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Veralto Corp

VLTO
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Business Summary

Veralto Corporation operates through two segments, Water Quality and Product Quality & Innovation, providing essential technology solutions that monitor, enhance and protect key resources globally. The company serves customers across regulated industries including municipal utilities, food and beverage, pharmaceutical, and industrials, where the consequence of failure is high. The industry is characterized by intense competition based on brand recognition, product quality, price, performance, delivery speed, application expertise, service and support, technology and innovation, distribution network, breadth of product and service offerings, and brand name recognition. Veralto faces competition from well-established regional competitors, more specialized competitors, large companies with substantial capabilities, and emerging companies with competitive technologies.

Veralto believes it has a leadership position in many of the markets it serves, resulting from the strength of its commercial organizations, legacy of innovation, and close long-term connectivity to customers. The company's Water Quality segment includes leading brands Hach, Trojan Technologies, and ChemTreat, while the Product Quality & Innovation segment includes leading brands Videojet, Linx, Esko, X-Rite, and Pantone. Hach serves over 149,000 customers and helps ensure safe water for more than 3.4 billion people every day. Trojan Technologies systems support the treatment of 15 trillion gallons of water annually, helping improve access to clean water for more than 312 million people every day. PQI's solutions are used by a majority of the top 25 global CPG brands and a majority of the top 20 pharmaceutical brands. Esko has over 25,000 customers in over 140 countries. X-Rite serves over 13,000 brands and suppliers across 140 countries.

Veralto generates revenue through a business model that is highly resilient, with approximately 61% of total sales during the year ended December 31, 2025 derived from recurring sales including consumables, spare parts, services, and software. The company serves a broad range of customers spanning municipal, industrial, food and beverage, and CPG end markets, many of which are highly regulated. The business model supports a strong margin profile with limited capital expenditure requirements and has generated attractive cash flows. The Veralto Enterprise System provides a foundation for competitive differentiation, using tools to improve profitability and cash flows, supporting expansion of addressable market and market position through investments in commercial organization and R&D, including software and digital solutions.

The Water Quality segment provides one of the most comprehensive portfolios of water analytics and differentiated water treatment solutions. Under brands including Hach, Trojan Technologies, and ChemTreat, the segment provides proprietary precision instrumentation and advanced water treatment technologies for residential, commercial, municipal, industrial, research, and natural resource applications. Hach offers analytical measurement instruments, digital solutions, and related consumables that test water quality. ChemTreat associates work alongside customers to tailor chemical treatment plans and dosing protocols, and the company's solutions helped customers save over 88 billion gallons of water in 2025. Trojan Technologies offers UV and membrane filtration systems for water disinfection and contaminant removal. For the year ended December 31, 2025, Water Quality segment sales were $3,321 million and operating profit was $844 million with operating profit margins of 25.4% .

The Product Quality & Innovation segment provides equipment, consumables, software, and services for marking and coding, traceability, printing, packaging design and quality management, packaging converting, and color and appearance management applications. Under brands including Videojet, Linx, Esko, X-Rite, and Pantone, the segment serves brand owners in consumer packaged goods, food and beverage, pharmaceutical, and industrial sectors. Videojet and Linx offer technologies that mark and code packaged goods, with Videojet printing billions of codes a day. Esko facilitates packaging design through design software and imaging systems. TraceGains, acquired in 2024, provides cloud-based software solutions for food and beverage safety and traceability. X-Rite provides color management solutions, and Pantone is the preeminent color standard in the design industry. For the year ended December 31, 2025, Product Quality & Innovation segment sales were $2,182 million and operating profit was $549 million with operating profit margins of 25.2% .

On October 4, 2024, the Company acquired TraceGains for a cash purchase price of approximately $349 million , net of cash acquired, which is now part of the PQI segment. During 2025, the Company acquired assets and businesses across three transactions for total consideration of approximately $32 million in cash, net of cash acquired. On November 25, 2025, the Company's Board of Directors approved a share repurchase program authorizing the repurchase of up to $750 million of the Company's common stock. In the fourth quarter of 2025, the Company increased the quarterly dividend from $0.11 per share to $0.13 per share on its common stock. On January 22, 2026, the Company completed the acquisition of In-Situ, Inc. for a cash purchase price of approximately $427 million , net of cash acquired.

Total sales for the year ended December 31, 2025 were $5,503 million , an increase of 6.0% compared to 2024. Core sales increased 4.7% on a year-over-year basis. Net earnings for 2025 totaled approximately $940 million , or $3.76 per diluted common share , compared to approximately $833 million , or $3.34 per diluted common share , for 2024. Gross profit margin was 59.9% in 2025 compared to 59.8% in 2024. Operating profit margins were 23.2% for 2025 compared to 23.3% in 2024. Net cash provided by operating activities was $1,077 million in 2025 compared to $875 million in 2024.

Business Outlook

The Company anticipates 2026 results will be driven by expectations in each reportable segment. For Water Quality, the Company continues to expect global growth led by positive secular growth drivers across municipal and industrial markets globally and disciplined commercial execution, with segment performance expected to benefit from municipal demand driven by recurring revenue from large installed base, while industrial demand is driven by regional end-market dynamics. For Product Quality & Innovation, the Company expects continued global growth driven by steady demand in the consumer packaged goods market globally, with segment performance expected to benefit from large installed base and new product offerings that help customers convey the quality and safety of their products and build trust with consumers.

The Company views acquisitions as a key part of its growth strategy, intended to supplement core growth and support ongoing expansion of the business, including through new technologies, additional products, organizational strength, and geographic breadth. The Company has successfully completed the acquisition of over 85 businesses over more than two decades. The Company believes future growth depends in part on its ability to continue developing products and sales models that successfully target high-growth markets, where the Company has scaled its presence to approximately 5,000 associates with 9 local manufacturing facilities. The Company is making significant investments, organically and through acquisitions and investments, to address the rapid pace of technological change in its served markets and to globalize its manufacturing, research and development, and customer-facing resources.

Operating profit margins were 23.2% for the year ended December 31, 2025 as compared to 23.3% in 2024. The Company leverages the Veralto Enterprise System to support customers, promote growth, and drive continuous improvement. The potential effects of tariffs and prospective changes in trade policies remain uncertain, and the Company's objective is to implement appropriate countermeasures designed to mitigate the impact of these items and other forms of macroeconomic volatility.

The Company's manufacturing operations employ a wide variety of raw materials, including metallic-based components, electronic components, chemistries, OEM products, plastics, and other petroleum-based products. Throughout 2025, the Company took substantial actions through the application of VES tools and processes to actively address the impact of various tariffs applied by the U.S. government and reciprocal tariffs from other trading partners, largely mitigating the impact on profitability. The Company continues to work with suppliers to understand existing and potential future impacts and continues to take actions to mitigate such impacts, including qualifying additional suppliers. The Company utilizes techniques including safety stock, alternative materials, and qualification of multiple supply sources to address potential disruption and other risks relating to its supply chain.

Research and development expenses were $266 million in 2025, representing 4.8% of sales. The Company anticipates it will continue to make significant expenditures for R&D as it seeks to provide a continuous flow of innovative products and services. Payments for additions to property, plant and equipment were $63 million in 2025. The Company's Board of Directors authorized a quarterly dividend of $0.13 per share of Company common stock totaling $32 million that was paid on January 30, 2026. The share repurchase program authorizes the repurchase of up to $750 million of the Company's common stock. During the year ended December 31, 2025, the Company did not make any share repurchases.

The potential effects of tariffs and prospective changes in trade policies remain uncertain. The U.S. government has imposed significant tariffs or other restrictions on certain foreign imports and has raised the possibility of additional tariff increases or expansion to other countries and types of foreign imports. These tariffs and other trade actions could increase the cost of and reduce demand for the Company's products and services. Political tensions as a result of trade policies could reduce trade volume, investment, technological exchange, and other economic activities between major international economies. The Company's business is sensitive to general economic conditions, and slower economic growth, inflation, volatility in currency and credit markets, military conflicts, and other challenges have in the past adversely affected and may in the future adversely affect the Company.

Risk Factors

The Company faces intense competition and if unable to compete effectively may experience decreased demand and market share, and even if it competes effectively may be required to reduce prices. The U.S. government has imposed and may continue to impose significant tariffs or other restrictions on foreign imports, and such trade restrictions or related countermeasures could negatively affect the business, results of operations, or financial condition. As of December 31, 2025, the Company had approximately $2.7 billion in outstanding indebtedness, and its debt level and related debt service obligations can have negative consequences including requiring significant cash flow for debt service and reducing flexibility. The net carrying value of goodwill and other intangible assets totaled approximately $3.4 billion as of December 31, 2025, and significant negative industry or economic trends could impair these assets. The Company is subject to extensive regulation, and failure to comply with those regulations could adversely affect the business and financial statements.

Management Priorities

Management's message emphasizes the Company's unifying purpose of Safeguarding the World's Most Vital Resources and its commitment to the advancement of public health and safety. The Company believes it is positioned to support customers as they address large global challenges including environmental resource sustainability, water scarcity, management of severe weather events, food and pharmaceutical security, and the impact of an aging workforce. The Company's strategic priorities include leveraging the Veralto Enterprise System to support customers, promote growth, and drive continuous improvement, continuing to make significant investments organically and through acquisitions to address rapid technological change, and expanding the business in high-growth geographies and high-growth market segments. The Company's outlook for 2026 reflects current visibility and expectations based on current market factors, with the Company's ability to meet expectations subject to numerous risks.

View Source Annual Report on SEC.gov ↗

References

  1. [1] Item 7, MD&A — Business Segments
  2. [2] Item 7, MD&A — Water Quality Selected Financial Data
  3. [3] Item 7, MD&A — Water Quality Selected Financial Data
  4. [4] Item 7, MD&A — Business Segments
  5. [5] Item 7, MD&A — Product Quality & Innovation Selected Financial Data
  6. [6] Item 7, MD&A — Product Quality & Innovation Selected Financial Data
  7. [7] Item 7, MD&A — Acquisitions
  8. [8] Note 2, Acquisitions
  9. [9] Item 5, Market for Registrant's Common Equity — Issuer Purchases of Equity Securities
  10. [10] Item 5, Market for Registrant's Common Equity
  11. [11] Item 7, MD&A — Acquisitions
  12. [12] Item 8, Consolidated and Combined Statements of Earnings
  13. [13] Item 7, MD&A — Sales Growth and Core Sales Growth
  14. [14] Item 7, MD&A — Sales Growth and Core Sales Growth
  15. [15] Item 8, Consolidated and Combined Statements of Earnings
  16. [16] Item 8, Consolidated and Combined Statements of Earnings
  17. [17] Item 8, Consolidated and Combined Statements of Earnings
  18. [18] Item 8, Consolidated and Combined Statements of Earnings
  19. [19] Item 7, MD&A — Cost of Sales and Gross Profit
  20. [20] Item 7, MD&A — Cost of Sales and Gross Profit
  21. [21] Item 7, MD&A — Operating Profit Performance
  22. [22] Item 7, MD&A — Operating Profit Performance
  23. [23] Item 8, Consolidated and Combined Statements of Cash Flows
  24. [24] Item 8, Consolidated and Combined Statements of Cash Flows
  25. [25] Item 7, MD&A — Operating Profit Performance
  26. [26] Item 7, MD&A — Operating Profit Performance
  27. [27] Item 7, MD&A — Operating Expenses
  28. [28] Item 7, MD&A — Operating Expenses
  29. [29] Item 8, Consolidated and Combined Statements of Cash Flows
  30. [30] Item 5, Market for Registrant's Common Equity
  31. [31] Item 7, MD&A — Dividends
  32. [32] Item 5, Market for Registrant's Common Equity — Issuer Purchases of Equity Securities
  33. [33] Item 1A, Risk Factors — Financial and Tax Risks
  34. [34] Item 1A, Risk Factors — Financial and Tax Risks
  35. [35] Item 8, Consolidated and Combined Statements of Earnings
  36. [36] Item 8, Consolidated and Combined Statements of Earnings
  37. [37] Item 8, Consolidated and Combined Statements of Earnings
  38. [38] Item 8, Consolidated and Combined Statements of Earnings
  39. [39] Item 8, Consolidated and Combined Statements of Earnings
  40. [40] Item 8, Consolidated and Combined Statements of Earnings
  41. [41] Item 8, Consolidated and Combined Statements of Earnings
  42. [42] Item 8, Consolidated and Combined Statements of Earnings
  43. [43] Item 8, Consolidated and Combined Statements of Earnings
  44. [44] Item 8, Consolidated and Combined Statements of Earnings
  45. [45] Item 8, Consolidated and Combined Statements of Earnings
  46. [46] Item 8, Consolidated and Combined Statements of Earnings
  47. [47] Item 7, MD&A — Cost of Sales and Gross Profit
  48. [48] Item 7, MD&A — Cost of Sales and Gross Profit
  49. [49] Item 7, MD&A — Cost of Sales and Gross Profit
  50. [50] Item 8, Consolidated and Combined Statements of Cash Flows
  51. [51] Item 8, Consolidated and Combined Statements of Cash Flows
  52. [52] Item 8, Consolidated and Combined Statements of Cash Flows
  53. [53] Item 7, MD&A — Cash and Cash Requirements
  54. [54] Item 7, MD&A — Cash and Cash Requirements
  55. [55] Item 7, MD&A — Cash and Cash Requirements
  56. [56] Note 12, Financing
  57. [57] Item 7, MD&A — Income Taxes
  58. [58] Item 7, MD&A — Income Taxes
  59. [59] Item 7, MD&A — Income Taxes
  60. [60] Item 7, MD&A — Water Quality Selected Financial Data
  61. [61] Item 7, MD&A — Water Quality Selected Financial Data
  62. [62] Item 7, MD&A — Product Quality & Innovation Selected Financial Data
  63. [63] Item 7, MD&A — Product Quality & Innovation Selected Financial Data

Analysis on 10/15/2026