Veralto (VLTO) Q2 2024 earnings summary

Executive summary

• Q2 2024 sales grew 2.8% year-over-year to $1.29 billion, with core sales up 3.8% driven by both price and volume increases in Water Quality and Product Quality & Innovation segments.

• Adjusted operating profit rose 5% to $309 million, with adjusted operating profit margin at 24% and adjusted EPS up 6% to $0.85, exceeding guidance.

• Gross profit margin improved by 230 basis points to 60.1%, reflecting higher prices, productivity gains, and lower material costs.

• Free cash flow was $240 million, representing 118% conversion of GAAP net income, though down year-over-year.

• Net earnings for Q2 2024 were $203 million, impacted by standalone public company costs and higher interest expense post-separation from Danaher.

Financial highlights

• Net sales for Q2 2024 were $1.29 billion (up 2.8% year-over-year); core sales up 3.8%.

• Adjusted EBITDA reached $319 million, with a margin of 24.8%, up 60 basis points year-over-year.

• Operating profit for Q2 2024 was $299 million (23.2% margin), up from $289 million (23.1%) in Q2 2023.

• Recurring revenue grew mid-single digits, now 61–62% of total sales.

• Cash and cash equivalents stood at $1.04 billion, with net debt at $1.57 billion.

Outlook and guidance

• Full-year 2024 core sales growth expected at the high end of low single digits, with adjusted EPS guidance raised to $3.37–$3.45.

• Adjusted operating profit margin for FY 2024 expected to expand by ~75 basis points to about 24%.

• Q3 2024 guidance: core sales growth in low to mid-single digits, adjusted EPS $0.82–$0.86.

• Free cash flow conversion guidance remains at 100%–110% of GAAP net income.

• Water Quality segment expected to benefit from secular growth in North America and steady municipal demand; PQI segment to see modest CPG recovery.