Ralliant Corp (RAL)

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.

23

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.

24

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

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

25

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.

26

Business

Segments and Geographic Area Results

Sales by business segment and geographic area were as follows:

[Excerpt truncated for page length; source filing is linked above.]

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following management’s discussion and analysis of financial condition and results of operations (“MD&A”) of Ralliant for the fiscal years ended December 31, 2025 and 2024 should be read in conjunction with the Company’s consolidated and combined financial statements and accompanying notes included in Part II, Item 8 of this Annual Report. This MD&A generally discusses results for the years ended December 31, 2025 and 2024 and includes year-to-year comparisons between such years. Information regarding results for the year ended December 31, 2023 and year-over-year comparisons between the years ended December 31, 2024 and 2023 may be found in the section entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the Company’s Information Statement filed with the U.S. Securities and Exchange Commission (“SEC”) as an exhibit to the Company’s Form 10-12B/A on May 28, 2025, other than with respect to research and development expense by segment, which is set forth in Operating Expenses within the Results of Operations section below.

This MD&A is designed to provide a reader of the financial statements with a narrative from the perspective of management. This MD&A is divided into seven sections:

•Basis of Presentation

•Overview

•Results of Operations

•Financial Instruments and Risk Management

•Liquidity and Capital Resources

•Critical Accounting Estimates

•New Accounting Standards

BASIS OF PRESENTATION

The accompanying financial results present 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”). 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 Precision Technologies 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. Related party allocations prior to the Separation, including the method for such allocation, are discussed further in Note 18 to the consolidated and combined financial statements included in this Annual Report. In the fourth quarter of 2025, the Company made an enhancement to its reporting process related to sales by geography to better align sales to the end customer. Prior year information has been recast to conform to current year presentation.

These financial results may not be indicative of Ralliant’s financial performance had it been a separate standalone entity throughout the periods presented, nor are the results stated herein indicative of what its financial position, results of operations, and cash flows may be in the future.

47

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 – Test and Measurement and Sensors and Safety Systems – 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 which are used in more than 90 countries by over 90,000 customers.

Ralliant is a multinational business with global operations, where sales derived from customers outside the United States were 48.7% and 49.5% for the years ended December 31, 2025 and December 31, 2024, respectively.

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.

Recent and 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. The U.S. government has announced various modifications to its tariff policy, and further changes may be made in the future. 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.

The Company continues to 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.

48

Non-GAAP Measures

In this Annual Report, 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. 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, which excludes the effects of acquisitions and divestitures and foreign currency translation, 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.

Acquisitions

EA Elektro-Automatik Holding GmbH (“EA”), a leading supplier of high-power electronic test solutions for energy storage, mobility, hydrogen, and renewable energy applications, was acquired in January 2024. The acquisition of EA bolsters Ralliant’s innovative portfolio of products and services for engineers with complementary test and measurement solutions enabling the global energy transition. The total consideration paid was approximately $1.72 billion, net of acquired cash. Ralliant recorded approximately $1.18 billion of goodwill within its Test and Measurement segment related to the EA acquisition, which was not tax deductible. The Company anticipates future tax benefits as a result of the transaction.

Divestitures

In June 2024, Invetech, excluding the Dover Motion Business, was divested to Invetech’s management team (the “Invetech Divestiture”). As a result of the Invetech Divestiture, in the year ended December 31, 2024, a net realized loss of $25.6 million was recorded, which is identified as Loss from divestiture in the Consolidated and Combined Statements of (Loss) Earnings. The Invetech Divestiture did not represent a strategic shift with a major effect on the Ralliant’s operations and financial results, and therefore the divested businesses are not reported as discontinued operations.

Other Matters

In the third quarter of 2025, the Company announced a Cost Savings program, targeting $9 million to $11 million of annualized cost savings, which is expected to be completed by December 31, 2026. The nature of the activities is focused on spin-related dis-synergies within the Test & Measurement segment. In the fourth quarter of 2024, Ralliant initiated a discrete restructuring plan that was completed as of December 31, 2025. The nature of the activities in the plan was related to the separation from the Former Parent and consisted primarily of targeted workforce reductions to realign the cost

[Excerpt truncated for page length; the complete text is on the linked full-MD&A page.]