Resideo Technologies, Inc.

Ladies and gentlemen, at this time, I'd like to welcome everyone to the Residio Technologies third quarter 2020 earnings conference call. Today's call is being recorded. All participants will be in a listen-only mode until the formal question-and-answer portion of the call. If anyone should require operator assistance during the call, please press star zero on your telephone keypad. It is now my pleasure to introduce Mr. Jason Willey, Senior Director of Investor Relations. Mr. Willey, you may now begin, sir.

Good morning, everyone, and thank you for joining us for Residio's third quarter 2020 earnings conference call. On today's call will be Jay Geldmacher, Residio's chief executive officer, and Tony Trunzo, our chief financial officer. A copy of our earnings release and related presentation materials are available on the investor relations page of our website at investors.residio.com. We would like to remind you that this morning's presentation contains forward-looking statements. The statements other than historical facts made during this call 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 vary materially from those on the forward-looking statements as a result of a number of factors, including those described from time to time in the video's filings with the Securities and Exchange Commission. The company assumes no obligation to update any such forward-looking statements. Additionally, during our call today, we will refer to certain non-GAAP financial information. The reconciliation of our GAAP to non-GAAP results is included in the company's earnings press release and accompanying presentation, both of which can be found on the investor relations section of our website. We identify the principal risks and uncertainties that affect our performance in our annual report on Form 10-K and other SEC filings. I will now turn the call over to Jay.

Thank you, Jason, and good morning, everyone. During the third quarter, we saw a meaningful improvement in demand across our markets. This demand enabled us to leverage our extensive product portfolio, unmatched relationships with the professional channel, and the broad reach of our ADI distribution platform to deliver a significant improvement in year-over-year and sequential financial results. At ADI, revenue grew 11% year-over-year in the third quarter. reflecting another quarter of outperformance relative to the markets it serves. The ADI team has a long track record of executing on value-enhancing growth initiatives and a well-defined strategy for driving continued outperformance. Within products and solutions, we grew revenue 12% compared with third quarter 2019. We saw underlying strength in each of our end markets, which translated to top-line growth and gross margin expansion. Across the business, COVID-19 dynamics shifted from a meaningful headwind in the second quarter to a tailwind in Q3. As we indicated on our Q2 call, underlying demand and customer behavior trended positive as Q2 progressed and into July. This momentum accelerated as we moved through the third quarter. People continue to spend more time in their homes, which we believe is creating increased attention on the home and a desire to invest. Driving demand for renovation and repair projects and home security. With leading solutions and distribution reach across home comfort and security markets, our business is well positioned to capitalize on the current positive market trends, which we believe have durability beyond one or two quarters. Looking back on my first five months at Resideo, there's been significant progress on driving operational improvement and an accelerated focus on innovation. We solidified the senior leadership team, adding individuals with proven track records of delivering efficiency improvements, cost, discipline, and growth. We reorganized products and solutions to bring needed operational focus, while at the same time better structuring the organization to move quicker to address customer needs, product innovation, and new market development. The strengthening and reorganizing of our teams are critical to unlocking long-term value at Resideo. In August, we added Jeff Frank as Senior Vice President of Product Innovation to create cohesion across the organization around new innovation in our product roadmap and engagement in strategic market development. The innovation organization is new within Resideo, and Jeff and his team bring fresh perspective to our technology development, drawing on a multi-decade track record of successfully bringing new products to market. The formation of the innovation team and their focus on unifying software, platforms and user experience across the business is critical to ensuring our position as a leader in enabling the connected home ecosystem. In October, Phil Theodore, who joined Resideo earlier this year to lead our transformation efforts, took on the role of president of our products and solutions segment. Bill is the hands-on, operationally focused leader that is essential for executing on the transformation of this business, leading the efficiency efforts and positioning the business for sustained growth. As we look to accelerate product development and bring historically siloed product lines together as one business, we have reorganized products and solutions to integrate engineering and product line management. These changes are designed to foster collaboration across the entire product portfolio and establish linkages critical to bringing innovative new products to market quickly and cost effectively, while ensuring we are aligned with the needs of our customers. As we make these organizational changes, we recognize the need to maintain our focus on bringing operational discipline and accountability to the business, while driving to sustainable long-term revenue growth. I view transformation as a continuous journey and not a discrete project or program. Our transformation team, now reporting to Tony, will continue leading this crucial work, Resideo, with a focus on ingraining these critical values into the culture of Resideo. I have focused much of my time over the past few months on directly engaging with senior leadership of our key customers and partners. I believe building these relationships will allow us to better understand our customers' needs, identify opportunities for collaboration, and inform our decisions around product development, marketing support, and other critical areas. I have also challenged the team to accelerate our engagement related to partnerships and strategic relationships. While we have a broad suite of products in the residential solutions market, the market itself is substantial. and there is meaningful opportunity to partner in areas where we are clearly differentiated or we can leverage the innovations of others to create greater value. With that, I will turn the call over to Tony to discuss our third quarter financial performance in more detail.