Company Overview - Veralto Corporation, headquartered in Waltham, Massachusetts, specializes in water analytics, water treatment, marking and coding, and packaging and color services globally [11] - The company was spun off from Danaher Corporation in 2023 and employs nearly 17,000 people, with significant operations in North America, Western Europe, and high-growth markets [11] Investment Ratings - Veralto is rated 2 (Buy) on the Zacks Rank, indicating a positive outlook for the stock [11] - The company has a VGM Score of B, suggesting it has attractive value, growth, and momentum characteristics [11][12] Performance Metrics - Veralto's Momentum Style Score is A, and its shares have increased by 1% over the past four weeks [11] - In the last 60 days, three analysts have revised their earnings estimates upwards for fiscal 2025, with the Zacks Consensus Estimate rising by $0.08 to $3.78 per share [12] - The company has an average earnings surprise of +6.3%, indicating a strong performance relative to expectations [12]

Core Insights - Veralto Corporation (VLTO) reported strong second-quarter 2025 results, with earnings and revenues exceeding the Zacks Consensus Estimate [1][6] - Adjusted earnings per share were 93 cents, surpassing estimates by 4.5% and increasing 9.4% year over year [1][6] - Total revenues reached $1.37 billion, beating the consensus estimate by 2.1% and rising 6.4% from the previous year [1][6] Financial Performance - The Water Quality segment generated revenues of $825 million, reflecting a year-over-year growth of 6.2% [4] - The Product, Quality & Innovation segment saw revenues increase by 6.9% year over year to $546 million [4] - Adjusted EBITDA was $285 million, marking a 5.6% increase from the same quarter last year, with an adjusted operating EBITDA margin improvement to 20.79% [4] Cash Flow and Debt - At the end of Q2, Veralto had cash and cash equivalents of $1.56 billion, up from $1.1 billion at the end of the previous quarter [5] - Long-term debt was reported at $2.67 million, a slight increase from $2.60 billion at the end of Q4 2024 [5] - The company generated $496 million in cash from operating activities during the quarter, with capital expenditures of $16 million [5] Future Guidance - For Q3 2025, Veralto anticipates mid-single-digit revenue growth year over year and adjusted diluted earnings per share between 91 cents and 95 cents [7] - The full-year 2025 adjusted earnings per share guidance has been raised to a range of $3.72 to $3.80, up from $3.60 to $3.70 [8] - The company targets a free cash flow conversion rate of 90% to 100% and has increased its core sales growth assumption to mid-single-digits [8]

Financial Data and Key Metrics Changes - Total sales grew 6.4% year over year to $1.37 billion, with core sales growth of 4.8% driven by broad-based volume gains across both segments [21][22] - Adjusted earnings per share increased 9.4% year over year to $0.93, exceeding guidance due to better-than-expected sales volumes [14][23] - Free cash flow generation was strong at $323 million, an increase of $83 million year over year, reflecting effective cash management [30][31] Business Line Data and Key Metrics Changes - Water Quality segment sales reached $825 million, up 6.2% year over year, with core sales growth of 5% driven by strong demand for water analytics and treatment solutions [24][26] - PQI segment sales grew 6.8% year over year to $546 million, with core sales growth of 4.6% supported by recurring revenue and equipment shipments [27][29] Market Data and Key Metrics Changes - Core sales growth in Western Europe was 6.3%, led by double-digit growth in water quality, while North America saw core sales growth of 5.6% [14][16] - High growth markets experienced over 6% core sales growth year over year, with notable performance in Latin America and India [20] Company Strategy and Development Direction - The company raised its full-year adjusted earnings per share guidance to a range of $3.72 to $3.80, reflecting stable demand and positive macroeconomic conditions [10][32] - The capital allocation strategy remains focused on acquisitions, with a commitment to invest in emerging technology-oriented businesses [11][31] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in navigating a dynamic macroeconomic environment, citing strong secular growth drivers in water quality and essential goods [36][37] - The company anticipates continued strong performance in the second half of the year, supported by robust demand and effective execution of its business model [36][58] Other Important Information - The company announced a €20 million commitment to invest in Emerald Technology Ventures Global Water Fund II, enhancing its innovation and technology development efforts [11] - Adjusted operating profit margin for the quarter was 23.7%, with expectations for margin expansion in the second half of the year [22][33] Q&A Session Summary Question: Can you provide more details on core water quality growth by region? - Management indicated that their water quality business is resilient to fluctuations in government funding, driven by secular trends such as water reuse and sustainability goals [44][45] Question: What is the impact of tariffs and pricing on PQI margins? - Management explained that margin compression was due to acquisitions, timing of pricing actions, and investments, with expectations for gradual improvement in the second half of the year [48][51] Question: How is the company positioned in the UK water utility market? - Management expressed confidence in capitalizing on opportunities in the UK, leveraging direct sales to customers to identify and act on local opportunities [105][106]

Financial Data and Key Metrics Changes - Total sales grew 6.4% year over year to $1.37 billion, with currency providing a 150 basis point tailwind [20] - Adjusted earnings per share increased 9.4% year over year to $0.93, exceeding guidance due to higher sales volumes [22] - Free cash flow generation was $323 million, an increase of $83 million year over year [22] Business Line Data and Key Metrics Changes - Water Quality segment sales reached $825 million, up 6.2% year over year, with core sales growth of 5% [22][23] - PQI segment sales grew 6.8% year over year to $546 million, with core sales growth of 4.6% [24][25] - Water Quality's adjusted operating profit increased 11.5% to $214 million, with a margin of 25.9% [24] - PQI's adjusted operating profit was $140 million, flat year over year, with a margin of 25.6% [28] Market Data and Key Metrics Changes - Core sales growth in Western Europe was 6.3%, led by double-digit growth in water quality [13] - North America saw core sales growth of 5.6%, with both segments generating growth above 5% [13] - High growth markets experienced over 6% sales growth year over year, with high single-digit growth in PQI [13] Company Strategy and Development Direction - The company raised its full-year adjusted EPS guidance to a range of $3.72 to $3.80 per share, reflecting stable demand and macroeconomic conditions [9][31] - The capital allocation strategy remains focused on acquisitions to fuel long-term shareholder value [10][30] - The company is investing in emerging technology-oriented businesses, such as a €20 million commitment to Emerald Technology Ventures Global Water Fund II [10] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in navigating a dynamic macroeconomic environment, citing strong demand for technology solutions [34] - The company anticipates continued growth driven by secular trends in water reuse and sustainability [42] - Management noted that the infrastructure supporting technology and AI growth will strain water capacity, positioning the company well to meet these needs [15] Other Important Information - The company achieved mid-single-digit core sales growth for four consecutive quarters, demonstrating the durability of its business model [7] - Adjusted operating profit margin was 23.7%, consistent with underlying guidance assumptions [12][21] Q&A Session Summary Question: Can you provide more details on core water quality growth by region? - Management indicated that their water quality business is resilient to government funding fluctuations, driven by secular trends in water reuse and sustainability [41] Question: What is the impact of tariffs and pricing on PQI margins? - Management explained that margin compression was due to acquisitions, timing differences in pricing actions, and investments, with expectations for gradual improvement in the second half of the year [46][49] Question: How is the company positioned in the current M&A market? - Management stated that the M&A pipeline is active, with a focus on identifying attractive markets and companies, while maintaining a disciplined approach to capital allocation [62] Question: What is the outlook for the UK water utility market? - Management expressed confidence in capitalizing on increased spending opportunities in the UK, leveraging their direct sales approach [102] Question: How is the company addressing the challenges in the Chinese market? - Management noted that while water quality sales in China have been flat, they are executing well within available opportunities [94]

Q2 2025 Financial Performance - Sales increased by 6.4% year-over-year, reaching $1.371 billion[16] - Core sales growth was +4.8%, driven by a +3.1% increase in volume and a +1.7% increase in price[8] - Adjusted operating profit reached $325 million, with a margin of 23.7%[8] - Adjusted EPS increased by 9.4% year-over-year to $0.93[8] - Free cash flow was $323 million, representing a 145% free cash flow conversion[8] Segment Performance - Water Quality sales reached $825 million, a 6.2% increase year-over-year[20] - Water Quality adjusted operating profit increased by 11.5% to $214 million, with a margin of 25.9%[23] - Product Quality & Innovation sales reached $546 million, a 6.8% increase year-over-year[28] - Product Quality & Innovation adjusted operating profit decreased slightly by 0.7% to $140 million, with a margin of 25.6%[31] Regional Sales Growth - North America core sales grew by +5.6% in Q2 2025 and +5.7% YTD, representing 48% of total sales[11] - Western Europe core sales grew by +6.3% in Q2 2025 and +8.5% YTD, representing 23% of total sales[11] - High Growth Markets core sales grew by +6.1% in Q2 2025 and +6.1% YTD, representing 27% of total sales[11] 2025 Guidance - The company expects mid-single-digit core sales growth for Q3 and full year 2025[39, 40] - Adjusted EPS is projected to be between $0.91 and $0.95 for Q3 2025, and between $3.72 and $3.80 for the full year[39] - Free cash flow conversion is expected to be between 90% and 100% for the full year[39]

Group 1 - Veralto reported $1.37 billion in revenue for the quarter ended June 2025, a year-over-year increase of 6.4% [1] - The EPS for the same period was $0.93, compared to $0.85 a year ago, indicating a positive trend in earnings [1] - The reported revenue exceeded the Zacks Consensus Estimate of $1.34 billion, resulting in a surprise of +2.06% [1] Group 2 - The company delivered an EPS surprise of +4.49%, with the consensus EPS estimate being $0.89 [1] - Veralto's stock has returned +2.2% over the past month, while the Zacks S&P 500 composite has changed by +4.9% [3] - The stock currently holds a Zacks Rank 2 (Buy), suggesting potential outperformance against the broader market [3] Group 3 - Sales in Product Quality & Innovation reached $546 million, exceeding the two-analyst average estimate of $534.05 million, with a year-over-year change of +6.9% [4] - Sales in Water Quality amounted to $825 million, surpassing the $801.05 million average estimate, reflecting a +6.2% year-over-year change [4] - Operating profit for Water Quality was reported at $211 million, above the average estimate of $194.2 million [4]

Core Insights - Veralto (VLTO) reported quarterly earnings of $0.93 per share, exceeding the Zacks Consensus Estimate of $0.89 per share, and showing an increase from $0.85 per share a year ago, resulting in an earnings surprise of +4.49% [1] - The company achieved revenues of $1.37 billion for the quarter ended June 2025, surpassing the Zacks Consensus Estimate by 2.06% and up from $1.29 billion year-over-year [2] - Veralto has consistently surpassed consensus EPS and revenue estimates over the last four quarters [2] Earnings Outlook - The future performance of Veralto's stock will largely depend on management's commentary during the earnings call and the trends in earnings estimate revisions [3][4] - The current consensus EPS estimate for the upcoming quarter is $0.92 on revenues of $1.37 billion, and for the current fiscal year, it is $3.71 on revenues of $5.43 billion [7] Industry Context - The Waste Removal Services industry, to which Veralto belongs, is currently ranked in the top 39% of over 250 Zacks industries, indicating a favorable outlook compared to the bottom 50% [8] - Empirical research suggests a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can be tracked by investors [5]

Core Insights - Veralto reported strong second quarter results driven by effective commercial execution and consistent customer demand, leading to mid-single-digit core sales growth and double-digit adjusted earnings per share growth [2][10] - The company raised its full-year core sales growth and adjusted earnings per share guidance based on stable demand and macroeconomic conditions [2][5] Financial Performance - Total sales increased by 6.4% year-over-year to $1,371 million, with non-GAAP core sales growth of 4.8% [10][20] - Adjusted diluted earnings per share for the second quarter were $0.93, compared to $0.81 in the same period last year [10][14] - Operating profit margin was reported at 22.8%, while non-GAAP adjusted operating profit margin was 23.7% [10][14] Guidance and Forecast - For the third quarter of 2025, Veralto anticipates non-GAAP core sales growth of mid-single digits year-over-year, with adjusted diluted earnings per share expected to be between $0.91 and $0.95 [4][22] - The full-year adjusted earnings per share guidance was raised to a range of $3.72 to $3.80, up from the previous range of $3.60 to $3.70 [5][22] - The company expects full-year core sales growth to be mid-single digits, an increase from the prior low-to-mid-single-digit assumption [5][22] Cash Flow and Financial Health - Operating cash flow for the second quarter was $339 million, with non-GAAP free cash flow at $323 million, reflecting a year-over-year increase of approximately 34.5% [10][23] - The company maintains a strong financial position and is focused on prudent capital allocation to enhance long-term shareholder value [2][5] Company Overview - Veralto is a global leader in essential technology solutions with annual sales exceeding $5 billion and a workforce of nearly 17,000 associates [7][10] - The company is dedicated to addressing complex societal challenges, particularly in providing access to clean water and safe food [7][10]

Core Insights - Veralto Corporation (VLTO) is set to release its second-quarter 2025 results on July 29, with earnings estimated at 89 cents per share, reflecting a 4.7% year-over-year increase, and revenues projected at $1.34 billion, indicating a 4.3% rise year-over-year [2][9]. Earnings Performance - VLTO has a strong earnings surprise history, having exceeded the Zacks Consensus Estimate in each of the last four quarters, with an average surprise of 6.4% [3]. Revenue Expectations - The Water Quality segment is expected to generate revenues of $801 million, representing a 3% year-over-year growth, while the Product Quality & Inspection segment is estimated to bring in $534 million, up 4.5% from the previous year [4][9]. Operating Efficiency - Robust operating efficiency is anticipated to contribute to bottom-line growth in the upcoming quarter [5]. Earnings Prediction Model - The current model does not predict a definitive earnings beat for VLTO, as it has an Earnings ESP of -0.43% and a Zacks Rank of 2 (Buy) [6].

Core Insights - Veralto Corporation has committed €20 million to Emerald Technology Ventures' Global Water Fund II, emphasizing its dedication to advancing water innovation and addressing global water challenges [1][4][5] - Emerald Technology Ventures, with over €1.2 billion in assets under management, focuses on sustainable industrial innovation and has a strong presence in the venture capital space [2][6] - The partnership will provide Veralto with access to early- and growth-stage water technology businesses, enhancing its ability to meet customer needs and scale innovative solutions [3][4] Company Overview - Veralto is a global leader in essential technology solutions, generating over $5 billion in annual sales and employing nearly 17,000 associates [5] - The company's mission is to safeguard vital resources, including clean water and safe food, through innovative solutions [5] Fund Details - Emerald's Global Water Fund II, set to launch in October, aims to raise between €150 million and €180 million to accelerate innovation across the water value chain [4]