Veralto posted steady growth in the fourth quarter.
Veralto (VLTO -0.19%), a key player in water treatment and printing solutions, announced its fourth-quarter earnings on Feb. 4. The company, which was spun off from Danaher in 2023, reported revenue of $1.345 billion, marking a 4.4% year-over-year increase. Adjusted earnings per share reached $0.95.
| Metric | Q4 2024 | Q4 2023 | % Change |
|---|---|---|---|
| Diluted EPS (non-GAAP) | $0.95 | $0.87 | 9.2% |
| Revenue | $1.345 billion | $1.288 billion | 4.4% |
| Operating margin (non-GAAP) | 23.8% | 23.8% | 0 |
| Net earnings | $227 million | $200 million | 13.5% |
| Free cash flow | $263 million | $241 million | 9.1% |
Business Overview
Veralto operates mainly in two segments: water treatment solutions, and printing and coding solutions. In water treatment, it provides essential services such as filtration and purification technologies for industrial and consumer use. For printing and coding, it offers solutions for the food, beverage, and pharmaceutical industries that emphasize compliance and traceability.
Recently, Veralto has focused on strategic acquisitions, notably purchasing TraceGains to enhance its compliance software offerings.
Quarterly Analysis and Highlights
In Q4, Veralto continued to strengthen its core segments. Water treatment solutions generated $811 million in revenue, up from $782 million in the same period last year, revealing a steady demand in North America. Similarly, the printing and coding solutions segment grew, with sales hitting $534 million versus last year’s $506 million, partly due to the acquisition of TraceGains.
The company maintained a non-GAAP operating margin of 23.8%, consistent with the prior year. This stability reflects its effective cost management and growth strategies across diverse markets.
Veralto’s technology-driven approach is evident in its growing R&D budget — expenditures on that front increased by about 21% year over year to $69 million in the quarter. The acquisition of TraceGains also reflects management’s strategic push toward digitization and market expansion in food safety.
However, challenges persist. Veralto’s long-term debt was approximately $2.599 billion, nearly unchanged from 2023. Additionally, geopolitical tensions have caused a decline in sales within China, and could affect its future growth.
From a financial perspective, free cash flow rose 9.0% to $263 million.
Looking Ahead
Veralto has provided guidance for 2025, anticipating core sales growth in the low- to mid-single-digit percentages and earnings per share between $3.60 and $3.70. Management also expects continued incremental margin expansion.
Investors should keep an eye on how well Veralto handles acquisitions like TraceGains in its efforts to foster synergies and bolster market capabilities. Additionally, geopolitical risk and long-term debt management will be crucial aspects for future re-evaluation, as their impact could meaningfully impact Veralto’s financial trajectory.
