Editor’s Note: This breaking news about Resideo and its plans to separate the ADI Global Distribution business reflects fresh updates as of 9:15am ET on July 30.
Resideo Technologies, Inc., just announced the organization’s intention to separate its ADI Global Distribution business through a tax-free spin-off to Resideo shareholders. Upon completion of the separation, Resideo’s Products & Solutions business (P&S) will continue to operate as Resideo. ADI, by contrast, will become an independent public company.
Strong Operational Discipline Enables Resideo and ADI to Separate
Jay Geldmacher, Resideo’s president and CEO, says that Resideo has instilled strong operational discipline across the enterprise. This, he notes, has “…[resulted] in independence for each of ADI and P&S.” Through continued growth and investment, ADI and P&S enjoy a leading position in their distinct areas. ADI is a global wholesale distributor of low-voltage products, including security and audiovisual solutions. Meanwhile, P&S is a building products manufacturer focused on residential controls and sensing solutions. According to Geldmacher, “We believe a separation is the next, most natural step, allowing ADI and P&S the opportunity to unlock their full potential and better serve all our stakeholders.”
Geldmacher confirms that ADI and P&S will continue to be led by Rob Aarnes and Tom Surran, respectively. “Both of [them] will be able to execute their respective strategies with greater focus, agility and tailored resources,” he says. “The entire Resideo team is the backbone of these businesses, and, with their continued support and dedication, we are more confident than ever in the future success of each organization.”
Plans for Resideo
Resideo, of course, will continue as a leading building products manufacturer. It will remain focused on residential controls and sensing solutions that maximize comfort, help ensure safety, and deliver cost savings and value to businesses and homeowners. The company boasts an expansive network of 100,000 pro installers and more than 15 million installations per year.
In the 12-month period that ended March 29, the P&S segment delivered net revenue of $2.6 billion and a segment adjusted EBITDA margin of 24.2%.
Plans for ADI Global Distribution
ADI, meanwhile, is a leading global wholesale distributor of low-voltage products. This, of course, includes security and AV solutions. It boasts a portfolio of more than 500,000 professionally installed products. ADI serves both the commercial and residential markets across key specialty categories. These include security, fire, audiovisual, access control, smart living and data communications. An expanding suite of proprietary technologies and services under key exclusive brands, such as Control4, OvrC, Araknis Networks and WattBox, complements this extensive offering.
ADI expects its global footprint, omnichannel shopping experience, deep supplier relationships and exclusive brands to remain core competitive advantages. Pointing to strong margins, cash flow generation and a differentiated growth profile, ADI believes it will be well positioned to organically grow its distribution business and pursue selective M&A opportunities aligned to its go-forward strategic-growth initiatives.
In the 12-month period that ended March 29, the ADI segment delivered net revenue of $4.5 billion and a segment adjusted EBITDA margin of 7.5%.
Executive Leadership Confirmed
In light of today’s announcement, Geldmacher’s previously announced retirement will now become effective upon completion of the separation. After that time, he will serve in an advisory capacity for six months. Following the separation, Tom Surran, president of P&S, and Rob Aarnes, president of ADI, will continue leading Resideo and ADI, respectively. Additional corporate governance details for Resideo and ADI will be disclosed in the coming months. All appointments are subject to Board approval.
