We're starting up here. This is the 11:30 session with Resideo Technologies. My name is Chirag Patel. I cover the machinery, multi, and distribution space here at Jefferies, along with Steve Volkmann. But we're welcome to host Mike Carlet, the CFO of Resideo, in the room with us today. So it is being webcast, I believe. So that's also a positive here. But Mike, thanks for taking the time. But I kind of just want to start out with an overview of the business and kind of just touching on a little bit about the record results in 2Q. And then just what were some of the key metrics that were kind of involved there? A lot in the first question there, but let's start there. Yeah. So for those not familiar with the story, Resideo was a spinoff from Honeywell about nine years ago now. And when it was spun off, they really took two pieces of their business. Honeywell decided they were getting out of some of the residential things that they wanted to do. And they took our ADI distribution business that's focused on commercial, low voltage, around security products, access control, some other things, also with adjacent markets around Datac om and Pro AV, and took that business along with a number of product lines that they had and formed Resideo out of that. And so for the last eight or nine years, the company's been operating under that auspices, done really well in a number of areas. There's been some relationships, some legacy agreements with Honeywell that have put a little bit of headwind that we've recently settled. We'll talk about that, I'm sure. But really, the business operates in a couple of different segments. ADI is a distribution business servicing commercial integrators, doing, again, low voltage security. And the products and services really focused on control and sensing of residential things that are of the home, not in the home. So if you think about security systems, you think about the fire and safety, you think about energy management, you think about water, all those things that are part of the infrastructure. If you think about a home as a system of systems, then we service those systems of the home that are there. The business has been performing really well over the last few years. I've been there about a year. ADI bought Snap One a little bit over a year ago, and I joined coming out of that acquisition. So I've learned a lot about the business since I've been here, but really done a lot of things really well. There's been really good gross margin improvement. We've made some investments in R&D. And overall, I've seen really good top-line results. So ADI with double-digit growth in Q2, P&S with higher single-digit growth on both sides, really driven by sound execution, driven by continued market share gains, continued within the product side of the business, a lot of new product introduction that we've been doing in our safety, security areas that have been driving some of that market share gain, despite an overall macro environment of housing and residential and macro that really has not been worsening, but it certainly has not been improving lately. Right. And actually, that's the part that was kind of interesting to me was that with the underlying market trend that's been so soft, the execution was very key there. Can you kind of help me out with the idea of was it volume-based market share? Can you break out the pieces of the pie for me a little bit? Sure. A little bit of all of it. So there was volume growth at both ADI and P&S, along with pricing. And so if you think about both businesses, despite a relatively soft residential market, our product organization continues to execute really well. Our launch of our FocusPRO thermostats, our launch of our connected fire and smoke products, so some NPI that has been a while coming that we've gotten in the market has been really well received, has allowed us to capture some share out there despite, again, a relatively anemic top line. I think people get confused between anemic and degrading. So it's not good, but it's not like it was getting worse, I think. So I think despite that, we've seen volume increases in what has been a challenging market. On top of that, we have taken some price action, some of that caused by some of the tariff activity that's out there by China to offset that. We're not trying to grow our margin result. We certainly want to offset any challenges we have, which aren't huge, but we have some, like everyone has. And then we also, some areas of business, we do have some pricing power that we elected to go get some improvement from. So P&S saw that. And at ADI, we continue to see just really strong performance from our deliverables to the professionals. So at ADI, we are servicing over 120,000 installers and professionals that are installing our products. Our delivery, our execution is second to none in that market. We've made big investments on the digital experience side, which have allowed us to capture some share there. Overall, that market really is a bit different. While we talk about the residential impacts on the product side, the ADI market is more driven by that commercial low voltage. There's a lot of things going on in the security and surveillance space that are driving some positive market actions. It doesn't have quite the challenge environment that exists on residential. Understood. And then I guess keeping it towards the near term for a second, any sort of nuances we should be mindful of as we're thinking about the upcoming quarters? Yeah. We still remain very confident in the guide that we have out there. That guide does show a little bit of slower growth at both businesses, continuing to grow, but that growth slows down a little bit from Q2 into Q3. ADI at 10% growth was great in Q2, but we don't think it's a consistent 10% grower. We do think it should grow above the cycle. In Q3, we do have one headwind that we mentioned out there. When I was back in 2000, the Y2K, we put a new ERP system in place in Honeywell. I swore I would never do another ERP system implementation, and we just did one at ADI. We had to. Our system there was 40 years old. It was AS/400. And it's gone really well. And when ERP system implementations go really well, they still present a headwind against them. We had to close the stores for a couple of days for data conversion. The folks behind the counter that have been used for decades of clicking, pressing Control, Alt to do something now have to click a button. And so they have to go through that training exercise. So that provides some headwinds. So we do have that, but that's baked into the guide. And so we feel really good about the guide, and we think we'll still continue to see good growth. And then as we go through the rest of the year, we do anticipate continuing to grow at good mid-single-digit ranges at both businesses. Excellent. I guess moving to the strategic side of the equation and the announcement for the timing of the ADI spinoff, can you kind of walk us through the decision process of that? And then what are you expecting the separation will unlock overall? Sure. When the company was spun off by Honeywell, they really took these two businesses, and I understood why they put them together at the time, but they really didn't belong together, and so one's a distribution business primarily focused on commercial selling right to integrators. The other is a product business with lots of NPI, manufacturing-based selling in a completely different way to the residential market, so really different capital structures, different business models, different go-to-market activities that happen to exist under common ownership. Not a lot of integration is going on between the businesses. There is a customer-supplier commercial relationship that's in the single digits. Single-digit% of ADI sales are P&S's product. Single-digit% of P&S sales are through ADI, so there's that commercial relationship. Other than that, operationally, these two things exist very, very standalone. And that causes confusion to the market about why does Resideo exist? Why are they under common ownership, and so we always talked about separating the businesses, at least for the last five, six years that have been there. One of the things that was done to Resideo or that Honeywell put in place when they spun Resideo off was an indemnification agreement where Resideo was indemnifying Honeywell for their environmental liabilities. These were not Resideo's environmental liabilities. These were Honeywell's environmental liabilities, but it was basically a financial instrument where Resideo reimbursed them. Came out to about $35 million a quarter of cash payment. That was the cap. The GAAP accounting was very confusing. I don't want to get into it, but the cash impact was $35 million a quarter. For the company, there were covenants around that IRA agreement that would restrict the company from doing a bunch of things strategically. So even though the company contemplated separating the businesses, that IRA prevented it from doing so. So any decision around separating the businesses would first have to be governed by some resolution to that IRA. On top of that, as the company was going through its transformation, as it was really developing itself as a standalone business, particularly in the product business, there was a lot of execution things around operations that had to be fixed. The company's done a really good job with that. You can see the improvement of margin. We'll talk about that. But we also had to feel good about both businesses being able to operate standalone if we got there. So those were the two big things. We were able to reach an agreement with Honeywell to settle that IRA liability. They were kind enough to reach an agreement with us to do that. We announced the settlement. We actually did settle it on August 13th. So that's now been funded, been settled. We financed that with a combination of $1.2 billion in debt and about $400 million of cash from the balance sheet. So that's removed all the restrictions that were in place around us. In conjunction with that, we did announce the separation because, again, as we think about these two businesses, other than that commercial relationship, there are different businesses, different comps, different capital structures. We really think allowing them each to be freed up, to be able to tell their story independently, to be able to allocate their capital independently, to be able to make decisions as independent businesses will allow them to be more successful as they go forward. They're not overly restricted being under common ownership, but it is clearly confusing. It clearly makes some decisions around capital allocation a little bit more complicated. Putting them out there on their own will definitely free them up to be the great companies that they expect to be. Excellent. The timing of the ADI spin? Yeah. And first, it's funny. We talk about it as a spin. I thought it was a separation more than a spin. Spins have this negative connotation sometimes, like there's a good company and a bad company, or we're getting rid of something we don't want. These are within Resideo relatively equally sized business. ADI actually has more revenue. P&S has more profitability. The business models are different. But we really just view this as a very amicable breakup of a couple of businesses. The spin we announced as a 9- 12 month process. We said we think it'll be sometime in the second half of next year. Hopefully, it's earlier in the second half of next year than later. We're going through all the work that has to be done. And while, again, these businesses operate very independently, there are a number of entanglements that you have to deal with. Everything from in Europe, they operate on a common SAP platform. And we have one HRIS system and lots of legal entity things that we need to get through. So lots of work to be done. I think everybody knows the process. You have to go around this. You have to file. You have to get standalone financials, carve out financials, file your SEC reporting. So all that work needs to be done, which creates really that timeline of when you can execute against it. Understood. And then I guess talking about the idea of the revenue aspect of ADI and kind of integrating the Snap One acquisition, can you walk us through what's happening on that front? How is that integration process happening? What are kind of the synergies you're already benefiting from and seeing? Yeah, it's funny. So I came from the Snap side, and I remember back in 2017, Snap was owned by a PE firm. We were going through a recapitalization. We were going through that process. It was the first time that I actually met Rob, who runs ADI. And we walked out of that meeting in 2017 and said, "Boy, we should put these companies together." Not because they were servicing the same end markets, per se, but because we had very, very similar business models, very similar philosophies, servicing integrators, professionals that were installing our products, selling directly to them, solving those professionals' problems in a variety of ways. We were looking at the commercial market as a growth opportunity at Snap. ADI was looking at residential audio-video as one of their adjacencies they were looking for. And so we saw some opportunity to accelerate that as we went forward. And then from 2017- 2024 is how long it took to actually make that happen. And so in June of 2024, we completed that transaction. It's been about a year. The integration has gone really, really well. Rob and the leadership team at ADI have done a really good job of taking best of breed from both businesses, putting his leadership together with folks from both teams, and really executing really, really well. In fact, they're at the big CEDIA consumer electronics show this week, displaying jointly, which is great. And so the integration has gone well organizationally. We still go to market a little bit separately. There's a lot of work to do to bring sales platforms together, to bring store operating platforms together. While we're going through this ERP at ADI, that's going to free us up to then bring the Snap piece onto that at some point in the future. So today, there are still two different go-to-market platforms, but we really operate the business as one. We brought that together really well, the next two big steps, one is bring together that actual go-to-market activity. And the second is a lot of real estate optimization to go through where we've got two stores in one market or our distribution, our DC footprint needs to be consolidated and combined. We announced when we did the transaction that there would be $75 million of synergy over three years, and I think we're very confident that it's at least $75 million. We hope we can drive it higher than that, and we think we're going to get it sooner than the three years because things are going really, really well. That synergy is everything from low-hanging fruit such as the cost of not having two public companies, some of those things that come out. We think there's a lot of synergy on the revenue side where we take the Snap exclusive branded products and open them up to all the ADI customers. And that cross-sale activity has also seen a lot of benefits. And then finally, again, that real estate and longer-term things, we have to bring footprints together is the last piece. That's going to take a little bit longer to get all the way through. But we feel really good about the synergy that we're generating out of it. I remember at Snap, there was a bigger push on getting a proprietary product and increasing that volume. How has that been progressing as well? Really well. So, Snap, I joined Snap a decade ago, and it was exclusively proprietary products. Over time, we then expanded the footprint to start selling some third-party products. ADI was very, very heavy on third-party products. They had some exclusive brands. So bringing these two things together has really allowed us to benefit from both. Our exclusive brand products are still, they're a portion. We're never going to be a majority exclusive branded product at ADI. We are a distributor at heart. We've got great relationships with a lot of third-party suppliers. We want to be the best partner to them that we can be and continue to sell their products. But where we identify market gaps where we don't think the existing products are really meeting the needs of the markets, and we don't think the companies that are out there are going to drive those needs, and our customers, those professionals are asking for solutions that don't exist, we're going to look to our exclusive brand product catalogs and really look for things that we can drive. And that's mostly around the software solutions. If you think about the hardware side, a lot of what we do on the hardware side is JDM, contract manufacturing, and where we add a lot of values in the software layers that we bring, the remote management capabilities, the control systems integration that all brings that allows the professionals to be more effective and efficient as they install these products and support those products. Understood. And sticking with the ADI business for a few minutes here, just try to get the idea of what's differentiated about the value proposition in the commercial markets that ADI is bringing to the table versus any of the other competitors that are out there. Yep. I think to start, what's been there and continues to be there forever is ADI is an operationally excellent company. They think about the customer first. They have a customer-first ethos that drives everything they do, and so they want to continue to be the provider of choice to customers and then understanding those customer needs and delivering against them, so our store footprint of having over 180 ADI stores plus the 40 Snap stores in the US provides those local touch points, so products available where customers need it when they need it. I think on top of that, the biggest thing that ADI has been doing really, really well is on the digital experience side. They've made significant investments over the last three or four years. We continue to make significant investments to really drive that digital side. And so what's important to know is we're building an omnichannel platform. This isn't a separate e-commerce business and storefront. It really is an omnichannel platform. And so many, many, many of our professionals buy through all the channels we have. One day, they might order online to pick up in store. They might buy a product online that gets delivered to a job site. They need to return it. They need it that day, so they go run to the store to pick it up and make that exchange. They still value the relationship they have with the folks behind the counter in the store to talk about new product initiatives and be able to hear about solutions to problems that are out there. And so it's that whole experience. But having the digital piece of it is really, really important. I laugh sometimes. I saw this at Snap. We saw it at ADI. We've all been buying personally online for years and years. But I think a lot of the professionals that have been operating these businesses for decades have just been in the habit of, "What do I do in the morning? I wake up. I go to the store. I buy the product I need for that day at the store." And so the shift to digital has been slower in those markets than it has even in the consumer world. But over the last four, five, six years, there has been a changing of the guard there. You're seeing more and more folks coming in, buying online, looking for that, "I want inventory availability. I don't want to walk into a store and see something's out of stock. I don't want to have to call Jimmy behind the counter and ask about it, and we have been at the cutting edge of those digital experiences and driving a lot of initiatives there that are really beneficial. We talked about the idea of 120,000 integrators that you kind of work with on the ADI side. I'm always interested in knowing that integrator, how much of the wallet share do you guys capture currently? What's the opportunity look like? How do you kind of address that as we go forward? Yeah, I think it really depends upon the categories you're in and what that integrator is. So there are some integrators where we capture almost all of their wallet. We have all the products they need. We used to say on the Snap side on the residential AV, we have just about every product that an integrator needs to do a residential job. And therefore, our opportunity is to capture 100% of their wallet. Same thing at ADI. I think within certain months, the product categories, certain product lines we have, we have everything the integrator needs. And so we should have the opportunity to capture 100% of their wallet. As you think about bigger integrators that are servicing more than the low-voltage security side and looking broader and broader, we have some of the products they need. So that's some of the adjacency opportunities and growth opportunities we have is continuing to enhance our product suite, bringing more and more products to market so we can fill more of that wallet share. But within the core of low-voltage security surveillance, within the core of residential high-end AV, we have all the products that people need. And now within the 120,000 integrators, there are some where we have 100% wallet share, and there are some where we have 0.1% wallet share. And we're looking to grow that. We value those relationships, and we're continuing to grow it. But keeping that great relationship with the folks that we have huge wallet share is really important. And then growing it with the rest of the folks is also really important. Understood. And then if we can move to the Products and Solutions side for a second here, what's kind of the roadmap to your, I think you guys had about 43% gross margins in the last quarter. What's the roadmap to the 300-400 basis points of margin expansion that's been targeted? Yep. So first of all, I think it's interesting to go back to the strategic, the fact that we talk about ADI and P&S separately. That's why we're strategically separating the businesses because they are just different conversations. As you talk about P&S, one of the challenges that Resideo had when they got spun off from Honeywell is the P&S side of the business was not an operating business within Honeywell. It was a number of different product lines and another number of different product categories that existed that sort of got slammed together. And for the first couple of years, the company really struggled to get on top of how do we fix that and operationalize it. The company was doing a lot of good things forward-looking at that point, but they weren't really looking internally to say, "Hey, we got to set the structure up right." About four or five years ago, our CEO, Jay Geldmacher, Tony, my predecessor, other folks on the leadership teams really focused on saying, "We have to fix the operations of the business." A lot of the margin improvement we've seen, because you talked about 43%, it was not 43% three or four years ago, right? It was much lower than that. We've already seen 300-400 basis points of margin improvement. We've had nine quarters of sequential year-over-year margin rate increase driven by really operational execution. This is about combining these businesses together, optimizing the manufacturing footprint, optimizing the supply chain, bringing all of this together so it is operating as one coherent business. We've done a really, really good job of that. I think we're probably about two-thirds of the way through that work. There's still a bit more to go, but we've got the path. We've got the people. We've got the organization in place. It's really now more about execution on that, where a couple of years ago, there was still a lot of work to do to really even just get the muscle memory. Now, that doesn't get us all the way there. We're already two-thirds. That's a part of the additional margin increase. The other two pieces that are out there is one, we've had some pricing challenges in a couple of categories where our margin rates are just too low. And we've gone out there and just told folks, "Listen, we're not going to get single-digit margins on products," particularly on our OEM side of the business where we're supplying valves and igniters to water heaters and heat pump type of things. And so we've just made a decision that if we can't get the right price, then we're not going to keep those folks as customers. We've had a bunch of success on that. It's not a big piece of the business, but it definitely is incremental to the margin. And then the other really big thing, probably the bigger thing, is our new product initiatives. So while we were very, very focused on fixing the operation of the business, we did not invest in NPI. We had to get the core foundation. We invested, but not nearly at the rate we should be. You go back to the Honeywell days. There's a reason Honeywell spun these businesses off because we're not core to Honeywell. They were underinvesting even prior to the spinoff, so there's been a long history of underinvesting from an NPI. You can see this year in our results. We've increased the amount of R&D that's gone into the business because we're investing in that NPI, and we've had a number of good product launches. Those product launches are A, engineered to have higher margins, and B, because they're newer products that have been built now where we're getting on top of the NPI issue, we're able to command a little bit better margin, a little bit better price, so all that NPI initiative that continues to roll out is the other piece of ongoing margin improvement that we expect to generate. Excellent. And then we did touch on tariff as a topic for a brief moment. I don't want to think that we're not going to touch on that again here. No, never. I think it's a topical situation every day. It feels like it changes. Where do we stand currently with both the impact to you guys and the mitigation efforts that you're taking as well? So we feel, let's talk again of business a little bit separately. On the P&S side, we feel really good about our position right now. And there's one big thing that we talk about pretty openly. Most of our products that are sold in the US are manufactured in Mexico. 98% of the products that are manufactured in Mexico and sold in the US are USMCA compliant. So as long as that exemption remains in force, then I think we feel really, really good about our position. We feel we're advantaged. We think we've got a great position. And I will tell you, not a week goes by, used to be a day, at least now it's a week, that we don't just ask, "What are we going to do if that goes away? How do we think about it?" We've got lots of contingency plans. But obviously, that would be impactful to us if that exemption changed in some way, shape, or form. But right now, we're in really, really good shape about that. Again, it's not crippling if it goes away, but it's impactful if it goes away as we think about it. But we've had to do very little mitigation around that given the fact that that's in place. The rest of our P&S, there's a little bit that comes out of China, but not a lot. It's the de minimis in most ways. And so we haven't seen much. And the de minimis piece that we have, we've taken a little bit of price to offset, but again, it's been very, very small. There's other mitigation activities that exist if we have to execute them. ADI, a little bit different. There is a significant part of the business that does come out of China. We have, but it's third-party product generally, mostly. And we are no more impacted than anybody else. So if you're a Chinese manufacturer that's selling in the U.S., whether it's ADI, one of our competitors, somebody else that's selling that, we all have the same cost impact. Nobody's advantage or disadvantage. And so you just see all of the distribution world basically raise or lower their prices based upon the impacts of those tariffs as they go. We're no different than anybody else. We haven't had to do much yet. We've done some. Hasn't been much. We expect there's a bit more out there, but not a ton. And as long as that continues to be an environment where everybody's sort of equally impacted, I don't see how it's not, then it shouldn't be significant. But it will cause some fluctuations in the performance as we modify our price to offset the impacts of those costs that are out there. Like every distribution business in the very short term, sometimes you get really short-term positive blips because you raise your price when the tariff goes into place, and you've still got product that you're carrying at the lower value. And so you get a little bit of benefit. We've had a little bit of that. It's not material, but a little bit of that's been happening. How quickly are you able to price within that business? Within 30 days. Okay. Not the vast majority of the business within 30 days. Understood. Okay. Talking a little bit about the cash flow and the capital allocation part of the equation, I know there's a split happening, but walk me through how you see both businesses post-split and what the strategy would be on both businesses basically at this point. So, before post, let's talk where we're at now. Yes. What we've said and we continue to say is we want Resideo to have a near investment-grade rating on its credit. What's great, despite the fact that we had to go borrow $1 billion and use $400 million of cash, both Moody's and S&P reaffirmed the company's credit rating, which was awesome. Appropriate, but awesome. And we have a bit over 3x leverage right now post that transaction. But to really maintain the leverage where we think it should be and maintain that credit rating, we really should be pretty close to two. So that's where we sort of think about getting net leverage to around 2x. Remains the priority. Now, again, we thought the opportunity to settle the IRA was once in a lifetime, so we had to do what we did. But our near-term priority, regardless of the spin, is to get leverage back down to close to two. If we weren't doing the spin, that's what we'd be talking about. It's almost all we'd be talking about. That doesn't mean you won't do some M&A around it, but you always have to have visibility in the cash flow and be able to predict with a high, high level of confidence that you can get back down to two in a reasonable timeframe. We think both P&S and ADI should have the same philosophy. So going into the separation, our intention is to set up both businesses with the same credit rating philosophy, be near investment grade, have the right leverage. Now, they're different businesses. It might be slightly different on both two, but as we think about allocating the capital out, allocating the debt out, that's where we're going. Now, we're nine months away from actually doing it, so things might shift and change around that, how we're specifically going to do it, what the specific levers we're going to pull. That all remains to be seen, but at least our intention going in is to have both companies operate with near investment-grade credit ratings on their debt with the appropriate amount of leverage and then execute against whatever strategies they have from there. Excellent, and then I did want to talk a little bit about just the market dynamics and where you guys sit in both businesses from a competitive standpoint as well. Let's start first with the ADI business and what you're seeing there right now, where you sit in the market environment, how much share is yours versus potentially a competitor. Yep. I think if you think about ADI's two core markets now, one is this low-voltage security space, and they are clearly the market leader in that space. And then the other is the high-end residential market as a result of buying the Snap business and clearly the market leader on that high-end residential space as well. We think there's share opportunities. We think, again, as we invest in digital experiences, we think about the cross-sell opportunities that exist. We do think in those two cores, we will continue to see some beyond the cycle market growth, but we are pretty well established in both. And it's the rule of big numbers. Once you have a lot of share, growth becomes a little bit harder. And in both those businesses, I think are both there. I think the real opportunity to ADI is the adjacencies that exist. The big adjacencies, really three. If you think about Data com space, you think about the Pro AV space, and you think about taking the residential piece from where Snap was very much the high end and bringing it down to the upper middle market that's there. All are adjacencies that we continue to explore and make investments in all of them to grow. And all of those, we have footholds, but they're much more nascent. They're much more early stage, and we think there's lots of opportunity to grow in all three of those as we sit there. The market dynamics around ADI are a little bit different than on the P&S side. Again, ADI very much focused on commercial, but it's a little bit less tied to commercial construction. Everybody wants to tie to commercial construction. A lot of this is tied to the macro factors around security and surveillance that are out there, which are not necessarily tied to construction. One of our integrators is doing work for a bank. They did the same work for the bank three years ago, and this bank decided to take the surveillance they put in three years ago and rip it all out and put new surveillance in because now with the AI capabilities that are out there, with the analytical capabilities, there's a different world out there, and they figure that they need that incremental layer of security that's out there, and so there's a number of things in there that are driving it. They're a little bit outside the normal cyclical terms that are out there on ADI, so we think we're going to continue to benefit from that. We think we are. We think we'll capture share in our core market, and we think there's a lot of adjacencies to continue to grow through. On the P&S side, it's very interesting. P&S, really, there's four different lines of business within P&S. You've got air, you've got safety and security, you've got energy, you've got water. They all have a little bit different dynamics. There's different competitive sets in each one. There's nobody that looks like Resideo on the P&S side that has that entire suite of products. Home is a system of systems. Again, we're thinking about combining all those systems from a control and sensing standpoint, and I think we're really well positioned to do that. There are some product lines, thermostats as an example, where we are clearly the market leader. There are some where we are a great market participant in security. We probably have not made the investments in security we've needed to make over the last 5- 10 years. We're starting to invest there, so we've probably been bleeding a little bit of share, and we think we know we have some share regain opportunities within that. You take some of the air things that are outside of the actual control side of it, filtration, humidification, lots of opportunities to grow there again from an adjacency standpoint. And so within each one, there are some product categories where we're clearly the market leader, and then lots of opportunities for adjacencies to continue to grow. And nobody has the entire suite that we have that allows us to really go in and provide that entire solution to the folks that are doing that work, the professionals. One of the things that does tie ADI and P&S together is we both think about the professional as our customer. We go to market differently. We think about it differently, but the professional is the customer of both of these. These are products that on both sides are professionally installed, vast majority of them. And so we think about servicing the needs of that professional as the thing that really allows us to be successful in both markets. Gotcha. And we touched on the idea of new product introductions and whatnot. Can we talk a little bit about the R&D spend that you're putting into it? Are there certain hurdles that you're looking at as you're kind of making these investments? I certainly hope so. There are. So I think that on one hand, we view the margin rate that we have on each business as indicative of how we should be thinking about spending at R&D. So if you have a business that's earning a 20% margin rate, for instance, that's getting a 50%, different requirements or different opportunities to invest, but also goes back, what's the market opportunity? I had an old CEO taught me about buggy whips, right? It doesn't matter if you're the best buggy whip manufacturer. Back in 1910, they were going to go out of business, right? And so we think about both the margin rate that exists, but also what's the growth opportunity of the market itself? Where is our position? What is our right to win within that with the professional? How do we think about all those, which then obviously drives an ROI calculation, which then talks about the various alternatives that are there. So when we look at the entire business, first of all, deciding your R&D investment, every board is going to debate every single year because I guarantee you, in any given year, we can put $50 million in and we can take $50 million out. It's all about, because it's all short-term and the return on that's longer-term. That's all the trade-offs that you have. We look and say, "Okay, this is how much we think we can invest given our capital requirements, given our desire to drive the business down to that appropriate investment level, given some of the M&A opportunities, given opportunities to return cash to shareholders. Where do we think the right R&D spend overall? How do we calculate that R&D spend into the appropriate categories given the opportunities that exist in each one from a share capture and margin rate opportunity? Understood. We got a couple of minutes left here. Within the P&S business, can we discuss a little bit of the transition to the eighth edition of connected devices? The iteration of the next, the upgrade cycle that we're kind of seeing. Sure. Is what you're kind of seeing there. Yeah, I think very specifically, the eighth edition is very much about smoke. And so that's a regulatory UL, regulatory issue. For some reason, they skipped the seventh generation, which I don't understand. They went from six to eight. But it's not really an upgrade opportunity per se. So it's not a requirement. Maybe someplace there's some zoning that requires you to upgrade it when you sell your home, but generally, it's not. Whatever there, as long as it was compliant when you got it, it's more about the opportunity to sell the next one. So this is about compliance with the next one that's out there. So now we take the opportunity as we were going through that to refresh the cycle, to add more connectivity to some of them. So a whole bunch of things that we're doing. But as you think about the shift, not much of an upgrade. This isn't TVs going from 1080p to 4K and people go running out and say, "I need a new TV." This is really about, "Hey, the next thing I sold has to be compliant." And so now we're compliant with that. With all that said, there'll be some upgrade opportunity. There are different pieces. And we definitely think about upgrade opportunities in a number of areas of the business as we're thinking about NPIs. So if you can get the cost of a connected thermostat down low enough when somebody's thinking about replacing their thermostat, they might think about that opportunity. Maybe they wouldn't think about connectivity because the cost differential was too high between a non-connected and connected. But if you get the cost differential right, that upgrade opportunity definitely does exist more as you go out there. Excellent. Is there any part of the story that we're kind of skipping over here at this point? Is there something that we want to make sure that? No, listen. I think that I think given the external constraints that were on Resideo from the time of spin really created a lack of awareness and understanding of the business. I think folks looked at the IRA, saw the word indemnification, environmental, and then they looked at these two businesses that didn't quite belong together, and they looked at what are the market comps for this business? Well, it's really a sum of the parts thing. I think all that caused lots of people to just immediately tune out. And I think the opportunities we have now that we've settled that IRA, the opportunities to really allow these businesses to stand alone is going to free them up to be much clearer, have much better messaging to the markets, and allow folks to really understand what's out there. And while we've seen a huge increase in the stock price, obviously, since we made all these announcements, I think if people look at it, everybody's doing their own work and their own math. But if you think about this as sum of the parts and you think about the market comps for each one and just sort of take those and put them out there, I don't think many people would say the stock's trading at a premium right now. And so I think there's still a big opportunity for folks that want to invest in two really good companies. Again, we're not spinning off something that's not wanted. It really is just an appropriate separation of two businesses that deserve to be on their own. We're going to do that. We're going to continue to execute. Tom and Rob are both doing a great job executing. We have lots of execution, and I think those opportunities that can continue to grow through market adjacencies, through NPI, through digital experience are all going to continue to drive really good opportunities in the future. Excellent. We are out of time, so thank you so much for the time. Thanks, Chirag. Have a good one.