Financial Analysis

NOTE 8. COMMITMENTS AND CONTINGENCIES Legal Proceedings Ralliant is, from time to time, subject to a variety of litigation and other proceedings incidental to Ralliants business, including lawsuits involving claims for damages arising out of the use of its products and services, claims relating to intellectual property matters, employment matters, commercial disputes, and personal injury as well as regulatory investigations or enforcement. Ralliant may also become subject to lawsuits as a result of past or future acquisitions or as a result of liabilities retained from, or representations, warranties, or indemnities provided in connection with divested businesses. Some of these lawsuits may include claims for punitive and consequential as well as compensatory damages. Based upon Ralliants experience, current information, and applicable law, Ralliant does not believe that any currently pending legal proceedings or claims will have a material adverse effect on Ralliants financial position, results of operations, or cash flows. There have been no material changes to the disclosures in Note 14 of the Notes to the Consolidated and Combined Financial Statements included in the Form 10-K. Leases Operating lease costs for each period are presented as follows: Three Months Ended Six Months Ended July 3, 2026 June 27, 2025 July 3, 2026 June 27, 2025 Operating lease costs $ 4.3 $ 5.1 $ 9.0 $ 10.2 Supplemental balance sheet and cash flow information related to operating leases for each p …

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Disaggregation of revenue for the three months ended July 3, 2026 was: Total Sensors and Safety Systems Test and Measurement Geographic: United States $ 289.2 $ 203.8 $ 85.4 China 93.8 37.3 56.5 All other 184.8 105.4 79.4 Total $ 567.8 $ 346.5 $ 221.3 End markets: Industrial manufacturing $ 116.6 $ 116.6 $ Defense and space 96.5 96.5 Utilities 81.4 81.4 Other 52.0 52.0 Diversified electronics 118.9 118.9 Communications 61.9 61.9 Semiconductors 40.5 40.5 Total $ 567.8 $ 346.5 $ 221.3 Disaggregation of revenue for the three months ended June 27, 2025 was: Total Sensors and Safety Systems Test and Measurement Geographic: United States $ 253.4 $ 184.8 $ 68.6 China 85.2 32.9 52.3 All other 164.7 93.1 71.6 Total $ 503.3 $ 310.8 $ 192.5 End markets: Industrial manufacturing $ 104.1 $ 104.1 $ Defense and space 84.4 84.4 Utilities 78.2 78.2 Other 44.1 44.1 Diversified electronics 96.9 96.9 Communications 57.0 57.0 Semiconductors 38.6 38.6 Total $ 503.3 $ 310.8 $ 192.5 Disaggregation of revenue for the six months ended July 3, 2026 was: Total Sensors and Safety Systems Test and Measurement Geographic: United States $ 575.2 $ 407.2 $ 168.0 China 172.1 68.0 104.1 All other 355.0 195.6 159.4 Total $ 1,102.3 $ 670.8 $ 431.5 End markets: Industrial manufacturing $ 225.3 $ 225.3 $ Defense and space 189.5 189.5 Utilities 154.9 154.9 Other 101.1 101.1 Diversified electronics 229.7 229.7 Communications 125.1 125.1 Semiconductors 76.7 76.7 Total $ 1,102.3 $ 670.8 $ 431.5 Disaggregation of revenu …

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NOTE 3. FAIR VALUE MEASUREMENTS Accounting standards define fair value based on an exit price model, establish a framework for measuring fair value for assets and liabilities required to be carried at fair value, and provide for certain disclosures related to the valuation methods used within the valuation hierarchy as established within the accounting standards. This hierarchy prioritizes the inputs into three broad levels as follows: Level 1 inputs are quoted prices (unadjusted) for identical assets or liabilities in active markets. Level 2 inputs are quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets in markets that are not active, or other observable characteristics for the asset or liability, including interest rates, yield curves and credit risks, or inputs that are derived principally from, or corroborated by, observable market data through correlation. Level 3 inputs are unobservable inputs based on the Companys assumptions. A financial assets or liabilitys classification within the hierarchy is determined based on the lowest level input that is significant to the fair value measurement in its entirety. Financial assets and liabilities that are measured at fair value on a recurring basis were as follows: Quoted Prices in Active Market (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Total July 3, 2026 Deferred compensation liabilities $ $ 11.0 $ $ 11.0 Decem …

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NOTE 7. INCOME TAXES Ralliants effective tax rate was 16.5% for the three and six months ended July 3, 2026 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 Companys uncertain tax positions and valuation allowances. Ralliants effective tax rate for the three and six months ended July 3, 2026 differs from the U.S. federal statutory rate of 21% due primarily to the impact of state income taxes, U.S. international tax provisions, tax credits and deductions, non-deductible executive compensation, and changes in the Companys uncertain tax positions. …

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NOTE 4. FINANCING The components of the Companys long-term debt were as follows: Effective Interest Rate July 3, 2026 December 31, 2025 USD Term Loan due March 2029 4.98 % $ 550.0 $ 530.8 USD Term Loan due June 2028 4.86 % 600.0 619.2 Long-term debt, principal amounts 1,150.0 1,150.0 Less: aggregate unamortized debt discounts, premiums, and issuance costs 1.5 1.2 Long-term debt, carrying value $ 1,148.5 $ 1,148.8 Less: current portion of long-term debt, carrying value 530.4 Long-term debt, net of current maturities $ 1,148.5 $ 618.4 Amendment to Credit Agreement On March 30, 2026, Ralliant entered into Amendment No. 2 (the Second Amendment) to the Credit Agreement dated as of May 15, 2025 (the Credit Agreement). The Second Amendment, among other things, (i) refinanced the $530.8 million then outstanding under the term loan due December 2026 with a $550.0 million term loan due March 2029 that includes an applicable borrowing rate thereunder that is 12.5 basis points higher than that of the previous rate; (ii) reduced the amount outstanding under the then outstanding term loan due June 2028 from $619.2 million to $600.0 million, and decreased the applicable borrowing rate thereunder by 12.5 basis points; and (iii) removed the 85% cap on netting cash and cash equivalents outside of the United States for purposes of calculating the Companys consolidated net leverage ratio. Ralliant incurred immaterial debt issuance costs associated with the Second Amendment. All other material te …

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New Accounting Pronouncements Issued and Adopted In July 2025, the FASB issued ASU 2025-05, Financial Instruments - Credit Losses (Topic 326) Measurement of Credit Losses for Accounts Receivable and Contract Assets , which provides all entities with a practical expedient in developing reasonable and supportable forecasts as part of estimating expected credit losses. An entity may elect the practical expedient when measuring credit losses, to assume that current conditions as of the balance sheet date do not change for the remaining life of the asset. This standard is effective for the fiscal year ending December 31, 2026 and interim periods beginning with the first quarter of 2026, with early adoption permitted, and should be applied prospectively. On January 1, 2026, the Company adopted the practical expedient described in ASU 2025-05 using a prospective approach and updated the allowance for credit losses recorded on the Consolidated Condensed Balance Sheet as of April 3, 2026 to align with the new standard. The adoption did not have a material impact on the consolidated financial statements. Issued But Not Yet Adopted In November 2024, the FASB issued ASU 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40) Disaggregation of Income Statement Expenses , which amends the disclosure requirements related to certain costs and expenses on an interim and annual basis. This standard is effective for fiscal year ending De …

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NOTE 11. RELATED-PARTY TRANSACTIONS In connection with the Separation, on June 27, 2025, Fortive and Ralliant entered into a Separation and Distribution Agreement as well as various other related agreements (collectively the Agreements) that govern the Separation and the relationships between Fortive and Ralliant going forward, including an employee matters agreement, a tax matters agreement, a transition services agreement, an intellectual property matters agreement, a Fortive Business System (FBS) license agreement, and a Fort Solutions license agreement. The Agreements provide for the allocation of assets, employees, liabilities, and obligations (including investments, property, employee benefits, and tax-related assets and liabilities) between Fortive and Ralliant attributable to periods prior to, at, and after the Separation and govern certain relationships between Fortive and Ralliant after the Separation. Such Agreements are described further in the Form 10-K. Tax Matters Agreement In connection with the Separation, the Company entered into the Tax Matters Agreement with Fortive, that governs the parties respective rights, responsibilities and obligations with respect to taxes, including responsibility for tax liabilities, entitlement to tax refunds and other tax benefits, allocation of tax attributes, preparation and filing of tax returns, control of audits and other tax proceedings and other matters relating to taxes. Pursuant to the terms of the Tax Matters Agreemen …

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NOTE 6. SALES Ralliant derives revenue primarily from the sale of products, with additional revenue from the sale of services. Revenue is recognized when control of promised products or services is transferred to customers in an amount that reflects the consideration the Company expects to be entitled to in exchange for those products or services. Product sales include revenue from the sale of products and equipment. Service sales include revenues from extended warranties, maintenance contracts or services, and services related to previously sold products. Contract Liabilities The Companys contract liabilities consist of deferred revenue generally related to customer deposits received in advance of performance under the contract, extended warranty sales, and product maintenance agreements, where the Company generally receives up-front payment and recognizes revenue over the service or support term. The Company classifies deferred revenue as current or noncurrent based on the timing of when it expects to recognize revenue. The noncurrent portion of deferred revenue is recorded within Other long-term liabilities in the accompanying Consolidated Condensed Balance Sheets. The Companys contract liabilities consisted of the following: July 3, 2026 December 31, 2025 Deferred revenue - current $ 163.1 $ 154.6 Deferred revenue - noncurrent 38.4 38.7 Total contract liabilities $ 201.5 $ 193.3 For the three and six months ended July 3, 2026, the Company recognized $26.5 million and $70. …

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NOTE 10. SEGMENT INFORMATION Ralliant reports its results in two reportable segments that are also its two operating segments, consisting of Sensors and Safety Systems and Test and Measurement. Ralliants operating segments were determined based primarily on how the chief operating decision maker (CODM) views and evaluates the Companys operations. Other factors including products and services, end markets served, and business cycle were also considered in determining the formation of operating segments. The Company's CODM is the chief executive officer. The CODM uses operating profit at the segment level as the measure of profitability to assess performance and allocate resources, including merger and acquisition targets. The CODM also compares the actual results to expectations in assessing the performance of the segments. Operating profit represents total revenue, less cost of sales, and operating expenses. Operating expenses generally include Selling, general, and administrative expenses and Research and development expenses, which are the significant expense categories regularly provided to the CODM. Depreciation expense is recorded within both Cost of sales and Selling, general, and administrative expenses. Amortization expense is recorded within Selling, general, and administrative expenses. Goodwill impairment, when incurred, is also separately disclosed by segment. The identifiable assets by segment are those used in each segments operations. Inter-segment amounts are …

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NOTE 9. NET EARNINGS PER SHARE Net Earnings per Common Share Basic net earnings per share (EPS) is calculated by dividing net earnings attributable to common stockholders by the weighted average number of shares of common stock outstanding for the applicable period. Diluted EPS is similarly calculated, except that the calculation includes the dilutive effect of the assumed issuance of shares under stock-based compensation plans under the treasury stock method, except where the inclusion of such shares would have an anti-dilutive impact. Anti-dilutive options excluded from the diluted EPS calculation for the three and six months ended July 3, 2026 were 0.3 million and 0.5 million, respectively. For the three and six months ended June 27, 2025, there were no anti-dilutive options. The total number of shares outstanding at the time of the Separation was 112.7 million and is utilized for the calculation of both basic and diluted EPS for all periods prior to the Separation. Information related to the calculation of net earnings per share of common stock is summarized as follows: Three Months Ended Six Months Ended July 3, 2026 June 27, 2025 July 3, 2026 June 27, 2025 Numerator Net earnings $ 57.2 $ 47.6 $ 101.4 $ 111.5 Denominator Weighted average common shares outstanding used in basic earnings per share 111.4 112.7 111.9 112.7 Incremental common shares from: Assumed exercise of dilutive options and vesting of dilutive Stock Awards 1.2 1.0 Weighted average common shares outstandi …

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