REZI Q4 2025: Record Results Partially Refute Spruce Point — 1 Signal De-Escalated, 4 Confirmed

Resideo Technologies reported record FY2025 results: revenue $7.5B (+11% YoY), adjusted EBITDA $833M (+20% YoY), and adjusted cash from operations $453M (+2% YoY). The company exceeded the high end of all 2025 outlook ranges and guided 2026 EBITDA to $935–$985M. The 10-K filed today disclosed no goodwill impairment. Our three-lens update re-evaluated key signals from the February 1 analysis that followed Spruce Point Capital's “Strong Sell” report. Result: 1 signal de-escalated, 4 confirmed.

The Numbers

$7.5B

FY2025 Revenue

+11% YoY (record)

$833M

Adjusted EBITDA

+20% YoY (record)

3.9x

Actual Leverage

Not 5.5x per Spruce Point

$75M

Snap One Synergies

18 months early

Leverage Discrepancy

Spruce Point's 5.5x leverage figure used non-standard EBITDA adjustments that excluded ~$245M in credit agreement add-backs (SBC, restructuring, ERP costs, acquisition costs, Honeywell normalization). The covenant-relevant leverage is 3.9x using FY2025 reported EBITDA of $833M. Both figures have analytical value, but 3.9x is the metric that drives covenant compliance and near-term distress probability.

Signal Update: 1 De-Escalated

FUNDING_FRAGILITYStress Scanner

STRAINED→STRETCHED

Leverage corrected from 5.5x to 3.9x on FY2025 EBITDA of $833M. OCF recovered to $453M (+2% YoY), reversing the “37% decline” narrative. 2026 guided EBITDA of $935–$985M implies further deleveraging to 3.3–3.5x. No covenant issues. Absolute debt ($3.2B) and 72% floating rate exposure prevent further de-escalation.

Confirmed Signals: 4 Unchanged

ACCOUNTING_INTEGRITY — CONCERNING

Record results reduce motive for aggressive accounting, but Snap One 12-year customer life (unverified), $142M tax discrepancy, and serial disclosure eliminations persist. No goodwill impairment is positive, but methodology concerns remain open.

CAPITAL_DEPLOYMENT — QUESTIONABLE

$75M Snap One synergies and P&S organic growth (+4% FY2025) are encouraging. But ADI exclusive brands decelerated from +32% to +2%, revenue synergy thesis (light commercial NPI) is 12–18 months from validation, and standalone cash flows remain undisclosed.

GOVERNANCE_ALIGNMENT — MISALIGNED

No new data: CFO Carlet remained (positive), but OCF still absent from compensation, no management buying, and no public response to Spruce Point. DEF14A 2026 will be the next data point.

REGULATORY_EXPOSURE — ELEVATED

Nebraska AG lawsuit not discussed on earnings call. No second state AG action. Video surveillance decline cited but attributed to sales cycle, not regulatory. Status quo.

Monitoring Triggers Resolved

Goodwill impairment: Not triggered. 10-K filed without impairment charge. CAPITAL_DEPLOYMENT avoids DESTRUCTIVE escalation.

OCF recovery: Triggered. FY2025 adjusted OCF $453M exceeds $400M+ threshold. FUNDING_FRAGILITY de-escalated.

Covenant amendment: Not triggered. No changes disclosed. Covenant compliance maintained.

Fifth CFO/CAO departure: Not triggered. CFO Carlet remained on call.

What We're Watching

ADI Form 10 filing: The separation is on track for H2 2026. The Form 10 will reveal how $3.2B in debt and the Nebraska litigation are allocated between P&S and ADI. This is the most important upcoming catalyst.

Q1-Q2 2026 EBITDA trajectory: Guided $935–$985M implies ~15% growth. First half tracking below $900M annualized would re-escalate leverage concerns.

DEF14A 2026: Will OCF be reinstated as a compensation metric? This is the key governance de-escalation trigger.

Spruce Point Thesis: Partially Refuted

The leverage and cash flow sections of Spruce Point's thesis are materially weakened by FY2025 results. Actual leverage is 3.9x (not 5.5x), OCF recovered to $453M (not declining), and no goodwill impairment occurred. However, Spruce Point's governance and accounting methodology concerns (4 CFOs, OCF removed from bonuses, 12-year customer life assumption, disclosure eliminations) remain unaddressed. The short thesis is approximately half-refuted.

Assessment

Overall posture remains HIGHER SCRUTINY, but with reduced conviction in the capital structure distress thesis. The near-term leverage risk has been de-escalated from STRAINED to STRETCHED. However, structural governance and accounting methodology concerns persist. Investors should focus on the Form 10 filing and DEF14A 2026 as the next meaningful data points.