful. So this is separate from your branded security refresh that's gaining momentum, correct?
Totally separate. Yes.
We have reached the end of the Q&A session. This concludes today's call. Thank you for attending. You may now disconnect.