This Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) is designed to provide a reader of the financial statements with a narrative from the perspective of management of Ralliant Corporation (“Ralliant,” the “Company,” or “it”). The following discussion should be read in conjunction with the MD&A and consolidated and combined financial statements included in the Company’s 2025 Annual Report on Form 10-K filed with the Securities and Exchange Commission (the “SEC”) on February 26, 2026 (the “Form 10-K”). This MD&A is divided into six sections:
•Basis of Presentation
•Information Relating to Forward-Looking Statements
•Overview
•Results of Operations
•Liquidity and Capital Resources
•Critical Accounting Estimates
BASIS OF PRESENTATION
The following discussion of financial results presents the historical financial position, results of operations, changes in equity and cash flows of the Company in accordance with accounting principles generally accepted in the United States of America (“GAAP”), unless otherwise specified.
On May 27, 2025, the Board of Directors of Fortive Corporation (“Fortive” or the “Former Parent”) approved the separation of Fortive’s Precision Technologies (“PT”) operating segment through the pro rata distribution of all of the issued and outstanding common stock of Ralliant to Fortive's stockholders (the “Separation”), which was completed on June 28, 2025. Prior to the Separation, the Company operated as Fortive’s PT operating segment and not as a standalone company. The combined financial statements as of June 27, 2025 or earlier have been derived from Fortive’s consolidated financial statements and accounting records and prepared in accordance with GAAP for the preparation of carved-out combined financial statements. Through the date of the Separation, all revenues and costs, as well as assets and liabilities, directly associated with the business activity of the Company are included as a component of the combined financial statements. Prior to the Separation, the combined financial statements also included allocations of certain general, administrative, and sales and marketing expenses from Fortive’s corporate office and from other Fortive businesses to the Company. The allocations were determined on a reasonable basis for the applicable periods; however, the amounts were not necessarily representative of the amounts that would have been reflected in the financial statements had the Company been an entity that operated independently of Fortive.
These financial results for periods prior to the Separation may not be indicative of Ralliant’s financial performance had it been a separate standalone entity throughout such periods, nor are the results stated herein indicative of what its financial position, results of operations, and cash flows may be in the future.
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INFORMATION RELATING TO FORWARD-LOOKING STATEMENTS
Certain statements included in this Quarterly Report on Form 10-Q are “forward-looking statements” within the meaning of the U.S. federal securities laws. All statements other than historical factual information are forward-looking statements, including, without limitation, statements regarding: Ralliant’s future financial performance and results, tax rates, tax provisions, cash flows, pension and benefit obligations and funding requirements, the Company’s liquidity position or other financial measures; management’s plans and strategies for future operations and growth, including statements relating to anticipated operating performance, cost reductions, productivity and savings initiatives, innovation, restructuring activities, new product and service developments, customer demand, competitive strengths or market position, acquisitions, divestitures, strategic opportunities, securities offerings, and capital allocation priorities, including stock repurchases and dividends; the effects of the separation from Fortive on the Company; growth, declines and other trends in markets the Company sells into, including the expected impact of trade and tariff policies, the geopolitical climate, impacts from changes in electric vehicle demand, and increased demand in the Defense and Space end market; changes in government contracting requirements and in federal spending; government shutdowns; new or modified laws, regulations and accounting pronouncements; outstanding claims, legal proceedings, tax audits and assessments and other contingent liabilities; foreign currency exchange rates and fluctuations in those rates; impact of changes to tax laws; general economic and capital markets conditions, including expected impact of inflation or interest rate changes; impact of geopolitical events; the timing of any of the foregoing; assumptions underlying any of the foregoing; and any other statements that address events or developments that the Company intends or believes will or may occur in the future. Terminology such as “believe,” “anticipate,” “will,” “should,” “could,” “intend,” “plan,” “expect,” “estimate,” “project,” “target,” “may,” “might,” “opportunity,” “possible,” “potential,” “seek,” “forecast,” “outlook,” and “position” and similar 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 management of the Company 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 “Information Relating to Forward-Looking Statements and Risk Factor Summary,” “Risk Factors,” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in the Form 10-K.
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 statements. 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). Ralliant assumes no obligation to update or revise any forward-looking statement, whether as a result of new information, future events, and developments or otherwise.
OVERVIEW
General
Ralliant is a global technology company with businesses that design, develop, manufacture, and service precision instruments and highly engineered products. The Company empowers engineers with precision technologies essential for breakthrough innovation in an electrified and digital world, enabling its customers to bring advanced technologies to market faster and more efficiently. Its strategic segments – Sensors and Safety Systems and Test and Measurement – include well-known brands with prominent positions across a range of attractive end markets. The Company is headquartered in Raleigh, North Carolina, and has a global team of approximately 7,000 employees with solutions that are used in more than 90 countries by over 90,000 customers.
Ralliant is a multinational business with global operations, of which sales derived from customers outside the United States were 47.8% and 49.5% for the six months ended July 3, 2026 and June 27, 2025, respectively.
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As a company with global operations, Ralliant’s businesses are affected by worldwide, regional, and industry-specific economic and political factors. Its geographic and industry diversity, as well as broad product and service offerings, typically limits the impact of any single industry or the economy of any single country (except for the United States) on its operating results. Given the broad range of its offerings and the geographies served, the Company does not use any indices other than general economic trends to predict the overall outlook for the Company. The Company monitors key competitors and customers, including their sales to the extent possible, to gauge relative performance and the outlook for the markets within which it competes.
Ralliant operates in a highly competitive business environment and its long-term growth and profitability will depend, in particular, on its ability to execute across geographies and end markets; develop innovative and differentiated new product offerings; continue to reduce costs; improve operating efficiency; and attract, retain, and develop an empowered workforce. The Company makes, and expects to continue to make, investments in research and development, customer-facing resources, its workforce and its manufacturing capabilities and capacity to meet the needs of its customers.
Tariffs
Ongoing changes to U.S. tariff policy have resulted in broad-based increases in tariff rates, and several countries, including China, have imposed or threatened to impose retaliatory measures on imports from the U.S. Although the U.S. Supreme Court struck down tariff provisions authorized under the International Emergency Economic Powers Act (“IEEPA”), the U.S. government immediately replaced the IEEPA tariffs with tariffs authorized under a different provision of law. The U.S. government continues to pursue broad-based tariffs under provisions less vulnerable to legal challenge, and further changes to U.S. tariff policy may be made in the future. On April 20, 2026 and June 29, 2026, Customs and Border Protection launched Phase 1 and Phase 2, respectively, of an administrative IEEPA tariff refund process. The Company has filed refund claims for IEEPA tariffs paid and eligible for refund under both phases. The Company has received a portion of the refunds, but the timing and amount of the remaining refunds is uncertain. Changes to trade policies, retaliatory measures, and sustained uncertainty in global trade relationships have negatively impacted, and are expected to continue to negatively impact, the Company’s operations and financial results, including through resulting supply chain disruptions, increased input costs, delayed shipments, and increased operational complexities and costs. Additionally, these developments have contributed in the past and may in the future contribute to adverse macroeconomic conditions and increased economic nationalism, which could further reduce demand for the Company’s products and negatively impact its business. For additional information, see “Risk Factors” in the Form 10-K.
The Company continues to monitor and evaluate the evolving impact of these tariffs, as the application and imposition of these tariffs remain unpredictable. The Company continues to deploy the Ralliant Business System (“RBS”), including tools and processes to leverage existing sourcing strategies and optimize production and logistics, to actively manage these challenges and utilize pricing, cost, and productivity actions and other countermeasures to offset the aforementioned dynamics.
Enterprise Productivity Program
On May 12, 2026, Ralliant announced a new Enterprise Productivity Program, which is estimated to drive approximately $50 million to $60 million of net annualized savings once fully executed by the end of 2028. These anticipated savings are inclusive of the Cost Savings Program announced in the prior year. The Enterprise Productivity Program includes expected cost of sales savings primarily driven by strategic sourcing actions and the introduction of a Group Purchasing Office. The Enterprise Productivity Program also includes expected general and administrative cost savings with a focus on labor productivity, spend optimization, and organization simplification.
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Non-GAAP Measures
In this Quarterly Report on Form 10-Q, references to sales from existing businesses (“organic revenue”) refer to sales from operations calculated according to GAAP but exclude (1) the impact from acquired and divested businesses and (2) the impact of foreign currency translation (in each case as applicable to the period(s) presented). The portion of sales attributable to acquisitions or acquired businesses refers to sales from acquisitions or acquired businesses prior to the first anniversary of the acquisition date, less the amount of sales attributable to certain businesses or product lines that, at the time of reporting, have been divested or are pending divestiture, but are not, and will not be, considered discontinued operations, prior to the first anniversary of the divestiture. The portion of sales attributable to the impact of foreign currency translation is calculated as the difference between (a) the period-to-period change in sales (excluding sales impact from acquired businesses) and (b) the period-to-period change in sales (excluding sales impact from acquired businesses) after applying the current period foreign exchange rates to the prior year period. Organic revenue should be considered in addition to, and not as a replacement for or superior to, sales from operations, and may not be comparable to similarly titled measures reported by other companies.
Management believes that reporting the non-GAAP financial measure of organic revenue provides useful information to investors by helping identify underlying growth trends in the Company’s business and facilitating comparisons of its sales performance with its performance in prior and future periods and to its peers. The Company excludes the effect of acquisition and divestiture related sales because the nature, size, and number of such transactions can vary dramatically from period to period and between the Company and the Company’s peers. The Company excludes the effect of foreign currency translation from organic revenue because the impact of foreign currency translation is not under management’s control and is subject to volatility.
RESULTS OF OPERATIONS
Selected Financial Data
Three Months Ended Six Months Ended
($ in millions) July 3, 2026 June 27, 2025 July 3, 2026 June 27, 2025
Sales $ 567.8 $ 503.3 $ 1,102.3 $ 985.1
Cost of Sales (274.9) (255.0) (537.1) (493.4)
Gross Profit 292.9 248.3 565.2 491.7
Selling, general, and administrative (“SG&A”) expenses (166.0) (147.4) (326.5) (275.7)
Research and development (“R&D”) expenses (44.7) (42.0) (88.4) (83.3)
Operating profit $ 82.2 $ 58.9 $ 150.3 $ 132.7
Depreciation $ (7.9) $ (6.7) $ (15.2) $ (13.3)
Amortization $ (22.2) $ (21.9) $ (44.5) $ (42.2)
Gross profit margin 51.6 % 49.3 % 51.3 % 49.9 %
Operating profit margin 14.5 % 11.7 % 13.6 % 13.5 %
See the Sensors and Safety Systems and Test and Measurement sections below for further discussion of year-over-year sales and operating profit margin.
Components of Sales Growth
Three Months Ended July 3, 2026 vs. Comparable 2025 Period Six Months Ended July 3, 2026 vs. Comparable 2025 Period
Total revenue growth (GAAP) 12.8 % 11.9 %
Impact of:
Currency exchange rates (0.2) % (1.2) %
Organic revenue growth (Non-GAAP) 12.6 % 10.7 %
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Sales
During the three and six months ended July 3, 2026 (the “second quarter” and “year-to-date period”), sales increased by 12.8% and 11.9%, respectively.
The year-over-year increase in sales in the second quarter was driven by a 12.6% increase in organic revenue and a 0.2% increase from favorable foreign currency exchange rates. The increase in organic revenue in the second quarter included volume increases of 9.7% and favorable pricing increase of 2.9%.
The year-over-year increase in sales in the year-to-date period was driven by a 10.7% increase in organic revenue, and a 1.2% increase from favorable foreign currency exchange rates. The increase in organic revenue in the year-to-date period included volume increases of 8.3% and favorable pricing increase of 2.4%.
Geographically, in the second quarter, the sales increase of 12.8% year-over-year was driven by 17.3% growth in Western Europe, 13.0% growth in North America, 11.8% growth in the rest of the world, and 10.1% growth in China. Geographically, in the year-to-date period, the sales increase of 11.9% year-over-year was driven by 15.0% growth in North America, 10.3% growth in Western Europe, 9.2% growth in China, and 6.4% growth in the rest of the world.
Cost of Sales and Gross Profit
The year-over-year increase in gross profit during the second quarter and year-to-date period was primarily due to volume and pricing increases.
Operating Expenses
The year-over-year increases of $18.6 million and $50.8 million in SG&A expenses during the second quarter and year-to-date period, respectively, were primarily due to increases in employee costs related to higher compensation, benefits, and contract dis-synergies which were allocated to the segments and standalone public company costs that did not occur in the prior period.
R&D, consisting principally of internal and contract engineering personnel costs, increased $2.7 million during the second quarter and increased $5.1 million in the year-to-date period compared with the comparable periods in 2025.
Operating Profit Margins
Operating profit margin was 14.5% for the second quarter, representing an increase of 280 basis points, compared with 11.7% for the comparable period of 2025. The year-over-year increase in operating profit margin was primarily due to higher volumes, price increases, lapping pre-spin corporate cost allocations, and productivity savings, partially offset by an increase in employee costs related to higher compensation, benefits, and contract dis-synergies, which were allocated to the segments. The operating profit margin of 13.6% for the year-to-date period was flat compared with the comparable period of 2025.
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Business
Segments and Geographic Area Results
Sales by business segment and geographic area were as follows:
Three Months Ended Six Months Ended
($ in millions) July 3, 2026 June 27, 2025 July 3, 2026 June 27, 2025
Segments
Sensors and Safety Systems $ 346.5 $ 310.8 $ 670.8 $ 604.1
Test and Measurement 221.3 192.5 431.5 381.0
Total $ 567.8 $ 503.3 $ 1,102.3 $ 985.1
Geographic area
United States $ 289.2 $ 253.4 $ 575.2 $ 497.6
China 93.8 85.2 172.1 157.6
All other 184.8 164.7 355.0 329.9
Total $ 567.8 $ 503.3 $ 1,102.3 $ 985.1
SENSORS AND SAFETY SYSTEMS
The Company’s Sensors and Safety Systems segment provides leading power grid monitoring solutions, safety systems for mission critical aero, defense, and space applications, and sensing solutions for critical environments where uptime, precision, and reliability are essential. The Sensors and Safety Systems segment provides advanced monitoring, protection, and diagnostic solutions for high-voltage electrical assets in power generation, transmission, and distribution. The segment’s energetic materials, ignition safety systems, and precision pyrotechnic devices are used in mission-critical applications such as satellite deployment, rocket propulsion initiation, aerial vehicle safety systems, and military defense systems. The Sensors and Safety Systems segment also provides premium sensing products encompassing liquid level, flow, and pressure sensors; motion sensors and components; and hygienic sensors.
Sensors and Safety Systems Selected Financial Data
Three Months Ended Six Months Ended
($ in millions) July 3, 2026 June 27, 2025 July 3, 2026 June 27, 2025
Sales $ 346.5 $ 310.8 $ 670.8 $ 604.1
Selling, general, and administrative expenses $ (59.7) $ (56.4) $ (116.1) $ (103.1)
Research and development expenses $ (10.0) $ (9.1) $ (19.7) $ (17.3)
Operating profit $ 98.5 $ 79.5 $ 187.3 $ 166.5
Depreciation $ (3.1) $ (2.9) $ (6.1) $ (5.7)
Amortization $ (0.3) $ (0.6) $ (0.6) $ (1.2)
Operating profit margin 28.4 % 25.6 % 27.9 % 27.6 %
Components of Sales Growth
Three Months Ended July 3, 2026 vs. Comparable 2025 Period Six Months Ended July 3, 2026 vs. Comparable 2025 Period
Total revenue growth (GAAP) 11.5 % 11.0 %
Impact of:
Currency exchange rates (0.7) % (1.2) %
Organic revenue growth (Non-GAAP) 10.8 % 9.8 %
The year-over-year increase in sales in the second quarter was driven by an increase in organic revenue of 10.8% and the favorable impact from foreign currency exchange rates.
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The year-over-year increase in sales in the year-to-date period was driven by an increase in organic revenue of 9.8% and the favorable impact from foreign currency exchange rates.
The year-over-year increase in organic revenue in the second quarter and year-to-date period was primarily attributable to increased sales volumes of 7.9% and 7.0%, respectively, primarily from liquid and air sensors in industrial manufacturing and other end markets and defense and space customers. Year-over-year price increases contributed 2.9% and 2.8% to sales growth in the second quarter and the year-to-date period respectively, and is reflected as a component of the change in organic revenue.
Geographically, in the second quarter, the sales increase of 11.5% year-over-year was driven by 20.8% growth in Western Europe, 13.4% growth in China, 13.0% growth in the rest of the world, and 9.1% growth in North America. Geographically, in the year-to-date period, the sales increase of 11.0% year-over-year was driven by 11.3% growth in China, 11.1% growth in North America, 10.8% growth in Western Europe, and 10.7% growth in the rest of the world.
Operating Profit Margin
Operating profit margin was 28.4% for the second quarter, an increase of 290 basis points compared with 25.6% for the comparable period in 2025, primarily driven by higher volumes and price increases, favorability due to lapping pre-spin corporate cost allocations, benefits from productivity measures and RBS initiatives, partially offset by employee costs related to higher compensation, benefits, and contract dis-synergies, which were allocated from corporate.
Operating profit margin was 27.9% for the year-to-date period, an increase of 30 basis points compared with 27.6% for the comparable period in 2025, primarily driven by higher sales volumes and price increases, favorability due to lapping pre-spin corporate cost allocations, partially offset by an increase in employee costs related to higher compensation, benefits, and contract dis-synergies, which were allocated from corporate.
TEST AND MEASUREMENT
The Company’s Test and Measurement segment provides precision test and measurement instruments, systems, and services. Through its portfolio of industry leading solutions, including oscilloscopes, probes, source measuring units, semiconductor test systems, high-power bi-directional power supplies, and measurement analysis software packages, the Test and Measurement segment empowers scientists, engineers, and technicians to create and realize technological advances with ever greater efficiency, speed, and accuracy.
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Test and Measurement Selected Financial Data
Three Months Ended Six Months Ended
($ in millions) July 3, 2026 June 27, 2025 July 3, 2026 June 27, 2025
Sales $ 221.3 $ 192.5 $ 431.5 $ 381.0
Selling, general, and administrative expenses $ (84.6) $ (84.7) $ (171.3) $ (165.0)
Research and development expenses $ (34.7) $ (32.9) $ (68.7) $ (66.0)
Operating profit (loss) $ 5.4 $ (14.3) $ 2.1 $ (26.2)
Depreciation $ (4.6) $ (3.8) $ (8.9) $ (7.6)
Amortization $ (21.9) $ (21.3) $ (43.9) $ (41.0)
Operating profit (loss) margin 2.4 % (7.4) % 0.5 % (6.9) %
Components of Sales Growth
Three Months Ended July 3, 2026 vs. Comparable 2025 Period Six Months Ended July 3, 2026 vs. Comparable 2025 Period
Total revenue growth (GAAP) 14.9 % 13.3 %
Impact of:
Currency exchange rates 0.7 % (1.1) %
Organic revenue growth (Non-GAAP) 15.6 % 12.2 %
The year-over-year increase in sales in the second quarter was driven by an increase in organic revenue of 15.6%, partially offset by the unfavorable impact from foreign currency exchange rates.
The year-over-year increase in sales in the year-to-date period was driven by an increase in organic revenue of 12.2% and the favorable impact from foreign currency exchange rates.
The year-over-year increase in organic revenue in the second quarter was primarily attributable to increased sales volumes of 12.6%, primarily driven by strengthened demand across diversified electronics and communications end markets. Year-over-year price increases contributed 3.0% to sales growth in the second quarter and is reflected as a component of the change in organic revenue.
The year-over-year increase in organic revenue in the year-to-date period was primarily attributable to increased sales volumes of 10.5%, primarily driven by strengthened demand across the diversified electronics end market due to elevated customer investments in electrification, and continuation of demand from defense and government customers and data center infrastructure investments in the communications end market. Year-over-year price increases contributed 1.7% to sales growth in the year-to-date period and is reflected as a component of the change in organic revenue.
Geographically, in the second quarter, the sales increase of 14.9% year-over-year was driven by 23.7% growth in North America, 12.6% growth in Western Europe, 10.4% growth in the rest of the world, and 8.0% growth in China. Geographically, in the year-to-date period, the sales increase of 13.3% year-over-year was driven by 25.9% growth in North America, 9.8% growth in Western Europe, 7.9% growth in China, and 1.9% growth in the rest of the world.
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Operating Profit Margin
Operating profit margin was 2.4% for the second quarter, an increase of 980 basis points compared with operating loss margin of 7.4% for the comparable period in 2025, primarily impacted by higher sales volumes and price increases, productivity savings, and favorability due to lapping pre-spin corporate cost allocations, partially offset by employee costs related to higher compensation, benefits, and contract dis-synergies, which were allocated from corporate.
Operating profit margin was 0.5% for the year-to-date period, an increase of 740 basis points compared with operating loss margin of 6.9% for the comparable period in 2025, primarily driven by higher sales volumes and price increases and favorability due to lapping pre-spin corporate cost allocations, partially offset by an increase in employee costs related to higher compensation, benefits, and contract dis-synergies, which were allocated from corporate.
NON-OPERATING EXPENSE, NET
During the three and six months ended July 3, 2026, Non-operating expenses, net, primarily consisted of Interest expense, net, of $13.8 million and $28.4 million, respectively. The Company incurred no interest expense, net, for the comparable periods in the prior year.
INCOME TAXES
Ralliant’s effective tax rate was 16.5% for the three and six months ended July 3, 2026, respectively, compared with 19.2% and 15.7% for the three and six months ended June 27, 2025, respectively. The decrease in the effective tax rate for the three months ended July 3, 2026 compared with the three months ended June 27, 2025 was primarily attributable to the mix of earnings between jurisdictions, uncertain tax positions, and valuation allowances. The increase in the effective tax rate for the six months ended July 3, 2026 compared with the six months ended June 27, 2025 was primarily attributable to the impacts of changes in the Company’s uncertain tax positions and valuation allowances.
In January 2026, the Organization for Economic Co-operation and Development (“OECD”) released a side-by-side package that would exempt U.S. multinational companies from certain aspects of the Pillar Two framework. The application of this exemption remains subject to enactment by jurisdictions that have adopted, or are in the process of adopting, the Income Inclusion Rule and Undertaxed Profits Rule. For additional information regarding the OECD and the Pillar Two framework, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the Form 10-K. The Company does not anticipate a material impact on its consolidated condensed financial statements and will continue to monitor country-by-country adoption and implementation.
COMPREHENSIVE INCOME
Comprehensive income decreased by $162.0 million during the second quarter compared with the comparable period in 2025 due to unfavorable changes in foreign currency translation of $171.3 million, partially offset by an increase in net earnings of $9.6 million.
Comprehensive income decreased by $333.4 million during the year-to-date period compared with the comparable period in 2025 due to unfavorable changes in foreign currency translation of $323.0 million, as well as a decrease in net income of $10.1 million.
LIQUIDITY AND CAPITAL RESOURCES
Prior to the Separation, Ralliant was dependent upon Fortive for all funding needs. For the three and six months ended June 27, 2025, only cash, cash equivalents, and borrowings clearly associated with Ralliant have been included in the consolidated and combined condensed financial statements included elsewhere in this Quarterly Report on Form 10-Q. Financial transactions relating to business operations prior to the Separation were accounted for through the Net Former Parent investment account of the Company.
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Following the Separation, management independently assesses the Company’s ability to generate cash to fund operating and investing activities. The Company believes its operating cash flow and other sources of liquidity will, after giving effect to any dividend payments and debt servicing obligations, be sufficient to fund the Company’s existing businesses, consummate strategic acquisitions, fulfill its contractual obligations, and manage its capital structure on a short- and long-term basis.
On May 15, 2025 (the “Closing Date”), the Company entered into a credit agreement (the “Credit Agreement”), with a syndicate of banks. This included an eighteen month $600.0 million senior unsecured delayed-draw term loan facility (the “Eighteen-Month Term Loan”), a three-year $700.0 million senior unsecured delayed-draw term loan facility (the “Three-Year Term Loan”, and together with the Eighteen-Month Term Loan, the “Term Loans”) and a five-year $750.0 million senior unsecured multi-currency revolving credit facility, including a $25.0 million sublimit for swingline loans and a $75.0 million sublimit for the issuance of letters of credit (the “Revolving Credit Facility” and, together with the Term Loans, the “Credit Facilities”). The Credit Agreement contains an option to request increases of the Credit Facilities (in any combination thereof) of up to an aggregate amount of $500.0 million, subject to lender agreement, and upon the satisfaction of certain conditions. The Revolving Credit Facility was undrawn and the letters of credit were unused as of July 3, 2026.
On June 27, 2025, Ralliant borrowed $1.15 billion, drawn pro rata under the Term Loans. The proceeds were used to pay Fortive on June 27, 2025, as consideration for the contribution of assets to Ralliant by Fortive in connection with the Separation. On March 30, 2026, Ralliant entered into Amendment No. 2 (the “Second Amendment”) to the Credit Agreement. The Second Amendment, among other things, (i) refinanced the $530.8 million then outstanding under the Eighteen-Month Term Loan with a $550 million term loan due March 2029 that includes an applicable borrowing rate thereunder that is 12.5 basis points higher than that of the Eighteen-Month Term Loan; (ii) reduced the amount outstanding under the Three-Year Term Loan from $619.2 million to $600 million and decreased the applicable borrowing rate thereunder by 12.5 basis points; and (iii) removed the 85% cap on netting cash and cash equivalents outside of the United States for purposes of calculating the Company’s consolidated net leverage ratio. Refer to Note 4 of the notes to the consolidated and combined condensed financial statements included elsewhere in this Quarterly Report on Form 10-Q for more information related to the Company’s long-term indebtedness.
Borrowings under the Credit Agreement are prepayable at any time in whole or in part without premium or penalty. Term loans under the Credit Agreement may not be reborrowed once repaid. Amounts borrowed under the Revolving Credit Facility may be repaid and reborrowed prior to the maturity date.
Ralliant must maintain a Consolidated Net Leverage Ratio, as defined by the Credit Agreement, of 3.50 to 1.00 or less; provided that, not more than two times after the Closing Date, the maximum Consolidated Net Leverage Ratio may be increased to 4.00 to 1.00 in connection with any permitted acquisition by Ralliant occurring after the Closing Date with aggregate consideration (including, without duplication, the assumption or incurrence of indebtedness in connection with such acquisition) equal to or in excess of $100.0 million, which such increase shall be applicable for the fiscal quarter in which such acquisition is consummated and the three consecutive quarters thereafter; provided that, there shall be at least one full fiscal quarter following the cessation of each such increase during which no such increase shall then be in effect. The Consolidated Net Leverage Ratio is calculated at the end of each fiscal quarter.
The Term Loans under the Credit Agreement contain customary covenants. None of these covenants are considered restrictive to Ralliant’s operations. As of July 3, 2026, Ralliant was in compliance with all of the covenants under the Credit Agreement, as amended.
The Company cannot assure that its net cash provided by operating activities, cash and equivalents, or cash available under its Credit Facilities will be sufficient to meet its future needs. If the Company is unable to generate sufficient cash flows from operations in the future and if availability under its Credit Facilities is not sufficient, the Company may have to obtain additional financing. If the Company obtains additional capital by issuing equity, the interests of existing stockholders will be diluted. If the Company incurs additional indebtedness, that indebtedness may contain financial and other covenants that may significantly restrict its operations. The Company cannot assure that it could obtain refinancing or additional financing on favorable terms or at all.
On June 28, 2025, the Company’s Board of Directors (the “Board”) approved a share repurchase authorization of up to $200.0 million of the Company’s common stock. During the first quarter of 2026, the Company repurchased 1.2 million shares of its common stock at an average price of $42.40 per share for a total cost of $50.5 million (including $0.5 million in taxes and fees) in the open market.
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On May 8, 2026, the Board raised the share repurchase authorization to $500.0 million. The timing and amount of share repurchases will be determined by the Company based on its evaluation of market conditions and other factors. The share repurchase authorization has no expiration date, does not obligate the Company to acquire any particular amount of shares, and may be suspended or discontinued at any time. The share repurchase authorization is consistent with the Company's capital allocation strategy to prioritize returning capital to stockholders.
On May 12, 2026, the Company entered into an accelerated share repurchase (“ASR”) program to execute $100 million of the Company’s share repurchase authorization. During the three months ended July 3, 2026, the ASR was fully settled, and the Company received 1.6 million shares of its common stock for a total cost of $101.0 million (including $1.0 million in taxes), based on a share price of $64.05. The shares repurchased under the ASR program were based on the average of the daily Rule 10b-18 volume-weighted average prices of Ralliant’s common stock during the term of the ASR program, less a discount, and pursuant to the terms and conditions of the ASR agreement.
During the six months ended July 3, 2026, the Company repurchased an aggregate of 2.8 million shares of its common stock under the share repurchase authorization for a total cost of $151.5 million (including $1.5 million in taxes and fees), at an average price per share of $54.74, inclusive of shares purchased under the ASR.
As of July 3, 2026, $400.0 million is remaining under the share repurchase authorization.
Overview of Cash Flows and Liquidity
The following is an overview of the Company’s cash flows and liquidity:
Six Months Ended
($ in millions) July 3, 2026 June 27, 2025
Net cash provided by operating activities $ 124.6 $ 157.4
Purchases of property, plant and equipment $ (15.1) $ (17.2)
Proceeds from settlement of investments 0.6 —
Proceeds from sale of property — 1.5
Net cash used in investing activities $ (14.5) $ (15.7)
Net proceeds from borrowings $ 59.2 $ 1,146.8
Repayment of borrowings (60.0) —
Repurchase of common shares (151.5) —
Dividends paid (11.1) —
All other financing activities 6.9 —
Consideration paid to Former Parent in connection with Separation — (1,150.0)
Net transfers from Former Parent — 47.3
Net cash (used in) provided by financing activities $ (156.5) $ 44.1
Operating Activities
Net cash provided by operating activities can fluctuate significantly from period-to-period as working capital needs and the timing of payments for income taxes, interest, pension funding, and other items impact reported cash flows.
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Net cash provided by operating activities was $124.6 million during the year-to-date period, representing a decrease of $32.8 million compared with the comparable period of 2025. The year-over-year change in net cash provided by operating activities was primarily attributable to $20.6 million cash usage related to Prepaid expenses and other current assets and Accrued expenses and other liabilities related to higher incentive compensation and timing differences related to contract assets, contract liabilities, payments of employee compensation, income taxes, and interest. The change in net cash provided by operating activities was also driven by $14.0 million cash usage related to changes working capital accounts, including Accounts receivable, Inventories, net, and Trade accounts payable. Changes in working capital are primarily impacted by the timing of collections and payments in a period.
Investing Activities
Cash used in investing activities decreased by $1.2 million during the year-to-date period compared with the comparable period of 2025, primarily due to decreased capital expenditures related to timing of investments in production capacity expansion and facility improvement projects. Capital expenditures totaled $15.1 million for the six months ended July 3, 2026 and $17.2 million for the six months ended June 27, 2025.
Financing Activities
Net cash used in financing activities was $156.5 million during the year-to-date period, representing a $200.6 million increase compared with the comparable period of 2025, primarily driven by repurchases of common shares and dividend payments in the year-to-date period, partially offset by the Net transfers to Former Parent in the prior period. Additionally, the Company borrowed and repaid $60 million under the Revolving Credit during the second quarter.
Cash and Cash Requirements
The Company held $270.9 million of Cash and equivalents as of July 3, 2026. The Company had $318.8 million of Cash and equivalents as of December 31, 2025.
The Company requires cash to support working capital needs, capital expenditures and acquisitions, pay interest and service debt, pay taxes and any related interest or penalties, fund its pension plans as required, pay dividends to stockholders, and support other business needs or objectives. With respect to cash requirements, the Company generally intends to use available cash and internally generated funds to meet these cash requirements, but in the event that additional liquidity is required, particularly in connection with acquisitions and repayment of maturing debt, the Company may also borrow under its Credit Facilities or enter into new credit facilities to borrow directly thereunder. It also may access the capital markets, including to take advantage of favorable interest rate environments or other market conditions.
Foreign cumulative earnings remain subject to foreign remittance taxes. The Company has made an election regarding the amount of earnings that it does not intend to repatriate due to local working capital needs, local law restrictions, high foreign remittance costs, previous investments in physical assets and acquisitions, or future growth needs. For most of its foreign operations, the Company makes an assertion regarding the amount of earnings in excess of intended repatriation that are expected to be held for indefinite reinvestment. No provisions for foreign remittance taxes have been made with respect to earnings that are planned to be reinvested indefinitely. The amount of foreign remittance taxes that may be applicable to such earnings is not readily determinable given local law restrictions that may apply to a portion of such earnings, unknown changes in foreign tax law that may occur during the applicable restriction periods caused by applicable local corporate law for cash repatriation, and the various tax planning alternatives it could employ if the Company repatriated these earnings.
Borrowings under the Credit Facilities bear interest as described in Note 4 of the notes to the consolidated and combined condensed financial statements included elsewhere in this Quarterly Report on Form 10-Q.
As of July 3, 2026, the Company believes it has sufficient liquidity to satisfy its cash needs for at least the next 12 months and foreseeable future.
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CRITICAL ACCOUNTING ESTIMATES
There were no material changes during the three and six months ended July 3, 2026 to the items disclosed as critical accounting estimates in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in the Form 10-K.