What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-11-06 compared with 2025-08-11 · 131 added, 154 removed, 230 unchanged (55% of the section changed)

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

On May 27, 2025, the Board of Directors of Fortive Corporation (“Fortive” or the “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 Corporation (“Ralliant”, “the Company”, “its”, or “their”) to Fortive's stockholders (the “Separation”), which was completed on June 28, 2025.

Ralliant is a global technology company with businesses that design, develop, manufacture, and service precision instruments and highly engineered products.

Ralliant Corporation (“Ralliant”, the “Company”, “its”, or “their”) 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.

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.

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.

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• Critical Accounting Estimates

BASIS OF PRESENTATION

The accompanying consolidated and combined condensed financial statements 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”) for the preparation of carved-out combined condensed financial statements.

The Company has historically operated as part of Fortive’s Precision Technologies segment and not as a stand-alone company.

The financial statements as of June 27, 2025 or earlier have been derived from Fortive’s historical accounting records and are presented on a carve-out basis.

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 financial statements.

Those historical 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.

Prior to the Separation, the Company was dependent upon Fortive for all of its working capital and financing requirements as Fortive uses a centralized approach to cash management and financing of its operations.

Because the Company was part of Fortive for the three and nine months ended September 27, 2024, only cash, cash equivalents, and borrowings clearly associated with Ralliant and related to the Separation, including the financing transactions described in the “Liquidity and Capital Resources” section, have been included in these Consolidated and Combined Condensed Financial Statements.

Other financial transactions relating to the business operations of the Company during the period were accounted for through the Net Former Parent investment account of the Company.

The Company’s business consists of two segments:

Test and Measurement and Sensors and Safety Systems.

For additional details regarding these operations, refer to Note 12 titled “Segment Information” in the Notes to the Consolidated and Combined Condensed Financial Statements.

Segment Realignment and Divestiture

In January 2024, Fortive realigned Invetech from the Advanced Healthcare Solutions segment to the PT segment.

In June 2024, Fortive divested and transferred ownership of Invetech, excluding the Dover Motion Business, to Invetech’s management team (the “Invetech Divestiture”).

As a result of the Invetech Divestiture, in the three months ended September 27, 2024, Ralliant recorded a net realized loss of $25.6 million, which is identified as “Loss from divestiture” in the Consolidated and Combined Condensed Statements of 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.

INFORMATION RELATING TO FORWARD-LOOKING STATEMENTS

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management’s plans and strategies for future operations, including statements relating to anticipated operating performance, cost reductions, restructuring activities, new product and service developments, competitive strengths or market position, acquisitions, divestitures, strategic opportunities, securities offerings, stock repurchases, dividends and executive compensation;

the effects of the Separation on the business;

the effects of the Separation on the Company;

growth, declines and other trends in markets the Company sells into, including the expected impact of trade and tariff policies;

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assumptions underlying any of the foregoing;

and any other statements that address events or developments that we intend or believe will or may occur in the future.

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,” “possible,” “potential,” “forecast,” “outlook,” and “positioned” and similar references to future periods are intended to identify forward-looking statements, although not all forward-looking statements are accompanied by such words.

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See “Risk Factors”, “Cautionary Statement Concerning Forward-Looking Statements” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the Company’s Information Statement filed as an exhibit to the Company’s Form 10-12B/A on May 28, 2025 and “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in this Quarterly Report on Form 10-Q for further discussion regarding reasons that actual results may differ materially from the results, developments, and business decisions contemplated by the forward-looking statements.

BASIS OF PRESENTATION

The accompanying combined condensed financial statements present the historical financial position, results of operations, changes in Fortive’s equity and cash flows of the Company in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for the preparation of carved-out combined condensed financial statements.

The Company has historically operated as part of Fortive’s Precision Technologies segment and not as a stand-alone company.

The financial statements have been derived from Fortive’s historical accounting records and are presented on a carve-out basis.

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 financial statements.

The financial statements also include 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 have been determined on a reasonable basis;

however, the amounts are 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, including the method for such allocation, are discussed further in Note 13 of the Notes to the Combined Condensed Financial Statements for the three and six months ended June 27, 2025 and June 28, 2024 (the “quarter” or the “second quarter” and “year-to-date period,” respectively).

Until the Separation, the Company was dependent upon Fortive for all of its working capital and financing requirements as Fortive uses a centralized approach to cash management and financing of its operations.

Because the Company was part of Fortive for the three and six months ended June 27, 2025, only cash, cash equivalents, and borrowings clearly associated with Ralliant and related to the Separation, including the financing transactions described in the “Liquidity and Capital Resources” section, have been included in these Combined Condensed Financial Statements.

Other financial transactions relating to the business operations of the Company during the period were accounted for through the Net Parent investment account of the Company.

Unaudited Pro Forma Combined Financial Statements for the periods ended March 28, 2025 and December 31, 2024 can be found in the Company’s Information Statement filed as an exhibit to the Company’s Form 10-12B/A on May 28, 2025.

There have been no material changes to the Pro Forma adjustments in the second quarter or year-to-date period.

The Company’s business consists of two segments:

Test and Measurement and Sensors and Safety Systems.

For additional details regarding these operations, refer to Note 12 titled “Segment Information”.

Segment Realignment and Divestiture

In January 2024, Fortive realigned Invetech from the Advanced Healthcare Solutions segment to the PT segment.

In June 2024, Fortive divested and transferred ownership of Invetech, excluding the Dover Motion Business, to Invetech’s management team (the “Invetech Divestiture”).

As a result of the Invetech Divestiture, in the three months ended June 28, 2024, Ralliant recorded a net realized loss of $25.6 million, which is identified as “Loss from divestiture” in the Combined Condensed Statements of Earnings.

Ralliant is a global technology company with businesses that design, develop, manufacture, and service precision instruments and highly engineered products.

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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, of which 48.9% of its 2024 sales derived from customers outside the United States, including high-growth markets.

The Company defines high-growth markets as developing markets of the world experiencing extended periods of accelerated growth in gross domestic product and infrastructure which include Eastern Europe, the Middle East, Africa, Latin America, and Asia with the exception of Japan and Australia.

Ralliant is a multinational business with global operations, of which 47.9% and 49.3% of its sales were derived from customers outside the United States, as of the nine months ended September 26, 2025 and September 27, 2024, respectively.

As a company with global operations, Ralliant’s businesses are affected by worldwide, regional, and industry-specific economic and political factors.

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On January 3, 2024, Ralliant acquired EA Elektro-Automatik Holding GmbH (“EA”), a leading supplier of high-power electronic test solutions for energy storage, mobility, hydrogen, and renewable energy applications.

The acquisition of EA will bolster Ralliant’s innovative portfolio of products and services for engineers with complementary test and measurement solutions enabling the global energy transition.

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.

Fortive, on behalf of Ralliant, funded this transaction with financing activities and available cash.

Ralliant recorded approximately $1.18 billion of goodwill within its Test and Measurement segment related to the EA acquisition, which is not tax deductible.

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.

In June 2024, Fortive completed the Invetech Divestiture.

As a result of the Invetech Divestiture, in the six months ended June 28, 2024, Ralliant recorded a net realized loss of $25.6 million, which is identified as “Loss from divestiture” in the Combined Condensed Statements of Earnings.

As a result of the Invetech Divestiture, in the nine months ended September 27, 2024, Ralliant recorded a net realized loss of $25.6 million, which is identified as “Loss from divestiture” in the Consolidated and Combined Condensed Statements of Earnings.

Business Performance

Business Performance During the Three and Six Months Ended June 27, 2025

During the three and six months ended June 27, 2025, sales decreased by 5.7% and 8.3%, respectively.

The year-over-year decrease in sales in the second quarter was driven by a 5.8% decrease in organic revenue and a 1.1% decrease from the Invetech Divestiture, partially offset by an increase of 1.2% from favorable foreign currency exchange rates.

The decrease in organic revenue in the second quarter included volume declines of 9.2%, partially offset by favorable pricing of 3.4%.

Business Performance During the Three and Nine Months Ended September 26, 2025

During the three and nine months ended September 26, 2025 (the “quarter” or the “third quarter”, and “year-to-date period,” respectively), sales decreased by 0.5% and 5.7%, respectively.

The year-over-year decrease in sales in the third quarter was driven by a 1.4% decrease in organic revenue, partially offset by an increase of 0.9% from favorable foreign currency exchange rates.

The decrease in organic revenue in the third quarter included volume declines of 5.2%, partially offset by favorable pricing of 3.8%.

The year-over-year decrease in sales in the year-to-date period was driven by 5.4% decrease from organic revenue declines and a 0.7% decrease from the Invetech Divestiture, partially offset by 0.4% increase from favorable foreign currency exchange rates.

The decrease in organic revenue in the year-to-date period included volume declines of 8.5%, partially offset by favorable pricing of 3.1%.

Geographically, in the second quarter, organic revenue in developed markets decreased by high single-digits year-over-year, driven by a mid-twenties decline in Western Europe and mid single-digit decline in North America.

Organic revenue in high growth markets increased slightly in the second quarter year-over-year, driven by mid-teens growth in Latin America, offset by a low single-digit decline in China.

Geographically, in the year-to-date period, organic revenue in developed markets decreased by low double-digits year-over-year, driven by a low-thirties decline in Western Europe and a mid single-digit decline in North America.

Organic revenue in high growth markets decreased low single-digits in the year-to-date period year-over-year, driven by a mid single-digit decline in China, partially offset by low-twenties growth in Latin America.

Geographically, in the third quarter, revenue was flat year-over-year, driven by 3% growth in North America, offset by 6% decline in Western Europe, 6% decline in China, and 3% decline in the rest of the world.

Geographically, in the year-to-date period, revenue decreased 6% year-over-year, driven by 20% decline in Western Europe, 3% decline in North America, 6% decline in China, and flat revenue in the rest of the world.

RESULTS OF OPERATIONS

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Three Months Ended

Six Months Ended

($ in millions) June 27, 2025 June 28, 2024 June 27, 2025 June 28, 2024

Nine Months Ended

($ in millions) September 26, 2025 September 27, 2024 September 26, 2025 September 27, 2024

Sales $ 529.1 $ 531.7 $ 1,514.3 $ 1,606.6

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Components of Sales Growth

Three Months Ended June 27, 2025 vs.

Three Months Ended September 26, 2025 vs.

Comparable 2024 Period

Six Months Ended June 27, 2025 vs.

Nine Months Ended September 26, 2025 vs.

Comparable 2024 Period

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Operating Profit Margins

Operating profit margin was 11.7% for the second quarter, representing a decrease of 800 basis points compared with 19.7% for the comparable period of 2024.

Operating profit margin was 9.8% for the third quarter, representing a decrease of 1,110 basis points, compared with 20.9% for the comparable period of 2024.

The year-over-year changes in operating profit margin primarily comprised the following:

• The second quarter decrease in results from existing businesses — unfavorable 810 basis points, primarily driven by:

• The third quarter decrease in results primarily driven by -425 basis points from the stock-based compensation modification in the third quarter resulting from the revaluation of the share price as a result of the Separation;

-270 basis points from volume reduction;

-250 basis points from higher salaries and wages;

-150 basis points from higher corporate costs allocable to its segments;

-250 basis points from public company standalone costs;

and -110 basis points from the net impact of tariffs, partially offset by +100 basis points from price increases.

◦ As a separate public company, Ralliant incurred incremental costs with the establishment of a separate corporate function, primarily related to employee compensation and IT system costs, as well as incremental standalone public company costs such as corporate governance costs, including audit and other professional services fees, consulting and legal fees, and stock exchange listing fees.

As further discussed in Note 13 to the financial statements, certain shared corporate costs have been allocated to Ralliant by Fortive, and are reflected as expenses in these financial statements.

-200 basis points from higher salaries and wages;

partially offset by +180 basis points from price increases.

The net impact of tariffs was fully offset via countermeasures in the period.

Operating profit margin was 12.2% for the year-to-date period, representing a decrease of 1,010 basis points, compared with 22.3% for the comparable period of 2024.

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• The year-over-year decrease in results from existing businesses — unfavorable 580 basis points, primarily driven by:

◦ -225 basis points driven by volume reduction, partially offset by price increases;

◦ -350 basis points driven by volume reduction;

-235 basis points from higher salaries and wages;

-110 basis points from corporate costs allocable to its segments;

-130 basis points from standalone public company costs;

and -60 basis points from the net impact of tariffs.

-35 basis points from the net impact of tariffs;

partially offset by 125 basis points from price increases.

• The year-over-year effect of the gain on sale of land and certain office buildings in 2024 — unfavorable 400 basis points.

• The stock-based compensation modification in the third quarter resulting from the revaluation of the share price as a result of the Separation — unfavorable 150 basis points.

• The year-over-year net effect of acquisition and divestiture related transaction costs incurred in 2024 primarily related to the EA acquisition — favorable 160 basis points.

• The year-over-year net effect of acquired and divested businesses, including amortization and acquisition-related fair value adjustments — favorable 120 basis points

Business Segments and Geographic Area Results

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Three Months Ended

Six Months Ended

($ in millions) June 27, 2025 June 28, 2024 June 27, 2025 June 28, 2024

Nine Months Ended

($ in millions) September 26, 2025 September 27, 2024 September 26, 2025 September 27, 2024

Test and Measurement $ 203.1 $ 236.6 $ 584.1 $ 707.2

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Western Europe

70.2 74.8 197.4 246.3

All other 104.1 106.9 300.0 301.7

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Three Months Ended

Six Months Ended

($ in millions) June 27, 2025 June 28, 2024 June 27, 2025 June 28, 2024

Nine Months Ended

($ in millions) September 26, 2025 September 27, 2024 September 26, 2025 September 27, 2024

Sales $ 203.1 $ 236.6 $ 584.1 $ 707.2

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Components of Sales Growth

Three Months Ended June 27, 2025 vs.

Three Months Ended September 26, 2025 vs.

Comparable 2024 Period

Six Months Ended June 27, 2025 vs.

Nine Months Ended September 26, 2025 vs.

Comparable 2024 Period

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Organic revenue growth (Non-GAAP) (15.3) % (17.9) %

The decreases in sales for both the second quarter and year-to-date period were primarily driven by decreases in organic revenue of 16.8% and 19.1%, respectively, partially offset by the favorable impact from foreign currency exchange rates.

The decrease in organic revenue in the second quarter and year-to-date period was primarily attributable to declines in sales volumes of 19.2% and 20.5%, respectively, primarily in product lines for oscilloscopes and related accessories and high-power solutions which were driven by demand weakness across all end markets.

Geographically, in the second quarter, year-over-year organic revenue in developed markets decreased by low-twenties year-over-year, driven by a mid-forties decline in Western Europe and a low double-digit decline in North America.

Organic revenue in high growth markets decreased by low double-digits in the second quarter year-over-year, driven by a low double-digit decline in China and a high-teens decline in the rest of Asia.

Geographically, in the year-to-date period, year-over-year organic revenue in developed markets decreased by mid-twenties, driven by high-fifties decline in Western Europe and a low double-digit decline in North America.

Organic revenue in high growth markets decreased by low double-digit, driven by low double-digit decline in China and low double-digit decline in the rest of Asia.

Operating loss margin was 7.4% for the second quarter, a decrease of 1,830 basis points compared with operating profit margin of 10.9% for the comparable period in 2024, primarily impacted by:

The decreases in sales for both the third quarter and year-to-date period were primarily driven by decreases in organic revenue of 15.3% and 17.9%, respectively, partially offset by the favorable impact from foreign currency exchange rates.

The decrease in organic revenue in the third quarter and year-to-date period was primarily attributable to declines in sales volumes of 18.1% and 20.0%, respectively, primarily in product lines for oscilloscopes and related accessories and high-power solutions which were driven by demand weakness across diversified electronics and communications end markets.

Geographically, in the third quarter, revenue decreased 14% year-over-year, driven by 16% decline in North America, 20% decline in China, 15% decline in Western Europe, and 5% decline in the rest of the world.

Geographically, in the year-to-date period, revenue decreased 17% year-over-year, driven by 34% decline in Western Europe, 15% decline in North America, 17% decline in China, and 7% decline in the rest of the world.

Operating loss margin was 0.8% for the third quarter, a decrease of 1,320 basis points compared with operating profit margin of 12.4% for the comparable period in 2024, primarily impacted by:

• The year-over-year decrease in results from existing businesses — unfavorable 1,025 basis points, primarily driven by:

◦ -925 basis points driven by volume declines due to demand weakness in all end markets, partially offset by price increases;

-400 basis points primarily from higher salaries and wages;

-210 basis points from corporate costs allocations;

-110 basis points from the net impact of tariffs;

partially offset by +100 basis points from benefits from productivity measures and RBS initiatives.

• The year-over-year effect of amortization from existing businesses — unfavorable 210 basis points

◦ -800 basis points driven by net volume declines due to demand weakness in diversified electronics and communications end markets, partially offset by price increases;

and -170 basis points primarily from higher salaries and wages.

• The year-over-year effect of costs relating to the discrete restructuring plans — unfavorable 150 basis points.

Operating loss margin was 4.8% for the year-to-date period, a decrease of 2,060 basis points compared with operating profit margin of 15.8% for the comparable period in 2024, primarily impacted by:

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◦ -950 basis points driven by volume declines due to demand weakness in all end markets, partially offset by price increases;

-250 basis points primarily from higher salaries and wages;

-115 basis points from corporate cost allocations;

-60 basis points from the net impact of tariffs;

partially offset by +150 basis points from benefits from productivity measures and RBS initiatives.

and -300 basis points primarily from higher salaries and wages.

• The year-over-year effect of the gain on sale of land and certain office buildings in 2024 — unfavorable 900 basis points.

• The year-over-year effect of acquisition-related transaction costs incurred in 2024 related to the EA acquisition — favorable 360 basis points.

• The year-over-year effect of amortization from existing businesses — unfavorable 210 basis points

SENSORS AND SAFETY SYSTEMS

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Three Months Ended

Six Months Ended

($ in millions) June 27, 2025 June 28, 2024 June 27, 2025 June 28, 2024

Nine Months Ended

($ in millions) September 26, 2025 September 27, 2024 September 26, 2025 September 27, 2024

Sales $ 326.0 $ 295.1 $ 930.2 $ 899.4

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Components of Sales Growth

Three Months Ended June 27, 2025 vs.

Three Months Ended September 26, 2025 vs.

Comparable 2024 Period

Six Months Ended June 27, 2025 vs.

Nine Months Ended September 26, 2025 vs.

Comparable 2024 Period

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Organic revenue growth (Non-GAAP) 9.8 % 4.4 %

The increase in sales for the second quarter was driven by an increase in organic revenue of 2.2% and favorable impact from foreign currency exchange rates, partially offset by a 1.8% unfavorable impact from the Invetech Divestiture.

The sales result for the year-to-date period was driven a net price and volume increase of 1.8%, equally offset by the 1.8% unfavorable impact from the Invetech Divestiture.

Year-over-year price increases in the Sensors and Safety Systems segment contributed 4.2% and 3.5% to sales growth during the second quarter and year-to-date period, respectively, compared with 2024, and is reflected as a component of the change in organic revenue.

The net volume decrease in the second quarter and year-to-date period resulted from declines in the energetic materials product line from aero, defense, and space customers, along with liquid and air sensors in manufacturing and other end markets, and automation and control applications within the industrial manufacturing end market.

The volume declines were partially offset by increased demand in the utilities sector for grid modernization.

Geographically, in the second quarter, year-over-year organic revenue in developed markets decreased low single-digit year-over-year, driven by slight decline in North America, low single-digit decline in Western Europe, and a low-forties decline in Japan.

Organic revenue in high growth markets increased by high-teens year-over-year, driven primarily by mid-teens growth in China, mid-teens growth in the rest of Asia, and low-twenties growth in Latin America.

Geographically, in the year-to-date period, year-over-year organic revenue in developed markets decreased low single-digits, driven by slight decline in North America, low single-digit decline in Western Europe, and high-twenties decline in Japan.

Organic revenue in high growth markets increased by mid-teens year-over-year, driven primarily by low double-digit growth in China, high-twenties growth in Latin America, and low double-digit growth in the rest of Asia.

Operating profit margin was 25.6% for the second quarter, a decrease of 60 basis points compared with 26.2% for the comparable period in 2024, primarily impacted by:

• The year-over-year decrease in results from existing businesses — unfavorable 200 basis points, primarily driven by:

◦ -225 basis points from corporate cost allocations;

-160 basis points from higher employee compensation;

-100 basis points from the net impact of tariffs;

partially offset by +175 basis points from contract cost adjustments;

and +100 basis points from net pricing and volume impacts.

• The year-over-year net effect of changes in certain Invetech businesses that were divested in 2024 — favorable 135 basis points

Operating profit margin was 27.6% for the year-to-date period, an increase of 50 basis points, compared with 27.1% for the comparable period in 2024, primarily impacted by:

• The year-over-year net effect of changes in certain Invetech businesses that were divested in 2024 — favorable 185 basis points

• The year-over-year decrease in results from existing businesses — unfavorable 140 basis points, driven by:

◦ -175 basis points from higher employee compensation;

-130 basis points from corporate cost allocations;

-60 basis points from the net impact of tariffs;

partially offset by +125 basis points from contract cost adjustments;

+100 basis points from net pricing and volume impacts.

The increase in sales for the third quarter was driven by price and volume increases of 9.8% and favorable impact from foreign currency exchange rates.

The sales result for the year-to-date period was driven by price and volume increases of 4.4%, partially offset by the 1.2% unfavorable impact from the Invetech Divestiture.

Year-over-year price increases in the Sensors and Safety Systems segment contributed 4.6% and 3.9% to sales growth during the third quarter and year-to-date period, respectively, compared with 2024, and is reflected as a component of the change in organic revenue.

The net volume increase in the third quarter resulted from increases in the energetic materials product line from aero, defense, and space customers, increases in liquid and air sensors in manufacturing and other end markets, and increases in utility solutions.

The net volume increase in the year-to-date period resulted primarily from increases in utility solutions, partially offset by declines in automation and control applications within the industrial manufacturing end market.

Geographically, in the third quarter, revenue increased 11% year-over-year, driven by 12% growth in North America, 23% growth in China, and 4% growth in Western Europe, and flat revenue in the rest of the world.

Geographically, in the year-to-date period, revenue increased 3% year-over-year, driven by 15% growth in China, 2% growth in North America, 8% growth in the rest of the world, partially offset by 2% decline in Western Europe.

Operating profit margin was 27.6% for the third quarter, which remained consistent compared with 27.8% for the comparable period in 2024 and operating profit margin was 27.6% for the year-to-date period, which remained consistent compared with 27.3% for the comparable period in 2024.

COST OF SALES AND GROSS PROFIT

Three Months Ended

Six Months Ended

($ in millions) June 27, 2025 June 28, 2024 June 27, 2025 June 28, 2024

Nine Months Ended

($ in millions) September 26, 2025 September 27, 2024 September 26, 2025 September 27, 2024

Sales $ 529.1 $ 531.7 $ 1,514.3 $ 1,606.6

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Gross profit margin 50.8 % 52.6 % 50.2 % 51.7 %

The year-over-year decreases in gross profit during the second quarter and year-to-date period were primarily due to net volume declines, higher employee compensation costs, and tariffs, partially offset by year-over-year increases in price, benefits from productivity measures and RBS initiatives.

The year-over-year decrease in gross profit during the third quarter was primarily due to net volume declines, partially offset by increases in price.

The year-over-year decrease in gross profit during the year-to-date period was primarily due to net volume declines, higher employee compensation costs, and tariffs, partially offset by year-over-year increases in price.

OPERATING EXPENSES

Three Months Ended

Six Months Ended

($ in millions) June 27, 2025 June 28, 2024 June 27, 2025 June 28, 2024

Nine Months Ended

($ in millions) September 26, 2025 September 27, 2024 September 26, 2025 September 27, 2024

Sales $ 529.1 $ 531.7 $ 1,514.3 $ 1,606.6

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R&D as a % of sales 7.3 % 7.5 % 8.1 % 7.6 %

The year-over-year increase in SG&A expenses during the second quarter was due to higher employee compensation, Ralliant corporate costs incurred to establish a separate corporate function, in addition to Fortive allocated corporate costs, and standalone public company costs, partially offset by lower year-over-year transaction expenses related to the EA acquisition in 2024 and benefits from productivity measures through RBS initiatives.

The year-over-year decrease in SG&A expenses during the year-to-date period was due to lower year-over-year transaction expenses related to the EA acquisition in 2024 and benefits from productivity measures through RBS initiatives, partially offset by higher employee compensation, Ralliant corporate costs incurred to establish a separate corporate function, in addition to Fortive allocated corporate costs in the second quarter, and standalone public company costs.

R&D, consisting principally of internal and contract engineering personnel costs, increased during the second quarter and year-to-date period compared with the comparable periods of 2024 due to continuing investments in innovation.

The year-over-year increase in SG&A expenses during the third quarter was primarily due to the stock-based compensation modification resulting from the conversion of Fortive equity awards upon the Separation, standalone public company costs, and higher employee compensation.

The year-over-year increase in SG&A expenses during the year-to-date period was primarily due to the stock-based compensation modification resulting from the conversion of Fortive equity awards upon the Separation, higher employee compensation, Ralliant corporate costs incurred to establish a separate corporate function, in addition to Fortive allocated corporate costs that were both incurred in the second quarter, and standalone public company costs, partially offset by lower year-over-year transaction expenses related to the EA acquisition in 2024 and benefits from productivity measures through RBS initiatives.

R&D, consisting principally of internal and contract engineering personnel costs, remained consistent during the third quarter and year-to-date period compared with the comparable periods of 2024.

NON-OPERATING INCOME (EXPENSE), NET

Loss from divestiture

During the three and six-month periods ended June 28, 2024, the Company recognized a net loss of $25.6 million related to the Invetech Divestiture.

For further discussion of this transaction, refer to Note 1 to the combined condensed financial statements.

Ralliant’s effective tax rates were 19.2% and 15.7% for the three and six months ended June 27, 2025, respectively, compared with 18.2% and 17.7% for the three and six months ended June 28, 2024, respectively.

The increase in the effective tax rate for the three months ended June 27, 2025 compared with the three months ended June 28, 2024 was primarily related to changes in valuation allowances recorded in the three months ended June 27, 2025.

The decrease in the effective tax rate for the six months ended June 27, 2025 compared with the six months ended June 28, 2024 was primarily related to the impact of credits and deductions provided by law, including those associated with state income taxes, and changes in the Company’s uncertain tax position reserves.

During the three and nine months ended September 26, 2025, the Company recognized interest expense of $16.3 million.

During the nine months ended September 27, 2024, the Company recognized a net loss of $25.6 million related to the Invetech Divestiture.

For further discussion of this transaction, refer to Note 1 of the consolidated and combined condensed financial statements.

Ralliant’s effective tax rates were (13.4)% and 9.6% for the three and nine months ended September 26, 2025, respectively, compared with 18.0% and 17.8% for the three and nine months ended September 27, 2024, respectively.

The decrease in the effective tax rate for the three months ended September 26, 2025 compared with the three months ended September 27, 2024 was primarily related to the impact of the repricing of deferred tax balances due to an enacted reduction in the German corporate tax rate and the impact of credits and deductions provided by law, including those associated with state income taxes, and changes in uncertain tax position reserves.

The decrease in the effective tax rate for the nine months ended September 26, 2025 compared with the nine months ended September 27, 2024 was attributable to the impact of the repricing of deferred tax balances due to German corporate tax rate change on deferred taxes.

Globally, the Company monitors legislative action and the Organization for Economic Co-operation and Development (“OECD”) initiatives related to global taxation.

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multinationals from certain portions of the Pillar Two framework.

However, as of the balance sheet date, no related legislation has been enacted.

The Company continues to monitor further guidance and legislative developments related to the Pillar Two framework.

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The legislation has multiple effective dates, with certain provisions effective in 2025 and others implemented through 2027.

The Company is currently assessing the impact of OBBBA on its consolidated financial statements.

As a result of the retroactive treatment for research and experimental expenditures enacted under OBBBA, Ralliant was notified of Fortive’s intent to accelerate the amortization of previously capitalized research and experimental expenditures.

Accordingly, Ralliant reduced its deferred tax assets by approximately $65 million during the quarter.

COMPREHENSIVE INCOME

Comprehensive income increased by $164.7 million during the second quarter compared with the comparable period in 2024 due to favorable changes in foreign currency translation of $181.5 million, partially offset by a decrease in net income of $17.2 million.

Comprehensive income decreased by $142.0 million during the third quarter compared with the comparable period in 2024 due to unfavorable changes in foreign currency translation of $90.9 million, partially offset by a decrease in net income of $51.0 million.

Comprehensive income increased by $102.4 million during the year-to-date period compared with the comparable period in 2024 due to favorable changes in foreign currency translation of $222.6 million, partially offset by a decrease in net income of $120.5 million.

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Before the Separation, the Company was dependent upon Fortive for all of the Company’s working capital and financing requirements as Fortive uses a centralized approach to cash management and financing of its operations.

Because the Company was part of Fortive during the three and six months ended June 27, 2025, only cash, cash equivalents and borrowings clearly associated with Ralliant and related to the Separation, including the financing transactions described below, have been included in the combined condensed financial statements included elsewhere in this Quarterly Report on Form 10-Q.

Other financial transactions relating to the business operations of the Company during the period were accounted for through the Net Parent investment account of the Company.

Because the Company was part of Fortive during the six months ended June 27, 2025, only cash, cash equivalents, and borrowings clearly associated with Ralliant prior to June 27, 2025 and related to the Separation, including the financing transactions described below, have been included in the consolidated and combined condensed financial statements included elsewhere in this Quarterly Report on Form 10-Q.

Other financial transactions relating to the business operations of the Company through the date of the Separation were accounted for through the Net Former Parent investment account of the Company.

As a result of the Separation, the Company no longer participates in Fortive’s cash management and financing operations.

Management assesses the Company’s liquidity in terms of its ability to generate cash to fund its operating and investing activities.

The Company continues to generate substantial cash from operating activities and believes that its operating cash flow and other sources of liquidity, will, after giving effect to any dividend payments and debt servicing obligations, be sufficient to allow the Company to continue funding and investing in its existing businesses, consummate strategic acquisitions, make interest payments on its outstanding indebtedness, fulfill its contractual obligations, and manage its capital structure on a short- and long-term basis.

In connection with the Separation, Parent transferred to the Company certain cash balances and amounts due to banks.

On May 15, 2025 (the “Closing Date”), the Company en tered into a credit agreement (“Credit Agreement”), with a syndicate of banks, consisting of 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 three-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 also contains an expansion option permitting Ralliant to request increases of the Credit Facilities (in any combination thereof) of up to an aggregate additional amount of $500.0 million from lenders that elect to make such increase available, upon the satisfaction of certain conditions.

The Company incurred $1.5 million of debt issuance costs associated with the Revolving Credit Facility that have been recorded as a prepaid asset within Other assets in the accompanying Combined Condensed Balance Sheets, as this facility was undrawn as of June 27, 2025.

The Company continues to generate substantial cash from operating activities and believes that its operating cash flow and other sources of liquidity, will, after giving effect to any dividend payments and debt servicing obligations, be sufficient to allow the Company to continue funding and investing in its existing businesses, consummate strategic acquisitions, fulfill its contractual obligations, and manage its capital structure on a short- and long-term basis.

In connection with the Separation, the Former Parent transferred to the Company certain cash balances and amounts due to banks.

On June 27, 2025, Ralliant borrowed $1.15 billion, drawn pro rata under the eighteen month, $600.0 million senior unsecured delayed-draw term loan facility (the “Eighteen-Month Term Loan”), and the three-year, $700.0 million senior unsecured delayed-draw term loan facility (the “Three-Year Term Loan”).

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.

Refer to Note 5 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 the Company’s option at any time in whole or in part without premium or penalty.

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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 will be calculated at the end of each fiscal quarter commencing with the fiscal quarter ending September 26, 2025.

On June 27, 2025, Ralliant borrowed $1.15 billion, drawn pro rata under the Three-Year Term Loan and the Eighteen-Month Term Loan, the proceeds of which 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.

Refer to Note 5 in the notes to the 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.

The Consolidated Net Leverage Ratio is calculated at the end of each fiscal quarter commencing with the fiscal quarter ending September 26, 2025.

The Company cannot assure you 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.

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The share repurchase authorization is consistent with the Company's capital allocation strategy to prioritize returning capital to shareholders.

On August 6, 2025, the Board declared a quarterly common stock dividend of $0.05 per share, payable on September 23, 2025 to stockholders of record as of the close of business on September 8, 2025.

No share repurchases have occurred as of September 26, 2025.

On October 30, 2025, the Board declared a quarterly common stock dividend of $0.05 per share, payable on December 23, 2025 to stockholders of record as of the close of business on December 8, 2025.

Overview of Cash Flows and Liquidity

Following is an overview of the Company’s cash flows and liquidity:

Six Months Ended

($ in millions) June 27, 2025 June 28, 2024

Nine Months Ended

($ in millions) September 26, 2025 September 27, 2024

Net cash provided by operating activities $ 296.0 $ 293.4

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Proceeds from borrowings $ 1,146.8 $ —

Consideration paid to Parent in connection with Separation (1,150.0) —

Net transfers from Parent 47.3 1,588.6

Net cash provided by financing activities $ 44.1 $ 1,588.6

Consideration paid to Former Parent in connection with Separation

Net transfers (to) from Former Parent

(10.2) 1,434.5

Dividends paid

All other financing activities 2.2 —

Net cash (used in) provided by financing activities

$ (16.8) $ 1,434.5

Operating Activities

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• A year-over-year decrease of $55.6 million in net earnings, net of non-cash items (Amortization, Depreciation, Stock-based compensation, Gain on sale of property, net of Loss from divestiture).

• The aggregate changes in accounts receivable, inventories, and trade accounts payable used $17.2 million of cash during the year-to-date period compared with generating $2.5 million in the comparable period of 2024.

The amount of cash provided by the aggregate of trade accounts receivable, inventories, and trade accounts payable depends upon how effectively the Company managed the cash conversion cycle, which generally represents the number of days that elapse from the day the Company pays for the purchase of raw materials and components to the collection of cash from its customers, and can be significantly impacted by the timing of collections and payments in a period.

• The aggregate changes in Prepaid expenses and other current assets and Accrued expenses and other liabilities used $7.0 million of cash in the year-to-date period compared with using $60.5 million of cash in the comparable period of 2024.

The year-over-year changes were driven by timing differences related to contract assets, contract liabilities, payments of employee compensation, income taxes, and interest.

• The aggregate changes in Accounts receivable, Inventories, net, and Trade accounts payable used $39.1 million of cash during the year-to-date period compared with generating $26.0 million in the comparable period of 2024.

The amount of cash provided by the aggregate of Accounts receivable, Inventories, net, and Trade accounts payable depends upon how effectively the Company managed the cash conversion cycle, which generally represents the number of days that elapse from the day the Company pays for the purchase of raw materials and components to the collection of cash from its customers, and can be significantly impacted by the timing of collections and payments in a period.

• The aggregate changes in Prepaid expenses and other current assets and Accrued expenses and other liabilities generated $52.3 million of cash in the year-to-date period compared with using $71.0 million of cash in the comparable period of 2024.

The year-over-year changes were dependent upon how effectively the Company managed the cash conversion cycle and driven by timing differences related to contract assets, contract liabilities, payments of employee compensation, income taxes, and interest.

Investing Activities

Cash used in investing activities decreased by $1,719.9 million during the second quarter compared with the comparable period of 2024, primarily due to less cash used for acquisitions, net of cash acquired.

Cash used in investing activities decreased by $1,704.1 million during the third quarter compared with the comparable period of 2024, primarily due to less cash used for acquisitions, net of cash acquired.

Capital expenditures are made primarily for increasing production capacity, replacing aged equipment, supporting product development initiatives for product offerings, and improving information technology systems.

Capital expenditures totaled $17.2 million for the six months ended June 27, 2025 and $13.7 million for the six months ended June 28, 2024.

Capital expenditures totaled $29.2 million for the nine months ended September 26, 2025 and $19.8 million for the nine months ended September 27, 2024.

Financing Activities

Net cash provided by financing activities reflects Proceeds from borrowings, net of issuance costs, of $1,146.8 million, offset by the Consideration paid to Parent in connection with the Separation of $1,150.0 million.

Other financing activity represents net cash transferred from Fortive of $47.3 million.

Net cash provided by financing activities reflects Proceeds from borrowings, net of issuance costs, of $1,146.8 million, offset by the Consideration paid to Former Parent in connection with the Separation of $1,150.0 million.

Other financing activity includes net cash transferred to Former Parent in the third quarter of $57.5 million, primarily related to the cash adjustment paid to Fortive in accordance with the Separation and Distribution agreement and the payments made in the period related to the Tax Matters Agreement.

Cash and Cash Requirements

The Company held $198.6 million of cash and equivalents as of June 27, 2025.

Pursuant to the terms of the Separation and Distribution Agreement, the Company is subject to cash adjustment provisions, with payment of such adjustments to be made within five business days of the determination of the applicable final cash balance.

Pursuant to the adjustment provisions, if Ralliant’s aggregate cash balance at the time of the Separation, excluding any cash in certain restricted jurisdictions, is determined to have been greater than the reference cash balance of $150 million, Ralliant is obligated to pay Fortive the excess.

Subsequent to the Separation, Fortive notified Ralliant the aggregate cash balance exceeded such reference cash balance by approximately $41 million and Ralliant paid Fortive in accordance with the terms of the Separation and Distribution Agreement.

Pursuant to the terms of the Tax Matters Agreement, Ralliant expects to reimburse Fortive or pay taxing authorities directly for an amount asserted by Fortive to be approximately $50 million, with $16 million paid in July 2025 and the remainder expected to be paid in third quarter 2025, for certain tax transaction costs recognized upon Separation.

The Company held $264.2 million of Cash and equivalents as of September 26, 2025.

The Company had no cash and equivalents as of December 31, 2024.

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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.

As of June 27, 2025, the Company believes it had sufficient liquidity to satisfy its cash needs for at least the next 12 months and foreseeable future.

Pursuant to the terms of the Tax Matters Agreement, Ralliant will reimburse Fortive or pay taxing authorities directly for an amount contractually agreed with Fortive of approximately $51.0 million.

Of the approximately $51.0 million of tax transaction costs, $16.0 million was paid in the third quarter and $35.0 million was accrued as a payable due to Fortive as of September 26, 2025, of which $25.9 million was subsequently paid on September 29, 2025.

The total $51.0 million tax transactions costs, were recognized in the third quarter and were recorded as a offset to additional paid-in capital as the items represent a settlement with the Former Parent in accordance with the Tax Matters Agreement.

Borrowings under the Credit Facilities bear interest as described in Note 5 of the notes to the consolidated and combined condensed financial statements.

At facility close, Ralliant made an interest election of six-month Secured Overnight Financing Rate (“SOFR”).

The first related interest payment of $16.4 million was due on September 29, 2025.

The second payment is due on December 29, 2025, at which time a new election will be made.

As of September 26, 2025, the Company believes it had sufficient liquidity to satisfy its cash needs for at least the next 12 months and foreseeable future.

CRITICAL ACCOUNTING ESTIMATES

There were no material changes during the three and six months ended June 27, 2025 to the items disclosed as critical accounting estimates in the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in the Company’s Information Statement filed as an exhibit to the Company’s Form 10-12B/A on May 28, 2025.

There were no material changes during the three and nine months ended September 26, 2025 to the items disclosed as critical accounting estimates in the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in the Company’s Information Statement filed as an exhibit to the Company’s Form 10-12B/A on May 28, 2025.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis