Veralto Corp

Q2 results were strong and momentum improved (supports raised guidance): - Total sales +7.6% YoY in Q2. - Adjusted EPS +19.4% YoY. - Free cash flow $328M (robust cash generation). - Core sales +4.2% YoY, led by Water Quality +5.7% and PQI +2.0%. - Management highlighted sequential acceleration in both segments from Q1 → Q2 and framed durability into the second half based on funnel/booking trends.

Forecast/outlook: core growth acceleration in 2H and guidance raise (key positive): - Company expects year-over-year core sales growth to accelerate in 2H to ~5%–6% (implying better volume trends). - Pricing expected to be slightly moderated vs earlier periods, but still at or slightly above the high end of the guided range. - Full-year adjusted EPS raised to $4.35–$4.43, representing ~12%–14% YoY growth. - Margin: guided ~25 bps margin expansion in Q3 and 25–50 bps for full year; Q4 improvement expected to be “nice,” led by PQI.

What’s driving growth (opportunities, with segment specifics): - Water Quality drivers: - Industrial demand remains strong, tied to data centers and associated ecosystem (power/mining/semiconductors). - Scarcity/reuse tailwind supporting recycling and reuse solutions. - PQI drivers: - Strong demand for digital workflow solutions (bookings/visibility cited), including integrations around Esko, TraceGains, GlobalVision. - Marking/coding supported by easier comps in Q4. - Packaging & color equipment recovery: exited Q2 with better funnels and stronger service growth. - AI angle in PQI: management said AI is increasingly embedded in workflows (notably GlobalVision’s deterministic/inspection reliability for regulated environments), supporting mistake-proofing and speed to market.