Second fiscal quarter 2026
Filed Aug 12, 2026Resideo Announces Record Second Quarter 2026 Financial Results; Initiates Standalone 2026 Outlook
Record revenue, gross margin, Adjusted EBITDA and segment revenue results exceeded the high end of outlook ranges, supported by P&S growth and tariff refunds, although ADI profitability declined and operating cash flow was lower year over year.
Key metrics
as reported| Metric | Value | q/q | y/y |
|---|---|---|---|
| RevenueGAAP | $1,981 million | – | up 2% |
| Gross marginGAAP | 30.0% | – | up 70 basis points year-over-year |
| Net incomeGAAP | $97 million | – | – |
| Adjusted EBITDAnon-GAAP | $249 million | – | up 19% |
| Diluted EPSGAAP | $0.51 | – | – |
| Adjusted EPSnon-GAAP | $0.83 | – | up 26% |
| Cash provided by operating activitiesGAAP | $148 million | – | – |
| Products & Solutions gross marginGAAP | 43.6% | – | up 70 basis points |
| Products & Solutions income from operationsGAAP | $138 million | – | down 3% |
| Products & Solutions Adjusted EBITDAnon-GAAP | $177 million, or 25.5% of revenue | – | up 6% |
| ADI Global Distribution gross marginGAAP | 22.7% | – | up 50 basis points |
| ADI Global Distribution income from operationsGAAP | $64 million | – | down 10% |
| ADI Global Distribution Adjusted EBITDAnon-GAAP | $103 million, or 8.0% of revenue | – | decreased 4% |
Segments
| Segment | Revenue | q/q | y/y |
|---|---|---|---|
| Products & SolutionsRevenue grew year-over-year across substantially all sales channels and product families due primarily to volume increases given customer demand for Resideo products. Revenue included a favorable impact of approximately 35 basis points from foreign currency. | $695 million | – | up 4% |
| ADI Global DistributionRevenue reflected average daily sales growth of 2% year-over-year and one fewer sales day. Growth in security, professional audio-visual, and data communications was partially offset by weakness in residential audio-visual due primarily to a continued soft U.S. residential housing market. | $1,286 million | – | up 1% |
Q3 2026 and 2026 outlook
- Revenue$705 - $730 (Q3 2026); $2,900 - $2,950 (2026)
- NoteNon-GAAP Adjusted EBITDA (1): $145 - $155 (Q3 2026); $605 - $625 (2026)
Capital returns
- Resideo received a $900 million dividend from ADIG and used the proceeds to repay $900 million of outstanding principal under its Term Loan B credit facility.
- Resideo expects to make a further repayment of approximately $200 million under its Term Loan B credit facility following the completion of the post-closing cash adjustment under the separation agreement with ADIG.
- Resideo’s outstanding Preferred Stock was reduced by 150,000 shares, leaving 350,000 shares outstanding. This will result in a proportionally smaller quarterly dividend payable on the outstanding Preferred Stock.
What drove it
- Consolidated gross margin was impacted by the receipt of $27 million of tariff refunds, of which approximately $20 million was received by ADI.
- P&S gross margin benefited from volume increases, favorable manufacturing and supply chain variances, and tariff refunds, partially offset by unfavorable product sales mix.
- P&S incurred inflationary input costs that were partially offset by price actions announced last quarter.
- ADI gross margin benefited from approximately $20 million of tariff refunds, partially offset by unfavorable price and mix shift and higher fuel costs for freight.
- P&S research and development expenses increased $5 million, selling, general and administrative expenses increased $6 million, and restructuring expenses increased $10 million from the second quarter of 2025.
- ADI research and development expenses increased $2 million, selling, general and administrative expenses increased $8 million, and restructuring expenses increased $4 million from the second quarter of 2025.
Concerns
- ADI income from operations was $64 million compared to $71 million in the second quarter of 2025, while Segment Adjusted EBITDA decreased 4% to $103 million.
- ADI residential audio-visual revenue faced weakness due primarily to a continued soft U.S. residential housing market.
- Operating cash flow declined to $148 million from $200 million, driven primarily by approximately $45 million of non-recurring business separation costs and settlement payments and $20 million of higher cash interest paid.
- P&S income from operations declined 3% to $138 million despite revenue growth and gross-margin expansion.
- Consolidated and ADI gross margins were favorably affected by tariff refunds.
What to watch
- Execution against standalone Q3 2026 revenue outlook of $705 - $730 and Non-GAAP Adjusted EBITDA outlook of $145 - $155.
- Execution against standalone 2026 revenue outlook of $2,900 - $2,950 and Non-GAAP Adjusted EBITDA outlook of $605 - $625.
- The expected further repayment of approximately $200 million under the Term Loan B credit facility by the end of the third fiscal quarter.
- The transition beginning in the third quarter of 2026, when ADI will no longer be consolidated and P&S results will be presented as continuing operations with revenue adjusted to reflect ADI as an external customer and allocated corporate costs.
- Whether P&S can sustain gross-margin expansion following the thirteenth consecutive quarter of year-over-year gross-margin expansion.
Balance sheet and cash flow
- Net cash provided by operating activities was $148 million, compared to net cash provided by operating activities of $200 million in the second quarter of 2025.
- Cash, cash equivalents, and restricted cash were $949 million at July 4, 2026, including $400 million of cash proceeds from the ADIG notes offering that were funded into escrow.
- Total outstanding debt was $3.62 billion at July 4, 2026.
- The $400 million of ADIG notes moved onto the ADIG balance sheet in connection with the ADI Spin-Off and will not be included in future Resideo balance sheets.
Analysis
Resideo reported record consolidated revenue of $1,981 million, up 2% from $1,943 million, and stated that revenue was above the high end of its outlook range. Gross margin reached a record 30.0%, up 70 basis points year over year, while Adjusted EBITDA rose 19% to a record $249 million. GAAP net income was $97 million compared with a net loss of $825 million, and Adjusted EPS increased 26% to $0.83, also above the high end of the outlook range.
P&S was the principal operating highlight. Revenue increased 4% to $695 million, with growth across substantially all sales channels and product families attributed primarily to volume increases and customer demand. Its gross margin reached a record 43.6%, compared with 42.9%, supported by volume, manufacturing and supply-chain variances, and tariff refunds. However, income from operations declined 3% to $138 million as research and development, selling, general and administrative, and restructuring expenses increased. Segment Adjusted EBITDA nevertheless increased 6% to $177 million, or 25.5% of revenue.
ADI reported record revenue of $1,286 million, up 1%, but profitability softened. Revenue reflected 2% average daily sales growth and one fewer sales day, led by security, professional audio-visual, and data communications categories. Residential audio-visual remained weak because of the continued soft U.S. residential housing market. ADI gross margin expanded to 22.7% from 22.2%, but it was favorably affected by approximately $20 million of tariff refunds. Income from operations fell to $64 million from $71 million and Adjusted EBITDA decreased 4% to $103 million, or 8.0% of revenue.
Cash generation was lower, with cash provided by operating activities of $148 million compared with $200 million. Management attributed the decrease primarily to approximately $45 million of non-recurring separation costs and settlement payments, including the Honeywell Tax Matters Agreement termination payment, plus $20 million of higher cash interest paid. At July 4, 2026, cash, cash equivalents, and restricted cash were $949 million and total outstanding debt was $3.62 billion. Following the ADI Spin-Off, Resideo received a $900 million dividend from ADIG and used it to repay $900 million of Term Loan B principal, with a further repayment of approximately $200 million expected by the end of the third fiscal quarter.
The completed August 3, 2026 separation materially changes future reporting comparability. Beginning in the third quarter, ADI will no longer be consolidated and historical ADI results will be reflected as discontinued operations, while P&S will be presented as continuing operations with revenue adjusted for ADI as an external customer and allocated corporate costs. Resideo initiated standalone outlook for Q3 2026 revenue of $705 - $730 and Non-GAAP Adjusted EBITDA of $145 - $155, alongside 2026 revenue of $2,900 - $2,950 and Non-GAAP Adjusted EBITDA of $605 - $625. The key operating focus is the durability of P&S demand and margin expansion after tariff-refund benefits, alongside execution of the standalone cost and capital structure.
Management, verbatim
Resideo’s second quarter consolidated results were strong, reporting record high revenue and financial results that were above the high-end of the outlook range for all our key financial metrics. The Products and Solutions segment had another standout quarter with year-over-year revenue growth and the thirteenth consecutive quarter of year-over-year gross margin expansion.
Tom Surran, President and CEO
With the business separation now complete, Resideo is entirely focused on leveraging our competitive strengths to increase the value we deliver to customers as a standalone building technologies company.
Tom Surran, President and CEO
Not in the filing
stated, not guessed- Previous-quarter revenue, gross margin, net income, EPS, Adjusted EBITDA, operating income, and cash-flow comparisons were not provided.
- Consolidated operating income was not provided.
- Consolidated operating expenses were not provided.
- Free cash flow was not provided.
- Share repurchases and common-stock dividend amounts were not provided.
- Gross margin, operating expenses, tax rate, EPS, and cash-flow guidance were not provided.
- Prior guidance was not provided.
- Standalone actual first-half 2026 results on the same basis as the new standalone outlook were not provided.
AlphaAI analysis generated from the company’s SEC earnings filing (Form 8-K Item 2.02, or Form 6-K for a foreign private issuer). Every figure was cross-checked against the filing text; consensus estimates, price targets and share-price reactions are not shown because they are not in the filing. AI-generated research, not investment advice.