Veralto (VLTO) Q2 2024 earnings summary

Executive summary

• Q2 2024 sales reached $1.29 billion, up 2.8% year-over-year, with core sales growth of 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 margin expanding to 24% and adjusted EPS up 6% to $0.85.

• Free cash flow was $240 million, representing 118% conversion of GAAP net income, though down 17–18% year-over-year.

• Raised full-year adjusted EPS guidance based on strong execution and positive end-market outlook.

• 85% of sales are tied to water, food, and essential goods, providing business durability.

Financial highlights

• Net sales grew 2.8% year-over-year to $1.29 billion; core sales up 3.8%.

• Gross profit increased 7% to $774 million; gross margin improved 230 bps to 60.1%.

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

• Recurring revenue grew mid-single digits, now 61–63% of total sales.

• Free cash flow conversion at 118% of GAAP net income.

Outlook and guidance

• Full-year core sales growth expected at the high end of low single digits; adjusted operating profit margin to expand ~75 bps to ~24%.

• Raised full-year adjusted EPS guidance to $3.37–$3.45, midpoint up 7% year-over-year.

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

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