Ralliant (RAL) J.P. Morgan 54th Annual Global Technology, Media and Communications Conference summary

Company overview and strategy

• Focuses on precision technologies for critical environments, serving utilities, defense, test and measurement, and industrial markets.

• Profitable growth strategy centers on higher growth vectors, stronghold positions, and continuous improvement via the Ralliant Business System.

• Stronghold positions provide recurring revenue through maintenance and repair in low-growth markets.

• Higher growth vectors include electrification (power grid, data centers, AI) and defense (missiles, munitions, modernization).

• AI and digital initiatives are integrated into manufacturing and commercial workflows for productivity and customer engagement.

Market trends and growth outlook

• Defense and space backlog exceeds $1 billion, with double-digit growth expected in 2026 and beyond.

• Utility segment saw record orders and is projected to grow at high single digits, above prior expectations.

• Test and measurement segment experienced strong order growth, with book-to-bill ratios of 1.2–1.3, and is now expected to grow high single digits for the year.

• Industrial manufacturing is recovering above historical 0–2% growth, but normalization is expected over time.

• AI data center exposure is 10–15% of total sales, higher in test and measurement, with indirect benefits across the portfolio.

Financial performance and guidance

• Full-year organic growth guidance raised to 5–8%, with some deceleration expected in the second half due to macro uncertainty.

• Sensors and safety systems represent 60% of business, with adjusted EBITDA margins in the mid-to-high 20s; defense margins are lower, around 20%.

• Test and measurement segment offers strong operating leverage, with incremental EBITDA margins of 50–60%+ during growth periods.

• Enterprise productivity program targets $50–60 million in annualized cost savings by 2028, split 30% COGS and 70% G&A.

• CapEx is increasing to 2–3% of revenue, focused on expanding defense and utility capacity for growth through 2028.