Resideo Technologies, Inc. (REZI) Earnings Call Transcript & Summary

Ladies and gentlemen, please welcome to the stage, Chris Lee.

All right. Thanks for the warm welcome. Really exciting times. Good afternoon. It's really great to see some familiar and new faces in the crowd. Look, we're standing here at the New York Stock Exchange for an incredibly profound moment for Resideo. When I think about the last year or so and the amount of people involved, the hours of effort and collaboration, this moment feels amazing for all of us. Thanks for sharing this moment with the entire Resideo team. I'm Chris Lee. I'm the Global Head of Strategic Finance at Resideo and your host today. On behalf of the company, I'd like to welcome you to Resideo's Investor Day. We're so glad that you could join us in person or via the live stream. And we have a great event planned and are excited to share more about our business with you. Okay. I got to take a breath. Before I cover our agenda, I got to draw your attention to the forward-looking statements. I feel like Vanna White. We will be making in today's presentations. All right. So stick with me for this. Statements other than historical facts made during this presentation may constitute forward-looking statements and are not guarantees of future performance or results and involve a number of risks and uncertainties. Actual results may differ materially from those in the forward-looking statements as a result of a number of factors, including those from time to time in Resideo's filings with the Securities and Exchange Commission. The company assumes no obligation to update any such forward-looking statements. We identify the principal risks and uncertainties that affect our performance in our annual report on Form 10-K and other SEC filings. In addition, we will discuss non-GAAP financial measures in today's presentation. These non-GAAP financial measures, which can sometimes be identified by the use of adjusted in the description of the measure should be considered in addition to, not as a substitute for or in isolation from our GAAP results. A reconciliation of GAAP to non-GAAP financial measures are included as an appendix to this presentation, which is accessible on the Investor Relations page of our website at investor.resideo.com. Okay. That was a mouthful. All right. So in July 2025, we took a strategic and transformative action to spin off ADI from Resideo. We believe this business separation sharpens both companies' focus, provides greater financial flexibility and tailored capital allocation priorities that are directed toward their respective growth initiatives while reducing complexity. We believe this transaction unlocks significant value for our investors and enables both companies to offer distinct and compelling investment profiles. As part of the ADI spin-off, Resideo's Board of Directors remains largely intact. As announced this past May, the following changes to Resideo's Board become effective upon completion of the spin-off. Cynthia Hostetler and Nate Sleeper will resign from Resideo's Board to become members of ADI's Board. We thank them for their contributions. Jay Geldmacher will resign from the Resideo Board in conjunction with his retirement. We thank Jay for his leadership over the last 6 years as Resideo's CEO. Andrew Campelli and Tom Surran will be appointed to the Resideo Board, and we welcome the experience and expertise they bring. During today's event, we'll look to share more about our value creation strategy as a pure-play building technologies company. As you can see on the screen, members of our executive team will discuss how we work together to create and deliver value. I'm really excited to introduce you to members of our executive team as this may be the first time you're meeting some of them. My colleagues are accomplished executives who give us conviction about the execution we describe in today's presentation. A couple of housekeeping matters. A replay of today's presentation will be available later today on the Investor Relations page of our website at investor.resideo.com. We plan to have a Q&A session at the end of the presentation. We encourage Q&A. So please feel free to ask questions in the room or submit them if you are participating virtually. To submit a virtual question for the Q&A session, please follow the instructions noted on the live stream platform, but I'll give it to you all right now, e-mail investor.resideo.com, and I will get your questions. And I will make sure I keep them anonymous for everyone who wants to stay anonymous. We will take as many questions as time permits. And if you're unable to get to your question, we will get back to you. We hope you walk away today with a better understanding of Resideo and share our conviction about the opportunities for Resideo to be the leader in residential sensing and controls. I personally look forward to catching up with many of you after the event. Before I hand it off to Tom Surran, the CEO of Resideo, let's play a video. [Presentation]

Good morning, and thank you for joining us. I'm Tom Surran, and I joined Resideo 2.5 years ago as the President of the Product and Solutions division. I'm honored and excited to be named as the CEO of the company after the completion of the spin-off of the ADI distribution business. There are 3 reasons why I was drawn to Resideo. First, it's a control and sensing company, and I've spent 30 years of my career in control and sensing. Prior to joining Resideo, I was the Chief Operating Officer for FLIR Systems. That background allowed me to recognize the strength of Resideo's technical foundation and the importance of the problems we solve for homeowners and professionals every day. Second, one of the opportunities I saw at Resideo was the chance to reinvigorate product development. Creating innovative differentiated solutions and bringing new technologies to market has been a central theme through my career, and it remains one of the areas that excites me most about our future. Finally, I have a personal passion for building science. I know that sounds weird, but it began when I worked in construction as a teenager. What started as a way to earn money became a lifelong interest. I was fortunate to be able to learn from the craftsman around me and develop skills in many of the building trades. I was drawn by the ability to create something enduring and useful. In fact, it's what I love about it. That passion has never left me. Building and renovating home is still how I spend most of my weekends. In fact, over the past 30 years, I have built or substantially rebuilt every home I have owned. And despite all those construction projects, I'm still married to the wonderful wife of 32 years. That construct experience has given me a deep appreciation for how dramatically homes have changed and become more complex. Today's homes are smarter, more efficient and more sustainable than those built just a few decades ago. The science behind residential buildings continues to evolve, and we believe we're still in early stages of that evolution. That's what makes this such an exciting time to lead Resideo. We operate in a terrific market with powerful long-term drivers. We're becoming a pure-play building technology company focused on residential control and sensing solutions. We're stewards of a rich legacy, but we're firmly in command of our future. We believe in quality. We believe in differentiation, and we believe the companies that create meaningful value for homeowners, contractors and channel partners will be the companies that win. Those beliefs are why I love this company. Today, we want to share why you should be excited about Resideo story as well. Before I start talking about the company, I want to speak a little bit about the people who are leading it. One of the things I've learned throughout my career is strategies matter, products matter, markets matter. But ultimately, if companies succeed because of the people. We've built a cohesive leadership team united by a shared mission and a shared commitment to our customers, employees and shareholders. While each of us brings different experiences, perspectives and expertise, we operate with a common purpose and a common set of values. We describe our leadership approach as a team of teams. But what does that mean? First, we're aligned around a shared purpose. Every function and every leader understands how their work contributes to our mission of delivering comfort and protection to homeowners. Second, we prioritize collaboration over silos. The best ideas and the best outcomes rarely come from a single individual or even department. They come from teams working together to solve problems and seize opportunities. Third, we communicate with transparency. We believe people perform at their best when they understand the challenges we face, the opportunities ahead of us and the reasons behind our decisions. Fourth, we empower our organization. We want the people closest to the customer or the problem. Clear accountability combined with empowered, creates speed, ownership and better outcomes. And finally, we are building the processes, systems and operating disciplines for continuous improvement. We're never satisfied with the status quo. We believe that small improvements consistently applied over time create meaningful competitive advantages. This leadership philosophy is more than management approach. It's how we operate the company. It's how we develop products, how we serve our customers and execute our strategy. Most importantly, it is how we will continue to build a stronger Resideo for the years ahead. A home. It's more than 4 walls and a roof. It is a system of systems designed for one purpose to provide its occupants with comfort and protection. That purpose has not changed for thousands of years. What has changed is our ability to deliver it. Advances in building sites, sensing and control technologies and connectivity have transformed what a home can do. At Resideo, our role is simple. We provide the sensing and control solutions that help optimize comfort and protection throughout the home. Whether it's maintaining the right temperature, securing the home or ensuring critical systems are operating properly, our products work together to help homeowners enjoy a greater peace of mind. It's a responsibility we take very seriously. We have been serving homeowners and the professionals who support them for generations. And everything we do comes back to that simple mission, helping make homes more comfortable and protected. The markets we serve, they're large, they're attractive and they're supported by powerful long-term secular trends, including electrification, efficiency and connectivity. Collectively, we estimate our core served markets to represent more than $40 billion of opportunity. And unlike many of our competitors, which tend to focus on a single category or a narrow set of applications, Resideo sits at the intersection of comfort and protection, serving the critical systems of the home. We have one of the broadest portfolios of sensing, control and connected solutions in the industry, giving us a unique ability to solve problems across multiple domains and create integrated solutions. Importantly, we do not view our current leadership position as the end state. In many ways, they provide the foundation for our next phase of growth. There are several adjacent categories that represent a natural extension of our existing capabilities and customer relationships, Areas such as ventilation, access control, hydronics control as well as presence monitoring and video solutions. They're all highly complementary to our portfolio and represent attractive investment opportunities. Take ventilation, for example. Building codes and energy standards are increasingly driving homes to become significantly more air tight. In the past, homes naturally exchange air because they were leaky. Today, creating a healthy and comfortable indoor environment requires active management of air exchange and air quality. As a result, ventilation is becoming an increasingly critical system within the home. Yet it's a category where we have limited participation today. For Resideo, this represents an attractive opportunity because ventilation is inherently connected to our existing HVAC and sensing capabilities. That's why that is just one example of the adjacencies that we feel we can address. We believe there are a number of adjacent product categories, which may offer significant growth opportunities. Within the residential housing market, we participate both in the repair and remodel market as well as the new construction model market. A common question we receive from investors is, how much of your opportunity is tied to repair and remodel versus new construction? And the answer is simple. It's approximately 80% repair and remodel, 20% new construction. And the math behind that is relatively simple. Let's just take the U.S.A., okay? There are 114 million existing single-family residential homes. Each year, we're currently building about 700,000 new single-family residential homes. If you take, let's say, even something as long as a 20-year replacement cycle for an HVAC system, the size of the replacement market dominates the size of the new construction market. We all recognize the current economic environment for the housing is not ideal. However, despite this, Resideo has continued to execute well. And more importantly, we believe that many of the long-term drivers for a recovery in the housing market remain intact. On the repair and remodel side, we see several favorable trends. The housing stock continues to age. Homeowners are accumulating significant equity in their homes and homeowners are increasingly investing in upgrades driven by efficiency, comfort and safety. At the same time, we are excited about the long-term outlook for new construction. The current housing supply shortage is not sustainable in the long run. Housing starts remain below equilibrium levels as they have for a number of years now. And yet demographic trends continue to support household formation and housing demand. As the market normalizes, we expect new construction activity to become an additional tailwind for growth. We believe Resideo is exceptionally well positioned within the new construction market. We have relationships with every one of the top 25 builders, and we're well regarded across the industry. Our products are frequently specified into homes during the design and development phase, which creates a strong foundation for future growth. We see opportunities to increase our penetration in the homes -- the number of homes as well as the amount of content per home. In fact, over the past several years, we have consistently increased our content per home, demonstrating the value brings to the Pro and builder and homeowner alike. A moment ago, I used a common refrain in building science that a house is a system of systems. House is not simply a collection of individual products. It's an interconnected set of critical systems. They must work together to deliver the comfort and protection and savings. These systems include heating, cooling, electrical plumbing, security and life safety. And while we sell individual products, our products are typically more than stand-alone devices. In most cases, they are the sensing and control points that determine how these larger complex systems perform. That leads to 2 important applications. First, homes are not uniform. Every home is different, every installation is different, every job site presents new challenges. It's common for repair or installation to require several different products to get the job done. And those products need to interact seamlessly. For any problem profession encounters on the job site, we have a solution that will let them get the job done correctly. Second, sensing and control products are often the most critical components within a system. Consider a thermostat. It may cost a few hundred dollars, yet it determines the performance of a $20,000 HVAC system. And the same principle applies throughout the home. Small sensing and control devices frequently determine the efficiency, reliability and safety of much larger, more complex and expensive systems. This is one of the reasons why professionals -- our professional customers love Resideo. We're not simply providing products, we're providing solutions, trustworthy solutions across the full range of critical home systems. But our vision extends beyond individual systems. Today, we're building the FORTIQ platform for the Resideo ecosystem. At the foundation is FORTIQ, our next-generation platform designed to provide a robust and scalable foundation capable of supporting a broad portfolio of devices with exceptional availability and uptime. On top of FORTIQ is our Common Data Model. This enables devices and systems to share information through a common language. Above that sits Redlink Plus, our communication protocol that securely connects devices and systems throughout the home. This is important. Together, these systems create something much more powerful than a collection of connected products. What they create is coordination between systems. They create contextual awareness, and that's very important because ultimately, in order to have intelligent homes, you need to have context. When people hear the word legacy, they sometimes think about the past. We think about the future because at Resideo, innovation and legacy are inseparable. The reason we have a rich heritage is that for more than a century, we have created new categories, solved important problems and brought innovative solutions to market. We did not become leaders by following others. In many of the areas we compete today, we were the original innovators. We invented the thermostat. We pioneered residential security. We developed the residential smoke detector. That history matters because it has created something extraordinarily valuable, unmatched domain expertise. Over decades, we've accumulated a deep understanding of how critical systems interact, how professionals solve problems and how homeowners experience comfort and protection. As I've spent time across the company, one of the things that continues to impress me is the depth of knowledge that exists within our organization. Our teams understand these segments at a level that few companies can match. They understand not only the products that we have been successful in bringing to market, but the many ideas, technologies and solutions, we explored it along the way. That accumulated knowledge becomes a powerful competitive advantage. It helps us identify opportunities sooner. It helps us solve customer problems more effectively and it gives us confidence we can continue to create solutions as markets evolve. With the stewards of a rich heritage, yes. Our history gives us credibility. Our expertise gives us confidence and our innovation will determine our future. One of the strengths of Resideo is the power of our brands. The reality is you see our brands every day. Brands like Honeywell Home and First Alert are among the most recognized name in the residential market. For generations, homeowners have relied on these brands to provide them comfort and protection. But recognition is only part of the story. What makes the brands really valuable is trust. Whether a homeowner is choosing a thermostat, a smoke detector or a security solution, they want a product they can depend on. And when a professional installer recommends a product to a customer, their own reputation and their own business is on the line. That's why trust matters. In addition to our flagship consumer brands, we have a number of highly regarded professional brands, including BRK, Braukmann and ADEMCO. These brands have earned the trust of professionals through decades of performance and reliability. Professionals know our brands. They trust our brands. And in many cases, they prefer our brands. That trust creates customer loyalty. It strengthens our competitive position and provides a powerful platform for future growth. I've just been talking about the Pro a bit. And as I refer to them, the reason is they're one of our most important competitive advantages. And our relationship with the Pro it's one we spend a great deal of time developing because when homeowners think about comfort and protection, they think about the products, but the Pro is the person that delivers the value that those products can offer. Whether it's a security system, a life safety system or an HVAC system, installation quality and system performance matter. And the increasing complexity of these applications they increasingly require the expertise of a professional rather than a DIY approach. And that's where Resideo excels. Over decades, we have built the brands and installation experience of choice for critical comfort, safety and security applications. Professionals trust our products because they know they perform well, they're easy to install, and they help them deliver superior results for their customers. But the relationship goes far beyond the products. We've invested for years in professional training and technical support and the tools that help our customers, the professional, build and grow their business. These capabilities have been developed over decades, and they're difficult to replicate by our competitors. We've created software platforms that are embedded into the daily operations of the professional. Solutions such as AlarmNet, customer applications and Resideo Pro are integrated into professional workflows, and we believe the forthcoming FORTIQ platform will drive greater engagement between the Pro and Resideo. Every year, those relationships become stronger. With more than 15 million installations annually, every installation creates another customer interaction, another data point and another opportunity to deepen our relationship with the professional community. Contractors rely on us to solve problems across a full range of installation and residential installations. From straightforward applications to highly specialized and technically demanding applications, they know they can come to Resideo for answers. Simply put, the professionals do not just buy Resideo products. They often build their business around them. One of the defining characteristics of Resideo is our scale. Scale by itself does not create value. What creates value is the ability to leverage scale to deliver better products, greater efficiency and financial performance. At Resideo, we design and manufacture substantially all of our own products. Every year, we produce more than 75 million units that help homeowners improve comfort and protection. Historically, however, that scale was spread across numerous product lines in each product category. And while we benefited from the breadth of our portfolio, we did not always capture the full advantage that scale can offer. Today, that's changing. We are managing Resideo as a unified operating company rather than a collection of individual product lines. We are leveraging our purchasing power, manufacturing footprint and engineering resources across the enterprise. As a result, we are becoming more efficient, more responsive and better positioned to create value for our customers. Importantly, we believe we're still in the early stages of that change, and there remains significant opportunities to further optimize our operations, simplify our processes and increase the returns generated from our scale. As we move forward as a stand-alone company, unlocking the full power of our scale will remain one of our highest priorities, and we believe one of the most important drivers of long-term shareholder value. We view operating scale as more than an advantage. It's a strategic asset. One of the strategic choices we've made as a company is to remain meaningfully vertically integrated. In today's environment, many companies have adopted asset-light models and outsourced significant portions of their manufacturing operations. We've chosen a different path with an emphasis on making the vast majority of our products in-house. And we believe there are 4 important reasons why our vertical integration creates meaningful advantages for our customers and shareholders. First, our manufacturing operations are an extension of our domain expertise. For more than 140 years, we've been developing products that provide comfort and protection. That knowledge is not limited to our engineering teams. It is embedded throughout our manufacturing processes, our production systems and our quality disciplines. Second, vertical integration gives us greater control over quality. The products we manufacture are often responsible, as I mentioned, for the critical functions within the home. Whether it's a smoke alarm, a thermostat or combustion control, reliability matters. By maintaining control over manufacturing, we are managing quality throughout the production process and ensure our products consistently meet the standards our customers expect. Third, manufacturing plays an important role in accelerated differentiated solutions and accelerating the development of these new products because our engineering and manufacturing teams work closely together, we can iterate faster. We can move products through development more efficiently, and we can bring those innovations to market more quickly. Manufacturing is not separate from our product development process. It's a critical enabler of it. Fourth, scale creates meaningful economic advantages. With more than 75 million units produced annually, our manufacturing footprint provides purchasing leverage, operational efficiencies and cost advantages that strengthen our competitive position. As I transition today to talk about our strategy, I want to make something that's pretty important. The strategy we'll be talking about today is not new. It's what we've been doing for the past 2.5 years. And while we have specific strategies related to each of our product categories, the 4 pillars I'll be talking about today represent the common framework through which we guide our decisions across the entire company. The first pillar is accelerating differentiated solutions or differentiated products. And the key word is differentiated. We're not interested in creating generic products. We are focused on developing solutions that solve meaningful problems, create value for our customers and ultimately delight the homeowner. We believe innovation should be purposeful, and we believe differentiated products create both competitive advantage and superior financial returns. The second pillar is focusing on the professional. You've heard me talking about it. As we've discussed throughout this presentation, the professional is central to our business model. And when we talk about focusing on the professional, we're talking about viewing every decision through their lens. How do we save them time? How do we help them solve the broadest possible range of customer problems? How do we help them create happy, loyal homeowners. Because when the professionals succeed, we succeed. The third pillar is expanding geographically. And while we have leadership positions in many of the segments we serve today, we have not pursued all geographies equally. For example, our smoke detectors sell primarily in the United States, where certain categories of our water products sell predominantly in Europe. The reason for that non-uniformity has little to do with the markets or the product requirements. It has to do with prior management decisions. As a result, though, there are significant opportunities for us to increase our participation in existing markets around the world. As a company, we need to think more globally. We need to leverage our investments that we make across multiple regions and apply best practices across markets and thereby expand our participation in these international opportunities. The fourth pillar is leveraging our scale. Scale allows us to invest more in innovation, provide greater value to customers and operate more efficiently. It is one of the most important competitive advantages we have, and we intend to leverage it aggressively. These 4 pillars work together. Differentiated products strengthen our value proposition. A deep understanding of the Pro drives adoption, geographic expansion broadens our opportunity set and scale enables us to execute more effectively and create greater value. As a stand-alone company, we believe these strategies position us to accelerate growth, improve profitability and create long-term shareholder value. Up to this point, I have focused on what we are doing and why we believe Resideo is uniquely positioned to win. But ultimately, strategy only matters if it produces results. We believe the actions that we've been discussing today allow us to target mid-single-digit revenue growth even without a significant improvement in the economic environment. At the same time, we believe these initiatives will drive meaningful margin improvement. As we continue to improve our product mix, increase our operating efficiency and execute with greater focus as a stand-alone company, we have set a goal of increasing adjusted EBITDA margins to the 23% to 25% range. Importantly, this is not dependent on a perfect macroeconomic environment. While we would certainly benefit from a stronger housing activity and improved market conditions, our strategy is designed to create value in a variety of economic backdrops. In summary, we believe the answer to creating long-term shareholder value is to deliver better long-term profitable growth through economic cycles, maintain durable competitive advantages and continuously increase the value we deliver to our customers. Our conviction in this is supported for the following 3 reasons. First, we occupy a unique position within the home. Our products touch many of the critical residential systems, including air, energy, water, safety, security. Few companies, if any, have as broad a footprint across the home. That footprint provides us with the opportunities for enhanced systems integration, which in turn provides better system coordination as well as that contextual awareness that's so important. And that creates the opportunity to drive whole home optimization. Second, we believe our position is highly durable. The products we provide are essential to the operation of the home. Much of our demand is driven by repair, replacement, maintenance and upgrades, creating a resilient foundation that extends across economic environments. And third, we have built an exceptionally strong competitive position. Our brands, our customer relationships, our expertise in sensing control, they create advantages that are difficult to replicate. When you combine our footprint in the home, our durable market position and our competitive position with the focus that will come from being a stand-alone company, we believe Resideo is uniquely positioned to win. What you've heard from me today is the framework. Now I'm going to turn it over to the team -- members of our team who will talk you through the individual components of the plan, explain the actions that are already underway and show you how we intend to translate these strategic priorities into growth, margin expansion and long-term shareholder value. Up first, I'm going to introduce you to Scott Ziffra. He's Resideo's engineering leader, and he's going to talk to you about our differentiated offering. You should know Scott is and avid marathoner. In fact, he's actually completed the 7 continent Marathon challenge. And one of the great things about Scott, as he demonstrates that tenacity of a marathon every day at his job in Resideo. Scott? [Presentation]

Turning the dial on the T87 round Thermostat. That's a core memory for so many people, isn't it? It's simple. It's iconic. It's Resideo. Good afternoon. I'm Scott Ziffra. I lead the engineering team. I joined Resideo about 6 years ago. And from developing communication systems for first responders to powering AI scale data centers, I've built a career obsessing over technology that simply works. That same principle, reliability, simplicity, trust, what powers everything you just saw and it's what's driving our next generation of products. Your home, one of the most important places in the world. It's deceptively simple until it's not, right? Homes are actually one of the most difficult technology environments on the planet. It's a system of fragmented systems. Every home is different. Every installation is different. It's the place where hardware, software, buildings and humans all interact. And we don't see an end to this complexity. If anything, it's growing. We face ever more stringent regulation demands, demands for greater efficiency. At the same time, we're all using our homes differently, spending more time at home, greater variability in how we use our homes. And you know what, we love it. Over decades, we've developed deep expertise in how homes actually operate, not in some lab but across over 150 million homes and small businesses, over 150 million unique environments, over 150 million edge cases. That experience has shaped our technology, our road map, and it forms the foundation for the differentiation that you'll see today. Our product philosophy is simple, great products create value. connectivity amplifies that value and then intelligence compounds that value. At each level, we're developing a closer and more enduring relationship with our homeowners and our professionals. We start with the foundation of award-winning industry-leading best-in-breed products. These solve hard, important challenges. We then connect these devices. It started with Redlink, our own wireless protocol purpose-built for home comfort systems. And that matters. The home is not an easy networking environment. It's walls, it's floors, it's interference. The Redlink protocol beloved for its long range, robust coverage and very long battery life. And most importantly, it just works out of the box. And that's critical for our Pro channel. They want to install, get systems up and running quickly and move on to the next job. We've continued to enhance this technology and are expanding it across our full portfolio with Redlink Plus. This brings the same level of performance, speed of installation and connectivity to every product we deploy. And that's difficult to replicate with off-the-shelf protocols. This becomes our foundational advantage as we scale our platform across more devices and more homes. Now great products, they'll get you in the house, but great platforms keep you there. Once you have a reliable way to connect the home, the next step is turning that connectivity into intelligence. And that's what FORTIQ enables. FORTIQ is our cloud platform for connecting devices, services, partners across the home. We've built it to scale to tens of millions of devices and to deliver the reliability needed for life-critical applications. I'd like to say FORTIQ is the layer that's woven into the fabric of our homeowners' lives and into our professionals' businesses. As we dive deeper into our products, let me start with a core belief that drives our product strategy. Delivering comfort is not about a single device. It's orchestrating the entire home. I mean what even is comfort, right? I probably go temperature. And that's important, but it's constantly balancing temperature, humidity and air quality efficiently. So our approach is threefold. First, that's control. That's thermostats, that's hydronics, it's zoning. This is the intelligence layer where sensing and decision-making happen. Second, conditioning. That's humidification, dehumidification, actively controlling moisture in the environment. And third, air quality, ensuring air is clean and fresh. Our differentiation is not just having products in each of these categories. It's how we integrate them. Our systems work together, sharing data and coordinating decisions to optimize the whole home. At the center of this is the thermostat. Winning in comfort starts by winning the thermostat. I'm sure to some people, it's some box on the wall, maybe something for you to argue over. But to us, it's much more than that. It represents 12 months of development, over 1 million lines of code, 500 qualification tests. It sits at the center of the most expensive system in your home. And that's why it's also the center of our strategy. Over the past 2 years, we've reinforced our leadership across that portfolio, strengthening both entry-level as well as the premium segments. Released in 2025, our premium Elite Pro model has quickly established itself as one of the leading smart thermostats on the market. We're building upon our strength in thermostats to expand into the broader system, extending into conditioning, where we recently released one of the most efficient and easiest to install dehumidifiers on the market. And soon to follow will be a refresh of our humidification portfolio. In air quality, as Tom mentioned, we're pursuing growth opportunities in both filtration as well as ventilation. Finally, as we update our thermostat portfolio, we're greatly reducing the complexity from over 40 families to 5 global platforms. These platforms mean faster innovation cycles and greater scale efficiencies. We have a video that plays in our Aurora, Illinois office. And in it, a firefighter says, we meet people on the worst day of their lives. I like to think that our mission, my job is to ensure that day never happens. And that's really how we think about protection, not as a set of products, but as a system designed to prevent, detect and respond before small issues become major events. In Security, we provide the full system that's panels, sensors, video and importantly, monitoring. Monitoring creates a continuous connection to the home and is a meaningful source of recurring revenue for us while delivering ongoing protection to the homeowner. We extend that into safety with smoke, carbon monoxide and gas detection, providing against life critical risks. And finally, leak detection, helping prevent one of the most common and costly sources of damage in the home. The key point is these are not stand-alone products. They're designed to work together as an integrated system, allowing us to move from reacting to problems to helping prevent them. We see a significant opportunity in security and safety, but our approach is different from traditional point solutions. Our strategy is to develop a fully integrated whole home solution. This starts with next-generation intrusion and monitoring, but it extends well beyond that. We're building a broader ecosystem that includes video, access control and leak detection, all working together in a coordinated system. We've recently introduced video solutions for both homes and small businesses and have next-generation all-in-one and hybrid panels in development. And we're integrating all of this into FORTIQ, delivering a more complete solution for homeowners and a simpler, more powerful offering for our professionals. A security system can involve installing dozens of sensors. The low latency of FORTIQ allows sensors to be added in seconds. And just like in comfort, we're leveraging global platforms to speed product development and reduce costs. As an example, we recently released our 10th edition smoke and carbon monoxide detectors, where we transformed 12 product families into one global platform, cutting development time by nearly 50% from over 2 years to just over 1 year. So FORTIQ is the intelligence layer. Our apps are where that intelligence shows up every day. This is where we turn connectivity and system understanding into an ongoing expert experience. On the Pro side, our applications simplify installation. They'll provide advanced diagnostic, and they create a direct connection to the homeowner for the pro. For homeowners, our apps deliver a seamless experience across comfort and protection, providing insights, energy savings and increasingly proactive protection. It creates continuous engagement. It's how we stay connected to the home, not just over time -- not just at install, but over time. So now imagine you're a contractor and you're building out a new subdivision. You've got dozens of technicians are installing hundreds of thermostats. Each thermostat may require over 100 configuration settings and each one of them needs to be done quickly and consistently. Through our Bluetooth-enabled configuration tool, we've reduced what may have taken 15 minutes to mere seconds. You literally walk up to the thermostat, pull your phone out, click in the app, you're done. One of the biggest constraints in this industry is access to labor in the Pro channel. We create solutions that are purpose-built for the Pros from Redlink Plus that reduces install time to on device and in-app branding that helps them strengthen their relationships with their customers. We also provide diagnostics, system insights and a direct connection to their installed base. We become integrated into how they run their businesses. It becomes part of how they install, how they service, how they engage with their customers. And you know what, once you're embedded in those workflows, it's very difficult to be replaced. We tie this all into a concept we call labor, loyalty and leads that Scott Harkins will talk about in detail in his section, but it all starts with quality. As an engineer, I cannot begin to tell you how it feels to hear a customer say, my family is alive today because of your product. That's not marketing, that's a standard we aim to meet every single day. We take that responsibility very seriously and is a commitment that's recognized by our customers. Amazon needed someone to design a thermostat. They turn to Resideo. Google needed someone to design a smoke detector. They turn to Resideo. Over 100,000 professionals across the world trust Resideo for their businesses, their customers, their families, delivering 24 million smoke detectors a year, that's hard. Processing 50 billion cloud transactions per month is hard. It requires deep engineering expertise and disciplined manufacturing. And that's why quality for us is not just operational excellence. It's a core part of our differentiation. I think most people have this common belief that quality and speed their trade-offs. We disagree. We've made deliberate investments in talent and platforms and how we operate. We've added over 130 engineers, bringing the team to just over 1,000. We've increased R&D by over 130 basis points to roughly 5% of revenue. We've invested over $100 million in platform and core technologies. These investments have translated into execution, into velocity. The impact is clear. We're delivering products 30% faster than prior generations, and we've tripled NPI revenue since 2023 to over $900 million. For all this talk about smart homes, most homes today are actually pretty dumb. What we're building is the shift from pure connectivity to a home that actually understands context, behavior, intent. And what you see on this slide is that evolution. We start with the connected home, devices that can sense and respond. We then move to a coordinated and contextual home where those systems work together, making better decisions about real-world conditions. And ultimately, we move to a cognitive home where the system understands reasons and acts. We're adopting AI today to turn device and system data into actionable insights from identifying activity in video streams, for example, to proactively detecting water leaks, automatically shutting off the water supply before significant damage occurs. To be clear, AI is an enabler, but the real value comes from how our understanding of the home actually operates, our models, our data, our algorithms. That's what ultimately creates new value and differentiation. Let me walk you through a quick example. So I'm sure we've all experienced this, your HVAC system fails, your furnace, your air conditioner, it's always at the worst possible time, like 9:00 p.m. on a weekend. The industry is largely reactive. That's expensive for you. That's expensive for our Pros. What if there was some sort of check engine light for the home, something that could tell you a problem is happening before it actually fails. That's exactly what we're doing with Pro-IQ Predict. We're leveraging building science, machine learning and deep HVAC equipment experience to predict and notify when a piece of equipment is about to fail. The benefit is clear for homeowners, fewer surprises, fewer emergency repairs, a more reliable home. For Pros, it fundamentally shifts the model from reactive to proactive. They can schedule service in advance, arrive with the right parts and complete the job faster and more efficiently. When you step back, what we're building, it's more than a set of products or even a platform. It's a connected ecosystem that makes the home smarter over time, a truly cognitive home. By integrating the best-of-breed devices, connecting them through Redlink Plus and unifying everything on a single platform, we're able to turn how the home operates into real intelligence. And since we are delivering each layer of that system, that's something very difficult to replicate. We're creating a home that knows, anticipates, reacts. Building on over 100 years of innovation, our engineers around the world are solving hard problems, and they are doing it at speed. We don't just build products. We understand how homes actually work. That understanding becomes our data, our insight and ultimately, our advantage. We take this foundation and compound value over time, starting with great products, extending through connectivity and building towards intelligence. And that leads to where we're going. We're building a home that understands, anticipates and acts. And ultimately, this connected ecosystem, connectivity, platform, intelligence. It doesn't just add value. It creates a durable compounding advantage that's very difficult to replicate. So I'm going to close by sharing a little secret, product people, we can tend to be an obsessive bunch. Wherever we go, we like to see our products in the wild, whose smoke detectors on the ceiling whose door sensor is there. I'll be at dinner with my wife. She's talking to me, and I'm looking past her whose thermostats on the wall there. But here's the thing. After doing this for so many years, in many homes, I've realized you're never far from a Resideo product. And once you see it, you start to notice it everywhere. So when you go home tonight, look around, look at your walls, look at your ceilings, if you've got to look at your basement. Look for Honeywell Home, look for First Alert, look for Resideo. Chances are we're already there. And if you find one, there's a good chance our next speaker, Senior Vice President of Sales and Marketing, Scott Harkins has something to do with getting it there. With more than 30 years at the company, Scott has spent his career earning the trust of our professionals. And many of those relationships have grown into lasting friendships. Scott will take the stage after a short break. Thank you. [Break]

Ladies and gentlemen, please welcome to the stage Scott Harkins.

Welcome back. My name is Scott Harkins, and I lead Resideo's global sales and marketing organization. I am a 30-year veteran of this company having joined in 1995 as part of ADEMCO and through its evolution to Honeywell and then the Resideo spin-off in 2018. You can say I have had front row seats to our transformation. And that long tenure gives me a unique perspective on both our past and on our future, and it makes me somewhat of a company historian. Over that time, I've led sales and marketing organizations. I've managed the $700 million P&L and have helped build our connected home software organization. And across all of those roles in all of those years, I can say with conviction, I have never been more excited about our future than I am right now. And over the next few minutes, I hope to share that excitement with you. At Resideo, our mission has always been to serve the Pro. They are the professionals that serve the HVAC, security and electrical needs of homeowners and small business owners. They install, repair and monitor the systems that provide comfort and protection. Today, almost everything in your life is connected and monitored, your cars, your phones, your watches, everything, except most people's largest investment they ever make, the home. The home is managed by catastrophe. Water heaters fell by leaking. HVAC systems fell on the hottest and coldest days of the year, and security systems are of purchased after a critical event. The reality is home systems fail at the worst possible times and that's when our Pros show up. That's when the Pro becomes the hero of the home. It's the Pro who ultimately delivers that sense of comfort and protection, that feeling, that peace of mind that turns a house into a home. And when the Pro is engaged, that's when Resideo wins. And we take our mission very seriously. We understand our role. We must help them win more business, be more cost efficient and ensure that our products are available when they're needed. Our connection of this community is unmatched with more than 100,000 Pros globally in millions of homes weekly, selling and installing residual solutions. For decades, we've been their trusted partner, supporting them with reliable Pro-first solutions and investing $10 million a year in training and education. It's their expertise and our solutions that gives them confidence that they can overcome any challenge. And over time, this has built a deep trust. In today's world, it's unusual for someone to spend their entire career with one company. And when people ask me why I have, the answer is simple. It's our customers. They inspire me with their focus on their employees and their customers and within their communities. Today, you'll hear about technology and challenges -- channels and innovation and supply chains. And all of that is obviously important, but it's our customer relationships, our partnerships and our friendships that are a major differentiator in the market. I believe that these relationships are sacred. And I'm grateful that some of our customers have joined us here today, our friends. It's by serving these pros that we will win. In our markets, the Pro is the channel and winning the pro means winning the market and delivering long-term growth. Our brand is trusted by Pros worldwide who choose what gets installed, and that trust drives our performance. As Tom said earlier, we've been innovating for a very long time. We've launched our first thermostat in 1885, our first security solution in 1929 and our first smoke detector in 1964. These brands Honeywell Home First Alert and BRK represent quality, reliability and performance, attributes that matter to the Pro when failure is not an option. And they resonate not only with Pros, but also with homeowners, helping Pros win the home and reinforcing their credibility with consumers. This brand equity was built over decades by working alongside our customers, understanding their challenges and delivering solutions that solve real-world everyday problems. And we continue to strengthen our brand equity today through innovation. A great example is innovation that we brought to a simple thermostat wall plate. Our UWP Wall Plate makes every thermostat installation exactly the same. This innovation takes time out of every install, it reduces installation errors and it makes future upgrades fast and friction-free. Professional contractors have responded by installing over 30 million units. Think about that 30 million units. That is an overwhelming response from the HVAC community. That is how we build our brand, not just through awareness, but through performance that drives productivity and profitability for the Pro. Every week, I receive articles on fires and burglaries and carbon monoxide poisonings that happen around the world and have real impact on people's families, and they're completely avoidable. I am proud to be associated with these brands and the pros that install them, all in an effort to help people and protect homes. In our markets, trust isn't built through marketing. It's built through performance in the field. And after 30 years, I can tell you, this level of trust and brand equity is incredibly difficult to duplicate. It's the kind of trust that money can't buy. Our channel strategy gives us unmatched access to those Pros and it ensures we capture demand wherever and whenever it occurs. We serve the Pro through 5 channels: security, HVAC, electrical, retail and OEM. This makes us unique in our markets and allows us to participate in virtually every system in the home. And each of these channels is served by a network of distributors that was built over decades. And today, that network spans more than 30,000 locations. In fact, in the U.S., over 90% of our contractors are within 15 miles of one of our distribution partners and therefore, within 15 miles of one of our products, 15 miles. That proximity matters. To our customers, the job can't wait. If the product isn't available, the sale could be lost. We complement that network with products in more than 7,500 retail locations, serving consumers and Pros who choose that channel and a strong OEM channel that supplies leading manufacturers that rely on Resideo's technology to create value for their own solutions. Together, this multichannel approach ensures that regardless of how the Pro chooses to buy, we are present and positioned to win. The scale of this distribution network also unlocks a platform, a platform to launch new products at speed and at scale. This means we can bring new innovations across entire regions, maximizing our Pro engagement and launch in just days. In fact, last year, working with our HVAC distributors in the U.S., we launched a new indoor air quality product, a dehumidifier, and the results speak for themselves. We have delivered exponential growth with clear gains in the indoor air quality category. And in Europe, where our water solutions are the backbone of our portfolio, we worked with our distribution partners to launch the industry's first lead-free water filter. And once again, the results were amazing. It delivered immediate incremental growth. That's the power of our distribution network. That scale, coupled with a level of proximity and channel breadth is a deep and durable moat, and it is structurally difficult to replace and a key reason why no competitor has. Over the past 5 years, we've delivered consistent baseline of growth across a wide range of market conditions. That consistency is not accidental. It's the result of a deliberate and repeatable growth strategy built on 3 strategic pillars: everyday growth drivers, strategic expansion and macro trends. These pillars create a balanced growth model, combining growth, expansion and tailwinds. We have a proven growth engine and a clear path to accelerate it, and I'll go a little bit deeper into each of these categories. Our first pillar is compelling everyday growth drivers. This is the core engine that drives our business every single day. It's the growth we generate driven by execution and not dependent on macro trends. This everyday effort has 3 primary levers: First, expanding wallet share. Our portfolio spans multiple categories, and it creates natural upsell and cross-sell opportunities. So by introducing more of our solutions to our customers, we can increase the share of each Pro interaction. Second, competitive conversions. We operate in competitive markets, and we've developed a disciplined approach to competitive conversions. Our new product innovations lead those efforts to deliver and win new customers and drive incremental growth above our baseline. And finally, demand generation. We have built a world-class demand generation capability focused on influencing end markets, not just the Pro. We target segments like residential new construction, property management and insurance markets, where decisions are made upstream. These customers specify our solutions, which are then installed by our Pros, creating pull-through demand across our channels. A great example of this are our efforts in residential new construction. In just 4 years, we have executed dozens of agreements with builders, including all 25 top U.S. builders. Those agreements cover more than 60% of all new homes built. And over that same period, we've doubled. We have doubled our content per home to roughly $400. And the highest content per home is $800. We're not just participating in demand, we're helping create it. This is a powerful growth engine. And even in a down market, we're growing our position, setting up for an acceleration when the cycle returns. Importantly, these 3 growth drivers are repeatable and within our control. This is the growth that happens every day, job by job, customer by customer, and it will remain the foundation of our long-term growth strategy. Our second pillar is strategic expansion. This is how we build on our core and drive incremental growth above our baseline. We do this by extending our capabilities into adjacencies where we have a clear right to win. Two simple examples. First, we're already a leader in the U.S. market with our First Alert and BRK brands, but we have yet to enter the European market. That is a $2.9 billion segment with requirements very similar to the U.S., making it a highly attractive adjacency. And just 3 weeks ago, we launched a new family of smoke detectors in the U.S. It's a new technology with a sleek design. It meets the latest standards and regulations and it provides an enhanced consumer experience. As Scott Ziffra said, they were intentionally designed to be a global platform. And because they are a global platform, these products will be the beachhead for our expansion into the EMEA Life Safety segment where even small gains will deliver meaningful growth. The second example is, again, demand generation, where we intend to expand our efforts into the small and medium business segment in 2027. That timing is intentional. It aligns with the ongoing rollout of our FORTIQ software platform and with an all-new security hardware platform. We'll focus on multi-location small business owners, where one customer win represents a high-volume deployment of Resideo products and meaningful lead generation for our customers. In both examples, we're building on strengths we already have. We're not just entering new segments. We're extending our proven capabilities. We have existing customers, existing channels to market and a very real right to play and win. And as I said, strategic expansion will drive incremental growth above our baseline while strengthening our ecosystem and creating long-term demand for our Pro customers. Our final pillar are macro trends. These are the powerful forces that increase demand for our solutions and ultimately amplify our growth. There are 3 primary trends that impact our industries. First is housing. I've already talked about it. We have dozens of agreements in place, nearly $400 in content per home, and we are well positioned with builders and the Pros who serve them. When the housing market recovers, we are ready to capture and capitalize on that demand across our markets. Second, our equipment replacement cycles. This is one of the most important drivers in our industries. HVAC systems typically have a lifespan of 12 to 15 years. And our life safety products, smoke detectors and CO detectors typically follow a 10-year replacement cycle. What's important is where we are in those cycles today. HVAC installs began to recover again in 2014 after the housing crisis and have consistently grown 9 million to 14 million new installs annually ever since. And those older units are just entering their natural replacement cycle. The 10-year battery smoke detectors that really started to gain traction for us in 2014 as well. And today, we continue to sell millions of units annually, fueling a long-term replacement tailwind. We have entered a sustained replacement cycle in both the HVAC and Life Safety segment, not a short-term spike, but a peak and plateau cycle that will last well into the 2030s. The final macro is building science. Both Scott and Tom talked about how buildings are being built more tightly and more energy efficiently. And that drives the need for integrated controls and monitoring and safety solutions. This will create a higher content per home for our solutions with IAQ, zoning, safety and security solutions. Importantly, our baseline growth does not depend on any of those trends. But as they materialize, they become a powerful accelerant to drive incremental growth on top of a fantastic baseline. And then software. Our software is a value multiplier. Our software ties it all together. It's a layer on top of our hardware that unleashes and maximizes value for our Pros. I have been involved with the smart home since the 1990s. And over that time, I've seen many companies make the same mistake. They think that the power of the smart home is in the consumer app. And of course, the consumer experience is critical. In fact, our app is rated at 4.8 stars on the Apple Store, one of the highest in the space. But the real value, the true value of the smart home is what the software does for the Pro and by extension, the consumer. I have had thousands, probably tens of thousands of conversations with customers, and I ask them the same question every single time. What are the biggest challenges you face? And their answers are amazingly consistent. Labor, leads and loyalty. Labor, our Pros are facing a significant labor shortage. 25% of all technicians are nearing retirement, and there will be 2 million open positions by 2030. Leads, online customer acquisition costs have never been higher, and they keep rising. This makes it harder, especially for smaller companies to compete for new customers. And loyalty, long-term customer relationships are increasingly difficult to maintain in a world where a customer can be lost to an online search, crippling the lifetime value of that client. Our software platform, FORTIQ and specifically the ProIQ services are designed to directly address these challenges. Our technician app improves labor productivity. It reduces installation errors, minimizes truck rolls and helps upskill new technicians, allowing Pros to do more with fewer resources. We embed the Pros brand directly into our consumer app, where every interaction becomes a brand impression between that homeowner and that Pro. It reinforces their relationship, creating a persistent connection that consistently associates comfort and protection with that Pros brand in ways that a billboard or truck wrap never can. And with predictive analytics that Scott Z spoke about, ProIQ enables a transformational shift from reactive services to proactive engagement, identifying issues before they become catastrophes and creating leads within a Pro's existing customer base. That means fewer emergency calls, more efficient service calls and better outcomes for the Pro and more importantly, for the homeowner. Instead of a onetime transaction, software enables an ongoing 24/7 relationship between the Pro and the homeowner. It is a fundamentally better model, and it has powerful implications. It drives higher retention rates, increased lifetime value and expanded opportunities to deliver recurring revenue. The smart home won't be one in the app. It will be one with the Pro. And in doing so, it will unlock a new level of growth for Resideo. In closing, we have built long-term trusted relationships with over 100,000 Pros globally. Our focus on the Pro is our competitive advantage. It's the foundation of our competitive moat. Our products are accessible through 30,000 outlets, giving us unmatched reach into markets. And our brands are trusted by Pros and consumers. Our Pro-first approach drives innovation that delivers value where it matters. And our sales strategies consistently deliver growth without the benefit of macro tailwinds and it will accelerate when they return. Resideo is a long-term growth story. It's built on the Pro, it's scaled globally and is positioned to compound value for both our customers and our investors. In recent years, I've become a fan of the story of Sisyphus from Greek mythology. He was condemned to push a rock up a hill only to have it roll back down over and over and over again. At first glance, it seems like a fetal existence. But what resonated with me is the idea that he found meaning in the effort in showing up every day and doing the work. And in many ways, that's what we do. Every day, every month, every quarter, we start over focused on driving growth, serving our customers and executing our strategy. But here's the difference. I don't push that rock alone. The real strength of Resideo is our people. The teams that show up every day to serve our customers to innovate and to execute across every part of the business. People like our engineers that are building an innovation machine that keeps raising the bar. And many others who aren't here today because they're out doing the work, they're pushing the rock and delivering for our customers in real time. In my 30 years with this company, this is the strongest team I've had the privilege to work with. They're smart, driven, competitive and deeply committed to winning. And that's ultimately what gives me the greatest confidence in our future. Our next speaker is someone who isn't afraid to put his shoulder into the back of the rock and push. He ensures that our products are built available and delivered with the quality and reliability that our customers expect. After a brief video, please welcome from the city of Boston, Massachusetts; our Senior Vice President of Integrated Supply Chain, Patrick Murray. Thank you. [Presentation]

Good afternoon. Scott Harkins just highlighted the tremendous work of our sales team, and I couldn't agree more. I'd like to thank Scott's team makes the first sale while every following sale is made by the operations team by delivering high-quality products on time every time. I'm Pat Murray, and I lead the integrated supply chain and IT teams at Resideo. For the first 25 years in my career, supply chains were boring. No one really cared how products were built and delivered. To quote my wife, today, supply chains are sexy. Since COVID, supply chains have been in the global spotlight from tariffs and geopolitical tensions to disruptions in critical trade routes and constraints and component supply. Volatility is the new normal. Fortunately, we have an exceptional team who consistently navigates these challenges and delivers results. I joined Resideo in late 2018, bringing over 30 years of experience in operations. I've been fortunate to work at world-class companies such as Bose Corporation, Danaher, Motorola Solutions and Zebra Technologies. These experiences have enabled me to develop deep expertise across multiple disciplines, including advanced manufacturing, lean principles, product distribution and IT systems. As a hands-on operations executive, I have a proven track record of leading large-scale transformations across complex international organizations. And I thrive on the daily challenges. I specialize in driving supply chain innovation, building high-performing teams who deliver measurable results, including quality and service level improvements and unlocking hundreds of millions of dollars in savings. As a former college athlete, I bring a competitive fire and a team-first mentality focused on coaching and mentoring great people and winning together. What I love most about my job is seeing the professional and personal growth of the people with whom I work. My personal leadership philosophy is rooted in not just motivating people, but inspiring them. When I joined Resideo, our operations and systems were fragmented, making them difficult and complex to manage. Today, we operate as one integrated team, delivering industry-leading quality, lead time and customer service. A clear example of this is our ERP systems. In 2019, Resideo operated across 7 separate ERP systems. Today, our business runs on a single ERP platform, providing 1 data source of truth across the globe. Our ability to consistently deliver exceptional service is built on 3 core principles. Vertical integration, regional manufacturing and the use of technology as a competitive advantage. This includes both factory automation and digital systems. Our manufacturing strategy has strengthened product quality, improved supply chain resiliency and increased our speed of execution. In fact, everything we have done has been centered on 1 thing, speed. Speed and manufacturing, speed in the flow of information and speed in decision-making. These strengths enable us to deliver the industry-leading performance that defines Resideo today. This focus has created greater value for our customers while driving stronger financial performance for shareholders. Resideo has significant operational scale. In our 11 factories, we have a workforce of approximately 8,000 strong, producing over 75 million units per year. Our factories are strategically located as part of the regional manufacturing philosophy. Regional manufacturing provides a competitive advantage through faster customer response, lower landed costs and greater resilience to geopolitical instability, including ever-changing trade policies, and supply disruptions. Continuous evolution remains a key focus. We are not stuck in the past. Since 2018, we have increased factory utilization and improved network efficiency by consolidating operations and reducing our manufacturing footprint by 4 facilities. We have also recently announced 2 additional site consolidations. We will continue to unlock further productivity and cost advantages across our manufacturing network. Deliver speed and quality, we need flexibility. This means being able to change quickly to stay ahead of shifting market conditions, and this is inherent in not only our factories but also our strategic suppliers. Over the years, we have streamlined our supply base and in doing so, have improved executive relationships and purchasing leverage. Recent supply chain disruptions have underscored the value of these relationships which provide greater flexibility, priority access and more resilience than a manufacturing model solely reliant on third-party contract manufacturers. Our executive level relationships with suppliers, including memory and semiconductor companies helps to ensure supply continuity and provide greater visibility into market conditions. This allows us to respond quickly to supply challenges and changing demand. The additional leverage improves cost management and strengthens our negotiating position. In short, in times of supply constraints, relationships matter. We drive operational flexibility in other ways as well. Our localized supply chains to reduce inventory in transit, enabling faster response to supply disruptions. We have worked closely with our engineering friends to create product platforms, which enable improved factory efficiency. As an example, in 2018, we started with over 110 different product platforms, our goal today is to have 1 or 2 product platforms per product family. Our vertical integration allows manufacturing to -- the ability to deliver speed, quality and operational flexibility at scale. Vertical integration strengthens our supply chain performance by reducing handoffs, eliminate waiting cues and minimizing transportation between suppliers. By avoiding unnecessary air, trucking and ocean freight, we lower cost, shorten lead times and improve resilience. Gartner recently recognized Resideo as having a mature supply chain that is well ahead of our peer group with top quartile grades in manufacturing expertise, logistics, material planning and sourcing and procurement. That's external validation of the transformation we have been building for years. At heart, I'm an engineer. That's why our journey has always been grounded in utilizing technology. We invested heavily in advanced digital technologies, automation and Industry 5.0 principles to build an agile, efficient and sustainable manufacturing network supported by world-class systems and processes. We have a robust continuous improvement program, driving improvements in productivity, quality and operational performance. And most importantly, every one of our investments and process improvements has been designed with the customer in mind. We deliver superior customer results by creating long-term value for shareholders. Customer satisfaction begins with product quality and outstanding service. Professionals and distributors build their business around reliable, quality products, that need to be right the first time into every time. We have built our manufacturing operation to deliver this exact customer experience. Our investment in technology, digital capabilities and AI have helped us achieve some of the highest service levels in the industry. Our ability to anticipate customer needs and adapt to market changes has earned us the trust of our customers and channel partners, driving long-term loyalty and sustained growth. At Resideo, quality is not just a catch phrase. With our promise to deliver comfort and protection, it can quite literally be a matter of life and death. And that's an awesome responsibility that we take very seriously from product development through delivery. We've delivered consistent year-over-year quality improvements through our enhanced supplier quality management program by controlling almost every aspect of production, utilizing tools such as statistical process control and automated in-line inspection systems, we consistently achieve high levels of quality and operational excellence. Our deep integration with our engineering teams has allowed us to optimize product designs. This includes design for manufacturability and design for automation principles from the earliest stages of development to further drive quality and operational efficiencies. This collaboration accelerates product development cycles by providing immediate feedback on design decision and helps to allow rapid product development. As a result, our new products consistently achieve production yields that matter in many cases, exceed those of our most mature products. At Resideo, we use a metric called cost of poor quality. COPQ is a powerful metric because it quantifies the financial impact of quality problems. Not just warranty costs, but rather measure the totality of waste and inefficiency. These improvements that I've mentioned have resulted in a 65% improvement in cost of poor quality in the last 3 years. Let me say that again. These improvements have resulted in a 65% improvement in the cost of poor quality in the last 3 years that is truly a remarkable achievement. The combination of faster development, higher production yields and improved product quality ultimately translates into lower warranty costs, but more importantly, a better customer experience. As an avid Boston Red Sox fan, I've spent a lot of time in my beloved Fenway Park. To use a baseball analogy, we are only in the middle innings. The game continues to be to unlock structural operational advantages and we are playing to win. We have a significant competitive advantage to the speed at which we move and leverage data. While virtually all manufacturing companies use similar assembly equipment and injection molding machines, not every company can move data at the speed of Resideo. Today, process and systems are connected to a unified digital ecosystem. We have built world-class capabilities that create a seamless digital connection from customers to suppliers, to factories. This end-to-end connectivity provides real-time inventory visibility enable us to deliver exceptional customer service while simultaneously reducing overall inventory levels. Our integrated business planning process provides more accurate forecasting, rapid scenario analysis and synchronized decision-making across the organization. Simply put, we are a data-driven company. We generate, analyze and act on data every day. To continuously optimize our operations, improve responsiveness and drive superior supply chain performance. One area of superior supply chain performance is our inventory management. The use of technology, combined with a disciplined lean culture, has contributed to a steady and deliberate improvement in material management and inventory turns. Benchmarked against other top-rated industrial supply chains, our inventory turns are at the same level as the Gartner top 25 supply chains in 2025. Our inventory management is a proven capability which we have purposely and methodically improved. We have taken over $76 million out of our working inventory in the last 3 years, and we will continue on this path. We have also reduced excess and obsolete cost through the end-to-end digital ecosystem that I mentioned. It enables a rapid flow of data across our supply chain to improve forecast accuracy, inventory optimization and decision-making speed throughout the organization. Speed and quality need automation. Our focus on technology-driven improvements include significant investments in automation, we have deployed more than 300 purpose-built cobots in the last 5 years, and we have plans to deploy another 300 cobots in the next 5 years. When I say we control end-to-end manufacturing, I mean it. Unlike most companies, we employ our own in-house custom automation team. These 39 automation engineers design, assemble and deploy our own proprietary systems. We can develop cobots in half the time and at half the cost for us going to an outsourcing third-party automation company. Developing our own cobots is again all about speed, speed of deployment. And these cobots will continue to yield savings for years and years to come. The benefits are already being realized. Labor cost reductions, more consistent production times, yield improvement, reduced scrap, reduced rework and an ability to scale production without any incremental cost increases. As I mentioned, we are only in the middle innings. We have an active pipeline of projects to enhance our manufacturing capabilities and to drive further cost reductions. The automation investments today will continue to expand future margins on a structural basis. Speed, quality and efficiency gains are nothing, if not executed responsibly. With our safety and sustainability programs, we have accomplished much, but we're not done. A safe working environment breeds employee loyalty and prime the workforce and Resideo's safety record exceeds all industry benchmarks. Our safety program is perhaps the thing I am most proud of. There is nothing more important than providing a safe work environment for our employees. Furthermore, inherent in our mission to deliver comfort and protection is to do so sustainably in a way that helps our people and the planet. Globally, we have installed over 17,000 solar panels with a savings of over 3,600 metric tons of CO2. Our high-efficiency HVAC initiative in Mexico has resulted in a reduction of over 2 million gallons of water. These examples are a few of many that demonstrate our commitment to our long-term sustainability and a commitment to our children's future. The results of our efforts include the stats you see on the slide, but also complement our overall manufacturing strategy by shortening supply chains, resulting in fewer transportation miles and lower emissions. We have high standards, and we're striving to be better because we believe it is the right thing to do. The operations teams are well positioned to help accelerate our growth. Our manufacturing footprint is a strategic asset being actively improved. Our supply chain is a competitive advantage that drives speed, quality and the customer experience, and this shows up in margin and value creation. As a vertically integrated manufacturer, our end-to-end control gives a systemic advantage, we will continue to optimize. We are building an operation function that gets better every year. Our efficiency gains are a structural capability, not just a cost-cutting exercise. It's been a long time since I was a competitive athlete, but it's something I've never forgotten. Ruthlessly focused on the fundamentals, work to improve every single day and to lean on my teammates to win big. And this is a team that works together and wins together. And let me hand it over to Tom.

Okay. All right. So, the first thing I want to talk about is why I'm up here. So I will be covering the financial section today because we are currently in the final stages of a comprehensive search for our new Chief Financial Officer. We've evaluated a number of very outstanding candidates who have gone through a rigorous process and as I mentioned, we are at the final stages of that. And we feel highly confident that we'll be able to choose a Chief Financial Officer who will guide us to that next phase through that next phase of growth. Okay? All right. So let's go. Great. We're a little off on this, but that's fine. So one of the main things that's on this chart is, I want to discuss basically the change in the business model. As compared to as reported where we had the $7.5 billion of revenue, this is the -- what Resideo would look like as a stand-alone business based on fiscal year 2025 results, post the spin off the ADI business. Obviously, the revenue is smaller than it was $2.9 billion. That includes what you saw as segment reported revenue as well as about $175 million of revenue that was intercompany sales, us selling to ADI previously. So that's where that number comes from. And I should mention, by the way, I think Chris mentioned that all of the presentations here will be available. And in that, there is a reconciliation section that we're not going to be covering on the screen but you will have access to it. So let's go back though to that, the $2.7 billion includes -- added $175 million of intercompany sales to the $2.9 billion. Now the next line, of course, is the gross profit. There is a fundamental difference between the 2 businesses we currently have. There is the distribution business versus the product business. And the product business has higher gross profitability. And in this case, can you please go back whoever has a slide. I want to go through all these points. So the profitability of the product business currently generating 39.5%. And we're going to talk about how we will be improving that in the future. And we'll be talking about how we'll be improving several of these metrics and performances. The next piece is our stand-alone adjusted EBITDA. And when you compare that to the as reported $833 million, as a stand-alone entity, we'll be generating 70% of that same amount of adjusted EBITDA, and that operating margin will be 20.3%. And again, we'll be talking about how we'll be improving that. So the next line is stand-alone adjusted EBITDA less adjusted CapEx. And everyone is looking at me like, what? That's a proxy for free cash flow, okay? So given because of the GAAP rules, we're going to be speaking and using this statistic, but I think cash flow, okay? So as a stand-alone business, we will be generating -- or had been stand-alone at the end of 2025, we would have generated $519 million of cash flow, okay? So when you look at that relative to the adjusted EBITDA amount of $581 million, you can quickly do the math. There's $62 million of CapEx. We'll be talking about that in a second. But most importantly, is the fact that 89.3% or approximately 90% cash generation from our business. We are a strong cash flow generating business. Okay. All right. Now we can go to the next slide. All right. So this slide is important because I want to explain to you some of the reported numbers. And today, we've been talking about comfort and protection. In fact, we wanted to make sure people understand I've heard comments about it's a complex business. It's really we wanted to simplify it down. What is the core of what we're doing. It's come from protection. And I know we've reported these segments before, but -- so how do these relate to comfort and protection. Very simply, air and water, 41%, that's comfort, okay? So when you hear us talking about comfort, air and water, that's comfort. Security and safety, 33%, that's protection. Okay? So there's your comfort, your protection. And then we have the OEM businesses, which we have 2 parts to. We have combustion. So we have talked about that. Sometimes you'll hear us slip into the word global climate solutions or energy, that is our OEM combustion business. And then the next one is our OEM security business. This is the sale of products that we design, manufacture and we sell to third parties for them to brand and sell under their name. So combined, our OEM business is about 26%. In the middle is our channel. The distribution channel that you see here, this is the supply house. This is part of every contractors daily routine. They go to the supply house, they pick up the materials they need. You'll hear more about it when ADI talks. They're in this business. They support the pro every day with the needs that they want for that job site, and that's obviously our largest channel, 60%. The next one is retail. And what retail was primarily represented by is the big box home improvement stores. And to give you the reason why is if we want to support the Pro, let's take Home Depot, for example, 50% of their sales go to the professional. So we need to be where the professional is got to pick up their products. And if it's going to be a casual drive by a Home Depot and [indiscernible] so be it. We're going to be there for them. And so that's why we're in retail. And then we have, again, the OEM business is being broken out. And that last column stack geography. This speaks to the opportunity you've been hearing us talk about the opportunity we have for taking the solutions that we have in, say, the North American market and expanding it into the international market. There's no reason for us to be lopsided like this. We want to drive this, so you see pretty much balanced between these. But this is where it stands today. Now we could go to the next slide, please. Okay. One of the things here is, first, this is going to be a summary slide. So I'll be talking about each of these points in a minute. The first one, though, is the revenue. So we have the target of a 4% to 5% compounded growth rate by 2030. And you say, okay, well, show me what has happened in the last 3 years, and you see a 1.5% growth rate. Behind that, something else, when I got to the company about 2.5 years ago, and we started trying to reinvigorate our product development there's something we call cavitation or I call cavitation. That means you're spinning the wheel a little bit or spinning the prop and you're not quite getting that forward trajectory, and you have the development cycle of the products. So '23 to '24, the actual growth rate was 0. '24 to '25, gross rate was 3%. That progress gives us conviction, and we know how many products we've got coming out this year. Scott mentioned some of we have more that we didn't cover today. That's why we have conviction about getting to that 4% to 5% growth rate. The adjusted gross margin, again, in a few -- in the next slides, we're going to talk about how we will be achieving that 400 basis points of gross margin and the 400 basis points of adjusted EBITDA. So let's go to those, please. All right. So when we look at revenue and the 4% to 5% compounded growth, the first piece is the 1% is the market growth. Above that is the pricing. And there's 2 pieces to the pricing. There is -- and this is above the market growth. So this is the piece where we're delivering more value. And as we've talked about, that's something that we're continuously thinking about how do we create more value for the Pro as well as for the homeowner. And by doing that, we expect to be compensated for the value we create. In addition, there is also trying to get the customer and creating so much value at the premium that they move up into the higher products, the greater capability products, the more sophisticated products, we believe that, that mix will be part of it. And then you heard Scott do a really good job talking about new products and how we're going to be growing. And he said it, first is wallet share, right? So that's the first one, grow with existing customers. And then the next one, competitive conversions. This means our products win against the competition. We feel good about that. And then the last is the strategic expansion opportunities. We've been talking about that. The markets that we think we have a right to play in and win. And with our domain expertise, we have confidence of that. You add those together, you get the 4% to 5%. That's the path we're on. Let's go to the next slide. So we're going to be talking about gross margin improvement. How are we going to achieve that gross margin improvement? I think one of the important things, just as I mentioned about the revenue growth, how have we been doing in the last 2.5 years. The past 12 consecutive quarters, we have improved gross profitability every quarter. We're on a path to continue to improve the efficiency that we deliver the value we create. So you're going to hear that every day. I know that probably the folks in the company are just all the time, drone it in. We have to continually focus on our efficiency. We're continuously looking at this. We want to create more value, and we want to deliver it more efficiently. That's what this shows. But let's go to the chart that says the stack of exactly how we're going to get to it. There we go. First is the product mix. We are continually reviewing the products that we offer, making sure that we're offering the right products if a product is not receiving the value, there's something wrong in the product. We may have to change that product to review it. There will be product areas we won't participate. There are some of the segments that we currently participate today that if we are not able to improve, we will be exiting. That's a continuous process. It's not a onetime thing. The next is the pricing and the value delivery this is channel efficiency. And I'm going to say that part of that is being compensated correctly for the value we create. And finally, it's the ability to efficiently create that value, just as we have been speaking about, that is a major part of what you heard Pat talk about. Those actions that we're taking, this is what it's about, creating the value, delivering inefficiently. That drives margin. That drives profitability. So that's how we're going to get the 4% to 43% to 45%. Let's go to the next slide, please. So adjusted EBITDA. The biggest driver for that, so we talked about increasing that 4%, approximately 4% from 20% to 23% to 25%. That's our target. That's our commitment for 2030. How are we going to do it? All right? The first thing is, of course, the gross margin. You're saying, well, there's your 4%. Behind that, though, we will be investing in additional R&D. We want to get into a virtuous cycle. So increasing the value we deliver, generating more profit but we're going to be investing part of that back into more R&D to accelerate that virtuous cycle, okay? So for every 2 points of margin expansion, we'll be adding 1 point to R&D investment. Now offsetting that is the operating leverage that we have in our models and our plans for increasing SG&A operating leverage. So they kind of net out. So it looks like it's just the gross profit going to the bottom line. But behind that is the idea, we will be investing in more R&D to the extent we achieve that improved gross margin, okay? And then we have the operating leverage that kind of works it. So that's how we're going to achieve the adjusted EBITDA margins. Let's go to the next slide. Okay. So we talked a little bit about the free cash flow. We invest about 2% each year in capital expenditures, and we have for several years. And there's going to be a little fluctuation, right, because some of these investments are large. You've heard about what we do in the production system and how we make investments to improve our efficiency. And about 40% of our capital expenditure relates to NPI. That's the tooling, the equipment and those parts that we need to bring new products to market. So that's a substantial portion of it. Beyond that is the things that you've heard us talking about investing to make the company more efficient. So we're investing in ourselves to improve the efficiency of the business. But after that, even after that capital expenditure, the cash flow generation. It's been running about 89%. Our commitment is to raise that in our target to 92% by 2030. So we want to do even better. And as much cash flow as we generate today, we know we can do better. So this is again our continuous improvement, but we are a very strong cash flow generating business. Okay. Let's go to the next slide, please. Okay. One of the importance here is the -- just the financial condition of the business as a stand-alone post-spin, we're going to have quite a bit of liquidity. We have a $500 million revolver that has no draw on it. We're going to have $150 million of cash. We have near investment-grade rating, but we are going to have a chunk of debt. 3.3x. We talked about the cash flow generation. Our first priority is to reduce our net leverage from 3.3x to 2.0x within 24 months. That's our top priority on the use of our cash. I think that's really kind of this slide. It's the most important thing. Let's go forward. So when we talk about our cash flow that we do generate a substantial amount, what's our priorities. Number one, we're going to deleverage, okay? Number two, the organic reinvestment. Now that's a business where we -- if we have opportunities, and those are almost always the best investment opportunities, we will look at them because you could do the calculations and you say, wait, your cash flow generation is so strong, you'd be able to take this down in just basically 15 months. But there will be -- if there should be opportunities to reinvest in the business, we will be looking at those and evaluating those. After that, we will be looking at this selectively at M&A primarily at businesses and almost specifically at the businesses that are the adjacencies where there is the opportunity to accelerate our participation in those markets. It will be a disciplined approach, and it comes after those other things, okay? And finally, we will be evaluating the best means of deploying and returning capital to shareholders in the future. Okay. Let's go forward. So Resideo is well positioned to drive the long-term value creation. We have the growth that we've talked about of 4% to 5%, driven by our new products, driven by our innovation and driven by the investment we're making. We have the profitability of the business, 20% today, driving to 23% to 25%. We know how to do it. It's creating more value and deliver it efficiently. We have the free cash flow of the business. We saw the numbers 90% going to 92%, a substantial cash flow generating business. And then the capital allocation, our commitment to reduce the amount of net leverage from 3.3X down to 2.0x. That's our focus here. Let's go forward. So I want to go back and call back to the summary of the key slides here. When we talked about the 3 things we wanted you to think about, as you heard it. One of the things -- the key point is the unique footprint in the home. No one else has that footprint, and that especially when you think about the context and how to go forward and what it means to connect the home. So there's a lot of pieces to the puzzle about connecting. And we could speak a lot more about this. But having that footprint is absolutely critical. That enables us to understand everything that could be going on in the home, and we want to expand that. So we create that cognitive home. The highly durable demand, the fact that we're providing solutions to the critical systems of the home. This is how the home functions and the fact that for 80% of it, it's the repair, remodel, maintenance upgrades. That's highly durable demand. And lastly, our strong competitive position. You've heard about our brands, our domain expertise, our customer relationships. Those are difficult to replicate. So at the start of today, I said I was hoping that you would -- we wanted to share actually why we thought you should be excited about the Resideo story. And hopefully, today, we've been able to do that to get you excited about our Resideo story. We're going to take a 5-minute break to provide a stage crew an opportunity to bring up some chairs and set us up. And when we return, we'll be opening up the audience, both those participating here as well as those virtually to ask us Q&A questions to be fielded by the members of the team. Thank you very much for participating today. [Break]

Okay. Thanks, everybody, for joining back again. We're going to start the Q&A session. The management team is on stage. And I'm going to start off with a couple of questions received online. We do have mic runners in the room. So people that are in the room, please feel free to raise your hand, ask a question. And when you ask your question, it'd be appreciated if you could introduce yourself to the team. Okay. So let me start off with a question directed to Tom. And Tom, maybe walk the audience through your philosophy as the CEO of Resideo. What are your top 3 priorities as a CEO?

Okay. Thanks for that. So you made a comment about being as a stand-alone company. And being a stand-alone company is not going to fundamentally change 2 of my 3. What we've been doing for the past couple of years, focusing on our customer and creating products and value and services that are innovative and create incremental value, that's number one. You probably picked up on that and like, well, yes, that was obvious. I've heard this all day. So yes, that's still one. Number two also doesn't change, which is the efficiency that we're going to be focused on continuously improving the efficiency of the business, okay? And that's not only supply chain, but that's in all of the operations and all of the functions. Now the third one -- the third priority is the use of our cash flow to deleverage the business down to 2x. So that's number three. So one, products and customers; two, the efficiency that we execute with; and three, deleveraging the business.

Great. Thanks for that response. Why don't we open up to the room. Erik, why don't -- Erik, why don't you start? Can we get a mic up to Erik, please? He's in the second row in the front, please.

Erik Woodring from Morgan Stanley. So Tom, just a very clear presentation. I know this is a long time coming, so just congrats on getting that behind you and really nice to get some details we haven't seen before. I'd love to ask, can you be a bit more specific or detailed on why this asset in the P&S business effectively is better positioned stand-alone than without ADI. I understand the opportunity to simplify and focus the story, but just as a business unit, what are the clearest benefits you get now as a stand-alone Resideo effectively?

What -- yes, I hear you. And I think that we spoke about how over the past 3 years, we've had a very independent life from ADI, very distinct businesses. And I know we were together part of Resideo. But the execution that we've been doing over the past 3 years is exactly what we will continue to be focused on doing. So I don't think it's going to change that. But hopefully, one of the things it does create is the opportunity to understand our business better. And I feel like we even kind of scratched the surface today. I would have loved to have gone even deeper, especially on some of the products and what some of these things mean that we had to basically condense down to a sentence or a few comments. And so when people understand, this is what we do. We're comfort and protection. We're in the sensing and controls of the critical systems in the home. And then how are we taking that forward, having our investors, our shareholders and basically even customers understand with clarity what that is, I think that's really important.

Do you have another?

Yes.

Yes, go for a quick follow-up.

Just maybe a combination of Scott and Tom. Just the connectivity opportunity seems kind of incremental and again, new details. Scott, can you maybe just help us understand exactly what's so different and unique -- and then just recurring revenue, like what -- how do you monetize that? Is there an opportunity there as we think down the line?

Okay. So this is one of the things where we talked about understanding a little deeper. I'm going to hand off to Scott in a second, so he'll go even further. So when we talk about connected, we have products -- and so many times, that's shorthand for WiFi devices that are connected. And we talk about Redlink Plus. What we're doing is every one of our devices, almost every one of our devices that's sensing will have Redlink Plus in it. So it doesn't have the overhead of something a WiFi connected device or the power usage. But that means all of our systems will be able to be aware of every other system and sensor in the entire home. That goes beyond just having a WiFi connection. That means if any of these systems, say, security wants to understand anything that is going on in the home to improve its contextual awareness, it is able to do so. It can subscribe to it, and we could have a bigger, longer technical description about that. So the idea now is that you have all of the awareness across the entire home and that contextual awareness, that's powerful. So now I've kind of gone beyond what connected means to us beyond just WiFi connected to products or smart products.

Yes. Thanks, Tom. Maybe I can add to the recurring revenue question that you had there. And today, that's really a foundation of security, intrusion monitoring and to an extent, video clip storage. But we think that's truly a foundation where we can build additional services on top of that. So once you're monitoring for protection from an intrusion standpoint, that could be leak detection, that could be more advanced video analytics, even Pro-IQ Predict that we talked about. So monitoring, maybe protection grow beyond kind of that security mindset and into the HVAC world. I was telling the team over the weekend that I was doing a run and looking at HVAC ads and hearing some HVAC commercials on the radio. And there's millions of dollars of spend that go into that for our professionals. And I'm in the industry. And I'll tell you, I can't remember one of those names that were mentioned because it's not important to me at that time. Some of the Pro services we're talking about that we showed in the video where we have in-app branding and on-device branding, that brings tremendous value to Pro's right when the customer interacts with that device or needs it. If your app says, "Hey, something is going wrong with your HVAC system, would you like to dial Tom Surran's HVAC company, that's tremendously valuable versus just kind of the low-impact advertising that the industry has today.

We'll go to Ian and then Keith.

Okay. It's Ian Zaffino from Oppenheimer. Paolo, I know you spent a lot of time talking about NPI. So I'm going to ask you something more about NPI. Maybe help us understand where the current portfolio is right now as far as how long has it been since you've had new products and maybe some categories you might want to highlight. I know you have kind of a new low-end thermostat that you've launched. I know there's a new security panel you launched. But kind of like where are we as far as the portfolio? And as you look to refresh the portfolio, is it more about refreshing something that's been very old? And how much more of it is looking at kind of where future markets are going?

Okay. Thank you for that, Ian. So you're right. when I got to the company 3 years ago, there had been an underinvestment in new products. And so part of the task at hand is to revitalize the existing product categories. And then part of it is obviously to create new product categories and new value propositions. Where do we stand? And so you brought up the question or the statement about the thermostats. When we got there, we said, okay, in the thermostat market, what's important for us is to control the corners. We don't want to be eaten away by companies entering the market, competing on low price point. And we don't want to have people that have superior technology to us that are coming down, trickling that technology. In order to control that cornerstone of our business, we need to control those corners. So then you saw the Focus Pro come out at the entry point. We brought out the ElitePRO at the premium price point. And the ElitePRO, our goal, and I think we have done it, but we still can do even more is create the best thermostat that exists in the market. That's what the ElitePRO. And so I probably got in trouble with the lawyers. But the fact of the matter is we still have to do the mid-tier that's being worked. We have products that we want to create that create certain advantages for us that will be new categories in Europe and certain ability to handle basically zoning a little better and for Hydronic's integration as well as various hybrid systems, we want to create that. If you look at, say, the products and security, one of the important things is when we talk about FORTIQ, it's across everything, right? So the platform that we talked about just a second ago, all the products communicating, all of them connecting, having awareness of everything, having that ready and having Redlink, which we had an old Redlink, Redlink Plus is our next generation. It's a huge step in terms of its capability. Getting all of that infrastructure ready, that foundation, that ecosystem ready. Now for security, we're about to, this summer release a whole new set of products that basically build on that. The security products go on to the FORTIQ platform. We started incorporating Redlink Plus, and we started doing that already in some of the products. So having and built on that platform and then introducing security on top of that, when we brought out the new H3 panel, which I think you're referring to, it was replacing a product that was created in 1995. okay? So now we basically have a new all-in-one panel that we'll be bringing to market. We have a new hybrid panel that we're going to be bringing out, all built on FORTIQ. So we're revitalizing that. Safety, Scott made a reference to 3 weeks ago, we introduced it's not in the stores yet. Well, it's really close. They should be stocking the shelves pretty quickly here. But that is a new 10th edition smoke detector, which is the global platform. You happen to have a picture right behind you there of that safety product, which we're very excited about. Scott, do you want to add anything about that?

Yes. I just -- maybe I'll just be very, very direct. So 2.5 years, Tom?

Yes.

So I think that was like a December, January time line.

This December, yes.

And by October, we launched a brand-new family of entry-level thermostats, Focus Pro. It's been accepted exceptionally well in the market. We followed that up within, I think, under 12 months, pretty close with the premium product. We've launched a brand-new and it's out in the hallway here, innovative dehumidifier that's very cool and getting really, frankly, tremendous traction out in the marketplace. We have humidifiers coming. We have flipped like the core piece of our business in the HVAC community pretty aggressively. We've turned over the safety portfolio, I think, twice now, right? We had a regulatory change that happened, and now we've changed it again into our brand-new platform that I mentioned earlier. And then something that gets overlooked because it's not a product is this FORTIQ platform, right? So FORTIQ has been launched in the market. I mean I think we'll probably have 2 million connected customers on it. We're somewhere in that neighborhood. And -- but it's not a thing that we sell, so we overlook it, but like it's foundational to releasing a whole bunch of other buckets for our engineering leader here for a bunch of other NPI that's coming at speed. And then I think the place where a lot of our focus is right now is security. And while we did launch VISTA H3, FORTIQ will be launched into the security space here very soon. Probably the security space will be the bulk of my NPI focus for the next couple of quarters. So we're really excited about that.

And then if I could just focus on price and volume. I know you gave some forward-looking guidance on that. Again, with the new product introductions, I mean, I would have thought that you would see maybe some upside to the pricing there. And maybe if we just go back a little bit, I would have thought historically or at least over the past several years, you've seen significantly better pricing than kind of what's in the forward guidance. And maybe that's just a function of volumes being depressed. And maybe to kind of add to that question is how much are volumes depressed in the business? And then why wouldn't pricing be higher than kind of your forward guidance?

Okay. I'm going to let -- I feel like I should have you answer this because we have a different metric of the measure. But I think the important thing is you will see improvement in volume. That's our expectation. Our share capture would represent volume capture. And I think that's what we're committing to in our numbers. Pricing is important. We've had a lot of pricing activities because we've had to adjust for inflationary costs that have come in with tariffs and various component costs that have gone up. So we've been adjusting to that. But long-term, volume will be a driver of our revenue.

Keith Hughes, Truist. Kind of building on the last question on pricing as you have in the bridge is 1% to 1.25%. Given some of the innovation you have brought and are bringing based on the presentation, I'm just a little surprised that number is not higher, is there anything specific long-term where you're hitting resistance in pricing? Or any detail you can give on that would be great.

I think that was for Scott. I think you asked for Scott?

Whoever has the answer.

Pricing resistance. Are we seeing pricing resistance?

Yes. No, we've consistently -- whether it's cost driven or just our annual price increases, we've consistently been able to get price in the market. Our new products have all come to market at a premium, including these brand-new smoke detectors that we've just talked about. So we've traditionally for -- gosh, for a long time, I've been here a little while, been able to capture price in the market. And again, sometimes that's driven by cost challenges like have happened in the past few years with COVID and supply challenges. If you look at the ElitePRO, which we talked about it was in the video, there's a few different models within that family. We're always debating internally which one would be most successful in the marketplace. And the X12, which has -- I don't know what the external name is, the internal name, X12, has the video integration that was in the video, and that's performed very well in the marketplace. One of the first thermostats that has the multi-vendor doorbell integration.

Why don't we bring it to Aaron in the front and then Dan in the third row.

Great. Aaron Kimson Aaron from Citizens. When we think about the pace of development for FORTIQ, how much more are you getting out of $1 of software development CapEx today with the improvements of the Frontier labs? And are lower barriers to software development ultimately a big driver of NPI time going from about 2 years to about 1-year like you were talking about, Scott?

Yes. I missed the question. I want to make sure I'm still -- so let's talk about AI's impact to software development first. Yes, it's -- I would say we're still in the early testing stages as I think a lot of companies are. I would not say that the gains you saw here were as a result of AI. It's really a couple more fundamental areas, portfolio, making sure we're focusing on the most important programs, not getting distracted by shiny objects. It's people, not just adding people, that's easy, but a deep change to the culture and how we execute. So what is that? I mean culture is kind of vague. We come from a very conservative heritage of Honeywell. And people wanted to make sure it was done right, but there's a difference between done right and done fast. So for example, let's do testing of a product. We had a very serial process. Let's do test 1, test 2, test 3. I'm asking the team, why would you do that? Let's do all of them at the same time. There's a chance they'll fail and we'll have to retest this and that costs money. And we said, well, what's the chance of those tests failing? Very little. Okay. Well, let's start stacking that in parallel. And Tom has driven a very strong culture of we're not penalizing anybody for being late. We want to drive more -- greater acceleration to market. Now you also had a kind of a software dimension to that question. A lot of what we've released from a device perspective is more hardware engineering, more firmware engineering. And we do use some of the AI in the firmware development to help accelerate. But again, I think that's test development, that's QA resources and just the beginning stages of using it from a development standpoint.

Okay. That's really helpful. And then as a follow-up, how do you think about the manufacturing footprint as it relates to geographic expansion, adding to existing sites? Or will there be net new sites? And do you still want to stick with the ethos of producing products near where you're going to ultimately distribute them if you're looking at Australia, New Zealand and more in Europe?