Ralliant Corporation

Hello, my name is Donna and I will be your conference facilitator this morning. At this time, I would like to welcome everyone to Ralliant Corporation's third quarter 2026 earnings results conference call. All lines have been placed on mute to prevent background noise. After the speaker's remarks, we'll open the call for questions. If you would like to ask a question, please press star then one on your telephone keypad. If you would like to withdraw your question, please press star two. I would now like to turn the call over to Mr. Nathan McCurren, Vice President of Investor Relations. Mr. McCurren, you may begin your conference.

Thank you. Good morning, everyone, and thank you for joining Ralliant's third quarter 2026 earnings call. I'm Nathan McCurren, Vice President of Investor Relations. Today, we'll walk through our results, highlight key operational progress, and provide our outlook for the fourth quarter and full year of 2026. I'm joined today by Tammy Newcombe, Please note that we'll be discussing certain non-GAAP financial measures on today's call. A reconciliation of these measures to US GAAP can be found in the appendix to our presentation. During today's call, and unless otherwise stated, we are comparing our third quarter 2026 results to the same period in 2025. During the call, we will make forward-looking statements, including statements regarding events or developments that we expect or anticipate will or may occur in the future. and all the statements we make today. Information regarding these risks and uncertainties is available in our annual report on Form 10-K for the year ended December 31st, 2025 filed with the SEC on February 26th, 2026 and in our quarterly reports on Form 10-Q filed with the SEC on May 12th, 2026 and July 30th, 2026 and to be filed after market today. With that, I'd like to turn the call over to Tammy.

Welcome everyone. And thank you for joining us for our Q3 2026 earnings call. I'll start by thanking our team. We are benefiting from attractive market tailwinds, but it's their disciplined execution that is turning those opportunities into growth, margin expansion, and strong cash generation. Today, I'll highlight our performance in the quarter and the progress we are making against our strategy before Neill takes you through the financials. Let's start on slide four with a summary of our Q3 performance. First, our execution across multiple growth sectors delivered 17% revenue growth, and our book-to-bill remained above 1.1 in both segments, reflecting continued broad-based demands. Second, our operating rigor, led by the Ralliant Business System, or RBS, expanded normalized adjusted EBITDA margin by 400 basis points as we accelerated savings from our enterprise productivity program. Third, our targeted investments in innovation and manufacturing capacity are strengthening our positions in defense systems, power grid solutions, and AI enablement from the data center to the edge. And fourth, our disciplined cash management delivered more than $100 million of free cash flow, supporting our organic investments and the return of capital to shareholders. Turning to slide five. In the third quarter, we delivered on all metrics above the high end of our guidance ranges with the sensors and safety system segment growing 15% and the test and measurement segment growing 21% organically. Orders outpaced revenue and demand signals in our short cycle business accelerated during the quarter. The expanded backlog provides better visibility and reinforces our confidence in the durability of underlying demand. Based on these indicators, We're raising our full year 2026 guidance by more than our Q3B. We expanded both gross and adjusted EBITDA margins despite facing higher inflation as disciplined execution led to strong operating leverage and the acceleration of our enterprise productivity program. Combined with revenue growth, this resulted in adjusted EPS growth of 64% on a normalized basis. Turning to slide six, our profitable growth strategy is gaining momentum. Our winning growth factors position us to capture long-term investment cycles in electrification and defense. Starting with electrification, rising global power demand is driving investment in grid and energy infrastructure. Our intelligent sensing solutions improve grid reliability and resilience, while our advanced test capabilities support innovation, in energy storage and power distribution. At the same time, AI is accelerating technology innovation from the data center to the edge. Engineers are designing more complex power electronics to improve efficiency, performance, and reliability, increasing the need for advanced test and measurement. Turning to defense, replenishment and surge demand remain elevated. framework agreements are converting into customer orders and backlog, providing visibility to multi-year demand. And the defense opportunity extends well beyond replenishment. Modernization and the evolution of next-generation defense systems create a broader, longer-term growth opportunity for our precision energetics and advanced test and measurement capabilities. Turning to slide seven in our performance by regions. North America is our largest region at 54% of total revenue and grew 18% in the quarter with broad-based momentum across all end markets. High quality backlog and healthy channel inventories show continued growth runway. China is 16% of total revenue and grew 39% this quarter due to increasing investments in data centers and the power grid. Strong book to build gives us confidence Thank you. Thank you. Thank you. Rest of the world is 18% of total revenue and grew 15% this quarter, led by utilities and ongoing investment in power and energy infrastructure across Korea, Japan, and Southeast Asia. Transitioning to our end markets on slide eight. The Centers and Safety Systems segment is approximately 60% of total revenue and grew double digits in the quarter. Defense and Space End Market is 18% of total revenue, grew 21% in the quarter, on the back of double-digit growth in Q3 last year. PacSci EMC, our defense and space business, has received undefinitized contracts supporting Lockheed Martin's THAAD and PAC-3 programs. Lockheed Martin received seven-year undefinitized contract actions for THAAD interceptor production and PAC-3 Missile Segment Enhancement, or MSE, production, supporting the Department of War's efforts to expand critical missile defense production capacity. We began to receive orders against these contracts in the quarter, which helped fuel our multi-year defense and space backlog to now surpass $1.5 billion. We are partnering with our customers to meet ramping production requirements through productivity, capacity expansion, and initiatives to secure supply. We are also securing design wins on emerging defense technologies across lower cost, affordable mass munitions, autonomous air vehicles, and counter UAS systems, confirming our status as a critical supplier across the multi-tiered defense architecture. Utilities and market is 14% of total revenue and grew 16% in the quarter. We delivered another record quarter of both orders and revenue. Market growth further accelerated with the rising power demand from data centers, electrification, and aging grid infrastructure. Even with a large step up in revenue growth in the quarter, we continued to build significant backlog with a high book to bill. Our deep customer relationships are central to how we capture that demand. We partner with leading transformer OEMs to develop intelligent sensing solutions that improve grid reliability and resilience, while our relationships with utilities and hyperscalers give us direct insight into their evolving requirements and investment plans. Our operating execution and investment are supporting that growth. Productivity improvements are increasing manufacturing output and we broke ground in July on a facility expansion to support future demand. Industrial manufacturing and other end markets are 29% of total revenue and grew 11% on a combined basis. After several years of cautious customer spending, demand is broad-based, supported by strong secular trends and healthier general industrial activity in North America and selectively across Europe and Asia. Our customer focus combined with RBS led manufacturing execution is our competitive advantage in these markets. With trusted brands and strong lead time performance, we're responding faster to customers and gaining share across data center cooling, semiconductor equipment, and critical environments. Test and measurement is approximately 40% of revenue and grew 21% driven by our investment in innovation intersecting with strong secular demand. Our customers are designing increasingly complex power systems that must handle higher voltages with greater efficiency and reliability. And we help engineers test and validate these increasingly complex systems. Our Q3 product launches are focused on addressing this growing power design challenge. First, we introduced a high-capacity regenerative test system that simulates the electrical loads of next-generation higher-voltage data centers. Instead of wasting that energy as heat, the system returns it to the grid, helping customers lower the cost of testing in development and skilled production. Next, we launched the world's first eight-channel oscilloscope aimed at multi-channel RF, High Speed Digital, and System Level Debug, helping engineers ensure power stays stable and clean across increasingly dense and complicated systems. Finally, we extended the MP5000 automated test platform by introducing a new module to support higher voltage semiconductor characterization and optical device validations. These new products demonstrate our technology leadership and how we are helping customers solve increasingly complex power and performance challenges across a broad range of applications. Our innovation velocity is translating into results. Diversified electronics is 21% of total revenue and grew 48% in the quarter. Market growth further accelerated as the pace of technology innovation increased. Engineers need increasingly sophisticated tools to see, understand, and validate electrical systems across the applications supported by each new generation of semiconductors. That plays directly to our strengths in oscilloscopes and advanced test and measurement instruments. Communications is 11% of total revenue and grew 4% in the quarter. We continue to see strong demand across both commercial and defense communications. In defense, orders outpaced shipments and the opportunity pipeline continued to build. Our new high-performance oscilloscopes are gaining traction in high-speed communications. In Q3, we secured significant customer wins expanding our position in a market where we historically have lower penetration and see meaningful opportunities to gain share. Semiconductor is 7% of total revenue and declined 7% in the quarter, reflecting the expected comparison to a large customer project completed in Q3 of 2025. Excluding that project, revenue grew in the high teens with broad-based demand accelerations. Growing adoption of optical interconnects is driving increased investment in R&D and production, where we are expanding our position in testing high-speed optical modules. Next on slide nine, we're investing behind the opportunities where we see the greatest potential to extend our profitable growth. In utilities and defense, we are supporting customer demand by expanding our Fairport New York site and adding a site in Solon, Ohio. In addition, we are leveraging AI to deepen digital customer engagement and accelerate software development and new product innovation. As we look to 2027, we like our setup for continued strong revenue growth. We have elevated backlogs, healthy channel inventories, positive customer demand signals, and targeted investments underway to support the growth ahead. I'll now turn it over to Neill to go deeper on our results and guidance.