Resideo Technologies Q1 2026 Earnings Call - Outperformance Amidst Macro Uncertainty and Separation Progress

Operator: I will now hand the conference over to Chris Lee, Global Head of Strategic Finance. Please go ahead.

Chris Lee, Global Head of Strategic Finance, Resideo: Thank you, and good afternoon, everyone. Thank you for joining us for Resideo’s first quarter 2026 earnings call. On today’s call is Jay Geldmacher, Resideo’s Chief Executive Officer; Michael Carlet, Chief Financial Officer; Rob Aarnes, President of Resideo’s ADI Global Distribution business; and Thomas Surran, President of Resideo’s Products and Solutions business. 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 in 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 now turn the call over to Jay.

Jay Geldmacher, Chief Executive Officer, Resideo: Thank you, Chris, and thanks to everyone for joining us today. I’m very pleased with the continued execution demonstrated by the entire team. Resideo exceeded the high end of the first quarter outlook ranges for all metrics. Total net revenue grew 8% year-over-year to over $1.9 billion. Total adjusted EBITDA grew 20% year-over-year to $215 million. Total adjusted earnings per share grew 3% year-over-year to $0.65. Our first quarter results reflect the solid health of our operating fundamentals. Our Products and Solutions segment report 9% net revenue growth year-over-year, driven primarily by increases in both price and volume across most sales channels. Our ADI segment report 8% net revenue growth year-over-year, primarily from strength in our security business, partially offset by declines in our residential AV business.

The strength of our combined operations, coupled with the elimination of the indemnification agreement, result in strong bottom-line results. Resideo’s execution continues to be steady in an uncertain global macroeconomic environment and with end markets still soft. I’d like to make two important points on recent macro events that are relevant to Resideo. First, on inflationary cost dynamics, we have largely absorbed cost inflation primarily related to higher costs for freight in our reported first quarter results. We intend to raise prices later in the second quarter to combat increasing costs. There is broad understanding from our customers for the need to share the inflationary pressures, and we expect to work collaboratively with our customers as we have historically. Second, on the impact of cost inflation on customer behavior, macroeconomic conditions have generally had an impact on consumer confidence and affordability.

While the high-end residential audio visual market has been softening, Resideo remains well-positioned with its existing products, its upcoming new product introductions, and its exceptional distribution footprint to take advantage of the markets we serve. Notwithstanding these macroeconomic conditions, as a result of our outperformance in the first quarter and other actions we are taking, Resideo is reaffirming its 2026 outlook. We believe our solid execution and proactive mitigation tactics will enable Resideo to manage through the uncertain environment for the rest of the year. Michael Carlet will speak more about this in his comments. Before I hand over the call to Thomas Surran to discuss the performance of the Products and Solutions business segment, let me give you an update on our separation activities. We’ve achieved key milestones in our business separation process, including yesterday’s public filing of ADI’s Form 10.

I’m very pleased with the high caliber management team and board of directors that ADI will have as a standalone company, which is a testament to Rob Aarnes and the entire ADI team for the business they have built. For Resideo Technologies, Thomas Surran has built a world-class team within Products and Solutions that will carry the business forward. We have accomplished a tremendous amount of work to get us to this point, and we have done so while continuing our strong business execution, including providing high-level products and services to our customers.

Additional details will be shared at a later date, but we plan to hold investor day events for Resideo and ADI in N.Y. during mid-July, where we will introduce the full leadership teams and discuss each company’s go-forward business strategy and value creation model. As we noted in our announcement yesterday, we expect the spin-off to be complete between the middle of the third quarter and the middle of the fourth quarter. I’m very pleased with the focus, discipline, dedication, and leadership demonstrated in the first quarter by the entire team. Now, let me hand the call over to Tom.

Thomas Surran, President of Products and Solutions Business, Resideo: Thanks, Jay. The Products and Solutions team continued its strong operational execution, resulting in another quarter of year-over-year organic net revenue growth and the twelfth consecutive quarter of year-over-year gross margin expansion. Products and Solutions reported net revenue growth of 9% year-over-year, including an approximate 200 basis point favorable impact from currency. The impact of having an extra four days in the first quarter on net revenue growth was approximately 300 basis points. Net revenue grew across substantially all our sales channels and product families due to both price and volume driven by customer demand. Let me walk through our activities in each of our primary sales channels as our products can be sold through multiple channels. In the retail channel, strong year-over-year net revenue growth was primarily driven by volume.

There was an uptick in demand for our safety and thermostat products available in the retail channel, driven by both weather and regulatory changes. Point of sales volumes at our key accounts continue to be strong and supported by healthy levels of channel inventory. Sales of First Alert products, including the First Alert SC5 connected smoke and carbon monoxide detectors, showed increasing adoption, which we believe contributed to market share gain in safety products. The OEM channel posted its sixth consecutive quarter of healthy year-over-year net revenue growth, driven almost equally by price and volume. Weather was a tailwind, with notably stronger than expected demand in EMEA for our higher priced and more profitable units. The electrical distribution channel had one another quarter of year-over-year net revenue growth driven by volume. We saw continued demand for our BRK branded non-connected safety products, primarily in the MRO and the manufactured housing markets.

Net revenue from the security channel grew year over year, driven primarily by price increases on our existing products. Security sales to a large customer were in line with our expectations. We are receiving positive market signals for our new integrated security platform scheduled for general market release in the second half of 2026. Concluding our channel walk on a high note, net revenue from the HVAC channel was down only 1% year over year. Volume declines were partially offset by higher prices related to new products. During the quarter, we saw conditions in the residential HVAC market stabilize, as we indicated several quarters ago. We saw a material reduction in the channel inventory held by our large HVAC distribution partners over the past 3 quarters, which we do not expect to continue going forward.

While we saw improved market conditions at the end of Q1, during the quarter, there was a modest volume decline that was partially offset by weather-driven demand and increased adoption of our new products, including continued strong demand for the Honeywell Home ElitePRO Smart Thermostat. Gross margin was 41.8%, up 40 basis points year-over-year, driven primarily by continued improvements in factory utilization, partially offset by product sales mix. We achieved the 12th consecutive quarter of year-over-year gross margin expansion despite absorbing higher fuel costs. We increased investments in R&D to support new product launches and speed to market. adjusted EBITDA grew 12% year-over-year due to continued gross margin efficiency, which led to operating leverage. We intend to continue driving operational efficiencies during 2026 and beyond.

Looking forward, we’re excited to capitalize on the profitable growth momentum from our continued new product introduction cadence. With that, let’s turn the call over to Rob.

Rob Aarnes, President of ADI Global Distribution Business, Resideo: Thanks, Tom. ADI reported net revenue growth of 8% year-over-year. After accounting for 4 extra sales days in the quarter, average daily sales growth was 1% year-over-year. Both growth metrics include a favorable impact from currency of approximately 1%. Net revenue growth was driven by demand in the security, professional audiovisual, and data communications categories, partially offset by the residential audiovisual category due to a continued soft U.S. residential market. We saw sequential growth in security product categories, including an expected rebound in video surveillance. We saw stronger contributions from large accounts this quarter relative to the last 2 quarters, demonstrating conviction in our operational stability. Performance in our international business was also a call-out, yielding a positive return from operational changes we made last year.

In our areas of strategic focus, e-commerce continues to grow as part of ADI’s net revenue while also being accretive to gross margin. E-commerce revenue grew 12% year-over-year, and average daily sales grew 5% year-over-year, both driven by greater customer adoption. Customer rating metrics continue to trend upward, and ADI achieved top-tier recognition for service, training, and technical support from CE Pro, which is voted upon by the distribution industry. In another area of strategic focus, exclusive brands revenue increased by 7% year-over-year, while also generating 13% more gross margin dollars in the quarter versus the same period last year. From a new product introduction standpoint, we added approximately 60 SKUs in the first quarter, including new Luma security cameras, Triad premium residential sound products, and Araknis residential and SMB networking products.

Also, the availability of the new Control4 operating system continues to broaden, resulting in an increased number of projects and attach opportunities for our Lux lighting product. Moving on to profitability, ADI reported 21.2% gross margin in the first quarter, down 40 basis points year-over-year. Gross margin was primarily impacted by higher fuel costs for freight. Operating expenses in the quarter were up year-over-year, due primarily to incrementally higher variable costs during the 4 extra sales days, as well as duplicate costs as we continue to optimize stores and distribution centers. ADI’s income from operations was flat year-over-year, and adjusted EBITDA declined by $6 million, due primarily to the previously mentioned decline in gross margin. I’ve said in the past that one of our key operating principles is our customer-first ethos.

We pride ourselves in delivering an optimized customer experience that breeds loyal and profitable customer behavior. Another of our key operating principles is continuous improvement. We are pleased that we delivered against the Snap One synergy target, as well as implemented new operational systems integral to our future growth. We can now fully focus on business transformation actions, including optimizing our real estate footprint and streamlining our operating expenses globally, that we believe will result in EBITDA margin expansion later this year. Now, let’s turn the call over to Michael Carlet to discuss our first quarter’s financial results and 2026 outlook.

Michael Carlet, Chief Financial Officer, Resideo: Thank you, Rob. Good afternoon, everyone. Let’s get straight into the quarterly results, starting with revenue. Total net revenue was $1.9 billion, up 8% year-over-year, including an approximate 2% favorable impact from currency, exceeding the high end of the outlook range. Gross margin in the quarter was 28.8%, down 10 basis points year-over-year. The slight decrease in gross margin rate was primarily driven by higher fuel costs on freight at both business segments. Adjusted EBITDA was $215 million in the quarter, up 28% year-over-year, and above the high end of the outlook range. The primary reason for the increase year-over-year was higher net income, driven in part by net revenue outperformance and the benefit of $35 million associated with the terminated indemnification agreement.

GAAP net income per share was $0.17 versus a net loss of $0.02 in the prior period. Adjustments to arrive at adjusted earnings per share include $0.15 of business separation costs and $0.12 related to a one-time litigation settlement impacting Products and Solutions. First quarter’s adjusted earnings per share was $0.65, exceeding the high end of our outlook range and increasing from $0.63 in the prior year period. Total reported cash used by operating activities in the first quarter was $145 million versus the use of $65 million in the same period last year. The year-over-year fluctuation was driven by business separation activities, higher cash interest paid, and working capital dynamics. Our outlook for the full year 2026 cash provided by operations we provided last quarter, excluding separation-related payments, remains unchanged.

Now, before I provide our financial outlook, let me walk you through some of our market perspectives and assumptions that are incremental to those shared with you last quarter when we set our 2026 outlook. As Jay Geldmacher stated, we believe uncertainty in the macro has resulted in increased operating costs and softer market demand in certain end markets. From a cost standpoint, we anticipate higher costs during 2026 in areas such as fuel and freight. We do not anticipate material cost increases related to new Section 232 tariffs after conducting our assessment. Additionally, we do not anticipate material cost impacts for memory chips. As noted earlier, we intend to take pricing actions starting in the second quarter that are intended to fully mitigate these increasing costs.

Given that our price actions will lag inflationary costs, there could be a slight headwind to the gross margin for each business segment in the second quarter. From a market demand standpoint, we expect the ongoing uncertain macro to impact ADI more than Products and Solutions as questions around consumer confidence and affordability are anticipated to impact ADI’s high-end residential end markets. Now, on our annual outlook, we are reaffirming our 2026 outlook. The shape of the company’s outlook for the remainder of the year is now more weighted to the second half due primarily to a shift across fiscal quarters for ADI. On net revenue growth, we continue to anticipate both business segments achieving year-over-year net revenue growth in 2026, and now forecast the growth rate of ADI and Products and Solutions to be approximately the same.

On gross margin, we now forecast total company gross margin % expansion to be flat year-over-year. We continue to anticipate that Products and Solutions will have greater gross margin % expansion than ADI. As Rob noted, ADI is executing against business transformation plans that we believe will be of benefit to EBITDA in the second half. Our outlook for the second quarter of 2026 is as follows: total company net revenue to be in the range of $1.916 billion-$1.940 billion. Total company adjusted EBITDA to be in the range of $216 million-$230 million. Total company fully diluted earnings per share to be in the range of $0.71-$0.75.

Note that there is one less day in the second quarter of 2026 versus the same period last year. We encourage you to visit our investor relations website to access our earnings presentation, which includes our outlook ranges along with key modeling assumptions for 2026. Let me turn the call back to Jay before we open the call up for Q&A.

Jay Geldmacher, Chief Executive Officer, Resideo: Thanks, Mike. Our outperformance this quarter is another proof point of Resideo’s execution and product innovation pipeline resulting in profitable growth. Following the separation, there will be two pure play companies. We expect the strategic focus for each company to be sharper and supported by greater financial flexibility that can be directed toward achieving their respective initiatives to create shareholder value. We believe there is more opportunity for the investment community to recognize the positive progress we have made. We say our upcoming business separation providing another catalyst for a multiple re-rating as investors can learn more about how each company is well-positioned to deliver long-term growth and value creation for shareholders. Let’s now open the call up for questions, operator.

Operator: We will now begin the question and answer session. Please limit yourself to 1 question and 1 follow-up. If you would like to ask a question, please press star 1 to raise your hand. To withdraw your question, press star 1 again. We ask that you pick up your handset when asking a question to allow for optimum sound quality. If you are muted locally, please remember to unmute your device. If you have additional questions, please reenter the queue. Your first question comes from Dan Stratemeyer with Jefferies. Please go ahead.

Dan Stratemeyer, Analyst, Jefferies: Thank you. My questions, I guess maybe this question is for Michael Carlet. On a high level basis, I think this reminds some folks of the third quarter, a really good quarter, and a little bit more of a muted outlook in the very near term. Why are you confident, your, I guess, the price actions, will be enough to overcome the macro and, you know, given your confidence in still hitting these numbers? Just a little more comfort on that. It’s clearly a little bit of deja vu for folks.

Michael Carlet, Chief Financial Officer, Resideo: Sure. Hey, Dan. Thanks for the question. You know, obviously as we look out the rest of the year, there remains macro uncertainty. Every day the news changes with what the outcomes are gonna be between the war, other issues that are out there. We feel confident that we’ve got the right pricing actions. We’ve talked to our customers. Tom and Rob can certainly comment on that as needed. Our communication with our customers that we feel good we can pass through the appropriate pricing to pass along the cost increases that we expect. You know, there’s a little bit of timing as these things come through, and we roll through contracts when we can actually implement that pricing. We’re very highly confident that what we’re doing will offset the cost that we see. Obviously, there’s uncertainty out there.

Costs could continue to rise, they can moderate, and we’ll continue to adjust as needed. We feel really good about the position we’re in from a commercial standpoint as it relates to our pricing and our competitors and our ability to raise prices to offset.

Dan Stratemeyer, Analyst, Jefferies: All right. Thanks, Mike. Rob, I’ll turn it over to you. You mentioned business transformation actions. Could you just dive into that a little bit further? How significant could they be? How quickly do you think you’re gonna be able to do those?

Rob Aarnes, President of ADI Global Distribution Business, Resideo: Yeah. Thanks, Dan. Great question. I would tell you that they are quite significant. To the point where we are doubling down on trying to bring as much of that into 2026 as possible. They’re in the area some I mentioned on the call or in my prepared remarks and some I didn’t. The big buckets are, first of all, are rationalizing our real estate footprint. You know, we’re, I would say, first, second inning there in terms of looking at our stores and our DC footprint since we’ve actually acquired Snap One. There’s a lot of opportunity to rationalize the footprint there. Second, you may have seen the press release Monday, yesterday, on my leadership team. We reorganized the team.

We put all the sales and operations reporting into Alicia Copeland, and then on Marco Cardazzi’s merchandising team, e-com, marketing, and all of category management. Those two, they have a lot of opportunity to look at redundant costs and optimize OpEx going forward. Between our real estate footprint and just optimizing our current, you know, headcount across the businesses, we see quite a bit of opportunity there.

Dan Stratemeyer, Analyst, Jefferies: Okay. How about on the, on the sales and growth side? Understanding the high-end Snap One side, how about the sort of the core ADI? Any initiatives to reinvigorate growth there?

Rob Aarnes, President of ADI Global Distribution Business, Resideo: 100%. In fact, I was I’ll use the term I was just using to I was talking about this with somebody earlier today. I mean, we’ve got a number of powerful, very focused initiatives on driving and returning our commercial categories, really the strength of what we do back to year-over-year growth. When you look at, you look at Q1 as a whole, obviously, you know, up 8%, but 1% on average daily sales. You gotta I would challenge to look past that. I was very encouraged to see a number of our commercial categories actually return to growth. We’ve got a couple that are, you know, continuing to lag a bit behind. That is where we are focused going forward.

I’m very encouraged by what I’m seeing from the team, and the categories that we did return to growth and what we’re gonna do with those remaining categories going forward. I would just lastly tell you, look, this is the same team, right? That has delivered, you know, some really nice growth over the last decade, year over year. Now they’re, you know, equipped with better tools, there’s nothing that makes me believe that we won’t be back and pretty soon.

Dan Stratemeyer, Analyst, Jefferies: All right. Thanks, Rob. I don’t want Tom to feel left out. Tom, the growth at P&S here-

Thomas Surran, President of Products and Solutions Business, Resideo: Thank you.

Dan Stratemeyer, Analyst, Jefferies: has been a numbered quarter, a number of quarters in a row here, Thomas Surran, that’s just, you know, above market, really impressive. Give us the bullet points as to why, you know, P&S is just flat out outperforming the end markets and the overall industry. I mean, you’re obviously as levered to resi as anyone in the entire company. How about that, number 1, and then as everybody knows, these memory stocks are through the roof, memory costs are through the roof. There’s a lot of concern that you’re not gonna be able to mitigate that. I heard the comments from Michael Carlet earlier. How are you able to mitigate the memory cost increases?

Thomas Surran, President of Products and Solutions Business, Resideo: Okay. Yeah, let’s take that 1 second. Let’s go back to your first question, the outperformance. In the press release, we made a comment that we’ve assembled and have an extremely strong management team. As I think through, and I could give you specific examples, the person that’s gonna be heading up our sales and marketing and how that team has gone out there and just a tremendous job introducing the new products as well as some of the existing products and working with our customers and communicating the message of what we’re trying to do, fantastic. Our supply chain, I’m gonna come back to that 1 in a little bit, so let’s just put a pin, but they’ve executed extremely well. Our product management and our engineering team, shortening development cycles, creating new differentiated products that create and deliver value to our customers, exceptional execution.

In general, I think it’s been the execution of that team that’s enabled that. All right. One of the questions, I’m gonna come back to supply chain to answer the memory question. Michael Carlet did do a great job, by the way, of explaining, you know, that we have the fuel costs, we’ve got metals, we’ve got Section 232 costs. All of these, what I believe, are transitory inflationary pressures, and we have, as Jay Geldmacher mentioned, worked with transparency in sharing this information and working with our customers to that we’ve had to pass this on. That, how we’re passing that on is over this next quarter. We’ve already communicated these price increases. They’re going into effect. There’ll be a bit of a lag, but they’re all set up to execute, and we’ve had no pushback on that.

The bigger question, how do we know we’re in at the correct position related to memory? That supply team I was mentioning, they’ve been working on this since last year, as we saw the first indicators that there was going to be a memory squeeze. They worked with all of our suppliers to make sure that we had allocation commitments for all of 2026. That’s the allocation. On the pricing, there was also some pull-forward in pricing, the engineering, product, and supply chain have worked on other means of addressing this. Our products, only a minority have memory in them, when we use memory, it’s typically smaller capacity, so less amounts of memory, it’s not the cutting-edge technology that’s in such high demand at the data centers. There’s a little bit less pressure on that.

We’ve also tried to do whatever we can to try to maximize that value to customers by trying to see if there’s ways we can reduce some of the memory or change how we execute. You know, there is some cost to our customers that we are passing. It was described as non-material, and we feel comfortable that we have received the allocations we need to be able to execute in 2026.

Dan Stratemeyer, Analyst, Jefferies: Thank you, guys.

Rob Aarnes, President of ADI Global Distribution Business, Resideo: Thanks, guys.

Operator: Your next question comes from Ian Zaffino with Oppenheimer. Please go ahead.

Ian Zaffino, Analyst, Oppenheimer: Please go ahead.

Hi. Great. Thank you very much. you know, question would be on the guide. you know, as we think about the second half of the year, what’s giving you confidence in that second half of the year? I know we talked about price increases going through, but at the same time, you have some softness in some of the other end markets that may or may not recover. What are you seeing maybe there that you think is going to improve? any other kind of factors that are driving kind of the guide into the second half of the year or the implied guide into the second half of the year, from puts and takes basis. Thanks.

Michael Carlet, Chief Financial Officer, Resideo: Thanks, Ian. I’ll kick it off. Rob, Tom, feel free to jump in with any color commentary. I think, you know, first of all, when we think about our guide for the year, the first thing we look at is the current trends of the business and ask ourselves what’s gonna change for the good or the bad. What are those macro factors? What are our internal initiatives? We try to bake all that into how we think about the rest of the year.

We think about the second half of this year, you know, Rob has mentioned the cost activities that he has in place, some of which we’re going to plan, some of which he’s looking to pull forward. We’ve added some of that to our guide for the year because we know that what we’ve identified we can get done. We know our current trends of our daily sales average. We know going into the second half, you know, at ADI specifically, we had a weak second half last year with some things that were going on operationally with the business that we’re gonna be lapping some easier comps. Same thing at the PNS side of the business. We’re lapping that HVAC disruption in the market last year.

All those things, as we think about the current trends of the business compared to how we were performing in the second half last year, give us a lot of confidence on the top line. We’ve talked about the pricing actions we’re taking to protect our margins, and again, the OpEx activity specifically at ADI that we’re implementing to pull some costs out of the business, we’re highly confident will be achieved as well. All that together makes us feel like our guide for the year is very prudent and appropriate for what we think is gonna happen. Again, we all would acknowledge the uncertainty that’s out there. Things can get better, they can get worse, and we’ll react accordingly. Based upon what we can see today, we feel real good about how we’re thinking about the full year.

Ian Zaffino, Analyst, Oppenheimer: Okay, thanks. You know, as a follow-up, you know, when we’re talking about fuel and freight, you know, what type of inflation have you seen there maybe in a dollars and cents basis? Also in ADI, remind us how much of that is high-end AV and maybe how much of that You know, how much was that segment down? Thanks.

Michael Carlet, Chief Financial Officer, Resideo: I’ll do the first one or the second one first. It’s easier. If you just look back when ADI bought Snap One, Snap One was about a $1 billion business. We’re about a $5 billion business plus or minus today, it’s around 20%-ish. There’s some pluses and minuses, if you use that as a directional sort of proxy, that’ll get you in the ballpark of what those numbers are. As far as the fuel and freight costs, you know, it’s millions of dollars that we are incurring in each quarter right now. You know, it’s obviously changing as we speak. The cost of bunkers and fuel changes every single day. It is a not insignificant number that we’re incurring at both sides of the business, at both ADI and PNS, and offsetting that again with price.

For the year, you know, it’s gonna be in the tens of millions of dollars of cost, but the timing of how that flows through obviously varies as you go through inventory, as you think about receipts, and as you, again, think about the uncertainty that’s out there in the market.

Ian Zaffino, Analyst, Oppenheimer: Okay. Thank you very much.

Michael Carlet, Chief Financial Officer, Resideo: Thanks, Ian.

Operator: Your next question comes from Erik Woodring with Morgan Stanley. Please go ahead.

Ralph, Analyst (on behalf of Erik Woodring), Morgan Stanley: Hi, this is Ralph here on behalf of Erik. Good evening, and thank you so much for taking my question. Just with regard to the Form 10 you put out earlier this week, you outlined some leverage targets for Resideo or RemainCo. I’m just curious, how are you thinking about that timeline to achieve your net leverage goal and any other checkpoints that you are considering to consider M&A share repurchases, dividends, et cetera. I just have one quick follow-up. Thank you.

Michael Carlet, Chief Financial Officer, Resideo: Sorry. Excuse me. Thanks for the question. I think first of all, you know, look, we have a lot further conversations about the separate companies as we go forward. As we sit here today, we’re very focused on running the business today. We’re certainly preparing for the separation. We’ve posted decks for both ADI and PNS, the RemainCo separately, that can be viewed on our website. I’d encourage everyone to take a look through them. I think at a high level, both companies on a separate company basis, we’re very focused on deleveraging. We’ve got 3x leverage as gross leverage as the target for both companies. We think we get there pretty rapidly. These are both strong cash flow generating businesses. We think we’ll get there pretty quickly.

You know, we’re gonna hold off talking about specifics on that till we get further down the path and get closer to Investor Day.

Ralph, Analyst (on behalf of Erik Woodring), Morgan Stanley: Got it. Makes sense. Totally understand. Just wanted to double-click a little bit on the memory supply chain dynamics that the other gentleman alluded to. I know you talked about, you know, having relative comfort with the allocations you received in 2026. You know, we’re hearing in the industry that in a lot of cases, there are constraints extending well into 2027. I guess to the extent you’re able to provide any color beyond 2026 in terms of what you’re seeing in the supply chain, that’d be helpful. Thank you.

Thomas Surran, President of Products and Solutions Business, Resideo: Sure. This is Tom, Ralph. I wanted to just explain clearly for 2026, it’s not that we stopped working on this problem at the end of 2026. We’re working on allocations for 2027, dealing with our vendors to do it. You’re right, I would expect this to continue in 2027. Again, I’d go back to the comment that the products that are in the most demand are things such as DDR5 DRAM, right? Which is the latest and greatest at high capacities. We’re typically using DDR3, DDR4 in low capacities. And then some non-volatile memory. That, will it have the same duration of impact as some of the high capacity, high performance, high speed memory?

I wouldn’t think so. We are making sure that we’re taking the actions to secure our allocation as far out as we can.

Ralph, Analyst (on behalf of Erik Woodring), Morgan Stanley: Got it. Okay. Very helpful. That’s all for me. Thank you.

Operator: There are no further questions at this time. This concludes today’s call. Thank you for attending. You may now disconnect.