Investor Update December 2019 DISCLAIMER Forward-Looking - - PowerPoint PPT Presentation

Investor Update

December 2019

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DISCLAIMER

Forward-Looking Statements This presentation contains “forward-looking statements.” All statements, other than statements of fact, that address activities, events or developments that we or our management intend, expect, project, believe or anticipate will or may occur in the future are forward-looking statements. Although we believe forward-looking statements are based upon reasonable assumptions, such statements involve known and unknown risks, uncertainties, and other factors, which may cause the actual results or performance of the company to be materially different from any future results or performance expressed or implied by such forward-looking statements. Such risks and uncertainties include, but are not limited to, those described under the headings “Risk Factors” and “Cautionary Statement Concerning Forward-Looking Statements” in our Annual Report on Form 10-K for the year ended Dec. 31, 2018 filed with the Securities and Exchange Commission (“SEC”). You are cautioned not to place undue reliance on these forward-looking statements, such as guidance regarding full-year 2019, our ability to realize cost reductions over the lifecycle of our products and realize related gross margin opportunity, the commencement, progress and results of the comprehensive operational and financial review and its oversight by the Strategic and Operational Committee, including our ability to improve operating margins, core business processes, direct product costs, and G&A, our cost optimization program, our ability to achieve greater operational flexibility under the credit agreement amendments, and

• ur ability to work with our professional partners to better position our thermostat portfolio and the related expected significant sales improvement in 2020, status and estimates of

inventory write-downs, each of which speak only as of the date of this release. Forward looking statements are not guarantees of future performance, and actual results, developments and business decisions may differ from those envisaged by our forward-looking statements. Non-GAAP Financial Measures This release includes EBITDA, adjusted EBITDA, constant currency growth, adjusted basic earnings per share and other financial measures not compliant with generally accepted accounting principles in the United States (GAAP). The non-GAAP financial measures are adjusted for certain items and may not be directly comparable to similar measures used by

• ther companies in our industry, as other companies may define such measures differently. Management believes that, when considered together with reported amounts, these

measures are useful to investors and management in understanding our ongoing operations and in analysis of ongoing operating trends and provide useful additional information relating to our operations and financial condition. These metrics should be considered in addition to, and not as replacements for, the most comparable GAAP measure. We believe EBITDA, adjusted EBITDA and constant currency growth, adjusted basic earnings per share are important indicators of operating performance. They should be read in connection with our financial statements presented in accordance with GAAP. A reconciliation of adjusted EBITDA to the corresponding GAAP measure is not available on a forward-looking basis without unreasonable efforts due to the impact and timing on future operating results arising from items excluded from these measures, particularly environmental expense, Honeywell reimbursement agreement expense or gain, stock compensation expense, repositioning charges, and other non-operating expense (income).

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BOB RYDER –CFO RESIDEO TECHNOLOGIES

CFO CONSTELLATION BRANDS (2007-2015)

• Market Cap grew from $4B to $27B, reduced leverage, implemented first dividend and stock buy-back program
• Restructured wine business: consolidated facilities, centralized functions and focused on net pricing, core brand

strength, profit margins

• Exited most of the international wine business, acquired Modelo Beer Brands for US Market

CFO AMERICAN GREETINGS (2002-2005)

• Market Cap grew from $1.1B to $1.6B, reduced leverage, reinstated dividend
• Retooled go-to-market strategy for greeting cards, divested non-core business, reduced SG&A

PEPSICO (1989-2002)

• Controller Frito-Lay North America
• CFO Frito-Lay Europe
• Strategic Planning, M&A, Controller roles at divisional and PepsiCo level

3

RESIDEO INVESTOR THESIS

Post-Spin

• Resideo opened trading on the first day as an independent company on October 29, 2018 at $28 per

share

• The spin thesis was strong brand recognition, Pro Install channel and Home Install base, consistent

ADI performance and leadership share in large and growing segments

• SpinCos often have teething pains due to legacy tie-ins, allocated pre-spin financials, management

and customer turnover, TSA transitions and shareholder churn

• Resideo has additional complexity due to Honeywell determined spin obligations, lack of pre-existing

stand-alone business and dramatic profitability shortfalls to estimates

• Performance has been disappointing in 2019, with commensurate stock market reaction

Path Forward

• The foundational assets of the business remain sound, and profitable growth is the goal
• Operational and Financial review intended to put Resideo back on the path to leverage its strengths

and create shareholder value

4

RESIDEO BUSINESS SEGMENTS

Note: Sales and EBITDA represent 2019 Estimate; Segment mix % is based on September Year-to-Date results as presented in latest 10Q; Sales represents External Sales *Represents mid-point of the EBITDA guidance range of $330M to $350M

Resideo ADI Products & Solutions

2019 Estimates

43% 57% Products & Solutions ADI 16% 82% EMEA US / Canada 2% APAC 25% 49% 26% Security Comfort RTS

$5.0B $2.8B $2.2B

• Segment growing sales at 1%
• Adjusted EBITDA of $291M and

13% margin

• Segment growing at 6%
• Adjusted EBITDA of $189M and

7% margin

• Sales growth +2% to +4%
• Adjusted EBITDA of

$340M*, or 7% margin

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STRONG BASE BUSINESS, GOOD POSITION IN ATTRACTIVE INDUSTRIES

Addressable Market ($B)3 & Select Product Categories Resideo Positions Products & Solutions ($2.5B)2 Comfort & RTS $1.7B1 $10.4B

Select Product Categories

• Connected Thermostats
• Traditional Temp. Control
• IAQ & Potable Water

Security $0.8B1 $5.2B

Select Product Categories:

• Pro Security4
• DIY Awareness

ADI Distribution ($2.8B) $20.6B

Select Product Categories:

• Intrusion
• Access Control
• And other 10 categories

Leader or Main Player in Most Categories Deep Relationship with Pro 150 Million Households with Resideo Product ~6 Million Connected Customers Trusted Brand with Broad Portfolio Data Collected from 30 Million Sensor Points #1 Global Distributor for Security Products 1,300 Suppliers and 350K Products 200+ Distributor Stocking Locations

• 1. Revenue as reported in our Annual Report on Form 10-K for the year ended December 31, 2018 filed with the Securities and Exchange Commission; 2. Includes intersegment revenue of $305M as reported in 10K; 3. Addressable market

for 2019 in the markets and geographies that we compete in; 4. Pro Security is professionally monitored security including those systems that are self-installed by consumers, e.g. Simplisafe

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THROUGH THE PRO INSTALL CHANNEL WE DELIVER COMFORT , SECURITY AND SIMPLICITY TO PLACES WE CALL HOME

1 2 3 4 8 7 6 5 2 9

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BROAD PORTFOLIO PROVIDING COMPREHENSIVE SOLUTIONS, SERVING CONSUMER NEEDS VIA PROFESSIONAL CHANNEL

Intrusion Video Surveillance Fire Access Control Pro AV Enterprise Connectivity

Select Offerings Products & Solutions Comfort & RTS Connected Thermostats Traditional Temperature Control IAQ & Potable Water Residential Thermal Solutions (RTS) Security Pro Security DIY Awareness ADI Distribution

T10 T6 Vision Pro Wifi 9000 T4 Damper Actuator Zone Valve Control Humidification Dehumidification Backflow Preventer Pressure Reducing Valve Water Heater Control Pilot Burner Gas Valve Wireless AquaReset Smart Home Security Security Panel Sensors Total Connect Camera Motion Sensor Flood Sensors Key Fob Indoor Access Sensor Consumer & Pro SWs Security Software

12 Categories Covering Wide Range Selection of Products

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IN PRODUCTS & SOLUTIONS RESIDEO HAS VERY STRONG BRAND EQUITY AMONG THE PROS

Results of pro survey (n=100)

Brand used by the pros1 (%total) Value for money for used brands (1 low – 5 high)3

• 1. Please indicate which security/HVAC providers you are familiar with from the vendors listed below. Select all that apply for companies you evaluated and heard of their product 2. Please

assign estimate percentages (%) of the revenue each of the following brands brings to your organization 3. How do you believe your customers get their money’s worth (value for money) when purchasing the following brands? Rank your answer from 1 (worst value for money) to 5 (best value for money)

Est Rev share2 (% of total)

33 17 19 9

Siemens 23% 31% 50% REZI 27% 38% Nest 45% 47% 16% Carrier 16% Trane 15% 39% 18% Emerson 29% 33% 31% Ring 24% 40% 19% 42% 67% SimpliSafe 30% Johnson Controls Ecobee 39% Bosch 41% 23% 62% 11% Lifeshield Control 4 53% 12% REZI 6% 36% 62% Carrier 18% 50% 8% Trane 3% 44% 6% Emerson Lifeshield 12% 30% 25% 18% 42% 5% Nest 9% 32% 11% Johnson Controls Ecobee 30% Bosch 12% 32% 2% Siemens SimpliSafe 10% 3% Control 4 Ring

16 13 22 7 12 7 13 18 20

Highest 2nd highest 3rd highest

Used exclusively Other Used Other 5 4

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ADI IS THE DISTRIBUTION MARKET LEADER WITH CONSISTENT STRONG GROWTH AND HIGH CUSTOMER LOYALTY

ADI holds largest market share in U.S. low-voltage security distribution… …and customers point to a differentiated service proposition

A one-day delay can cost me $25-50K – I'd rather pay ~10-15% more at ADI to know I get it on time ADI was able to apply pressure to the manufacturer to reduce turn time from a month to three days" With ADI, I can speak to someone in a reasonable amount of time and they'll work to immediately resolve the issue" I've had multiple positive experiences with ADI and each perpetuates the next purchase exponentially"

…consistently delivers strong financial results…

$2.4B $2.5B $2.7B $2.8B 2016 2017 2018 2019 +5% CAGR Revenue

Source: HIS Markit Data, Company Estimates

Source: IHS Markit Data, Company Estimates

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RESIDEO STRATEGIC SUMMARY

• 100+ year old brand with strong recognition among consumers and pros
• Extensive base of products with strong market position in large and growing categories
• $5B of annual sales, $330M to $350M of Adjusted EBITDA for 2019
• Very disappointing 2019 financial results
• Undergoing comprehensive strategic and operational review to improve business processes

and financial algorithm

2019 Financial Update

Investor & Analyst Presentation Dec 10, 2019

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RESIDEO 2019 UPDATE

• Resideo 2019 performance has been very disappointing
• Sales continue to grow, but are expected to be below original guidance
• ADI continues to perform at a high level with strong sales growth and margin expansion
• Adjusted EBITDA is well short of guidance due to lower sales, poor sales mix, disappointing product

launches, inconsistent sales execution and high inventory write-offs in P&S

• Resideo has successfully renegotiated its bank covenants
• Operational review underway to put Resideo back on the path to leverage its strengths and create

shareholder value

• Just announced a CEO transition plan, formation of a new Board Committee, and the addition of a new

independent director

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RESIDEO SPIN OVERVIEW

Spins can be difficult by their nature, and Honeywell mandatory spin obligations exacerbate the situation Spin Complexities:

• Management turnover, TSA / separation distractions, and commercial and operational execution
• NPI execution issues, lack of customer acceptance testing and too slow to identify poor performing

new product launches

Honeywell Determined Spin Obligations:

• 25 year obligation for maximum of +$140M to help Honeywell fund its environmental liabilities
• Structured by Honeywell to be non-tax deductible by Resideo: Resideo liability is capped
• Significant arrangement around leases, product supply, trademark license agreements and various tax

matters

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THIRD QUARTER 2019 RESULTS

Q3 2019 Year-Over-Year Commentary Revenue $1.23B

+$26M / +2%

• GAAP up 2%, Constant Currency 3% increase
• ADI GAAP and Constant Currency growth
• Products & Solutions revenue down

–

Comfort and RTS down

–

Security up

Adjusted EBITDA $79M

• $38M / -32%
• Adjusted EBITDA down

– Continued ADI EBITDA growth – P&S down

Adjusted EPS $0.19 per share

• $0.40 per share
• GAAP Basic EPS of $0.07
• Adjusted EPS consistent with Q2

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SEGMENT PERFORMANCE

PRODUCTS & SOLUTIONS External Revenue(1)

• Adj. EBITDA(2)
• Sales reduction driven by 6% declines in Comfort and RTS; partially offset by 8% growth

in Security

• Comfort declines primarily due to lower sales volumes in non-connected thermostats
• Water business growth double digits
• Connected customer growth from 4.7M in 2017 to 6.3M in 2019
• RTS slowdown driven by recent regulatory changes and a general slowdown across

large OEM customers

• Security revenue increase driven by new product launch with key customer
• Segment adjusted EBITDA decline due primarily to negative product mix and key

customer rebate

Q3 Performance ($M)

ADI GLOBAL DISTRIBUTION

• GAAP and constant currency growth across all regions
• Strong growth in North America
• Site expansion continuing in high growth regions
• Continued growth in Security, Life Safety, and Professional Audio/Video product lines
• EBITDA growth driven by higher volume and productivity

Key Highlights

2018 2019 $674 $714 6% 2018 2019 $43 $48 12% 2018 2019 $526 $512

• 3%

$107 $66 2019 2018

• 38%

16 Revenue 2019 Q2 Guidance ($48)

$340M

Slow Moving Product / Other Key Customer Rebate / RTS Channel Mix 2019 Q3 Guidance

$420M

($12) ($20)

$5.1B

2019 Q2 Guidance Comfort Revenue RTS Revenue 2019 Q3 Guidance Security Revenue ($66) ($22) ($22)

$5.0B

GAAP Sales Adjusted EBITDA

Guidance $330 to $350 Guidance +2% to +4%

RESIDEO FULL YEAR 2019 –CHANGES FROM Q2 GUIDANCE

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RESIDEO Q4 ESTIMATED RESULTS

PRODUCTS & SOLUTIONS External Revenue(1)

• Adj. EBITDA(2)
• 1% reported revenue decline expected;
• Security growth continues
• Comfort and RTS down; weaker thermostat sales and

slower demand for gas combustion products

• EBITDA continues to be impacted by negative mix and impact from

slow moving products partially offset by cost management actions

2018 2019 $602 $596

• 1%

$127 $69 2019 2018

• 46%

ADI GLOBAL DISTRIBUTION

• 9% reported revenue growth expected
• Continued growth expected across key product lines
• Sales leverage and cost management delivering over 2x EBITDA

growth

2018 2019 $664 $725 +9% $40 2019 2018 $48 +20%

Assumptions Q4 Estimate ($B)

CONSOLIDATED

• 4% GAAP revenue growth expected
• ADI top and bottom line growth
• Products and Solutions continued top line softness in key products

and on-going mix and cost issues

2019 2018 $1.27 $1.32 +4% $132 $82 2019 2018

• 38%

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RESIDEO INVENTORY & NEW PRODUCT DEVELOPMENT

New products developed in pre-spin period drove dramatic increase to inventory write-offs in 2019

• Inventory write-off impact accelerated in 2019

compared to historical rates

• Products and Solutions impact was the most

substantial, specifically in Comfort and Security

• Operational and Financial review will address

revamping the New Product Introduction process and governance

• Portfolio being adjusted to meet customer

needs

2016 - 2018 Average $5M - $10M $22M 3Q YTD Est 4Q Est 2019 $40M - $45M $18M - $23M

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Cash Overview:

• Finished Q3 with $132M of cash on balance sheet
• Year-to-date, cash used from operating activities was $70M

– Primarily driven by working capital and payments to Honeywell

• $159M net working capital use of cash primarily due to:

– Inventory build driven by normal seasonality, slower Q3 sales in P&S and inventory build at ADI to support strong future sales growth – $57M of spin-related contractual payments to Honeywell in the GAAP P&L and additional $49M of payments reflected in cash flow statement

• Forecasting positive operating cash flow for Q4 and full year 2019

CASH FLOW AND COVENANT FLEXIBILITY

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RESIDEO DEBT COVENENT AMENDMENT

3.75x 3.25x 2.75x 2.25x 1.50x 1.50x 1.50x 1.50x 2020 2019 2021 2022 3.75x 4.75x 5.25x 4.25x

Fees / Concessions

• 25 bps consent fee: $3M
• 25 bps spread addition: $3M
• November 2019 debt covenant

amendment provided 150 bps of additional debt leverage over the

• riginal ratio
• Annual covenant reduction

unchanged

New Covenant Increment Old Covenant

Annual EBITDA Coverage Leverage Ratios

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• CEO transition announced, with Mike Nefkens remaining in place until replacement starts
• Strategic and Operational Committee of Board formed to oversee the operational and financial review
• Andy Teich will chair the new Board Committee and will provide oversight to the operational and

financial review and provide insight to Resideo management

• Brian Kushner has been named a new independent director for Resideo and will be a member of the

new Board Committee

RESIDEO RECENTLY ANNOUNCED SEVERAL PERSONNEL AND GOVERNANCE CHANGES

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• Retained industry-recognized experts to review all

aspects of our business model to better ensure we are positioned for profitable growth and that we are competitively advantaged

• Consultants working closely with management and

reporting directly to independent committee of the Board of Directors

• Overall project is structured to create a more agile and

accountable organization with the appropriate cost structure and commercial focus to create shareholder value

• Project focus: product and geography simplification,

manufacturing and purchasing savings, G&A reduction, and sales force accountability and enablement

• Will discuss status of actions, savings, costs and

anticipated timelines in February 2020 Q4 results release

OPERATIONAL AND FINANCIAL REVIEW

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Top line and Gross Margin Orient topline efforts towards optimal revenue efforts towards core customers Review strategic value drivers along portfolio, channels, and markets in 2020 Optimize COGS through manufacturing and end-to-end supply chain efforts SG&A and Cash Streamline overhead simplifying towards new Op Model in 2020 Free up cash rapidly

+

• Structured program with

executional certainty

• Effective governance with

clear escalation path

• Best in class tools and

support deployed

• Mix of internal and

external talent working

• Organization engaged

across multiple layers

• Change management with

focus on solidifying results Driving robust program execution

OPERATIONAL AND FINANCIAL REVIEW TO CREATE PLATFORM FOR GROWTH PROJECT IS WELL UNDERWAY AND DETAILS WILL BE SHARED ON 4Q 2019 ANALYST CALL

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IN CLOSING

• We are confident in the fundamentals of our business
• ADI is running well and performing at a high level
• Issues in Products and Solutions are fixable and are being actively addressed
• Resideo has a strong product platform, a strong brand name, and maintains loyalty from the Pro Install

channel

• Our Financial and Operational Review is designed to:
• Simplify the business
• Drive gross margin improvement
• Right-size G&A costs

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Appendix

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CONSOLIDATED AND COMBINED INTERIM STATEMENT OF OPERATIONS (UNAUDITED)

2019 2018 2019 2018 Net revenue $ 1,226 $ 1,200 $ 3,684 $ 3,561 Cost of goods sold 937 853 2,786 2,525 Gross profit 289 347 898 1,036 Selling, general and administrative expenses 230 219 712 648 Operating Profit 59 128 186 388 Other expense, net 35 144 54 320 Interest expense 16 2 51 2 Income (loss) before taxes 8 (18) 81 66 Tax expense (benefit)

• (329)

36 (323) Net income $ 8 $ 311 $ 45 $ 389 Weighted Average Number of Common Shares Outstanding (in thousands) Basic 122,770 122,967 122,681 122,967 Diluted 123,244 122,967 123,404 122,967 Earnings Per Share Basic $ 0.07 $ 2.53 $ 0.37 $ 3.16 Diluted $ 0.06 $ 2.53 $ 0.36 $ 3.16 (Dollars in millions except per share data) September 30, September 30, Three Months Ended Nine Months Ended

27

CONSOLIDATED INTERIM BALANCE SHEET (UNAUDITED)

September 30, December 31, 2019 2018 ASSETS Current assets: Cash and cash equivalents 132 $ 265 $ Accounts receivable 845 821 Inventories 729 628 Other current assets 134 95 Total current assets 1,840 1,809 Property, plant and equipment – net 306 300 Goodwill 2,632 2,634 Other intangible assets – net 125 133 Other assets 230 96 Total assets 5,133 $ 4,972 $ LIABILITIES Current liabilities: Accounts payable 932 $ 964 $ Short-term portion of debt 88 22 Accrued liabilities 531 503 Total current liabilities 1,551 1,489 Long-term debt 1,165 1,179 Obligations payable to Honeywell 580 629 Other liabilities 264 142 EQUITY Common stock, $0.001 par value, 700,000 shares authorized, 123,382 and 122,967 shares issued and 122,786 and 122,499 shares outstanding as of September 30, 2019 and December 31, 2018, respectively

• Additional paid-in capital

1,751 1,720 Treasury stock, at cost (3)

• Retained earnings

47 2 Accumulated other comprehensive loss (222) (189) Total equity 1,573 1,533 Total liabilities and equity 5,133 $ 4,972 $ (Dollars in millions, shares in thousands)

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CONSOLIDATED AND COMBINED INTERIM STATEMENT OF CASH FLOWS (UNAUDITED)

• Other liabilities

• Proceeds received related to amounts due from related parties
• 7

• Repayment of long-term debt

• Non-operating obligations paid to Honeywell, net

• Payments related to amounts due to related parties, net
• (1)

• Net (decrease) in invested equity
• (300)

• 115

29

RECONCILIATION OF NET INCOME (UNAUDITED) TO ADJUSTED NET INCOME (NON- GAAP)

• 146
• 322

• 57
• Estimated stand-alone costs (3)
• 4

• 34

• 65

30

RECONCILIATION OF NET INCOME (UNAUDITED) TO ADJUSTED EBITDA (NON- GAAP)

• 49

• (329)

• 146
• 322

• 57
• Estimated stand-alone costs (3)
• 2
• 9

• 34

• 65

(1) Represents historical environmental expenses as reported under 100% carryover basis. (2) Represents recorded expenses related to the Honeywell Reimbursement Agreement. (4) Stock compensation expense adjustment includes only non-cash expenses.

(3) Represents the difference between our estimate of Selling, general and administrative costs as a stand-alone company and historical allocated costs, which excludes corporate depreciation charges. (6)Pursuant to the Honeywell Reimbursement Agreement, we are responsible to indemnify Honeywell in amounts equal to 90% of payments, which include amounts billed, with respect to certain environmental claims, remediation and, to the extent arising after the Spin-Off, hazardous exposure or toxic tort claims, in each case including consequential damages in respect of specified properties contaminated through historical business

• perations, including the legal and other costs of defending and resolving such liabilities, less 90% of Honeywell’s net insurance receipts relating to

such liabilities, and less 90% of the net proceeds received by Honeywell in connection with (i) affirmative claims relating to such liabilities, (ii) contributions by other parties relating to such liabilities and (iii) certain property sales; such payments will be subject to a cap of $140 million in respect

• f liabilities arising in any given year (exclusive of any late payment fees up to 5% per annum).

(5) Represents $19 million and $53 million in cost directly related to the Spin-Off, $0 million and $13 million related to developments on legal claims that arose prior to Spin-Off, and $0 million and ($1) million in non-operating (income) expense adjustment which excludes net interest (income) for the three and nine months ended September 30, 2019. For the three and nine months ended September 30, 2018, Other represents other non-operating (income) expense. The nine months ended September 30, 2019 includes an adjustment for $6 million of costs directly related to the Spin-Off. Costs from prior quarters of 2019 were identified during the third quarter as Spin-Off costs and are now included in our nine months ended adjustments.

31

RECONCILIATION OF SEGMENT ADJUSTED EBITDA TO CONSOLIDATED INCOME FROM CONTINUING OPERATIONS BEFORE TAXES

2019 2018 2019 2018 Products & Solutions Segment Adjusted EBITDA $ 66 $ 107 $ 222 $ 333 ADI Global Distribution Segment Adjusted EBITDA 48 43 141 124 Segment Adjusted EBITDA (1) 114 150 363 457 Environmental expense (2)

• (146)
• (322)

Honeywell reimbursement agreement expense (3) (35)

• (57)
• Net interest (expense) income

(16)

• (49)

1 Depreciation and amortization (19) (16) (55) (49) Stock compensation expense (4) (8) (6) (22) (15) Repositioning charges (9)

• (34)

(5) Other (5) (19)

• (65)

(1) Income (loss) before taxes $ 8 $ (18) $ 81 $ 66

(2) Represents historical environmental expenses as reported under 100% carryover basis. (3) Represents recorded expenses related to the Honeywell Reimbursement Agreement. (5) Represents $19 million and $53 million in cost directly related to the Spin-Off, $0 million and $13 million related to developments on legal claims that arose prior to Spin-Off, and $0 million and ($1) million in non-operating (income) expense adjustment which excludes net interest (income) for the three and nine months ended September 30, 2019. For the three and nine months ended September 30, 2018, Other represents other non-operating (income)

• expense. The nine months ended September 30, 2019 includes an adjustment for $6 million of costs directly related to the Spin-Off. Costs from prior

quarters of 2019 were identified during the third quarter as Spin-Off costs and are now included in our nine months ended adjustments.

(Dollars in millions) Three Months Ended Nine Months Ended September 30, September 30,

(4) Stock compensation expense adjustment includes only non-cash expenses. (1) Excludes $2 million and $9 million of estimated stand-alone costs for the three and nine months ended September 30, 2018, which is included in adjusted EBITDA (Non-GAAP).

32

RECONCILIATION OF CONSTANT CURRENCY REVENUE % CHANGE

Three Months Ended Nine Months Ended September 30, September 30, 2019 2019 Products & Solutions revenue (decline) growth Net Products & Solutions revenue (decline) growth (GAAP) $ (14) $ 33 % Change

• 3%

2% Exclude: Foreign currency translation

• 2%
• 3%

Constant currency (decline) growth (Non-GAAP)

• 1%

5% ADI Global Distribution revenue growth Net ADI Global Distribution revenue growth (GAAP) $ 40 $ 90 % Change 6% 5% Exclude: Foreign currency translation

• 1%
• 1%

Constant currency growth (Non-GAAP) 7% 6% Total revenue growth Total revenue growth (GAAP) $ 26 $ 123 % Change 2% 3% Exclude: Foreign currency translation

• 1%
• 2%

Constant currency growth (Non-GAAP) 3% 5% (Dollars in millions)

33

RECONCILIATION OF NET INCOME (UNAUDITED)TO ADJUSTED EBITDA (NON-GAAP) Q4 2018

• Other (5)

(6) Pursuant to the Honeywell reimbursement agreement, we are responsible to indemnify Honeywell in amounts equal to 90% of payments, which include amounts billed, with respect to certain environmental claims, remediation and, to the extent arising after the Spin-Off, hazardous exposure or toxic tort claims, in each case including consequential damages in respect of specified properties contaminated through historical business operations, including the legal and other costs of defending and resolving such liabilities, less 90% of Honeywell’s net insurance receipts relating to such liabilities, and less 90% of the net proceeds received by Honeywell in connection with (i) affirmative claims relating to such liabilities, (ii) contributions by other parties relating to such liabilities and (iii) certain property sales; such payments will be subject to a cap of $140 million in respect of liabilities arising in any given year (exclusive of any late payment fees up to 5% per annum).

(1) Represents historical environmental expenses as reported under 100% carryover (2) Represents recorded expenses related to the Honeywell reimbursement (3) Represents the difference between our estimate of Selling, general and administrative costs as a stand-alone company and historical allocated costs, which (4) Stock compensation expense adjustment includes only non-cash expenses. (5) Represents $23 million in cost directly related to the Spin-Off, and $3 million in non-

• perating (income) expense adjustment which excludes net interest (income) for the

three months ended December 31, 2018.

34

RECONCILIATION OF SEGMENT ADJUSTED EBITDA TO CONSOLIDATED INCOME FROM CONTINUING OPERATIONS BEFORE TAXES Q4 2018

Q4 2018 Products & Solutions Segment Adjusted EBITDA $ 127 ADI Global Distribution Segment Adjusted EBITDA 40 Segment Adjusted EBITDA (1) 167 Environmental expense (2) (18) Honeywell reimbursement agreement expense (3) (49) Net interest (expense) income (14) Depreciation and amortization (17) Stock compensation expense (4) (5) Repositioning charges

• Other (5)

(26) Income before taxes $ 38

(5) Represents $23 million in cost directly related to the Spin-Off, and $3 million in non-operating (income) expense adjustment which excludes net interest (income) for the three months ended December 31, 2018.

(Dollars in millions)

(1) Excludes $6 million of estimated stand-alone costs for the three months ended December 31, 2018, which is included in adjusted EBITDA (Non-GAAP). (2) Represents historical environmental expenses as reported under 100% carryover basis. (3) Represents recorded expenses related to the Honeywell reimbursement agreement. (4) Stock compensation expense adjustment includes only non-cash expenses.

35

RECONCILIATION OF NET WORKING CAPITAL USE OF CASH

Nine Months Ended September 30, 2019 (Dollars in millions) Components of Consolidated and Combined Statement of Cash Flows:

Accounts, notes and other receivables (27) $ Inventories (109) Accounts payable (23) Net working capital use of cash (159) $