Veralto expects underlying sales growth of up to 6.5% in fourth quarter of 2026
Key Facts
Veralto reported results on October 29 for the third quarter ended October 2, 2026, saying sales rose 7.5% year over year to $1.509 billion, with underlying sales growth of 5.1%. The company issued fourth-quarter guidance calling for underlying growth of 5.5% to 6.5%, an adjusted operating margin of about 24.5%, and adjusted diluted earnings per share of $1.13 to $1.16. The chief executive said on the earnings call that total sales could grow about 10% to 11% during the quarter, including contributions from acquisitions. This separates the official underlying growth forecast from the estimate for total sales growth, which includes the impact of deals. Veralto also raised its full-year fiscal outlook, citing third-quarter performance and expectations for the rest of the year.
Third-quarter performance included a 19.2% year-over-year increase in adjusted diluted earnings per share to $1.18, while adjusted net earnings were $290 million. Underlying sales growth for the quarter exceeded the 4.2% recorded in the second quarter, when sales rose 7.6% to $1.474 billion. In its second-quarter results announcement, the company had raised its 2026 underlying sales growth forecast to a range of 4.0%–4.5% from 3.0%–4.5%. In its October announcement, it raised the annual range again to 4.2%–4.5%, compared with the previous estimate of 4.0%–4.5%. It also raised its full-year adjusted earnings-per-share outlook to $4.49–$4.52 from $4.35–$4.43. This latest range is for fiscal 2026, while fourth-quarter earnings-per-share guidance starts at $1.13.
The fourth-quarter outlook includes a contribution of about 5% from acquisitions alongside underlying growth of 5.5% to 6.5%, the chief executive said on the earnings call. That puts expected total sales growth at about 10%–11%, an estimate that includes the additional impact of deals. On profitability, the company expects an adjusted operating margin of about 24.5% in the fourth quarter. For the full year, it raised its forecast for adjusted operating-margin expansion to about 50 basis points, from a previous range of 25–50 basis points. It also raised its forecast for free cash flow conversion to more than 105% of GAAP net earnings, from a previous forecast of more than 100%.
On demand drivers, the chief executive said water treatment solutions recorded double-digit growth in the third quarter. She attributed this to favorable industrial trends in North America, including digital infrastructure investment and rising industrial production. She added that growing demand for water reuse solutions supported demand for treatment products. On costs, the company said expected savings from its cost-improvement program for 2026 rose to $10–15 million. It pointed to early gains from the program, alongside higher estimates for margin expansion and free cash flow conversion.
Veralto also said it had allocated $1.1 billion to four strategic acquisitions from the start of the year through October 28. The company repurchased $550 million of shares over the same period, equivalent to 2.4% of shares outstanding. These figures come as management estimates acquisitions will contribute about 5% to fourth-quarter sales growth. The company is scheduled to webcast its third-quarter earnings conference on October 30, 2026, starting at 7:30 a.m. Eastern time. The conference follows the results announcement by one day and gives management an opportunity to present details of performance and the outlook it issued.