RAL 10-K & 10-Q changes, risk factors and insider trading

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 (including the anticipated accelerated share repurchase (“ASR”) program), 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.

Ralliant is a multinational business with global operations, of which sales derived from customers outside the United States were 46.5%47.8% and 49.3%49.5% for the threesix months ended AprilJuly 3, 2026 and MarchJune 28,27, 2025, respectively.

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 thisboth phase.phases. The Company has received a portion of the refunds, but the timing and amount of anythe remaining refunds is uncertain. Accordingly, no recovery has been recognized in the accompanying financial statements as of April 3, 2026. 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.

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.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.

During the three and six months ended AprilJuly 3, 2026 (the “firstsecond quarter” and “year-to-date period”), sales increased by 11.0%.12.8% and 11.9%, respectively.

The year-over-year increase in sales in the firstsecond quarter was driven by ana 8.8%12.6% increase in organic revenue and a 2.2%0.2% increase from favorable foreign currency exchange rates. The increase in organic revenue in the firstsecond quarter included volume increases of 6.9%9.7% and favorable pricing increase of 1.9%.2.9%.

The year-over-year increase in gross profit during the firstsecond quarter and year-to-date period was primarily due to volume and pricing increases.

The year-over-year increaseincreases of $32.2$18.6 million and $50.8 million in SG&A expenses during the firstsecond quarter comparedand withyear-to-date theperiod, priorrespectively, year period waswere 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 and increases in other employee costs related to higher compensation, benefits, and contract dis-synergies which are allocated to the segments.period.

R&D, consisting principally of internal and contract engineering personnel costs, increased $2.4$2.7 million during the firstsecond quarter and increased $5.1 million in the year-to-date period compared with the comparable periodperiods in 2025.

Operating profit margin was 12.7%14.5% for the firstsecond quarter, representing aan decreaseincrease of 260280 basis pointspoints, compared with 15.3%11.7% for the comparable period of 2025. The year-over-year declineincrease in operating profit margin was primarily due to higher operatingvolumes, expensesprice increases, lapping pre-spin corporate cost allocations, and productivity savings, partially offset by an increase in employee costs related to standalonehigher publiccompensation, company costsbenefits, and highercontract employeedis-synergies, costswhich were allocated to the segments,segments. partiallyThe offsetoperating byprofit highermargin volumeof and13.6% pricefor increases.the year-to-date period was flat compared with the comparable period of 2025.

Business Segments and Geographic Area Results

The year-over-year increase in sales in the firstsecond quarter year-over-year was driven by increasesan increase in organic revenue of 8.8%10.8% 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 6.0%,7.9% and 7.0%, respectively, primarily from defense and space customers and liquid and air sensors in industrial manufacturing and other end markets, partially offset by volume reductions in automationmarkets and controldefense applicationsand withinspace the industrial manufacturing end market.customers. Year-over-year price increases contributed 2.9% and 2.8% to sales growth in the firstsecond 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 10.6%11.5% year-over-year was driven by 13.2%20.8% growth in NorthWestern America,Europe, 8.8%13.4% growth in China, 8.2%13.0% growth in the rest of the world, and 0.6%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.Europe, and 10.7% growth in the rest of the world.

Operating profit margin was 27.3%28.4% for the firstsecond quarter, aan decreaseincrease of 230290 basis points compared with 29.7%25.6% for the comparable period in 2025, primarily driven by otherhigher 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, partially offset by price increases.corporate.

The year-over-year increase in sales in the firstsecond quarter was driven by an increase in organic revenue growth of 8.7%15.6%, andpartially offset by the favorableunfavorable 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 8.3%,12.6%, primarily driven by strengthened demand across communicationsdiversified electronics and diversified electronicscommunications end markets. Year-over-year price increases contributed 0.4%3.0% to sales growth in the firstsecond quarter and is reflected as a component of the change in organic revenue.

Operating lossprofit margin was 1.5%2.4% for the firstsecond quarter, an increase of 480980 basis points compared with operating loss margin of 6.3%7.4% for the comparable period in 2025, primarily impacted by higher sales volume,volumes and price increases, productivity savings, and favorability due to lapping pre-spin corporate cost allocations, partially offset by other employee costs related to higher compensation, benefits, and contract dis-synergies, which were allocated from corporate, and increased restructuring costs.corporate.

NON-OPERATING INCOME (EXPENSE),EXPENSE, NET

During the three and six months ended AprilJuly 3, 2026, theNon-operating Companyexpenses, recognizednet, interestprimarily expenseconsisted of $14.7Interest million.expense, net, of $13.8 million and $28.4 million, respectively. The Company incurred no interest expenseexpense, net, for the comparable periodperiods in the prior year.

Ralliant’s effective tax rate was 16.5% for the three and six months ended AprilJuly 3, 20262026, respectively, compared with 12.8%19.2% and 15.7% for the three and six months ended MarchJune 28,27, 2025.2025, respectively. The increasedecrease in the effective tax rate for the three months ended AprilJuly 3, 2026 compared with the three months ended MarchJune 28,27, 2025 was primarily attributable to the effectsmix of variousearnings between jurisdictions, uncertain tax creditspositions, and deductionsvaluation providedallowances. byThe law,increase includingin thosethe associatedeffective tax rate for the six months ended July 3, 2026 compared with statethe incomesix taxes,months U.S.ended internationalJune taxes,27, non-deductible2025 executivewas compensation,primarily andattributable to the impacts of changes in the Company’s uncertain tax positionpositions reserves.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 localcountry-by-country countryadoption adoption.and implementation.

Comprehensive income decreased by $171.4$162.0 million during the firstsecond quarter compared with the comparable period in 2025 due to unfavorable changes in foreign currency translation of $151.7$171.3 million, aspartially welloffset asby aan decreaseincrease in net earnings of $19.7$9.6 million.

Prior to the Separation, Ralliant was dependent upon Fortive for all funding needs. For the three and six months ended MarchJune 28,27, 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.

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,month $600.0 million senior unsecured delayed-draw term loan facility (the “Eighteen-Month Term Loan”), a three-year,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 AprilJuly 3, 2026.

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 of the Credit Agreement,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 AprilJuly 3, 2026, Ralliant was in compliance with all of the covenants under the Credit Agreement, as amended.

On June 28, 2025, the Company'sCompany’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 threefirst monthsquarter ended April 3,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), leaving $150.0 million remaining underin the shareopen repurchase authorization. On May 8, 2026, the Board raised the share repurchase authorization to $500.0 million.market.

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.

TheOn May 12, 2026, the Company plans to enterentered into an accelerated share repurchase (“ASR”) program to execute $100 million of the Company’s share repurchase authorization. TheDuring 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 numbercost of $101.0 million (including $1.0 million in taxes), based on a share price of $64.05. The shares ultimately repurchased under the ASR program will be determined upon final settlement and will bewere based on the average of the daily Rule 10b-18 volume-weighted average prices of Ralliant’s common stock during the term of the program.ASR Theprogram, less a discount, and pursuant to the terms and conditions of the ASR program is expected to be executed during the second quarter of 2026.agreement.

Cash used in investing activities increaseddecreased by $4.6$1.2 million during the firstyear-to-date quarterperiod compared with the comparable period of 2025, primarily due to increaseddecreased capital expenditures related to increasingtiming of investments in production capacity,capacity replacing aged equipment,expansion and supportingfacility productimprovement development initiatives for product offerings.projects. Capital expenditures totaled $8.7$15.1 million for the threesix months ended AprilJuly 3, 2026 and $5.6$17.2 million for the threesix months ended MarchJune 28,27, 2025.

Net cash used in financing activities was $59.1$156.5 million during the firstyear-to-date quarter,period, representing a $13.5$200.6 million decreaseincrease compared with the comparable period of 2025.2025, Netprimarily transfersdriven to Former Parent in the first quarter of 2025 exceeded cash outflow forby repurchases of common shares and dividend payments in the firstyear-to-date quarterperiod, ofpartially 2026offset asby wellthe asNet paymentstransfers ofto debtFormer issuanceParent costsin ofthe $0.8prior period. Additionally, the Company borrowed and repaid $60 million associated withunder the SecondRevolving AmendmentCredit toduring the Creditsecond Agreement.quarter.

The Company held $268.0$270.9 million of Cash and equivalents as of AprilJuly 3, 2026. The Company had $318.8 million of Cash and equivalents as of December 31, 2025.

As of AprilJuly 3, 2026, the Company believes it hadhas sufficient liquidity to satisfy its cash needs for at least the next 12 months and foreseeable future.

There were no material changes during the three and six months ended AprilJuly 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.