Release Date: May 06, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Resideo Technologies Inc (NYSE:REZI) reported a 19% year-over-year increase in total net revenue, reaching approximately $1.8 billion.

• The company achieved a gross margin of 28.9%, which is an increase of 200 basis points year over year.

• Adjusted earnings per share grew 34% year over year to $0.63.

• The products and solutions business segment saw 6% organic revenue growth year over year.

• The ADI business segment achieved 4% organic revenue growth year over year, despite having two fewer selling days in the quarter.

Negative Points

• The ADI business segment is significantly exposed to China tariffs, which could impact costs.

• Revenue in the security channel was down year over year, although the rate of decline is slowing.

• The residential audio video category experienced a low single-digit percentage decline due to a soft US residential market.

• The company is operating in a highly dynamic and uncertain macroeconomic environment, which affects its ability to tighten outlook ranges.

• There is a cautious market outlook with low levels of existing home sales impacting demand for fix and replace and remodel activities.

Q & A Highlights

• Warning! GuruFocus has detected 2 Warning Sign with REZI.

Q: Can you explain the pricing strategy in the ADI segment and how it relates to tariff-related increases? A: Unidentified_5 (Rob, President of ADI): We've taken a phased approach to pass through price increases from suppliers to mitigate tariff impacts. We're in a good position today and have built these impacts into our guidance. The environment is complex, but we're being prudent and thoughtful in our approach.

Q: How do you anticipate demand will be affected by price increases in the Products and Solutions (PNS) segment? A: Unidentified_4 (Tom, President of Products and Solutions): Less than 10% of products are subject to tariffs, and the required price increases are small. We've communicated with customers, and they do not expect a material impact on demand. For products from China, which require larger increases, we've communicated with the largest impacted customer, and they do not anticipate changes in demand.

Q: Can you provide insights into customer buying behavior in March and April, particularly regarding any hesitancy or buying ahead due to tariffs? A: Unidentified_3 (Jay, CEO): During Q1, we saw minimal buying ahead and strong demand. Unidentified_4 (Tom) and Unidentified_5 (Rob) added that communication with customers has minimized the need for buying ahead, and demand remained strong into April.