Resideo Technologies Signals Growth Ahead After Record Year

Resideo Technologies ((REZI)) has held its Q4 earnings call. Read on for the main highlights of the call.

Resideo Technologies’ latest earnings call struck an overall upbeat tone, highlighting record annual revenue and profitability alongside continued gross margin gains in both major segments. Management balanced that optimism with caution on near‑term pressures in select categories, higher interest costs, and macro uncertainty, but framed 2026 as another year of growth and operational progress.

Record Year Caps 2025 With Double-Digit Growth

Resideo closed 2025 with about $7.5 billion in net revenue, up 11% year over year, and adjusted EBITDA of $833 million, a robust 20% increase. Adjusted EPS climbed 17% to $2.68 while cash from operations ticked up 2% to $453 million, underscoring a year in which both the top and bottom line expanded meaningfully.

Fourth Quarter Tops Guidance Despite EPS Dip

Fourth quarter net revenue reached $1.895 billion, rising 2% with a 1% boost from currency, and adjusted EBITDA of $226 million grew 21%, coming in above the high end of management’s outlook. Gross margin improved 110 basis points to 29.6%, though adjusted EPS slipped to $0.50 from $0.59 mainly due to higher interest expense tied to debt from the Honeywell indemnification termination.

Products & Solutions Delivers Growth and Fatter Margins

The Products & Solutions segment posted 4% organic net revenue growth for 2025 and delivered 6% year‑over‑year growth in the fourth quarter, including about a 1% currency tailwind. Full‑year P&S gross margin expanded 110 basis points and reached 41% in Q4, up 20 basis points, marking an eleventh straight quarter of year‑over‑year margin expansion.

New Products Fuel Demand Into 2026

Management pointed to ten major product launches in 2025 as a key growth engine, citing strong customer reception for offerings like the First Alert SC5 connected smoke and CO detector and the Honeywell Home ElitePRO Thermostat. These introductions are helping build demand momentum going into 2026 and reinforce the strategy of innovating around connected home and comfort solutions.

ADI Stabilizes Operations and Advances Digitization

ADI completed its ERP rollout and achieved operational stabilization, a major milestone after a complex multiyear effort, while delivering 3% organic net revenue growth for 2025 and 4% growth in organic average daily sales. Digital channels are gaining traction, with e‑commerce revenue and average daily sales up 3% and exclusive brands growing 2% while adding more gross profit dollars.

ADI Margins March Higher on Price and Mix

ADI’s profitability profile continued to improve, with fourth quarter gross margin rising 110 basis points year over year to 22.7%, the seventh consecutive quarter of expansion. Management credited the improvement mainly to favorable pricing and product mix, reinforcing the distributor’s ability to manage its portfolio and pass through value in a competitive market.

Snap One Synergies Arrive Far Ahead of Plan

Resideo’s integration of Snap One is running ahead of schedule, with about $75 million of synergies realized in 2025, roughly 18 months earlier than originally planned. Management believes additional cost and revenue synergy opportunities remain over the next 18 to 24 months, suggesting further margin and cash flow tailwinds as integration deepens.

Near-Term Pressure at ADI From Video Surveillance

Despite the structural improvements, ADI posted a slight year‑over‑year decline in fourth quarter net revenue and average daily sales, down roughly 50 basis points on a reported basis. The shortfall was driven largely by weakness in the video surveillance category, which operates on a multi‑month sales cycle and temporarily weighed on results.

Higher SG&A Weighs on ADI Quarterly EBITDA

In the quarter, ADI’s higher gross profit dollars did not fully translate into earnings as adjusted EBITDA slipped modestly year over year. The decline reflected elevated SG&A tied to completing the ERP program and ongoing investments in real estate and digital capabilities, costs management frames as necessary to support future scale and growth.

HVAC Channel Softness Hits Products & Solutions

Within Products & Solutions, fourth quarter revenue in the HVAC channel fell by a low‑ to mid‑single‑digit percentage, reflecting a soft residential HVAC market and distributor efforts to trim inventories. Management noted early signs of normalization but acknowledged that near‑term demand in this channel remains pressured relative to other parts of the portfolio.

Interest Costs Drive Quarterly EPS Decline

Resideo’s quarterly earnings per share took a hit despite stronger operating results, with adjusted EPS falling to $0.50 from $0.59 a year earlier. The company pointed to roughly $20 million in higher interest expense from additional debt used to terminate a legacy indemnification agreement, partly offset by a $35 million benefit associated with that termination.

Macro, Tariffs, and Housing Keep Outlook Cautious

Executives highlighted ongoing macro uncertainty, citing tariff risks, geopolitical tensions, and a subdued outlook for U.S. residential housing growth in 2026. These factors are shaping a conservative planning stance and assumptions around trade policy and market activity, even as the company still expects to grow both segments in the year ahead.

Separation Clouds Near-Term Cash Flow Visibility

While operational cash generation remains healthy, management declined to issue a 2026 outlook for cash from operations due to uncertainty around the timing and cost of an anticipated business separation in the second half of 2026. That decision introduces some variability into near‑term cash planning, though they expect operating cash flow excluding separation payments to be similar to 2025.

Guidance Points to Continued Growth in 2026

For 2026, Resideo guided to net revenue between $7.8 billion and $7.9 billion, adjusted EBITDA of $935 million to $985 million, and diluted EPS of $3.00 to $3.20, with both ADI and Products & Solutions expected to grow and ADI outpacing P&S. First quarter guidance calls for revenue of $1.866 billion to $1.890 billion, adjusted EBITDA of $193 million to $207 million, and EPS of $0.58 to $0.62, alongside modest gross margin expansion and slightly stronger second‑half seasonality.

Resideo’s earnings call painted a picture of a company executing well operationally, delivering record results, and realizing acquisition synergies ahead of schedule, even as certain categories and interest costs weigh on quarterly EPS. For investors, the message was one of disciplined growth with a cautious eye on macro and separation‑related cash uncertainty, but a still‑constructive trajectory into 2026.