What changed in this filing

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Item 2. Management’s Discussion and Analysis

2026-07-30 compared with 2026-05-12 · 96 added, 78 removed, 214 unchanged (45% of the section changed)

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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, capital allocation priorities, stock repurchases (including the anticipated accelerated share repurchase (“ASR”) program), and dividends;

management’s plans and strategies for future operations and growth, including statements relating to anticipated operating performance, cost reductions, productivity and savings initiatives, innovation, restructuring activities, new product and service developments, customer demand, competitive strengths or market position, acquisitions, divestitures, strategic opportunities, securities offerings, and capital allocation priorities, including stock repurchases and dividends;

the effects of the separation from Fortive on the Company;

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Ralliant assumes no obligation to update or revise any forward-looking statement, whether as a result of new information, future events, and developments or otherwise.

The timing and amount of share repurchases will be determined by the Company based on its evaluation of market conditions and other factors.

The Company’s stated plans do not obligate it to acquire any particular amount of shares and may be suspended or discontinued at any time.

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 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 46.5% and 49.3% for the three months ended April 3, 2026 and March 28, 2025, respectively.

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.

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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tariff policy may be made in the future.

On April 20, 2026, Customs and Border Protection launched Phase 1 of an administrative IEEPA tariff refund process.

The Company has filed refund claims for IEEPA tariffs paid and eligible for refund under this phase.

The timing and amount of any refunds is uncertain.

Accordingly, no recovery has been recognized in the accompanying financial statements as of April 3, 2026.

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.

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Non-GAAP Measures

In this Quarterly Report on Form 10-Q, references to sales from existing businesses (“organic revenue”) refer to sales from operations calculated according to GAAP but exclude (1) the impact from acquired and divested businesses and (2) the impact of foreign currency translation.

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.

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Three Months Ended

($ in millions) April 3, 2026 March 28, 2025

Six Months Ended

($ in millions) July 3, 2026 June 27, 2025 July 3, 2026 June 27, 2025

Sales $ 567.8 $ 503.3 $ 1,102.3 $ 985.1

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Operating profit margin 14.5 % 11.7 % 13.6 % 13.5 %

See the Sensors and Safety Systems and Test and Measurement sections below for further discussion of year-over-year sales and operating profit margin.

Components of Sales Growth

Three Months Ended April 3, 2026 vs.

Three Months Ended July 3, 2026 vs.

Comparable 2025 Period

Six Months Ended July 3, 2026 vs.

Comparable 2025 Period

Total revenue growth (GAAP) 12.8 % 11.9 %

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Organic revenue growth (Non-GAAP) 12.6 % 10.7 %

During the three months ended April 3, 2026 (the “first quarter”), sales increased by 11.0%.

The year-over-year increase in sales in the first quarter was driven by an 8.8% increase in organic revenue and a 2.2% increase from favorable foreign currency exchange rates.

The increase in organic revenue in the first quarter included volume increases of 6.9% and favorable pricing increase of 1.9%.

Geographically, the sales increase of 11.0% year-over-year was driven by 17.2% growth in North America, 8.2% growth in China, 3.9% growth in Western Europe, and 0.8% growth in the rest of the world.

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 first quarter was primarily due to volume and pricing increases.

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 increase of $32.2 million in SG&A expenses during the first quarter compared with the prior year period was primarily due to 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.

R&D, consisting principally of internal and contract engineering personnel costs, increased $2.4 million during the first quarter compared with the comparable period in 2025.

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 12.7% for the first quarter, representing a decrease of 260 basis points compared with 15.3% for the comparable period of 2025.

The year-over-year decline in operating profit margin was primarily due to higher operating expenses related to standalone public company costs and higher employee costs allocated to the segments, partially offset by higher volume and price increases.

See the Sensors and Safety Systems and Test and Measurement sections below for further discussion of year-over-year sales and operating profit margin.

Business Segments and Geographic Area Results

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.

Segments and Geographic Area Results

Sales by business segment and geographic area were as follows:

Three Months Ended

($ in millions) April 3, 2026 March 28, 2025

Six Months Ended

($ in millions) July 3, 2026 June 27, 2025 July 3, 2026 June 27, 2025

Sensors and Safety Systems $ 346.5 $ 310.8 $ 670.8 $ 604.1

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Three Months Ended

($ in millions) April 3, 2026 March 28, 2025

Six Months Ended

($ in millions) July 3, 2026 June 27, 2025 July 3, 2026 June 27, 2025

Sales $ 346.5 $ 310.8 $ 670.8 $ 604.1

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Components of Sales Growth

Three Months Ended April 3, 2026 vs.

Three Months Ended July 3, 2026 vs.

Comparable 2025 Period Six Months Ended July 3, 2026 vs.

Comparable 2025 Period

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Organic revenue growth (Non-GAAP) 10.8 % 9.8 %

The increase in sales in the first quarter year-over-year was driven by increases in organic revenue of 8.8% and the favorable impact from foreign currency exchange rates.

The year-over-year increase in organic revenue was primarily attributable to increased sales volumes of 6.0%, primarily from defense and space customers and liquid and air sensors in industrial manufacturing and other end markets, partially offset by volume reductions in automation and control applications within the industrial manufacturing end market.

Year-over-year price increases contributed 2.8% to sales growth in the first quarter and is reflected as a component of the change in organic revenue.

Geographically, the sales increase of 10.6% year-over-year was driven by 13.2% growth in North America, 8.8% growth in China, 8.2% growth in the rest of the world, and 0.6% growth in Western Europe.

Operating profit margin was 27.3% for the first quarter, a decrease of 230 basis points compared with 29.7% for the comparable period in 2025, primarily driven by other employee costs related to higher compensation, benefits, and contract dis-synergies, which were allocated from corporate, partially offset by price increases.

The year-over-year increase in sales in the second quarter was driven by an increase in organic revenue of 10.8% and the favorable impact from foreign currency exchange rates.

The year-over-year increase in sales in the year-to-date period was driven by an increase in organic revenue of 9.8% and the favorable impact from foreign currency exchange rates.

The year-over-year increase in organic revenue in the second quarter and year-to-date period was primarily attributable to increased sales volumes of 7.9% and 7.0%, respectively, primarily from liquid and air sensors in industrial manufacturing and other end markets and defense and space customers.

Year-over-year price increases contributed 2.9% and 2.8% to sales growth in the second quarter and the year-to-date period respectively, and is reflected as a component of the change in organic revenue.

Geographically, in the second quarter, the sales increase of 11.5% year-over-year was driven by 20.8% growth in Western Europe, 13.4% growth in China, 13.0% growth in the rest of the world, and 9.1% growth in North America.

Geographically, in the year-to-date period, the sales increase of 11.0% year-over-year was driven by 11.3% growth in China, 11.1% growth in North America, 10.8% growth in Western Europe, and 10.7% growth in the rest of the world.

Operating Profit Margin

Operating profit margin was 28.4% for the second quarter, an increase of 290 basis points compared with 25.6% for the comparable period in 2025, primarily driven by higher volumes and price increases, favorability due to lapping pre-spin corporate cost allocations, benefits from productivity measures and RBS initiatives, partially offset by employee costs related to higher compensation, benefits, and contract dis-synergies, which were allocated from corporate.

Operating profit margin was 27.9% for the year-to-date period, an increase of 30 basis points compared with 27.6% for the comparable period in 2025, primarily driven by higher sales volumes and price increases, favorability due to lapping pre-spin corporate cost allocations, partially offset by an increase in employee costs related to higher compensation, benefits, and contract dis-synergies, which were allocated from corporate.

TEST AND MEASUREMENT

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Three Months Ended

($ in millions) April 3, 2026 March 28, 2025

Six Months Ended

($ in millions) July 3, 2026 June 27, 2025 July 3, 2026 June 27, 2025

Sales $ 221.3 $ 192.5 $ 431.5 $ 381.0

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Research and development expenses $ (34.7) $ (32.9) $ (68.7) $ (66.0)

Operating loss

$ (3.2) $ (11.9)

Operating profit (loss) $ 5.4 $ (14.3) $ 2.1 $ (26.2)

Depreciation $ (4.6) $ (3.8) $ (8.9) $ (7.6)

Amortization $ (21.9) $ (21.3) $ (43.9) $ (41.0)

Operating loss margin

(1.5) % (6.3) %

Operating profit (loss) margin 2.4 % (7.4) % 0.5 % (6.9) %

Components of Sales Growth

Three Months Ended April 3, 2026 vs.

Three Months Ended July 3, 2026 vs.

Comparable 2025 Period Six Months Ended July 3, 2026 vs.

Comparable 2025 Period

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Organic revenue growth (Non-GAAP) 15.6 % 12.2 %

The increase in sales in the first quarter was driven by organic revenue growth of 8.7% and the favorable impact from foreign currency exchange rates.

The year-over-year increase in organic revenue was primarily attributable to increased sales volumes of 8.3%, primarily driven by strengthened demand across communications and diversified electronics end markets.

Year-over-year price increases contributed 0.4% to sales growth in the first quarter and is reflected as a component of the change in organic revenue.

Geographically, the sales increase of 11.6% year-over-year was driven by 28.3% growth in North America, 7.9% growth in China, and 7.5% growth in Western Europe, partially offset by a 6.1% decline in the rest of the world.

Operating loss margin was 1.5% for the first quarter, an increase of 480 basis points compared with operating loss margin of 6.3% for the comparable period in 2025, primarily impacted by higher sales volume, partially offset by other employee costs related to higher compensation, benefits, and contract dis-synergies, which were allocated from corporate, and increased restructuring costs.

NON-OPERATING INCOME (EXPENSE), NET

During the three months ended April 3, 2026, the Company recognized interest expense of $14.7 million.

The Company incurred no interest expense for the comparable period in the prior year.

Ralliant’s effective tax rate was 16.5% for the three months ended April 3, 2026 compared with 12.8% for the three months ended March 28, 2025.

The increase in the effective tax rate for the three months ended April 3, 2026 compared with the three months ended March 28, 2025 was primarily attributable to the effects of various tax credits and deductions provided by law, including those associated with state income taxes, U.S.

international taxes, non-deductible executive compensation, and changes in the Company’s uncertain tax position reserves.

The year-over-year increase in sales in the second quarter was driven by an increase in organic revenue of 15.6%, partially offset by the unfavorable impact from foreign currency exchange rates.

The year-over-year increase in sales in the year-to-date period was driven by an increase in organic revenue of 12.2% and the favorable impact from foreign currency exchange rates.

The year-over-year increase in organic revenue in the second quarter was primarily attributable to increased sales volumes of 12.6%, primarily driven by strengthened demand across diversified electronics and communications end markets.

Year-over-year price increases contributed 3.0% to sales growth in the second quarter and is reflected as a component of the change in organic revenue.

The year-over-year increase in organic revenue in the year-to-date period was primarily attributable to increased sales volumes of 10.5%, primarily driven by strengthened demand across the diversified electronics end market due to elevated customer investments in electrification, and continuation of demand from defense and government customers and data center infrastructure investments in the communications end market.

Year-over-year price increases contributed 1.7% to sales growth in the year-to-date period and is reflected as a component of the change in organic revenue.

Geographically, in the second quarter, the sales increase of 14.9% year-over-year was driven by 23.7% growth in North America, 12.6% growth in Western Europe, 10.4% growth in the rest of the world, and 8.0% growth in China.

Geographically, in the year-to-date period, the sales increase of 13.3% year-over-year was driven by 25.9% growth in North America, 9.8% growth in Western Europe, 7.9% growth in China, and 1.9% growth in the rest of the world.

Operating Profit Margin

Operating profit margin was 2.4% for the second quarter, an increase of 980 basis points compared with operating loss margin of 7.4% for the comparable period in 2025, primarily impacted by higher sales volumes and price increases, productivity savings, and favorability due to lapping pre-spin corporate cost allocations, partially offset by employee costs related to higher compensation, benefits, and contract dis-synergies, which were allocated from corporate.

Operating profit margin was 0.5% for the year-to-date period, an increase of 740 basis points compared with operating loss margin of 6.9% for the comparable period in 2025, primarily driven by higher sales volumes and price increases and favorability due to lapping pre-spin corporate cost allocations, partially offset by an increase in employee costs related to higher compensation, benefits, and contract dis-synergies, which were allocated from corporate.

NON-OPERATING EXPENSE, NET

During the three and six months ended July 3, 2026, Non-operating expenses, net, primarily consisted of Interest expense, net, of $13.8 million and $28.4 million, respectively.

The Company incurred no interest expense, net, for the comparable periods in the prior year.

Ralliant’s effective tax rate was 16.5% for the three and six months ended July 3, 2026, respectively, compared with 19.2% and 15.7% for the three and six months ended June 27, 2025, respectively.

The decrease in the effective tax rate for the three months ended July 3, 2026 compared with the three months ended June 27, 2025 was primarily attributable to the mix of earnings between jurisdictions, uncertain tax positions, and valuation allowances.

The increase in the effective tax rate for the six months ended July 3, 2026 compared with the six months ended June 27, 2025 was primarily attributable to the impacts of changes in the Company’s uncertain tax positions and valuation allowances.

In January 2026, the Organization for Economic Co-operation and Development (“OECD”) released a side-by-side package that would exempt U.S.

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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 local country adoption.

The Company does not anticipate a material impact on its consolidated condensed financial statements and will continue to monitor country-by-country adoption and implementation.

COMPREHENSIVE INCOME

Comprehensive income decreased by $171.4 million during the first quarter compared with the comparable period in 2025 due to unfavorable changes in foreign currency translation of $151.7 million, as well as a decrease in net earnings of $19.7 million.

Comprehensive income decreased by $162.0 million during the second quarter compared with the comparable period in 2025 due to unfavorable changes in foreign currency translation of $171.3 million, partially offset by an increase in net earnings of $9.6 million.

Comprehensive income decreased by $333.4 million during the year-to-date period compared with the comparable period in 2025 due to unfavorable changes in foreign currency translation of $323.0 million, as well as a decrease in net income of $10.1 million.

LIQUIDITY AND CAPITAL RESOURCES

Prior to the Separation, Ralliant was dependent upon Fortive for all funding needs.

For the three months ended March 28, 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.

For the three and six months ended June 27, 2025, only cash, cash equivalents, and borrowings clearly associated with Ralliant have been included in the consolidated and combined condensed financial statements included elsewhere in this Quarterly Report on Form 10-Q.

Financial transactions relating to business operations prior to the Separation were accounted for through the Net Former Parent investment account of the Company.

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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 April 3, 2026.

The Revolving Credit Facility was undrawn and the letters of credit were unused as of July 3, 2026.

On June 27, 2025, Ralliant borrowed $1.15 billion, drawn pro rata under the Term Loans.

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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, 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, not more than two times after the Closing Date, the maximum Consolidated Net Leverage Ratio may be increased to 4.00 to 1.00 in connection with any permitted acquisition by Ralliant occurring after the Closing Date with aggregate consideration (including, without duplication, the assumption or incurrence of indebtedness in connection with such acquisition) equal to or in excess of $100.0 million, which such increase shall be applicable for the fiscal quarter in which such acquisition is consummated and the three consecutive quarters thereafter;

provided that, there shall be at least one full fiscal quarter following the cessation of each such increase during which no such increase shall then be in effect.

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None of these covenants are considered restrictive to Ralliant’s operations.

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

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

The Company cannot assure that its net cash provided by operating activities, cash and equivalents, or cash available under its Credit Facilities will be sufficient to meet its future needs.

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On June 28, 2025, the Company’s Board of Directors (the “Board”) approved a share repurchase authorization of up to $200.0 million of the Company’s common stock.

During the three months ended April 3, 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 under the share repurchase authorization.

During the first quarter of 2026, the Company repurchased 1.2 million shares of its common stock at an average price of $42.40 per share for a total cost of $50.5 million (including $0.5 million in taxes and fees) in the open market.

On May 8, 2026, the Board raised the share repurchase authorization to $500.0 million.

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

The Company plans to enter into an ASR program to execute $100 million of the share repurchase authorization.

The total number of shares ultimately repurchased under the ASR program will be determined upon final settlement and will be 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.

The ASR program is expected to be executed during the second quarter of 2026.

On May 7, 2026, the Board declared a quarterly common stock dividend of $0.05 per share, payable on June 23, 2026 to stockholders of record as of the close of business on June 8, 2026.

On May 12, 2026, the Company entered into an accelerated share repurchase (“ASR”) program to execute $100 million of the Company’s share repurchase authorization.

During the three months ended July 3, 2026, the ASR was fully settled, and the Company received 1.6 million shares of its common stock for a total cost of $101.0 million (including $1.0 million in taxes), based on a share price of $64.05.

The shares repurchased under the ASR program were based on the average of the daily Rule 10b-18 volume-weighted average prices of Ralliant’s common stock during the term of the ASR program, less a discount, and pursuant to the terms and conditions of the ASR agreement.

During the six months ended July 3, 2026, the Company repurchased an aggregate of 2.8 million shares of its common stock under the share repurchase authorization for a total cost of $151.5 million (including $1.5 million in taxes and fees), at an average price per share of $54.74, inclusive of shares purchased under the ASR.

As of July 3, 2026, $400.0 million is remaining under the share repurchase authorization.

Overview of Cash Flows and Liquidity

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

Three Months Ended

($ in millions) April 3, 2026 March 28, 2025

Six Months Ended

($ in millions) July 3, 2026 June 27, 2025

Net cash provided by operating activities $ 124.6 $ 157.4

Purchases of property, plant and equipment $ (15.1) $ (17.2)

Proceeds from settlement of investments 0.6 —

Proceeds from sale of property — 1.5

Net cash used in investing activities $ (14.5) $ (15.7)

Payments for debt issuance costs

Net transfers to Former Parent

Net proceeds from borrowings $ 59.2 $ 1,146.8

Repayment of borrowings (60.0) —

Repurchase of common shares (151.5) —

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All other financing activities 6.9 —

Net cash used in financing activities

$ (59.1) $ (72.6)

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

Net transfers from Former Parent — 47.3

Net cash (used in) provided by financing activities $ (156.5) $ 44.1

Operating Activities

Net cash provided by operating activities can fluctuate significantly from period-to-period as working capital needs and the timing of payments for income taxes, interest, pension funding, and other items impact reported cash flows.

Net cash provided by operating activities was $19.1 million during the first quarter, representing a decrease of $52.9 million compared with the comparable period of 2025.

The year-over-year change in net cash provided by operating activities was primarily attributable to the following factors:

• A year-over-year decrease of $12.3 million in net earnings, net of non-cash items (Amortization, Depreciation, and Stock-based compensation).

• The aggregate changes in Accounts receivable, Inventories, net, and Trade accounts payable used $28.7 million of cash during the year-to-date period compared with using $9.4 million in the comparable period of 2025.

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 used $37.2 million of cash in the year-to-date period compared with using $15.9 million of cash in the comparable period of 2025.

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

Net cash provided by operating activities was $124.6 million during the year-to-date period, representing a decrease of $32.8 million compared with the comparable period of 2025.

The year-over-year change in net cash provided by operating activities was primarily attributable to $20.6 million cash usage related to Prepaid expenses and other current assets and Accrued expenses and other liabilities related to higher incentive compensation and timing differences related to contract assets, contract liabilities, payments of employee compensation, income taxes, and interest.

The change in net cash provided by operating activities was also driven by $14.0 million cash usage related to changes working capital accounts, including Accounts receivable, Inventories, net, and Trade accounts payable.

Changes in working capital are primarily impacted by the timing of collections and payments in a period.

Investing Activities

Cash used in investing activities increased by $4.6 million during the first quarter compared with the comparable period of 2025, primarily due to increased capital expenditures related to increasing production capacity, replacing aged equipment, and supporting product development initiatives for product offerings.

Capital expenditures totaled $8.7 million for the three months ended April 3, 2026 and $5.6 million for the three months ended March 28, 2025.

Cash used in investing activities decreased by $1.2 million during the year-to-date period compared with the comparable period of 2025, primarily due to decreased capital expenditures related to timing of investments in production capacity expansion and facility improvement projects.

Capital expenditures totaled $15.1 million for the six months ended July 3, 2026 and $17.2 million for the six months ended June 27, 2025.

Financing Activities

Net cash used in financing activities was $59.1 million during the first quarter, representing a $13.5 million decrease compared with the comparable period of 2025.

Net transfers to Former Parent in the first quarter of 2025 exceeded cash outflow for repurchases of common shares and dividend payments in the first quarter of 2026 as well as payments of debt issuance costs of $0.8 million associated with the Second Amendment to the Credit Agreement.

Net cash used in financing activities was $156.5 million during the year-to-date period, representing a $200.6 million increase compared with the comparable period of 2025, primarily driven by repurchases of common shares and dividend payments in the year-to-date period, partially offset by the Net transfers to Former Parent in the prior period.

Additionally, the Company borrowed and repaid $60 million under the Revolving Credit during the second quarter.

Cash and Cash Requirements

The Company held $268.0 million of Cash and equivalents as of April 3, 2026.

The Company held $270.9 million of Cash and equivalents as of July 3, 2026.

The Company had $318.8 million of Cash and equivalents as of December 31, 2025.

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Borrowings under the Credit Facilities bear interest as described in Note 4 of the notes to the consolidated and combined condensed financial statements included elsewhere in this Quarterly Report on Form 10-Q.

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

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

CRITICAL ACCOUNTING ESTIMATES

There were no material changes during the three months ended April 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.

There were no material changes during the three and six months ended July 3, 2026 to the items disclosed as critical accounting estimates in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in the Form 10-K.

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