All right, thanks everybody for joining this morning. I am Adam Tindle, and it's part of our initiative on IoT and connected home. Very happy to be hosting the team from Resideo here this morning. We've got Mike Carlet, CFO, and Rob Aarnes, who's President of ADI Global Distribution. In terms of our format, we're going to try to just keep it fairly casual. We do have some slides that we'll reference as we answer questions, but we'd love to keep it as interactive as possible. So if you do have a question as we go, please feel free to raise your hand and ask that. So, gentlemen, thank you for being here. Thank you. Yep. Mike, this is, I mean, how many times have you been here? Five? Yeah, yeah. Or four, five. So, same face, different company. There you go. Mike Carlet, some of the folks in the audience might recognize Mike from the CFO of Snap One previously, but now the CFO at Resideo after their acquisition of Snap One. So you would probably be a good person to walk us through Resideo and the background. Sure, happy to. I think I'm here with Rob, who runs one of our two segments. So Resideo is a two-segment business. Really, our operation is driven by those two segments. And what holds those two segments together, I think, is the focus on the professional. As we think about all the things we do, the services, the products, the solutions we provide, both ADI and our products business really focus on the professional. ADI, you know, Rob's business, which we'll talk more about, I'm sure, $4.2 billion of revenue last year, historically focused on the commercial side of the business. I think about 70% of the ADI business being done with commercial integrators, installing products and solutions into commercial establishments. Excuse me. They deliver success through a high-touch service solution as a distributor, providing over 190 locations globally, but also an omnichannel solution with a very important, significant part of e-commerce delivering against that. As Adam said, last year, as Resideo and ADI looked to broaden their footprint, they acquired Snap. Snap was about $1 billion revenue, about $100 million of EBITDA. About half-year results of Snap are included in there. So if you just sort of take Snap's results and think about half years in and half years out, you can sort of do the math. And really, you know, as Rob and I met with our former CEO, John, you know, over the last, gosh, five or six years, we always said this deal makes a ton of sense. You know, ADI focus on commercial, Snap more on residential, ADI more on the security side, Snap more on the entertainment side. So as Rob looked at it and thought about from his standpoint, we can bring in a more residential piece. We can bring in the audio video piece of this to really help grow it, which is great. And then, you know, right now, ADI operates at around a 20% gross margin, a high single-digit EBITDA margin, throws off a ton of cash from a cash flow standpoint. But as we think about the margin expansion opportunities there, the Exclusive Brands, our proprietary products that carry higher margins, Rob and his team have been investing in some of them prior to the acquisition. And Snap brought a whole nother layer of those products and solutions on the AV side and that we're looking to leverage and grow. So that's the ADI side. On the P&S side, you know, it's really a bunch of products that are installed residentially, again, mostly through the professional things in the safety, security, air and HVAC space, really around home management. So brands you've heard of, like First Alert, like Honeywell Home, all are part of our brand portfolio as we deliver against that. P&S is about a $2.6 billion revenue company, gross margins above 40%, EBITDA margins, you know, pushing 20%. Again, lots of free cash flow coming out of the business. And those products and solutions really delivering the solutions that those professionals need to deliver into the residential market, those things needed for those solutions. You know, they're large global markets. I still have cheat sheet here. I scribbled this morning just to make sure I didn't miss anything. You know, we are positioned to take share, I think, over the last few years. The Resideo story is that it was spun off from Honeywell about six years ago, and for the first 3-4 years, there was a lot of focus on fixing the operations, operating as a standalone company as we're sitting here today, investing in NPI, investing in growth on the P&S side for go-forward opportunities, and we think they're really positioned us really well for the things that we think are out there. That's a great summary. So on high-level demand, we've got a general investor audience here, and you've got good perspectives across both technology as well as consumer trends with the portfolio. So after turning into a new year, what are you seeing from a macro perspective and any notable differences between the ADI side that you just recapped and the product side or maybe domestic versus international? Yeah, sure. You know, the majority of our revenue for both P&S and ADI is driven in the Americas, about ±70% a bit more. EMEA is the second piece with a significant chunk in EMEA, and then a small piece is in APAC and other places. You know, so certainly there's some different market dynamics around it. EMEA has been struggling more over the last few years with a lot of the things going on there. When we look at the domestic, you know, U.S. market where the bulk of our business is, I think it's been a mixed market. You know, it's really big. There's lots to do. We think that the housing has certainly been mixed. New housing has bounced back a bit. Everybody can look at the same housing statistics we all look at. Remodel activity seems like it's got a pretty good forecast. Yet interest rates remain high. A lot of our business on the residential side is focused on resale activity, and resale activity is still at pretty much an all-time low. So while remodel is good, you know, that major renovation that comes with a resale of a home is still pretty depressed. You know, we'll see what happens. Everybody's guessing the macro is as good as mine, but you know, we don't expect that turning around. So we think we have a mixed environment out there where we're continuing to see, you know, good performance from both sides of the business. I think on the commercial side, Rob would say that he's seeing backlogs, you know, as strong as we've ever seen them. Continue to see National Accounts doing really well. On the P&S side, our business with homebuilders is growing. Our business with retail is doing really well. Security is probably the side of it that's a little bit more challenged, so as we think about that piece, but overall, good, and demand is out there. Consumers are still, you know, very interested in investing in their home and taking advantage of the technology changes that are certainly happening out there. And I think that's probably consistent. We've got Alarm.com here tomorrow, and they've been talking about those positive commercial trends that they're seeing as well. Maybe one for Mike and Rob. On the last Q4 earnings call, you mentioned detailed plans that could be enacted to substantially mitigate the impact of tariffs. Obviously, this is a relevant topic because of the amount of product that we're going through on both sides here. Maybe just walk us through those plans and how you will substantially mitigate the impact. Yeah, I think the plans start with our great relationship with our customers. You know, I think anything that happens as we talk to our customers and talk about how it impacts us, how it impacts them, I think it starts with our communication. I don't know, Rob, you want to touch on maybe a couple of conversations you've had with folks and what the reaction's been? Yeah, yeah. I would approach it from a few different angles. To Mike's point, from a customer perspective, we obviously have great relationships with our customers, over 100,000 active customers in our database. And obviously, we got the same news on tariffs at the same time they did. And so we took a very proactive approach, reached out to our top 20 + customers within a few days of the announcements. They were very, very appreciative. Wasn't great news, but they were very appreciative. We were the first ones to reach out in many cases. And then the last thing I would say is, look, we've been through this before, right? As a distributor, we went through this during the first term. We were able to mitigate the full effects. The majority of our product line is branded products, right? It's where we pass those prices through. And then a small portion is our exclusive brands, which, you know, part one, we negotiate with our JDMs to try and reduce the impact. And where we can't, we pass those prices through. In the channel where we're not competitive, we have an ability to maybe move some of those prices around to where, on the distribution side anyway, we feel confident we can fully mitigate anything that's coming our way. I think on the P&S side, you know, there's some bigger impact. Certainly Mexico, I think we publicly disclosed that almost half of our manufacturing is produced out of Mexico. So clearly we're watching that with a lot of attention. As we think about mitigating activities down there, clearly same thing that Rob did on the ADI side. Tom, who runs our P&S group, has been having those same conversations with his large customers, talking about the pricing movements that are going to have to be made to offset some of that. Additionally, we're looking at other opportunities to mitigate, whether that's sourcing, whether it's location, whether it's outsourcing some of the manufacturing. There's lots of things to do. So we are very confident based upon the conversations we've had with our customers, with our suppliers, as we think about our manufacturing base, that, you know, in a steady macro, you know, the things we could do would offset the vast, vast majority, if not all of the tariff impacts. Now, at the same time, as we do those things, you know, the macro is going to get impacted as these things happen. And really hard to predict the implications of that at the same time. I'm going to ask one more, and then we'll pause for audience questions. Rob, what's the competitive environment like on the distribution side? And have you seen any changes to this as vendors are fighting for tighter budgets and this tariff environment that we're talking about? Yeah, great question. So if I look at 2024 in general, each quarter, I think the team would tell you increased from a competitive perspective, with Q4 being the most competitive. Mixed macro environment, a lot of things like that obviously going on. But we were able to grow 9% organically, the ADI business, when you take the effects of Snap away. And I think that's just a testament to the focus and some of the investments we've been making the last few years across our strategic imperatives. One, best-in-class omnichannel experience for the pro. You think about if you haven't, you know, visited ADI's e-comm site, I mean, I'd put it up there at the top of all industrial distribution and continuing to grow. We made several enhancements in Q3 and Q4 to even improve that experience more. The store footprint, localized inventory, expansion of services, the exclusive brands line we had before Snap and now with Snap. And then probably the biggest one that helped us out outside of the omnichannel piece in Q4 was that we've got strength across multiple different categories outside just security. If you saw on the first slide there, security is our core business. Commercial is our core business, 70% of the business, as Mike said. But in addition to security, we spent the last five years building strength in both Pro AV and Datacom. Why we do that? Because technology was converging. Now you have all systems on the same network. We wanted to be the industrial distributor that could help our large integrators win the entire job, right? So that, and that's what you've seen the last few years with the big guys, the National Accounts actually being able to do that. And we were very, we are very well positioned to diversify some of our competitors. And I think that helped us in the back half to produce the growth numbers that we produce and gives us a lot of confidence going into 2025 as well. Any questions so far? Just had a question from Mike. You're new to the organization. What are your thoughts and observations about companies' valuation? It's kind of been stuck for the last four years. You have this very valuable ADI distribution business. Yep. On one hand, we're supposedly constrained because of legacy liabilities, but we did manage to do two acquisitions and spend $2 billion. So I'm not sure how I reconcile. We're constrained on the debt side, but we can go out and make two deals. What are you thinking about long-term value creation? Sure. It's a great question, so listen. I think the same question we asked coming into this thing, you know, when I joined the company is the company appears to be a lot more valuable than the market gives it credit for, and I think the market has us undervalued for a number of reasons. I think the spin from Honeywell, you know, was not well understood. I think that, you know, while this Honeywell liability thing, and for those who don't know, when Honeywell spun off the company, they put this environmental indemnification on the company, which has nothing to do with any environmental liabilities we have. We just indemnify Honeywell for their environmental liabilities. It's a good piece of financial engineering, but people look at it and go, "I don't want to deal with this," and so immediately it puts this sort of pressure. We don't get the coverage. We don't get the attention, and it causes just a lot of angst right off the bat. We're constantly talking about it. To me, it's $35 million a quarter for the next 17 years. It's pretty easy to model. You just sort of put it down there. You deduct $35 million and you're done, but I do think it causes a lot of confusion. I think, you know, we have two great segments, but I think a lot of people question why exactly are they together. You know, we've got Rob and his team at ADI. P&S is their largest supplier, and ADI is the largest customer of P&S. And so there is a lot of synergy, but they do operate as two separate segments. You know, there's not a lot of shared services. There's some, clearly the cyber and the legal. There's a bunch of things we do. But really, Rob and Tom run their two businesses very successfully separately. And so people get confused about valuation. That takes some more work. People again then don't pay attention. And so I think all those things have caused a lot of confusion. We're not constrained, right? I think our leverage right now is a bit high, just given the Snap acquisition. We knew that going in. We said we're going to focus for the next, you know, 18 months, two years, to get our leverage down to 2x. That's our primary capital allocation strategy. But we think we generate tons and tons of free cash flow, and we're going to evaluate the best use of that free cash, certainly returning it to shareholders, deleveraging us first. Then we'll think about other opportunities, but our bias is deleverage and look for great opportunities. The Snap ADI deal was one we talked about for, you know, literally six, seven years. This was not something we did solely. We said for years, this is the deal that needs to happen. Rob pounded his fist on the table. We actually pounded our fist on the table on the other side saying, you know, this makes all the sense in the world. We didn't love the price. They did a good job of negotiating it. But, you know, it was the deal to get done, and so, you know, I think all those things just put pressure on the stock. Nobody expected it internally. You know, if you think about the poll that we all run when we do earnings, is what do you expect the stock to do? Nobody expected it to drop 10%. We thought we had a pretty good story out there. And so we just need to continue to tell that story, continue to drive the clarity in the market, and get the valuation where it should be. But I don't think, you know, I don't think there's very many people that think the company is appropriately valued right now. Just to elaborate a little bit, I think at one point the thinking was we got to grow the EBITDA so that the liability looks more manageable. So we did do two large transactions. Is it unreasonable for us to assume once you get to your next leverage target, then at that point you should have enough EBITDA and perhaps a separation, a split, something is a reasonable expectation? I think that the first thing that has to happen is this Honeywell liability puts some constraints on the company. There's covenants that you could all go read it. It's a long document, and it's very hard to explore those strategic options while that exists, and Honeywell has always said, you know, we like it. We like the credit risk. We like the way it all flows, and therefore, you know, while we'd love to be helpful to you guys if we can, like we're not interested in overly, you know, in changing it, and so the company for years before I got here has had conversations with them exploring opportunities, and it's always, you know, been it is what it is, so really hard to talk about what might happen in the future, given that's out there. If some miracle happens at some point in our lives and something changes that restriction, we'll then talk about what happens next after that. Question back there. Go. Yeah. What's the accounting basis for the $35 million? Is that just a negotiated amount? There's the 30-second version, the two-minute version, and the 1.5 hour version. The 30-second version is ignore everything on the GAAP financial statements about it and just assume it's $35 million a quarter for 17 years. That's the basic case. 3%. A quarter. The agreement basically says this, that we indemnify Honeywell for 90% of their environmental liabilities up to a cap of $35 million a quarter. And it was originally for, you know, 25 years when the company got spun off. It's been six or seven years, so we're at least a little ways through that. It's been $35 million every quarter since the company was spun. And my expectation is it would be $35 million every quarter for the rest of, you know, that 17-year period. But I don't know what their liabilities are in the future. The impact of that, right? Yep. The impact of the value, right? $140 million a year. $1.5 billion +. I mean, that does impact market value. Absolutely. I guess the big question is how real is it? So really, is it actually going to ever be realized? That's a liability. So there's a lot. So then you go back. This is the hour-and-a-half conversation. We recognize on our GAAP books a liability that's 90% of Honeywell's liability. They told us there's a whole complication on how they recognize it. We've got a 700. So we have the $700 million liability on the books, roughly, that has no basis on what the long term is going to be or what the short term is. The short term is $35 million a quarter. The long term is, you know, whatever. Multiply that by 17 years of quarters. That's the long term. The short term, we recognize an expense every quarter and book it based upon how they recognize Honeywell's environmental liability. So the GAAP accounting is very confusing. The modeling of cash is really, really easy, so. But the sale of that liability is not available to you? Even if we sold, again, we'd have to. Honeywell likes the way it is. There's a contract around it that has restrictions and. So you're not allowed to sell this liability to a third party B and C? No. Great deal for Honeywell. They're smart folks over there. I'm giving that. Silvering. But presumably you talked about debt pay down. You know, if a split, because obviously there's an obvious sum of the parts argument here, if that's unrealistic, upon debt pay down, the other option would potentially be share repurchase. Maybe just, you know, talk about that opportunity, you know, what the size could be, what the shareholder return might look like. Sure. You know, our bias, again, is to get us our leverage down under 2x. So our strong bias, until that happens, you know, everything looks like we have an outstanding share repurchase program that's out there. We haven't actioned it for about, I don't know, a year. I think last January was the last time we did it. I always do the end of the year. Again, as we were in the middle of the ADI-Snap merger, thinking about our dry powder, how we utilized it for that. I think when we get through that, I think those conversations in the boardroom about, you know, our bias towards returning capital to shareholders, which I think is clearly there. At the same time, you know, there's lots of opportunities out there for us to continue to grow the business, both organically and inorganically. If we can find deals that are as good as the Snap ADI deal with, you know, significant extensive synergy with a high level of confidence that have been talked about for years and years, I think we'd look at them. Outside that, you know, once we get to the appropriate leverage levels for our business, and by appropriate, I mean get down to deleveraging. I think they're appropriate for the deals that were out there. Then we'll think about the best way to utilize that capital. Rob, let's talk about the integration of Snap. Maybe you could just take a step back and recap. What were the growth and margin profiles of Resideo and Snap separately and how you're thinking about what the growth and margins could look like together? Yeah, so that's a great question. As Mike talked about, we had had our eye on Snap for quite some time. I say, well, 70%, you know, why? 70% of your business is commercial, 30% is residential. Goes back to something I said in my opening comments. You know, we are maniacal about understanding our customers and how they shop, where they shop, following technology, how that influences how they shop. And so five years ago, six years ago. Which is why, again, we started to engage with Snap. I think seven years ago was the first time I sat down with them. Took us that long to get it done, but that's okay because the timing was perfect. Before that, we had our security dealers that were largely dabbling at Resideo AV, but we didn't have the real CEDIA customers that Snap had. So now we've done the deal. We've got that customer base. Now our total customer base, right, is well over 100,000 active customers with Snap. Obviously, with $1 billion of revenue from Snap, 60% of that being their exclusive brands, which are very margin accretive, we now get to add that to our portfolio. And that obviously took the overall ADI margin base, you know, up pretty significantly, probably at 30 basis points, 25 basis points, right? And now the opportunity is to expand that and drive a higher mix there. You know, before we did the acquisition, our exclusive brands line was low single digits, right? Low, mid-single digits. Now it's into the teens with Snap. And we have a real opportunity to expand that into our existing customer base that, quite frankly, didn't have access to those products. We can also utilize Snap's NPI machine. I mean, you talk about launching new products. Over 400 new products a year is Snap's trend. We have that today in our roadmap and plan to expand some into commercial areas as well. So from a margin perspective, this is a real driver for us. In addition to their e-com presence, our e-com presence, best in class, we see a high mix of customers already shopping there, but even more so as we continue to drive and make enhancements. So this is definitely a margin benefit, number one, this deal, this acquisition for us. Maybe talk about cost synergies associated with it. Yeah, yeah, thank you. I appreciate that. So if you would have told me, you know, backed up eight months from now and said, "Hey, listen, you know, at the end of February, would you have achieved the milestones we've achieved in such a short amount of time?" I would have said that would have been tall thinking, a tall order. But I'm really proud of the team. Culturally, processes, the team is very committed to bringing the best of these businesses together, really understanding where the strengths of one was, the opportunities for the other, and bringing the best of both together. And because of that, I think we were able to identify synergies quicker and double our synergy target that we had in place for 2024. That's part one. The majority of those were cost synergies. But now we're opening up and speeding. We're seeing acceleration for cross-sell revenue synergies as well. We got that done faster. In fact, one of the proudest moments is nine days after we closed, nine days after we closed, we had Snap's entire WattBox line across all of our ADI locations. Not an easy thing to do, so that's part one. We were able to double our synergy target in 2024, and then I think you heard, you may have heard from the earnings call, we had committed $75 million of synergies by the time we exited year three. We think we're going to be able to drive north of that as well. Perfect. I'm going to ask one more and then we'll pause again for audience questions. Mike, just talk about your initial 2025 outlook. I think it was ahead of consensus expectations. What's, you know, kind of recap that process for 2025 guidance and what gave you the confidence to, you know, upside relative to expectations at the time? Yeah, I think that, excuse me, you know, we continue to look at 2025 as a mixed macro. We specifically left any tariff impacts out of our guide. I think we're supposed to get some more news today about what's going to happen or not happen tomorrow. And, you know, your guess is as good as ours. So, trying to predict that is really hard. But we looked at the macro out there. We think that we still see some good activity on the residential side, as Rob talked about on the commercial side, national accounts doing really well. And so we felt really confident in the top line, the margin with the things that we're doing to drive it. At the same time, we know that over the last few years, as we've really focused the business, particularly at P&S, on, you know, inherent structural operational fixes that have driven structural improvement in our gross margin, which has been great. We've done that to the, it's probably to the expense somewhat of investing in NPI. And we said, "We really need to think about this year as an investment year." And so we've put a significant amount of cost into the business this year. Not all of the growth that we've seen in margin, but a chunk of it to say we need to reinvest. We need to be thinking about some of those product investments to continue to drive the future health of the business. And so we baked those into our budget. We baked them into our guide. And so you do see some of that out there. And obviously, there's levers in that expense as we think about everything that's going to happen. We feel really good that we've got the levers to pull the mitigating activities that will happen. But again, our guide specifically excludes tariffs. But we think that the overall mixed macro provides, thank you, Chris, appropriate guide. And I think for Q1, Chris just reminded me, we are having some weather impacts, which are built into the guide, probably negatively impacting Rob a little bit. I think Rob was telling me he's seen the most closed store days that he's had in about 10 years. That's a fact. Yeah, where it's all over. At the same time, you know, given some of the activities at P&S, some of the products we sell, some of the things around the air side of the business, probably benefiting them a little bit, and so we think about those a little bit of a hedge between both businesses, so we feel good about Q1, probably a little bit below where we would normally think it was given the weather impacts, and we feel great about the year. But that was incorporated into good. It was incorporated. Yeah. Questions? Is there a geographical impact or concentration in your business? And if so, well, I mean, do these you were talking about weather, but have you had any positive impact of like the fires or any of that stuff that did you jump-start it? I know it takes a long time to get something started, but. Yeah, Rob could touch on the geographic effect of ADI to start, and then I'll touch on it a little bit. Yeah, so what we see, as Mike mentioned, right? I mean, most of those closures were actually in January, and about a third of them were in February. And then, of course, our Southern California business, right, was devastated on both the ADI and the Snap side as everything just shut down. So typically, or even the snowstorms come through like that, is it takes a while, right, to get everything rescheduled for our integrators, right? Things get pushed out. It's never right away. But I'd say 90-120 days after these things happen to include, say, hurricanes in Florida, things like that, we see that business actually come back to us. So, you know, end of Q, you know, March into Q2, we expect to see some of those lost revenues come back our way. There is not a lot of geographical concentration, so if you think about California as a small piece, I mean, we'll have some benefit from there at some point. I don't think we've seen anything really big. Yeah, sorry. I mean, the concentration of Southern California is much, obviously, less dense than, say, where the majority of the snowstorms hit, the Mid-Atlantic and the Northeast. That's highly, highly concentrated for the ADI side in terms of number of stores, density of customers, both on the commercial and the residential side. Any final thoughts that you want to leave with investors? You've got potentially a new CEO coming on, I think at the end of 2025. What would be the priorities and final thoughts for investors? Yeah, listen, I think that there's lots of great things happening. I think as the question was asked, you know, we think that it's a great opportunity to learn about the story, spend the time. We announced Jay's retirement. The board's running their process. There's not really an update there. They'll go through it at whatever pace they think. Jay's still totally engaged, driving a lot of the activity on tariffs and other things. But I think that, you know, there's lots of great things in this business. There's lots of great products. There's lots of great solutions. The relationship with professional, I think, is something that really provides an inherent value to the company that I think is not as well understood as it should, and I think for people to do the work, I think there's a real opportunity here. All right. We're going to continue this discussion downstairs. Mike, Rob, thank you. Thank you. Thank you. Thanks, guys.