# ADI Global Distribution Inc.: Form 10-Q for the period ended Jul 4, 2026

- Company: [ADI Global Distribution Inc.](/companies/adig.md) (CIK 2105139)
- Form: 10-Q
- Filed: 2026-08-13
- Accepted by EDGAR: Aug 13, 2026, 16:19 ET
- Period: 2026-07-04
- Accession: 0001628280-26-056748
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/2105139/000162828026056748/adig-20260704.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/2105139/000162828026056748/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2026-07-04.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Revenue | 3 months, 2026-04-05 to 2026-07-04 | $1.29bn | us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax |
| Revenue | 6 months, 2026-01-01 to 2026-07-04 | $2.49bn | us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax |
| Cost of revenue | 3 months, 2026-04-05 to 2026-07-04 | $994.0m | us-gaap:CostOfGoodsAndServicesSold |
| Cost of revenue | 6 months, 2026-01-01 to 2026-07-04 | $1.94bn | us-gaap:CostOfGoodsAndServicesSold |
| Gross profit | 3 months, 2026-04-05 to 2026-07-04 | $292.0m | us-gaap:GrossProfit |
| Gross profit | 6 months, 2026-01-01 to 2026-07-04 | $548.0m | us-gaap:GrossProfit |
| Research and development | 3 months, 2026-04-05 to 2026-07-04 | $11.0m | us-gaap:ResearchAndDevelopmentExpense |
| Research and development | 6 months, 2026-01-01 to 2026-07-04 | $23.0m | us-gaap:ResearchAndDevelopmentExpense |
| Selling, general and administrative | 3 months, 2026-04-05 to 2026-07-04 | $206.0m | us-gaap:SellingGeneralAndAdministrativeExpense |
| Selling, general and administrative | 6 months, 2026-01-01 to 2026-07-04 | $405.0m | us-gaap:SellingGeneralAndAdministrativeExpense |
| Operating income | 3 months, 2026-04-05 to 2026-07-04 | $25.0m | us-gaap:OperatingIncomeLoss |
| Operating income | 6 months, 2026-01-01 to 2026-07-04 | $38.0m | us-gaap:OperatingIncomeLoss |
| Interest expense | 3 months, 2026-04-05 to 2026-07-04 | $16.0m | us-gaap:InterestExpenseNonoperating |
| Interest expense | 6 months, 2026-01-01 to 2026-07-04 | $33.0m | us-gaap:InterestExpenseNonoperating |
| Income tax | 3 months, 2026-04-05 to 2026-07-04 | $2.0m | us-gaap:IncomeTaxExpenseBenefit |
| Income tax | 6 months, 2026-01-01 to 2026-07-04 | $1.0m | us-gaap:IncomeTaxExpenseBenefit |
| Net income | 3 months, 2026-04-05 to 2026-07-04 | $6.0m | us-gaap:NetIncomeLoss |
| Net income | 6 months, 2026-01-01 to 2026-07-04 | $5.0m | us-gaap:NetIncomeLoss |
| Operating cash flow | 6 months, 2026-01-01 to 2026-07-04 | −$76.0m | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Capital expenditure | 6 months, 2026-01-01 to 2026-07-04 | $26.0m | us-gaap:PaymentsToAcquirePropertyPlantAndEquipment |
| Cash and equivalents | at 2026-07-04 | $131.0m | us-gaap:CashAndCashEquivalentsAtCarryingValue |
| Current assets | at 2026-07-04 | $2.52bn | us-gaap:AssetsCurrent |
| Total assets | at 2026-07-04 | $4.64bn | us-gaap:Assets |
| Current liabilities | at 2026-07-04 | $902.0m | us-gaap:LiabilitiesCurrent |
| Total liabilities | at 2026-07-04 | $2.18bn | us-gaap:Liabilities |
| Long-term debt | at 2026-07-04 | $988.0m | us-gaap:LongTermDebtNoncurrent |
| Shareholders' equity | at 2026-07-04 | $2.46bn | us-gaap:StockholdersEquity |

## Management's discussion and analysis

As filed, 49,329 characters.

This Management's Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) is designed to provide a reader of our financial statements with a narrative from the perspective of management and is intended to help the reader understand the results of operations and financial condition of the Company. Our MD&A should be read in conjunction with our MD&A and combined financial statements included in the Company's Information Statement filed as an exhibit to the Company's Form 10-12B/A on July 1, 2026 (the (“Information Statement”).

### Forward-Looking Statements

Certain statements included in this Quarterly Report on Form 10-Q are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). All statements other than historical factual information are forward-looking statements, including, without limitation, statements regarding: the separation of the Company from Resideo, which was completed on August 3, 2026 (the “Spin-Off” or the “separation”); expected future financial and operating performance of, and future opportunities for, the Company following the separation; anticipated benefits of the separation; the tax treatment of the separation; our liquidity position or other financial measures; management’s plans and strategies for future operation; the effects of the separation or the distribution on our business; growth, declines and other trends in markets we sell into, including the expected impact of trade and tariff policies; and any other statements that address events or developments that we intend or believe will or may occur in the future. Terminology such as “believe,” “anticipate,” “continue,” “will,” “should,” “could,” “intend,” “plan,” “expect,” “estimate,” “project,” “target,” “may,” “possible,” “potential,” “goal,” “forecast” and “positioned” and words and terms of similar substance or references to future periods are intended to identify forward-looking statements, although not all forward-looking statements are accompanied by such words.

Forward-looking statements are based on assumptions and assessments made by our management in light of their experience and perceptions of historical trends, current conditions, expected future developments and other factors they believe to be appropriate. These forward-looking statements are subject to a number of risks and uncertainties, including but not limited to the risks and uncertainties set forth under “Cautionary Statement Concerning Forward-Looking Statements,” “Risk Factors,” and “Management's Discussion and Analysis of Financial Condition and Results of Operations” included in the Company's Information Statement and this Form 10-Q.

Forward-looking statements are not guarantees of future performance and actual results may differ materially from the results, developments and business decisions contemplated by the Company's forward-looking statements. Accordingly, you should not place undue reliance on any such forward-looking statement. Forward-looking statements speak only as of the date of the document or other communication in which they are made (or such earlier date as may be specified in such statement). ADI assumes no obligation to update or revise any forward-looking statement, whether as a result of new information, future events and developments or otherwise. Important factors that could cause actual results to differ materially from those expressed or implied by these forward-looking statements include:

- competitive markets and our ability to retain and expand our customer relationships;
- cybersecurity incidents, data privacy breaches and other information security events;
- risks associated with the use of artificial intelligence and other emerging technologies, including model performance, bias, data governance, intellectual property and evolving legal and regulatory frameworks;
- our ability to forecast demand and manage working capital, including inventory and product availability;
- disruptions, delays or cost increases in our supply chain and fulfillment operations, including our reliance on third-parties;
- the impacts of tariffs, import and export restrictions, trade barriers, sanctions and related judicial or regulatory developments;
- risks related to our international operations, including political instability, changes in law, compliance obligations, and currency exchange rate fluctuations;
- financial institution failures, defaults or other counterparty risks;
- harm to our brand, reputation or customer relationships resulting from product or service quality issues, recalls or negative publicity;
- risks associated with acquisitions and other strategic transactions, including our ability to identify, consummate and integrate acquisitions, realize expected benefits and manage integration-related costs and disruptions;
- failures or disruptions of our information technology systems and infrastructure;
- adverse macroeconomic and market conditions affecting our customers, including inflation, interest rates and access to credit, and the resulting impacts on demand, order patterns and pricing;
- our ability to protect our intellectual property and defend against infringement or misappropriation claims;
- our ability to comply with, and changes in, applicable laws and regulations and related enforcement actions;
- the outcome from litigation, claims, investigations, government proceedings and enforcement actions;
- our ability to recruit and retain key personnel as a newly independent company;
- our limited operating history as a separate public company;
- Spin-Off-related costs, dis-synergies and business interruptions;
- indemnification and other obligations that may be owed between ADI and Resideo under the transaction agreements, and related disputes;
- the tax treatment of the Spin-Off and related transactions;
- Spin-Off related agreements that impose restrictions following the Spin-Off and limit our ability to raise capital, engage in certain corporate transactions or take other corporate actions;
- the risk that we may not achieve the anticipated benefits of the Spin-Off within the expected timeframe, or at all, including due to dis-synergies and separation-related complexity;
- our post-Spin-Off indebtedness;
- restrictions in our debt agreements that may limit our operational and financial flexibility;
- the development of an active trading market for our common stock, and volatility in the market price and trading volume of our common stock following the Spin-Off;
- our failure to maintain effective internal controls over financial reporting or disclosure controls and procedures, which could reduce investor confidence and adversely affect our stock price;
- uncertainty regarding the amount and timing of any dividends;
- dilution to our stockholders from future equity issuances or other capital-raising transactions;
- the rights, preferences and terms of any preferred stock issued by ADI, including preferred shares issued to CD&R and the impact on our common stockholders;
- the influence of CD&R Group and its affiliates, including their equity interest and any board designation rights, and potential conflicts arising from such arrangements;
- actual or potential conflicts of interest involving our executive officers and directors arising from their equity ownership or other relationships with Resideo;
- the potential for competitive activities by Resideo;
- the allocation of assets and liabilities under the transaction agreements;
- disputes with Resideo regarding the transaction agreements entered into as part of the Spin-Off, or other matters;
- anti-takeover provisions in our certificate of incorporation, bylaws and Delaware law, as well as exclusive forum provisions, which could discourage or delay a change of control;
- the risk that the combined post-Spin-Off value of our common stock and Resideo's common stock, if applicable, may not equal or exceed the pre-Spin-Off value, and that the market price of each may fluctuate independently;
- changes in our effective tax rate;
- the use of critical accounting estimates and judgments;
- the risk of goodwill, intangible asset or long-lived asset impairment charges; and
- other risks detailed under the caption “Risk Factors” in this Quarterly Report and under “Cautionary Statement Concerning Forward-Looking Statements,” “Risk Factors,” and “Management's Discussion and Analysis of Financial Condition and Results of Operations” included in the Company's Information Statement.

### Overview and Business Trends

ADI is a leading, global specialty distributor of professionally installed low-voltage products, including security and audio-visual (“AV”) solutions, serving commercial and residential markets through an omnichannel go-to-market platform. ADI sells primarily to professional installers, dealers and integrators. Within North America, ADI is the market-leading distributor in the professionally installed security, fire/life safety and audio-visual product categories. We offer over 500,000 products from more than 1,000 suppliers across key specialty low-voltage categories with strong proximity to our customers with a large network of store locations. ADI sells primarily to professional installers, dealers and integrators.

Our omnichannel go-to-market platform is underpinned by a digital experience designed to deepen customer engagement and broaden our reach. We combine an extensive third-party product portfolio and deep supplier relationships with a growing suite of exclusive brands and software-based services. These exclusive brands and services are designed to help our customers build stronger businesses, differentiate our offerings and improve the end user experience.

ADI Global Distribution is our sole operating and reportable segment based upon the information used by our chief operating decision maker (“CODM”) in evaluating the performance of our business and allocating resources and capital.

### Current Quarter Highlights

- Net revenue of $1,286 million, up 0.7% year-over-year
- Gross margin of 22.7%, up 50 basis points year-over-year
- Net income of $6 million, compared to net loss of $283 million in the second quarter of 2025; Adjusted EBITDA of $86 million, or 6.7% of revenue, compared to $95 million or 7.4% of net revenue in the second quarter of 2025

### Outlook

For the remainder of 2026, we anticipate executing our business operations against a highly dynamic global macroeconomic environment. We are evaluating the impact of the Section 301 tariffs implemented by the United States relating to forced labor prohibitions that became effective on July 24, 2026. These policies can impact the pricing, purchase costs and availability of the products we sell. We will continue to take actions to address the cost impact of tariffs that affect our business; however, rising prices and other macroeconomic 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, we anticipate stable remodeling and upgrade demand across commercial markets, while residential markets remain soft.

### Separation and Distribution

We completed our separation from Resideo Technologies, Inc. (“Resideo”) on August 3, 2026 (the “Spin-Off”), in a transaction intended to be tax free for U.S. federal income tax purposes. Holders of Resideo common stock as of the close of business on July 20, 2026, the record date of the distribution, received one share of common stock of ADI for every two shares of Resideo common stock. Prior to the Spin-Off, we were wholly owned by Resideo and our business and operations were a part of Resideo. As noted above, CD&R Group beneficially owns shares of ADI common stock and ADI preferred stock, which, taken together on an as-converted basis, represent approximately 19.69% of ADI’s total voting power.

In connection with the Spin-Off, we entered into the separation agreement and certain other agreements with Resideo, including a transition services agreement, an employee matters agreement, a tax matters agreement, an intellectual property matters agreement and other commercial agreements. As noted above, we entered into a shareholder's agreement with the CD&R Group. We generally expect to be able to utilize Resideo’s services for a transitional period following the Spin-Off before we replace these services over time with services supplied either internally or by third parties, as Resideo is only obligated to provide the transition services for limited periods following completion of the Spin-Off.

For a further discussion of the Spin-Off related risks and agreements, including the separation agreement and the risks and uncertainties associated with the separation and distribution, refer to the “The Separation and Distribution” and “Risk Factors” sections included in the Company's Information Statement.

Prior to the completion of the Spin-Off, we were a wholly-owned subsidiary of Resideo, and all of our outstanding shares of common stock were owned by Resideo. Following the Spin-Off, we and Resideo operate separately, each as a public company. Historically, we have relied on Resideo to manage certain of our operations and provide certain services, the costs of which were either allocated or directly billed to us. Historical costs for such services may not necessarily reflect the actual expenses we would have incurred, or will incur, as an independent company.

The expenses for the services we will receive from Resideo initially and then internally or by third parties may vary from the historical costs directly billed and allocated to us for the same services. Addressing the needs that arise from becoming a standalone company will require significant resources, including time and attention from our senior management and others throughout ADI. We will continue to monitor potential separation dis-synergies and we anticipate incurring certain one-time and ongoing costs associated with creating our own capabilities, as further discussed below. As discussed below, we were jointly and severally liable for certain third-party debt instruments and other obligations to which Resideo is a party. Accordingly, a portion of these obligations and the related expenses have been allocated to the Company for the periods presented to the extent the Resideo balances remained outstanding. These outstanding debt obligations did not transfer to ADI in connection with the Spin-Off; however, the historical debt balances were allocated to the Company in a manner intended to approximate the indebtedness incurred by the Company upon completion of the Spin-Off. All amounts reflected in our Unaudited Condensed Combined Financial Statements reflect estimated allocations. Refer to *Note 8. Long-*

*Term Debt* and *Note 9. Indemnification Agreement,* of the Notes to the Unaudited Condensed Combined Financial Statements for additional information.

### Future Standalone Company Expenses

As a result of the Spin-Off, we are subject to the requirements of federal and state securities laws and applicable stock exchange requirements. We have established additional procedures and practices required of a standalone public company. As a result, we have started to and will continue to incur additional one-time and non-recurring expenses consisting primarily of employee-related costs, costs to establish certain standalone functions and information technology systems and other transaction-related costs. Additionally, we have incurred and will continue to incur incremental costs that arise from becoming a standalone public company, including costs related to external reporting, internal audit, treasury, investor relations, board of directors and officers and stock administration, as well as costs from expanding the services of existing functions, such as information technology, finance, supply chain, human resources, legal, tax, facilities, branding, security, government relations, community outreach and insurance. In line with our long-term cost strategy, we will continue to evaluate operational cost improvement opportunities as a standalone company by utilizing our lean culture and innovative technologies to drive lower costs and increased productivity levels across our business and corporate functions.

### Results of Operations

The following tables summarize our results of operations for the periods presented:

*(in millions, except percentages)*

|  | Three Months Ended July 4, 2026 | June 28, 2025 | $ Change | % Change |
| --- | ---: | ---: | ---: | ---: |
| Net revenue | $1,286 | $1,277 | $9 | 0.7% |
| Cost of goods sold | 994 | 994 | – | –% |
| Gross profit | 292 | 283 | 9 | 3.2% |
| Gross profit margin | 22.7% | 22.2% |  | 50bps |
| Operating expenses: |  |  |  |  |
| Selling, general and administrative expenses | 206 | 190 | 16 | 8.4% |
| Research and development expenses | 11 | 9 | 2 | 22.2% |
| Intangible asset amortization | 25 | 23 | 2 | 8.7% |
| Transaction related expenses | 18 | 3 | 15 | 500.0% |
| Restructuring expenses | 7 | 1 | 6 | 600.0% |
| Total operating expenses | 267 | 226 | 41 | 18.1% |
| Income from operations | 25 | 57 | (32) | (56.1)% |
| Indemnification agreement expense | – | 331 | (331) | (100.0)% |
| Other expense (income) | 2 | (2) | 4 | (200.0)% |
| Interest expense | 16 | 4 | 12 | 300.0% |
| Interest income | (1) | (2) | 1 | (50.0)% |
| Income (loss) before taxes | 8 | (274) | 282 | (102.9)% |
| Provision for income taxes | 2 | 9 | (7) | (77.8)% |
| Net income (loss) | $6 | $(283) | $289 | (102.1)% |

25

*(in millions, except percentages)*

|  | Six Months Ended July 4, 2026 | June 28, 2025 | $ Change | % Change |
| --- | ---: | ---: | ---: | ---: |
| Net revenue | $2,492 | $2,398 | $94 | 3.9% |
| Cost of goods sold | 1,944 | 1,873 | 71 | 3.8% |
| Gross profit | 548 | 525 | 23 | 4.4% |
| Gross profit margin | 22.0% | 21.9% |  | 10bps |
| Operating expenses: |  |  |  |  |
| Selling, general and administrative expenses | 405 | 371 | 34 | 9.2% |
| Research and development expenses | 23 | 17 | 6 | 35.3% |
| Intangible asset amortization | 49 | 46 | 3 | 6.5% |
| Transaction related expenses | 26 | 4 | 22 | 550.0% |
| Restructuring expenses | 7 | 5 | 2 | 40.0% |
| Total operating expenses | 510 | 443 | 67 | 15.1% |
| Income from operations | 38 | 82 | (44) | (53.7)% |
| Indemnification agreement expense | – | 364 | (364) | (100.0)% |
| Other expense (income) | 2 | (2) | 4 | (200.0)% |
| Interest expense | 33 | 12 | 21 | 175.0% |
| Interest income | (3) | (4) | 1 | (25.0)% |
| Income (loss) before taxes | 6 | (288) | 294 | (102.1)% |
| Provision for income taxes | 1 | 10 | (9) | (90.0)% |
| Net income (loss) | $5 | $(298) | $303 | (101.7)% |

### Net Revenue

### Three months ended

Net revenue for the three months ended July 4, 2026 was $1,286 million, an increase of $9 million, or 0.7%, compared to the same period in 2025. The increase was primarily driven by $35 million from favorable price and mix shift, and $3 million from favorable foreign currency exchange rates, partially offset by lower sales volumes of $31 million.

### Six months ended

Net revenue for the six months ended July 4, 2026 was $2,492 million, an increase of $94 million, or 3.9%, compared to the same period in 2025. The increase was primarily driven by $77 million from favorable price and mix shift and $18 million from favorable foreign currency exchange rates.

### Gross Profit

### Three months ended

Gross profit for the three months ended July 4, 2026 was $292 million, an increase of $9 million, or 3.2%, as compared to 2025, and gross margin was 22.7% for the three months ended July 4, 2026, up 50 basis points (“bps”) from the prior year three months ended period. The increase in gross margin was primarily driven by the favorable impact from tariff refunds of $20 million, or 160 bps, partially offset by unfavorable price and mix shift of 100 bps and higher duty and freight costs of 20 bps.

### Six months ended

Gross profit for the six months ended July 4, 2026 was $548 million, an increase of $23 million, or 4.4%, as compared to 2025, and gross margin was 22.0% for the six months ended July 4, 2026, up 10 bps from the prior year six months ended period. The increase in gross margin was primarily driven by the favorable impact from tariff refunds of $20 million, or 90 bps, partially offset by unfavorable price and mix shift of 50 bps and higher duty and freight costs of 30 bps.

### Selling, General and Administrative Expenses

### Three months ended

Selling, general and administrative expenses for the three months ended July 4, 2026 were $206 million, an increase of $16 million, or 8.4%, as compared to the same period in 2025. The increase was driven mainly by $15 million of inflationary impacts and investment in the business including employee and facility costs, and $1 million of unfavorable foreign currency exchange rates.

### Six months ended

Selling, general and administrative expenses for the six months ended July 4, 2026 were $405 million, an increase of $34 million, or 9.2%, as compared to the same period in 2025. The increase was driven mainly by $30 million due to the incremental days in the year-over-year reporting period, inflationary impacts and investment in the business including employee and facility costs, and $4 million of unfavorable foreign currency exchange rates.

### Research and Development Expenses

### Three months ended

Research and development expenses for the three months ended July 4, 2026 were $11 million, an increase of $2 million compared to the same period in 2025. The increase was primarily due to incremental costs incurred to develop and introduce new products into the market.

### Six months ended

Research and development expenses for the six months ended July 4, 2026 were $23 million, an increase of $6 million compared to the same period in 2025. The increase was primarily due to incremental costs incurred to develop and introduce new products into the market.

### Intangible Asset Amortization

### Three months ended

Intangible asset amortization for the three months ended July 4, 2026 was $25 million, an increase of $2 million as compared to the same period in 2025, primarily related to an increase in capitalized software.

### Six months ended

Intangible asset amortization for the six months ended July 4, 2026 was $49 million, an increase of $3 million as compared to the same period in 2025, primarily due to an increase in capitalized software.

### Transaction Related Expenses

### Three months ended

Transaction related expenses for the three months ended July 4, 2026 were $18 million, an increase of $15 million as compared to the same period in 2025. The increase was primarily due to $18 million of expenses incurred in connection with the Spin-Off, including third-party advisory, consulting, legal and other incremental separation-related costs, offset by a $3 million decrease in expenses related to integration costs incurred for the Snap One acquisition in the three months ended June 28, 2025.

### Six months ended

Transaction related expenses for the six months ended July 4, 2026 were $26 million, an increase of $22 million as compared to the same period in 2025. The increase was primarily due to $26 million of expenses incurred in connection with the Spin-Off, including third-party advisory, consulting, legal and other incremental separation-related costs, offset by a $4 million decrease in expenses related to integration costs incurred for the Snap One acquisition in the six months ended June 28, 2025.

### Restructuring Expenses

### Three months ended

Restructuring expenses for the three months ended July 4, 2026 were $7 million, an increase of $6 million as compared to the same period in 2025. The increase was due to restructuring actions taken to better align our cost structure with our strategic objectives, improve operating efficiency and optimize our operating footprint.

### Six months ended

Restructuring expenses for the six months ended July 4, 2026 were $7 million, an increase of $2 million as compared to the same period in 2025. The increase was due to restructuring actions taken to better align our cost structure with our strategic objectives, improve operating efficiency and optimize our operating footprint.

### Indemnification Agreement Expense

### Three months ended

We incurred no Indemnification Agreement expense for the three months ended July 4, 2026, a decrease of $331 million compared to the same period in 2025. The decrease was driven by Resideo's termination of the Indemnification Agreement with Honeywell in 2025. Refer to *Note 9. Indemnification Agreement,* of the Notes to the Unaudited Condensed Combined Financial Statements for additional information.

### Six months ended

We incurred no Indemnification Agreement expense for the six months ended July 4, 2026, a decrease of $364 million compared to the same period in 2025. The decrease was driven by Resideo's termination of the Indemnification Agreement with Honeywell in 2025. Refer to *Note 9. Indemnification Agreement,* of the Notes to the Unaudited Condensed Combined Financial Statements for additional information.

### Interest Expense

### Three months ended

Interest expense for the three months ended July 4, 2026 was $16 million, an increase of $12 million compared to 2025. The change was due to an increase in the total long-term debt held by Resideo through additional borrowings related to the termination of the Indemnification Agreement and the resulting increase in the allocated debt and associated interest expense to the Company. Refer to *Note 8. Long-Term Debt,* of the Notes to the Unaudited Condensed Combined Financial Statements for additional information.

### Six months ended

Interest expense for the six months ended July 4, 2026 was $33 million, an increase of $21 million compared to 2025. The change was due to an increase in the total long-term debt held by Resideo through additional borrowings related to the termination of the Indemnification Agreement and the resulting increase in the allocated debt and associated interest expense to the Company. Refer to *Note 8. Long-Term Debt* of the Notes to the Unaudited Condensed Combined Financial Statements, for additional information.

### Interest Income

### Three months ended

Interest income for the three months ended July 4, 2026 was $1 million, a decrease of $1 million compared to 2025.

### Six months ended

Interest income for the six months ended July 4, 2026 was $3 million, a decrease of $1 million compared to 2025.

### Provision for Income Taxes

### Three and six months ended

The Company's effective income tax rate was 25% and 17% for the three and six months ended July 4, 2026, respectively, on pre-tax income, compared to (3)% for both the three and six months ended June 28, 2025, which reflected income tax expense recorded on a pre-tax loss. The change in the effective tax rate for the three and six months ended July 4, 2026 compared to the same periods in 2025 is primarily driven by the decrease to nondeductible indemnification expense and an increase in deductible stock-based compensation.

Income tax expense was $2 million and $1 million during the three and six months ended July 4, 2026, compared to expense of $9 million and $10 million during the three and six months ended June 28, 2025.

### Non-GAAP Financial Measures

In addition to the key operational metrics above and our financial results as prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”), we evaluate our operating performance using certain financial measures, including Adjusted EBITDA and Adjusted EBITDA margin, that are not defined by, or prepared in accordance with GAAP. We refer to these measures as “non-GAAP” financial measures. These non-GAAP financial measures are supplemental measures of our performance that we believe help investors to better understand our financial condition and operating results and to analyze business trends by providing measures which management uses to evaluate operating performance. We use these non-GAAP financial measures, in addition to the corresponding GAAP financial measures, as important supplemental measures of our operating performance that exclude non-cash and other disclosed items that we believe are not indicative of our underlying business, core operating results and the overall health of our company. We believe the use of such non-GAAP financial measures assists investors in understanding the ongoing operating performance of the Company by presenting the financial results between periods on a more comparable basis. These non-GAAP measures should be considered only as supplements to, and should not be considered in isolation or used as a substitute for, financial information prepared in accordance with GAAP. We further believe that providing this information assists our investors in understanding our operating performance and the methodology used by management to evaluate and measure such performance. In conjunction with our GAAP results, we use these non-GAAP measures to assess business performance, particularly when comparing performance to past periods. As such, we believe these measures are useful for investors because they facilitate a comparison of financial results from period to period.

Management recognizes that these non-GAAP financial measures have limitations, including that they may be calculated differently by other companies or may be used under different circumstances or for different purposes, thereby affecting their comparability from company to company. In order to compensate for these and the other limitations discussed below, management does not consider these measures in isolation from, or as alternatives to, the comparable financial measures determined in accordance with GAAP. Readers should review the reconciliations below and should not rely on any single financial measure to evaluate our business. The reasons we use these non-GAAP financial measures and the reconciliations to their most directly comparable GAAP financial measures follow.

We believe that Adjusted EBITDA and Adjusted EBITDA margin, which are adjusted to exclude the effects of unique and/or non-cash items that are not closely associated with ongoing operations, provide management and investors with meaningful measures of our performance that increase the period-to-period comparability by highlighting the results from ongoing operations and the underlying profitability factors. We define Adjusted EBITDA margin as Adjusted EBITDA as a percentage of revenue. We believe Adjusted EBITDA and Adjusted EBITDA margin provide management and investors with a more complete understanding of underlying operating results and trends of established, ongoing operations without the effect of charges that do not relate to the core operations of our business, such as the impact of transaction costs, the Indemnification Agreement and foreign currency impacts, as these activities can obscure underlying trends.

We believe these measures provide additional insight into how our businesses are performing by excluding certain disclosed items that we believe are not representative of our underlying business and operating performance. However, Adjusted EBITDA and Adjusted EBITDA margin should not be construed as inferring that our future results will be unaffected by the items for which the measures adjust.

### Adjusted EBITDA and Adjusted EBITDA margin

The following table provides a reconciliation of net income (loss) and net income (loss) margin, the most closely comparable GAAP financial measures, to Adjusted EBITDA and Adjusted EBITDA margin:

*(in millions, except percentages)*

|  | Three Months Ended July 4, 2026 | June 28, 2025 | Six Months Ended July 4, 2026 | June 28, 2025 |
| --- | ---: | ---: | ---: | ---: |
| Net revenue | $1,286 | $1,277 | $2,492 | $2,398 |
| Net income (loss) | $6 | $(283) | $5 | $(298) |
| Net income (loss) margin | 0.5% | (22.2)% | 0.2% | (12.4)% |
| Provision for income taxes | 2 | 9 | 1 | 10 |
| Income (loss) before taxes | 8 | (274) | 6 | (288) |
| Depreciation and amortization | 30 | 28 | 59 | 57 |
| Interest expense | 16 | 4 | 33 | 12 |
| Interest income | (1) | (2) | (3) | (4) |
| Indemnification Agreement expense (1) | – | 331 | – | 364 |
| Stock-based compensation expense (2) | 6 | 6 | 12 | 12 |
| Restructuring expenses (3) | 7 | 1 | 7 | 5 |
| Transaction related expenses (4) | 18 | 3 | 26 | 4 |
| Other (5) | 2 | (2) | 2 | (2) |
| Adjusted EBITDA | $86 | $95 | $142 | $160 |
| Adjusted EBITDA margin | 6.7% | 7.4% | 5.7% | 6.7% |

(1) Consists of charges associated with the Indemnification Agreement that were allocated to the Unaudited Condensed Combined Financial Statements. Refer to *Note 9. Indemnification Agreement,* of the Notes to the Unaudited Condensed Combined Financial Statements for additional information.

(2) Represents non-cash compensation expenses recognized for stock-based compensation arrangements.

(3) Consists of non-recurring charges associated with restructuring initiatives. Refer to *Note 10. Restructuring,* of the Notes to the Unaudited Condensed Combined Financial Statements for additional information.

(4) For the three and six months ended July 4, 2026, represents $18 million and $26 million of transaction costs related to the Spin-Off. For the three and six months ended June 28, 2025, represents $3 million and $4 million of Snap One integration costs.

(5) Represents amounts included in Other expense (income), net reported on the Unaudited Condensed Combined Statement of Operations.

### Liquidity and Capital Resources

As of July 4, 2026, we had $131 million of cash and cash equivalents and $400 million of restricted cash proceeds from the offering of Senior Notes due 2034 that were placed into escrow. The proceeds were released from escrow to ADI in connection with the consummation of the Spin-Off and satisfaction of the escrow release conditions. Our liquidity is primarily dependent on our ability to continue to generate positive cash flows from operations, supplemented by external sources of capital as needed.

The cash reflected on our Unaudited Condensed Combined Balance Sheets represents cash accounts legally owned by our subsidiaries and comprises both (a) bank accounts held by local jurisdictions that do not participate in centralized cash pooling arrangements, as well as (b) bank accounts that participate in centralized cash pooling arrangements and are owned by our subsidiaries.

Historically, Resideo had provided cash management and other treasury services to us, the effect of which was presented as Due from related parties – current, Due to related parties – current, Due from related parties – non-current, Due to related parties – non-current and Net parent investment on the Unaudited Condensed Combined Balance Sheets. As a result of completing the Spin-Off, we ceased participating in Resideo’s cash pooling process, effectively settling any outstanding related party loan arrangements and our cash and cash equivalents are now held and used solely for our own operations. As a result, our capital structure, long-term commitments and sources of liquidity changed meaningfully from our historical practices.

Our future capital requirements will depend on many factors, including 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. In connection with the Spin-Off, we entered into new financing arrangements and issued shares of ADI Preferred Stock which includes an obligation to pay regular dividends (in cash or in-kind) to the holders of the ADI Preferred Stock. Fulfilling our obligations to pay dividends or the exercise of any optional redemption rights with respect to the outstanding ADI 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 purposes. We believe our existing cash held as of the Spin-Off, cash flows generated from operations and access to capital markets will provide adequate resources to meet the needs of our current and planned operations.

To the extent our current liquidity is insufficient to fund future activities, we may need to raise additional funds, such as refinancing or securing new secured or unsecured debt, issuing common or preferred equity, disposing of certain assets to fund our operations, and/or accessing other public or private sources of capital. If we raise additional funds by issuing equity securities, the ownership of our existing stockholders will be diluted. The incurrence of additional debt financing would result in debt service obligations, and any future instruments governing such debt could provide for operating and financial covenants that could restrict our operations. We cannot assure you that we could obtain refinancing or additional financing on favorable terms or at all.

With respect to long-term debt facilities remaining with Resideo and the Indemnification Agreement liability, the Company had not historically made cash payments to third parties as such payments are made by Resideo and there is no expectation or requirement for the Company to be obligated to make payments of this nature in the future as the Indemnification Agreement (including the guarantee provided by the Company) was terminated on June 22, 2026 and, in the case of the long-term debt facilities remaining with Resideo, ADI is no longer an obligor or guarantor with respect to these obligations upon completion of the Spin-Off.

Upon the completion of the Spin-Off, the Company used the aggregate proceeds received from the Senior Notes due 2034 and the Term Facility to make a one-time distribution payment of $900 million to Resideo in the form of a dividend. Following payment of the dividend and completion of the other cash transfers required under the separation and distribution agreement, the Company retained approximately $150 million of cash and cash equivalents as of the date of the Spin-Off.

### Senior Unsecured Notes of ADI

On June 30, 2026, the ADI Escrow Issuer LLC (the “Escrow Issuer”), a direct, wholly-owned subsidiary of ADI and an indirect, wholly-owned subsidiary of our Parent, completed an offering of $400 million aggregate principal of the Escrow Issuer’s 7.125% Senior Notes due 2034 (“Senior Notes due 2034”). As of July 4, 2026, the proceeds from the offering were held in escrow and were released after completion of the Spin-Off. Such proceeds are included in Restricted cash on the Unaudited Condensed Combined Balance Sheet. The Senior Notes due 2034 mature on July 15, 2034 and bear interest at an annual rate of 7.125%, payable semi-annually. We recognized the Senior Notes due 2034 at issuance price of $400 million less debt issuance costs. Interest income from the escrow arrangements and expense recognized for the three and six months ended July 4, 2026 were immaterial.

### Credit Agreement of ADI

On July 1, 2026, ADI Global Distribution Funding LLC (“ADI Funding”) entered into the Credit Agreement with the lenders that provides for a $600 million Term Facility and a $500 million Revolving Facility (collectively referred to as the “Credit Facilities”). Borrowings under the Credit Facilities became available in connection with the completion of the the Spin-Off, with the Term Facility and Revolving Facility maturing seven and five years after the Spin-Off, respectively. As of July 4, 2026, no amounts had been drawn under the credit facilities.

### A&R Credit Agreement and Senior Notes of Resideo

In 2021, Resideo (“Borrower”) entered into a credit agreement with JPMorgan Chase Bank N.A. as administrative agent (the “A&R Credit Agreement”), which was most recently amended on June 4, 2026 (as amended, the “Second A&R Credit Agreement”). We were jointly and severally liable as a guarantor, along with other U.S. subsidiaries of the Borrower. For such arrangements, the Borrower’s long-term third-party debt had been allocated to the Company for each reporting period. The related interest expense, including the effects of the Borrower’s interest rate swaps and interest rate cap, and amortization of deferred financing costs have been allocated to the Company for the periods presented in this information statement. An allocated portion of the Borrower’s unrealized gains or losses on the swaps and interest rate cap was also included within Accumulated other comprehensive loss for all periods presented. The portion of the Borrower’s debt and debt-related items allocated to us is based on what we would reasonably expect to pay on behalf of our co-obligors.

As of July 4, 2026, the Borrower had $3,622 million of gross long-term debt outstanding, including $2,322 million outstanding under the Second A&R Credit Agreement, $300 million 4.000% Senior Notes due 2029, $600 million 6.500% Senior Notes due 2032, and $400 million 7.125% Senior Notes due 2034 that transferred to the Company upon completion of the Spin-Off on August 3, 2026. The Borrower has $18 million in outstanding debt due in the next twelve months, and $44 million of unamortized deferred financing costs. The 4.000% Senior Notes due 2029 and the 6.500% Senior Notes due 2032 are senior unsecured obligations of Resideo guaranteed by Resideo’s existing and future domestic subsidiaries and rank equally with all of Resideo’s senior unsecured debt.

In June 2026, the Credit Agreement was amended to extend the maturity of the revolving credit facility thereunder to June 2031 and to permit the Spin-Off.

The Borrower has entered into certain interest rate swap agreements to effectively convert a portion of the variable-rate debt to fixed-rate debt.

As of July 4, 2026, the Borrower was in compliance with all covenants related to the Second A&R Credit Agreement, Senior Notes due 2029, Senior Notes due 2032 and the Senior Notes due in 2034.

In connection with the completion of the Spin-Off, we were released from our obligations under the Second A&R Credit Agreement and the obligations of certain of our subsidiaries under the Senior Notes due 2029 and the Senior Notes due 2032 were automatically and unconditionally released.

Refer to *Note 8. Long-Term Debt,* of the Notes to the Unaudited Condensed Combined Financial Statements for additional information.

### Indemnification Agreement

Resideo separated from Honeywell in 2018, becoming an independently traded public company as a result of the Parent Spin-Off. In connection with the Parent Spin-Off, Resideo entered into the Indemnification Agreement for which we were jointly and severally liable along with other subsidiaries of Resideo until the termination thereof on August 13, 2025. Accordingly, a portion of Resideo’s historical obligations under the agreement, and the resulting termination discussed below, has been allocated to us for the periods presented. The related expenses have also been allocated to us for the periods presented. The portion of Resideo’s obligation and related items allocated to us is based on what we would have reasonably expected to pay on behalf of our co-obligors. Refer to *Note 9. Indemnification Agreement,* of the Notes to the Unaudited Condensed Combined Financial Statements for additional information.

Indemnification Agreement expenses were presented within Indemnification Agreement expense in the Unaudited Condensed Combined Statement of Operations. As of July 4, 2026, no allocated portion of the liabilities related to the

Indemnification Agreement was presented within the Unaudited Condensed Combined Balance Sheet as the Indemnification Agreement was terminated on June 22, 2026.

### Cash Flow Summary

Our cash flows from operating, investing, and financing activities for the six months ended July 4, 2026 and June 28, 2025, as reflected in the Unaudited Condensed Combined Financial Statements are summarized as follows:

*(in millions)*

| Cash provided by (used in): | Six Months Ended July 4, 2026 | June 28, 2025 | $ Change |
| --- | ---: | ---: | ---: |
| Operating activities | $(76) | $32 | $(108) |
| Investing activities | (12) | (22) | 10 |
| Financing activities | 498 | (30) | 528 |
| Effect of exchange rate changes on cash | (3) | 7 | (10) |
| Net increase (decrease) in cash, cash equivalents and restricted cash | $407 | $(13) | $420 |

### Operating Activities

Net cash used in operating activities for the six months ended July 4, 2026 was $76 million, an increase of $108 million, compared to $32 million of net cash provided by operating activities in the same period of 2025. The $108 million increase in the use of cash was primarily driven by a $421 million unfavorable change in working capital, partially offset by increased net income of $303 million and higher non-cash adjustments of $10 million. The unfavorable change in working capital primarily related to the $337 million termination of the Indemnification Agreement liability, $54 million from accounts payable due to the timing of supplier payments and $30 million from higher inventory levels to support the business.

### Investing Activities

Net cash used in investing activities for the six months ended July 4, 2026 was $12 million, a decrease of $10 million, compared to the $22 million of net cash used in investing activities in the same period of 2025. The $10 million decrease was primarily driven by a $15 million increase in proceeds from related-party loan arrangements, partially offset by a $5 million increase in cash outflows for capital expenditures.

### Financing Activities

Net cash provided by financing activities for the six months ended July 4, 2026 was $498 million, an increase of $528 million compared to $30 million net cash used in financing activities in the same period in 2025. The $528 million increase is primarily driven by $400 million of proceeds from the Senior Notes due 2034, $17 million in proceeds from related party-loan arrangements and $182 million from Resideo in connection with general financing activities partially offset by an increase of $70 million of cash outflow related to net financings associated with cash pooling arrangements.

### Contractual Obligations and Probable Liability Payments

In addition to our long-term debt discussed above, our material cash requirements include the following contractual obligations:

### Operating Leases

We have operating lease arrangements for the majority of our stores, distribution centers, offices, engineering sites, automobiles, and certain equipment. As of July 4, 2026, we had operating lease payment obligations of $236 million, with $38 million payable within 12 months.

### Purchase Obligations

On occasion, we enter into purchase obligations with certain vendors. As of July 4, 2026, we had purchase obligations of $77 million, all of which is payable within 12 months.

As of July 4, 2026, we have additional operating leases that have not yet commenced. The total undiscounted future lease payments for these leases was $58 million.

### Off-Balance Sheet Arrangements

We do not engage in any off-balance sheet financial arrangements that have or are reasonably likely to have a material current or future effect on our financial condition, changes in financial condition, net revenue or expenses, results of operations, liquidity, capital expenditures, or capital resources.

### Critical Accounting Estimates

Our Unaudited Condensed Combined Financial Statements are prepared in accordance with GAAP and pursuant to the regulations of the SEC and are based in part on the application of significant accounting policies, many of which require us to make estimates and assumptions. Application of critical accounting estimates requires management’s significant judgments and involve a significant level of estimation uncertainty and have had or are reasonably likely to have a material impact on our financial condition and results of operations. We review our estimates and assumptions on an ongoing basis and reflect changes as appropriate when additional information becomes available. There have been no significant changes to the Company's critical accounting estimates described in the Company's Information Statement.

### Other Matters

### Litigation and Indemnification Agreement

Refer to *Note 9. Indemnification Agreement* and *Note 13. Commitments and Contingencies,* of the Notes to the Unaudited Condensed Combined Financial Statements for additional information.

### Recent Accounting Pronouncements

Refer to *Note 2. Summary of Significant Accounting Policies,* of the Notes to the Unaudited Condensed Combined Financial Statements for additional information.

## Market risk

As filed, 2,357 characters.

We are exposed to market risk from foreign currency exchange rates, commodity prices and interest rates, which could affect operating results, financial position, and cash flows. We manage our exposure to these market risks through our regular operating and financing activities.

### Interest Rate Risk

While we were not the primary obligor on the underlying debt facilities of the Parent, we were jointly and severally liable for such arrangements and therefore recorded an allocated portion of the related obligations in our Unaudited Condensed Combined Financial Statements. Accordingly, we were exposed to interest rate risk on the portion of variable-rate debt that was allocated to us. Our exposure was affected by the overall terms of the debt structure and was sensitive to changes in the general level of interest rates.

As of July 4, 2026, an increase in interest rates by 100 bps would have had an immaterial impact on our annual interest expense. From time to time, we may use interest rate hedging instruments to manage our exposure to interest rate risk; however, we had no such arrangements outstanding as of July 4, 2026.

### Foreign Currency Exchange Rate Risk

We are exposed to market risks from changes in currency exchange rates. While we primarily transact with customers and suppliers in the U.S. dollar, we also transact in foreign currencies, including the British Pound, Canadian Dollar, Euro,

Mexican Peso, Indian Rupee and Czech Koruna. These exposures may impact total assets, liabilities, future earnings and/or operating cash flows. Our exposure to market risk for changes in foreign currency exchange rates emerges from transactions arising from international trade, foreign currency denominated monetary assets and liabilities and international financing activities between subsidiaries. We rely primarily on natural offsets to address our exposures and may supplement this approach from time to time by entering into hedging contracts. As of July 4, 2026, we have no outstanding foreign currency hedging arrangements.

### Commodity Price Risk

While we are exposed to commodity price risk, we attempt to pass through significant changes in component and raw material costs to our customers based on the contractual terms of our arrangements. In limited situations, we may not be fully compensated for such changes in costs.

## Controls and procedures

As filed, 1,787 characters.

### Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), have evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) or 15d-15(e) under the Securities Exchange Act of 1934, as amended (“Exchange Act”)) as of the end of the period covered by this Quarterly Report on Form 10-Q. Based on such evaluation, our CEO and CFO have concluded that as of July 4, 2026, our disclosure controls and procedures are effective to ensure information required to be disclosed in reports filed under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission (“SEC”), and that such information is accumulated and communicated to our management, including our CEO and CFO, as appropriate, to allow timely decisions regarding required disclosure.

Management recognizes that any disclosure controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives. Because there are inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud have been or will be detected.

### Changes in Internal Controls Over Financial Reporting

Prior to August 3, 2026, the Company relied on certain material processes over financial reporting provided by Resideo. There have not been any changes in our internal control over financial reporting during the quarter ended July 4, 2026 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

## Risk factors

As filed, 698 characters.

As of the date of this Quarterly Report on Form 10-Q, there have been no material changes to the risk factors previously disclosed in the Information Statement under the section titled “Risk Factors,” which is incorporated by reference herein, except that the Spin-Off has now been completed. For a discussion of these risk factors, refer to the section titled “Risk Factors” in our Information Statement. Any of these risk factors could materially adversely affect our business, financial condition, results of operations or cash flows. We may disclose changes to these risk factors or additional risk factors from time to time in future filings with the Securities and Exchange Commission (“SEC”)

Filed Aug 13, 2026.
Source: SEC EDGAR, the filing index for accession 0001628280-26-056748. Last ingested by Listed: Oct 30, 2026, 13:40 ET. No prices; not investment advice.