Veralto Corporation (VLTO) Q3 2026 Earnings Report

The call was strongly positive, marked by sales and EPS growth, raised full-year guidance, robust free cash flow, accelerating core growth, early cost savings, active capital deployment, and healthy demand across most businesses. Challenges included weak municipal spending in China, project timing variability, modest regional softness, inflationary pressures, the loss of a tariff benefit in 2027, and some Cleanwater1 margin dilution, but management characterized overall demand, execution, and the outlook as strong.

For the fourth quarter, Veralto expects core sales growth of 5.5%-6.5% and approximately 5% growth from acquisitions, resulting in total sales growth of approximately 10%-11%; it raised full-year adjusted EPS guidance to $4.49-$4.52 per share, representing 15%-16% growth over the prior year. The Cost Optimization Program is expected to deliver $10 million-$15 million worth of savings in 2026, with roughly half the savings by the end of 2027 and the full run rate in 2028. Fourth-quarter fall-through is expected to be 30%-35%, or roughly 30 basis points of a margin expansion on a year-over-year basis, while the Cost Optimization Program adds another roughly 40 basis points to the OMX, for 70 basis points mostly offset by Cleanwater1; for 2027, management said to expect 30%-35% of a fall-through, close to 30-ish basis points, and roughly $35 million cost saves, with the tariff benefit not there next year and some dilution from the Cleanwater1 acquisition. PQI is expected to be closer to the high end of the 5%-6.5% range in the fourth quarter.