BRC

New in FY2026

• Business Risks The acquisition of Honeywell’s PSS business is subject to significant integration risks that may impact the combined company’s financial results.
• On August 3, 2026, we completed the acquisition of PSS.
• The transaction significantly increases the size and complexity of our current operations and exposes us to operational, financial, and other risks associated with integrating a large global business, and there can be no assurance that the business cultures of the two businesses will prove to be compatible.
• In addition, in connection with the closing of the transaction, Honeywell completed a global internal reorganization to separate the PSS business from its other operations.
• Despite completion of this reorganization, we may identify operational, financial, tax, legal or other issues arising from the separation that were not anticipated before closing, which could result in additional costs, liabilities or delays in the integration of the acquired business.
• The integration of the PSS business requires significant management attention, resources and expenditures.
• We may experience difficulties in integrating or coordinating systems, processes, internal controls, product portfolios, operations, sales channels and go-to-market activities, as well as retaining employees and maintaining relationships with customers, distributors, other channel partners and suppliers.
• The ongoing integration process is subject to a number of uncertainties, and it is possible that the ongoing integration process could take longer than anticipated.
• Our results of operations could also be adversely affected by any issues attributable to the PSS business’s operations that arose or are based on events or actions that occurred prior to the closing of the transaction.
• These challenges could disrupt our operations, adversely impact customer or channel partner relationships, or prevent us from realizing the anticipated benefits of the acquisition.
• We may not realize the anticipated benefits of the acquisition, including expected growth opportunities and cost synergies, within the anticipated time periods or at all.
• These expected benefits and cost synergies are based on estimates and assumptions made by us that are inherently uncertain, and are subject to significant business, economic, and competitive uncertainties and contingencies, all of which are difficult to predict and many of which are beyond our control.
• We cannot guarantee that we will achieve the full amount of expected benefits and cost synergies on the schedule anticipated, or at all, that the actual expenses required to achieve these benefits and cost synergies will not materially exceed our current estimates, or that these benefits and cost synergies will not have other adverse effects on our business.
• If we are unable to successfully integrate PSS or realize the expected benefits of the acquisition, our business, financial condition and results of operations could be adversely affected.
• We have incurred and expect to continue to incur a number of non-recurring costs associated with combining the operations of the two businesses, which cannot be fully estimated accurately at this time.
• We may also incur additional costs to attract, motivate or retain management personnel and other key employees.
• We have incurred and will continue to incur acquisition fees and costs related to formulating integration plans for the combined business, and the execution of these plans may lead to additional unanticipated costs.
• Our increased indebtedness could limit our financial flexibility and adversely affect our business and financial results.
• To fund the acquisition of the PSS business, we incurred indebtedness consisting of $800 million aggregate principal amount of borrowings under our new credit agreement and $800 million aggregate principal amount of senior notes issued in a private placement.
• The use of debt financing to fund the acquisition increases our indebtedness and creates additional financial risks for our business.
• Our increased leverage could have adverse consequences, including reducing our financial flexibility to respond to changing business and market conditions, limiting our ability to pursue strategic opportunities, and requiring us to dedicate a greater portion of our operating cash flows to principal and interest payments.
• If our cash flows from operations are insufficient to satisfy our debt service requirements, or we are unable to reduce our indebtedness as anticipated, our ability to fund organic growth initiatives, R&D, capital expenditures, acquisitions and other strategic priorities could be limited.
• Our ability to make scheduled payments on or to refinance our debt obligations depends on our financial condition and operating performance, which are subject to prevailing economic and competitive conditions and to certain financial, business, legislative, regulatory and other factors beyond our control.
• We may be unable to maintain a level of cash flows from operating activities sufficient to permit us to fund our day-to-day operations or to pay the principal, premium, if any, and interest on our indebtedness.
• Rising interest rates may also reduce our ability to access the capital markets and/or increase our cost of capital either of which could adversely affect our business, financial condition and results of operations.
• Our debt agreements also contain financial and other covenants that may restrict our ability to take certain actions, and failure to comply with these covenants could result in an event of default and accelerate our repayment obligations.
• In addition, borrowings under our new credit agreement bear interest at variable rates, which exposes us to increases in interest expense if market interest rates rise.
• These factors could adversely affect our business, financial condition and results of operations.
• Raw material, component and other cost inflation, as well as supply shortages, could adversely affect our business and financial results.
• We manufacture certain parts and components of our products and rely on third-party suppliers for raw materials, components and finished goods.
• The availability, pricing and lead times of these inputs may be affected by a variety of factors, including supply and demand imbalances, supplier capacity constraints, tariffs and other trade restrictions, geopolitical developments, transportation disruptions and other supply chain constraints.
• Certain materials and components may be available from a limited number of suppliers, and qualifying alternative suppliers may require significant time and expense.
• Following the acquisition of PSS, our exposure to the cost and availability of electronic components, including memory and other semiconductor components, has increased.
• Significant increases in input costs, shortages of key components or extended lead times could increase our costs, disrupt production, limit our ability to meet customer demand and adversely affect our profit margins and results of operations.
• We may take actions to mitigate supply shortages and disruptions, including increasing inventory levels or purchasing components in advance of anticipated demand.
• These actions may increase our working capital requirements and expose us to greater risk of excess or obsolete inventory, particularly if customer demand, component pricing or technology trends differ from our expectations.
• In addition, labor shortages or increases in the cost of labor could adversely affect our profit margins and results of operations.
• Due to competitive pressures, contractual arrangements or other factors, we may not be able to pass increased raw material, component, labor or other costs to our customers through price increases, or our ability to do so may be delayed.
• Changes in input costs may occur more rapidly than we are able to adjust customer pricing, which could result in periods of reduced profitability.
• While we have implemented cost containment measures, selective price increases and other actions intended to mitigate inflationary and supply chain pressures, these actions may not be sufficient to offset increases in our costs or the effects of supply shortages and disruptions.

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Gone since FY2025

• Business Risks Raw material and other cost inflation as well as product shortages could adversely affect our business and financial results.
• We manufacture certain parts and components of our products and therefore require raw materials from suppliers, which could be interrupted for a variety of reasons, including availability and pricing.
• Our prices and lead times for raw materials and other components necessary for production have continued to fluctuate over the past year, including increased raw production costs, increased wage rates, and extended lead times.
• Significant increases could adversely affect our profit margins and results of operations.
• Changes in trade policies; supply chain disruptions; and the imposition of duties and tariffs and potential retaliatory countermeasures could adversely impact the price or availability of raw materials, which could adversely affect our profit margins and results of operations.
• In addition, labor shortages or an increase in the cost of labor could adversely affect our profit margins and results of operations.
• Due to competitive pressures or other factors, we may not be able to pass along increased raw material and component part costs to our customers in the form of price increases or our ability to do so could be delayed, which could adversely impact our business and financial results.
• While we have implemented certain cost containment measures and selective price increases, as well as taken other actions to offset recent inflationary pressures in our supply chain, we may not be able to offset all of the increases in our operational costs, which could adversely impact our business and financial results.
• Numerous factors may affect the demand for our products, including: • Deterioration of economic conditions in major markets served • Catastrophic events, including epidemics, major health concerns, or natural disasters • Economic and operational impact of the war between Russia and Ukraine or other wars • Consolidation in the marketplace allowing competitors to be more efficient and more price competitive • Competitors entering the marketplace • Decreasing product life cycles • Changes in customer preferences • Ability to achieve strong operational performance, including the manufacture and sale of high-quality products and the ability to meet customer delivery expectations If any of these factors occur, the demand for our products could suffer, and this could adversely impact our business and financial results.
• Competition may force us to reduce prices or incur additional costs to remain competitive in an environment in which business models, including the development and use of artificial intelligence technologies, are changing rapidly.
• The failure to properly identify, integrate and grow acquired companies, and to manage contingent liabilities from divested businesses could adversely affect our business and financial results.
• Our historical growth has included acquisitions and our future growth strategy includes acquisitions.
• Acquisitions place significant demands on management, operational, and financial resources.
• Recent and future acquisitions will require integration of operations, sales and marketing, information technology, finance, and administrative operations, which could decrease the time available to focus on our other growth strategies.
• We cannot assure that we will be able to successfully integrate acquisitions, that these acquisitions will operate profitably, or that we will be able to achieve the desired sales growth or operational success.
• Our sales, results of operations, cash flow, and liquidity could be adversely affected if we do not successfully integrate acquired businesses, including realizing synergies, or if our other businesses suffer due to the increased focus on the acquired businesses.
• We continually assess the strategic fit of our existing businesses and may divest businesses that we determine do not align with our strategic plan, or that are not achieving the desired return on investment.
• When we decide to sell a business or specific assets, we may be unable to do so on satisfactory terms or within our anticipated timeframe, and even after reaching a definitive agreement to sell a business, the sale is typically subject to pre-closing conditions which may not be satisfied.
• In addition, the impact of the divestiture on our revenue and net income may be larger than projected, which could distract management, and disputes may arise with buyers.
• We have retained responsibility for and have agreed to indemnify buyers against certain contingent liabilities related to several businesses that we have sold.
• The resolution of these contingencies has not had a material adverse impact on our financial results, but we cannot be certain that this pattern will continue.
• Our security measures, and those of our third-party service providers, may not detect or prevent all attempts to hack our systems, denial-of-service attacks, viruses, malicious software, break-ins, phishing attacks, social engineering, security breaches or other similar disruptions that may jeopardize the security of information stored in or transmitted by our sites, networks and systems or that we or our third-party service providers otherwise maintain.
• Approximately 50% o f our sales are derived outside the United States.
• Sales and purchases in currencies other than the U.S. dollar expos e us to fluctuations in foreign currencies relative to the U.S. dollar, and may adversely affect our financial results.
• Our sales and expenses are translated into U.S. dollars for reporting purposes, and further strengthening of the U.S. dollar could result in unfavorable translation effects.
• On July 4, 2025, the U.S. government enacted tax legislation commonly referred to as the One Big Beautiful Bill Act (“OBBBA”).
• The OBBBA made permanent or extended several provisions from the Tax Cuts and Jobs Act of 2017, including restoration of 100% bonus depreciation, an EBITDA-based limitation on interest expense deductions, and immediate expensing of domestic research and development expenditures.
• Future changes to these or other tax laws, as well as related regulations and interpretations, could materially affect our financial results.
• The OECD has continued to issue new administrative guidance on the Pillar Two model rules throughout 2025.
• Significant uncertainty remains regarding the interpretation and consistent implementation of the Pillar Two model rules across jurisdictions, their interaction with existing national tax laws, and their alignment with current tax treaty obligations.
• Final adoption and implementation of Pillar Two in the jurisdictions where we operate could adversely affect our business and financial results.
• While it is impossible to predict whether other tax proposals will be enacted, many could have an impact on our business and financial results.
• We have goodwill of $676.9 million and other intangible assets of $105.4 million as of July 31, 2025, which represent 45.1% of our total assets, and we have recognized impairment charges in the past.