Veralto — Third Quarter 2026 Earnings Summary

Financial Performance:

• Total sales increased 7.5% year-over-year to $1,509 million; non-GAAP core sales growth was 5.1%.
• GAAP operating profit margin was 19.7%; non-GAAP adjusted operating profit margin was 25.6%.
• Net earnings were $253 million ($1.03 per diluted share); non-GAAP adjusted net earnings were $290 million ($1.18 per diluted share).
• Operating cash flow was $323 million; non-GAAP free cash flow was $304 million.
• Year-to-date (nine months) sales were $4,405 million compared to $4,107 million in the prior year period.
• Year-to-date net earnings were $748 million ($3.03 per diluted share) compared to $686 million ($2.74 per diluted share) in the prior year period.
• Free cash flow conversion guidance was raised to greater than 105% of GAAP net earnings (up from >100%).

Guidance and Future Outlook:

• Full-year 2026 non-GAAP core sales growth guidance raised to 4.2%–4.5% (up from 4.0%–4.5%).
• Full-year 2026 adjusted diluted earnings per share guidance raised to $4.49–$4.52 (up from $4.35–$4.43), representing 15%–16% growth over the prior year.
• Full-year 2026 adjusted operating profit margin expected to expand approximately 50 basis points year-over-year.
• Fourth quarter 2026 non-GAAP core sales growth expected to accelerate to 5.5%–6.5% year-over-year.
• Fourth quarter 2026 adjusted operating profit margin expected to be approximately 24.5%.
• Fourth quarter 2026 adjusted diluted earnings per share guidance set at $1.13–$1.16.

Business Segments and Product Lines:

• Water Quality segment core sales grew 6.4% year-over-year, driven by double-digit growth in water treatment solutions.
• Product Quality and Innovation (PQI) segment core sales growth increased sequentially, supported by steady demand in marking and coding and acceleration in packaging and color.
• Acquisitions contributed 2.3% to total sales growth in the third quarter.
• Year-to-date capital allocation included four strategic acquisitions: In-Situ, GlobalVision, Alfaa UV, and Cleanwater1 (closed October 5, 2026).

Market and Competitive Landscape:

• Demand remains healthy across both Water Quality and Product Quality and Innovation segments.
• Favorable industrial trends in North America, including digital infrastructure investments, higher industrial production, and increasing need for water reuse solutions, drove Water Quality growth.
• Steady demand continues for water analytics products and services supporting municipal, environmental, and industrial customers.

Risks and Challenges:

• The press release includes standard forward-looking statement disclaimers regarding factors that may cause actual results to differ materially, including global trade policies, tariffs, regulatory approvals, foreign currency exchange rates, and legal proceedings.
• Non-GAAP measures exclude amortization of acquisition-related intangible assets, restructuring charges, and other discrete items which may obscure underlying business trends or vary significantly in timing and size.

Management Commentary and Tone:

• CEO Jennifer L. Honeycutt described results as "outstanding" with "broad-based sales growth and strong operating leverage."
• Management highlighted a "disciplined approach to capital allocation" and "rigorous VES-driven execution" as foundations for sustained momentum into 2027.
• Honeycutt noted ample financial flexibility to continue deploying capital, optimizing costs, and compounding long-term shareholder value.

Other Key Points:

• The Company repurchased $550 million of shares in the year-to-date period, representing 2.4% of outstanding shares.
• Early gains from the 2026 Cost Optimization Program are expected to yield full-year savings of $10–$15 million.
• A reduction of $39 million to a tax indemnification asset related to the separation from Danaher was recorded in the third quarter.
• Restructuring costs related to the 2026 Cost Optimization Program totaled $22 million pretax in the third quarter.
• Veralto has approximately 17,000 associates globally and reported annual sales of approximately $5.5 billion.