What happened
Resideo Technologies, Inc. (NYSE: REZI) repaid $1.1 billion of debt in its third quarter, leaving gross debt at $2.1 billion. The money came from a $900 million cash dividend from ADI Global Distribution Inc., which Resideo spun off on Aug. 3, plus $200 million of its own cash.
Revenue for the quarter ended Oct. 3 rose 3% to $727 million from $703 million a year earlier. Revenue excluding OEM Security rose 6%. Gross margin was 40.4%, the 14th straight quarter of year-over-year gains. Standalone Adjusted EBITDA rose 5% to $154 million. Standalone Adjusted diluted EPS rose 8% to $0.52.
Key numbers
| Metric | Latest | Change | Source |
|---|---|---|---|
| Revenue | $727 million | from $703 million, +3% | SEC 8-K Exhibit 99 |
| GAAP income from continuing operations | $31 million | from $90 million, -66% | SEC 8-K Exhibit 99 |
| Standalone Adjusted EBITDA | $154 million | from $146 million, +5% | SEC 8-K Exhibit 99 |
| Standalone Adjusted diluted EPS | $0.52 | from $0.48, +8% | SEC 8-K Exhibit 99 |
| Gross debt repaid in the quarter | $1.1 billion | SEC 8-K Exhibit 99 | |
| Net margin (net income divided by revenue) | 3.0% | from 22.2%, -19.2 percentage points | Calculated from SEC 8-K |
Read more: Resideo Technologies (REZI) company research
Why it matters
Reported earnings tell a weaker story than the adjusted measures. GAAP income from continuing operations fell 66% to $31 million from $90 million. Diluted EPS from continuing operations fell 71% to $0.14. Diluted EPS including discontinued operations was $0.08, down 90.6%.
The release names $30 million of non-recurring business separation expenses in selling, general and administrative costs. It also reports a $17 million rise in restructuring, impairment and extinguishment costs. OptimistFi calculates that net margin, using net income of $22 million, was 3.0%, down from 22.2% a year earlier, a 19.2 percentage point drop.
OptimistFi has argued that REZI works if gross profit keeps improving while last year's cash-flow and net-loss shock proves temporary. The margin streak supports the first half. Operating cash flow from continuing operations was positive this quarter. A year earlier it was a $1.59 billion outflow, when Resideo paid Honeywell to end the Indemnification Agreement.
The caution is OEM Security. Its revenue fell 34% to $33 million on reduced volumes from a large customer. The release said the decline was expected.
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What's next
Resideo holds a conference call at 5:00 p.m. ET on Nov. 10. For the fourth quarter it guides to revenue of $710 million to $730 million, Standalone Adjusted EBITDA of $145 million to $155 million and Standalone Adjusted EPS of $0.42 to $0.48.
For 2026 it expects Standalone Adjusted EPS of $1.92 to $1.98 and operating cash flow of at least $165 million. Fourth-quarter results inside those ranges would support the case. A cash flow shortfall would reopen the question of whether last year's shock was temporary.
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Sources
- Resideo third quarter 2026 earnings release (Exhibit 99 to Form 8-K) — Press release dated Nov. 10, 2026 announcing third quarter results for the period ended Oct. 3, 2026 and updated 2026 outlook.
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Originally published on OptimistFi, evidence-first equity research. More at optimistfi.com.
