Ralliant (RAL) Barclays 43rd Annual Industrial Select Conference summary

Business performance and outlook

• Achieved public company status ahead of schedule, with two quarters completed and Q1 2026 growth guidance of 5%-8%.

• Growth in Q4 was about 4% in industrial manufacturing and related segments, driven by pent-up demand and improved optimism in North America.

• Test and Measurement (T&M) segment is returning to growth in 2026, with diversified electronics showing improved indicators since the company spin.

• Defense and space programs have seen an uptick in replenishment, extending production timelines and contributing to a strong backlog.

• Growth is expected to be front-half loaded in 2026, with prudent guidance for the second half due to short-cycle business dynamics.

Profitability, cost management, and investment

• Adjusted EBITDA margin guidance for 2025 is 18%-20%, below prior Investor Day targets, but with a focus on driving profit faster than revenue.

• Cost savings program of $9M-$11M is on track, including productivity initiatives, value engineering, and dynamic resource allocation.

• Committed to 40%-45% incrementals in the near term, with historical operating leverage in the 30% range as growth normalizes.

• Investments in capacity, innovation, and selling resources are planned to support higher growth ambitions, with reinvestment encompassed in incremental margin targets.

• Share buyback of $39M executed since the last earnings call, with capital allocation toggling between repurchase and tuck-in M&A.

Market dynamics and competitive landscape

• Pricing discipline maintained, with typical price increases of 1.5%-2% and successful coverage of tariff costs.

• Competitive landscape remains steady, with customers valuing reliability and expertise, though low-end T&M faces new entrants, especially from China.

• Mix factors to watch include volume sensitivity in T&M and margin bifurcation within Sensors and Safety Systems, with defense and space running at lower margins.

• Backlog provides good visibility in defense, utilities, and services, but about 60% of business remains short cycle.

• Ongoing focus on cost improvement and operating rigor, with segment and corporate costs stabilized at current run rates.