Company Overview - Veralto Corporation (VLTO) is set to release its first-quarter 2025 results on April 30, before market open [1] - VLTO has a positive earnings surprise history, surpassing the Zacks Consensus Estimate in the last four quarters with an average beat of 6.7% [1] Q1 Expectations - The Zacks Consensus Estimate for VLTO's revenues is $1.3 billion, indicating a 3% increase from the same quarter last year [1] - Revenue expectations from the Water Quality segment are $772 million, while the Product Quality & Inspection segment is estimated at $512.4 million [2] - The consensus estimate for earnings per share is 87 cents, reflecting a 3.6% rise from the previous year [2] - Strong operating efficiency is anticipated to contribute to bottom-line growth in the upcoming quarter [2] Earnings Prediction Model - The current model does not predict a definitive earnings beat for VLTO, with an Earnings ESP of 0.00% and a Zacks Rank of 3 (Hold) [3] - A combination of a positive Earnings ESP and a higher Zacks Rank typically increases the likelihood of an earnings beat, which is not applicable in this case [3] Comparative Analysis - Other companies in the Business Services sector, such as Fidelity National Information Services (FIS) and Thomson Reuters (TRI), are also preparing to report their earnings, with FIS showing an Earnings ESP of +0.88% and TRI at +0.47% [5][6][7]

Core Insights - Veralto Corporation (VLTO) is experiencing growth due to its leadership in Water Quality and Product Quality and Inspection (PQI) segments, strategic acquisitions, and increasing dividends [1][6]. Financial Performance - In the fourth quarter of 2024, VLTO reported earnings per share (EPS) of 95 cents, exceeding the Zacks Consensus Estimate by 8% and showing a year-over-year increase of 9.2% [2]. - Total revenues reached $1.35 billion, slightly surpassing consensus expectations and reflecting a 4.4% increase from the previous year [2]. Industry Position and Growth Drivers - VLTO's leadership in the Water Quality segment positions it to leverage growth opportunities in the U.S., particularly in industrial and municipal sectors [3]. - The CHIPS Act of 2022 is a significant driver for the industrial vertical, providing support for semiconductor manufacturing, which is crucial for VLTO's water solutions [3]. - Increased U.S. government funding for water infrastructure improvements serves as a catalyst for growth in the municipal vertical, enhancing demand for VLTO's offerings [4]. PQI Segment Insights - VLTO is a trusted leader in the PQI segment, primarily serving consumer-packaged goods (CPG), life sciences, and pharmaceutical companies [5]. - The Marketing & Coding (M&C) sub-segment is the largest revenue contributor within PQI, essential for regulatory compliance and data management in the pharmaceutical sector [5][6]. - PQI revenues grew by 3.7% year over year in 2024, supported by the acquisition of TraceGains, which enhances digital workflow solutions for the food and beverage industry [7]. Strategic Acquisitions - The planned acquisition of AQUAFIDES is expected to enhance VLTO's customer support in Europe and expand its UV treatment portfolio, set to be finalized in the second quarter of 2025 [7]. - VLTO's commitment to shareholder returns is evident through its consistent quarterly dividend payments, recently increased by 22% to 11 cents per share, reflecting confidence in financial strength and growth prospects [7].

Company Overview - Veralto Corporation (VLTO) has gained 15% over the past year and holds a Growth Score of A, indicating strong growth quality and sustainability [1] - The expected long-term EPS growth rate for VLTO is 6.3%, with earnings projected to grow by 3.4% in 2025 and 9% in 2026 [1] Water Quality Segment - VLTO leads in the Water Quality segment, benefiting from growth opportunities in the U.S. driven by industrial and municipal verticals [2] - The CHIPS Act of 2022 supports semiconductor manufacturing, which is crucial for VLTO as ultra-pure water is essential for this industry [2] - Increased U.S. government funding for water infrastructure is expected to drive demand for VLTO's solutions, with WC revenues growing 3.4% year over year in 2024 [3] Product Quality and Inspection (PQI) Segment - VLTO is a trusted leader in the PQI segment, serving major consumer-packaged goods (CPG), life sciences, and pharmaceutical companies [4] - The Marketing & Coding (M&C) sub-segment is the largest revenue contributor, essential for regulatory compliance and data management in pharmaceuticals [4][5] - PQI revenues grew 3.7% year over year in 2024, bolstered by the acquisition of TraceGains, enhancing digital workflow solutions for the food and beverage industry [6] Strategic Acquisitions - VLTO plans to acquire AQUAFIDES to enhance European customer support and expand its UV treatment portfolio, expected to finalize in Q2 2025 [7] Shareholder Value - VLTO has consistently paid a quarterly dividend of 9 cents since its NYSE listing in late 2024, recently increasing it by 22% to 11 cents per share, reflecting financial strength and a commitment to shareholder returns [8]

Financial Performance - Total assets increased to $6,406 million in 2024, up from $5,693 million in 2023, representing a growth of 12.5%[282] - Sales for 2024 reached $5,193 million, a 3.4% increase from $5,021 million in 2023[284] - Gross profit improved to $3,105 million in 2024, compared to $2,901 million in 2023, marking an increase of 7.0%[284] - Net earnings for 2024 were $833 million, slightly down from $839 million in 2023, reflecting a decrease of 0.7%[288] - Research and development expenses rose to $253 million in 2024, up from $225 million in 2023, indicating an increase of 12.4%[284] - Retained earnings significantly increased to $917 million in 2024, compared to $178 million in 2023, showing a growth of 415.7%[290] - Total equity grew to $2,045 million in 2024, up from $1,389 million in 2023, representing a rise of 47.3%[282] - The company reported a comprehensive income of $716 million in 2024, down from $839 million in 2023, a decrease of 14.7%[288] - Long-term debt decreased slightly to $2,599 million in 2024 from $2,629 million in 2023, a reduction of 1.1%[282] - Cash and equivalents increased to $1,101 million in 2024, up from $762 million in 2023, reflecting a growth of 44.5%[282] - Net cash provided by operating activities was $875 million in 2024, down from $963 million in 2023, while cash used in investing activities increased to $434 million from $55 million in 2023[293] - The company reported total revenues of $5.193 billion for the year ended December 31, 2024, a 3.4% increase from $5.021 billion in 2023[354] - Recurring revenue for 2024 was $3.149 billion, while nonrecurring revenue was $2.044 billion[354] Goodwill and Acquisitions - As of December 31, 2024, Veralto's total goodwill was $2.7 billion, with no impairment recorded during the year[276] - The Company acquired TraceGains for approximately $349 million, resulting in $240 million of goodwill recorded[339][340] - In 2024, the Company completed three additional acquisitions for a total consideration of approximately $14 million, recording $3 million of goodwill[341] - Goodwill as of December 31, 2024, amounted to $2.693 billion, an increase from $2.533 billion in 2023[391] Internal Control and Compliance - The company assessed the effectiveness of its internal control over financial reporting as of December 31, 2024, concluding it was effective[255] - The independent auditor issued an unqualified opinion on the effectiveness of Veralto's internal control over financial reporting as of December 31, 2024[260] - The company’s management used the COSO framework for assessing internal control effectiveness[255] - TraceGains, acquired in 2024, represented less than 1% of total consolidated amounts and was excluded from the internal control assessment[256] - The company maintains compliance with various U.S. regulations, including the International Traffic in Arms Regulations and Export Administration Regulations[10] Segment Performance - The company operates through two segments: Water Quality and Product Quality & Innovation, focusing on essential technology solutions for global challenges[295] - Water Quality segment sales increased to $3,138 million in 2024, up 3.3% from $3,039 million in 2023[362] - Product Quality & Innovation segment sales rose to $2,055 million in 2024, a 3.7% increase from $1,982 million in 2023[362] - The total operating profit for the company was $1,208 million in 2024, up 6.0% from $1,140 million in 2023[362] - Operating profit for the Water Quality segment improved to $768 million in 2024, a 5.2% increase from $730 million in 2023[362] Debt and Financing - The Company issued approximately $2.1 billion in senior unsecured notes in September 2023, with maturity dates ranging from 2026 to 2033[401] - The Company entered into a five-year unsecured revolving credit facility with a committed amount of $1.5 billion, with no outstanding amounts as of December 31, 2024[407] - The carrying amount of long-term debt as of December 31, 2024, was $2,599 million, with a fair value of $2,638 million, compared to a carrying amount of $2,629 million and a fair value of $2,710 million in 2023[397] - The Company’s current credit rating as of December 31, 2024, is Baa1/BBB, with a facility fee of 9.0 basis points under the credit facility[408] Tax and Legal Matters - The effective income tax rate for 2024 was 23.3%, slightly lower than 23.4% in 2023[369] - The Company reported a net deferred tax liability of $12 million as of December 31, 2024, down from $73 million in 2023[370] - As of December 31, 2024, unrecognized tax benefits totaled $156 million, up from $97 million in 2023, reflecting a significant increase[375] - The Company recognized approximately $7 million of net tax expense from potential interest and penalties during 2024, compared to a net tax benefit of $1 million in 2023[375] - The company did not believe that ongoing legal proceedings would materially affect its business or financial statements[64] Stock-Based Compensation - The Company recorded a stock-based compensation expense of $65 million in 2024, compared to $55 million in 2023[293] - A total of 22 million shares of Veralto common stock have been authorized for issuance under the Stock Plan, with approximately 14 million shares remaining available as of December 31, 2024[443] - Stock options under the Stock Plan generally vest pro rata over a four to five-year period and terminate 10 years from the grant date[444] - RSUs granted under the Stock Plan vest pro rata over a four to five-year period, with certain senior management receiving performance-based RSUs[445] - PSUs issued under the Stock Plan can vest at 0% to 200% of the target share amount based on performance targets over a three-year period[446] Pension and Retirement Plans - The Company measures its pension and postretirement plans' funded status at the end of the fiscal year, recognizing any changes in funded status in comprehensive income[331] - The projected benefit obligation (PBO) decreased from $171 million in 2023 to $162 million in 2024, reflecting a year-over-year change in benefit plans with PBOs exceeding plan assets[419] - The fair value of plan assets decreased from $135 million in 2023 to $127 million in 2024, indicating a decline in the funded status of the pension plans[427] - The accumulated benefit obligation (ABO) decreased from $157 million in 2023 to $149 million in 2024, also showing a reduction in obligations exceeding plan assets[420] - The net periodic pension cost decreased from $4 million in 2023 to $2 million in 2024, reflecting changes in service and interest costs[422]

Group 1 - The core investment thesis for Veralto (NYSE: VLTO) remains positive, driven by favorable market conditions that are expected to enhance core sales growth and improve margins [1] - The investment strategy focuses on long-term positions while also utilizing short-term shorts to identify alpha opportunities, emphasizing a bottom-up analysis of individual companies' fundamentals [1] - The investment horizon is medium to long-term, targeting companies with strong fundamentals, sustainable competitive advantages, and growth potential [1]

Financial Performance - Total sales for 2024 grew 3.4% year-over-year to just under $5.2 billion, marking an all-time high [28] - Adjusted earnings per share increased 11% to $3.54 per share, exceeding initial guidance [28][29] - Free cash flow generation was strong at $820 million, with a cash balance of $1.1 billion and net leverage at 1.2 times [29] Business Segment Performance - Water Quality segment delivered $3 billion in annual sales with 3.9% core sales growth and an adjusted operating profit margin of 25% [30] - PQI segment achieved over $2 billion in sales with 3.3% core sales growth and an adjusted operating profit margin of 27% [30] - In Q4, Water Quality sales grew 3.7% year-over-year, while PQI sales increased 5.4% [49] Market Performance - North America and Western Europe, which comprise about 70% of total sales, grew nearly 6% [32] - Core sales in North America grew 5.8% across both segments, driven by strong demand in food & beverage, chemical processing, and power generation [33][36] - High growth markets saw low-single-digit growth year-over-year, with Latin America and India leading the way [38] Company Strategy and Industry Competition - The company executed disciplined capital allocation, acquiring TraceGains and investing in Axine Water Technologies while divesting AVT [19][24] - The focus remains on enhancing the portfolio and driving future value creation through strategic acquisitions [26] - The company anticipates low to mid-single-digit core sales growth for 2025, supported by strong demand trends in key end-markets [27] Management Commentary on Operating Environment and Future Outlook - Management expressed confidence in the durability of the business model, supported by the Veralto Enterprise System [27][66] - Positive trends in end-markets, particularly in industrial water treatment and consumer packaged goods, were highlighted [27] - The company expects to continue leveraging its competitive advantages to drive growth even in dynamic macro environments [27][66] Other Important Information - R&D expenses increased to about 5% of sales, reflecting a 40 basis point year-over-year increase [15][44] - The company approved a 22% increase in its quarterly dividend, aligning with its growth strategy [56] Q&A Session Summary Question: Can you break down margin expansion expectations for segments? - Management indicated similar margin expansion contributions from both segments, with core growth expected in the low to mid-single-digit range [72][73] Question: What initiatives under VES are driving margin enhancement? - Management noted a focus on commercial execution and factory discipline, with tools from VES being effectively utilized [74][75] Question: How are growth investments impacting margins? - Management acknowledged that investments, particularly in TraceGains, have a dilutive effect on margins but are expected to set up for growth in 2025 [86][87] Question: What is the outlook for the CPG market recovery? - Management indicated that the CPG market is recovering, with six consecutive quarters of mid to high-single-digit recurring revenue growth [130] Question: How does the company view the impact of tariffs? - Management stated that current guidance does not reflect sustained impacts from tariffs, emphasizing a robust global supply chain [146]

Fourth Quarter and Full Year 2024 Results February 4, 2025 Opening Remarks Jennifer L. Honeycutt President and Chief Executive Officer Q4 2024 Results | February 4, 2025 Veralto / Full Year 2024 key consolidated financial results SALES ADJUSTED OPERATING PROFIT* ADJUSTED EPS* ADJUSTED EBITDA* FREE CASH FLOW* $1,251m 24.1% adjusted operating margin* +80 basis points year-over-year $3.54 +11% year-over-year $820m 98% free cash flow conversion* $1,291m 24.9% adjusted EBITDA margin* +80 basis points year-over-y ...

For the quarter ended December 2024, Veralto (VLTO) reported revenue of $1.35 billion, up 4.4% over the same period last year. EPS came in at $0.95, compared to $0.87 in the year-ago quarter.The reported revenue represents a surprise of +0.20% over the Zacks Consensus Estimate of $1.34 billion. With the consensus EPS estimate being $0.88, the EPS surprise was +7.95%.While investors scrutinize revenue and earnings changes year-over-year and how they compare with Wall Street expectations to determine their ne ...

Veralto (VLTO) came out with quarterly earnings of $0.95 per share, beating the Zacks Consensus Estimate of $0.88 per share. This compares to earnings of $0.87 per share a year ago. These figures are adjusted for non-recurring items.This quarterly report represents an earnings surprise of 7.95%. A quarter ago, it was expected that this water and product quality services provider would post earnings of $0.86 per share when it actually produced earnings of $0.89, delivering a surprise of 3.49%.Over the last f ...

Core Insights - Veralto reported steady growth in Q4 2024, with revenue of $1.345 billion, a 4.4% increase year-over-year, and adjusted earnings per share of $0.95, reflecting a 9.2% rise from the previous year [1][2] Financial Performance - Diluted EPS (non-GAAP) increased to $0.95 from $0.87, marking a 9.2% growth [2] - Revenue rose to $1.345 billion from $1.288 billion, a 4.4% increase [2] - Net earnings grew to $227 million from $200 million, a 13.5% increase [2] - Free cash flow increased to $263 million from $241 million, a 9.1% rise [2] - Operating margin remained stable at 23.8%, consistent with the prior year [2][6] Business Segments - Veralto operates in two main segments: water treatment solutions and printing and coding solutions [3] - Water treatment solutions generated $811 million in revenue, up from $782 million, indicating strong demand in North America [5] - Printing and coding solutions saw revenue increase to $534 million from $506 million, partly due to the acquisition of TraceGains [5] Strategic Initiatives - The company has focused on strategic acquisitions, including the purchase of TraceGains to enhance compliance software offerings [4][6] - R&D expenditures increased by approximately 21% year-over-year to $69 million, reflecting a technology-driven approach [6] Challenges and Outlook - Long-term debt remained approximately $2.599 billion, unchanged from 2023 [7] - Geopolitical tensions have negatively impacted sales in China, posing potential risks to future growth [7] - For 2025, Veralto anticipates core sales growth in the low- to mid-single-digit percentages and expects earnings per share between $3.60 and $3.70 [8]