VLTO 10-K & 10-Q changes, risk factors and insider trading
Veralto Corp · NYSE · Instruments For Meas & Testing Of Electricity & Elec Signals · CIK 1967680 · All filings on SEC.gov
At a glance
What changed in the latest 10-K
Risk Factors
New heading “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 taken by impacted foreign countries could negatively affect our business and financial statements.”
New heading “Uncertainties with respect to the development, deployment, and use of artificial intelligence in our business and products may result in harm to our business and financial statements.”
Removed heading “If we are unable to maintain effective internal control over financial reporting in the future, investors may lose confidence in the accuracy and completeness of our financial reports and the market price of our common stock may be negatively affected.”
Removed heading “Separation and Our Relationship with Danaher Risks”
Removed heading “As an independent, publicly traded company, Veralto may not enjoy the same benefits that Veralto did as a part of Danaher.”
Removed heading “Potential indemnification liabilities to Danaher pursuant to the separation agreement could materially and adversely affect Veralto’s business and financial statements.”
Removed heading “In connection with Veralto’s separation from Danaher, Danaher will indemnify Veralto for certain liabilities. However, there can be no assurance that the indemnity will be sufficient to insure Veralto against the full amount of such liabilities, or that Danaher’s ability to satisfy its indemnification obligation will not be impaired in the future.”
Removed heading “If there is a determination that the separation and/or the distribution, together with certain related transactions, is taxable for U.S. federal income tax purposes, Danaher and its stockholders could incur significant U.S. federal income tax liabilities, and we could also incur significant liabilities.”
Removed heading “Veralto may be affected by significant restrictions, including on its ability to engage in certain corporate transactions for a two-year period after the distribution in order to avoid triggering significant tax-related liabilities.”
Removed heading “Certain of Veralto’s executive officers and directors may have actual or potential conflicts of interest because of their equity interest in Danaher. Also, certain of Danaher’s current directors and a current Danaher officer and current Danaher employee have joined Veralto’s Board, which may create conflicts of interest or the appearance of conflicts of interest.”
Removed heading “Danaher may compete with Veralto.”
Removed heading “Veralto or Danaher may fail to perform under various transaction agreements that were executed as part of the separation or Veralto may fail to have necessary systems and services in place when certain of the transaction agreements expire.”
Largest changes
“The process of designing, implementing, and testing the internal control over financial reporting required to comply with this obligation is time consuming, costly, and complicated. …”see in full comparison
“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 taken by impacted foreign countries could negatively affect our business and financial statements.”see in full comparison
“Uncertainties with respect to the development, deployment, and use of artificial intelligence in our business and products may result in harm to our business and financial statements.”see in full comparison
“The U.S. government has imposed significant tariffs or other restrictions on certain foreign imports and has raised the possibility of imposing additional tariff increases or expanding the tariffs to capture other countries and types of foreign imports. For example, since January 2025, the U.S. government has threatened or imposed significant tariffs on imports from China and various new or additional tariffs on imports from other countries with limited, temporary exclusions for certain goods. Any such current or future tariffs, along with other U.S. …”see in full comparison
“Certain of Veralto’s executive officers and directors may have actual or potential conflicts of interest because of their equity interest in Danaher. Also, certain of Danaher’s current directors and a current Danaher officer and current Danaher employee have joined Veralto’s Board, which may create conflicts of interest or the appearance of conflicts of interest.”see in full comparison
“In connection with Veralto’s separation from Danaher, Danaher will indemnify Veralto for certain liabilities. However, there can be no assurance that the indemnity will be sufficient to insure Veralto against the full amount of such liabilities, or that Danaher’s ability to satisfy its indemnification obligation will not be impaired in the future.”see in full comparison
Full comparison: every changed paragraph (57)
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 taken by impacted foreign countries could negatively affect our business and financial statements.
The U.S. government has imposed significant tariffs or other restrictions on certain foreign imports and has raised the possibility of imposing additional tariff increases or expanding the tariffs to capture other countries and types of foreign imports. For example, since January 2025, the U.S. government has threatened or imposed significant tariffs on imports from China and various new or additional tariffs on imports from other countries with limited, temporary exclusions for certain goods. Any such current or future tariffs, along with other U.S. trade actions, have triggered and could further trigger retaliatory actions by certain affected countries, and other foreign governments may also impose trade measures, including reciprocal tariffs, on other U.S. goods in the future. These tariffs and other trade actions could increase the cost of, and reduce demand for, our products and services, which would adversely impact our business. In addition, political tensions as a result of trade policies could reduce trade volume, investment, technological exchange and other economic activities between major international economies, resulting in a material adverse effect on global economic conditions and the stability of global financial markets, which could adversely affect our business and financial statements.
Uncertainties with respect to the development, deployment, and use of artificial intelligence in our business and products may result in harm to our business and financial statements.
We are in the early stages of incorporating artificial intelligence (“AI”) into our business activities and our product and service offerings. As with many innovations, AI presents risks and challenges that could adversely impact our business. The development, adoption, and use of AI technologies are still in their early stages and ineffective or inadequate AI development or deployment practices could result in unintended consequences. For example, AI algorithms may be flawed or may be based on datasets that are biased or insufficient. In addition, any disruption or failure in the AI functionality we incorporate into our business activities, products or services could adversely impact our business or result in delays or errors in our offerings. Conversely, any failure to successfully develop and deploy AI in our business activities, products and services could adversely affect our competitiveness (particularly if our competitors successfully deploy AI in their businesses, products and services), and the development and deployment of AI will require additional investment and increase our costs. There also may be real or perceived social harm, unfairness, or other outcomes that undermine public confidence in the use and deployment of AI. Any of the foregoing may result in decreased demand for our products or harm to our business and financial statements.
The legal and regulatory landscape surrounding AI technologies is rapidly evolving and uncertain, including in the areas of intellectual property, cybersecurity and privacy and data protection. Compliance with new or changing laws, regulations or industry standards relating to AI may impose significant costs and may limit our ability to develop, deploy or use AI technologies. Failure to appropriately respond to this evolving landscape may result in legal liability, regulatory action, or brand and reputational harm.
•geopolitical instability arising from or related to military conflicts; and
•public health crises and epidemics; andepidemics.
•remaining uncertainties relating to the impact of the UK’s exit from the EU.
•pre-closing and post-closing earnings charges can adversely impact our results in any given period, and the impact may be substantially different period-to-period;
•acquisitions, investments, joint ventures or strategic relationships can create demands on our management, operational resources and financial and internal control systems that we are unable to effectively address;
•in connection with acquisitions and joint ventures, we may enter into post-closing financial arrangements such as purchase price adjustments, earn-out obligations and indemnification obligations, which can have unpredictable financial results;
Prices for and availability of the components, raw materials and other commodities we use in our business, as well as for labor, have fluctuated significantly in the past, including during 2024.2025. Please see “Item 1. Business-MaterialsBusiness” for a discussion of the inputs we use in our business, supply chain and labor availability disruptions and constraints our businesses have faced and are facing, and the adverse impacts that we have incurred and may incur relating thereto. The supply chains for our businesses can be disrupted by supplier capacity constraints, transportation and logistics issues, fluctuations in demand, decreased availability of key raw materials or commodities, legislative or regulatory changes, bankruptcy or exiting of the business for other reasons and external events such as natural disasters, pandemic health issues, war, terrorist actions and governmental actions (such as trade protectionism). In addition, some of our businesses purchase certain requirements from sole or limited source suppliers for reasons of quality assurance, regulatory requirements, cost effectiveness, availability or uniqueness of design. In the event of interruptions in the supply, or increases in the cost, of such supplies, we might not be able to quickly establish or qualify replacement sources of supply. Sustained interruptions in the supply of, or increase in the cost of, key components, raw materials, other commodities and labor can result in production interruptions, delays, extended lead times and inefficiencies and adversely affect our business and financial statements. In addition, due to the highly competitive nature of the industries that we serve, the cost-containment efforts of our customers and the terms of certain contracts we are party to, when prices of raw materials, key components, other commodities and labor rise we are not always able to pass along cost increases through higher prices for our products. If we are unable to fully recover these higher costs through price increases or offset these increases through cost reductions, or if there is a time delay between the increase in costs and our ability to recover or offset these costs, our margins and profitability can decline and our business and financial statements can be adversely affected.
The market for highly skilled workers and leaders in our industries, particularly in the areas of science and technology, is extremely competitive and expectations from qualified talent in many areas of the labor market have evolved and escalated recently. In addition, in 20242025 we faced labor availability constraintschallenges and labor cost inflation in certain areas of our business. If we are less successful in our recruiting efforts, if we cannot retain and motivate highly skilled workers and key leaders representing diverse backgrounds, experiences and skill sets, or if we experience labor disputes, our business and financial statements may be adversely affected.
Many of the markets we serve are technology-driven, and as a result intellectual property rights play a significant role in product development and differentiation. We own numerous patents, trademarks, copyrights, trade secrets and other intellectual property and licenses to intellectual property owned by others, which in aggregate are important to our business. The intellectual property rights that we obtain, however, are not always sufficiently broad and do not always provide us a significant competitive advantage, and patents may not be issued for pending or future patent applications owned by or licensed to us. In addition, the steps that we and our licensors have taken to maintain and protect our intellectual property do not always prevent it from being challenged, invalidated, circumvented, designed-around or becoming subject to compulsory licensing.licensing, particularly in countries where intellectual property rights are not highly developed or protected.
These risks are particularly pronounced in countries in which we do business that do not have levels of protection of corporate proprietary information, intellectual property, technology and other assets comparable to the United States. The risks we encounter in such countries include but are not limited to the following:
•Joint ventures that we participate in can include restrictions that could compromise our control over the intellectual property, technology and proprietary information of the joint venture;
•As we expand our operations globally, increasing amounts of our data, intellectual property and technology is used and stored in countries outside the United States, and regulations in certain countries require data to be stored locally. These factors increase the risk that such data, intellectual property and technology could be stolen or otherwise compromised;
•Certain of our products have been counterfeited and we may encounter additional and/or increased levels of counterfeiting in the future;
•Governmental entities may adopt regulations or other requirements that give them rights to certain of our intellectual property, technology and/or proprietary information, such as through compulsory licensing or ownership restrictions or requirements;
•In certain countries, we do not have the same ability to enforce intellectual property rights as we do in the U.S.;
•Governmental regulations relating to state secrecy or other topics limit our ability to transfer data or technology out of certain jurisdictions; and
•Risks, costs and challenges of operating in a particular jurisdiction can result in a decision to relocate or divert operations to a different jurisdiction, potentially at higher cost.
Any of these risks can adversely impact our business and financial statements. Refer to “—International economic, political, legal, compliance, social and business factors could negatively affect our financial statements” for a discussion of additional risks relating to our international operations.
OurWe outstandinghave incurred a significant amount of debt, and our debt has increased significantly as a result of our separation from Danaher, and we may incurcontinue additionalto debt in the future.increase. Our existing and future indebtedness may limit our operations and our use of our cash flow and negatively impact our credit ratings; and any failure to comply with the covenants that apply to our indebtedness could adversely affect our business and financial statements.
Our credit facilities and long-term debt obligations also impose certain restrictions on us, including certain restrictions on our ability to incur liens on our assets, and a requirement under our credit facilities to maintain a consolidated net leverage ratio (the ratio of consolidated net indebtedness to consolidated EBITDA) of 3.75 to 1.0 or less. The maximum consolidated net leverage ratio will be increased to 4.25: to 1.00 for the four consecutive full fiscal quarters immediately following the consummation of any material acquisition (as defined by the credit facilities) by us. If we breach any of these restrictions and cannot obtain a waiver from the lenders on favorable terms, subject to applicable cure periods, the outstanding indebtedness (and any other indebtedness with cross-default provisions) could be declared immediately due and payable, which would adversely affect our business and financial statements (including our liquidity). If we add new debt in the future, the risks described above would increase.
We are subject to income taxes in the U.S. and in numerous non-U.S. jurisdictions. Due to the potential for changes to tax laws and regulations or changes to the interpretation thereof (including regulations and interpretations pertaining to the U.S. Tax Cuts and Jobs Act (“TCJA”) or the One Big Beautiful Bill Act (“OBBBA”)), the ambiguity of tax laws and regulations, the subjectivity of factual interpretations, the complexity of our intercompany arrangements, uncertainties regarding the geographic mix of earnings in any particular period, and other factors, our estimates of effective tax rate and income tax assets and liabilities can be incorrect and our financial statements could be adversely affected.
These are not the only regulations that our businesses must comply with. The regulations we are subject to have tended to become more stringent over time and can be inconsistent across jurisdictions. We, our representatives and the industries in which we operate are at times under review and/or investigation by regulatory authorities. Failure to comply (or any alleged or perceived failure to comply) with the regulations referenced above or any other regulations can result in import detentions, fines, damages, civil and administrative penalties, injunctions, consent decrees, suspensions or losses of regulatory approvals, operating restrictions, refusal of the government to approve product export applications or allow us to enter into supply contracts, disbarment from selling to certain governmental agencies, integrity oversight and reporting obligations to resolve allegations of non-compliance, disruption of our business, limitation on our ability to manufacture, import, export and sell products and services, loss of customers, significant legal and investigatory fees, disgorgement, individual imprisonment, reputational harm, contractual damages, diminished profits, curtailment or restricting of business operations, criminal prosecution and other monetary and non-monetary penalties. Compliance with these and other regulations can also affect our returns on investment, require us to incur significant expenses or modify our business model or impair our flexibility in modifying product, marketing, pricing or other strategies for growing our business. Our products and operations are also often subject to the rules of industrial standards bodies such as the International Standards Organization, and failure to comply with these rules can result in withdrawal of certifications needed to sell our products and services and otherwise adversely impact our business and financial statements. For additional information regarding these risks, refer to “Item 1. Business — Regulatory Matters.”
Certain provisions in Veralto’s amended and restated certificate of incorporation and bylaws, and of Delaware law, may prevent or delay an acquisition of Veralto, which could decrease the trading price of Veralto’s common stock.
Veralto’s amended and restated certificate of incorporation and amended and restated bylaws contain, and Delaware law contains, provisions that are intended to deter coercive takeover practices and inadequate takeover bids and to encourage prospective acquirers to negotiate with the Board rather than to attempt an unsolicited takeover not approved by the Board. These provisions include, among others:
•the division of the Board into three classes of directors, with each class serving a staggered three-year term, and this classified board provisionwhich could have the effect of making the replacement of incumbent directors more time consuming and difficult;
•a provision that stockholders may only remove directors with cause;
•the requirement that the affirmative vote of stockholders holding at least 66-2/3% of Veralto’s voting stock is required to amend Veralto’s amended and restated bylaws and certain provisions in Veralto’s amended and restated certificate of incorporation.
The forum selection provisions under Veralto’s amended and restated certificate of incorporation could discourage lawsuits against Veralto and Veralto’s directors, officers, employees and stockholders.
Veralto’s amended and restated certificate of incorporation provides that, unless Veralto consents otherwise, the state courts in the State of Delaware or, if no state court located within the State of Delaware has jurisdiction, the federal court for the District of Delaware, will be the sole and exclusive forum for any derivative action or proceeding brought on behalf of Veralto, any action asserting a claim of breach of a fiduciary duty owed by any of Veralto’s directors, officers, employees or stockholders to Veralto or Veralto’s stockholders, any action asserting a claim arising pursuant to any provision of the DGCL or Veralto’s amended and restated certificate of incorporation or bylaws, or any action asserting a claim governed by the internal affairs doctrine. We recognize that this forum selection clause may impose additional litigation costs on stockholders in pursuing any such claims, particularly if the stockholders do not reside in or near the State of Delaware. Veralto’s amended restated certificate of incorporation further provides that, unless Veralto consents otherwise, the federal district courts of the United States of America shall, to the fullest extent permitted by law, be the sole and exclusive forum for the resolution of any complaint asserting a cause of action arising under the Securities Act.
These exclusive forum provisions do not apply to actions arising under the Exchange Act or the rules and regulations thereunder. While the Delaware Supreme Court ruled in March 2020 that federal forum selection provisions purporting to require claims under the Securities Act be brought in federal court are “facially valid” under Delaware law, there is uncertainty as to whether other courts will enforce our federal forum provision described above. Our stockholders will not be deemed to have waived compliance with the federal securities laws and the rules and regulations thereunder.
These forum selection provisions may limit the ability of Veralto’s stockholders to bring a claim in a judicial forum that such stockholders find favorable for disputes with Veralto or Veralto’s directors or officers, which may discourage such lawsuits against Veralto and Veralto’s directors, officers, employees and stockholders, and such provision may also make it more expensive for Veralto’s stockholders to bring such claims. Alternatively, if a court were to find these exclusive forum provisions inapplicable to, or unenforceable in respect of, one or more of the specified types of actions or proceedings described above, Veralto may incur additional costs associated with resolving such matters in other jurisdictions, which could materially and adversely affect Veralto’s business and financial statements.
If we are unable to maintain effective internal control over financial reporting in the future, investors may lose confidence in the accuracy and completeness of our financial reports and the market price of our common stock may be negatively affected.
As a public company, we are required to maintain internal controls over financial reporting and to report any material weaknesses in such internal controls. In addition, we are required to furnish a report by management on the effectiveness of our internal control over financial reporting, pursuant to Section 404 of the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”). Our independent registered public accounting firm is required to express an opinion as to the effectiveness of our internal control over financial reporting. At such time, our independent registered public accounting firm may issue a report that is adverse in the event it is not satisfied with the level at which our internal control over financial reporting is documented, designed or operating.
The process of designing, implementing, and testing the internal control over financial reporting required to comply with this obligation is time consuming, costly, and complicated. If we identify material weaknesses in our internal control over financial reporting, if we are unable to comply with the requirements of Section 404 of the Sarbanes-Oxley Act in a timely manner or to assert that our internal control over financial reporting is effective, or if our independent registered public accounting firm is unable to express an opinion as to the effectiveness of our internal control over financial reporting, investors may lose confidence in the accuracy and completeness of our financial reports and the market price of our common stock could be negatively affected, and we could become subject to investigations by the NYSE, the SEC, or other regulatory authorities, which could require additional financial and management resources.
Separation and Our Relationship with Danaher Risks
As an independent, publicly traded company, Veralto may not enjoy the same benefits that Veralto did as a part of Danaher.
As an independent, publicly traded company, Veralto may become more susceptible to market fluctuations and other adverse events than it would have been if it were still a part of the current Danaher organizational structure. As part of Danaher, Veralto was able to enjoy certain benefits from Danaher’s operating diversity, purchasing power and opportunities to pursue integrated strategies with Danaher’s other businesses. As an independent, publicly traded company, Veralto may not have similar diversity or integration opportunities and may not have similar purchasing power or access to capital markets. Additionally, as part of Danaher, Veralto was able to leverage the Danaher historical market reputation and performance and brand identity to recruit and retain key personnel to run its business. As a separate, publicly traded company, Veralto does not have the same historical market reputation and performance or brand identity as Danaher and it may be more difficult for us to recruit or retain such key personnel.
Potential indemnification liabilities to Danaher pursuant to the separation agreement could materially and adversely affect Veralto’s business and financial statements.
The separation agreement, among other things, provides for indemnification obligations (for uncapped amounts) designed to make Veralto financially responsible for substantially all liabilities that may exist relating to its business activities, whether incurred prior to or after the separation, as well as any other liabilities it agrees to assume pursuant to the separation agreement. If Veralto is required to indemnify Danaher under the circumstances set forth in the separation agreement, Veralto may be subject to substantial liabilities.
In connection with Veralto’s separation from Danaher, Danaher will indemnify Veralto for certain liabilities. However, there can be no assurance that the indemnity will be sufficient to insure Veralto against the full amount of such liabilities, or that Danaher’s ability to satisfy its indemnification obligation will not be impaired in the future.
Pursuant to the separation agreement and certain other agreements with Danaher, Danaher will agree to indemnify Veralto for certain liabilities. However, third parties could also seek to hold Veralto responsible for any of the liabilities that Danaher has agreed to retain, and there can be no assurance that the indemnity from Danaher will be sufficient to protect Veralto against the full amount of such liabilities, or that Danaher will be able to fully satisfy its indemnification obligations. In addition, Danaher’s insurance will not necessarily be available to Veralto for liabilities associated with occurrences of indemnified liabilities prior to the separation, and in any event Danaher’s insurers may deny coverage to Veralto for liabilities associated with certain occurrences of indemnified liabilities prior to the separation. Moreover, even if Veralto ultimately succeeds in recovering from Danaher or such insurance providers any amounts for which Veralto is held liable, Veralto may be temporarily required to bear these losses. Each of these risks could negatively affect Veralto’s business and financial statements.
If there is a determination that the separation and/or the distribution, together with certain related transactions, is taxable for U.S. federal income tax purposes, Danaher and its stockholders could incur significant U.S. federal income tax liabilities, and we could also incur significant liabilities.
The distribution, along with certain related transactions, was conditioned upon the receipt by Danaher of (i) the ruling from the IRS substantially to the effect that, among other things, the distribution, together with certain related transactions, will qualify as a transaction that is tax-free for U.S. federal income tax purposes under Sections 355 and 368(a)(1)(D) of the Code and (ii) an opinion of Skadden, Arps, Slate, Meagher & Flom LLP, tax counsel to Danaher, to the effect that, among other things, the distribution, together with certain related transactions, qualified as a reorganization within the meaning of Sections 355 and 368(a)(1)(D) of the Code. Danaher received the ruling from the IRS. The ruling and the opinion of tax counsel relied on certain facts, assumptions, representations and undertakings from Danaher and Veralto regarding the past and future conduct of the companies’ respective businesses and other matters. If any of these facts, assumptions, representations or undertakings are incorrect or not otherwise satisfied, Danaher and its stockholders may not be able to rely on the ruling or the opinion of tax counsel and could be subject to significant tax liabilities. Notwithstanding the ruling or opinion of tax counsel, the IRS could determine on audit that the distribution or any of the certain related transactions is taxable if it determines that any of these facts, assumptions, representations or undertakings are not correct or have been violated or if it disagrees with the conclusions in the opinion that are not covered by the ruling, or for other reasons, including as a result of certain significant changes in the stock ownership of Danaher or Veralto after the distribution. If the distribution or any of the certain related transactions is determined to be taxable for U.S. federal income tax purposes, Danaher and/or its stockholders could incur significant U.S. federal income tax liabilities, and Veralto could also incur significant liabilities.
In addition, under the tax matters agreement between Danaher and Veralto, Veralto is generally required to indemnify Danaher against taxes and related liabilities incurred by Danaher that result from a breach of any representation made by us, or as a result of us taking or failing to take, as the case may be, certain actions, including in each case those provided in connection with the ruling from the IRS or opinion of tax counsel, that result in the distribution, together with certain related transactions, failing to meet the requirements of a tax-free distribution under Sections 355 and 368(a)(1)(D) of the Code.
Veralto may be affected by significant restrictions, including on its ability to engage in certain corporate transactions for a two-year period after the distribution in order to avoid triggering significant tax-related liabilities.
To preserve the tax-free treatment for U.S. federal income tax purposes to Danaher and its stockholders of the distribution and certain related transactions, under the tax matters agreement that Veralto entered into with Danaher, Veralto is restricted from taking any action that prevents the distribution, together with certain related transactions, from being tax-free for U.S. federal income tax purposes. Under the tax matters agreement, for the two-year period following the distribution, Veralto is subject to specific restrictions on its ability to enter into acquisition, merger, liquidation, sale and stock redemption transactions. These restrictions may limit Veralto’s ability to pursue certain strategic transactions or other transactions that it may believe to be in the best interests of its stockholders or that might increase the value of its business. These restrictions will not limit the acquisition of other businesses by Veralto for cash consideration. In addition, under the tax matters agreement, Veralto may be required to indemnify Danaher against any such tax liabilities as a result of an acquisition of Veralto’s stock or assets, even if Veralto does not participate in or otherwise facilitate the acquisition. Furthermore, Veralto is subject to specific restrictions on discontinuing the active conduct of its trade or business, issuing or selling its stock or other securities (including securities convertible into Veralto stock but excluding certain compensatory arrangements), and selling its assets outside the ordinary course of business. Such restrictions may reduce Veralto’s strategic and operating flexibility.
Certain of Veralto’s executive officers and directors may have actual or potential conflicts of interest because of their equity interest in Danaher. Also, certain of Danaher’s current directors and a current Danaher officer and current Danaher employee have joined Veralto’s Board, which may create conflicts of interest or the appearance of conflicts of interest.
Because of their current or former positions with Danaher, certain of Veralto’s executive officers and directors own equity interests in Danaher. Continuing ownership of shares of Danaher common stock and equity awards could create, or appear to create, potential conflicts of interest if Veralto and Danaher face decisions that could have implications for both Danaher and Veralto. In addition, certain of Danaher’s current directors (Linda Filler and John T. Schwieters), a current Danaher officer (William H. King), and a current Danaher employee who previously served as Danaher’s Chief Financial Officer (Daniel L. Comas) are members of Veralto’s Board, and this could create, or appear to create, potential conflicts of interest when Veralto and Danaher encounter opportunities or face decisions that could have implications for both companies or in connection with the allocation of such directors’ time between Danaher and Veralto.
Danaher may compete with Veralto.
Danaher will not be restricted from competing with Veralto. If Danaher in the future decides to engage in the type of business Veralto conducts, it may have a competitive advantage over Veralto, which may cause Veralto’s business and financial statements to be materially adversely affected.
Veralto or Danaher may fail to perform under various transaction agreements that were executed as part of the separation or Veralto may fail to have necessary systems and services in place when certain of the transaction agreements expire.
The separation agreement and other agreements entered into in connection with the separation determine the allocation of assets and liabilities between the companies following the separation for those respective areas and include any necessary indemnifications related to liabilities and obligations. The transition services agreement provides for the performance of certain services by each company for the benefit of the other for a period of time after the separation. Veralto is relying on Danaher after the separation to satisfy its performance and payment obligations under these agreements. If Danaher is unable or unwilling to satisfy its obligations under these agreements, including its indemnification obligations, Veralto could incur operational difficulties or losses. If Veralto does not have in place its own systems and services, or if Veralto does not have agreements with other providers of these services once certain transition services terminate, Veralto may not be able to operate its businesses effectively and its profitability may decline. Veralto has created its own, or engaged third parties to provide, systems and services to replace many of the systems and services that Danaher previously provided to Veralto. However, Veralto may not be successful in implementing these systems and services or in transitioning data from Danaher’s systems to Veralto’s.
Management's Discussion & Analysis (MD&A)
New heading “2025 vs. 2024 operating profit margin comparisons were favorably impacted by:”
New heading “2025 vs. 2024 operating profit margin comparisons were unfavorably impacted by:”
New heading “2025 vs. 2024 operating profit margin comparisons were favorably impacted by:”
New heading “Stock Repurchase Program”
New heading “SEPARATION FROM DANAHER”
Removed heading “Acquisitions and Strategic Investments”
Removed heading “Public Company Expenses”
Removed heading “2024 vs. 2023 operating profit margin comparisons were favorably impacted by:”
Removed heading “2024 vs. 2023 operating profit margin comparisons were favorably impacted by:”
Removed heading “2023 Financing Transactions”
Removed heading “Registration Rights Agreement”
Largest changes
“2025 vs. 2024 operating profit margin comparisons were unfavorably impacted by:”see in full comparison
“2024 vs. 2023 operating profit margin comparisons were favorably impacted by:”see in full comparison
“2025 vs. 2024 operating profit margin comparisons were favorably impacted by:”see in full comparison
“2024 vs. 2023 operating profit margin comparisons were favorably impacted by:”see in full comparison
“2025 vs. 2024 operating profit margin comparisons were favorably impacted by:”see in full comparison
Full comparison: every changed paragraph (114)
Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) is designed to provide material information relevant to an assessment of the Company’s financial condition and results of operations, including an evaluation of the amounts and certainty of cash flows from operations and from outside sources. TheThis MD&A is designed to focus specifically on material events and uncertainties known to management that are reasonably likely to cause reported financial information not to be necessarily indicative of future operating results or of future financial condition. This includes descriptions and amounts of matters that have had a material impact on reported operations, as well as matters that are reasonably likely based on management’s assessment to have a material impact on future operations.
This MD&A is designed to provide a reader of the accompanying financial statements with a narrative from the perspective of management. TheThis MD&A is divided into seven sections:
•Separation from Danaher
The followingThis MD&A should be read together with Part I, “Item 1A. Risk Factors” and the accompanying Consolidated and Combined Financial Statements and Notes to Consolidated and Combined Financial Statements (“Notes”) included in Item 8. of this Annual Report on Form 10-K. TheThis MD&A generally discusses 2025 and 2024 items and year-over-year comparisons between 2025 and 2024. Discussions of 2023 items and year-over-year comparisons between 2024 and 2023. Discussions of 2022 items and year-over-year comparisons between 2023 and 2022 are not included, and can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” (“MD&A”) in Part II, Item 7 of the Company’s Annual Report on Form 10-K filed for the fiscal year ended December 31, 20232024 with the Securities and Exchange Commission on February 28,25, 2024.2025. TheThis MD&A includes forward-looking statements. For a discussion of important factors that could cause actual results to differ materially from the results referred to in these forward-looking statements, see “Information Relating to Forward-Looking Statements.”
The Company completed the Separation from Danaher Corporation (“Danaher” or “Former Parent”) on September 30, 2023, the first day of its fiscal fourth quarter of 2023 (the “Separation”). Before that date, Veralto’s businesses were comprised of certain Danaher operating units. The Separation was completed in the form of a pro rata distribution to Danaher stockholders of record on September 13, 2023 of all of the issued and outstanding shares of Veralto common stock held by Danaher. Because September 30, 2023 was a Saturday, not a business day, the shares were credited to “street name” stockholders through the Depository Trust Company on the first trading day thereafter, October 2, 2023. Veralto’s common stock began “regular way” trading on the New York Stock Exchange under the ticker symbol “VLTO” on October 2, 2023.
The accompanying Consolidated and Combined Financial Statements present the historical financial position, results of operations, changes in equity and cash flows of the Company in accordance with generally accepted accounting principles in the United States (“GAAP”). Prior to the Separation from Danaher Corporation (“Danaher” or “Former Parent”) on September 30, 2023, Veralto businesses were comprised of certain Danaher operating units. Veralto Corporation and the Veralto Businesses (including the periods prior to the Separation) are collectively referred to as “Veralto” or the “Company” herein.
The Combined Financial Statements for periods prior to the Separation were derived from Danaher’s consolidated financial statements and accounting records and prepared in accordance with GAAP for the preparation of carved-out combined financial statements. Prior to the Separation, all revenues and costs as well as assets and liabilities directly associated with Veralto have been included in the Combined Financial Statements. Additionally, the Combined Financial Statements for periods prior to the Separation included allocations of certain general, administrative, sales and marketing expenses and cost of sales from Danaher’s corporate office and from other Danaher businesses to Veralto, and allocations of related assets, liabilities, and the Former Parent’s investment, as applicable. The allocations were determined on a reasonable basis; however, the amounts are not necessarily representative of the amounts that would have been reflected in the financial statements had the Company been an entity that operated independently of Danaher during the applicable periods. Accordingly, the Consolidated and Combined Financial Statements may not be indicative of Veralto’s results had the Company been a separate stand-alone entity throughout the periods presented. For further discussion of related party allocations prior to the Separation, including the method for such allocation, refer to Note 18 to the Consolidated and Combined Financial Statements.
The Company’s overall revenues for the year ended December 31, 20242025 increased 3.4%6.0% as compared to 2023.2024. Core sales for the year ended December 31, 20242025 increased 3.7%4.7% as compared to 2023.2024. Currency exchange rates decreasedand acquisitions, net of divestitures increased reported sales by 0.3%.1.2% and 0.1%, respectively. For the definition of “core sales,” refer to “—Results of Operations” below.
Geographically, the Company’s sales during 20242025 in developed markets increased year-over-year by 4.6%6.4% driven by increased sales of 5.9% in North America and 2.6%8.0% in Western EuropeEurope. whileSales in high-growth markets wereincreased flat, primarily driven by year-over-year sales increases in the majority of countries within the high-growth markets offset by low double digit sales declines in China due to lower demand.4.8%.
The Company’s core sales during 20242025 in developed markets increased 4.2%4.8% year-over-year driven by a 5.3% increase in North America and a 2.2%3.8% increase in Western Europe. Core sales in high-growth markets increased 2.5%5.1% driven by high-singlemid-single digit increases in Latin America partiallyand offset by mid-singlelow-single digit decreasesincreases in China.
Net earnings for the year ended December 31, 20242025 totaled approximately $833$940 million, or $3.34$3.76 per diluted common share, compared to approximately $839$833 million, or $3.40$3.34 per diluted common share, for the year ended December 31, 2023.2024. The decreaseincrease in net earnings in 20242025 as compared to 20232024 was driven by higherincreased operatingsales, expenses,resulting standalonefrom publicpositive companypricing costsactions and interesthigher expensevolumes, postpartially separationoffset fromby Danaher.higher cost of sales. Refer to “—Results of Operations” for further discussion of the year-over-year changes in net earnings for the year ended December 31, 2024.2025.
•Water Quality: we continue to expect global growth led by positive secular growth drivers across municipal and industrial markets globally, and disciplined commercial execution. Segment performance is expected to benefit from municipal demand driven by recurring revenue from large installed base, while industrial demand is driven by regional end-market dynamics.
•Water Quality: the Company expects continued year-over-year growth driven by on-going strong demand for industrial water treatment, particularly in North America, with steady demand across municipal end-markets in North America and Europe, partially offset by continued weakness in China.
•Product Quality & Innovation: thewe Company expectsexpect continued year-over-yearglobal growth driven by improvedsteady demand in the consumer packaged goods market globally. Segment performance is expected to benefit from large installed base and new product offerings that help our customers convey the quality and safety of their products and build trust with consumers.
The potential effects of tariffs and prospective changes in trade policies remain uncertain. The Company’s objective is to implement appropriate countermeasures designed to mitigate the impact of these items, and other forms of macroeconomic volatility. Regardless of market conditions, the Company leverages the Veralto Enterprise System (“VES”) to support its customers, promote growth and drive continuous improvement.
The Company has access to capital resources and continues to focus on profitability improvements and leveraging Veralto Enterprise System (“VES”) to manage the anticipated impact of the challenging macroeconomic environment on business operations.
Acquisitions
On January 22, 2026, the Company completed the acquisition of In-Situ, Inc. (“In-Situ”), for a cash purchase price of approximately $427 million, net of cash acquired. The Company believes this business will complement the Water Quality segment. In-Situ is a global leader in environmental water measurement and monitoring solutions with a leading portfolio of water quality sondes, water quality sensors and data management solutions that help customers monitor and measure the quality or quantity of surface and groundwater.
Acquisitions and Strategic Investments
On October 4, 2024, the Company completed its acquisition of Information Exchange Holdings, Inc., the holding company that owns TraceGains, for $349 million, net of cash acquired. The Company believes this business complements the PQI segment, specifically the packaging and color solutions business. TraceGains is a leading provider of cloud-based software solutions that enable connected data and digital workflow management to help consumer brands meet increasingly stringent compliance and reporting regulations for food and beverage safety and traceability. Its solutions enable consumer brands to efficiently track ingredient inputs, monitor supplier quality and develop new products with greater safety and increased velocity.
On November 12, 2024, the Company completed an investment of CAD $20 million to establish a minority interest in Axine Water Technologies (“Axine”), a leading provider of electrochemical oxidation technology for contaminant destruction. Axine's electraCLEARTM solution provides simple, safe, efficient, and cost-effective destruction of organic contaminants in pharmaceuticals and industrial wastewater, including long- and short-chain PFAS. The strategic collaboration with Axine builds upon Veralto's diverse portfolio of water solutions for customers in the Company’s WQ segment.
Refer to Note 2 to the Consolidated and Combined Financial Statements for discussion regarding the Company’s acquisitions.
Public Company Expenses
As a result of the Separation, the Company is subject to the Sarbanes-Oxley Act and reporting requirements of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). The Company is now required to have additional procedures and practices as a separate public company. As a result, the Company has incurred and will continue to incur additional personnel and corporate governance costs, such as internal and external audit, investor relations, stock administration and regulatory compliance costs.
In this report, references to the non-GAAP measure of core sales refer to sales from continuing operations calculated according to GAAP but excluding:
Non-GAAP financial measures should not be considered in isolation from, or as a substitute for, financial information calculated in accordance with GAAP. Investors are encouraged to review the reconciliation of each non-GAAP financial measure to its most directly comparable GAAP financial measure.
Total sales increased 3.4%6.0% on a year-over-year basis during 20242025 as compared to 20232024 primarily as a result of a 3.7%4.7% increase in core sales resulting from the factors discussed below by segment. Currency exchange rates decreasedand acquisitions, net of divestitures increased reported sales by 0.3%1.2% and 0.1%, respectively, during 20242025 as compared to 2023. The impact of acquisitions was flat on a year-over-year basis during 2024 as compared to 2023.2024.
Price increases contributed 1.8%1.9% to sales growth on a year-over-year basis during 20242025 as compared to 20232024 and isare reflected as a component of core sales growth above.
Sales and operating profit at the business segment level are discussed in detail below. For information regarding the Company’s sales by geographical region, refer to Note 4 to the accompanying Consolidated and Combined Financial Statements.
Cost of sales decreasedincreased $32$116 million, or 1.5%,5.6%, on a year-over-year basis during 20242025 as compared to 20232024 driven primarily dueby to the impact of lowerhigher year-over-year materialsales costs.volumes and incremental materials and labor costs, partially offset by improved productivity.
Gross profit margins increased 20010 basis points on a year-over-year basis during 20242025 as compared to 2023,2024, driven by positive pricing actions and higher volume as discussed below and to a lesser extent lowerthe materialnet positive impact from the gross profit margin of recent acquisitions. The gross profit margin increase was partially offset by incremental year-over-year materials and labor costs, and the impactsimpact fromof foreignproduct currency exchange rates.mix.
SG&A expenses as a percentage of sales increased 11020 basis points on a year-over-year basis during 20242025 as compared to 20232024 primarily due to selectincremental investmentslabor incosts and sales and marketing growth initiatives, as well as the costs to operate as a stand-alone company.initiatives.
R&D expenses as a percentage of sales increasedslightly declined by 4010 basis points on a year-over-year basis during 20242025 as compared to 2023 driven by growth related R&D initiatives.2024.
2024 vs. 2023 operating profit margin comparisons were favorably impacted by:
•The impact of Argentine Peso devaluation on operations within the Product Quality & Innovation segment during 2023 - 60 basis points
•2023 impairment charge related to customer relationships and a trade name in the Product Quality and Innovation segment - 20 basis points
•One-time costs incurred in 2023 as a result of the Separation from Danaher - 10 basis points
•Costs incurred during 2025 related to certain strategic initiatives - 20 basis points
•Reduction of the tax indemnification related to the Separation from Danaher - 20 basis points
•The net dilutive impact during 2025 of 2024 acquisitions and dispositions - 10 basis pointspoints.
2025 vs. 2024 operating profit margin comparisons were favorably impacted by:
•Transaction costs incurred during 2024 related to the acquisition of TraceGains - 10 basis points
•Higher 2025 core sales, partially offset by incremental labor costs, sales and marketing growth initiatives, and the impact of product mix - 30 basis points
•The impact of incremental costs associated with operating as a stand-alone company, labor, R&D growth initiatives, and sales and marketing growth initiatives partially offset by higher 2024 core sales, foreign currency exchange rates, lower material costs and cost savings associated with continuing productivity improvement initiatives - 20 basis points
Total Water Quality segment sales increased 3.2%5.9% on a year-over-year basis during 20242025 as compared to 20232024 primarily as a result of core sales growth driven by the factors discussed below. Currency exchange rates and the impact of acquisitions, net of divestitures decreasedincreased reported sales by 0.4%1.0% and 0.3%,0.2%, respectively, during 20242025 as compared to 2023.2024. Geographically, the increase in reported sales was driven by an increase of 6.5%9.5% in Western Europe, 5.5% in high-growth markets, and 5.0% in North America, partially offset by a decrease of 2.8% in high-growth markets.America.
Core sales in the Water Quality segment increased 3.9%4.7% on a year-over-year basis during 20242025 as compared to 2023.2024. Geographically, core sales growth was driven by increases of 6.2%5.2% in North AmericaAmerica, 4.8% in high-growth markets, and 2.2%4.0% in Western Europe. Core sales were flatgrowth in high-growth markets,markets aswas adriven by mid-single digitsdigit core sales increaseincreases in Latin AmericaAmerica, was mostlypartially offset by a high-singlelow-single digit percentage core sales declinedeclines in China.
The increase in core sales was driven primarily by the ultraviolet water disinfection and filtration business and the chemical treatment solutions businessbusiness, and to a lesser extent by the analytical instrumentation business,business. andCore sales in the ultraviolet water disinfection and filtration business.business increased 6.0% in 2025, driven primarily by the municipal end-market. Year-over-year core sales in the chemical treatment solutions business increased 7.2%5.3% as a result of higher core sales across most major end-markets. Core sales in the analytical instrumentation business increased 2.9%4.0% as a result of increased core sales across North America and Western Europe. Core sales in the ultraviolet water disinfection and filtration business increased 1.5% in 2024, driven primarily by the municipal end-market.
•Higher 2025 core sales driven by positive pricing actions and materials cost saving initiatives, partially offset by incremental labor and raw materials costs and the impact of product mix - 100 basis points
2025 vs. 2024 operating profit margin comparisons were unfavorably impacted by:
•Higher 2024 core sales and incremental year-over-year cost savings associated with material costs, net of the impact of incremental year-over-year costs associated with labor and sales and marketing growth initiatives - 40 basis points
•One-time costsCosts incurred induring 20232025 asrelated ato resultcertain ofstrategic the Separation from Danaherinitiatives - 10 basis points
Sales Growth and Core Sales Growth (Decline)
Total Product Quality & Innovation segment sales increased 3.7%6.2% on a year-over-year basis during 20242025 as compared to 20232024 primarily as a result of core sales growth driven by the factors discussed below. TheCurrency impactexchange of acquisitionsrates increased reported sales by 0.4%1.5% during 20242025 as compared to 2023.2024. The impact of acquisitions, net of divestitures decreased reported sales by 0.1% during 2025 as compared to 2024. Geographically, reported sales increased by 4.5%8.0% in North America, 3.3%6.6% in Western Europe, and 4.0% in high-growth markets.
Core sales in the Product Quality & Innovation segment increased 3.3%4.8% on a year-over-year basis during 20242025 as compared to 2023.2024. Geographically, core sales growth was driven by increases of 3.0%5.8% in North America, 5.1%5.4% in high-growth markets, and 2.3%3.6% in Western Europe. Core sales growth in the high-growth markets was driven by high-singlemid-single digit core sales increases in Latin America and mid-single digit core sales increases in China.
From a product line perspective, core sales in the marking and coding business increased 2.8%5.2% on a year-over-year basis during 20242025 as compared to 20232024 driven by higher consumableincreased demand for consumables and new equipment in the industrial and consumer packaged goods end-markets. Core sales in the packaging and color solutions business increased 4.5%3.8% on a year-over-year basis during 20242025 as compared to 20232024 driven by increased demand across the consumer-packaged goods and industrial end-markets.
2024 vs. 2023 operating profit margin comparisons were favorably impacted by:
•The impact of Argentine Peso devaluation on operations during 2023 - 140 basis points
•2023 impairment charge related to customer relationships and a trade name - 60 basis points
•One-time costs incurred in 2023 as a result of the Separation from Danaher - 10 basis points
•Higher 2024 core sales, foreign currency exchange rates and cost savings associated with continuing productivity improvement initiatives, partially offset by incremental labor and sales and marketing growth initiatives - 30 basis points
What changed in the latest 10-Q
Risk Factors
There were no material changes during the quarter ended July 3, 2026 to the risk factors previously disclosed in the “Item 1A. Risk Factors” section of the 2025 Annual Report on Form 10-K, and as updated in the Company’s Form 10-Q for the period ended April 3, 2026.
Removed heading “Our restructuring activities could have adverse effects on our business.”
Largest changes
“Our restructuring activities could have adverse effects on our business.”see in full comparison
“We have implemented, and may continue to implement, significant restructuring activities across our businesses. These significant restructuring activities as well as our regular ongoing cost reduction activities (including in connection with the integration of acquired businesses) reduce our available talent, assets, and other resources and could slow improvements in our products and services, adversely affect our ability to respond to customers and limit our ability to increase production quickly if demand for our products increases. …”see in full comparison
There were no material changes during the quarter endedsee in full comparisonAprilJuly 3, 2026 to the risk factors previously disclosed in the “Item 1A. Risk Factors” section of the 2025 Annual Report on Form 10-K,otherandthanas updated in thenewCompany’sriskFormfactor10-Qidentifiedforbelow.the period ended April 3, 2026.
Full comparison: every changed paragraph (3)
There were no material changes during the quarter ended AprilJuly 3, 2026 to the risk factors previously disclosed in the “Item 1A. Risk Factors” section of the 2025 Annual Report on Form 10-K, otherand thanas updated in the newCompany’s riskForm factor10-Q identifiedfor below.the period ended April 3, 2026.
Our restructuring activities could have adverse effects on our business.
We have implemented, and may continue to implement, significant restructuring activities across our businesses. These significant restructuring activities as well as our regular ongoing cost reduction activities (including in connection with the integration of acquired businesses) reduce our available talent, assets, and other resources and could slow improvements in our products and services, adversely affect our ability to respond to customers and limit our ability to increase production quickly if demand for our products increases. In addition, delays in implementing planned restructuring activities or other productivity improvements, unexpected costs, or failure to meet targeted improvements may diminish the operational or financial benefits we realize from such actions. Any circumstances described above could adversely impact our business and financial statements.
Management's Discussion & Analysis (MD&A)
Removed heading “Year-Over-Year Changes in the Tax Provision and Effective Tax Rate”
Largest changes
Gross profit marginssee in full comparisondecreasedincreased30120 basis points on a year-over-year basis during the three-month period endedAprilJuly 3, 2026, as compared to the comparable period in 2025, driven byincrementalpositiveyear-over-yearpricing actions, the impact of improved laborcosts.overheadTheand productivity, recoveries of tariffs previously collected under IEEPA, and the net positive impact from the gross profit margindecreaseofwasrecent acquisitions, partially offset by increased labor costs and price increases due to inflation. Gross profit margins increased 40 basis points on a year-over-year basis during the six-month period ended July 3, 2026, as compared to the comparable period in 2025, driven by positive pricing actions, the impact ofproductforeignmix,currency exchange rates, recoveries of tariffs previously collected under IEEPA, and the net positive impact from the gross profit margin of recent acquisitions.
The Company’s net earnings for thesee in full comparisonthree-monththreeperiodand six-month periods endedAprilJuly 3, 2026 totaled$254$241 million and $495 million, respectively, compared to$225$222 million and $447 million, respectively, for thethree-monththreeperiodand six-month periods endedAprilJuly 4, 2025. The increase in net earnings was primarily driven by increased sales resulting from positive pricingactions andactions, the impact ofproductacquisitions,mix,and the positive impact of recoveries of tariffs previously collected under the International Emergency Economic Powers Act (“IEEPA”), partially offset by higher cost ofsales.sales and restructuring costs related to the 2026 Cost Optimization Program. Refer to “—Results of Operations” for further discussion of the year-over-year changes in net earnings for thethree-monththreeperiodand six-month periods endedAprilJuly 3, 2026.
“•Higher second quarter 2026 core sales and recoveries of tariffs previously collected under IEEPA, partially offset by incremental labor costs and sales and marketing growth initiatives - 90 basis points Operating profit margins were 22.5% for the six-month period ended July 3, 2026 as compared to 23.5% for the six-month period ended July 4, 2025. The following factors impacted year-over-year operating profit margin comparisons:”see in full comparison
“•Higher second quarter 2026 core sales and recoveries of tariffs previously collected under IEEPA, partially offset by incremental labor costs and sales and marketing growth initiatives - 50 basis points Operating profit margins were 24.6% for the six-month period ended July 3, 2026 as compared to 25.3% for the six-month period ended July 4, 2025. The following factors impacted year-over-year operating profit margin comparisons:”see in full comparison
“•Higher 2026 core sales and recoveries of tariffs previously collected under IEEPA, partially offset by incremental labor costs and sales and marketing growth initiatives - 80 basis points Operating profit margins were 23.6% for the six-month period ended July 3, 2026 as compared to 25.8% for the six-month period ended July 4, 2025. The following factors impacted year-over-year operating profit margin comparisons:”see in full comparison
SG&A expenses as a percentage of salessee in full comparisonwereincreasedflat270 bps and 130 bps during thethree-monththreeperiodand six-month periods endedAprilJuly 3, 2026, respectively, as compared to the comparableperiodperiods in2025.2025, driven primarily by restructuring costs related to the 2026 Cost Optimization Program, incremental labor costs, and sales and marketing growth initiatives.
Full comparison: every changed paragraph (78)
You should read this discussion along with the Company’s MD&A and audited financial statements and Notes thereto as of and for the year ended December 31, 2025, included within the 2025 Annual Report on Form 10-K, and the unaudited financial statements and related Notes as of and for the three-monththree periodand six-month periods ended AprilJuly 3, 2026 included in this Quarterly Report on Form 10-Q (this “Report”).
Veralto Corporation’s unifying purpose is Safeguarding the World’s Most Vital ResourcesTM. Our diverse group of leading operating companies provideprovides essential technology solutions that monitor, enhance and protect key resources around the globe. We are committed to the advancement of public health and safety and believe we are positioned to support our 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. For decades, we have used our scientific expertise and innovative technologies to address complex challenges our customers face across regulated industries – including municipal utilities, food and beverage, pharmaceutical and industrials – where the consequence of failure is high. Through our core offerings in water analytics, water treatment, marking and coding, and packaging and color, customers look to our solutions to help ensure the safety, quality, efficiency and reliability of their products, processes and people globally. Veralto is headquartered in Waltham, Massachusetts with a workforce of nearly 17,000 employees (whom we refer to as “associates”) as of December 31, 2025, strategically located in approximately 50 countries.
Veralto operates through two segments – Water Quality (“WQ”) and Product Quality & Innovation (“PQI”). Our businesses within these segments have strong globally recognized brands as a result of our leadership in served markets over several decades. Our WQ segment provides innovative products and services that improve the quality and reliability of water with leading brands including Hach, Trojan Technologies and ChemTreat. Our PQI segment enables our customers to promote consumer trust in their products and help enable product innovation with leading brands including Videojet, Linx, Esko, X-Rite and Pantone. We believe our leading positions result from the strength of our commercial organizations, our legacy of innovation, and our close and long-term connectivity to our customers and knowledge of their workflows, underpinned by our culture of continuous improvement. This has resulted in a large installed base of instruments that drive ongoing consumables and software sales to support our customers. As a result, our business generates recurring sales which represented approximately 62% of total sales during the threesix-month monthsperiod ended AprilJuly 3, 2026. Our business model also supports a strong margin profile with limited capital expenditure requirements and has generated attractive cash flows. We believe these attributes allow us to deliver financial performance that is resilient across economic cycles.
During the three-month period ended AprilJuly 3, 2026, overall revenues increased 6.7%7.6% and core sales increased 1.9%4.2% compared to the comparable period in 2025 primarily driven by core sales growth in the Water Quality segment. Currency exchange rates and acquisitions, net of divestitures increased reported sales by 3.5%1.0% and 1.3%,2.4%, respectively, during the three-month period ended AprilJuly 3, 2026 compared to the comparable period in 2025. For the six-month period ended July 3, 2026, overall revenues increased 7.1% and core sales increased 3.1%, compared to the comparable period in 2025. Currency exchange rates and acquisitions, net of divestitures increased reported sales by 2.2% and 1.8%, respectively, during the six-month period ended July 3, 2026 compared to the comparable period in 2025. For the definition of “core sales” refer to “—Results of Operations” below.
Geographically, the Company’s sales during the three-month period ended AprilJuly 3, 2026 in developed markets increased year-over-year by 7.7%,9.3%, driven by increased sales of 5.8%9.2% in North America, 12.3%9.0% in Western Europe, and 3.4%13.8% in other developed markets. Sales in high-growth markets increased 4.0%2.9% year-over-year. For the same period, core sales in developed markets increased 3.1%6.3% driven by increased core sales of 4.5%7.0% in North America and increased core sales of 0.6%4.9% in Western Europe. Core sales in high-growth markets decreased 0.6%0.1%, driven by mid-singlea low-single digit decreasedecreases in Latin America offset by low-single digit increaseand in China.
Geographically, the Company’s sales during the six-month period ended July 3, 2026 in developed markets increased year-over-year by 8.5%, driven by increased sales of 7.5% in North America, 10.6% in Western Europe, and 8.6% in other developed markets. Sales in high-growth markets increased 3.5% year-over-year. For the same period, core sales in developed markets increased 4.7% driven by increased core sales of 5.8% in North America and increased core sales of 2.7% in Western Europe. Core sales in high-growth markets decreased 0.3%, driven by low-single digit decreases in Latin America.
The Company’s net earnings for the three-monththree periodand six-month periods ended AprilJuly 3, 2026 totaled $254$241 million and $495 million, respectively, compared to $225$222 million and $447 million, respectively, for the three-monththree periodand six-month periods ended AprilJuly 4, 2025. The increase in net earnings was primarily driven by increased sales resulting from positive pricing actions andactions, the impact of productacquisitions, mix,and the positive impact of recoveries of tariffs previously collected under the International Emergency Economic Powers Act (“IEEPA”), partially offset by higher cost of sales.sales and restructuring costs related to the 2026 Cost Optimization Program. Refer to “—Results of Operations” for further discussion of the year-over-year changes in net earnings for the three-monththree periodand six-month periods ended AprilJuly 3, 2026.
Product Quality & Innovation: we expect improvedgrowth growthto accelerate as the year progresses, driven by steady demand from consumer packaged goods market globally.globally and increasing adoption of digital workflow solutions. Performance is expected to benefit from steady recurring revenue from a large installed base, new product offerings that help our customers convey the quality and safety of their products and build trust with consumers, and recovery in certain industrial end-markets in second half of the year.
The Company’s ability to meet its expectations areis subject to numerous risks, including, but not limited to, those described in “Item 1A. Risk Factors” within the Company’s 2025 Annual Report on Form 10-K and any subsequent updates in “Item 1A. Risk Factors” within Quarterly Reports on Form 10-Q.
On January 22, 2026, the Company completed the acquisition of In-Situ, Inc. (“In-Situ”), for a cash purchase price of approximately $426 million, net of cash acquired. In-Situ is a global leader in environmental water measurement and monitoring solutions with a leading portfolio of water quality sondes, water quality sensors and data management solutions that help customers monitor and measure the quality or quantity of surface and groundwater. In-Situ willhas bebeen integrated into the Water Quality segment.
On April 7, 2026, subsequent to the completion of the quarter, the Company completed the acquisition of GlobalVision, for a cash purchase price of approximately CAD $270 million,million ($195 million), net of cash acquired. GlobalVision leverages its core proprietary deterministic technology with AI-augmented functionality to help pharmaceutical and consumer packagedconsumer-packaged goods customers accelerate their speed to market and meet critical quality and packaging compliance regulations, verifying that packaging content remains accurate and compliant at every critical hand-off. GlobalVision will be integrated into the Product Quality & Innovation segment.
Total sales increased 6.7%7.6% and 7.1% during the three-monththree periodand six-month periods ended AprilJuly 3, 2026, respectively, compared to the comparable periodperiods in 2025, primarily as a result of core sales growth driven by the factors discussed below by segment.
Currency exchange rates and acquisitions, net of divestitures, increased reported sales by 3.5%1.0% and 1.3%,2.4%, respectively, during the three-month period ended AprilJuly 3, 2026, compared to the comparable period in 2025. Currency exchange rates and acquisitions, net of divestitures, increased reported sales by 2.2% and 1.8%, respectively, during the six-month period ended July 3, 2026, compared to the comparable period in 2025. Price increases contributed 1.9%3.0% and 2.4% to sales growth on a year-over-year basis during the three-monththree periodand six-month periods ended AprilJuly 3, 2026, respectively, and are reflected as a component of core sales growth above.
Cost of sales increased by $41$23 million,million or 7.8%,4.2% and by $64 million or 5.9% on a year-over-year basis during the three-monththree periodand six-month periods ended AprilJuly 3, 2026, respectively, as compared to the comparable periodperiods in 2025, driven primarily by higher year-over-year sales volumes, increased labor costs.costs and price increases due to inflation.
Gross profit margins decreasedincreased 30120 basis points on a year-over-year basis during the three-month period ended AprilJuly 3, 2026, as compared to the comparable period in 2025, driven by incrementalpositive year-over-yearpricing actions, the impact of improved labor costs.overhead Theand productivity, recoveries of tariffs previously collected under IEEPA, and the net positive impact from the gross profit margin decreaseof wasrecent acquisitions, partially offset by increased labor costs and price increases due to inflation. Gross profit margins increased 40 basis points on a year-over-year basis during the six-month period ended July 3, 2026, as compared to the comparable period in 2025, driven by positive pricing actions, the impact of productforeign mix,currency exchange rates, recoveries of tariffs previously collected under IEEPA, and the net positive impact from the gross profit margin of recent acquisitions.
SG&A expenses as a percentage of sales wereincreased flat270 bps and 130 bps during the three-monththree periodand six-month periods ended AprilJuly 3, 2026, respectively, as compared to the comparable periodperiods in 2025.2025, driven primarily by restructuring costs related to the 2026 Cost Optimization Program, incremental labor costs, and sales and marketing growth initiatives.
R&D expenses as a percentage of sales were essentially flat during the three-monththree periodand six-month periods ended AprilJuly 3, 2026,2026 as compared to the comparable periodperiods in 2025.
Operating profit margins were 23.8%21.4% for the three-month period ended AprilJuly 3, 2026 as compared to 24.2%22.8% for the three-month period ended AprilJuly 4, 2025. The following factors impacted year-over-year operating profit margin comparisons:
FirstSecond quarter 2026 vs. firstsecond quarter 2025 operating profit margin comparisons were unfavorably impacted by:
•Restructuring charges incurred related to the 2026 Cost Optimization Program - 200 bps
•Costs incurred in the firstsecond quarter of 2026 related to certain strategic initiatives, including transaction costs incurred related to the acquisitionsacquisition of In-Situ and GlobalVision - 3020 basis points
•The net dilutive impact during 2026 of acquisitions and dispositions - 10 basis points
•Acquisition-related fair value adjustment to inventory related to the acquisition of In-Situ - 10 basis points
•HigherThe incrementalnet labordilutive costsimpact partially offset by higher first quarterduring 2026 salesof acquisitions and dispositions - 1020 basis points FirstSecond quarter 2026 vs. firstsecond quarter 2025 operating profit margin comparisons were favorably impacted by:
•Transaction costs incurred during the firstsecond quarter of 2025 related to certain strategic initiatives - 2010 basis points
•Higher second quarter 2026 core sales and recoveries of tariffs previously collected under IEEPA, partially offset by incremental labor costs and sales and marketing growth initiatives - 90 basis points Operating profit margins were 22.5% for the six-month period ended July 3, 2026 as compared to 23.5% for the six-month period ended July 4, 2025. The following factors impacted year-over-year operating profit margin comparisons:
Year-to-date 2026 vs. year-to-date 2025 operating profit margin comparisons were unfavorably impacted by:
•Restructuring charges related to the 2026 Cost Optimization Program - 100 basis points
•Costs incurred in 2026 related to certain strategic initiatives, including transaction costs incurred related to the acquisitions of In-Situ and GlobalVision - 30 basis points
•The net dilutive impact during 2026 of acquisitions and dispositions - 10 basis points Year-to-date 2026 vs. year-to-date 2025 operating profit margin comparisons were favorably impacted by:
•Transaction costs incurred during the first two quarters of 2025 related to certain strategic initiatives - 10 basis points
•Higher 2026 core sales and recoveries of tariffs previously collected under IEEPA, partially offset by incremental labor costs and sales and marketing growth initiatives - 30 basis points
Total Water Quality segment sales increased 10.1% year-over-year during the three-monththree periodand six-month periods ended AprilJuly 3, 2026,2026 as compared to the comparable period in 2025, primarily as a result of core sales growth driven by the factors discussed below. Geographically, sales growth was driven by North America, which saw increases of 7.9%,10.8% and 9.4%, and Western Europe, which saw increases of 20.6%14.8% and 17.6% for the three-monththree periodand six-month periods ended AprilJuly 3, 2026, respectively, compared to the comparable periods in 2025. Sales in high-growth markets increased 7.7%3.7% and 5.6% during the three-monththree periodand six-month periods ended AprilJuly 3, 2026, respectively, compared to the comparable periods in 2025.
Price increases in the segment contributed 1.8%2.9% and 2.4% to sales growth on a year-over-year basis during the three-monththree periodand six-month periods ended AprilJuly 3, 2026, respectively, and are reflected as a component of the change in core sales growth.
Core sales in the Water Quality segment increased 3.8%5.7% and 4.8% year-over-year during the three-monththree periodand six-month periods ended AprilJuly 3, 2026.2026, respectively. Geographically, core sales growth was driven by increases of 5.8%8.3% in North America and 4.7%9.3% in Western Europe during the three-month period ended AprilJuly 3, 2026 compared to the comparable period in 2025. For the same period, core sales in high-growth markets increaseddecreased 0.3%,1.5%, driven by increases in certain Asian markets, partially offset by mid-single digit decreases in Latin America and low-single digit decreases in China. Geographically, core sales growth was driven by increased core sales of 7.0% in North America and 6.9% in Western Europe during the six-month period ended July 3, 2026 compared to the comparable period in 2025. For the same period, core sales in high-growth markets decreased 0.6%, driven by mid-single digit decreases in Latin America and low-single digit decreases in China.
The increase in core sales during the three-monththree periodand six-month periods ended AprilJuly 3, 2026 was driven by the chemical treatment solutions business and, to a lesser extent, the analytical instrumentation business. Core sales in the chemical treatment solutions business increased 4.1%10.7% and 7.4% year-over-year in the three-monththree periodand six-month periods ended AprilJuly 3, 2026, respectively, as a result of increased core sales across mostNorth major end-markets.America. Core sales in the analytical instrumentation business increased 2.6%2.8% and 2.7% year-over-year for the three-monththree periodand six-month periods ended AprilJuly 3, 2026, as a result of increased core sales across Western Europe and North America.
Operating profit margins were 24.0%25.1% for the three-month period ended AprilJuly 3, 2026 as compared to 24.9%25.6% for the three-month period ended AprilJuly 4, 2025. The following factors impacted year-over-year operating profit margin comparisons:
FirstSecond quarter 2026 vs. firstsecond quarter 2025 operating profit margin comparisons were unfavorably impacted by:
•TransactionRestructuring costs incurred in the first quarter of 2026charges related to the acquisition2026 ofCost In-SituOptimization Program - 4060 basis points
•The net dilutive impact during 2026 of acquisitions and dispositions - 40 basis points Second quarter 2026 vs. second quarter 2025 operating profit margin comparisons were favorably impacted by:
•Higher second quarter 2026 core sales and recoveries of tariffs previously collected under IEEPA, partially offset by incremental labor costs and sales and marketing growth initiatives - 50 basis points Operating profit margins were 24.6% for the six-month period ended July 3, 2026 as compared to 25.3% for the six-month period ended July 4, 2025. The following factors impacted year-over-year operating profit margin comparisons:
Year-to-date 2026 vs. year-to-date 2025 operating profit margin comparisons were unfavorably impacted by:
•Restructuring charges related to the 2026 Cost Optimization Program - 30 basis points
•Acquisition-relatedCosts fairincurred valuein adjustment2026 related to inventorycertain strategic initiatives, including transaction costs incurred related to the acquisition of In-Situ - 20 basis points
•Acquisition-related fair value adjustment to inventory related to the acquisition of In-Situ - 10 basis points Year-to-date 2026 vs. year-to-date 2025 operating profit margin comparisons were favorably impacted by:
•Higher 2026 core sales and recoveries of tariffs previously collected under IEEPA, partially offset by incremental labor costs - 20 basis points
Sales Growth and Core Sales DeclineGrowth
Total Product Quality & Innovation segment sales increased 1.7%3.8% and 2.8% year-over-year during the three-monththree periodand six-month periods ended AprilJuly 3, 2026, respectively, primarily as a result of changes in core sales driven by the factors discussed below. Geographically, sales growth was driven by North AmericaAmerica, which saw increases of 0.5%4.9% and 2.7%, and Western EuropeEurope, which saw increases of 5.0%3.7% and 4.3% during the three-monththree periodand six-month periods ended AprilJuly 3, 2026, respectively, compared to the comparable periodperiods in 2025. Sales in high-growth markets increased 0.6%2.1% and 1.4% during the three-monththree periodand six-month periods ended AprilJuly 3, 2026, respectively, compared to the comparable periods in 2025.
Price increases in the segment contributed 2.0%3.0% and 2.5% to sales growth on a year-over-year basis during the three-monththree periodand six-month periods ended AprilJuly 3, 2026, respectively, and are reflected as a component of the change in core sales described below.
Core sales in the Product Quality & Innovation segment decreasedincreased 1.0%2.0% and 0.5% year-over-year during the three-monththree periodand six-month periods ended AprilJuly 3, 2026, respectively. Geographically, the change in core sales was driven by decreasesincreases of 3.2%3.7% in North America and increases of 0.8% in Western Europe partially offset by increases of 1.2% in North America during the three-month period ended AprilJuly 3, 2026 compared to the comparable period in 2025. For the same period, core sales in high-growth markets decreasedincreased 1.4%, driven by mid-singleincreases in certain Asian markets, partially offset by low-single digit decreasedecreases in China and Latin America. Geographically, the change in core sales was driven by increases of 2.4% in North America partially offset by high-singledecreases of 1.2% in Western Europe during the six-month period ended July 3, 2026 compared to the comparable period in 2025. For the same period, core sales in high-growth markets were flat, driven by low-single digit increasedecreases in Latin America offset by mid-single digit increases in China.
From a product line perspective, core sales in the marking and coding business increased 2.0%3.5% and 2.8% year-over-year during the three-monththree periodand six-month periods ended AprilJuly 3, 2026, respectively, driven by demand across most major end-markets and geographies. Core sales in the packaging and color solutions business decreased 7.5%1.4% and 4.4% year-over-year during the three-monththree periodand six-month periods ended AprilJuly 3, 2026, respectively, due to the impact of global macroeconomic conditions on certain product lines.
Operating profit margins were 26.3%21.0% for the three-month period ended AprilJuly 3, 2026 as compared to 27.1%24.5% for the three-month period ended AprilJuly 4, 2025. The following factors impacted year-over-year operating profit margin comparisons:
FirstSecond quarter 2026 vs. firstsecond quarter 2025 operating profit margin comparisons were unfavorably impacted by:
•TransactionRestructuring costs incurred during the first quarter of 2026charges related to the acquisition2026 ofCost GlobalVisionOptimization Program - 40380 basis points
•Decreased core sales, along with incremental laborTransaction costs andincurred salesduring andthe marketingsecond growthquarter initiativesof 2026 related to the acquisition of GlobalVision - 6050 basis points FirstSecond quarter 2026 vs. firstsecond quarter 2025 operating profit margin comparisons were favorably impacted by:
•Higher 2026 core sales and recoveries of tariffs previously collected under IEEPA, partially offset by incremental labor costs and sales and marketing growth initiatives - 80 basis points Operating profit margins were 23.6% for the six-month period ended July 3, 2026 as compared to 25.8% for the six-month period ended July 4, 2025. The following factors impacted year-over-year operating profit margin comparisons:
Year-to-date 2026 vs. year-to-date 2025 operating profit margin comparisons were unfavorably impacted by:
•Restructuring charges related to the 2026 Cost Optimization Program - 190 basis points
•Transaction costs incurred during 2026 related to the acquisition of GlobalVision - 50 basis points Year-to-date 2026 vs. year-to-date 2025 operating profit margin comparisons were favorably impacted by:
•Higher 2026 core sales and recoveries of tariffs previously collected under IEEPA, partially offset by incremental labor costs and sales and marketing growth initiatives - 10 basis points
VLTO insider buying and selling (Form 4)
Since 2026-04-11, insiders reported open-market purchases in 0 Form 4 filings and open-market sales in 4 filings (3 insiders, 4 trade dates, 15,480 shares, about $1.5M; 3 of these filings say the sales were made under a Rule 10b5-1 trading plan). Net open-market shares: -15,480 (purchases minus sales); net value about -$1.5M.Totals add up every open-market (code P and S) line in those filings, using the prices reported in the filings. Awards, option exercises, tax withholding and gifts are listed below but not counted.
| Trade date | Insider | Transaction | Shares | Price | Value |
|---|---|---|---|---|---|
| 2026-08-17 | Trivedi Surekha |
Open-market sale |
986 | $97.05 | $95.7K |
| 2026-07-29 | Honeycutt Jennifer |
Open-market sale |
7,097 | $101.52 | $720.5K |
| 2026-07-29 | Honeycutt Jennifer |
Option exercise |
7,097 | $28.76 | $204.1K |
| 2026-07-17 | Honeycutt Jennifer |
Open-market sale |
7,097 | $95.00 | $674.2K |
| 2026-07-17 | Honeycutt Jennifer |
Option exercise |
7,097 | $28.76 | $204.1K |
| 2026-07-15 | Schwieters John T |
Grant/award | 1,009 | — | — |
| 2026-07-15 | Williams Thomas |
Grant/award | 1,009 | — | — |
| 2026-07-15 | Wallis-Lage Cindy L. |
Grant/award | 1,009 | — | — |
| 2026-07-15 | Sankaran Vijay P. |
Grant/award | 1,009 | — | — |
| 2026-07-15 | Mitts Heath A |
Grant/award | 1,009 | — | — |
| 2026-07-15 | Lohr Walter G |
Grant/award | 1,009 | — | — |
| 2026-07-15 | King William |
Grant/award | 1,009 | — | — |
| 2026-07-15 | Kambeyanda Shyam |
Grant/award | 1,099 | — | — |
| 2026-07-15 | Comas Daniel L |
Grant/award | 1,099 | — | — |
| 2026-07-15 | Colpron Francoise |
Grant/award | 1,099 | — | — |
| 2026-07-15 | Filler Linda |
Grant/award | 1,009 | — | — |
| 2026-07-15 | Filler Linda |
Grant/award | 825 | — | — |
| 2026-07-15 | Ralhan Sameer |
Shares withheld for tax | 3,305 | $91.00 | $300.8K |
| 2026-05-15 | Beneteau Lesley |
Shares withheld for tax | 423 | $84.83 | $35.9K |
| 2026-05-01 | Skeete Bernard M |
Open-market sale | 300 | $88.21 | $26.5K |
Well-known investors holding VLTO (13F)
| Investor | Quarter | Shares | Reported value | % of their 13F | Change vs prior quarter |
|---|---|---|---|---|---|
| AQR Capital Management (Cliff Asness) | 2026-06-30 | 2,313,579 | $202.8M | 0.07% | Reduced 3% |
| Millennium Management (Israel Englander) | 2026-06-30 | 2,064,110 | $183.0M | 0.12% | Added 952% |
| Citadel Advisors (Ken Griffin) | 2026-06-30 | 1,350,356 | $119.7M | 0.07% | Added 626% |
| Renaissance Technologies | 2026-06-30 | 1,078,600 | $95.7M | 0.13% | Reduced 23% |
| Gotham Asset Management (Joel Greenblatt) | 2026-06-30 | 486,076 | $43.1M | 0.1% | Added 45% |
| D. E. Shaw & Co. | 2026-06-30 | 228,038 | $20.2M | — | Sold out |
| Gates Foundation Trust | 2026-06-30 | 124,333 | $11.0M | 0.03% | No change |
| Two Sigma Investments | 2026-06-30 | 71,038 | $6.3M | 0.0% | Added 753% |
| Bridgewater Associates | 2026-06-30 | 42,120 | $3.7M | 0.02% | New position |