Bank CEOs meet with Trump to discuss Fannie Mae and Freddie Mac - Bloomberg
Veralto Corporation (NYSE:VLTO) reported strong first quarter 2025 results on April 29, with accelerating core sales growth and double-digit earnings per share expansion. The company’s shares rose 2.05% in after-hours trading to $95.00, reflecting positive market reaction to the results.
Quarterly Performance Highlights
Veralto delivered robust financial performance in Q1 2025, with total sales reaching $1,332 million, representing a 6.9% increase compared to the same period last year. Core sales growth, which adjusts for currency and acquisition impacts, was even stronger at 7.8%, driven by volume growth of 6.5% and price increases of 1.3%.
The company reported adjusted earnings per share of $0.95, up 13% year-over-year, while adjusted operating profit increased 9% to $333 million with margins expanding 50 basis points to 25.0%.
As shown in the following consolidated financial results, Veralto demonstrated strength across all key metrics:
"Q1 2025 performance reflects the durability of our businesses fortified by strong execution," said Jennifer L. Honeycutt, President and Chief Executive Officer, during the presentation.
The results represent a significant acceleration from the 4.6% core sales growth reported in the third quarter of 2024, indicating positive momentum in the company’s business.
Segment and Regional Analysis
Veralto’s performance was strong across both of its operating segments. The Water Quality segment, which represents approximately 60% of total sales, generated $794 million in revenue, up 6.0% year-over-year with core growth of 7.4%. The Product Quality & Innovation (PQI) segment delivered $538 million in sales, increasing 8.3% with core growth also at 8.3%.
Geographically, Veralto saw particularly strong performance in Western Europe, which posted 10.8% core sales growth despite representing only 23% of Q1 sales. North America, the company’s largest market at 49% of sales, grew 7.9%, while High Growth Markets increased 6.1%.
The following regional breakdown illustrates the company’s global performance:
Adjusted operating profit margins improved in both segments, with Water Quality reaching 25.2% and Product Quality & Innovation achieving 28.4%. This represents continued margin expansion compared to the previous year.
The detailed consolidated performance comparison with Q1 2024 shows consistent improvement across key metrics:
Financial Position and Cash Flow
Veralto maintained a strong financial position with $1,239 million in cash and cash equivalents at the end of Q1 2025. The company reported gross debt of $2,630 million and net debt of $1,391 million, resulting in gross leverage of 2.0x and net leverage of 1.1x.
Free cash flow increased 39% year-over-year to $142 million, with a free cash flow conversion rate of 63%. This represents a significant improvement from the $102 million reported in Q1 2024.
The following chart details the company’s cash flow and balance sheet position:
"We have a strong annual cash generation and resilient, capital-light business model," noted Sameer Ralhan, SVP and Chief Financial Officer, during the presentation.
Business Model and Strategic Positioning
Veralto emphasized the durability of its business model, highlighting that approximately 60% of its sales are recurring in nature. The company focuses on essential technologies that are integral to customers’ daily operations, with a significant portion of revenue coming from consumables, software, and services.
Approximately 80% of Veralto’s sales are in the water, food, and pharmaceutical sectors, which benefit from attractive long-term secular growth drivers. The company positions its technology solutions at the high end of the customer value continuum.
As part of its continuous improvement initiatives, Veralto highlighted its 2025 CEO Kaizen Week, which involved 6 operating companies, over 180 participants, 20 locations, and 10 events focused on improving operational efficiency and customer value.
Guidance and Outlook
Looking ahead, Veralto provided guidance for both Q2 and full-year 2025. For the second quarter, the company expects core sales growth in the low to mid-single digits and adjusted earnings per share between $0.84 and $0.88.
For the full year 2025, Veralto maintained its outlook for low to mid-single digit core sales growth, with adjusted operating profit margin expansion of 25 to 50 basis points. The company expects adjusted earnings per share between $3.60 and $3.70 for the full year, with free cash flow conversion of 90% to 100%.
The following guidance summary illustrates the company’s expectations:
The guidance takes into account estimated tariff increases and countermeasures, and assumes an effective tax rate of approximately 23% with diluted shares outstanding of about 251 million.
Conclusion
Veralto’s Q1 2025 results demonstrate the company’s ability to deliver strong performance across segments and regions. With accelerating core sales growth, expanding margins, and robust cash flow generation, the company appears well-positioned to meet its full-year targets.
The positive market reaction in after-hours trading suggests investors are encouraged by both the Q1 performance and the outlook for the remainder of 2025. As Veralto continues to focus on its core markets in water, food, and pharmaceuticals, its recurring revenue model provides stability while allowing for continued growth and margin expansion.
Full presentation:
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.