REZI 10-K & 10-Q changes, risk factors and insider trading

We operate in a highly competitive, rapidly changing environment in each of our Products and Solutions and ADI Global Distribution segments, and we compete directly with global, national, regional, and local providers of our products, services, and solutions, including manufacturers, distributors, service and software providers, retailers, and online commerce providers. The most significant competitive factors we face are product and service innovation, reputation of our Company and brands, sales and marketing programs, customer relationships, product performance, reliability and warranty, quality and breadth of product training and events, product availability, speed and accuracy of delivery, service and price, customer and technical support, and furnishing of customer credit, with the relative importance of these factors varying among our segments and their respective products and services.

To remain competitive, we will need to invest continually in product and services development, marketing, custom installer service and support, manufacturing, and our distribution networks. We may not have sufficient resources to continue to make such investments and we may be unable to maintain our competitive position including due to the fact that our competitors and potential competitors may have greater brand recognition, resources, access to capital, including greater research and development or sales and marketing funds, more customers, lower costs, and more advanced technology platforms. It is possible that competitive pressures resulting from customer or competitor consolidations, including customers taking manufacturing or distribution in house, or purchasing directly from a manufacturer instead of from ADI Global Distribution, could affect our growth and profit margins.

Some of our competitors, including large technology companies, may also be able to deliver their service solutions more quickly to market than we can by capitalizing on technology developed in connection with their substantial existing service models. In addition, some of our competitors have significant bases of customer adoption in other services and online content, which they could use as a competitive advantage. Large technologyTechnology companies could exert pricing pressure in the connected/smart home solutions space, resulting in a shift in customer preferences toward the services of these companies and a reduction in our market share. In addition, in order to successfully compete, our products often need to integrate with the platforms of our competitors, which may be able to focus more on their own solutions versus ours, which may make it difficult to compete for the consumer market. A portion of our net sales derives from subscription-based solutions. If we are unable to successfully develop new subscription solutions or to enhance existing such solutions to meet customer requirements in a timely manner, our net sales may not grow as expected or may decline.

Our Products and Solutions business' offerings, as well as certain proprietarybusiness offerings sold through our ADI Global Distribution business are primarily delivered through networks of professional contractors, installers and integrators, distributors, and original equipment manufacturers (“OEM”), as well as major retailers and online merchants. Our ADI Global Distribution offerings are primarily distributed and delivered through our omni-channel platform to a network of professional contractors, installers, and integrators, as well as select online merchants. Growth of the retail markets, adoption of simple do-it-yourself solutions rather than adopting professionally installed do-it-for-me solutions, and greater electronic retail distribution alternatives relative to the professional installation markets may negatively impact our sales and margins, which could have an adverse effect on our business, financial condition and results of operations and cash flows.

With respect to our ADI Global Distribution business, if retail outlets, including online commerce,commerce platforms, increase their participationpresence in wholesale distribution markets, or if buyingcustomers patternsincreasingly forpurchase our products become more retail or e-commerce based through these outletschannels rather than theythrough currently are,us, our ADI Global Distribution business may not be ableunable to effectivelycompete compete,effectively, which could haveadversely an adverse effect onaffect our business, financial condition, results of operations and cash flows.

Technology in our markets changes constantly as new technologies and enhancements to existing technologies continue to be introduced, both in our traditional and connected product marketsmarkets, and industry standards continuously evolve. Our future results will depend upon a number of factors, including our ability to (i) identify consumer and installer preferences, emerging technological and broader trends, (ii) develop and maintain competitive, innovative products that differentiate our products from those of our competitors as well as protect our products through the use of intellectual property protections, (iii) grow our market share, (iv) develop, manufacture, and bring compelling new products to market quickly and cost-effectively, (v) source and manage independent contract manufacturers, (vi) effectively partner with connected device manufacturers and (vii) attract, develop, and retain individuals with the requisite technical expertise and understanding of customers’ needs to develop new technologies and introduce new products. Our inability to predict the growth of and respond in a timely way to customer preferences and other developments could have an adverse effect on our business, financial condition, results of operations and cash flows.

Each of our business segments depends on third parties for the supply of certain materials,product components, production equipment, and servicesreplacement parts for products we manufacture and those manufactured on our behalf, or sold through our ADI Global Distribution business, some of which are supplied by single or limited source suppliers/manufacturers. Our business, results of operations, financial condition and cash flows have in the past been and could in the future continue to be adversely affected by the impact of disruptions in our supply chain from our third-party suppliers and manufacturers, including our inability to obtain necessary raw materials and product components, production equipment, or replacement parts, whether due to work stoppages, cyberattacks, component failures, natural disasters, pandemics, economic, political, financial or labor concerns, weather conditions affecting products or shipments or transportation disruptions or other reasons, or if suppliers lack sufficient quality control or if there are significant changes in their financial or business condition or otherwise. If we are required to find alternative sources of supply, qualification of alternative suppliers and the establishment of reliable supplies could result in delays and possible loss of sales, which may have a material adverse effect on our business, results of operations, cash flows, and financial condition.

Product and service quality issues could result in a negative impact on customer confidence in our Company, our products and our brand image. If our offerings do not meet applicable legal and safety standards or our customers’ expectations regarding safety or quality, or if our products are improperly designed, manufactured, packaged, or labeled, or are otherwise alleged to cause harm or injury, we may need to recall those items, experience increased warranty costs or lost sales, and increased costs and exposure to legal, financial, and reputational risks including litigation and government enforcement action, as well as product liability claims. Such actions may damage our relationship with our customers which may result in a loss of market share. Additionally, the financial expenses related to such events may not be covered by our insurance or may be subject to deductibles. We have had instances in the past and may in the future be unable to obtain indemnity or reimbursement from our suppliers or other third parties for the warranty costs or liabilities associated with our products and there can be no assurance that we will have adequate reserves to cover any recalls and repair and replacement costs. We have in the past experienced, and may in the future experience, product recalls and litigation related to our products or services, none of which have been material to date. A significant product recall, warranty claim, or product liability case, especially with respect to our security and life safety-related products or services, could also result in adverse publicity, damage to our reputation, and a loss of consumer confidence in our products and services. We rely on qualified installers and integrators to sell and install many of our products and solutions for end-users and if our solutions are not properly installed they may fail to operate as intended which could adversely impact our reputation and consumer confidence in our products and solutions and otherwise expose us to financial liability and adversely effectaffect our business, results of operations, and financial condition.

Our profitability and margin growth are dependent upon our ability to drive sustainable improvements. We seek productivity and cost savings benefits through our ongoing transformation, restructuring, and other programs, such as consolidation and outsourcing of manufacturing operations or facilities, reductions in manufacturing shifts, transitions to cost-competitive regions, workforce optimizations, product line rationalizations and divestitures, and other cost-saving initiatives. Risks associated with these actions that we have in the past or may in the future experience include delays in execution of the planned initiatives, additional unexpected costs, asset impairments, realization of fewer than estimated productivity improvements, reduced ability to manage supply chain anomalies, employment claims, and adverse effects on employee morale leading to reduced production and unanticipated departures. We may not realize the full operational or financial benefits we expect, the recognition of these benefits may be delayeddelayed, and these actions may potentially disrupt our operations. In addition, organizational changes, attrition, labor relations difficulties, or work stoppages could have an adverse effect on our business, reputation, financial condition, results of operations, and cash flows.

Our international revenue represented approximately 23%22% of our net revenue for the year ended December 31, 2024.2025. Our international geographic footprint subjects us to many risks including but not limited to: exchange control regulations; wage and price controls; antitrust/competition and environmental regulations; employment regulations; foreign investment laws; monetary and fiscal policies and protectionist measures that may prohibit acquisitions or joint ventures, establish local content requirements, or impact trade volumes; import, export and other trade restrictions (such as embargoes); tariffs; violations by our employees of anti-corruption laws (despite our efforts to mitigate these risks); changes in regulations regarding transactions with state-owned enterprises; nationalization of private enterprises; natural and manman- made disasters, hazards and losses; backlash from foreign labor organizations related to our restructuring actions; violence; civil and labor unrest; acts of terrorism; global conflicts; and our ability to hire and maintain qualified staff and maintain the safety of our employees in these regions.

Additionally, certain of the markets in which we operate have adopted increasingly strict requirements concerning personal and non-personal data, privacy, artificial intelligence and cybersecurity. These requirements may negatively affect our ability to maintain, develop, sell and advertise our products and our services, may limit our ability to derive revenue from data, may require us to disclose product and services data to our competitors, may cause us to incur additional expense in obtaining mandatory or quasi-mandatory certifications, and may restrict our ability to transfer data internationally.

Current global conflicts, such as those between Russia and Ukraine as well as the Middle East crisis between Hamas and Israel, have created substantial uncertainty in the global economy, including sanctions and penalties imposed on certain countries from several governments. While we do not have a physical presence in these locations and do not have significant direct exposure to customers and vendors in those countries, weWe are unable to predict the impact that these actions will have on the global economy or on our financial condition, results of operations, and cash flows as of the date of these financial statements.

The efficient operation of our business requires substantial investment in technology infrastructure systems, including enterprise resource planning systems, information systems, supply chain management systems, digital commerce systems, and connected solutions platforms and network operations and systems. The failure to acquire, implement, maintain, and upgrade these systems may impact our ability to respond effectively to changing customer expectations, manage our business, scale our solutions effectively, or impact our customer service levels, which may put us at a competitive disadvantage and negatively impact our business, results of operations, financial condition, and cash flows. In connection with our recent acquisition of the Snap One business, we are in the process of consolidating and integrating our ADI Global Distribution business and Snap One enterprise applications. We have experienced delays in certain aspects of the implementation of certain ADI Global Distribution enterprise systems; while we have resolved concerns to date related to the system implementation, we may not be able to successfully implement or consolidate all systems without delays related to resource constraints oradditional challenges with the critical implementation process. While we have in the past experienced interruptions of service in our enterprise systems, none of these have been material to date. Repeated or prolonged interruptions of service, due to cyber threats or problems with our systems or third-party technologies, such as that experienced globally by virtue of the CrowdStrike outage, whether or not in our control,technologies could have a significant negative impact on our reputation and our ability to sell products and services. Our business, results of operations, financial condition, and cash flows may be adversely affected if our information systems fail, become unavailable for prolonged periods of time, are corrupted or do not allow us to transmit accurate information. Failure to properly or adequately address these issues, including the failure to fund backups, upgrades, and improvements to our systems, could impact our ability to perform necessary business operations, which could adversely affect our reputation, competitive position, business, results of operations, financial condition, and cash flows. Our ability to keep our business operating is highly dependent on the proper and efficient operation of our own and thirdour partythird-party data centers, networks, and data backup systems. In addition, a significant portion of our employees are engaged in remote or hybrid work from their homes, which further exposes our IT systems to potential cyber interference and disruption of work activities based on availability and performance of internet access in the regions in which our employees reside.

Enhanced tariff, import/export restrictions, or other trade barriers may havecontinue an adverseto impact on global economic conditions.

We are subject to certain laws and regulations affecting our international operations which, among other things, provide certain preferential duties and tariffs for qualifying imports subject to compliance with the applicable rules of origin and other requirements. ThereVarious have been, and continuemodifications to be, uncertainties with respect to the global economytariffs, and trade relations between the U.S.sanctions, and other countries globally. Implementation of more restrictive trade policiesmeasures orhave theintroduced renegotiationuncertainty ofin existingglobal U.S.markets trade agreements or trade agreements of other countries where we sell, procure, or manufacture large quantities of products and services or procure supplies and other materials incorporated into our products could negatively impact our business results of operations, cash flows, and financial condition. Tariffs, sanctions and other barriers to tradethat could adversely affect the business of our customers and suppliers, which could in turn negatively impact our net revenuerevenue, cash flows, and results of operations.

In addition, the U.S. federal government, and certain states, as well as other foreign governments including the United Kingdom and European Union, have imposed certain restrictions on the licensing, use and import, and export of certain surveillance, networking, telecommunications, and other equipment manufactured by certain of our suppliers based in China for our ADI Global Distribution business, which may require us to find additional sources of end-user products and result in higher costs. We have in the past had inquiries and claims from the U.S. federal government and a U.S. state court regarding these sales of certain Chinese made products in the U.S., which inquiries and litigation could impact our business reputation.

WeFurther, we cannot predict the extent to which the U.S. or other countries will impose new or additional quotas, duties, tariffs, taxes, or other similar restrictions upon the import or export of our products in the future, nor can we predict future trade policy or the terms of any renegotiated trade agreements and their impact on our business. The continuing adoption or expansion of trade restrictions, the occurrence of a trade war, or other governmental action related to tariffs or trade agreements or policies has the potential to adversely impact demand for our products, our costs, our customers, our suppliers, and the U.S. economy, which in turn could have a material adverse effect on our business, operating results, and financial condition.

Addressing stakeholder expectations and regulatory requirements relating to environmental,corporate social and governanceresponsibility (“ESGCR”) matters requires an investment of time, money, and other resources. We have periodically communicated our strategies, commitments, and targets related to ESGCR matters through the issuance of ana ESGCR report. Although we are committed to these strategies and targets, we may be unable to achieve them due to impacts on resources, operational costs, regulatory changes, and technological advancements. Furthermore, investor and other stakeholder expectations relating to ESGCR matters changehave and evolvechanged over time. Any failure or perceived failure by us to achieve our strategies or targets or otherwise respond to stakeholder expectations could adversely impact our business and reputation.

In the ordinary course of business, we may make certain commitments, including representations, warranties, and indemnities relating to current and past operations, and issue guarantees of third-party obligations. We have in the past and may in the future be subject to various lawsuits, investigations, or disputes arising out of the conduct of our business, including matters relating to public disclosure and reporting, commercial transactions, government contracts, product liability, prior acquisitions and divestitures, compliance with laws, labor and employment matters, employee benefit plans, intellectual property, and environmental, health and safety matters.

While we maintain or may otherwise have access to insurance for certain risks, certain risks may be excludedexcluded, and the amount of our insurance coverage may not be adequate to cover the total amount of all insured claims, legal fees, costs, and liabilitiesliabilities, and we may have to satisfy high insurance retentions. The incurrence of significant liabilities for which there is no or insufficient insurance coverage (or where there is available insurance but high retention levels) could adversely affect our liquidity and financial condition, results of operations, and cash flows.

As described in Note 15. Commitments and Contingencies of the Notes to Consolidated Financial Statements, we are subject to potentially material liabilities related to the investigation and cleanup of environmental hazards and to claims of personal injuries or property damages that may arise from hazardous substance releases and exposures. These liabilities arise out of our current and past operations and the operations and properties of predecessor companies (including off-site waste disposal). We are also subject to potentially material liabilities related to compliance of Resideo owned sites with the requirements of various federal, state, local, and foreign governments that regulate the discharge of materials into the environment and the generation, handling, storage, treatment, and disposal of and exposure to hazardous substances. If we are found to be in violation of these laws and regulations, we may be subject to substantial fines, criminal sanctions, trade restrictions, product recalls, public exposure, and be required to install costly equipment or make operational changes to achieve compliance with such laws and regulations.

Risks related to the Honeywell Spin-Off, our agreements and our relationships with Honeywell

In connection with the Honeywell Spin-Off, we entered into the Tax Matters Agreement with Honeywell, pursuant to which we are responsible and will indemnify Honeywell for certain taxes, including certain income taxes, sales taxes, VAT, and payroll taxes, relating to the business for all periods, including periods prior to the consummation of the Honeywell Spin-Off (“Tax Matters Agreement”). Refer to Note 15. Commitments and Contingencies of the Notes to Consolidated Financial Statements.

The Honeywell Spin-Off was generally intended by Honeywell to be a tax-free transaction for our stockholders, but any failure to comply with the relevant tax requirements could result in certain of our stockholders incurring substantial tax liabilities. In addition, we may have material payment obligations to Honeywell under the Tax Matters Agreement, including upon the resolution of pending or future disputes with Honeywell regarding the appropriate allocation of tax liabilities incurred in connection with the Honeywell Spin-Off.

In addition, conflicts of interest have arisen in the past and may in the future arise with Honeywell in a number of areas relating to our past and ongoing relationships, including: tax, employee benefit, indemnification, and other matters arising from our separation from Honeywell; intellectual property matters; and interpretations of contractual arrangements; and business combinations involving our Company.arrangements.

The agreements that we entered into with Honeywell in connection with the Honeywell Spin-Off may impose significant restrictions on us and our subsidiaries and limit our ability to engage in actions that may be in our long-term best interests. As described in more detail in Note 15. Commitments and Contingencies of the Notes to Consolidated Financial Statements, the Reimbursement Agreement imposes material restrictions on our business and operations, including limitations or impediments on our ability to separate or otherwise divest businesses and modify or waive the terms of certain agreements in a manner that would adversely affect the rights of Honeywell under the Reimbursement Agreement. In addition, the Trademark Agreement is terminable by Honeywell under certain circumstances, including if we fail to comply with all material obligations, including the payment obligations, set forth in the Reimbursement Agreement.obligations. The Trademark Agreement also automatically terminates upon the occurrence of a change of control of Resideo that is not approved by Honeywell,Honeywell and automatically terminates as to any subsidiary of Resideo upon it ceasing to be a wholly owned subsidiary of Resideo. Any termination of the Trademark Agreement could have a material adverse effect on our business, financial condition, cash flows, and reputation. In addition, the provisions of the Trademark Agreement in respect of a change of control of Resideo or the sale of any interests in any subsidiary of Resideo may impact our ability to enter into transactions that are otherwise in the best interests of our stockholders. Our intention to separate the ADI Global Distribution business through a tax-free spin-off to our shareholders does not impact the terms of the Trademark Agreement.

We and Honeywell also have had and may in the future have disputes under the agreements and related exhibits entered into in connection with the Honeywell Spin-Off. In addition, because of their former positions with Honeywell, certain of our executive officers, own equity interests in Honeywell. Continuing ownership of Honeywell stock and equity awards could appear to create potential conflicts of interest if our Company and Honeywell face decisions that could have implications for both our Company and Honeywell.

We may require additional capital in the future to finance our growth and development, upgrade and improve our manufacturing capabilities, implement further marketing and sales activities, fund ongoing research and development activities, satisfy regulatory and environmental compliance obligations and national approvals requirements, satisfy obligations under the Reimbursement Agreement, fund acquisitions, pay preferred stock dividends to the extent we choose to settle these dividends in cash, and meet general working capital needs. If our access to capital were to become constrained significantly, or if costs of capital increased significantly, due to lowered credit ratings, increased interest rates, prevailing business conditions, financial leverage, the volatility of the capital markets, decreased investor interest, or other factors, our business, financial condition, results of operations, and cash flows could be adversely affected and our ability to fund future development and acquisition activities could be impacted.

We believe that we have adequate capital resources to meet our projected operating needs, capital expenditures, and other cash requirements, including payments to Honeywell under the Reimbursement Agreement.requirements. However, we may need additional capital resources in the future and if we are unable to obtain sufficient resources for our operating needs, capital expenditures, and other cash requirements for any reason, our business, financial condition, and results of operations could be adversely affected.

The market price of our common stock has been volatile in the past and may be volatile in the future. The market price of our common stock may be significantly affected by the following factors: actual or anticipated fluctuations in our operating results; changes in financial estimates by securities analysts or our failure to perform in line with such estimates; announcements by us or our competitors of significant technical innovations, acquisitions, divestitures, strategic partnerships, joint ventures, or capital commitments; the potential spin-off of the ADI Global Distribution business; the loss of, or decrease in sales to, one or more key customers; global macroeconomic conditions; and departures of key personnel.

In June 2024, we issued 500,000 shares of Series A Cumulative Convertible Participating Preferred Stock, par value $0.01 per share (the “Preferred Stock”), to CD&R Channel Holdings, L.P. (the “CD&R Stockholder”), an entity affiliated with the investment firm Clayton, Dubilier & Rice LLC, pursuant to an Investment Agreement dated April 14, 2024. The proceeds of the issuance were used to partially finance the Snap One transaction. The Preferred Stock is convertible perpetual participating preferred stock of Resideo. Refer to Note 20.16. Stockholders’ Equity of the Notes to Consolidated Financial Statements for a description of the material terms of the Preferred Stock, including with respect to conversion rights, voting rights, dividend rights, anti-dilution adjustments and the Company’s optional redemption rights.

Certain of the preferential rights belonging to the Preferred Stock could result in divergent interests between the holders of the Preferred Stock and our common shareholders. In addition, our obligations to pay regular dividends to the holders of the Preferred Stock (which we may elect to pay in cash or in-kind) or the exercise of any of our optional redemption rights with respect to the outstanding Preferred Stock could, if paid in cash, impact our liquidity and reduce the amount of cash available for working capital, capital expenditures, growth opportunities, acquisitions, and other general corporate purposespurposes.

The CD&R Stockholder holds a significant equity interest in our business and may exercise influence over us, including through its ability to designate up to two directors to our board of directors, and its interests as a preferred equity holder may diverge from, or even conflict with, the interests of our other holders of our common stockstock.

The CD&R Stockholder beneficially owns shares of our common stock and Preferred Stock, which, taken together on an as-converted basis, represent approximately 11%19.9% of our total voting power based on CD&R’s Schedule 13-D filed November 7,11, 20242025 and total shares outstanding as of FebruaryDecember 12,31, 2025. As a result, the CD&R Stockholder may have the indirect ability to influence our policies and operations. In addition, under the Investment Agreement, the CD&R Stockholder is entitled to appoint up to two directors to our board of directors, subject to specified minimum ownership requirements. Both Nathan K. Sleeper and John Stroup, partners at CD&R, currently serve as directors. With such representation on our board of directors, the CD&R Stockholder has influence over the appointment of management and any action requiring the vote of our board of directors, including significant corporate action such as mergers and sales of substantially all of our assets. Additionally, for so long as the CD&R Stockholder owns Preferred Stock, certain matters will require the approval of the CD&R Stockholder, including: (1) amendments to our certificate of incorporation, the certificate of designations for the Preferred Stock or our bylaws that would alter or change the terms or the powers, preferences, rights, or privileges of the Preferred Stock as to affect them adversely; (2) authorizing, creating, increasing the authorized amount of, or issuing any class or series of equity securities that rank senior to or on party with the Preferred Stock; (3) increasing or decreasing the authorized number of shares of Preferred Stock; (4) amending certain debt financing documents to include limitations on our ability to accrue dividends on the Preferred Stock that are more restrictive in any material respect than those set forth in our existing debt financing documents; or (5) adopting any plan of liquidation or filing any voluntary petition for bankruptcy, receivership, or any similar proceeding. The CD&R Stockholder and its affiliates are in the business of making or advising on investments in companies, including businesses that may directly or indirectly compete with certain portions of our business. In addition, the CD&R Stockholder may have an interest in pursuing acquisitions, divestitures, financings, or other transactions that, in their judgment, could enhance their overall equity investment and have a negative impact to holders of our common stock as a whole.

Our future performance is highly dependent upon the continued services of our employees and management who have significant industry expertise, including our engineering and design personnel and trained sales force. Our performance is also dependent on the development of additional personnel and the hiring of new qualified personnel for our operations. Competition for qualified personnel in our markets is intense; many locations in which we operate have seen competition for talent and increases in wages, and we may not be successful in attracting or retaining qualified personnel. The loss of key employees, our inability to attract new qualified employees or adequately train employees, or the delay in hiring key personnel could negatively affect our business, financial condition, results of operations and cash flows. In 2024With our CEO announced his intentionintent to retirespin fromour theADI CompanyGlobal inDistribution 2025business, and we are currently engaged in succession planning. Therethere can be no guarantee that we will be able to recruit and retain acritical newexecutive CEOtalent who hashave the necessary skill sets and capabilities required to lead the Company, nor can we guarantee the timeline required for such recruitment.

We are a leading global manufacturer, developer, and distributor of technology-driven sensing and controls products and solutions that help homeowners and businesses stay connected and in control of their comfort, security, energy use, and smart living. We are a leaderleading player in key product markets including home heating, ventilation, and air conditioning controls,controls; smoke and carbon monoxide detection home safety and fire suppression,suppression; and security. Our global footprint serves residential and commercial end-markets. Our solutions and services can be found in over 150 million residential and commercial spaces globally, with tens of millions of new devices sold annually.

Our Products and Solutions segment offerings include temperature and humidity control, water and air solutions, smoke and carbon monoxide detection home safety products, residential and small business security products, video cameras, other home-related lifestyle convenience solutions, cloud infrastructure, installation and maintenance tools, and related software. We also sell components to manufacturers of water heaters, heat pumps, and boilers. Our products and solutions for comfort, energy management, safety, and security benefit from trusted, well-established branded offerings such as Braukmann, BRK, First Alert, Honeywell Home, Resideo, and others.

Our financial performance is influenced by macroeconomic factors underlying end user demand such as repair and remodeling activity, residential and non-residentialcommercial construction, new and existing home sales, employment rates, interest rates and bank lending standards, and supply chain dynamics that can be influenced by geopolitics. The ongoing uncertainty and volatility in the global macroeconomic environmentand political environments have affected, and could continue to affect, our visibility toward future performance. WhileUncertainties supply chain and logistics continued to normalize over 2024, uncertainties remainremain, including the global tariff environment, geopolitical relations between and among the U.S. and other countries, potential for changes in inflation and interest rates, tariffs, increased labor costs, reduced consumer spending due to softening labor markets, elevated mortgage rates, unfavorable foreign currency impacts from a stronger U.S. dollar, shifts in energy policies, and potential market and other disruption from theany ongoing conflict between Russia and Ukraine as well asof the Middle East crisis.above.

Refer to Note 1. Nature of Operations and Basis of Presentation of the Notes to Consolidated Financial Statements.

This section of the Form 10-K discusses fiscal 20242025 and fiscal 20232024 items and year-over-year comparisons of these periods. Discussions of fiscal 20222023 items and year-over-year comparisons between fiscal 20232024 and fiscal 20222023 that are not included in this Form 10-K can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 in theour Company’s 20232024 Annual Report on Form 10-K filed February 14,20, 2024 as reclassified in our Current Report on Form 8-K filed on June 4, 2024 to reflect the impacts of certain corporate functions being decentralized to align with the business strategy. Refer to Note 4. Segment Financial Data for additional information.2025.

Net revenue for the year ended December 31, 20242025 was $6,761$7,472 million, an increase of $519$711 million, or 8.3%,10.5%, fromcompared to the priorsame year,period in 2024. The increase was primarily due to $553$446 million of revenue from the acquisition of Snap OneOne, $193 million from favorable price and mix, $47 million from higher sales volumevolume, ofand $74$32 million driven by the ADI Global Distribution segment. The increase was partially offset by $105 million of lower sales from the divestiture of the Genesis business in 2023, and $6 million of unfavorablefavorable foreign currency fluctuations.exchange The price increases at Product and Solutions were offset by the decreases at ADI Global Distribution, resulting in minimal impact from price on net revenue.rates.

(1)Gross Includesmargin onlyrate for the Snapyear Oneended acquisitionDecember and31, Genesis2025 divestiturewas Gross29.4%, profitan increase of $1,901 million increased $205 million and gross margin of 28.1% was up 90130 basis points (“bps”) from the prior year. The increase in gross margin was primarily driven by lowerfavorable manufacturingprice costsand mix shift of 140100 bps, and favorable impacts from the acquisition of Snap One, netOne of Genesis50 divestiturebps. ofThe 80 bps, whichincrease was partially offset by netlower unfavorablemargins priceon and mix shift of 90 bps and the impact from lowersales volumes of 3020 bps.

Selling, general and administrative expenses for the year ended December 31, 2024,2025, were $1,138$1,266 million, an increase of $178$128 million, or 18.5%, as11.2%, compared to the same period in 2023.2024. The increase was driven by $141$78 million of higher operating costs versus prior year associated with the acquisition and integration of Snap One, $44 million of incremental operating expensescosts fromincluding the Snap One acquisition,payroll and $45benefits, rent, and third-party spend, and $6 million of acquisitionunfavorable andforeign integrationcurrency costs. The increase was partially offset by lower expenses of $8 million from the divestiture of the Genesis business in 2023.impacts.

Intangible asset amortization increased $42 million for the year ended December 31, 2024,2025 aswas $122 million, an increase of $42 million, or 53% compared to the same period in 2023.2024. The increase was primarily due to additional amortization expense of $41$36 million associated with the new intangiblesintangible fromassets acquired in the Snap One acquisition.acquisition, and $6 million higher amortization primarily related to an increase in capitalized software development.

Restructuring,Indemnification impairmentAgreement and extinguishment costs increased $10 millionexpense for the year ended December 31, 2024,2025 aswas $972 million, an increase of $761 million compared to the same period in 2023.2024. The increase was primarilydriven dueby toadditional debtexpense extinguishmentsincurred andin related costs associatedconnection with multiplethe credittermination agreement amendments throughoutof the year.Indemnification Agreement with Honeywell.

Other Expenses,expense Net(income), net

Interest expense, net increased $16 million for the year ended December 31, 20242025 aswas $135 million, an increase of $54 million, or 67% compared to the same period in 2023,2024. The increase was primarily due to an approximately $1.2 billion increase in our long-termoutstanding debt resulting in $22$34 million of higher interest expenseexpense, whicha wasdecrease partiallyof offset by $6$14 million in interest rate derivative related receipts due to interest rate fluctuations and a lower aggregate notional amount of higherinterest rate swaps due to maturities, and lower interest income of $5 million as a result of effectivelylower investinginterest excessrates cash.and lower cash balances.

Income tax expense increased for the year ended December 31, 2024,2025 primarilywas due$70 million, a decrease of $35 million or 33% compared to anthe increasesame period in non-deductible expenses.2024. The increase in the overall effective tax ratedecrease was primarily driven by non-deductiblea indemnificationdecrease costs,in otherincome before taxes and an increase in the non-deductible expenses,Indemnification andAgreement U.S.expense, taxationoffset ofby foreignan earnings.increase in deductible interest expense.

The chart below presents net revenue and income from operations for the years ended December 31, 20242025 and 2023.December 31, 2024.

ADIProducts Globaland DistributionSolutions net revenue increasedfor $627the year ended December 31, 2025 was $2,688 million, an increase of $124 million, or 17.6%, as4.8%, compared to the same period in 2023,2024. The increase is primarily due to $553an $129 million offavorable revenueimpact from theprice acquisitionand ofmix, Snapand One, $98$14 million from higher volumes, and favorable foreign currency fluctuationsexchange of $4 million.rates. The increase was partially offset anby unfavorable$19 pricemillion impactfrom oflower $31sales million.volumes.

Corporate costs for the year ended December 31, 2024,2025 were $178$160 million, ana increasedecrease of $41$18 million, or 29.9%,10.1% fromcompared $137 million into the same period ofin 2023.2024. The increasedecrease was primarily duedriven toby $33 million of Snap One acquisition and integration costs,costs incurred in the prior year, and $9lower restructuring, impairment and extinguishment costs of $16 million. The decrease was partially offset by $18 million of extinguishmentsbusiness separation costs related to the announced ADI Spin-Off and incremental operating costs associatedof with$11 themillion creditincluding agreementpayroll amendments.and benefits and third-party spend.

Liquidity and Capital Resources and Liquidity

Our future capital requirements will depend on many factors, including acquisition or strategic transactions we may enter into such as the announced future ADI Spin-Off, the rate of sales growth, market acceptance of our products, the timing and extent of research and development projects, potential acquisitions of companies or technologies, and the expansion of our sales and marketing activities. We may enter into acquisitions or strategic arrangements in the future, which also could require us to seek additional equity or debt financing. While we may elect to seek additional funding at any time, we believe our existing cash, cash equivalents, and availability under our credit facilities are sufficient to meet our capital requirements through at leastfor the nextforeseeable 12 months and the longer term.future.

A&R Credit Agreement and Senior Notes

We face a variety of risks that are inherent in our business and our industry, including operational, legal, and regulatory risks. Such risks could cause our actual results to differ materially from our forward-looking statements, expectations, and historical trends. ThereOther than as set forth below, there have been no material changes to the risk factors described in our 2025 Annual Report on Form 10-K.

The following information should be read in conjunction with the Unaudited Condensed Consolidated Financial Statements included herein under “Item 1. Financial Statements.” and the Audited Consolidated Financial Statements and the notes thereto and “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” (“MD&A”) included in our 2025 Annual Report on Form 10-K.

•the impact of potentially volatile global market, geo-politicalgeopolitical and economic conditions and industry, and end market cyclicality, including factors such as interest rates, inflation, energy costs, availability of financing, consumer spending habits and preferences, housing market changes, and employment rates;

•regulations and societal actions to respond to global climate change; and

ThereOther than as described in Part II, Item 1A. Risk Factors, of this Quarterly Report, there have been no material changes to the risk factors described in our 2025 Annual Report on Form 10-K. These risks could cause actual results to differ materially from those implied by forward-looking statements in this Quarterly Report. Even if our results of operations, financial condition and liquidity, and the development of the industries in which we operate are consistent with the forward-looking statements contained in this Quarterly Report, those results or developments may not be indicative of results or developments in subsequent periods.

We are a global manufacturer, developer, and distributor of technology-driven sensing and controls products and solutions that help homeowners and businesses stay connected and in control of their comfort, security, energy use, and smart living. We are a leading player in key product markets including home heating, ventilation, and air conditioning controls; smoke and carbon monoxide detectiondetection, home safety and fire suppression; and security. Our global footprint serves residential and commercial end-markets. Our solutions and services can be found in over 150 million residential and commercial spaces globally, with tens of millions of new devices sold annually.

Current PeriodQuarter Highlights

•Net revenueRevenue of $1.91$1.98 billion, up 8.0%2.0% from $1.77$1.94 billion in the firstsecond quarter of 2025

•Gross profit margin of 28.8%,30.0%, compared to 28.9%29.3% in the firstsecond quarter of 2025

•Income from operations of $102$131 million, or 5.3%6.6% of revenue, compared to $136$177 million, or 7.7%9.1% of revenue in the firstsecond quarter of 2025

•Fully diluted earnings per common share of $0.17,$0.51, compared to fully diluted loss per common share of $0.02$5.59 in the firstsecond quarter of 2025

For 2026, we anticipate executing our business operations against a highly dynamic global macroeconomic environment. The vast majority of costs associated with the buildingsensing and control products that the Products and Solutions segmentResideo sells in the U.S. are incurred in Mexico. Most Products and SolutionsResideo products manufactured in Mexico, along with a significant portion of the ADI Global Distribution segment products sourced in Mexico,Mexico are currently exemptduty from tariffsfree under the United States-Mexico-Canada Agreement (“USMCA”) or qualify for specific commodity exceptions.exceptions to recent tariffs. While imported products that are not subject to the USMCA or other exceptions are subject to the tariffnew surchargeSection 301 tariffs of 10% - 12.5% implemented on February 24, 2026 (until July 24, 2026) andand, in some instances, the Section 232 metals tariffs ranging from 15-50%15% - 50% on the finished goods that were implemented on April 6, 2026, we do not expect a material impact to our business due to these tariffs. We are monitoring the litigation and recent ruling from the U.S. Court of International Trade (“CIT”) on the Section 122 tariffs for potential change in status.tariffs. We will continue to take actions to address the cost impact of tariffs that affect our business; however, rising prices and other macroeconomics factors may lead to lower purchase levels by our customers. We are monitoring these dynamics closely and will adjust our business operations as appropriate. Also, weWe anticipate slow growth in the U.S. residential housing market and a moderation of growth in the non-residential construction market. In addition, we anticipate a continued slowdown with a large OEM security customer during the second half of 2026 relative to second half of 2025. Based on the aforementioned, our 2026 revenue outlook is growth in the mid-single-digitslow-to-mid-single-digits range year-over-year.

Net Revenue

Net revenueRevenue for the three months ended AprilJuly 4, 2026 was $1,912$1,981 million, an increase of $142$38 million, or 8.0%,2.0%, compared to the same period in 2025,2025. The increase was primarily due to incremental sales days in the year-over-year reporting period, and includes $90$30 million of revenue from favorable price and mix shift, and $6 million from favorable foreign currency exchange rates of $30 million, and higher sales volume of $27 million.rates.

The chart below presents the drivers of the gross profit variance from the three months ended MarchJune 29,28, 2025 to the three months ended AprilJuly 4, 2026.

Gross profit for the three months ended AprilJuly 4, 2026 was $551$595 million, an increase of $40$26 million, or 7.8%,4.6%, compared to the same period in 2025, as shown in the above waterfall.

Gross margin rate for the three months ended AprilJuly 4, 2026 was 28.8%,30.0%, aan decreaseincrease of 1070 basis points (“bps”),bps, compared to the same period in 2025. The decreaseincrease was primarily driven by lowera 140 bps benefit from tariff refunds, and 60 bps from higher margins on new sales volumesvolumes. ofThe 30 bps andincrease was partially offset by netan favorableunfavorable price and mix shift of 20130 bps and higher manufacturing costs of 10 bps.

Research and development expenses for the three months ended AprilJuly 4, 2026 were $48 million, an increase of $13$7 million, or 37.1%,17.1%, compared to the same period in 2025. The increase was driven by $9$5 million in the Products and Solutions segment and $4$2 million in the ADI Global Distribution segment related to incremental headcount and third-party services to develop and introduce new products into the market.

Selling, general and administrative expenses for the three months ended AprilJuly 4, 2026 were $340$332 million, an increase of $34$13 million, or 11.1%,4.1%, compared to the same period in 2025. The increase was primarily driven by certain legal settlements of $19 million and an increase in operating costs including people costs, litigation reserves, rent, and third-party spend primarily due to the incremental days in the year-over-year reporting period.spend.

Intangible asset amortization for the three months ended AprilJuly 4, 2026 was $31 million, an increase of $1 million, or 3.3%, compared with the same period in 2025.

Restructuring expenses for the three months ended AprilJuly 4, 2026 were $6$22 million, an increase of $2$20 million, compared to the same period in 2025. The increase was primarily driven by $15 million of employee termination costs related to our ongoing transformation initiatives, including changes to our global manufacturing footprint and workforce alignment.alignment, and $5 million of debt related restructuring and extinguishment costs.

Business separation costs for the three months ended AprilJuly 4, 2026 were $24$31 million. These expenditures are one‑timenon-recurring in nature and included third‑party advisory, consulting, legal, and other incremental separation‑related costs incurred in connection with the announced future ADI Spin-Off.

We incurred no Indemnification Agreement expense for the three months ended AprilJuly 4, 2026, a decrease of $90$882 million compared to the same period of 2025. The decrease was driven by the termination of the Indemnification Agreement with Honeywell on July 30, 2025.

OtherWe expense,incurred netno Indemnification Agreement expense for the threesix months ended AprilJuly 4, 2026 were immaterial,2026, a decrease of $6$972 million,million compared to the same period inof 2025. The decrease was primarilydriven attributable to favorable impacts from foreign currency exchange rates of $4 million, and final settlement related toby the previous saletermination of the ResideoIndemnification GridAgreement Serviceswith businessHoneywell resultingon inJuly $130, million of incremental gain.2025.

Interest expense, net for the three months ended AprilJuly 4, 2026 was $47$46 million, an increase of $22 million, or 88.0%,91.7%, compared to the same period in 2025. The increase was driven by an approximately $1.2 billion increase in outstanding debt related to the settlement of the Indemnification Agreement, resulting in $23$20 million of higher interest expense.

Income tax expense for the three months ended AprilJuly 4, 2026 was $17$69 million, ana increasedecrease of $8$18 million or 89%,20.7%, compared to the same period in 2025. The increasedecrease was primarily driven by an increase in income before taxes for the quarter,one-time partiallynon-deductible offsetIndemnification byexpense athat decreaseoccurred induring the effective tax rate.2025.

The effective income tax rate decreasedincreased from 60.0%(11.8)% to 30.9%,41.6%, primarily driven by the mix of earnings across the jurisdictions in which we operate, increased income before taxes with relatively fixed non-deductible expenses and the eliminationderecognition of certain deferred tax assets related to the settlement of the non-deductibleTax IndemnificationMatters Agreement expense.Agreement.

The chart below presents net revenueRevenue and incomeIncome from operations for the three months ended AprilJuly 4, 2026 and MarchJune 29,28, 2025.

Products and Solutions income from operationsRevenue for the three months ended AprilJuly 4, 2026 was $128$695 million, aan decreaseincrease of $8$29 million, or 5.9%,4.4%, compared to the same period in 2025. The decreaseincrease is primarily driven by approximately $18$32 million of certain one-time legal settlements,from higher restructuringsales costs of $7 million,volumes, and lower$2 salesmillion volumesfrom offavorable $6foreign million.currency Theexchange decrease wasrates, partially offset by $22an millionunfavorable impact from favorable price and mix shift.shift of $5 million.