VLTO · Veralto Corporation

Veralto delivered a strong first quarter 2026, with GAAP revenue rising 6.7% year-over-year to $1,422 million, driven primarily by double-digit growth in the Water Quality segment (+10.1% GAAP, +3.8% core), partially offset by a 1.0% core sales decline in Product Quality and Innovation. Gross profit expanded to $854 million from $805 million, supporting a GAAP operating profit of $338 million (23.8% margin), though margin contracted slightly from 24.2% in Q1 FY2025 due to higher SG&A and R&D spend. Non-GAAP adjustments added $19 million to operating profit, lifting the non-GAAP margin to 25.1% and net earnings to $266 million ($1.07 EPS). Management attributed results to the Veralto Enterprise System’s effectiveness, resilient end markets, and disciplined commercial execution. Capital allocation was aggressive: $620 million deployed on the In-Situ and GlobalVision acquisitions (both completed post-quarter-end), and $300 million used to repurchase 1.3% of shares. The newly announced cost optimization program—expected to generate $65–$75 million in annual savings by 2028—signals continued focus on efficiency. Critically, Veralto raised full-year 2026 adjusted EPS guidance to $4.20–$4.28 (up 10–12 cents at the midpoint), reflecting confidence in accelerating core sales growth and margin expansion, while also increasing free cash flow conversion guidance to ~100% of GAAP net earnings—underscoring robust underlying cash generation despite elevated M&A and buyback activity. The forward-looking statements caution that guidance excludes uncertain items like future acquisition impacts, tax adjustments, and restructuring costs, consistent with prior disclosures.