Veralto Corp Q2 FY2025 earnings call

• Veralto delivered 4.8% core sales growth and nearly 10% adjusted EPS growth in Q2, marking the fourth consecutive quarter of mid-single-digit core sales growth. • Water Quality saw 5% core sales growth with robust mid-single-digit growth in water treatment solutions and water analytics. PQI had 4.6% core sales growth, with positive trends in consumer packaged goods markets and growth in marking and coding consumables and equipment, as well as digital workflow solutions. • Adjusted Operating Profit Margin was 23.7%, in line with guidance. • Raised full-year adjusted earnings per share guidance range to $3.72 to $3.80 per share. • Announced a EUR 20 million commitment to invest in Emerald Technology Ventures Global Water Fund II to support emerging water-focused ventures.

Water Quality segment delivered $825 million in sales, up 6.2% year-over-year with core sales growth of 5%. Adjusted operating profit increased 11.5% to $214 million, and adjusted operating profit margin was 25.9%. PQI segment had sales of $546 million, up 6.8% year-over-year with core sales growth of 4.6%. Adjusted operating profit was $140 million, with an adjusted operating profit margin of 25.6%.

• Raised full-year adjusted earnings per share guidance range to $3.72 to $3.80 per share, up from prior guidance of $3.60 to $3.70 per share. • Core sales growth expected to be mid-single digits, up from prior low to mid-single digits. • Expect currency translation to be about a 1% tailwind to full-year sales growth. • Acquisition growth expected to be modestly positive. • Full-year target for adjusted operating profit margin expansion remains flat to up 50 basis points year-over-year. • Q3 2025 guidance for Adjusted EPS is $0.91 per share to $0.95 per share.

Q: Andrew Alec Kaplowitz asked about PQI margins and how to think about them moving forward A: Sameer Ralhan said margin compression is roughly 200 basis points year-over-year, driven by acquisitions/divestitures, timing of pricing actions vs tariff headwinds, and investment net of productivity, with impact phasing out in Q3 and Q4 Q: Deane Dray asked about investments in TraceGains and go-to-market in data centers A: Jennifer Honeycutt talked about commercial investments in TraceGains and ChemTreat's direct-to-end-user approach in data centers Q: Nathan Jones asked about Veralto's competitive advantage and taking advantage of trade policy A: Jennifer Honeycutt and Sameer Ralhan discussed Veralto Enterprise System execution, regional manufacturing, and positioning to respond to trade policy changes Q: Andrew Buscaglia asked about recycle reuse opportunity with data centers A: Jennifer Honeycutt said data centers are a strong play for ChemTreat with direct sales and growing solutions, though still a small portion of overall business Q: Brian Lee asked about margin view for rest of year and Western Europe PQI performance A: Sameer Ralhan said pricing tailwinds will impact more in Q4, and Jennifer Honeycutt noted Western Europe PQI had steady growth with no concerning trends Q: Andrew Krill asked about Water Quality growth in Europe and moderation A: Jennifer Honeycutt and Sameer Ralhan discussed strong growth in Europe due to water reuse focus, sales team investments, and ongoing positive outlook