Core Insights - Veralto Corporation (VLTO) reported strong first-quarter 2025 results, with earnings and revenues exceeding the Zacks Consensus Estimate [1] - The stock has underperformed compared to the industry and the Zacks S&P 500 Composite over the past year [2] Financial Performance - Adjusted earnings per share for the quarter were 95 cents, surpassing the consensus by 9.2% and increasing 13.1% year over year [1] - Total revenues reached $1.33 billion, beating the consensus by 3.8% and growing 6.9% from the previous year [1] - The Water Quality segment generated revenues of $794 million, remaining flat year over year and exceeding the estimate of $772 million [3] - The Product, Quality & Innovation segment saw revenues of $538 million, an 8.3% year-over-year increase, outperforming the projection of $512.4 million [3] - Adjusted EBITDA was $343 million, reflecting an 8.9% rise from the year-ago quarter, with an adjusted operating EBITDA margin improvement of 50 basis points to 25.8% [3] Cash Flow and Balance Sheet - Veralto ended the quarter with cash and cash equivalents of $1.24 billion, up from $827 million in the prior year [4] - Long-term debt was reported at $2.63 million, slightly up from $2.62 billion at the end of the previous quarter [4] - The company generated $157 million in cash from operating activities, with capital expenditures of $15 million, resulting in free cash flow of $142 million [4] Future Guidance - For Q2 2025, Veralto anticipates revenue growth in the low-to-mid single-digit range year over year, with adjusted diluted earnings per share projected between 84 cents and 88 cents, below the Zacks Consensus Estimate of 92 cents [5] - For the full year 2025, the company reaffirms its adjusted earnings per share guidance of $3.60 to $3.70, with a midpoint of $3.65, slightly below the current year's Zacks Consensus Estimate of $3.66 [6] - The outlook assumes core sales growth in the low-to-mid single-digit range and adjusted operating profit margins to expand by up to 50 basis points year over year or remain flat [6]

Financial Data and Key Metrics Changes - Total sales grew 6.9% year over year to over $1.3 billion, with core sales growth at 7.8% driven by broad-based volume gains across both segments [25][26] - Adjusted earnings per share (EPS) increased 13% year over year to $0.95, exceeding guidance primarily due to better-than-expected sales volumes [11][27] - Adjusted operating profit margin expanded 50 basis points year over year to 25%, marking an all-time high [11][27] Business Line Data and Key Metrics Changes - Water Quality segment sales increased 6% year over year to $794 million, with core sales growing 7.4% driven by strong demand for water treatment solutions [28][29] - PQI segment sales grew 8.3% year over year to $538 million, with core sales growth led by volume growth of 6.7% and price increases contributing 1.6% [30][31] Market Data and Key Metrics Changes - Sales growth in Western Europe was robust at nearly 11%, with double-digit growth in both segments [13] - North America saw sales growth of approximately 8%, with high single-digit growth in both segments [13][15] - High growth markets experienced a 6% year-over-year increase, with strong growth in Latin America, India, and the Middle East [17] Company Strategy and Development Direction - The company is actively deploying countermeasures to mitigate changes in the global trade and tariff landscape, enhancing operational flexibility [8][19] - The acquisition of AquaFetus for $20 million is expected to expand the company's UV treatment portfolio and enhance service capabilities in Europe [12] - The company aims to leverage its enterprise system to drive continuous improvement and agility in navigating macroeconomic challenges [22][38] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in navigating the dynamic macroeconomic environment, citing the essential nature of their products and durable business model [19][38] - The company anticipates steady growth in the Water Quality segment due to the critical nature of its products and high levels of recurring sales [29] - Management reaffirmed full-year 2025 adjusted EPS guidance of $3.6 to $3.7 per share, with core sales growth expected to remain in the low to mid-single digits [34][36] Other Important Information - The company generated $142 million in free cash flow, an increase of $40 million year over year, driven by growth in earnings [27][32] - The company opened its first U.S. factory in Grand Rapids, Michigan, to support domestic UV water treatment customers, enhancing supply chain flexibility [20][21] Q&A Session Summary Question: Can you provide more color on the sequencing of tariff mitigation? - Management indicated confidence in mitigating tariffs, with gross exposure estimated at 3.5% of sales, and emphasized ongoing optimization efforts [44][45] Question: Have you seen any changes in demand indicators for Videojet? - Management reported strong demand remains for the PQI business, with no indications of softening in order patterns [48][49] Question: Can you discuss price elasticity regarding consumables versus equipment? - Management noted a surgical approach to pricing, with 80% of sales tied to essential goods, indicating a sticky relationship with customers [55][57] Question: What are the implications of the recent EPA announcement regarding PFAS? - Management expressed excitement about opportunities in PFAS analysis and treatment, emphasizing their commitment to innovation in this area [59][60] Question: How do you view the impact of tariffs on your competitive positioning? - Management sees potential advantages in market dislocations, leveraging their asset-light manufacturing model to navigate tariff impacts effectively [88][89]

Financial Data and Key Metrics Changes - Total sales grew 6.9% year over year to over $1.3 billion, with core sales growth at 7.8% driven by broad-based volume gains across both segments [25][26] - Adjusted operating profit margin expanded 50 basis points year over year to 25%, an all-time high, with adjusted earnings per share growing 13% year over year to $0.95 [11][27] - Free cash flow increased by 39% year over year to $142 million, primarily driven by growth in earnings [32] Business Line Data and Key Metrics Changes - Water Quality segment sales increased 6% year over year to $794 million, with core sales growth of 7.4% driven by strong demand for water treatment solutions [28][29] - PQI segment sales grew 8.3% year over year to $538 million, with core sales growth also at 8.3%, led by volume growth of 6.7% and price increases contributing 1.6% [30][31] Market Data and Key Metrics Changes - Sales growth in Western Europe was robust at nearly 11%, with double-digit growth in both segments [13] - North America saw sales growth of approximately 8%, with high single-digit growth in both segments, particularly in water quality [16][17] Company Strategy and Development Direction - The company is actively deploying countermeasures to mitigate changes in the global trade and tariff landscape, including strategic pricing roadmaps and shifts in manufacturing footprint [9][19] - The recent acquisition of AquaFetus for $20 million is expected to enhance the company's UV treatment portfolio and expand its ability to serve European customers [12] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in navigating the dynamic macroeconomic environment, citing the essential nature of their products and the durability of their business model [8][38] - The company reaffirmed its full-year 2025 adjusted EPS guidance of $3.6 to $3.7 per share, with expectations of low to mid-single-digit core sales growth [34][36] Other Important Information - The company has a strong financial position with gross debt of $2.6 billion and cash on hand exceeding $1.2 billion, resulting in a net leverage of 1.1 times [33] - The company completed its second CEO Kaizen week, focusing on continuous improvement and operational excellence [22][23] Q&A Session Summary Question: Can you provide more color on the sequencing of tariff mitigation? - Management indicated confidence in mitigating tariffs, with gross exposure estimated at 3.5% of sales, and emphasized ongoing optimization efforts [44][45] Question: Have you seen any changes in customer confidence based on demand indicators? - Management reported strong demand remains for the PQI business, with no indications of softening in order patterns [47][48] Question: Can you discuss price elasticity in relation to consumables versus equipment? - Management noted a surgical approach to pricing, with 80% of sales tied to essential goods, indicating a sticky relationship with customers [55][57] Question: How do you view the impact of tariffs on competitive positioning? - Management expressed optimism about leveraging their asset-light manufacturing model to gain market share amid market dislocations [91][92] Question: What are the implications of the recent EPA announcement regarding PFAS? - Management remains excited about opportunities in PFAS analysis and treatment, with no immediate impact on forecasts [60]

First Quarter 2025 Results April 29, 2025 Forward Looking Statements Certain statements in this presentation, including statements regarding the Company's second quarter and full year 2025 financial performance and guidance, the Company's differentiation and positioning to continue delivering sustainable, long-term shareholder value and any other statements regarding events or developments that we believe or anticipate will or may occur in the future are "forward-looking" statements within the meaning of th ...

Group 1 - Veralto reported quarterly earnings of $0.95 per share, exceeding the Zacks Consensus Estimate of $0.87 per share, and showing an increase from $0.84 per share a year ago, representing an earnings surprise of 9.20% [1] - The company achieved revenues of $1.33 billion for the quarter ended March 2025, surpassing the Zacks Consensus Estimate by 3.79%, and an increase from $1.25 billion year-over-year [2] - Over the last four quarters, Veralto has consistently surpassed consensus EPS and revenue estimates [2] Group 2 - Despite the positive earnings report, Veralto shares have declined approximately 9.6% since the beginning of the year, while the S&P 500 has decreased by 6% [3] - The company's earnings outlook is crucial for investors, as it includes current consensus earnings expectations for upcoming quarters and any recent changes to those expectations [4] - The current consensus EPS estimate for the next quarter is $0.92 on revenues of $1.33 billion, and for the current fiscal year, it is $3.66 on revenues of $5.33 billion [7] Group 3 - The Waste Removal Services industry, to which Veralto belongs, is currently ranked in the bottom 23% of over 250 Zacks industries, indicating potential challenges for stock performance [8] - Empirical research suggests a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can impact investor sentiment [5] - The estimate revisions trend for Veralto is currently unfavorable, resulting in a Zacks Rank 4 (Sell), suggesting expected underperformance in the near future [6]

[First Quarter 2025 Performance Highlights](index=1&type=section&id=First%20Quarter%202025%20Performance%20Highlights) Veralto delivered strong Q1 2025 results with broad core sales growth, solid margin expansion, and double-digit adjusted EPS growth across PQI and Water Quality segments Q1 2025 Key Financial Results | Metric | Value ($ million) | Growth/Note | | :--- | :--- | :--- | | Sales | $1,332 | +6.9% YoY | | Non-GAAP Core Sales Growth | 7.8% | - | | Operating Profit Margin | 24.2% | - | | Non-GAAP Adjusted Operating Profit Margin | 25.0% | - | | Net Earnings (Diluted) | $225 ($0.90/share) | - | | Non-GAAP Adjusted Net Earnings (Diluted) | $237 ($0.95/share) | - | | Operating Cash Flow | $157 | - | | Non-GAAP Free Cash Flow | $142 | - | - Core sales growth was **strong** across both major segments, with Product Quality and Innovation benefiting from positive trends in consumer-packaged goods and Water Quality seeing **robust growth** in North American water treatment and **double-digit growth** in European water analytics[4](index=4&type=chunk) - Management expressed confidence that the Veralto Enterprise System will enable the company to navigate macroeconomic changes and **reaffirmed its full-year 2025 adjusted EPS guidance** based on current assessments and implemented countermeasures against tariffs[5](index=5&type=chunk) [2025 Financial Guidance](index=1&type=section&id=2025%20Financial%20Guidance) Veralto reaffirmed full-year 2025 adjusted EPS guidance of $3.60-$3.70 and projected Q2 2025 low-to-mid single-digit core sales growth with adjusted diluted EPS of $0.84-$0.88 Q2 and Full Year 2025 Guidance | Period | Metric | Guidance | | :--- | :--- | :--- | | **Q2 2025** | Non-GAAP Core Sales Growth | Low-to-mid single-digits YoY | | | Adjusted Diluted EPS | $0.84 to $0.88 | | **Full Year 2025** | Core Sales Growth | Low-to-mid single digits | | | Adjusted Operating Profit Margin | Flat to +50 bps YoY | | | Adjusted Diluted EPS | $3.60 to $3.70 (Reaffirmed) | | | Free Cash Flow Conversion | 90% to 100% | [Consolidated Financial Statements](index=5&type=section&id=Consolidated%20Financial%20Statements) This section presents Veralto's unaudited consolidated financial results for Q1 2025 compared to Q1 2024 [Consolidated Condensed Statements of Earnings](index=5&type=section&id=Consolidated%20Condensed%20Statements%20of%20Earnings) Veralto's Q1 2025 sales increased 6.9% to $1,332 million, with operating profit rising to $322 million and net earnings to $225 million ($0.90 per diluted share) Q1 2025 vs. Q1 2024 Statement of Earnings Highlights ($ in millions) | Account | Q1 2025 (ended Apr 4) | Q1 2024 (ended Mar 29) | | :--- | :--- | :--- | | Sales | $1,332 | $1,246 | | Gross Profit | $805 | $747 | | Operating Profit | $322 | $293 | | Net Earnings | $225 | $184 | | Diluted EPS | $0.90 | $0.74 | [Reconciliation of GAAP to Non-GAAP Financial Measures](index=6&type=section&id=Reconciliation%20of%20GAAP%20to%20Non-GAAP%20Financial%20Measures) This section details reconciliations of GAAP to non-GAAP financial measures, adjusting for items like amortization, dispositions, and currency effects to derive core sales growth, adjusted operating profit, EPS, and free cash flow [Reconciliation of Net Earnings and EPS](index=6&type=section&id=Reconciliation%20of%20Net%20Earnings%20and%20EPS) Veralto's Q1 2025 GAAP diluted EPS of $0.90 was adjusted to a non-GAAP figure of $0.95, primarily due to amortization of acquisition-related intangibles and disposition losses Q1 2025 GAAP to Non-GAAP EPS Reconciliation | Description | Per Share Amount | | :--- | :--- | | **Reported Diluted EPS (GAAP)** | **$0.90** | | Amortization of acquisition-related intangible assets | $0.04 | | Loss on disposition of certain product lines | $0.02 | | Other items | $0.01 | | Tax effects and discrete adjustments | ($0.02) | | **Adjusted Diluted EPS (Non-GAAP)** | **$0.95** | [Sales Growth by Segment](index=8&type=section&id=Sales%20Growth%20by%20Segment) Total sales grew 6.9% in Q1, with non-GAAP core sales growth of 7.8% after adjustments, led by 8.3% core growth in Product Quality and Innovation and 7.4% in Water Quality Q1 2025 Year-over-Year Sales Growth (%) | Growth Metric | Total Company | Water Quality | Product Quality and Innovation | | :--- | :--- | :--- | :--- | | Total Sales Growth (GAAP) | 6.9% | 6.0% | 8.3% | | **Core Sales Growth (Non-GAAP)** | **7.8%** | **7.4%** | **8.3%** | [Cash Flow Reconciliation](index=10&type=section&id=Cash%20Flow%20Reconciliation) Non-GAAP free cash flow for Q1 increased approximately 39.0% year-over-year to $142 million, driven by a 36.5% increase in net cash from operating activities to $157 million Free Cash Flow Calculation ($ in millions) | Line Item | Q1 2025 | Q1 2024 | YoY Change | | :--- | :--- | :--- | :--- | | Net cash provided by operating activities (GAAP) | $157 | $115 | ~36.5% | | Less: Capital expenditures (GAAP) | ($15) | ($13) | - | | **Free cash flow (Non-GAAP)** | **$142** | **$102** | **~39.0%** | [Statement Regarding Non-GAAP Measures](index=11&type=section&id=Statement%20Regarding%20Non-GAAP%20Measures) Veralto utilizes non-GAAP financial measures to provide investors with additional performance insights, aiding in understanding long-term profitability, underlying growth trends, and cash generation for strategic use - Management uses non-GAAP measures to understand **long-term profitability trends**, identify **underlying business growth**, and assess the ability to **generate cash for investment and strategic opportunities**[33](index=33&type=chunk)[34](index=34&type=chunk) - Key exclusions from non-GAAP measures include **amortization of acquisition-related intangible assets**, **certain restructuring charges**, and the effects of **currency translation and recent acquisitions/divestitures** to allow for more consistent period-over-period comparisons[35](index=35&type=chunk)[36](index=36&type=chunk)

Core Insights - Veralto reported strong first quarter results for 2025, highlighting disciplined execution across its segments, leading to core sales growth, margin expansion, and double-digit adjusted earnings per share growth [3][4][5] Financial Performance - Total sales increased by 6.9% year-over-year to $1,332 million, with non-GAAP core sales growth of 7.8% [9] - Operating profit margin was 24.2%, while non-GAAP adjusted operating profit margin was 25.0% [9] - Net earnings reached $225 million, translating to $0.90 per diluted common share, with non-GAAP adjusted net earnings at $237 million or $0.95 per diluted common share [9][15] Segment Performance - Core sales growth was broad-based across Product Quality and Innovation (PQI) and Water Quality, with PQI benefiting from positive trends in consumer-packaged goods markets [4] - Water Quality saw robust growth in water treatment solutions in North America and double-digit growth in Europe for water analytics [4] Guidance and Outlook - For Q2 2025, Veralto anticipates non-GAAP core sales growth in the low-to-mid single digits, with adjusted diluted earnings per share projected between $0.84 and $0.88 [7][23] - The full year 2025 adjusted earnings per share guidance is reaffirmed in the range of $3.60 to $3.70, with free cash flow conversion expected between 90% to 100% [8][22] Cash Flow - Operating cash flow for the first quarter was $157 million, with non-GAAP free cash flow at $142 million, reflecting a 39% increase year-over-year [25]

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]