Veralto raises earnings-per-share outlook to $4.52 after 7.5% sales growth
Key Facts
Veralto reported results on October 29 for the third quarter ended October 2, 2026, with sales of $1.509 billion, up 7.5% year over year. Core sales growth, a non-GAAP measure, was 5.1%. The company posted net income of $253 million, or $1.03 per diluted share, while adjusted net income was $290 million, or $1.18 per share. Adjusted earnings per share exceeded the company’s forecast range for the quarter of $1.06 to $1.09. Veralto also raised its full-year outlook for core sales growth and adjusted earnings per share.
Operating profitability measures diverged between reported and adjusted figures. GAAP operating margin was about 19.7%, compared with 23.2% in the same quarter a year earlier, and operating profit fell to $298 million from $326 million. By contrast, adjusted operating margin rose to 25.6% from 23.9% a year earlier, while adjusted operating profit was $386 million versus $336 million. Reported net income rose to $253 million from $239 million in the year-earlier period. The comparison highlights an expansion in the adjusted margin alongside a decline in the reported operating margin.
Water Quality was the clearest driver of core sales growth, posting growth of 6.4%, while acquisitions contributed 2.3% to overall sales growth, Chief Executive Jennifer Honeycutt said. The segment reported sales of $939 million, compared with $856 million a year earlier. Product Quality & Innovation sales reached $570 million, versus $548 million. Honeycutt said core sales grew 5.1%, led by the water quality segment. She added that demand for water analytics products and services remained stable; these services support the daily operations of municipal, environmental and industrial customers.
The company attributed strong demand for water treatment solutions to favorable industry trends in North America. These included digital infrastructure investment, higher industrial production and growing demand for water reuse solutions. The company said core sales of water treatment solutions grew at a double-digit rate during the quarter. Honeycutt linked the segment’s growth to these factors, as Water Quality sales increased from the same period a year earlier. She also said core sales growth in Product Quality & Innovation accelerated from the previous quarter.
Operating cash flow was $323 million during the quarter, while free cash flow, a non-GAAP measure, reached $304 million. In capital allocation, Veralto spent $1.1 billion on four strategic acquisitions from the start of the year through October 28. The acquisitions were In-Situ, GlobalVision, Alfaa UV and Cleanwater1. The company also repurchased $550 million of shares, equivalent to 2.4% of shares outstanding as of that date. It raised its estimate for 2026 annual savings from its cost improvement program to a range of $10–15 million.
Veralto raised its full-year 2026 core sales growth outlook to a range of 4.2%–4.5%, from prior guidance of 4.0%–4.5%. It also raised its adjusted diluted earnings-per-share outlook to $4.49–$4.52, from $4.35–$4.43 previously. For the fourth quarter, the company expects year-over-year core sales growth of 5.5% to 6.5%. It estimated an adjusted operating margin of about 24.5% for the quarter and adjusted earnings per share of $1.13 to $1.16. Honeycutt said execution and investments during 2026 are laying the groundwork for continued momentum in 2027.
The third-quarter earnings call was scheduled for October 30, 2026, at 7:30 a.m. Eastern Time, after results were announced the previous day. The company said a replay would be available after the call ended through November 7, 2026. In trading on October 29, VLTO shares closed at $104.06, compared with a close of $102.80 on October 28. The closing data compare the two consecutive sessions surrounding the earnings announcement. Available data did not include the session high or low.