Dan Stratemeier

Dan Stratemeier from Jefferies asked for confirmation that no additional significant costs are foreseen for ADI's ERP system. He then inquired about the strategic rationale and excitement behind the Snap One acquisition, its complementary nature with ADI, synergy achievements, and the current market positioning and performance of Control4. Finally, he asked Tom Surran about the P&S margin ramp and how the finance team manages the trade-off between new product rollout/growth and margin expansion.

Answer

President of ADI Global Distribution Rob Aarnes confirmed no additional significant ERP costs are foreseen. He expressed strong excitement for Snap One, calling it a highly complementary deal operationally, financially, and strategically. He noted accelerating $75 million in synergies 18 months early and highlighted future synergy potential from platform consolidation, footprint optimization, and leveraging Snap One's R&D for light commercial new product introductions (NPI) starting late 2026. Rob Aarnes also mentioned the successful launch of the Control4 X4 operating system, which returned the business to growth. President of Products and Solutions Tom Surran discussed the 11 consecutive quarters of gross margin expansion, emphasizing it's a metric of efficient value delivery. He explained that while not purely linear, the team focuses on delivering superior, differentiated products efficiently, with a robust roadmap for air, safety, and security markets, expecting continued improvement as market conditions normalize.

Dan Stratemeier asked for confirmation that no additional significant costs are foreseen for the ADI ERP system. He also inquired about the strategic rationale and excitement behind the Snap One acquisition, its complementary nature, synergy realization, and the positioning of Control4 in the marketplace. Additionally, he asked about the difficulty of porting residential AV products to commercial applications and the Products and Solutions (PNS) business's margin expansion strategy, balancing new product introductions and growth with continued margin improvement.

Answer

Rob Aarnes, President of ADI Global Distribution Business, confirmed no additional significant ERP costs. He expressed strong excitement for the Snap One acquisition, citing its complementary nature across operational, financial, and strategic fronts. He highlighted accelerated synergy achievement ($75 million 18 months ahead of schedule), future synergies from platform consolidation and real estate optimization, and the potential to leverage R&D for light commercial NPI targeting ADI's 75,000+ customers. Rob Aarnes also noted the successful launch of the Control4 X4 operating system, which returned the business to growth, with plans for more frequent upgrades. He explained that porting residential AV to commercial products involves nuances due to higher stringency in commercial applications, but a robust roadmap is in place for launches in late 2026 and 2027. Tom Surran, President of Products and Solutions Business, discussed PNS's gross margin expansion, emphasizing it's a metric of efficient value delivery. He acknowledged 11 consecutive quarters of expansion but cautioned against expecting purely linear growth, stressing the focus on delivering superior, differentiated products efficiently across air, safety, and security markets. He anticipates further improvements when market conditions, particularly HVAC and housing, normalize.