ADI Global cuts 2026 outlook after $659 million write-down

By Rebecca Stone

ADI Global Distribution took a $659 million goodwill impairment and cut its 2026 adjusted standalone EBITDA outlook to $230 million–$240 million, the company said Thursday, Nov. 12, in its first quarterly report after Resideo Technologies’ August spin-off.

The write-down drove a net loss of $655 million, or $8.65 per share, for the quarter ended Oct. 3, compared with net income of $26 million a year earlier. ADI Global distributes security, fire, professional audiovisual and other low-voltage products.

ADI triggered an interim impairment test after continued weakness in the residential market, lower projected earnings and cash flows, and declines in its stock price and market capitalization. “Third-quarter profitability was below our expectations, primarily reflecting a continued challenging residential market and weaker-than-anticipated demand and product mix in our Exclusive Brands offering,” CEO Rob Aarnes said.

Why did revenue rise while margins fell?

Net revenue rose 8.6% to $1.306 billion—about 9%—while average daily sales grew 5%. The quarter contained two more selling days, and an ERP system conversion disrupted the year-earlier period in the Americas.

Security, professional audiovisual, fire and life safety, and data communications all grew. Residential audiovisual sales fell with the US housing market, exposing the weakness behind the impairment review.

Gross margin fell 170 basis points to 20.9% from 22.6%. Customer and product mix, inventory charges and the absence of a temporary tariff benefit from a year earlier drove the decline. Excluding tariff refunds and spin-off inventory adjustments, gross margin was 20.0%. A larger share of sales also went to lower-margin national accounts and projects.

ADI reports a separate adjusted profitability measure. Adjusted standalone EBITDA, which deducts the company’s estimated costs of operating as a public company, fell 13% to $66 million, equal to 5.1% of revenue.

How do the quarterly numbers compare?

The company’s table lists:

• Q3 2025: net revenue of $1.203 billion, gross margin of 22.6% and net income of $26 million.
• Q2 2026: net revenue of $1.286 billion, gross margin of 22.7% and net income of $6 million.
• Q3 2026: net revenue of $1.306 billion, gross margin of 20.9% and a net loss of $655 million.

Results before Aug. 3 are carve-out figures derived from Resideo’s accounts. Separately, Resideo used its first quarter after the separation to cut debt by $1.1 billion, MLQ.ai reported.

What did the full-year outlook change?

Management now expects 2026 net revenue of $4.910 billion–$4.930 billion, trimmed from $4.950 billion–$5.000 billion in August. The adjusted standalone EBITDA outlook fell to $230 million–$240 million from $275 million–$295 million set the same month.

Those ranges imply fourth-quarter revenue of $1.112 billion–$1.132 billion and adjusted EBITDA of $28 million–$38 million, both below the latest quarter’s $1.306 billion of revenue and $66 million of adjusted EBITDA. Management assumes the further weakness in Exclusive Brands seen in October persists.

Aarnes said ADI expects to exit 2026 with about $60 million in annualized gross cost savings, remains on track for $80 million by the end of 2027 and is developing further cuts. At quarter-end, the company held about $208 million of cash and an undrawn $500 million revolving credit facility.

What has to improve next?

Through year-end, the key commercial test is whether about $60 million in annualized gross cost savings can offset continued residential weakness and the rising share of lower-margin national-account and project work; management’s forecast still assumes October’s Exclusive Brands weakness persists.