Veralto Corporation

What they do

Veralto provides technology solutions that monitor, protect, and enhance water quality and product quality. Its Water Quality segment offers products and services for water analytics, treatment, and industrial water management under brands like Hach, Trojan Technologies, and ChemTreat. The Product Quality & Innovation segment enables marking, coding, packaging, and color solutions under brands including Videojet, Linx, Esko, X-Rite, and Pantone. The company generates recurring sales from its large installed base, which accounted for approximately 61% of total sales in 2025.

Revenue drivers

• Water Quality (WQ) — Provides instruments, consumables, and services for water analytics and treatment. Led second quarter 2026 core sales growth at 5.7% year-over-year.
• Product Quality & Innovation (PQI) — Offers marking and coding equipment, software, and packaging/color solutions. Demand steady, with digital workflow solutions delivering strong underlying growth.
• Recurring sales — Consumables, software, and services from installed base drive recurring revenue, about 61% of total sales in 2025, supporting resilience and cash flow.

Recent performance

In Q2 2026 (ended July 3, 2026), sales rose 7.6% year-over-year to $1,474 million, with non-GAAP core sales growth of 4.2%. Operating profit margin was 21.4%, and non-GAAP adjusted operating profit margin was 24.6%. Net earnings were $241 million, or $0.98 per diluted share; non-GAAP adjusted net earnings were $274 million, or $1.11 per share. Operating cash flow was $340 million and free cash flow was $328 million. Results included a $0.05 per share benefit from IEEPA tariff refunds.

Strategy

Management focuses on VES-driven execution, organic growth, and disciplined capital allocation. The company is making strategic bolt-on acquisitions, including In-Situ, GlobalVision, and Alfaa UV, to accelerate growth. It also repurchases shares opportunistically. Investments target digital workflow solutions, water treatment and reuse, and environmental monitoring to address global challenges like water scarcity and food/pharmaceutical security.

Risks

• Global economic sensitivity — Slower growth, inflation, and reduced capital expenditures can lower demand for Veralto's products and services.
• Trade and tariff policy changes — Changes in tariffs or trade policies could affect costs and demand; recent tariff refunds may not recur.
• Geopolitical and military conflicts — Conflicts like the Middle East situation can disrupt operations, supply chains, and demand in affected regions.
• Competitive and technological pressure — Rapid technological change and competitor consolidation require continued innovation and investment to maintain market positions.

Outlook

For Q3 2026, management guides to non-GAAP core sales growth of 4.0% to 5.0% year-over-year and adjusted EPS of $1.06 to $1.09. For full-year 2026, the company raised its non-GAAP core sales growth guidance to 4.0% to 4.5%, and adjusted operating profit margin is expected to expand 25 to 50 basis points. Full-year adjusted EPS guidance was raised to $4.35 to $4.43, representing 12% to 14% growth, including a $0.05 benefit from tariff refunds. Free cash flow conversion guidance was increased to greater than 100% of GAAP net earnings.