Melville, NY-based low-voltage products distributor ADI Global Distribution reported record second-quarter revenue on Aug. 13 in its first earnings release following its spin-off from Resideo Technologies.

ADI operated as part of Resideo throughout the second quarter, which ended July 4. As a result, its historical financial information was derived from Resideo’s accounting records and presented on a carve-out accounting basis.

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ADI posted 2Q26 net revenue of $1.286 billion, up 1% year-over-year. Average daily sales increased 2%.

The revenue result exceeded the $1.243 billion to $1.259 billion range Resideo provided for ADI in June. Adjusted EBITDA of $86 million landed within the previously issued range of $81 million to $87 million.

2Q Results

Gross profit increased 3% year-over-year to $292 million, while gross margin expanded 50 basis points to 22.7%.

The margin increase included approximately $20 million of tariff refunds. ADI’s earnings presentation showed the refunds contributed about 160 basis points to the quarter’s gross margin, with margin at 21.1% before that benefit. Unfavorable pricing and product mix, along with higher fuel costs for freight, partially offset the refunds.

Selling, general and administrative expenses increased by $16 million to $206 million, driven primarily by higher employee and facility costs. Income from operations fell 56% to $25 million.

Adjusted EBITDA declined 9% to $86 million, with adjusted EBITDA margin contracting to 6.7% from 7.4%. Standalone adjusted EBITDA — which accounts for estimated recurring costs of operating as an independent public company — declined 6% to $84 million. Standalone adjusted EBITDA margin was 6.5%, down from 7.0%.

Sequentially, ADI’s results improved considerably from the first quarter. Net revenue increased from $1.206 billion in 1Q26, while standalone adjusted EBITDA rose from $52 million to $84 million.

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Net income was $6 million, compared with a net loss of $283 million a year earlier. The prior-year period included a $331 million expense associated with an indemnification agreement, making the adjusted earnings figures more comparable measures of operating performance.

ADI President and CEO Rob Aarnes said the company is focused on converting recent investments into improved operating efficiency, profitability and cash generation as it begins operating independently.

Category Performance

Commercial markets drove the quarter’s growth. On an average-daily-sales basis, data communications increased in the low teens, commercial security grew in the mid-single digits and professional AV increased in the low single digits.

Residential AV posted a slight decline, reflecting continued softness in the U.S. residential housing market.

Security represented approximately 55% of ADI’s fiscal 2025 revenue, followed by AV at about 30%, fire and life safety at 10% and data communications at 5%.

2026 Outlook

ADI initiated its standalone 2026 outlook, calling for full-year net revenue of $4.95 billion to $5 billion and standalone adjusted EBITDA of $275 million to $295 million.

For the second half, ADI forecast net revenue of $2.458 billion to $2.508 billion and standalone adjusted EBITDA of $139 million to $159 million.

ADI expects average daily sales growth of 5% to 7% during the second half, with continued strength in commercial categories and no meaningful recovery in residential AV assumed.

The company also expects second-half gross margin pressure amid difficult comparisons with tariff-related pricing and inventory benefits in the prior year. Net operating expenses are expected to decline slightly as cost savings offset merit increases, inflation and targeted investments.

ADI is also transitioning away from what it described as a significant supplier, which it expects to result in approximately $6 million of EBITDA pressure during the second half. The company expects standalone adjusted EBITDA to increase moderately during the period.