Veralto (VLTO) Q3 2024 earnings summary

Executive summary

• Q3 2024 sales rose 4.7% year-over-year to $1.314 billion, with core sales up 4.6% and adjusted EPS increasing 19% to $0.89, supported by broad-based demand and operational excellence.

• Gross profit margin improved 200 basis points to 59.6%, and adjusted operating margin expanded 170 basis points to 24.1%.

• Free cash flow was $215 million with a 98% conversion rate, reflecting strong cash generation and a capital-light model.

• Completed the $350 million acquisition of TraceGains, a high-growth, recurring revenue SaaS provider, enhancing the PQI segment and digital workflow offerings.

• Raised full-year adjusted EPS guidance based on strong Q3 results and continued market momentum.

Financial highlights

• Net sales grew 4.7% year-over-year to $1.314 billion; core sales up 4.6%.

• Adjusted operating profit reached $317 million, up 13% year-over-year; adjusted EBITDA margin was 24.9%.

• Adjusted EPS increased 19% year-over-year to $0.89; free cash flow was $215 million, with 98% conversion of GAAP net income.

• Gross profit for the quarter was $783 million, up from $723 million year-over-year; gross margin was 59.6%.

• Net earnings for Q3 2024 were $219 million, with diluted EPS of $0.88.

Outlook and guidance

• Q4 2024 core sales growth expected in the low to mid-single digits year-over-year.

• Q4 adjusted operating margin targeted at approximately 24%, with adjusted EPS guidance of $0.86–$0.90.

• Full-year adjusted EPS guidance raised to $3.44–$3.48, representing 8% year-over-year growth at the midpoint.

• Free cash flow conversion for FY 2024 targeted at 100%–110%.

• Full-year adjusted operating profit margin projected at ~24.0%.