Ralliant Q2 Earnings Call Highlights

Ralliant exceeded Q2 guidance, with revenue up 13% year over year to $568 million, adjusted EPS up 58% to $0.68, a 19.8% adjusted EBITDA margin and $99 million in free cash flow. Growth was broad-based across both segments, led by Test & Measurement revenue growth of 15% and Sensors & Safety Systems growth of 12%. Defense and space demand remained strong, with backlog above $1 billion, while utilities growth was temporarily limited by shipment delays. The company raised its 2026 outlook to $2.25 billion-$2.3 billion in revenue, a 20%-21% adjusted EBITDA margin and adjusted EPS of $2.76-$2.90, supported by productivity savings, capacity investments and continued shareholder returns. Ralliant NYSE: RAL reported second-quarter 2026 results above its guidance ranges and raised its full-year outlook, citing double-digit revenue growth in both operating segments, margin expansion and strong free-cash-flow generation. Revenue increased 13% year over year, both reported and organically, to $568 million. Adjusted EBITDA margin was 19.8%, while adjusted earnings per share rose 58% to $0.68. The company generated $99 million in free cash flow during the quarter and reported trailing 12-month free-cash-flow conversion of 114%. President and Chief Executive Officer Tami Newcombe said the company’s strategy was producing growth, margin expansion and cash generation one year after becoming an independent company. She pointed to demand tied to electrification and defense, as well as progress under Ralliant’s enterprise productivity program. Sensors & Safety Systems revenue totaled $347 million, up 12% reported and 11% organically. Its adjusted EBITDA margin was 29.4%, representing a 350-basis-point improvement on a normalized basis. Chief Financial Officer Neill Reynolds said results benefited from operating leverage, favorable industrial mix and better-than-expected defense margins associated with program mix during the quarter. Test & Measurement revenue increased 15% reported and 16% organically to $221 million. The segment’s adjusted EBITDA margin reached 14.7%, improving 750 basis points on a normalized basis due to higher revenue and productivity savings. Newcombe said diversified electronics, which represented 21% of total company revenue, grew 23% in the quarter as customers increased investment in energy storage, electric vehicles, medical devices, consumer electronics and AI-enabled edge devices. She described the category as broad-based electronics innovation, supported by Tektronix instruments used by engineers in research and development labs. Communication revenue, representing 11% of company sales, grew 9%, while semiconductor revenue, representing 7% of sales, increased 5%. Reynolds said semiconductor results continued to face a year-over-year comparison related to a large customer project in 2025. That headwind was less pronounced in the second quarter but is expected to be more significant in the third quarter before the comparison becomes clean in the fourth quarter. Defense and space represented 17% of Ralliant’s revenue and grew 14% during the quarter. The company’s defense backlog remained above $1 billion. Newcombe said Ralliant is scaling production across certain product lines at roughly two to five times historic levels to support demand for priority munitions programs, including THAAD, PAC-3 and Tomahawk. Ralliant has doubled production throughput within its existing manufacturing footprint, according to Newcombe. PacSci EMC was awarded $27 million by the Department of War and expanded into an existing Ralliant manufacturing site in Ohio.