Ralliant — Third Quarter 2026 Earnings Summary

Financial Performance:

• Revenue reached $620 million for the quarter, representing a 17% year-over-year increase on both a total and organic basis.
• Net earnings were $86 million, with net earnings per diluted share (EPS) of $0.77, an 117% increase year-over-year.
• Adjusted net earnings were $104 million, resulting in adjusted EPS of $0.93, a 64% increase year-over-year on a normalized basis.
• Net earnings margin improved to 13.9%, a 630 basis point year-over-year improvement.
• Adjusted EBITDA margin was 23.5%, a 310 basis point year-over-year improvement (400 basis points on a normalized basis).
• Trailing twelve-month (TTM) operating cash flow was $338 million, and TTM free cash flow was $303 million.
• The Company generated $111 million in cash from operating activities for the quarter and invested $9 million in capital expenditures.
• Balance sheet included $366 million in cash and equivalents and $1.15 billion in long-term debt as of the end of the third quarter.

Guidance and Future Outlook:

• Full year 2026 revenue guidance was raised to $2.340 to $2.360 billion.
• Full year 2026 adjusted EBITDA margin guidance is approximately 21.5%.
• Full year 2026 adjusted EPS guidance is $3.10 to $3.16.
• Fourth quarter 2026 revenue guidance is $620 to $640 million.
• Fourth quarter 2026 adjusted EBITDA margin guidance is 23.5% to 24.5%.
• Fourth quarter 2026 adjusted EPS guidance is $0.93 to $0.99.
• Guidance assumptions include net interest expense of $13 to $15 million per quarter and an adjusted effective tax rate of 16% to 18%.
• Tariff assumptions reflect cost of sales benefits from IEEPA tariff refunds of $2 million, $7 million, and $5 million in Q2, Q3, and Q4 respectively.
• Corporate and other costs are expected to be $16 to $20 million in Q4.
• FY 2026 share repurchases are expected to represent approximately 50% of free cash flow.

Business Segments and Product Lines:

• Sensors & Safety Systems (S&SS): Revenue was $376 million, up 15% year-over-year and 15% organically. Operating profit margin was 29.7% (up 210 basis points), and adjusted EBITDA margin was 30.5% (up 185 basis points). Growth was driven by a multi-year defense backlog, record utility orders for grid modernization, and accelerating industrial manufacturing demand driven by data centers.
• Test & Measurement (T&M): Revenue was $244 million, up 20% year-over-year and 21% organically. Operating profit margin was 8.9% (up 970 basis points), and adjusted EBITDA margin was 19.3% (up 550 basis points). Growth was broad-based, with Diversified Electronics benefiting from compute and power infrastructure investment and Communications supported by commercial demand; Semiconductors declined due to the completion of a large customer project in Q3 2025.
• The Company reported a book-to-bill ratio above 1.1 across both segments.
• Productivity savings from the RBS-led Enterprise Productivity Program (EPP) are accelerating, with an expected exit run-rate of $30-35 million in 2026, on a path to a $50-60 million target by 2028.

Market and Competitive Landscape:

• Customer investment is accelerating in mission-critical defense programs, power grid modernization, and AI enablement.
• The Company maintains leading positions in its markets with well-known brands and a global footprint serving Fortune 1000 companies and start-ups.
• The operating model is rooted in the Ralliant Business System (RBS), emphasizing continuous improvement.

Risks and Challenges:

• Forward-looking statements are subject to risks including geopolitical events, specifically the ongoing conflict in the Middle East.
• Trade and tariff policies, including the ability to offset costs and the timing of refunds, present uncertainty.
• Changes in government contracting requirements and federal spending levels could impact performance.
• Foreign currency exchange rate fluctuations and changes in tax laws are potential risks.
• The Company notes that actual results may differ materially from forward-looking statements due to various uncertainties.

Management Commentary and Tone:

• Tami Newcombe, President and CEO, stated the quarter exceeded the high end of expectations and contributed to raised full-year guidance.
• Management highlighted that RBS-driven operating rigor is translating into strong growth, expanded margins, and strong cash flow.
• The tone emphasized profitable growth gaining momentum, with investments in organic opportunities and the capacity to return capital to shareholders.
• Management noted significant runway ahead for growth driven by productivity and strong cash management.

Other Key Points:

• The Board of Directors declared a quarterly cash dividend of $0.05 per share, payable on December 23, 2026.
• Year-to-date, the Company returned $167 million to shareholders: $150 million for the repurchase of 2.8 million shares (average price $54.74) and $17 million in dividends.
• $400 million remained under the Company's share repurchase authorization as of the end of the third quarter.
• The Company is a global provider of precision technologies specializing in designing, developing, manufacturing, and servicing precision instruments and highly engineered products.
• The Company employs approximately 7,000 people and is headquartered in Raleigh, North Carolina.