Resideo — Third Quarter 2026 Earnings Summary

Financial Performance:

• Total revenue was $727 million, up 3% year-over-year (YoY) from $703 million in Q3 2025; revenue excluding OEM Security was $694 million, up 6% YoY from $653 million.
• Gross margin was 40.4%, marking the 14th consecutive quarter of YoY gross margin expansion.
• GAAP income from continuing operations, net of taxes, was $31 million, down 66% compared to $90 million in Q3 2025.
• Standalone Adjusted EBITDA was $154 million, up 5% YoY from $146 million in Q3 2025.
• GAAP diluted EPS from continuing operations was $0.14, down 71% YoY; Standalone Adjusted diluted EPS was $0.52, up 8% YoY.
• Net cash provided by operating activities of continuing operations was $33 million in Q3 2026, compared to net cash used of $1.59 billion in Q3 2025.
• Research and development expenses increased $4 million to $37 million YoY; Selling, general and administrative expenses increased $24 million to $159 million YoY.
• Restructuring, impairment, and extinguishment expenses increased $17 million to $20 million YoY.

Guidance and Future Outlook:

• Q4 2026 revenue outlook is $710–$730 million; Full Year 2026 revenue outlook is $2,927–$2,947 million.
• Q4 2026 Standalone Adjusted EBITDA outlook is $145–$155 million; Full Year 2026 Standalone Adjusted EBITDA outlook is $614–$624 million.
• Q4 2026 Standalone Adjusted EPS outlook is $0.42–$0.48; Full Year 2026 Standalone Adjusted EPS outlook is $1.92–$1.98.
• Full Year 2026 cash provided by operating activities outlook is at least $165 million.
• Management noted Q3 results were near the high end of the provided outlook ranges.

Business Segments and Product Lines:

• OEM Security revenue was $33 million, down 34% YoY from $50 million, attributed to reduced volumes from a large OEM Security customer.
• Revenue excluding OEM Security grew across all sales channels and product categories driven by volume, pricing, and customer demand for non-discretionary products.
• New AI-powered capabilities are being launched on the next-generation FORTIQ software platform.
• The ADI Global Distribution segment was separated on August 3, 2026, and its historical results are presented as discontinued operations.

Market and Competitive Landscape:

• The company operates in a soft housing market and dynamic macro environment.
• Revenue growth was driven by customer demand for differentiated, non-discretionary products.
• Foreign currency exchange had an unfavorable impact of approximately 50 basis points on total revenue.
• Gross margin gains were partially offset by unfavorable product sales mix and inflationary input costs.

Risks and Challenges:

• Risks include the ability to achieve outlook, dependence on a select group of large customers, and impacts from tariffs including timing and recoverability of refunds.
• Macroeconomic conditions such as housing market fluctuations, interest rates, inflation, and raw material costs pose risks.
• Execution risks related to restructuring, productivity initiatives, and the expected benefits of the ADI Spin-Off are noted.
• Seasonal fluctuations and weather conditions affecting demand are identified as potential risks.

Management Commentary and Tone:

• Tom Surran, President and CEO, stated the team delivered results near the high end of outlook ranges in the first quarter following the ADI separation, underscoring strong execution.
• Management expressed confidence in executing strategic priorities with discipline and consistency to create positive momentum.
• The company remains focused on creating value through differentiated products and services.

Other Key Points:

• Resideo repaid $1.1 billion of gross debt during the quarter using a $900 million dividend received from ADI and $200 million of cash on hand.
• Total gross debt at the end of Q3 2026 was $2.1 billion.
• Resideo received a $900 million cash dividend from ADI as partial consideration for assets transferred in the spin-off.
• A $20 million payment was made to ADI as part of the post-separation adjustment mechanism.
• Outstanding Series A Cumulative Convertible Participating Preferred Stock was reduced by 150,000 shares, leaving 350,000 shares outstanding.
• Cash and cash equivalents at October 3, 2026, were $229 million.
• Business separation costs of $30 million were incurred in Q3 2026.
• The Indemnification Agreement expense and Honeywell Tax Matters Agreement expense were $0 in Q3 2026, compared to significant expenses in prior periods.