{ "docId": "019dd923-622c-750b-8b99-c8318190e1be", "docSlug": "c1709c763a52", "documentTitle": "Resideo Technologies, Inc. (REZI)", "authorId": "54_Spruce_Point_Capital", "authorName": "Spruce Point Capital Management", "documentKindSlug": "activist-deck", "documentKindLabel": "Activist deck", "sourceTypeSlug": "short_seller", "sourceTypeLabel": "Short seller", "presentationDate": "2026-01-27 00:00:00", "orientation": "landscape", "aspectRatio": 1.3333334, "pageNumber": 9, "pageCount": 93, "prevPage": 8, "nextPage": 10, "slideType": "villain_critique", "function": "name_villain", "density": "overcrowded", "nDataPoints": 8, "notes": "The slide uses a 'villain' narrative by linking the current acquisition to historical accounting fraud (Sunbeam/Al Dunlap).", "elementsJson": [ "headline_text", "paragraph", "callout_box" ], "metadataConfidence": 0.95, "imagePath": null, "slideHref": "/slides/019dd923-622c-750b-8b99-c8318190e1be/9", "deckHref": "/decks/019dd923-622c-750b-8b99-c8318190e1be", "deckJsonHref": "/decks/019dd923-622c-750b-8b99-c8318190e1be.json", "deckAnchorHref": "/decks/019dd923-622c-750b-8b99-c8318190e1be#slide-9", "components": [ { "bbox": { "h": 0.08, "w": 0.9, "x": 0.05, "y": 0.15 }, "kind": "callout", "text": "Recent acquisitions look troubled, paper over REZI's long-term goal failures, and appear to intensify its financial problems. Its initial foray into large scale acquisitions was First Alert in 2022.", "attrs": null, "subkind": "primary", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "c08ba7a0-1289-4b07-a813-9a905c6d7728", "frameworkName": null, "frameworkSlug": null }, { "bbox": null, "kind": "callout", "text": "Recent acquisitions look troubled, paper over REZI's long-term goal failures, and appear to intensify its financial problems.", "attrs": null, "subkind": null, "toolName": "Visual emphasis", "toolSlug": "visual-emphasis", "confidence": null, "componentId": "019dd953-2b62-723f-b672-a70a40e38ffd", "frameworkName": null, "frameworkSlug": null }, { "bbox": null, "kind": "metric", "text": "organic revenue growth: 2.9%", "attrs": null, "subkind": "primary", "toolName": "Quantification", "toolSlug": "quantification", "confidence": null, "componentId": "019dd953-2b62-723f-b672-ace19a16a851", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.35, "w": 0.9, "x": 0.05, "y": 0.6 }, "kind": "paragraph", "text": "Our analysis also suggests that REZI has engaged in value-destructive M&A with questionable financial reporting to bolster the appearance of earnings growth. Notably, in 2022 it acquired First Alert (smoke detectors) from Newell Brands (Nasdaq: NWL) for $593m. Ironically, First Alert was once used as an acquisition pawn to cover-up a massive accounting fraud in 1998 by Sunbeam Corp. (NYSE: SOC) run by the notorious Al \"Chainsaw\" Dunlap. Later, the business would pass to Newell (through Jarden Corp.) where both it and the CEO settled with the SEC in 2023 for $12.5m related to accounting violations and misrepresenting core \"organic\" growth. We provide evidence of challenges that lie ahead with the business, which one former employee who went through the acquisition described as \"a disaster\". Notably, we find revenue reporting issues around the time of acquisition and uncharacteristic strength followed by restructuring programs and sporadic synergy updates. The early revenue in 2022 went ahead of plan, and in early 2025, First Alert again had uncharacteristically strong performance against what it previously said were seasonally weak Q1 trends. The business is heavily retail distribution focused (66% Home Depot, Lowes, Costco, etc.) and 34% professional. An uplift in 2025 from a new Google connected device is likely to create difficult comps and carry lower margins. REZI is touting strengthening partnerships with home builders, but we believe price wars and volume discounts result in lower margins through this channel. Overall, a former executive intimately familiar with the First Alert business expressed the view that REZI overpaid for the business. First Alert's \"premium\" connected brand called Onelink also appears to have been quietly discontinued.", "attrs": null, "subkind": "paragraph", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "180cb4bc-e5b8-41bf-9e1e-054c852f4607", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.35, "w": 0.9, "x": 0.05, "y": 0.25 }, "kind": "paragraph", "text": "In March 2021 during its Investor Day, REZI set specific organic revenue and gross margin by segment and consolidated operating cash flow goals to be achieved by 2024. The Company did not mention acquisitions as being integral to the strategy, leading investors to believe its objectives were organic growth. In fact, acquisitions were listed as its lowest priority at its 2018 spin-off. Based on our analysis, we believe that REZI has woefully missed its 2024 targets communicated to investors in early 2021. Over the same period, REZI has ceased to provide key annual guidance metrics such as revenue growth per segment, gross margin and corporate expenses. Our analysis, which adjusts for recent acquisitions, FX, and divestitures estimates that total organic growth was ~2.9% or 310bps below the target. The underperformance was largely driven by the Product and Solutions (\"P&S\") segment which we estimate grew 0.8% vs. 4-6% targeted. In 2021, REZI even said the addressable market for products and solutions was growing \"mid-to-high single digits\" which suggests it may have lost serious market share. Furthermore, gross margins were projected to be 30-32% but came in at 28.1%. Again, the biggest variance was in the P&S segment which was projected to have 46-48% gross margins but produced 41%.", "attrs": null, "subkind": "paragraph", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "fa968508-4166-4b22-a28a-49106fcc59cb", "frameworkName": null, "frameworkSlug": null }, { "bbox": null, "kind": "quote", "text": "a former employee who went through the acquisition described as \"a disaster\"", "attrs": null, "subkind": null, "toolName": "Authority citation", "toolSlug": "authority-citation", "confidence": null, "componentId": "019dd953-2b62-723f-b672-a89eeb3904af", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.05, "w": 0.65, "x": 0.305, "y": 0.05 }, "kind": "title", "text": "REZI's Landmark Acquisitions Also Appear Troubled", "attrs": null, "subkind": "headline", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "973b50b5-2e89-4100-a99a-f59bc9295191", "frameworkName": null, "frameworkSlug": null } ], "metrics": [], "tools": [], "frameworks": [ { "name": "antagonist-introduction", "slug": null, "matchId": "21831fff-f588-473f-94c8-dd230c17b0cf", "evidence": "Linking current management to historical fraud figures like Al Dunlap.", "confidence": 0.8 } ], "arcBeats": [ { "to": 80, "from": 9, "beatId": "7202e722-c846-45f1-ac2f-eccd25950f31", "arcName": "Problem-Agitate-Solution", "arcSlug": "problem-agitate-solution", "beatName": "Agitate", "beatSlug": "problem-agitate-solution-agitate-make-it-worse", "evidence": "The deck agitates the problems, highlighting various contradictions, concerns, and red flags.", "position": 1, "confidence": 0.8, "parentBeatName": "Development", "parentBeatSlug": "development" } ], "loops": [], "imagePathAlt": null, "thumbSrc": null, "thumbSrcAlt": null, "locked": true }