Q - RESIDEO TECHNOLOGIES,
For the period ended Jun 28, 2025. Filed Aug 5, 2025.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 28, 2025 · Filed Aug 5, 2025
REZI$19.40-1.0%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2025-03-29; filed 2025-05-06.
0001740332-25-000019
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2025-06-28; filed 2025-08-05.
0001740332-25-000024
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 114 previous paragraphs and 138 current paragraphs.
68 unchanged; 36 reworded; 29 added; 10 removed; 0 previous and 5 current paragraphs rearranged.
Tables are not compared: 2 previous and 2 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (29)
Current report
•risks that the termination of the Indemnification Agreement contemplated by the Termination Agreement with Honeywell does not occur because we are not able to raise the necessary financing or otherwise;
Current report
•our ability to spin-off ADI Global Distribution, including the timeframe and process for the same;
Current report
Our ADI Global Distribution segment is the leading global wholesale distributor of low-voltage products, including security and audio-visual solutions. With a portfolio of over 500,000 professionally installed products, ADI Global Distribution serves both the commercial and residential markets across key specialty categories including security, fire, audio-visual, access control, smart living, and data communications. This extensive offering is complemented by an expanding suite of proprietary technologies and services, under key exclusive brands such as Control4, OvrC, Araknis Networks, and WattBox.
Current report
Net revenue for the six months ended June 28, 2025 was $3,713 million, an increase of $638 million, or 20.7%, from the same period in 2024, primarily due to $446 million of revenue from the acquisition of Snap One, $114 million from higher sales volume, and $83 million from favorable price and mix.
Current report
Gross margin rate for the three months ended June 28, 2025 was 29.3%, an increase of 120 basis points (“bps”) as compared to the same period in 2024. The increase was primarily driven by favorable price and mix shift of 120 bps, and the acquisition of Snap One of 80 bps. The increase was partially offset by lower margins on new volumes of 70 bps.
Current report
Gross profit for six months ended June 28, 2025 was $1,080 million, an increase of $233 million, or 27.5%, as compared to the same period in 2024, as shown in the above waterfall.
Current report
Research and development expenses for the six months ended June 28, 2025 were $76 million, an increase of $30 million, or 65.2%, as compared to the same period in 2024. The increase was driven by $17 million in the ADI Global Distribution segment primarily related to the inclusion of Snap One, and $13 million in the Product and Solutions segment related to incremental headcount and third party services to develop and introduce new products into the market.
Current report
Selling, general and administrative expenses for the three months ended June 28, 2025 were $319 million, an increase of $39 million, or 13.9%, as compared to the same period in 2024. The increase was primarily driven by $20 million from the inclusion of Snap One, net of prior year acquisition and integration costs, and $17 million of incremental operating costs, including payroll and benefits, rent, marketing, and third party spend.
Current report
Restructuring, Impairment and Extinguishment Costs
Current report
Restructuring, impairment and extinguishment costs for the six months ended June 28, 2025 were $6 million, a decrease of $12 million, or 66.7%, as compared to the same period in 2024. The decrease was primarily due to $6 million of debt extinguishment costs as part of the Snap One acquisition, and $5 million of impairment expense related to an equity security incurred in the prior year.
Current report
Indemnification Agreement Expense
Current report
Indemnification Agreement expense for the three months ended June 28, 2025 was $882 million, up $835 million from the $47 million recorded in the same period of 2024. The increase was driven by the recognition of additional expense in connection with our agreement to terminate the Indemnification Agreement with Honeywell. This expense reflects the revised estimate of our liability under the agreement of $1,625 million.
Current report
Indemnification Agreement expense for the six months ended June 28, 2025 was $972 million, up $882 million from the $90 million recorded in the same period of 2024. The increase was driven by the recognition of additional expense in connection with our agreement to terminate the Indemnification Agreement with Honeywell. This expense reflects the revised estimate of our liability under the agreement of $1,625 million.
Current report
Other expenses, net for the three months ended June 28, 2025 were $9 million, an increase of $8 million as compared to the same period in 2024. The increase was primarily driven by $7 million in unfavorable foreign currency exchange rates.
Current report
Other expenses, net for the six months ended June 28, 2025 were $15 million, an increase of $15 million as compared to the same period in 2024. The increase was primarily driven by $16 million in unfavorable foreign currency exchange rates.
Current report
Segment Results of Operations
Current report
Products and Solutions income from operations for the three months ended June 28, 2025 was $142 million, an increase of $12 million, or 9.2%, as compared to the same period in 2024. The increase is primarily due to favorable price and mix shift of $33 million, and lower material, freight, and other manufacturing costs of $4 million. The increase was partially offset by lower volumes of $12 million, and $11 million of incremental research and development expenses related to additional headcount and third party services to develop and introduce new products into the market.
Current report
The chart below presents net revenue and income from operations for the six months ended June 28, 2025 and June 29, 2024.
Current report
Products and Solutions net revenue for the six months ended June 28, 2025 was $1,315 million, an increase of $65 million, or 5.2%, as compared to the same period in 2024. The increase is primarily due to a $74 million favorable impact from price and mix. The increase was partially offset by $6 million from lower volumes, and $3 million from unfavorable foreign exchange rates.
Current report
ADI Global Distribution net revenue for the three months ended June 28, 2025, was $1,277 million, an increase of $318 million, or 33.2%, as compared to the same period in 2024. The increase was primarily driven by $218 million of revenue from the acquisition of Snap One, $85 million from higher volumes, $11 million from favorable price and mix shift, and $7 million from favorable foreign exchange rates.
Current report
The chart below presents net revenue and income from operations for the six months ended June 28, 2025 and June 29, 2024.
Current report
ADI Global Distribution net revenue for the six months ended June 28, 2025 was $2,398 million, an increase of $573 million, or 31.4%, as compared to the same period in 2024. The increase was primarily driven by $446 million of revenue from the acquisition of Snap One, $120 million from higher volumes, and $9 million from net favorable price and mix shift.
Current report
Corporate costs for the three months ended June 28, 2025 were $36 million, a decrease of $34 million, or 48.6%, as compared to the same period in 2024. The decrease was driven by $29 million of acquisition and integration costs, $6 million of debt extinguishment costs as part of the Snap One acquisition, and $5 million of impairment expense related to an equity security incurred in the prior year. The decrease was partially offset by incremental operating costs of $6 million including payroll and benefits, and third party spend.
Current report
Corporate costs for the six months ended June 28, 2025 were $70 million, a decrease of $33 million, or 32.0%, as compared to the same period in 2024. The decrease was driven by $29 million of acquisition and integration costs, $6 million of debt extinguishment costs as part of the Snap One acquisition, and $5 million of impairment expense related to an equity security incurred in the prior year. The decrease was partially offset by incremental operating costs of $8 million including payroll and benefits and third party spend.
Current report
To fulfill our obligation under the Termination Agreement, we intend to use the proceeds from newly raised debt financing as contemplated by the Debt Commitment Letter, together with cash on hand. To the extent that we are not able to raise the necessary financing by August 29, 2025, Honeywell may cancel the Termination Agreement and reinstate the Indemnification Agreement. In the event we do not raise the necessary financing by October 30, 2025, we also have the right to cancel the Termination Agreement and reinstate the Indemnification Agreement. Upon termination by either party, we will owe Honeywell $100 million in liquidated damages. Refer to Note 16. Commitments and Contingenciesfor further discussion.
Current report
Net cash provided by operating activities for the six months ended June 28, 2025 was $135 million. Compared to the six months ended June 29, 2024, net cash provided by operating activities increased $41 million. During the six months ended June 28, 2025, we recorded $972 million of expense related to the termination of the Indemnification Agreement which was the primary driver of the net loss of $819 million compared to $73 million of net income in the comparative period. This change of $892 million was partially offset by higher non-cash charges of $42 million primarily due to a $44 million increase in depreciation and amortization, and favorable changes of $891 million in assets and liabilities. These changes in assets and liabilities were primarily due to a $902 million increase in the Indemnification Agreement liability from its termination, and a $73 million increase in accrued liabilities primarily due to an increase in taxes payable. This was partially offset by an unfavorable change in other assets and liabilities of $62 million primarily due to increases in deferred tax assets and lease right-of-use assets and $85 million of increased accounts receivable primarily due to higher sales.
Current report
Indemnification Agreement Payments
Current report
In connection with our Spin-Off from Honeywell, we entered into the Indemnification Agreement with Honeywell. On July 30, 2025, we entered into the Termination Agreement with Honeywell to terminate the Indemnification Agreement. Subject to the terms and conditions of the Termination Agreement, we will make a pre-tax, one-time cash payment of $1,590 million to Honeywell, which is expected to occur in the third quarter of 2025. In addition, we paid our regularly scheduled payment of $35 million in July 2025. Upon completion of the pre-tax, one-time cash payment, the Indemnification Agreement will be fully terminated, we will no longer be required to make any further payments to Honeywell under the Indemnification Agreement, and the associated affirmative and negative covenants will no longer apply. As of June 28, 2025, we updated our assessment of what was probable and reasonably estimable under Accounting Standards Codification 450, Contingencies, based on the agreed payment amount. The liability of $1,625 million is recorded as current obligations payable under the Indemnification Agreement in the Unaudited Consolidated Balance Sheet as of June 28, 2025. To fulfill our obligation, we intend to use the proceeds from newly raised debt financing as contemplated by the Debt Commitment Letter, together with cash on hand. To the extent that we are not able to raise the necessary financing by August 29, 2025, Honeywell may cancel the Termination Agreement and reinstate the Indemnification Agreement. In the event we do not raise the necessary financing by October 30, 2025, we also have the right to cancel the Termination Agreement and reinstate the Indemnification Agreement. Upon termination by either party, we will owe Honeywell $100 million in liquidated damages. During the six months ended June 28, 2025, we paid Honeywell $70 million under the Indemnification Agreement. For further discussion, refer to Note 16. Commitments and Contingencies and Note 19. Subsequent Events.
Current report
Refer to Note 16. Commitments and Contingencies for further discussion.
Removed paragraphs (10)
Previous report
•our ability to recruit and retain qualified personnel and to recruit a new CEO given the announced intended retirement of our current CEO;
Previous report
Our ADI Global Distribution segment is a leading wholesale distributor of low-voltage products including security, fire, and access control, and participates significantly in the broader related markets of smart home, residential audio-visual, professional audio-visual, power management, networking, data communications, wire and cable, enterprise connectivity, and structured wiring products. In addition, ADI Global Distribution partners with a network of contract manufacturers and joint-development suppliers to produce a full range of proprietary smart-home technology products and solutions under our own exclusive brands. These products may be found in residential and commercial settings and utilize proprietary software platforms such as Control4 and OvrC for project commissioning and remote monitoring.
Previous report
Restructuring Expenses
Previous report
Other expenses, net for the three months ended March 29, 2025 were $96 million, an increase of $54 million, or 128.6%, as compared to the same period in 2024. The increase was driven by $47 million of incremental expenses related to the Reimbursement Agreement, and $8 million in unfavorable foreign currency exchange rates.
Previous report
ADI Global Distribution net revenuefor the three months ended March 29, 2025 was $1,121 million, an increase of $255 million, or 29.4%, as compared to the same period in 2024. The increase was primarily driven by $227 million of revenue from the acquisition of Snap One and $35 million from higher volumes. The increase was partially offset by $5 million from unfavorable foreign currency impacts, and a net unfavorable price and mix shift of $1 million.
Previous report
Corporate costs for the three months ended March 29, 2025 were $34 million, an increase of $1 million, or 3.0%, as compared to the same period in 2024. The increase was due to $1 million of restructuring costs.
Previous report
Net cash used for operating activities for the three months ended March 29, 2025 was $65 million. Compared to the three months ended March 30, 2024, net cash provided by operating activities decreased $67 million. The decrease was primarily driven by a $37 million decrease in net income and a $54 million decrease in assets and liabilities, partially offset by a $23 million increase in depreciation expense. Outflows related to changes in assets and liabilities include increased uses of $57 million in accounts payable including early payments to receive supplier discounts, an increase of $46 million in payables related to the Indemnification Agreements, an increase of $47 million in accounts receivables due to higher sales, and a $10 million decrease in inventory related to supply chain optimization.
Previous report
Reimbursement Agreement Payments
Previous report
In connection with the Spin-Off, we entered into the Reimbursement Agreement with Honeywell. As of March 29, 2025, a liability of $778 million was deemed probable and reasonably estimable; however, it is possible we could pay $140 million per year (exclusive of any late payment fees up to 5% per annum) until the earlier of: (1) December 31, 2043; or (2) December 31 of the third consecutive year during which the annual reimbursement obligation (including in respect of deferred payment amounts) has been less than $25 million. During the three months ended March 29, 2025, we paid Honeywell $35 million under the Reimbursement Agreement. For further discussion on the Reimbursement Agreement, refer to Note 16. Commitments and Contingencies to the Unaudited Consolidated Financial Statements.
Previous report
Refer to Note 16. Commitments and Contingencies to the Unaudited Consolidated Financial Statements for further discussion.
Reworded paragraphs (36)
Previous wording
•the potential adverse impacts of enhanced tariff, import/export restrictions, or other trade barriers on global economic conditions, financial markets and our business;
Current wording
•the potential adverse impacts of tariffs, import/export restrictions, or other trade barriers on global economic conditions, financial markets and our business;
Previous wording
•risks associated with the Reimbursement Agreement and our relationships with Honeywell, including our reliance on Honeywell for the Honeywell Home trademark;
Current wording
•prior to its pending termination, risks associated with the Indemnification Agreement and our relationships with Honeywell, including our reliance on Honeywell for the Honeywell Home trademark;
Previous wording
•impairment of other intangible assets and long-lived assets;
Current wording
•impairment of goodwill, other intangible assets, and long-lived assets;
Previous wording
Our Products and Solutions segment offerings include temperature and humidity control, water and air solutions, smoke and carbon monoxide detection home safety products, residential and small business security products, video cameras, other home-related lifestyle convenience solutions, cloud infrastructure, installation and maintenance tools, and related software. We also sell components to manufacturers of water heaters, heat pumps and boilers.
Current wording
Our Products and Solutions segment is a leading building products manufacturer focused on residential controls and sensing solutions. Our offerings include temperature and humidity control, water and air solutions, smoke and carbon monoxide detection home safety products, residential and small business security products, video cameras, other home-related lifestyle convenience solutions, cloud infrastructure, installation and maintenance tools, and related software. We also sell components to manufacturers of water heaters, heat pumps and boilers.
Previous wording
Our financial performance is influenced by macroeconomic factors underlying end user demand such as repair and remodeling activity, residential and non-residential construction, new and existing home sales, employment rates, interest rates and bank lending standards, and supply chain dynamics that can be influenced by geopolitics. The ongoing uncertainty and volatility in the global macroeconomic environment have affected, and could continue to affect, our visibility toward future performance. Uncertainties remain including the potential for changes in inflation and interest rates, tariffs, increased labor costs, reduced consumer spending due to softening labor markets, elevated mortgage rates, shifts in energy policies, and potential market and other disruption from the ongoing conflict between Russia and Ukraine as well as the Middle East crisis.
Current wording
Our financial performance is influenced by macroeconomic factors underlying end user demand such as repair and remodeling activity, residential and non-residential construction, new and existing home sales, employment rates, interest rates and bank lending standards, and supply chain dynamics that can be influenced by geopolitics. The ongoing uncertainty and volatility in the global macroeconomic environment have affected, and could continue to affect, our visibility toward future performance. Uncertainties remain including the global tariff environment, potential for changes in inflation and interest rates, increased labor costs, reduced consumer spending due to softening labor markets, elevated mortgage rates, shifts in energy policies, and potential market and other disruption from the ongoing conflict between Russia and Ukraine as well as the Middle East crisis.
Previous wording
•Net revenue of $1.77 billion, up 19.1% from $1.49 billion in the first quarter of 2024
Current wording
•Net revenue of $1.94 billion, up 22.3% from $1.59 billion in the second quarter of 2024
Previous wording
•Gross profit margin of 28.9%, compared to 26.9% in the first quarter of 2024
Current wording
•Gross profit margin of 29.3%, compared to 28.1% in the second quarter of 2024
Previous wording
•Income from operationsof $136 million, or 7.7% of revenue, compared to $128 million, or 8.6% of revenue in thefirst quarter of 2024
Current wording
•Income from operationsof $177 million, or 9.1% of revenue, compared to $122 million, or 7.7% of revenue in thesecond quarter of 2024
Previous wording
•Fully diluted loss per common share of $0.02, compared to $0.29 diluted earnings per common share in thefirst quarter of 2024
Current wording
•Fully diluted loss per common share of $5.59, compared to $0.19 diluted earnings per common share in thesecond quarter of 2024
Previous wording
•Cash used in operations was $65 million in the first quarter of 2025, compared to cash flow from operations of $2 million in the first quarter of 2024
Current wording
•Cash flow generated from operations was $200 million in the second quarter of 2025, compared to $92 million in the second quarter of 2024
Previous wording
For the remainder of 2025, we anticipate executing our business operations against a highly dynamic global macroeconomic environment. The vast majority of costs associated with the products that the Products and Solutions segment sells in the U.S. are incurred in Mexico. Those Products and Solutions costs, along with the ADI Global Distribution segment product costs incurred in Mexico, are currently exempt from tariffs under the United States-Mexico-Canada Agreement (USMCA). We intend to take actions to essentially mitigate the cost impact of any tariffs, which include increasing prices in a phased approach for costs not covered under the USMCA. Product costs not covered under the USMCA are primarily costs for products imported from China by our ADI Distribution segment. Trade dynamics are shifting continuously and could adversely affect our business operations and the broader macroeconomic environment. We are monitoring these dynamics very closely and will make adjustments in our business operation execution, as appropriate. Based on the aforementioned, we reaffirm our 2025 revenue outlook to be up low-to-mid single-digits year-over-year.
Current wording
For the remainder of 2025, we anticipate executing our business operations against a highly dynamic global macroeconomic environment. The vast majority of costs associated with the building products that the Products and Solutions segment sells in the U.S. are incurred in Mexico. Most Products and Solutions products manufactured in Mexico, along with a significant portion of the ADI Global Distribution segment products sourced in Mexico, are currently exempt from tariffs under the United States-Mexico-Canada Agreement (USMCA). Additional tariff impact relates to products imported from China (and other Asian countries) and the European Union primarily by our ADI Global Distribution segment. We intend to take actions to essentially mitigate the cost impact of any tariffs that affect our business; however, rising prices and other macroeconomics factors may lead to lower purchase levels by our customers. We are monitoring these dynamics very closely and will make adjustments in our business operation execution, as appropriate. Based on the aforementioned, we updated our 2025 revenue outlook to be up low double-digits year-over-year. On July 30, 2025, we also entered into an agreement with Honeywell to accelerate and eliminate all future monetary obligations under the Indemnification Agreement and entered into the Debt Commitment Letter to partially fund the termination. Refer to Note 16. Commitments and Contingenciesand Note 19. Subsequent Eventsfor further discussion.
Previous wording
Net revenue for the three months ended March 29, 2025 was $1,770 million, an increase of $284 million, or 19.1%, from the same period in 2024, primarily due to $227 million of revenue from the acquisition of Snap One, $51 million from higher sales volume, and $20 million from price and mix. The increase was partially offset by $13 million in unfavorable foreign currency exchange rates.
Current wording
Net revenue for the three months ended June 28, 2025 was $1,943 million, an increase of $354 million, or 22.3%, from the same period in 2024, primarily due to $218 million of revenue from the acquisition of Snap One, $64 million from favorable price and mix, $63 million from higher sales volume, and $11 million from favorable foreign currency exchange rates.
Previous wording
Gross profit for three months ended March 29, 2025 was $511 million, an increase of $111 million, or 27.8%, as compared to the same period in 2024, as shown in the above waterfall.
Current wording
Gross profit for three months ended June 28, 2025 was $569 million, an increase of $122 million, or 27.3%, as compared to the same period in 2024, as shown in the above waterfall.
Previous wording
Gross margin rate for the three months ended March 29, 2025 was 28.9%, an increase of 200 basis points (“bps”) as compared to the same period in 2024. The increasewas primarily driven by favorable impacts from the acquisition of Snap One of 140 bps, lower manufacturing costs of 20 bps, higher volume of 20 bps, and net favorable price and mix shift of 10 bps.
Current wording
Gross margin rate for the six months ended June 28, 2025 was 29.1%, an increase of 150 bps as compared to the same period in 2024. The increase was primarily driven by favorable impacts from the acquisition of Snap One of 110 bps and favorable price and mix shift of 70 bps. The increase was partially offset by lower volumes of 30 bps.
Previous wording
Research and development expenses for the three months ended March 29, 2025 were $35 million, an increase of $10 million, or 40.0%, as compared to the same period in 2024. The increase wasdriven by $8 million in the ADI Global Distribution segment and $2 million in the Product and Solutions segment related to the inclusion of Snap One and planned investments that we believe will drive future growth.
Current wording
Research and development expenses for the three months ended June 28, 2025 were $41 million, an increase of $20 million or 95.2% as compared to the same period in 2024. The increase was driven by $11 million in the Product and Solutions segment related to incremental headcount and third party services to develop and introduce new products into the market, and $9 million in the ADI Global Distribution segment related to the inclusion of Snap One.
Previous wording
Selling, general and administrative expenses for the three months ended March 29, 2025 were $306 million, an increase of $75 million, or 32.5%, as compared to the same period in 2024. The increase was primarily driven by a $71 million increase at the ADI Global Distribution segment due to the inclusion of Snap One and incremental operating costs including payroll and benefits, rent, marketing, IT, and travel expense.
Current wording
Selling, general and administrative expenses for the six months ended June 28, 2025 were $625 million, an increase of $114 million, or 22.3%, as compared to the same period in 2024. The increase was primarily driven by $82 million from the inclusion of Snap One, net of prior year acquisition and integration costs, and $34 million of incremental operating costs including payroll and benefits, rent, marketing, IT, third party spend, and travel expense.
Previous wording
Intangible asset amortization for the three months ended March 29, 2025 was $30 million, an increase of $21 million, or 233.3%, as compared with the same period in 2024. Theincrease was primarily due to additional amortization expense of $19 million associated with the new intangibles from the acquisition of Snap One.
Current wording
Intangible asset amortization for the three months ended June 28, 2025 was $30 million, an increase of $17 million, or 130.8% as compared with the same period in 2024. The increase was primarily due to additional amortization expense of $16 million associated with the new intangibles from the Snap One acquisition.
Previous wording
Restructuring expenses for the three months ended March 29, 2025, were $4 million, a decrease of $3 million, or 42.9%, as compared to the same period in 2024. Restructuring expenses primarily relate to employee termination costs.
Current wording
Restructuring, impairment and extinguishment costs for the three months ended June 28, 2025 were $2 million, a decrease of $9 million, or 81.8%, as compared to the same period in 2024. The decrease was primarily due to $6 million of debt extinguishment costs as part of the Snap One acquisition, and $5 million of impairment expense related to an equity security incurred in the prior year. The decrease was partially offset by $2 million of restructuring expenses incurred during the three months ended June 28, 2025. Restructuring expenses primarily relate to employee termination costs.
Previous wording
Interest expense, net for the three months ended March 29, 2025 was $25 million, an increase of $12 million, or 92.3%, as compared to the same period in 2024. The increase was due to an increase in our long-term debt resulting in $5 million of higher interest expense, a decrease of $4 million in interest rate derivative related receipts due to interest rate fluctuations and a lower aggregate notional due to swap maturities, and lower interest income of $3 million as a result of lower interest rates and lower cash balances.
Current wording
Interest expense, net for the six months ended June 28, 2025 was $49 million, an increase of $21 million, or 75.0%, as compared to the same period in 2024. The increase was due to an increase in our long-term debt resulting in $9 million of higher interest expense, a decrease of $8 million in interest rate derivative related receipts due to interest rate fluctuations and a lower aggregate notional due to swap maturities, and lower interest income of $3 million as a result of lower interest rates and lower cash balances.
Previous wording
Income tax expense for the three months ended March 29, 2025 was $9 million, a decrease of $21 million, or 70.0%, as compared to the same period in 2024. The decrease was primarily driven by a decrease in income before taxes, partially offset by an increase in effective tax rate. The effective income tax rate increased by 1,890 bps, primarily driven by the mix of earnings across the jurisdictions in which we operate, decreased income before taxes with relatively fixed non-deductible expenses, U.S. taxation of foreign earnings, and discrete items.
Current wording
Income tax expense for the three months ended June 28, 2025 was $87 million, an increase of $58 million as compared to the same period in 2024. The increase was primarily driven by a decrease in income before taxes, and an increase in the nondeductible Indemnification Agreement expense. The effective income tax rate decreased from 49.2% to (11.8)%, primarily driven by the mix of earnings across the jurisdictions in which we operate, decreased income before taxes with relatively fixed non-deductible expenses and a large increase in the non-deductible Indemnification Agreement expense, and U.S. taxation of foreign earnings.
Previous wording
Products and Solutions net revenue for the three months ended March 29, 2025 was $649 million, anincrease of $29 million, or 4.7%, as compared to the same period in 2024. The increase is due to a $21 million favorable impact from price and mix, and $16 million from higher volumes. The increase was partially offset by $8 million in unfavorable foreign currency exchange rates.
Current wording
Products and Solutions net revenue for the three months ended June 28, 2025 was $666 million, an increase of $36 million, or 5.7%, as compared to the same period in 2024. The increase is primarily due to a $53 million favorable impact from price and mix, and $4 million from favorable foreign exchange rates. The increase was partially offset by $22 million from lower volumes.
Previous wording
Products and Solutions income from opera tions for the three months ended March 29, 2025 was $136 million, an increase of $24 million, or 21.4%, as compared to the same period in 2024. Theincrease isprimarily due to higher volumes of $10 million, net favorable price and mix shift of $9 million, lower restructuring costs of $6 million, and lower material, freight, and other manufacturing costs of $3 million. The increase was partially offset by $4 million of higher selling, general and administrative expenses, and $2 million of incremental research and development expenses related to planned investments that we believe will drive future growth.
Current wording
Products and Solutions income from operations for the six months ended June 28, 2025 was $278 million, an increase of $36 million, or 14.9%, as compared to the same period in 2024. The increase is primarily due to favorable price and mix shift of $42 million, and lower material, freight, and other manufacturing costs of $7 million. The increase was partially offset by $13 million of incremental research and development expenses related to planned investments that we believe will drive future growth.
Previous wording
ADI Global Distribution income from operationsfor the three months ended March 29, 2025 was $34 million, a decrease of $15 million, or 30.6%, as compared to the same period in 2024. The decrease was primarily due to $101 million increase in operating expenses, including $71 million of selling, general and administrative expenses, $20 million of amortization, and $8 million of research and development cost. These increases were primarily due to the inclusion of Snap One, incremental operating costs at the segment, and addition planned investment that we believe will drive future growth. This decrease was partially offset by an $86 million increase in gross profit driven by the inclusion of Snap One and higher volumes.
Current wording
ADI Global Distribution income from operations for the six months ended June 28, 2025 was $105 million, down $6 million, or 5.4%, as compared to the same period in 2024. The decrease was primarily due to $186 million increase in operating expenses, including $132 million of selling, general and administrative expenses, $37 million of amortization, and $17 million of research and development cost. These increases were primarily due to the inclusion of Snap One and incremental operating costs at the segment. This decrease was partially offset by an $183 million increase in gross profit driven by the inclusion of Snap One, higher volumes and net favorable price and mix shift.
Previous wording
As of March 29, 2025, total cash and cash equivalents were $577 million, of which 31% were held by foreign subsidiaries. Our liquidity is primarily dependent on our ability to continue to generate positive cash flows from operations, supplemented by external sources of capital, as needed. Additional liquidity may also be provided through access to the capital markets and our A&R Revolving Credit Facility in an aggregate principal amount of $500 million.
Current wording
As of June 28, 2025, total cash and cash equivalents were $753 million, of which 26% were held by foreign subsidiaries. Our liquidity is primarily dependent on our ability to continue to generate positive cash flows from operations, supplemented by external sources of capital, as needed. Additional liquidity may also be provided through access to the capital markets and our A&R Revolving Credit Facility in an aggregate principal amount of $500 million.
Previous wording
We may from time to time take steps to reduce our debt or otherwise improve our financial position. These actions could include prepayments, open market debt repurchases, negotiated repurchases, other redemptions or retirements of outstanding debt, opportunistic refinancing of debt, raising additional capital, or divesting certain assets. The amount of prepayments or the amount of debt that may be refinanced, repurchased, or otherwise retired, if any, will depend on market conditions, trading levels of our debt, our cash position, compliance with debt covenants, and other considerations.
Current wording
We may from time to time take steps to reduce our debt or otherwise improve our financial position. These actions could include prepayments, liquidated damages, open market debt repurchases, negotiated repurchases, other redemptions or retirements of outstanding debt, opportunistic refinancing of debt, raising additional capital, or divesting certain assets. The amount of prepayments or the amount of debt that may be refinanced, repurchased, or otherwise retired, if any, will depend on market conditions, trading levels of our debt, our cash position, compliance with debt covenants, and other considerations.
Previous wording
As of March 29, 2025, we had $1,983 million of net long-term debt outstanding under our A&R Credit Agreement, Senior Notes due 2029, and Senior Notes due 2032, and $8 million is due in the next 12 months. We have also entered into certain interest rate swap agreements based on Term SOFR. These interest rate swap agreements effectively convert a portion of our variable-rate debt to fixed rate debt. Additionally, we assumed an interest rate cap in 2024 which effectively caps the interest on a portion of our variable rate debt with a notional amount of $344 million and a strike rate of 4.79%.
Current wording
As of June 28, 2025, we had $2,013 million of long-term debt outstanding under our A&R Credit Agreement, Senior Notes due 2029, and Senior Notes due 2032, with $8 million due in the next twelve months. We have also entered into certain interest rate swap agreements based on Term SOFR. These interest rate swap agreements effectively convert a portion of our variable-rate debt to fixed rate debt. Additionally, we assumed an interest rate cap in 2024 which effectively caps the interest on a portion of our variable rate debt with a notional amount of $344 million and a strike rate of 4.79%.
Previous wording
As of March 29, 2025, we were in compliance with all covenants related to the A&R Credit Agreement, Senior Notes due 2029, and Senior Notes due 2032.
Current wording
As of June 28, 2025, we were in compliance with all covenants related to the A&R Credit Agreement, Senior Notes due 2029, and Senior Notes due 2032. We may be subject to new or additional debt covenants in connection with the Debt Commitment Letter.
Previous wording
Refer to Note 12. Long-Term Debt and Note 13. Derivative Financial Instrumentsto the Unaudited Consolidated Financial Statements for a description of our debt obligations and the timing of future principal and interest payments, including impacts from our interest rate derivatives.
Current wording
Refer to Note 12. Long-Term Debt and Note 13. Derivative Financial Instruments for a description of our debt obligations and the timing of future principal and interest payments, including impacts from our interest rate derivatives.
Previous wording
In August 2023, we announced that our Board of Directors authorized a share repurchase program for the repurchase of up to $150 million of our common stock over an unlimited time period. During the three months ended March 29, 2025, there were no common share repurchases. As of March 29, 2025, we had $108 million of authorized repurchases remaining under the Share Repurchase Program.
Current wording
In August 2023, we announced that our Board of Directors authorized a share repurchase program for the repurchase of up to $150 million of our common stock over an unlimited time period. During the three and six months ended June 28, 2025, there were no common share repurchases. As of June 28, 2025, we had $108 million of authorized repurchases remaining under the Share Repurchase Program.
Previous wording
Cash Flow Summary for the Three Months Ended March 29, 2025 and March 30, 2024
Current wording
Cash Flow Summary for the Six Months Ended June 28, 2025 and June 29, 2024
Previous wording
Our cash flows from operating, investing, and financing activities for the three months ended March 29, 2025 and March 30, 2024, as reflected in the Unaudited Consolidated Financial Statements, are summarized as follows:
Current wording
Our cash flows from operating, investing, and financing activities for the six months ended June 28, 2025 and June 29, 2024, as reflected in the Unaudited Consolidated Financial Statements, are summarized as follows:
Previous wording
Net cash used for investing activities for the three months ended March 29, 2025 was $31 million. Compared to the three months ended March 30, 2024, net cash used for investing activities increased $9 million, primarily due to unfavorable changes in capital expenditures of $10 million partially offset by $1 million of favorable changes in other investing activities.
Current wording
Net cash used for investing activities for the six months ended June 28, 2025 was $51 million. Compared to the six months ended June 29, 2024, net cash used for investing activities decreased $1,313 million, due to the prior year Snap One acquisition for $1,334 million, partially offset by an increase in capital expenditures of $15 million.
Previous wording
Net cash used for financing activities for the three months ended March 29, 2025 was $22 million. Compared to the three months ended March 30, 2024, net cash used for financing activities increased $14 million, primarily due to an increase in preferred stock dividend payments of $9 million and an $8 million increase for the acquisition of treasury shares to cover stock award tax withholding, partially offset by lower debt repayments of $3 million.
Current wording
Net cash used for financing activities for the six months ended June 28, 2025 was $33 million. Compared to the six months ended June 29, 2024, net cash used by financing activities decreased $1,085 million, primarily due to a decrease in proceeds from the term loan borrowings of $582 million and Preferred Stock issuance of $482 million when compared to the prior year and an increase in preferred stock dividend payments of $17 million in the current year.
Previous wording
We have operating lease arrangements for the majority of our manufacturing sites, offices, engineering and lab sites, stocking locations, warehouses, automobiles, and certain equipment. As of March 29, 2025, we had operating lease payment obligations of $258 million, with $51 million payable within 12 months.
Current wording
We have operating lease arrangements for the majority of our manufacturing centers, distribution centers, branches, offices, engineering and lab sites, warehouses, automobiles, and certain equipment. As of June 28, 2025, we had operating lease payment obligations of $284 million, with $52 million payable within 12 months.
Previous wording
Litigation, Environmental Matters, and the Reimbursement Agreement
Current wording
Litigation, Environmental Matters, and the Indemnification Agreement
Previous wording
Refer to Note 2. Summary of Significant Accounting Policies to the Unaudited Consolidated Financial Statements for further discussion.
Current wording
Refer to Note 2. Summary of Significant Accounting Policies for further discussion.
Rearranged current paragraphs (5)
Current report — wording carried from elsewhere
The chart below presents the drivers of the gross profit variance from thesix months ended June 29, 2024 to thesix months ended June 28, 2025.
Current report — wording carried from elsewhere
Intangible asset amortization for the six months ended June 28, 2025 was $60 million, an increase of $38 million, or 172.7% as compared with the same period in 2024. The increase was primarily due to additional amortization expense of $36 million associated with the new intangibles from the Snap One acquisition.
Current report — wording carried from elsewhere
Interest expense, net for the three months ended June 28, 2025 was $24 million, an increase of $9 million, or 60.0%, as compared to the same period in 2024. The increase was due to an increase in our long-term debt resulting in $4 million of higher interest expense and a decrease of $4 million in interest rate derivative related receipts due to interest rate fluctuations and a lower aggregate notional due to swap maturities.
Current report — wording carried from elsewhere
Income tax expense for the six months ended June 29, 2024 was $96 million, an increase of $37 million as compared to the same period in 2024. The increase was primarily driven by a decrease in income before taxes and an increase in the non-deductible Indemnification Agreement expense. The effective income tax rate decreased from 44.7% to (13.3)%, primarily driven by the mix of earnings across the jurisdictions in which we operate, decreased income before taxes with relatively fixed non-deductible expenses and a large increase in the non-deductible Indemnification Agreement expense, and U.S. taxation of foreign earnings.
Current report — wording carried from elsewhere
ADI Global Distribution income from operations for the three months ended June 28, 2025 was $71 million, an increase of $9 million, or 14.5%, as compared to the same period in 2024. The increase was primarily driven by a $97 million increase in gross profit driven by the inclusion of Snap One, higher volumes, and net favorable price and mix shift. This increase was partially offset by an $87 million increase in operating expenses, including $61 million of selling, general and administrative expenses, $17 million of amortization, and $9 million of incremental research and development cost. These increases were primarily due to the inclusion of Snap One and incremental operating costs at the segment.