Ralliant (RAL) Q3 2025 earnings summary

Executive summary

• Q3 2025 results met or exceeded the high end of guidance, marking the first quarter as an independent public company after the Fortive spin-off, with strong growth in Utilities and Defense & Space, sequential improvement in Test & Measurement and Industrial Manufacturing, and two major Test & Measurement platform launches.

• Continuous improvement and cost-savings initiatives are on track to deliver $9–$11M in annualized savings by end of 2026.

• Working capital efficiencies and robust free cash flow, with trailing twelve-month (TTM) FCF conversion above long-term targets.

• Completed $1.72B acquisition of EA Elektro-Automatik in January 2024 and divested Invetech business in June 2024.

• Board declared a $0.05/share quarterly dividend and authorized a $200M share repurchase program.

Financial highlights

• Q3 2025 revenue was $529M, flat year-over-year but up 5% sequentially, with adjusted EBITDA margin at 20.4% (down 610 bps YoY), and adjusted EPS of $0.60; free cash flow was $127M, with TTM FCF conversion at 124%.

• Net earnings were $39.9M ($0.35 per diluted share), down from $90.9M ($0.81 per share) in Q3 2024.

• Operating profit margin for Q3 was 9.8%, down from 20.9% in Q3 2024; gross profit margin was 50.8%.

• Ended Q3 with $264M in cash and $1.15B in term loan debt; net leverage at 1.9x.

• Paid $57M of $90M in Fortive spin-related commitments, with $35M remaining for Q4.

Outlook and guidance

• Q4 2025 revenue expected at $535M–$550M, with adjusted EBITDA margin of 20%–21% and adjusted EPS of $0.62–$0.68; interest expense forecasted at $16–$18M.

• Free cash flow expected to decline sequentially in Q4 due to payment timing, but full-year conversion rate to remain above 95%.

• Normal seasonality expected: Q1 typically lowest revenue quarter, with a mid- to high-single-digit % step-down from Q4 and 2–3% EBITDA margin decrease.

• Management expects continued challenges from global economic and geopolitical factors, including tariffs and supply chain disruptions.

• CapEx expected to ramp from 2% to 2–3% of revenue by 2026, focusing on high-return opportunities, especially in defense.