Veralto (VLTO) Q2 2026 earnings summary

Executive summary

• Total sales grew 7.6% year-over-year in Q2 2026 to $1,474 million, with core sales up 4.2% and both Water Quality (+5.7%) and Product Quality & Innovation (+2.0%) segments contributing.

• Adjusted EPS rose 19.4% year-over-year to $1.11, with net earnings at $241 million ($0.98 per share), and free cash flow reached $328 million.

• Full-year 2026 adjusted EPS guidance was raised to $4.35–$4.43 (12–14% growth), and core sales growth guidance increased to 4.0–4.5%.

• Strategic bolt-on acquisitions (In-Situ, GlobalVision, Alfaa UV) and over 5 million shares repurchased for $480 million YTD, reducing outstanding shares by 2.1%.

• Cost optimization program launched, with restructuring charges recognized and major benefits expected by 2027.

Financial highlights

• Q2 2026 sales reached $1,474 million, adjusted gross margin was 61.6% (+160 bps YoY), and adjusted operating profit margin was 24.6% (+90 bps YoY).

• Adjusted EBITDA was $375 million (25.4% margin), and free cash flow for Q2 was $328 million with a 136% conversion rate.

• Net earnings margin (GAAP) for Q2 was 16.4%; operating profit margin was 21.4% (down from 22.8% due to restructuring and acquisition costs).

• IEEPA tariff refunds contributed $16 million, impacting adjusted OP margin by 110 basis points; $0.05 per share benefit in Q2.

• SG&A expenses increased to 34.9% of sales for the quarter, mainly due to restructuring and labor costs.

Outlook and guidance

• Q3 2026 core sales growth expected at 4.0–5.0%; full-year core sales growth guidance raised to 4.0–4.5%.

• Full-year adjusted EPS guidance increased to $4.35–$4.43, with adjusted operating margin expansion of 25–50 basis points.

• Free cash flow conversion expected to remain at or above 100% for the year.

• Margin expansion in Q4 expected to be led by PQI; pricing to remain strong but moderate due to tougher comps.

• Management remains cautious regarding tariffs, trade policy, and geopolitical risks.