Conference Transcript - REZI 2026-03-04

Erik Woodring, Analyst — Morgan Stanley

Great. Good afternoon. Just afternoon. Welcome to day three of the Morgan Stanley TMT Conference. My name is Eric Woodring. I cover the USIT hardware space here. I am pleased to be joined by Resideo Technologies today, President of the P&S Business, Tom Saran, and then Global Head of Strategic Finance, Chris Lee. Before we start, quickly from my end, for important disclosures, please see the Morgan Stanley Research Disclosure website at www.morganstanley.com slash researchdisclosures. If you have any questions, please reach out to your Morgan Stanley sales representative. Chris, do you have anything that you need to do from your end? Nope, I'm good. Perfect. So, Tom and Chris, thank you for joining us today. Thanks for having us. So there's a lot going on, obviously, so there's a lot to get into. I think maybe the best place to start, I want to do a look back on 2025 because it's such a transformational year. in the company's history, but maybe if you could just give us kind of the two to three highlights of 2025, but maybe more importantly, how that sets this company up for success in 2026, and we'll go from there. I'm going to let you handle it, because it's some corporate matters.

Christopher Lee, Head of Investor Relations

Yeah, so in July of 2025, we announced the termination of the indemnification agreement with Honeywell. Under that agreement that we entered into at the time of our residual spin out of Honeywell in 2018, we were obligated to reimburse Honeywell to the tune of $140 million a year for environmental liabilities that they incurred and, you know, attached us to help remediate. That was a major overhang to the street in terms of understanding our story and building a model for valuation. We were able to enter into that termination because Honeywell came to the table in 2025 versus other historical times where they didn't necessarily come to the table to talk constructively. And we were able to come to an agreement that settled and terminated the indemnification agreement for $1.625 billion of consideration. We paid that with cash on hand on our balance sheet and new term loan B debt in the amount of $1.225 million that was settled and paid in mid-August. But what was important about settling that identification agreement beyond clarifying the story and helping with the valuation model was it eliminated all covenants attached to the identification agreement that previously prevented us from pursuing strategic and value creation activities. And so in conjunction with the termination of the Honeywell Agreement, we also announced the intent to separate our ADI global distribution business from Residio. At that time, the news was very well received by the street. I think it helped to clarify, you know, a lot of that overhang and gave a clearer path toward valuation and a potential re-rate for that, some of the parts.

Erik Woodring, Analyst — Morgan Stanley

Cool. So great place to start. I'm going to kind of pivot and, Tom, turn to you just as a head of P&S. So there's a lot that we can talk about. Just very quickly to start, I want to just start on kind of like the macro backdrop, so to speak, or kind of the industry backdrop as you look at it? Housing starts, R&R, you just – how would you gauge that backdrop before you get into kind of company-specific stuff?

Tom Surran, Analyst — Other

Technically, I would describe it as meh. So, I mean, it really is. I mean, so we could go through the statistics and say what's going on. The amount of homes being built per year is 800,000 units per year. That's running probably 300,000 short of what would be an equal over. The housing stock at $114 million is $4.7 million short of equilibrium. So we're making things worse in the housing market. It's building up. Everyone kind of knows this is not a great housing market, but it's not sustainable. So it does need to break free at some point, which will basically create some tailwinds for the business.

Erik Woodring, Analyst — Morgan Stanley

And so you guys do a lot on your end. I called it a lot of a lot. A lot of different channels, a lot of different end customers, a lot of different products. What are some of the growth opportunities within P&S that excite you the most as we look out over the course of the next year? Are there any areas maybe conversely that face more challenges too? So just kind of each side of that coin.

Tom Surran, Analyst — Other

Sure. So understanding the products that we serve. So we are control and sensing in the house, all right? And what we create in that, let's just say an HVAC market, sometimes we call it air, we have, say, the thermostat market. We've reinvigorated our product line over the past year, and we're not completely done with that. We sell over 12 million units per year by an order of magnitude larger than our next nearest competitor, and we're making substantial investments, and we expect that to grow well. We are in the safety business under the brand First Alert. So that product is the smoke detectors, carbon monoxide detectors. That business has done very well for this past several years, and we actually have a new product that we'll be bringing out the middle of this year that we're very excited about. That's a new platform. It's a global platform. We'll concentrate our volume on that and be able to expand geographically, so that should drive some growth for the business. The OEM business is a little more driven by the demand for the products of our customers and the timeline for that much longer development cycle. So we're creating some things for the 29-30 timeline. So that's a longer look, but it's a business that's been doing well for us. The business that we have to make a significant investment in, and we're doing that right now, is our security business. Historically, we've been very active in intrusion, and we want to create an all-inclusive security for the home. And we're making investments in those products, and we'll start seeing some of those come out this year.

Erik Woodring, Analyst — Morgan Stanley

Okay. I want to touch on kind of air and the HVAC market first just because that was something that was a bit of a trip up in the second half of 25, not as a result of you guys, but kind of what's going on in the background of the market. So at earnings, you talked about your larger distribution customers managing inventory levels lower, below normalized inventory levels. Yes. On the other hand, some of the HVAC guys believe some of the inventory headwinds maybe won't clear until mid-year. And so you're also launching new products there. Yes. A lot going on, but it kind of is the issue from the second half of last year entirely in the rear view. And kind of second to that, just how does NPI contribute to the outlook as we then think about 26 for this market?

Tom Surran, Analyst — Other

Sure. So what's being referred to is the HVAC market did have some issues with some equipment as they made a transition in the refrigerant. As that relates, it created some supply or cash issues with the distributions, major distributors, that they basically constricted inventory of all their suppliers, and we were part of that. It happened in the middle of the year. So in Q3, we saw our revenue in the air business down about 13.5%. But at that same quarter, we grew our business 3%. So yes, it did have an impact on one of our segments, but our other segments outperformed and made up for that. In the fourth quarter, we saw our air business impacted by minus 5.5%. And again, we had 6% growth overall in the business. We see it ending here at the end of Q1, we think we'll be substantially done with it. Some people are saying you're not going to be completely done with it to the end of the Q2. That's very possible, but we're seeing it already kind of taper off. There'll be some impact in Q1, no doubt. We're seeing it right now, but we also see the rest of our businesses still continuing to execute. So it's more of a, right now, we obviously have a little bit of a headwind. We're able to perform better than most of the industry has relative to those headwinds. So we're expecting that that should be done here at the end of Q1.

Christopher Lee, Head of Investor Relations

And just to add on real quickly, the headwind that Tom just mentioned, potentially in 26, is already baked into our 2026 guide. Okay, cool.

Erik Woodring, Analyst — Morgan Stanley

Tom, something that you guys said at earnings that kind of caught my attention was, as it relates to the security business, was the relationship with your large security customer has been reinvigorated. Just talk to us about kind of what that means as we think about that segment.

Tom Surran, Analyst — Other

Yeah, so historically in the security market, we were an OEM provider. We have switched to become more of a general market. Now, there is one large customer who still remains an OEM customer, and the relationship had some bumps a couple years ago. We've worked hard on that relationship, tried to make sure that they understand the value we can bring to it. We've brought new products. In fact, we've got some new products that are going in this year for some various customer bases. I don't want to announce their market. And just the engagement with the customer and the relationship has substantially improved. It's now one looking forward rather than complaining about things that could have happened in the past. So it's a relationship we think we can build on. But in the security market, our focus is to be a leader in the general market with our own branded products.

Erik Woodring, Analyst — Morgan Stanley

We've talked a lot over the course of the last few months about NPI. And I'd love to get your perspective. Again, don't need to share state secrets, so to speak. but what are some of the more kind of critical or exciting areas of NPI that we should expect to see coming from you guys in 2026?

Tom Surran, Analyst — Other

So the 26th is a little bit of a pivot year. I mean, we are going to finish off the new platform we have for the HVAC market. So we've introduced a low-end product we call Focus Pro. We've introduced a high-end product called Leap Pro. And we'll be introducing our mid-tier as well as our European offerings this year. So that's coming out during the year. We'll announce a sequence of those. And that idea there is to get all the scale we have onto that single platform to leverage that to improve the efficiency. And we're very excited about the products themselves and what they bring. In safety, similarly, we have a product that will be coming out the middle of this year, which is our new global platform. We're consolidating all our volumes onto that one platform, and it's a product that will be able to do geographic expansion. into Europe with. It's a product we expect to do well both in the retail channel as well as the professional distribution channel. And in security, we'll start introducing products in the back half of the year. And the reason why I say the back half of the year is this year we're going to be introducing our new platform, which we'll call Fordic. And that is what creates the ecosystem for the future of the business. So it's pivotal for the future of the company. And the reality is this year we'll start bringing the new security products onto that. And it's something that will play a huge role in the future of the business.

Erik Woodring, Analyst — Morgan Stanley

I want to touch on margins of the P&S business. This is something where you've had a multi-quarter track record of success and margin expansion. There's still more to come as you guys have described it. What are the most kind of important or repeatable drivers of that margin expansion as we look forward that we, you know, as investors can kind of underwrite and have the highest degree of confidence in? And are there any kind of one-time items that are kind of mixed in there as well that aren't just necessarily secular over a multi-year period? Yeah, it's really a collection

Tom Surran, Analyst — Other

of one-time things you're doing, right? So the idea overall is you're trying to optimize the value you're delivering to the customers, and that's through the MPI. Create more value, make better products, right? And that the customer is willing to pay for and then deliver them efficiently. And that's really what we're doing. So in any one of those, it's the automation of this facility in Juarez. It's basically a rebalancing of a line over here. It's closing a factory. It's creating new IP in the products that we're delivering to the customer, creating an ecosystem that drives more synergies across the products. So it's this sequence. You're just continually try to create more value and do so efficiently.

Erik Woodring, Analyst — Morgan Stanley

And maybe last question, how does this all translate on the PNS side to our view on where it can kind of medium-term growth algorithm for PNS, medium-term kind of margin targets for PNS? What are you guys trying to build to as we think about all these moving pieces that we've just talked about?

Tom Surran, Analyst — Other

So we've committed to a low to mid-single-digit growth rate in the near term. And as we start seeing traction, we'll reevaluate that commitment. We're pretty optimistic about what we have in the works and how we see the business developing. So I hope to be able to talk to you about some different numbers. Right now, we're committing to low to mid-sequel digits. Cool. Perfect. And margin? Did he ask margin? Yeah, yes. Oh. Sorry about that, guys. We are going to continue to focus to improve the margins. We haven't committed, and we'll have an investor day where we give specifics about what our long-term outlook is on the margin, but you can expect us to continue to work on it. It is not going to be a linear process. I know we've done 11 consecutive quarters of margin improvement, and we will continue every day trying to optimize the value and the efficiency of delivering it. But it's going to be a little bit step-stairs as we go up, and that's acceptable, and we are going to continue to work on that. And by the time we talk at the investor days, we'll give you the long-term outlook at what the margin will be.

Erik Woodring, Analyst — Morgan Stanley

Okay, cool. Chris, I want to maybe bring you into the conversation as we focus on the ADI side now and maybe the broader corporate initiatives. First, again, kind of addressing a pain point from the second half of last year, which was the ERP upgrade in legacy ADI. You know, you made clear earnings. It's fully behind you guys now. One, any response to that, making sure there's nothing that we have to clean up there, but really, two, what kind of opportunities does that unlock for you guys on the ADI side that potentially you couldn't capitalize on before?

Christopher Lee, Head of Investor Relations

Yeah, so first, let's make clear, and I appreciate the question and the lean in there, ERP is fully operational. It is in the rearview mirror. There are no revenue hedges in the outlook for 26. There's no expectation for one-time costs in 26 like we incurred in the second half of 2025. Now, why did we do this? Well, one, it's a modernization project. And when you think back to what we were using prior to the new ERP, we were using a 40-year-old plus AS400 system. That was literally the green screen. And, you know, if you look at what we've been able to build at ADI from a revenue perspective, you know, almost, you know, $4.8 billion of revenue through last year with the scale both in-store and through e-commerce through the digital channels, you know, it's been pretty impressive. But what the new ERP really does for us is bring us to the future, and it's about things like price discovery and price discipline that we can maintain across a digital network that we had challenges with in the past. We also have better linkages from a data and management standpoint around inventory in the warehouse and at the distribution centers. And there's a number of other things that I believe Rob will talk to about those benefits going forward at the ADI Investor Day.

Erik Woodring, Analyst — Morgan Stanley

And maybe more broadly, what I think some investors are trying to do is gain conviction in the underlying drivers of the accelerating ADI growth that you laid out for 2026. So maybe first, is there a way to help us understand the second half of the year was impacted by the ERP upgrade? Is there any way to understand kind of what second half of 25 ADI growth was and maybe almost more importantly, what are the most important factors that are driving that kind of reacceleration in the business in 2026?

Christopher Lee, Head of Investor Relations

Yeah, I think to put it in perspective, Q2 of 25 organic revenue growth posted by ADI was plus 8. And when you look at Q3 and Q4, that decelerated down to a plus 3 in Q3 and flat in Q4. Solely attributable to some of the challenges with the ERP implementation. What did the ERP do in 2025 that we don't expect in 2026? Fundamentally, the ERP was a distraction. The ERP distracted the team in what they do best, which is execution. And ADI has always been known for very fast execution, very quality execution. If you're a professional who's ordering from us, you never had doubts about how much you received the mix of the items you received and you know the timing and the location it was all you know spot on you had high degree of confidence there whereas you know the erp created some of those operational challenges um in the second half of 25 so fundamentally the team is is very focused on that execution and when you look at what the execution is for it's around the customer experience and winning back some of the customers who are temporarily shopping at some of our competitors because of the ERP challenges in the second half. If you look at our customers, who is the professional installers, many of them are very dependent upon ADI to provide supply in order for them to do their job, which is to do the work in the commercial or the residential space.

Erik Woodring, Analyst — Morgan Stanley

Okay. Underlying this improvement in ADI growth, can you just help us also understand you acquired SnapOne, call it a little while ago, more than 12 months ago. What's the contribution from SnapOne? We can get to the cost side, obviously. There's obviously cost synergies there. But from a revenue synergy side there, how are we thinking about the contribution to Snap and the broader kind of ADI

Christopher Lee, Head of Investor Relations

landscape. Yeah, so let me reiterate and frame why we did the deal. It has strategic value. It was complementary to ADI's business. ADI historically had a commercial focus. Snap had a residential focus. It was complementary from a product category standpoint, audio-visual, complementing our strength in professional AV and adding the share-leading residential AV player, which was snap but when you look at the combined company it offers a wider line card to more customers and so that creates cross-sale synergies across that wider set of customers for a wider set of products and you know i mentioned in the in the response to previous question you know we want to have that that great customer experience because we have a very loyal customer set and what we want to do is continue to incentivize and attract customer behavior to shop at ADI you know you see that in our digital and omni-channel experience you see that in the line card you see that in our logistics and fulfillment and we are winning back some of those customers that I mentioned we had that we're temporarily shopping during some of our challenges. And so when you look going forward, it's about leveraging all those capabilities of selling more products to that wider set of customers.

Erik Woodring, Analyst — Morgan Stanley

Okay, very clear. Now I'll ask you the cost energy side of that, right? So I think you captured the $75 million that you had outlined when you acquired the business or when you announced the acquisition. Is there more to do? How do we think about the opportunity to find more cost synergies, if that's an opportunity?

Christopher Lee, Head of Investor Relations

Yes, it is an opportunity. While we were pleased to deliver $75 million in 2025, there's still more room to run. 2025 was the start of the real estate integration phase as planned. So you should expect a continuation of that in 26. And what we're talking about there is potentially closing some stores where there is a concentration in a specific geography. In other cases, it's about opening net new, especially when there's an opportunity to combine the stores to a bigger footprint with a wider array of products. The other area that we see opportunity for is in some of the websites and e-commerce platforms. Snap One's website, for example, is still operational and you can still shop through there. But you have ADI's really powerful website that we want to integrate and combine them together.

Erik Woodring, Analyst — Morgan Stanley

Okay. And just to maybe confirm on that, that's also kind of integrated into how you've guided. Is that upside just very quickly how to contextualize those opportunities?

Christopher Lee, Head of Investor Relations

So it is inherently baked into the guide, even though we have not explicitly provided a synergy target that we look to achieve in 2026. You know, I think you've seen over the last two annual periods, you know, we've given the actual achievement in each of the years, the six months and December 24 and the full year 25. we're not going to guide it because it's a pretty organic process as we manage the business

Erik Woodring, Analyst — Morgan Stanley

Okay, helpful Last question on ADI before we maybe turn to the broader changing landscape for you guys for Resideo is a similar question that I asked Tom as we look out three to five years, what's the growth opportunity for this business what's the margin expansion opportunity for this business and in that I think it would be helpful since the plan is to spend, I realize that hasn't happened yet, just the associated kind of incremental costs that come with that spend. How do we think about that flowing into that margin as well?

Christopher Lee, Head of Investor Relations

Okay, so a little bit to unpack there, so keep me honest. I'll go from top to bottom. The ADI growth profile prospectively is a mid-single-digit to high-single-digit growth profile that's very consistent with the historical growth profile under Rob Arnis, who is our president of ADI and the future CEO of the spin co. We see gross margin expansion opportunity of a couple hundred basis points probably over the next five years, and the team, the ADI team will likely expound on that a little bit more at Investor Day, but that will be partially driven by the scaling of the exclusive brand's portfolio, which is more margin accretive versus a third-party product sale, as well as continued usage by our customers of our digital channels, which inherently are more profitable than in-store. That's not to diminish the importance of in-store. In-store is very important for the experience to the customer. The ongoing corporate cost, I think, was the last part of the question.

Erik Woodring, Analyst — Morgan Stanley

Yeah, yeah, just how that incorporates into the...

Christopher Lee, Head of Investor Relations

So what we have shared with the community is currently we have about $115 million of run rate corporate costs that's already in the P&L. We think there's an additional $35 million of corporate costs necessary to stand up both Residio and ADI, Residio, Romainco, and ADI, Spinco, as independent public companies. The nature of the cost in the $35 million bucket would be, for example, hiring my counterpart for one of the two companies. At $150 million in totality, it should be divided into $75 million, and the $75 million should be burdened on each ADI and P&S at the spin.

Erik Woodring, Analyst — Morgan Stanley

Yep. Okay. So let's talk about, before we get into the spin transaction, just capital allocation priorities for kind of the whole co as we lead up into the spin transaction. I believe the priority is deleveraging, but just, like, talk about the priorities, but then also just do address the leverage and kind of what the goal is there.

Christopher Lee, Head of Investor Relations

Yeah, I think to set the frame, I mentioned earlier that as part of the termination of the indemnification agreement with Honeywell, we took on some more TLB. That brought leverage to a little bit over three times. Our stated goal and what we've been executing since taking on that new TLB would be to de-lever. And we would de-lever by the strong cash flow generation of both businesses and grossing that up on the balance sheet. And I think you guys have seen that, you know, since the Q3. Now, throughout all this, the philosophy to manage the cap structure is we want to be a near-investment-grade credit-rated company, Double B, which we are by both Moody's and S&P. And our targeted leverage goal is net two turns. And so I think that's likely the philosophy that will be promulgated at both companies. And, you know, we'll get into more of the details and the mechanics around, you know, the instruments and the path toward deleverage at the Investor Day.

Erik Woodring, Analyst — Morgan Stanley

Okay. And, you know, before we get there, obviously, you've shared some details ahead of the Investor Days, ahead of the spin, for example. We know we're talking to the future CEO of the Remain Co. So can you just help us understand at least or remind us the details that you have shared that we do know about as it relates to, again, leadership, target leverage, capital allocation? Again, we talked about growth rates and margins, but just any details that you have shared. Can you just remind us all of what those are?

Christopher Lee, Head of Investor Relations

Yeah, I think, you know, we talked about some of them throughout the conversation, but we are still on track for a second half of 26 event. You know, we anticipate having an investor day for each Resideo, Romainco, and ADI Spinco, you know, roughly three to four weeks before the effective date of the separation. And we would anticipate that the public flip of the Form 10 would precede the effective date by, you know, roughly two to three months. So I think those are some markers out there for the street to keep an eye out on. We mentioned that both Tom and Rob would be the future CEOs of the respective companies. We have not yet announced other members of the management team, nor have we mentioned members of the board as we're still going through those processes, those selection processes and org design. And I think we just talked about calculation. You mentioned the growth rates and the margin profile. So I think that's pretty much it.

Erik Woodring, Analyst — Morgan Stanley

Two questions before I'm going to turn back to you, Tom, towards the end of this, which is, Chris, can you address the decision to spin versus sell ADI Global? It's a question that I get really often. Why not sell? Why spin? Clearly, there's signals that you get behind the scenes. Just talk to us about the value unlock that you guys think about a spin versus a sale.

Christopher Lee, Head of Investor Relations

I think I get that question every time. You know, look, I think the company and the board has done a tremendous amount of diligence around the options here. And the board has determined that the separation is really the most optimal way for value creation for our stakeholders. You know, just to be very clear, we're not running a sale process formal, a formal sales process. And I think the decision at the board level for separation was unanimous. And so, you know, let's just lean in there because the second most common question we get is, you know, CD&R and their presence. You know, they're not.

Erik Woodring, Analyst — Morgan Stanley

That was going to be my next question.

Christopher Lee, Head of Investor Relations

They're not exerting control. They work collaboratively with the board and the management team. They're very constructive in their conversation. And so, you know, look, they clearly see value, which is why they have bought stock in the open, you know, Resi stock in the open market. And, you know, they've demonstrated that conviction in the boardroom.

Erik Woodring, Analyst — Morgan Stanley

And maybe bigger picture, the CD&R involvement, just speak to the leadership oversight that you get from them. Obviously, they have two board members now. They've been involved since the Snap-on acquisition. Just, again, leadership, what they bring to not just the spin process, so to speak, but just the overall oversight of the business and where it's going.

Christopher Lee, Head of Investor Relations

Yeah, look, I think Tom should also chime in on this as well. But, look, deep domain expertise in both the distribution and building product segments, you know, they have a great view of the capital markets, and they're just fundamentally, you know, really good people to work with. They're collegial, they're thoughtful, and they're constructive.

Tom Surran, Analyst — Other

That's exactly right. They are the kind of directors you want in the business. They add significantly to the board. We have a strong board, and they just enhance it that much more.

Erik Woodring, Analyst — Morgan Stanley

Okay, cool. Before I kind of wrap up on the one on you, Tom, and then kind of the last question, obviously tariffs in the news with Supreme Court. You guys are primarily manufacturing Mexico, so USMCA compliant. Just clarifying, nothing has necessarily changed post-Supreme Court ruling. I just want to make sure.

Tom Surran, Analyst — Other

No, USMCA was kind of honored and grandfathered into anything that's done under the new provisions. So there's really not a lot of impact to us there. There's obviously some small impact on some of the smaller amounts of importation we do for some of the Far East countries and some of the European countries, but it's small dollars.

Erik Woodring, Analyst — Morgan Stanley

And then, Tom, for you, Obviously, congratulations. I haven't actually formally congratulated you on being named the future CEO there. Just any early insights about kind of leadership mantra, what you kind of bring to the table. You know, as a CEO, you know, investors inherently are going to be betting on you. Don't want you to share anything that you would share at the investor day. But just what's the message as you step into, as you realize you step into that seat in the future?

Tom Surran, Analyst — Other

I think it's important to realize this is a separation rather than a spin. So these are two strong businesses that are executing independently right now. And the strategy that we've had over the past two-plus years in the P&S business, we're going to continue to execute. We have very specific things that we'll be doing and would love the opportunity and take more than a minute in 26 to go through exactly what that strategy is that we'll be executing in P&S. But we're on the path. We're going to continue with that because we see the success it's bringing. We know how much more it can bring us. And so that's exactly where we're going to be executing. And the reality is when I got to the company, the quality of the people and the brands and the strength and the domain knowledge that's in this company and our ability to be successful is just absolutely incredible. Okay, great.

Erik Woodring, Analyst — Morgan Stanley

So with that last minute, I'll give you each the opportunity to kind of give us a final word on either what most excites you, what you think is maybe most underappreciated, however you each want to take that, please.

Tom Surran, Analyst — Other

I'll go first and let you finish up. I think it's important to look deeply at each of the businesses independently. And I know they've been obscured through the co-mingling of the two businesses, but when you look at them independently and say, okay, let's look at this business, I think it's underappreciated the strengths we have in the products and how we go to market and how we're viewed by our customers. So don't just look at the category of, oh, they make a thermostat. Oh, they make gas control valves. Oh, they make smoke detectors as though those are generic. There's a lot of differentiation we can create on those products. There's a reason why our pro customers trust us and we have such success with them and how we can create even more value. So I think that's underappreciated how good we can make this business.

Christopher Lee, Head of Investor Relations

Yeah, and to build on what Tom said, I think, you know, at the onset of the conversation, we highlighted the valuation unlock opportunity. I think what the street, you know, should appreciate is the sustainability of that value creation, you know, given our positioning in the market, the brands and strength of the products in each domain that Tom just mentioned. And I think underpinned by a very focused leadership team with that domain expertise, that's what creates the conviction for a sustainable, profitable growth.

Erik Woodring, Analyst — Morgan Stanley

Perfect. That's a great place to end. Tom, Chris, thank you very much.