Veralto Reports Second Quarter 2026 Results
Rhea-AI Summary
Veralto (NYSE: VLTO) reported second quarter 2026 sales of $1.474 billion, up 7.6% year-over-year, with non-GAAP core sales growth of 4.2%. GAAP operating margin was 21.4%, while adjusted operating margin reached 24.6%. GAAP net earnings were $241 million or $0.98 per diluted share; adjusted net earnings were $274 million or $1.11 per share, including about $0.05 per share from IEEPA tariff recoveries.
Operating cash flow was $340 million and non-GAAP free cash flow was $328 million. Core sales grew 5.7% in Water Quality and 2.0% in Product Quality and Innovation. According to Veralto, full-year 2026 guidance was raised to adjusted EPS of $4.35–$4.43 and core sales growth of 4.0–4.5%, with expected adjusted operating margin expansion of 25–50 bps and free cash flow conversion above 100% of GAAP net earnings.
Positive
- Q2 2026 sales $1.474 billion, up 7.6% year-over-year
- Non-GAAP core sales growth 4.2% total, Water Quality 5.7%
- Adjusted operating margin improved to 24.6% in Q2 2026
- Adjusted diluted EPS rose to $1.11, up about 19% YoY
- Q2 free cash flow $328 million; trailing FCF margin 18.4%
- 2026 adjusted EPS guidance raised to $4.35–$4.43; core growth 4.0–4.5%
- 2026 free cash flow conversion guided to >100% of GAAP net earnings
Negative
- GAAP operating margin declined to 21.4% from 22.8% year-over-year
- Restructuring costs of $29 million under 2026 Cost Optimization Program
- Adjusted EPS includes non-recurring IEEPA tariff refunds of about $0.05 per share
- Product Quality and Innovation core sales growth only 2.0% year-over-year
Key Figures
Previous Earnings Reports
| Date | Event | Sentiment | 24h Move | Catalyst |
|---|---|---|---|---|
| Apr 28 | Q1 earnings report | Positive | +4.5% | Reported Q1 results and raised full-year adjusted EPS guidance. |
| Apr 14 | Q1 earnings scheduling | Neutral | +1.7% | Scheduled the Q1 earnings conference call and release materials. |
| Feb 03 | Q4 earnings report | Positive | -6.2% | Reported fourth-quarter results, acquisitions, buybacks, and higher 2026 guidance. |
| Jan 14 | Q4 earnings scheduling | Neutral | +0.5% | Scheduled the fourth-quarter and full-year earnings conference call. |
| Oct 08 | Q3 earnings scheduling | Neutral | -0.8% | Scheduled the third-quarter 2025 earnings conference call. |
24h Move is the share-price change in the day after each event; other market factors may also have contributed.
Earnings reactions were mixed, ranging from 4.52% after Q1 results to -6.2% after Q4 results, while the tag-specific average move was -0.05%.
Key Terms
non-gaap financial
free cash flow financial
adjusted operating profit margin financial
basis points financial
gaap financial
AI-generated analysis. How Rhea-AI works. Not financial advice.
Key Second Quarter 2026 Results:
- Sales increased
7.6% year-over-year to$1,474 million 4.2% - Operating profit margin was
21.4% and non-GAAP adjusted operating profit margin was24.6% - Net earnings were
$241 million $0.98 - Non-GAAP, adjusted net earnings were
$274 million $1.11 - Operating cash flow was
$340 million $328 million - These second quarter results include benefits from recoveries of tariffs previously collected under the International Emergency Economic Powers Act ("IEEPA") of approximately
$0.05
"In the second quarter, total sales grew approximately
Honeycutt continued, "In Water Quality, we continue to benefit from strong demand across industrial water treatment, water reuse initiatives and environmental water monitoring workflows. Demand for water analytics supporting the daily operations of our municipal customers remains steady. In PQI, demand also remains steady for our marking and coding solutions, while our digital workflow solutions in packaging and color continue to deliver strong underlying growth. We expect PQI core sales growth to accelerate meaningfully in the second half, driven by increasing adoption of digital workflow solutions and contributions from recent product launches."
"Looking ahead, we expect total year-over-year core sales growth to accelerate to approximately
2026 Guidance
The Company provides forecasted sales guidance on a non-GAAP basis because of the difficulty in estimating the other components of GAAP sales, such as currency translation, acquisitions, and divestitures.
For the third quarter of 2026, the Company anticipates non-GAAP core sales growth in the range of
For the full year 2026, the Company raised its non-GAAP core sales growth to a range of
Conference Call and Webcast Information
Veralto will webcast its second quarter 2026 earnings conference call tomorrow starting at 7:30 a.m. (ET). Access to the webcast, slide presentation and prepared remarks will be available on the "Investors" section of Veralto's website, www.veralto.com, under the subheading "News & Events" and additional materials will be posted to the same section of Veralto's website. A replay of the webcast will be available in the same section of Veralto's website shortly after the conclusion of the call and will remain available until the next quarterly earnings call.
The conference call can be accessed by dialing +1 (833) 309-3473 (
ABOUT VERALTO
With annual sales of approximately
NON-GAAP MEASURES AND SUPPLEMENTAL MATERIALS
In addition to the financial measures prepared in accordance with generally accepted accounting principles (GAAP), this earnings release also contains non-GAAP financial measures. Calculations of these measures, the reasons why we believe these measures provide useful information to investors, a reconciliation of these measures to the most directly comparable GAAP measures, as applicable, and other information relating to these non-GAAP measures are included in the supplemental reconciliation schedule attached.
In addition, this earnings release, the slide presentation accompanying the related earnings call, non-GAAP reconciliations and a note containing details of historical and anticipated, future financial performance have been posted to the "Investors" section of Veralto's website (www.veralto.com) under the subheading "Quarterly Earnings."
FORWARD-LOOKING STATEMENTS
Certain statements in this release, including the statement regarding the Company's anticipated third quarter and full year 2026 financial performance, 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 the federal securities laws. All statements other than historical factual information are forward-looking statements, including, without limitation, statements regarding: projections of revenue, expenses, profit, profit margins, asset values, pricing, tax rates, tax provisions, cash flows, pension and benefit obligations and funding requirements, Veralto's liquidity position or other projected financial measures; Veralto's management's plans and strategies for future operations, including statements relating to anticipated operating performance, customer demand, cost reductions, restructuring activities, new product and service developments, competitive strengths or market position, acquisitions and the integration thereof, divestitures, spin-offs, split-offs, initial public offerings, other securities offerings or other distributions, strategic opportunities, stock repurchases, dividends and executive compensation; growth, declines and other trends in markets Veralto sells into, the impact of global trade policies, tariffs, restrictions on imports, related countermeasures and reciprocal tariffs; future new or modified laws, regulations, accounting pronouncements or public policy changes; regulatory approvals and the timing and conditionality thereof; outstanding claims, legal proceedings, tax audits and assessments and other contingent liabilities; future foreign currency exchange rates and fluctuations in those rates; results of operations and/or financial condition; general economic and capital markets conditions; the anticipated timing of any of the foregoing; assumptions underlying any of the foregoing; and any other statements that address events or developments that Veralto intends or believes will or may occur in the future. Additional information regarding the factors that may cause actual results to differ materially from these forward-looking statements is available in our SEC filings. These forward-looking statements speak only as of the date of this release and except to the extent required by applicable law, the Company does not assume any obligation to update or revise any forward-looking statement, whether as a result of new information, future events and developments or otherwise.
VERALTO CORPORATION | |||||||
Three-Month Period Ended | Six-Month Period Ended | ||||||
July 3, 2026 | July 4, 2025 | July 3, 2026 | July 4, 2025 | ||||
Sales | $ 1,474 | $ 1,371 | $ 2,896 | $ 2,703 | |||
Cost of sales | (572) | (549) | (1,140) | (1,076) | |||
Gross profit | 902 | 822 | 1,756 | 1,627 | |||
Operating costs: | |||||||
Selling, general and administrative expenses | (514) | (442) | (962) | (861) | |||
Research and development expenses | (73) | (67) | (141) | (131) | |||
Operating profit | 315 | 313 | 653 | 635 | |||
Nonoperating income (expense): | |||||||
Other income (expense), net | 1 | — | 8 | (6) | |||
Interest expense, net | (27) | (28) | (51) | (55) | |||
Earnings before income taxes | 289 | 285 | 610 | 574 | |||
Income taxes | (48) | (63) | (115) | (127) | |||
Net earnings | $ 241 | $ 222 | $ 495 | $ 447 | |||
Net earnings per common share: | |||||||
Basic | $ 0.98 | $ 0.89 | $ 2.01 | $ 1.80 | |||
Diluted | $ 0.98 | $ 0.89 | $ 2.00 | $ 1.79 | |||
Average common stock and common equivalent | |||||||
Basic | 245.2 | 248.2 | 246.4 | 248.0 | |||
Diluted | 245.8 | 249.9 | 247.5 | 250.0 | |||
This information is presented for reference only. |
VERALTO CORPORATION | |||||||||
Reconciliation of GAAP to Non-GAAP Financial Measures | |||||||||
Three-Month Period Ended July 3, 2026 | |||||||||
Sales | Operating | Operating | Net earnings for | Diluted net | |||||
Reported (GAAP) | $ 1,474 | $ 315 | 21.4 % | $ 241 | $ 0.98 | ||||
Amortization of acquisition-related intangible assets A | — | 17 | 1.2 | 17 | 0.07 | ||||
Restructuring B | — | 29 | 2.0 | 29 | 0.12 | ||||
Other items C | — | 2 | 0.1 | 2 | 0.01 | ||||
Tax effect of the above adjustments D | — | — | — | (11) | (0.04) | ||||
Discrete tax adjustments E | — | — | — | (4) | (0.02) | ||||
Rounding | — | — | (0.1) | — | (0.01) | ||||
Adjusted (Non-GAAP) | $ 1,474 | $ 363 | 24.6 % | $ 274 | $ 1.11 | ||||
Three-Month Period Ended July 4, 2025 | |||||||||
Sales | Operating | Operating | Net earnings for earnings per | Diluted net | |||||
Reported (GAAP) | $ 1,371 | $ 313 | 22.8 % | $ 222 | $ 0.89 | ||||
Amortization of acquisition-related intangible assets A | — | 9 | 0.7 | 9 | 0.04 | ||||
Other items C | — | 3 | 0.2 | 3 | 0.01 | ||||
Tax effect of the above adjustments D | — | — | — | (2) | (0.01) | ||||
Adjusted (Non-GAAP) | $ 1,371 | $ 325 | 23.7 % | $ 232 | $ 0.93 | ||||
VERALTO CORPORATION | ||||||||||||
Notes to Reconciliation of GAAP to Non-GAAP Financial Measures | ||||||||||||
($ in millions) | ||||||||||||
A | Amortization of acquisition-related intangible assets in the following historical periods (only the pretax amounts set forth below are reflected in the amortization line item above): | |||||||||||
Three-Month Period Ended | ||||||||||||
July 3, 2026 | July 4, 2025 | |||||||||||
Pretax | $ 17 | $ 9 | ||||||||||
After-tax | 14 | 7 | ||||||||||
B | Costs incurred during the three-month period ended July 3, 2026 related to the 2026 Cost Optimization Program ( | |||||||||||
C | Costs incurred during the three-month periods ended July 3, 2026 and July 4, 2025 related to certain strategic initiatives ( | |||||||||||
D | This line item reflects the aggregate tax effect of all nontax adjustments reflected in the preceding line items of the table. In addition, the footnotes above indicate the after-tax amount of each individual adjustment item. Veralto estimates the tax effect of each adjustment item by applying Veralto's overall estimated effective tax rate to the pretax amount, unless the nature of the item and/or the tax jurisdiction in which the item has been recorded requires application of a specific tax rate or tax treatment, in which case the tax effect of such item is estimated by applying such specific tax rate or tax treatment. | |||||||||||
E | Discrete tax matters relate to changes in estimates associated with prior period uncertain tax positions, audit settlements and excess tax benefits from stock-based compensation. | |||||||||||
VERALTO CORPORATION | |||||
Sales Growth by Segment, Core Sales Growth by Segment | |||||
% Change Three-Month Period Ended July 3, 2026 | |||||
Segments | |||||
Total Company | Water Quality | Product Quality | |||
Total sales growth (GAAP) | 7.6 % | 10.1 % | 3.8 % | ||
Impact of: | |||||
Acquisitions/divestitures | (2.4) % | (3.2) % | (1.2) % | ||
Currency exchange rates | (1.0) % | (1.2) % | (0.6) % | ||
Core sales growth (non-GAAP) | 4.2 % | 5.7 % | 2.0 % | ||
VERALTO CORPORATION
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES
Forecasted Core Sales Growth, Adjusted Operating Profit Margin, Adjusted Diluted Net Earnings per Share and Free Cash Flow to Net Earnings Conversion Ratio
The Company provides forecasted sales only on a non-GAAP basis because of the difficulty in estimating the other components of GAAP revenue, such as currency translation, acquisitions and divested product lines. Additionally, we do not reconcile adjusted operating profit margin (or components thereof), adjusted diluted earnings per share or free cash flow to net earnings conversion ratio to the comparable GAAP measures because of the difficulty in estimating the other unknown components such as investment gains and losses, impairments and separation costs, which would be reflected in any forecasted GAAP operating profit, forecasted diluted earnings per share or forecasted net earnings ratio.
% Change Three-Month | |
Core sales growth (non-GAAP) | + |
Three-Month Period Ending | |
Adjusted Operating Profit Margin (non-GAAP) | +25 basis points |
Adjusted Diluted Net Earnings per Share (non-GAAP) | |
% Change Year Ending | |
Core sales growth (non-GAAP) | + |
Year Ending December 31, | |
Adjusted Operating Profit Margin (non-GAAP) | +25 to 50 basis points |
Adjusted Diluted Net Earnings per Share (non-GAAP) | |
Free cash flow to net earnings conversion ratio (non-GAAP) | > |
VERALTO CORPORATION | |||||
Cash Flow and Free Cash Flow | |||||
Three-Month Period Ended | Year-over-Year | ||||
July 3, 2026 | July 4, 2025 | ||||
Total Cash Flows (GAAP): | |||||
Net cash provided by operating activities (GAAP) | $ 340 | $ 339 | |||
Total cash used in investing activities (GAAP) | $ (206) | $ (40) | |||
Total cash used in financing activities (GAAP) | $ 558 | $ (15) | |||
Free Cash Flow (non-GAAP): | |||||
Total cash provided by operating activities (GAAP) | $ 340 | $ 339 | ~ 0.5 % | ||
Less: payments for additions to property, plant & equipment | (12) | (16) | |||
Free cash flow (non-GAAP) | $ 328 | $ 323 | ~ 1.5 % | ||
Free Cash Flow Margin | |||||||
Three-Month Period Ended | |||||||
July 3, 2026 | April 3, 2026 | December 31, | October 3, 2025 | ||||
Free Cash Flow Margin (non-GAAP) | |||||||
Free Cash Flow (non-GAAP) | $ 328 | $ 170 | $ 291 | $ 258 | |||
Sales (GAAP) | $ 1,474 | $ 1,422 | $ 1,396 | $ 1,404 | |||
Trailing Twelve Month Free Cash Flow (non-GAAP) | $ 1,047 | ||||||
Trailing Twelve Month Sales (GAAP) | $ 5,696 | ||||||
Free Cash Flow Margin (non-GAAP) | 18.4 % | ||||||
We define free cash flow as operating cash flows, less payments for additions to property, plant and equipment ("capital expenditures") plus the proceeds from sales of property, plant and equipment ("capital disposals").
Statement Regarding Non-GAAP Measures
Each of the non-GAAP measures set forth above should be considered in addition to, and not as a replacement for or superior to, the comparable GAAP measure, and may not be comparable to similarly titled measures reported by other companies. Management believes that these measures provide useful information to investors by offering additional ways of viewing Veralto Corporation's ("Veralto" or the "Company") results that, when reconciled to the corresponding GAAP measure, help our investors:
- with respect to the profitability-related non-GAAP measures, understand the long-term profitability trends of our business and compare our profitability to prior and future periods and to our peers;
- with respect to core sales and related sales measures, identify underlying growth trends in our business and compare our sales performance with prior and future periods and to our peers; and
- with respect to free cash flow and related cash flow measures (the "FCF Measure"), understand Veralto's ability to generate cash without external financings, strengthen its balance sheet, invest in its business and grow its business through acquisitions and other strategic opportunities (although a limitation of free cash flow is that it does not take into account the Company's non-discretionary expenditures, and as a result the entire free cash flow amount is not necessarily available for discretionary expenditures).
Management uses these non-GAAP measures to measure the Company's operating and financial performance.
- The items excluded from the non-GAAP measures set forth above have been excluded for the following reasons:
- Amortization of Intangible Assets: We exclude the amortization of acquisition-related intangible assets because the amount and timing of such charges are significantly impacted by the timing, size, number and nature of the acquisitions we consummate. While we have a history of significant acquisition activity, we do not acquire businesses on a predictable cycle, and the amount of an acquisition's purchase price allocated to intangible assets and related amortization term are unique to each acquisition and can vary significantly from acquisition to acquisition. Exclusion of this amortization expense facilitates more consistent comparisons of operating results over time between our newly acquired and long-held businesses, and with both acquisitive and non-acquisitive peer companies. We believe however that it is important for investors to understand that such intangible assets contribute to sales generation and that intangible asset amortization related to past acquisitions will recur in future periods until such intangible assets have been fully amortized.
- Restructuring Charges: We exclude costs incurred pursuant to discrete restructuring plans that are fundamentally different (in terms of the size, strategic nature and planning requirements, as well as the inconsistent frequency, of such plans) from the ongoing productivity improvements that result from application of the Veralto Enterprise System. Because these restructuring plans are incremental to the core activities that arise in the ordinary course of our business and we believe are not indicative of Veralto's ongoing operating costs in a given period, we exclude these costs to facilitate a more consistent comparison of operating results over time.
- Other Adjustments: With respect to the other items excluded from the profitability-related non-GAAP measures, we exclude these items because they are of a nature and/or size that occur with inconsistent frequency, occur for reasons that may be unrelated to Veralto's commercial performance during the period and/or we believe that such items may obscure underlying business trends and make comparisons of long-term performance difficult.
- With respect to core operating profit margin changes, in addition to the explanation set forth in the bullets above relating to "restructuring charges" and "other adjustments", we exclude the impact of businesses owned for less than one year (or disposed of during such period and not treated as discontinued operations) because the timing, size, number and nature of such transactions can vary significantly from period to period and may obscure underlying business trends and make comparisons of long-term performance difficult.
- Amortization of Intangible Assets: We exclude the amortization of acquisition-related intangible assets because the amount and timing of such charges are significantly impacted by the timing, size, number and nature of the acquisitions we consummate. While we have a history of significant acquisition activity, we do not acquire businesses on a predictable cycle, and the amount of an acquisition's purchase price allocated to intangible assets and related amortization term are unique to each acquisition and can vary significantly from acquisition to acquisition. Exclusion of this amortization expense facilitates more consistent comparisons of operating results over time between our newly acquired and long-held businesses, and with both acquisitive and non-acquisitive peer companies. We believe however that it is important for investors to understand that such intangible assets contribute to sales generation and that intangible asset amortization related to past acquisitions will recur in future periods until such intangible assets have been fully amortized.
- With respect to core sales related measures, (1) we exclude the impact of currency translation because it is not under management's control, is subject to volatility and can obscure underlying business trends, and (2) we exclude the effect of acquisitions and divested product lines because the timing, size, number and nature of such transactions can vary significantly from period-to-period and between us and our peers, which we believe may obscure underlying business trends and make comparisons of long-term performance difficult.
- With respect to the FCF Measure, we exclude payments for additions to property, plant and equipment (net of the proceeds from capital disposals) to demonstrate the amount of operating cash flow for the period that remains after accounting for the Company's capital expenditure requirements.
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SOURCE Veralto