Veralto Corp. Q2 2026 Filing Summary
Business Context and Reporting Period
This Form 10-Q covers the quarterly period ended July 3, 2026, for Veralto Corporation (VLTO), a Delaware corporation. Veralto operates in two segments: Water Quality (WQ) and Product Quality & Innovation (PQI). The company provides technology solutions for water analytics, treatment, marking, coding, and packaging. As of July 21, 2026, there were 243,793,344 shares of common stock outstanding.
Key Financial Metrics
| Metric | Q2 2026 (3 Months) | Q2 2025 (3 Months) | YTD 2026 (6 Months) | YTD 2025 (6 Months) |
|---|---|---|---|---|
| Sales | $1,474 million | $1,371 million | $2,896 million | $2,703 million |
| Gross Profit | $902 million | $822 million | $1,756 million | $1,627 million |
| Gross Margin | 61.2% | 60.0% | 60.6% | 60.2% |
| Operating Profit | $315 million | $313 million | $653 million | $635 million |
| Operating Margin | 21.4% | 22.8% | 22.5% | 23.5% |
| Net Earnings | $241 million | $222 million | $495 million | $447 million |
| Diluted EPS | $0.98 | $0.89 | $2.00 | $1.79 |
| Operating Cash Flow (YTD) | $522 million | $496 million | $522 million | $496 million |
| Cash & Equivalents (End Period) | $2,119 million | $2,031 million | $2,119 million | $2,031 million |
| Total Debt (End Period) | $3,379 million | $2,673 million | $3,379 million | $2,673 million |
Material Changes vs. Prior Period
- Revenue Growth: Sales increased 7.6% in Q2 and 7.1% YTD compared to 2025. Core sales (excluding currency and acquisitions) grew 4.2% in Q2 and 3.1% YTD.
- Acquisitions: The company completed two significant acquisitions in the first half of 2026:
- In-Situ, Inc. (Jan 2026): $426 million cash purchase, integrated into Water Quality.
- GlobalVision (Apr 2026): ~$195 million cash purchase, integrated into Product Quality & Innovation.
- Debt Issuance: In June 2026, Veralto issued $725 million in 4.85% senior unsecured notes due 2032. Total debt increased by approximately $706 million from year-end 2025.
- Share Repurchases: The company repurchased approximately 5 million shares for $434 million YTD under its $750 million program. $317 million remains authorized.
- Restructuring: A "2026 Cost Optimization Program" was announced in April 2026, with total expected charges of $85–$105 million. $29 million in restructuring expenses were recognized YTD.
- Tax Rate: The effective tax rate decreased to 16.6% in Q2 (vs. 22.1% in Q2 2025) and 18.9% YTD (vs. 22.1% YTD 2025), driven by the "One Big Beautiful Bill Act" (OBBBA) and discrete benefits.
Guidance, Outlook, and Risks
- Outlook: Management expects global growth in Water Quality driven by municipal and industrial demand. Product Quality & Innovation growth is expected to accelerate in the second half of the year, driven by consumer packaged goods demand and digital workflow adoption.
- Risks: Key risks include global economic conditions, trade policies/tariffs, competition, supply chain disruptions, and the impact of foreign currency exchange rates. The company notes that the potential effects of tariffs and conflict in the Middle East remain uncertain.
- Unusual Items: A $7 million pre-tax gain was recorded from the step acquisition of In-Situ. Tariff recoveries under IEEPA positively impacted gross margins.
Investor Verification Checklist
- Acquisition Integration: Verify the timeline and financial contribution of In-Situ and GlobalVision to future quarters.
- Restructuring Costs: Monitor the remaining $56–$76 million of expected restructuring charges and their impact on future operating margins.
- Debt Servicing: Review the impact of the new $725 million 2032 Notes on interest expense and liquidity.
- Core Sales Trends: Assess the divergence between reported sales growth (7.6%) and core sales growth (4.2%) to understand organic performance vs. M&A impact.
- Tax Rate Sustainability: Evaluate the sustainability of the reduced effective tax rate (16.6%) given the one-time discrete benefits and legislative changes cited.