Veralto (VLTO) Q2 2025 earnings summary

Executive summary

• Q2 2025 sales rose 6.4% year-over-year to $1.37 billion, with core sales up 4.8% and broad-based growth across both Water Quality and Product Quality & Innovation segments, driven by volume and price increases.

• Adjusted EPS grew 9.4% to $0.93, net earnings reached $222 million, and adjusted net earnings were $232 million, reflecting strong operational execution.

• Free cash flow increased 35% year-over-year to $323 million, with operating cash flow up over 34%, supporting disciplined capital allocation and M&A focus.

• All operating companies contributed to Q2 growth, with recurring sales comprising 61% of total sales, supporting a resilient business model.

• Developed markets, especially North America and Western Europe, led sales growth, while high-growth markets also posted gains.

Financial highlights

• Gross profit for the quarter was $822 million, with a 60.0% gross margin; adjusted operating profit margin was 23.7%, and adjusted EBITDA margin reached 24.4%.

• Net earnings for the quarter were $222 million, up from $203 million year-over-year; diluted EPS was $0.89, and adjusted diluted EPS was $0.93.

• Free cash flow in Q2 was $323 million, up $83 million year-over-year, with free cash flow conversion guidance at 90–100% of GAAP net income.

• Cash and cash equivalents stood at $1.6 billion, with net debt at $1.1 billion and gross debt at $2.67 billion.

• Operating profit margin for the quarter was 22.8% (GAAP), 23.7% (adjusted); effective tax rate was 22.1%.

Outlook and guidance

• Full-year 2025 adjusted EPS guidance raised to $3.72–$3.80 (from $3.60–$3.70), with core sales growth now expected to be mid-single digits.

• Q3 2025 adjusted EPS guidance is $0.91–$0.95; core sales growth expected mid-single digits.

• Free cash flow conversion guidance maintained at 90–100% of GAAP net income.

• Guidance incorporates estimated tariff increases, currency translation tailwinds, and modest acquisition growth.

• Expectation for adjusted operating profit margin expansion of flat to +50 basis points year-over-year.