Global Finance News
13 May 2026, 10:18
Resideo Drops 9.4% in Premarket Despite Beat as ADI Spin-Off Costs and Cash Burn Alarm Investors
May 12, 2026 | NYSE: REZI
Resideo is falling sharply in premarket despite beating its own guidance on every key metric — a reaction that speaks to concerns sitting below the headline numbers around cash consumption, ADI margin pressure, and the complexity of an impending corporate separation.
The top-line results are genuinely solid. Net revenue of $1.912 billion grew 8% year-on-year, above the high end of guidance. Adjusted EBITDA jumped 28% to $215 million, also above the high end. Adjusted EPS of $0.65 beat guidance and improved modestly from $0.63 a year ago. Net income recovered meaningfully to $38 million from just $6 million in Q1 2025. The Products and Solutions segment was particularly strong, with revenue up 9%, adjusted EBITDA margin expanding to 25.1%, and twelve consecutive quarters of year-on-year gross margin expansion.
The concern is elsewhere. Operating cash outflow deteriorated sharply to negative $145 million from negative $65 million a year ago, driven by business separation activities, higher cash interest payments, and working capital dynamics. With $3.23 billion in total debt on the balance sheet and a spin-off of ADI Global Distribution in process, that cash burn is drawing attention.
ADI itself is showing cracks. While revenue grew 8%, the segment's adjusted EBITDA fell 8% to $66 million, with margin compressing to 5.5% from 6.4%. Higher freight costs, unfavorable product mix, and a soft US residential market are weighing on what is the larger of the two business units by revenue. Average daily sales growth of just 1% excluding the calendar benefit of four extra sales days tells a more modest underlying demand story.
Full-year guidance was reaffirmed at $7.8 to $7.9 billion in revenue and $935 million to $985 million in adjusted EBITDA — but reaffirmation without a raise, following a beat quarter, often disappoints a market that was hoping for an upgrade. Combined with the cash flow deterioration and spin-off execution risk, that is likely enough to explain today's sharp premarket decline.
May 12, 2026 | NYSE: REZI
Resideo is falling sharply in premarket despite beating its own guidance on every key metric — a reaction that speaks to concerns sitting below the headline numbers around cash consumption, ADI margin pressure, and the complexity of an impending corporate separation.
The top-line results are genuinely solid. Net revenue of $1.912 billion grew 8% year-on-year, above the high end of guidance. Adjusted EBITDA jumped 28% to $215 million, also above the high end. Adjusted EPS of $0.65 beat guidance and improved modestly from $0.63 a year ago. Net income recovered meaningfully to $38 million from just $6 million in Q1 2025. The Products and Solutions segment was particularly strong, with revenue up 9%, adjusted EBITDA margin expanding to 25.1%, and twelve consecutive quarters of year-on-year gross margin expansion.
The concern is elsewhere. Operating cash outflow deteriorated sharply to negative $145 million from negative $65 million a year ago, driven by business separation activities, higher cash interest payments, and working capital dynamics. With $3.23 billion in total debt on the balance sheet and a spin-off of ADI Global Distribution in process, that cash burn is drawing attention.
ADI itself is showing cracks. While revenue grew 8%, the segment's adjusted EBITDA fell 8% to $66 million, with margin compressing to 5.5% from 6.4%. Higher freight costs, unfavorable product mix, and a soft US residential market are weighing on what is the larger of the two business units by revenue. Average daily sales growth of just 1% excluding the calendar benefit of four extra sales days tells a more modest underlying demand story.
Full-year guidance was reaffirmed at $7.8 to $7.9 billion in revenue and $935 million to $985 million in adjusted EBITDA — but reaffirmation without a raise, following a beat quarter, often disappoints a market that was hoping for an upgrade. Combined with the cash flow deterioration and spin-off execution risk, that is likely enough to explain today's sharp premarket decline.
