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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)

12 Months Ended

Dec. 31, 2025

Ralliant has historically operated as part of Fortive and not as a separate, publicly-traded company. For the periods prior to the Separation, the combined financial statements have been derived from Fortive’s historical accounting records of its PT segment and are presented on a carve-out basis. All revenues and costs as well as assets and liabilities directly associated with the business activity of Ralliant are included as a component of the consolidated and combined financial statements. The financial statements also include allocations of certain general, administrative, sales, and marketing expenses from Fortive’s corporate office and from other Fortive businesses to Ralliant, and allocations of related assets, liabilities, and Net Former Parent investment, as applicable. The allocations have been determined on a reasonable basis; however, the amounts are not necessarily representative of the amounts that would have been reflected in the financial statements had Ralliant been an entity that operated independently of Fortive. Related-party allocations are discussed further in Note 18.

Following the Separation, the consolidated and combined financial statements included the accounts of Ralliant and its wholly-owned subsidiaries. Accordingly:

•The Consolidated Balance Sheet at December 31, 2025 consisted of Ralliant’s consolidated balances, while the Combined Balance Sheet at December 31, 2024 consisted of the combined balances of the Ralliant businesses.

•The Consolidated and Combined Statements of (Loss) Earnings and Statements of Comprehensive (Loss) Income for the year ended December 31, 2025 consisted of Ralliant’s consolidated results for the six months ended December 31, 2025 and the combined results of Ralliant’s businesses for the six months ended June 27, 2025. The Combined Statements of (Loss) Earnings and Statements of Comprehensive (Loss) Income for the years ended December 31, 2024 and 2023 consisted of the combined results of the Ralliant businesses.

•The Consolidated and Combined Statements of Equity for the year ended December 31, 2025 consisted of Ralliant’s consolidated activity for the six months ended December 31, 2025 and the combined results of Ralliant’s businesses for the six months ended June 27, 2025. The Combined Statements of Equity for the years ended December 31, 2024 and 2023 consisted of the combined activity of the Ralliant businesses.

•The Consolidated and Combined Statements of Cash Flows for the year ended December 31, 2025 consisted of Ralliant’s consolidated results for the six months ended December 31, 2025 and the combined results of Ralliant’s businesses for the six months ended June 27, 2025. The Combined Statements of Cash Flows for the years ended December 31, 2024 and 2023 consisted of the combined results of the Ralliant businesses.

Prior to the Separation, Ralliant was dependent upon Fortive for all of its working capital and financing requirements under Fortive’s centralized approach to cash management and financing of its operations. Because the Company was part of Fortive during the six months ended June 27, 2025, only cash, cash equivalents, and borrowings clearly associated with Ralliant and related to the Separation have been included in these consolidated and combined financial statements. Other financial transactions relating to the business operations of the Company during the six months ended June 27, 2025 were accounted for through the Net Former Parent investment account of the Company.

Net Former Parent investment, which includes retained earnings prior to the Separation, represents Fortive’s interest in the recorded net assets of Ralliant. All significant transactions between Ralliant and Fortive have been included in the accompanying consolidated and combined financial statements for the years ended December 31, 2025, 2024, and 2023. Transactions with Fortive are reflected in the accompanying Consolidated and Combined Statements of Changes in Equity as “Net transfers (to) from Former Parent” and in the accompanying Consolidated and Combined Balance Sheets within “Net Former Parent investment.”

Consolidation

All significant intercompany accounts and transactions between the operations comprising Ralliant have been eliminated in the accompanying Consolidated and Combined Statements of (Loss) Earnings for the years ended December 31, 2025, 2024, and 2023 and the Consolidated and Combined Balance Sheets as of December 31, 2025 and December 31, 2024.

The accompanying consolidated and combined financial statements present the Company’s historical financial position, results of operations, changes in equity, and cash flows in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and are audited. In the opinion of management, these statements include all adjustments, consisting only of normal, recurring adjustments, necessary for a fair statement of the financial position of the Company.

The consolidated and combined financial statements include the Company’s accounts and the accounts of its subsidiaries. All intercompany balances and transactions have been eliminated upon consolidation. The Company reclassified sales by geography in the fourth quarter of 2025 to better align sales to the end customer, further disaggregate property, plant, and equipment by category, and separated the presentation of Prepaid expenses from Other current assets on the Consolidated and Combined Balance Sheet. Prior year information has been recast to conform to current year presentation. Such change to the Company’s reporting process is not material to the Company’s consolidated and combined financial statements.

Use of Estimates

Use of Estimates—The preparation of financial statements in conformity with GAAP requires management to make estimates and judgments that affect the reported amounts of assets (including goodwill and other indefinite-lived intangible assets), liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. Ralliant bases these estimates on historical experience, the current economic environment, and on various other assumptions that are believed to be reasonable under the circumstances. However, uncertainties associated with these estimates exist and actual results may differ from these estimates.

Cash and Equivalents

Cash and Equivalents—The Company considers all highly liquid investments with a maturity of three months or less at the date of purchase to be cash equivalents.

Accounts Receivable and Allowances for Credit Losses

Accounts Receivable and Allowances for Credit Losses—The Company measures its allowance to reflect expected credit losses over the remaining contractual life of the asset. Expected credit losses for the pooled assets are estimated based on historical loss experience, credit quality, the durations of outstanding account receivables, and expectations of the future economic environment. Expected credit losses of the assets originating during the year and changes to expected losses in the same period are recognized in earnings.

All trade accounts and unbilled receivables are recorded within the Consolidated and Combined Balance Sheet, adjusted for any write-offs, and net of allowances for credit losses. The Company regularly performs detailed reviews of the Company’s portfolios to evaluate the collectability of receivables based on a combination of past, current, and future financial and qualitative factors that may affect customers’ ability to pay. In circumstances where the Company is aware of a specific customer’s inability to meet its financial obligations, a specific reserve is recorded against amounts due to reduce the recognized receivable to the amount reasonably expected to be collected. Amounts determined to be uncollectible are charged directly against the allowances, while amounts recovered on previously written-off accounts increase the allowances. Ralliant does not believe that accounts receivable represent significant concentrations of credit risk because of the diversified portfolio of individual customers and geographical areas.

Inventory Valuation

Inventory Valuation—Inventories include the costs of material, labor, and overhead. Substantially all inventories are stated at the lower of cost or net realizable value using the first-in, first-out (“FIFO”) method or the average-weighted cost method.

Property, Plant and Equipment

Property, Plant, and Equipment—Property, plant, and equipment are carried at cost. The provision for depreciation has been computed principally by the straight-line method based on the estimated useful lives of the depreciable assets as follows:


Category						Useful Life
Buildings						30 years
Leased assets and leasehold improvements						Amortized over the lesser of the economic life of the asset or the term of the lease
Machinery, equipment and other						3 – 10 years

Estimated useful lives are periodically reviewed and, when appropriate, changes to estimates are made prospectively.

Fair Value of Financial Instruments

Fair Value of Financial Instruments—Ralliant’s financial instruments consist primarily of accounts receivable, nonqualified deferred compensation plans, and obligations under trade accounts payable. Due to their short-term nature, the carrying values for accounts receivable and trade accounts payable approximate fair value.

Goodwill and Other Intangible Assets

Goodwill and Other Intangible Assets—Goodwill and other intangible assets result from Ralliant’s business acquisitions. In accordance with accounting standards related to business combinations, goodwill and other indefinite-lived intangible assets are not amortized; however, certain finite-lived identifiable intangible assets, primarily customer relationships and acquired technology, are amortized over their estimated useful lives. The Company reviews identified intangible assets for impairment whenever events or changes in circumstances indicate that the related carrying amounts may not be recoverable. The Company also tests goodwill and other intangible assets with indefinite lives at least annually for impairment.

Revenue Recognition

Revenue Recognition—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.

For revenue related to a product or service to qualify for recognition, Ralliant must have an enforceable contract with a customer that defines the goods or services to be transferred and the payment terms related to those goods or services. Further, collection of substantially all consideration for the goods or services transferred must be probable based on the customer’s intent and ability to pay the promised consideration. Ralliant applies judgment in determining the customer’s ability and intention to pay, which is based on a combination of financial and qualitative factors, including the customer’s financial condition, collateral, debt-servicing ability, past payment experience, and credit bureau information.

Customer allowances and rebates, consisting primarily of volume discounts and other short-term incentive programs, are considered in determining the transaction price for the contract. These allowances and rebates are reflected as a reduction in the contract transaction price. Judgment is exercised in determining product returns, customer allowances, and rebates, and are estimated based on historical experience and known trends.

Most of Ralliant’s sales contracts contain standard terms and conditions. Ralliant evaluates contracts to identify distinct goods and services promised in the contract (performance obligations). Sometimes this evaluation involves judgment to determine whether the goods or services are highly dependent on or highly interrelated with one another, or whether such goods or services significantly modify or customize one another. Certain customer arrangements include multiple performance obligations, typically hardware, installation, training, consulting, and other services. Generally, these elements are delivered within the same reporting period, except services. Ralliant allocates the contract transaction price to each performance obligation on a relative standalone selling price basis. Ralliant estimates standalone selling price using the observable price that the good or service sells for separately in similar circumstances and to similar customers or, if observable price is not available, other methods. Allocating the transaction price to each performance obligation sometimes requires judgment.

Revenue from sales of hardware is recognized when control transfers to the customer, which is generally when the product is shipped. If any significant obligation to the customer with respect to a sales transaction remains to be fulfilled following shipment (typically installation, other services noted above, or acceptance by the customer), revenue recognition is deferred until such obligations have been fulfilled. Further, revenue related to separately priced extended warranty and product maintenance agreements is deferred when appropriate and recognized as revenue over the term of the agreement.

Shipping And Handling

Shipping and Handling—Shipping and handling costs are included as a component of Cost of sales in the Consolidated and Combined Statements of (Loss) Earnings. Revenue derived from shipping and handling costs billed to customers is included in Sales of products in the Consolidated and Combined Statements of (Loss) Earnings.

Advertising

Advertising—Advertising costs are expensed as incurred.

Research and Development

Research and Development—Ralliant conducts research and development activities for the purpose of developing new products, enhancing the functionality, effectiveness, ease of use, and reliability of the Company’s existing products, and expanding the applications for which uses of Ralliant’s products are appropriate. Research and development costs are expensed as incurred.

Restructuring

Restructuring—Ralliant periodically initiates restructuring activities to appropriately position Ralliant’s cost base relative to prevailing economic conditions and associated customer demand, as well as in connection with certain acquisitions. Costs associated with restructuring actions can include one-time termination benefits and related charges, in addition to facility closure, contract termination, and other related activities. Ralliant records the cost of the restructuring activities when the associated liability is incurred.

In the third quarter of 2025, the Company announced a Cost Savings program, which is expected to be completed by December 31, 2026. The nature of the activities is focused on spin-related dis-synergies within the Test & Measurement segment. In the fourth quarter of 2024, Ralliant initiated a discrete restructuring plan that was completed as of December 31, 2025. The nature of the activities in the plan was related to the Separation and consisted primarily of targeted workforce reductions to realign the cost structure. In the first quarter of 2023, Ralliant initiated a discrete restructuring plan that was completed by the end of 2023. The nature of the activities in 2023 consisted primarily of targeted workforce reductions in response to overall macroeconomic and other external conditions. Ralliant incurred these costs to position itself to provide superior products and services to customers in a cost-efficient manner, while taking into consideration the impact of broad economic uncertainties.

Foreign Currency Transaction and Translation

Foreign Currency Transaction and Translation—Exchange rate adjustments resulting from foreign currency transactions are recognized in Net (loss) earnings. Net foreign currency transaction losses were not material in any of the years presented. Assets and liabilities of subsidiaries operating outside the United States with a functional currency other than U.S. dollars are translated into U.S. dollars using year-end exchange rates and income statement accounts are translated at weighted-average exchange rates. These foreign currency translation impacts are reflected as a component of Accumulated other comprehensive loss (“AOCI”) within Consolidated and Combined Balance Sheets.

Accounting for Stock-Based Compensation

Accounting for Stock-Based Compensation—Ralliant accounts for stock-based compensation by measuring the cost of employee services received in exchange for all equity awards granted, including stock options, restricted stock units (“RSUs”) and performance-based stock units (“PSUs”), based on the fair value of the award as of the grant date. Equity-based compensation expense is recognized net of an estimated forfeiture rate over the requisite service period. Generally, equity awards are subject to graded vesting and compensation expense is recognized separately over each vesting tranche of the award, resulting in an accelerated expense recognition pattern.

Income Taxes

Income Taxes—In accordance with GAAP, deferred tax assets and liabilities are determined based on the difference between the financial statement and tax basis of assets and liabilities using enacted rates expected to be in effect during the year in which the differences reverse. Deferred tax assets generally represent items that can be used as a tax deduction or credit in the Company’s tax return in future years for which the tax benefit has already been reflected in the accompanying Consolidated and Combined Statements of (Loss) Earnings. Deferred tax liabilities generally represent items that have already been taken as a deduction on the Company’s tax return but have not yet been recognized as an expense in the accompanying Consolidated and Combined Statements of (Loss) Earnings. The effect on deferred tax assets and liabilities due to a change in tax rates is recognized in income tax expense in the period that includes the enactment date.

Ralliant’s deferred tax assets are reduced by a valuation allowance if, based on the weight of available evidence, it is more likely than not (a likelihood of more than 50 percent) that some portion or all of the deferred tax assets will not be realized. Ralliant evaluates the realizability of deferred income tax assets for each of the jurisdictions in which it operates. If Ralliant experiences cumulative pretax income in a particular jurisdiction in the three-year period including the current and prior two years, Ralliant normally concludes that the deferred income tax assets will more likely than not be realizable and no valuation allowance is recognized, unless known or planned operating developments would lead management to conclude otherwise. However, if Ralliant experiences cumulative pretax losses in a particular jurisdiction in the three-year period including the current and prior two years, Ralliant then considers a series of factors in the determination of whether the deferred income tax assets can be realized. These factors include historical operating results, known or planned operating developments, the period of time over which certain temporary differences will reverse, consideration of the utilization of certain deferred income tax liabilities, tax law carryback capability in the particular country, and prudent and feasible tax planning strategies. After evaluation of these factors, if the deferred income tax assets are expected to be realized within the tax carryforward period allowed for that specific country, Ralliant would conclude that no valuation allowance would be required. To the extent that the deferred income tax assets exceed the amount that is expected to be realized within the tax carryforward period for a particular jurisdiction, the Company establishes a valuation allowance and the impact is recorded in income tax expense.

Ralliant recognizes tax benefits from uncertain tax positions in income tax expense only if, in its assessment, it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such positions are measured based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement. Judgment is required in evaluating tax positions and determining income tax provisions. Ralliant re-evaluates the technical merits of the Company’s tax positions and may recognize an uncertain tax benefit in certain circumstances, including when: (i) a tax audit is completed; (ii) applicable tax laws change, including a tax case ruling or legislative guidance; or (iii) the applicable statute of limitations expires. Ralliant recognizes potential accrued interest and penalties associated with unrecognized tax positions in income tax expense.

Accumulated Other Comprehensive Income (Loss)

Accumulated Other Comprehensive Loss—AOCI refers to certain gains and losses that under GAAP are included in comprehensive income (loss) but are excluded from Net (loss) earnings as these amounts are initially recorded as an adjustment to Total equity on the Consolidated and Combined Balance Sheets. Foreign currency translation adjustments are generally not adjusted for income taxes as they relate to indefinite investments in non-U.S. subsidiaries.

Pension

Pension—Ralliant measures its pension assets and obligations to determine the funded status as of December 31st each year, and recognizes an asset for an overfunded status or a liability for an underfunded status in its Consolidated and Combined Balance Sheets. Changes in the funded status of the pension plans are recognized in the year in which the changes occur and are recorded within Other comprehensive income (loss). Ralliant records all components of net periodic pension costs, with the exception of service costs, in Other non-operating expenses, net, in the accompanying Consolidated and Combined Statements of (Loss) Earnings. Service costs are recorded within Cost of sales and Selling, general, and administrative expenses in the Consolidated and Combined Statements of (Loss) Earnings according to the classification of the participant’s compensation.

Warranty

Warranty—Ralliant generally accrues estimated warranty costs at the time of sale. In general, manufactured products are warranted against defects in material and workmanship when properly used for their intended purpose, installed correctly, and appropriately maintained. Warranty period terms depend on the nature of the product and range from 90 days up to the life of the product. The amount of the accrued warranty liability was determined based on historical information such as past experience, product failure rates or number of units repaired, estimated cost of material and labor, and, in certain instances, estimated property damage. The accrued warranty liability was reviewed on a quarterly basis and may be adjusted as additional information regarding expected warranty costs becomes known.

New Accounting Pronouncements

Issued and Adopted

In November 2023, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) No. 2023-07, Segment Reporting (Topic 280)—Improvements to Reportable Segment Disclosures (“ASU 2023-07”), which amends the disclosure requirements for reportable segments on an interim and annual basis. On January 1, 2024, the Company adopted ASU 2023-07 using a retrospective approach and updated the applicable annual disclosure to align with the new standard in Note 17.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740)—Improvements to Income Tax Disclosures (“ASU 2023-09”), which amends certain disclosure requirements related to income taxes on an annual basis. This standard is effective for fiscal year ending December 31, 2025, and interim periods thereafter. For the year ended December 31, 2025, the Company adopted ASU 2023-09 using a prospective basis and updated the applicable annual disclosure to align with the new standard in Note 13.

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 December 31, 2027, and interim periods within fiscal year ending December 31, 2028. This standard should be applied either on a prospective basis or retrospective basis. The adoption of the standard is not expected to impact the Company’s consolidated and combined financial statements; however, the Company is currently evaluating the impact of the new disclosure requirements on the notes to the consolidated and combined financial statements. Upon adoption, the Company will update the applicable annual and interim disclosures to align with the new standard.

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. The Company is currently evaluating the effects of this standard; however, it does not anticipate this standard to materially impact its consolidated and combined financial statements.

In September 2025, the FASB issued ASU 2025-06, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40) — Targeted Improvements to the Accounting for Internal-Use Software, which replaces the previous stage-based model for capitalizing internal-use software development costs, with requirements where capitalization begins when management authorizes and commits to funding a project and it is probable the project will be completed and used as intended. This standard is effective for the fiscal year ending December 31, 2028 and interim periods beginning with the first quarter of 2028, with early adoption permitted. The entity can elect to apply the new guidance through a prospective, modified transition, or retrospective approach. The Company is currently evaluating the effects of this standard on its consolidated and combined financial statements.

Leases

Ralliant determines if an arrangement is, or contains, a lease at inception and recognizes a right-of-use (“ROU”) asset and a lease liability for all leases with terms greater than 12 months. Ralliant has operating leases for office space, warehouses, distribution centers, research and development facilities, manufacturing locations, and certain equipment, primarily automobiles. Many leases include optional terms, ranging from options to terminate the lease in less than one year to options to extend the lease for up to 10 years. Ralliant includes optional periods as part of the lease term when Ralliant determines that it is reasonably certain to exercise the renewal option or it will not early terminate the lease. Reasonably certain is based on economic incentives and represents a high threshold. Ralliant has lease agreements with lease and non-lease components and has elected the practical expedient for all underlying asset classes to account for the lease and related non-lease component(s) as a single lease component.

Lease-related balances are recorded within the following three line items on the Consolidated and Combined Balance Sheets: (i) Other assets; (ii) Accrued expenses and other current liabilities; and (iii) Other long-term liabilities.