I appreciate you taking the time. My name is Ryan Fenske. I'm the High Yield Services Analyst here at Bank of America. I'm thrilled to have Resideo here at the conference with us this week. From the company on stage with me right now, we've got Mike Carlet, Chief Financial Officer. Mike, thank you for taking the time. Appreciate it. Thanks, Ryan. Appreciate it. And with that, I'll turn it over to Mike for some introductory remarks, and then we'll get into Q&A. Great. We've just got a couple of slides here t hat I'll just talk through real quick, just as background for those who might not be as familiar with the Resideo story. As background, I've only been with Resideo about four months now. Resideo recently acquired Snap One. I had been the CFO of Snap One for the last decade or so, fully expected to be playing golf right now, not CFO of Resideo. But Tony Trunzo, the outgoing CFO, approached me during one of the diligence sessions and said, "Hey, I'm thinking about doing something else. Why don't you think about taking over my role?" And so here we are. So I apologize in advance for anything I get wrong having been there three months. I do know where the bathrooms are. I know where the coffee pot is. I know a lot about the business, but I still am definitely moving down the learning curve as we go through this. Yeah, yeah, disclaimer. So what is Resideo for those that are less familiar with the story? Resideo really is two companies. We were spun off from Honeywell about six and a half years ago, and really, as they spun this off, there were really two businesses that came out of it. One is our ADI distribution business. ADI is a $3.6 billion business focused on selling to professional integrators, mostly on the commercial side, mostly on the security side of the business, and then we have a products and solutions group, which is developing our own products. It's brands like Honeywell Home, it's brands like First Alert that are really focused on those products that go into residential installations and really are part of that infrastructure of the home. About $2.5 billion of revenue. These are the 2023 numbers as we sit here. If you look here, 2023 combined $6 billion of revenue, $1.7 billion of profit, almost $600 million of adjusted EBITDA. That's before the Snap acquisition. The Snap was really a little bit over a billion dollars of revenue, a little bit over $100 million of EBITDA. You could sort of layer that on top of these numbers to think about the pro forma situation of the company today. Again, the brands that we have, many of them in your home, some people know, some people don't know. ADI is a distribution business. If you talk to professional security integrators, they all know who ADI is. Resideo is the corporate brand. You think about Honeywell Home and First Alert as really consumer brands. And then some brands that came with the Snap acquisition, our own proprietary brands, Control4 Automation, OvrC, which is a professional management tool that integrators use to manage their installations of AV and entertainment in homes. Really, if you think about the investment opportunity that we think is out there from both an equity and debt side, both the P&S side of the business and the ADI side of the business are focused on the professional. Our real value proposition is selling products to professionals through a variety of channels that allow them to install those produc ts, be successful, be profitable, be able to maintain and support those products in ways that create value both for the end user, the consumer, the homeowner, the commercial establishment, but also really thinking about the professional needs to be successful with those products. We think there's been and continues to be structural margin expansion opportunities. Really, over the last four years, this has been the focus of the management team and of the company is to take what was a fundamentally good business but had a lot of efficiency opportunities that existed, particularly on the P&S side, to think about leveraging our factory utilization, to think about the supply chain opportunities and drive margin accretion. We've been proud to have six consecutive quarters now of year-over-year margin accretion growth that we' ve seen. That story is not done, but it's going to slow down a little bit. You can't continue to drive margin. Maybe eventually we get to 100% margin, not in my lifetime. But I think there will continue to be growth there, but we also are thinking about other opportunities of the business. And that really is growing the content of the home. How do we think about the growth aspects of this business as we think about the products that we have, as we think about new product development, new product initiatives? How do we think about capturing more share of the home, of the products that go into the home? So those are the big three things that we're focused on right now. And I think the company is very well positioned for successful growth going forward. So Ryan, that was sort of the intro. I'll let you now pepper me with questions. Okay, great. Thanks for that, Mike. Maybe starting with the margin profile in the P&S business, is that pretty consistent across product categories and channels, or are there some areas that are stronger or weaker that you'd highlight? Yeah, clearly there's a variety of margin profiles that exist across the business. It's more based upon the product than the channel, quite frankly. But we've got four lines of business within our product group that we talk about: air, water, safety, and security. And each one has its own little margin profile. I would say that in the water side, we have a lot of OEM product. It's probably the lowest margin profile of the business, given that OEM nature of it. And the rest of them are more consistent, but they're all very profitable businesses that we are interested in growing. Okay, great. And then we saw nice organic growth, around 4% in the P&S business in the third quarter. Can you walk us through some of the key drivers there? How much of that is pricing versus volumes? Yeah, it was more price than volumes. A little bit of both. It was good to see some volume growth. As we think about the growth drivers that are there, there really are, again, the big residential aspect. And if you think about the residential market that we participate in, there's three aspects of residential. There's new home construction, there's remodel activity, tied to resales, and there's just remodel activity where someone wakes up one morning and says, "I want a new kitchen." And I think we've seen us bounce off the trough of things around new home and about the baseline of remodel. The resale piece of remodel is actually still pretty depressed, and we think there's opportunity there. But we think all those things allow us to start capturing some share. Again, I think on the pricing side, we've seen some pricing activity that we've taken really capture and hold on the P&S side. So that 4% growth, a little bit more on price than volume, but growth aspects on both of it. We still have challenged environments. I think EMEA continues to be a challenging aspect. And there's lots of things about the EMEA regulatory environment around the boiler market and the heat pumps that create some disruption there that we're still facing. So there's always going to be within different lines of business and different products, some outperforming, some underperforming. But overall, we're very happy with the trajectory of the overall business. Okay, great. Thanks for the color there. And then outside of the First Alert safety product portfolio, you've highlighted security as a drag on this portion of the business. I guess, how would you frame how much of that is software market conditions versus inventory destocking or just the need for some product line refreshes there? Yeah, I think I would start with the product line refreshes. Our products have gotten a little bit old. We have some great NPI initiatives there right now that are going to come. Those things are in development, and they're launching as we speak. So there is definitely some NPI opportunity that we need to execute against. There's always, we think destocking is at the right levels right now. Inventory levels in the channel are healthy. It's been a headwind for the last year or two as we think about what happened during COVID and supply chain getting through that. But we think right now inventory levels are back to normal levels as well. Okay, great. And then on the topic of product refreshes, you started taking orders from the new Honeywell Home FocusPRO in October. Is this part of a series of product refreshes you guys got coming up? I guess taking a step back and you walk us through the refresh strategy that you guys are working on, where are you seeing the most opportunity and what does the timeline look like here? Yeah, I think our opportunity is not just refresh. It's refresh and NPI. It's sort of put those two things together. Where do we want to compete? Where do we think we have the right to win? Where do we think that those best opportunities to invest are? Again, over the last four years, while we've been very focused on structural margin expansion, that has really been the focus of the business, and NPI has taken a backseat. As we look here today, if you think about the thermostat HVAC stuff that we've already announced, I think that we've got, within the product screen of entry level all the way up to the high end, we will see content coming out there over the next couple of years. I will continue to address all aspects of that screen. On the security side, there clearly are opportunities to recapture some share that we've lost over the last few years with some of those initiatives. And obviously, on the safety side with First Alert, there's lots of products there that we can continue to leverage that brand and think about opportunities to scale that up. Okay, great. Appreciate the color there. Then shifting to the distribution business, ADI, number one global distributor of low voltage security products. I guess, could you give us a sense of the value proposition in that business for your customers and how sales channels and markets are different than in the P&S business? Sure. I think in the P&S business, we're developing and manufacturing these products, which we then sell through a variety of channels, so we have a retail channel, right? We're not selling to consumers through retail. Consumers buy our products. They're on the shelf at Lowe's. They're on the shelf at Costco. But it really is about that. That's how professionals buy a lot there. We're not selling directly to the professionals in most instances. On the ADI side, we are selling directly to the professionals, but the value proposition is different because obviously what we're selling there is primarily third-party products. We also have a significant part of the product portfolio, which is exclusive brands, which are our proprietary brands. That piece of the business obviously grew with the Snap acquisition. Snap was very much focused much more on exclusive brand opportunities. But the value proposition at ADI is really this. A, we have the products you need. We are operationally efficient. We have a great digital experience platform. And so you as a professional can come to us and get great service, get the products you need, get them in an operationally effective way that meets your needs. And then the exclusive brand portfolio that we've added into ADI provides exclusive content, exclusive products that you can't get anywhere else that are some of the leading products in the industry, particularly on the entertainment side, but also in the areas of video and some others that are out there. So it really is that complete omnichannel solution at ADI that provides the products where you need them, when you need them in a way that nobody else can deliver against. Okay, got it. And then speaking of kind of recent performance in 3Q, ADI also saw nice organic growth at about 4%. Where in the portfolio are you seeing that uptick come from? And I guess what gives you guys confidence in that carrying forward? Yeah, the commercial business has really been doing well at ADI. And again, 70% of the legacy ADI business prior to the Snap acquisition was focused on the commercial security integrators. The commercial market's been doing well. Video and security really have been a strong point within that. And so we're continuing to see that grow. And the digital aspects of that is continuing to see really good growth as we go. The residential side of the market has been a bit more challenged. As we talk about the remodel market, that really is the sweet spot for a lot of our residential business on the ADI side is that residential remodel. Of course, we participate across all of the residential aspects, but that remodel piece has been a little bit of a headwind. We think we're still winning from a share standpoint, but overall, the macro around that has been a little bit more challenging. Okay, got it. And then within ADI, that's where you guys are holding Snap One. And it's been about six months since you closed the acquisition. I guess, what makes the Snap One business fit so well with ADI? And how's integration been progressing so far? Yeah, it's funny. I'll go back. I think it was seven years ago was the first time that the Snap leadership team, myself, John Heyman, who was our CEO, met Rob Aarnes, who was the leader of the ADI business. And ADI was still part of Honeywell at that point in time. They were talking about selling the business. But I remember meeting Rob, and we walked out the door together. And Rob and John and I turned to each other and said, "This deal makes total sense to happen." There's so much synergy here of combining these businesses. ADI really owned that commercial security piece. Snap was the leader on the residential entertainment piece, audio-video piece. How do we bring these things together makes a ton of sense. And over the next few years, every couple of years, we'd get together and say, "How do we do this deal?" So it was very much a strategic fit to both companies. We said, "We need to bring these together." And the reason why, again, if you just think about servicing the professional, the culture very, very similar about the customer comes first. We want to be the supplier of choice to those professionals to meet their needs, make them successful. Again, different strategies about exactly how we're doing that. Snap much more on a proprietary product side, exclusive brands. ADI much more from a brick-and-mortar standpoint, Snap more e-commerce. But we were converging. ADI was adding more exclusive brands, getting into digital. Snap got into the omnichannel piece with store footprint. So it just made more and more sense to bring these together. So we're thrilled that this came together. As Rob has put together his leadership team within ADI, it really has been folks from both sides. So I think three or four, three of the eight or so people on Rob's leadership team of ADI have come from Snap. It really is bringing together best-of-breed activity from both to make this successful going forward. The integration has been great so far. One of the women at ADI has taken on the leadership role as leading the integration. Ali's been doing a phenomenal job of driving it and really both teams coming together. So every deal has got bumps in the road and some positives that we didn't expect and some negatives that you hope you would avoid. But overall, I think things are better than we expected. We remain extremely enthusiastic about the opportunity. The people aspect, the customer aspect, the IT aspects, and systems aspect all going at or better than the plans that we put in place, so we're thrilled with how things are progressing. That's great to hear. And I guess you mentioned some of the leadership changes between the Snap One acquisition and the recently announced CEO succession plan. There's been some management turnover as of late, some more to come next year. I guess, how are you guys managing through that process? Yeah, I actually think it's healthy for the company. If you think where Jay and Tony on the CFO side came in four years ago, most of their focus was on this structural margin expansion on the P&S side. They spent a lot of time on that and did a phenomenal job, again, as shown by the execution that we've seen. I think both of them feel that the company is really well positioned. As we think about expanding now the strategy of the company to think about the growth aspects and some of the NPI, I think it's a great time for us to put a new lens on it. I think Rob has continued to be a phenomenal leader at ADI in executing the strategy there with just a tremendous focus on operational excellence and execution. And Tom Surran, who has joined us a little bit over a year ago now, maybe about a year ago, before I got there. So lead on the P&S side has really brought a new view on the product side, continuing to execute, again, margin expansion opportunity, but reinvigorating that NPI side. So if you think about the business today, with those two businesses operating really, really well with Tom and Rob sitting there as the leaders of their respective businesses, we're really well positioned. Jay's transition. Jay remains completely engaged in managing that. But we think we've got the right leadership in Rob and Tom to continue to drive those businesses forward. So we think it's a great transition for all of us. Okay, great. And then switching gears a little bit, tariffs have become increasingly topical again as of late, given the new administration coming in. I guess, how are you guys thinking about the impact of proposed tariffs on the business? Obviously, there's a lot of uncertainty as to where things shake out, but maybe we could start with the P&S business, given that about half of your finished products are manufactured in Mexico. Yeah, obviously, if we think on the P&S side, exposure to Asia is relatively minimal. We don't have a lot coming out of China. There's obviously products underneath some of the things that come out there, but we don't think we have much exposure on the China side of it. Mexico is a huge question. There are a lot smarter people than me around Mexico tariffs, probably some in this room. So everybody can speculate what's going to happen. As you said, about 50%-60% of our products on the P&S side are manufactured in Mexico. Now, parts are coming from all over, but they are assembled in Mexico. So anything that happens from a broad-based standpoint in Mexico is obviously going to impact our business. Personally, I don't think that we're going to see exactly what the new administration is saying happen, but something's likely to happen as we think it's there, so we're thinking about alternatives. That includes moving some capacity back over to the Vietnam, Thailand, Malaysia, pulling some into the U.S. where it might make sense to do so. There's cost and time associated with that. We think we have the opportunity in a lot of this to pass through some of the costs. These are not overly expensive products that we're talking about, so we think there is an ability to pass through some of that cost. It's not just us that will be impacted. Most manufacturers will be, so it's a really uncertain time. It's a ton of volatility. We're not taking any specific plans because nobody knows what's going to happen, but we are thinking about alternatives of how we would address it. And again, I think Asia is sort of a non-event, but Mexico would be something we'd have to think about what happens. But your guess is as good as mine was actually going to happen down there. We'll see how it shakes out. Yes. I guess then maybe shifting gears, capital allocation, how do you frame your relative priorities going forward coming out of the Snap One transaction? Yeah, I think they're tied to the company's overall strategy, and so as I think about the three legs of the company's strategy, first of all, it continues to be on operational excellence. We have to continue the things that we've put in place, continue to execute the margin expansion opportunity, but just overall the execution of the business, and by the way, that execution includes integrating Snap and ADI together appropriately, getting that execution plan, grabbing those synergies that are there. We said there's $75 million of synergy. We remain committed to that number, and we got to make sure we get that done, so first thing, go get that done, and while we're doing that, we're going to generate a bunch of cash. Second piece is, as we think about that cash generation, we are going to lean in a bit more on the organic growth profile of the business. If we think about the NPI initiatives that are there, we think about some of the opportunities we have to invest from an R&D standpoint, from a marketing standpoint. That would be the next area. And we're not talking about huge numbers, but I think you're going to see us lean in a little bit more on the organic growth part of the business than has happened over the last couple of years. And then we're going to generate a bunch of cash. This year, we said we're going to have at least $375 million of operating cash flow. We're sitting on over $500 million of cash right now. And as we think about those opportunities, M&A will always be the third leg of the stool. But just like the Snap deal that we did, it's got to fit strategically. It's got to have a lot of synergy. It's got to be deals that are better for us than anybody else. It's got to be things that are actionable. It's got to be things that we have a high level of confidence in executing. If somebody puts something like that in front of me, and it's got to have some scale. You put that in front of me, we're going to evaluate it. At the same time, we're committed to maintaining a debt rating that's close to Investment Grade. We think the flexibility of not being right at Investment Grade and some of the commitments you have to make about it is valuable, but we want to maintain a close to Investment Grade rating. We think leverage below 2x is the right leverage profile for the business. And then we'll look at our excess cash and figure out what the best opportunity is for it. But we are going to be a strong cash flow generation company. Okay, great. And then maybe just you mentioned the focus leaning towards organic opportunities, but on the M&A front there, are there certain parts of the business where you see it as an opportunity to grow via M&A transactions going forward? Is there anything that you think about as an opportunity? There always is. I think if you went to our category managers on both the P&S side or ADI side and said, "Hey, is there anything out there you'd like to buy?" You'd probably get a list of 50 different companies that would show up on my desk tomorrow. That doesn't mean they're all actionable. It doesn't mean they're all make sense to do. It doesn't mean they're all a synergy because people just aren't listing competitors. And that doesn't make a lot of sense. I think that the places that we would lean in on the ADI side, the first thing is they've got to digest the Snap elephant. That is a big acquisition. It's got to get done right. For the next 12-18 months, I'd be very surprised if anything happened on the ADI side at all other than get that done. Again, somebody puts the best deal in the world in front of us, we might go do it. But really, that's about executing, getting that synergy, and driving that integration. I think on the P&S side, we were very successful with the First Alert acquisition that we did three years ago. That has performed at or better than the plans that the company had in place at the time, and we think those areas of the product side of the business where it makes sense for us to continue to lean in on that residential infrastructure piece of it, that residential management piece of it, if you think about thermostats, fire and safety security, how that all fits, things that fit into that model, we'll look at. It's not the highest priority. We think we've got plenty of opportunity to drive value and value creation with the continued operational excellence and just investing in organically. But if somebody brings a great deal to us, we'll look at it. And it's going to be in those areas where we deserve to win. And it's going to be mostly on the residential side of the business where we think there's things that add value to those professionals that we serve that allow them to be more successful in how they manage the home. Okay, great. Appreciate all the detail there. Last year, you guys divested your Genesis Wire business. Is there anything left to do in terms of portfolio rationalization, or do you think you're feeling good about the current portfolio today? The answer is yes to both. I think we're very comfortable with the current portfolios that exist today. Genesis was a very good deal to happen. It was very easy to lift, take out. I think it's worked both from our standpoint as well from the buyer standpoint, which is the best deals in the world where they work for everybody. There are pieces of the portfolio that might be a little bit less strategic as we think about them, but they're also operationally working. They're cash flow generative. There's nothing today that I would say walking. We say, "Oh my God, this is a big drain. We have to get out of it." But I think as we think about the portfolio and capital management, there's probably a couple of things around it that we'll continue to look at. Nothing imminent, nothing urgent, but we'll continue to evaluate if it makes sense to look at pieces to divest. So just kind of an ongoing. Always an ongoing time. Okay. It's always a part of the conversation. I think when you have as many lines of business as we have, it's always going to be, are we still the best partner for this? Is this still the best area for us to focus on and deploy capital, or is there a better owner out there for that piece of the business? But again, very comfortable with the portfolio as it exists today. Okay, great. And then on the capital structure specifically, how are you guys thinking about cash pay versus payment in kind on the preferred equity from CD&R? So, the first, we've made two payments, and we've actually made the cash payment. So, how we're thinking about it right now is we're paying cash. Again, we've got plenty of cash. I'd much rather pay cash than PIK that where we have that. But having the PIK option there as a safety net if something comes up that we need to think about it, it's there, but we're going to think about it as a cash pay for the foreseeable future. Okay, great. And then I know you talked about the aspiration earlier for maintaining close to Investment Grade ratings. Can you think about taking a step back, like longer term? Is there a range of kind of in terms of leverage that you're comfortable within? And what do you think is the right long-term level for the business? Yeah, I think and the company's had this before I got there, and I think I'm very comfortable with where the company has set this. We look at sort of 2x leverage as the right leverage rate for the company. If you look at our covenant calculations, now covenant calculations, as we all know, have everything in the kitchen sink in them, so I wouldn't necessarily rely on them. But that is below 2x right now. I think just generally, we'll let leverage grow above two when we see a great deal like Snap happened that allows us to lean in from a leverage standpoint and use that funding vehicle where it makes sense. But we always want to have visibility and clarity that we're going to get back to 2x in a reasonable timeframe. And so we sort of view that 2x number as approximately the right level. We'll flex around it a little bit. We'll go above it where it makes sense, but then have, again, clarity on getting back there on the right timeframe. Okay, great. And then just in terms of your comment on the credit rating specifically, I guess why is close to Investment Grade, but not Investment Grade, the right level for the company as you think about flexibility? So I think Ian's given me the great answer on this. I'm going to parrot what my head of treasury has said to me on this because I think it's the right answer. It's the commitment to an Investment Grade rating sort of puts some constraints around you. I think from where we're at, from a growth standpoint, from the opportunities that we have, we just don't want to have that constraint. Right now, from a market standpoint, the funding that we're getting, the rates that we're getting, we're getting close enough to there without having to make that commitment. We want to still operate that way so that we put the discipline in place to think about our leverage appropriately. And so we just don't think we need to get quite there, but we want to operate the business like we do want to get there because I think that puts the right discipline on us to manage the capital structure the right way. Okay, great. Appreciate it. And Mike, now that you've been in the role for a few months, I guess what are you viewing as the biggest opportunities for the business, and what are you most excited about as we look out to 2025? Yeah, as I'm coming from the Snap side, and Snap was very much on the entertainment and sort of automation side of it, and it was much more of a discretionary purchase, but we were really well positioned to lead on that. Our underlying philosophy at Snap was that there was going to be more technology in more homes and more professionals to serve that technology. And we wanted to be the leader on that. I think ADI, Resideo, P&S all had sort of a similar thing. Now, ADI was a little bit more on the commercial side, but it's all about we want to be the leader in meeting the needs of the professional with the technology that's going into the residential and commercial establishments and winning and being the provider of choice both from a product and distribution standpoint to those professionals. I think the merger of Snap and ADI, I think the initiatives that P&S has positions us better than anyone else there. If you think about, again, the products that we have on P&S, they're not really discretionary. The world of thermostats, the world of security, the world of smoke and fire and safety, those are all mandatory things that go into the home. So we have that piece. You had the discretionary entertainment piece. We're going to continue to look for opportunities, and there's going to be more and more of that technology. And we think, again, from a professional standpoint, they want a partner that they can rely on. They want products they can rely on. They want suppliers they can rely on that provide both the right products and the right support to deliver them that allow them to be successful. The opportunity that we have to continue to be that provider of choice is huge, and that's where we're going to continue to lean in. Okay, awesome. Thank you so much for the time, Mike. Appreciate you joining us today. Thank you, Ryan. Appreciate it.