Prepared remarks
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Q3 2026 Earnings Prepared Remarks 10/29/2026 1 Third Quarter 2026 Prepared Remarks October 29, 2026 Please view these remarks in conjunction with our Q3 2026 earnings release, slide presentation and Form 10-Q. Reconciliations to all non-GAAP references can be found in the appendix of our webcast slides. These documents are available on our website, www.veralto.com, under the investors section, or via the following link: Quarterly Earnings | Veralto. We also invite you to listen to our live Q3 2026 earnings webcast featuring an overview by Jennifer L. Honeycutt, President and Chief Executive Officer, followed by a question- and-answer session with Jennifer L. Honeycutt and Sameer Ralhan, SVP and Chief Financial Officer, which will begin Friday, October 30th at 7:30 a.m. Eastern Time and will be available via the following link: Veralto Q3 2026 Earnings Webcast Forward Looking Statements These prepared remarks contain forward‐looking statements within the meaning of the federal securities laws, including fourth quarter and full year 2026 guidance, and other statements regarding events or developments that we believe or anticipate will or may occur in the future. These "forward-looking" statements are subject to a number of risks and uncertainties, including those set forth in our SEC filings. Actual results may differ materially from our forward-looking statements. These forward-looking statements speak only as of the date that they are made, October 29, 2026, and we do not assume any obligation to update any forward-looking statements except as required by law.
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Q3 2026 Earnings Prepared Remarks 10/29/2026 2 Jennifer L. Honeycutt, CEO: Third Quarter Executive Summary Third Quarter Executive Summary In the third quarter we delivered: ▪ 7.5% total sales growth [5.1% core, 2.3% acquisition, 0.1% currency], ▪ 170 basis points of adjusted operating profit margin expansion, ▪ 19.2% adjusted EPS growth, and ▪ $304 million of free cash flow, Core sales grew 5.1%, led by Water Quality at 6.4%. PQI core sales grew 3.2%. Demand for our products and services remains healthy across both segments. In Water Quality, core sales of our water treatment solutions grew double‐digits in the third quarter driven by favorable industrial trends in North America including digital infrastructure investments, higher industrial production and increasing need for water reuse solutions. 3 Note: Alfaa acquisi on announced on uly 21, 2026
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Q3 2026 Earnings Prepared Remarks 10/29/2026 3 We continue to see steady demand for our water analytics products and services which support the daily operations of municipal, environmental and industrial customers. As expected, PQI’s core sales growth rate increased sequentially, supported by steady demand for marking and coding solutions and an acceleration of growth in packaging and color. We expect PQI’s core sales growth rate to further accelerate in the fourth quarter, driven largely by increasing sales of digital workflow solutions. Relative to the fourth quarter, we expect core sales growth between 5.5% to 6.5%, acquisition growth of approximately 5.0%, and a modest (0.5%) headwind from currency translat ion… resulting in anticipated total year-over-year sales growth between 10.0% and 11.0%. Reflecting this Q4 growth outlook, early gains from our Cost Optimization Program and our strong third-quarter performance, we raised our full year 2026 adjusted earnings per share guidance to $4.49 to $4.52, representing 15% to 16% growth over the prior year. Our revised guidance includes the recently completed acquisition of Cleanwater1 and reflects our year‐to‐date share repurchase activity. In 2026, we have now deployed over $1.65 billion between acquisitions ($1.1 billion) and share repurchases ($550 million) while maintaining net leverage below 1x and ample financial flexibility to act decisively on attractive opportunities. This year we acquired four strategic bolt‐ons, including: 1. In‐Situ – environmental water analytics acquired in Q1 2. Global ision – digital workflow solutions acquired in Q2 3. Alfaa – ultraviolet water treatment acquired in Q3 4. Cleanwater1 – water treatment acquired in Q4 (completed October 5, 2026) We are excited about each of these leading technology providers which avail Veralto of structurally higher growth end-markets while meeting our disciplined capital allocation framework. Our most recent acquisition, Cleanwater1, enhances our portfolio of differentiated water treatment technologies. It expands our presence in attractive, faster‐growing water
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Q3 2026 Earnings Prepared Remarks 10/29/2026 4 disinfection applications while creating meaningful opportunities to drive recurring revenue growth across its large installed base. We see a clear path to leverage our combined capabilities to deliver enhanced value to our customers and drive long‐term shareholder value. More information on the Cleanwater1 acquisition can be found in our news release: Cleanwater1 Acquisition News Release. As our M&A flywheel has ramped up, so too has our share repurchase activity. Throughout 2026, we have opportunistically repurchased shares. As of October 28, 2026, we have repurchased over 6 million shares this year for approximately $550 million. This represents 2.4% of shares outstanding as of February 13, 2026, and we have now completed 73% of our $750 million share repurchase authorization. With a strong balance sheet and robust cash generation, we remain focused on compounding long-term shareholder value through high-quality growth, VES-driven execution and disciplined capital allocation. In summary, we delivered outstanding third quarter results, demand remains healthy across our end markets, and we are poised for a strong finish to 2026. We are on pace to achieve ~8% total sales growth and 15%‐16% adjusted EPS growth while generating over $1 billion dollars of free cash flow this year.
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Q3 2026 Earnings Prepared Remarks 10/29/2026 5 Key Accomplishments in Three Years Since Spin-Off ▪ This year’s performance and disciplined capital deployment reflect the stronger eralto that we have been architecting since our spin‐off in 2023. ▪ As we mark our third anniversary as an independent, public company, I’m proud of how much we’ve accomplished and even more excited about our future. ▪ Over the course of our first three years, we have: o Simplified ES and improved operating rigor o Accelerated growth through innovation and commercial execution, and o Strengthened our portfolio through disciplined M&A ▪ Since our spin‐off, we have accelerated core sales growth by ~200 basis points, expanded adjusted operating margins by ~50 basis points, on average, annually and are on pace to deliver our third consecutive year of double‐digit adjusted EPS growth. ▪ With a stronger foundation, talented team and proven track record, we are excited about the opportunities ahead and confident in our ability to deliver sustainable, long‐ term value for shareholders. 4 $5.0 $5.2 $5.5 ~$5.9 2023 2024 2025 2026E (1) Sales in $ billions 3.1% 3.4% 6.0% 7.7% to 8.0% Total Sales Growth 2.6% 3.7% 4.7% 4.2% to 4.5% Core Sales Growth Acquisi ons 60% Share epurchases 22% Dividends 12% CAPE 6% ~ 50 basis points 20 basis points 80 basis pointsn.a.Adj. OP Margin Expansion 15% to 16% 10% 11%n.a.Adj. Earnings Per Share Growth
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Q3 2026 Earnings Prepared Remarks 10/29/2026 6 Sameer Ralhan, CFO Commentary on Third Quarter Financial Results Q3 2026 Key Consolidated Financial Results In the third quarter, total sales grew 7.5% on a year-over-year basis, to over $1.5 billion. ▪ Core sales grew 5.1% ▪ Acquisitions contributed 2.3% growth ▪ Currency was a 0.1% tailwind year-over-year Core sales growth was led by volume growth of 2.8%, with disciplined price execution contributing 2.3%. Recurring revenue grew high-single digits and comprised 62% of total sales. Non-recurring revenue grew strong mid-single digits. Adjusted gross profit margin was 60.6%, up 50 basis points over the prior year period, with about half driven by leverage from core sales growth and half attributable to $4.6 million in tariff refunds received in the quarter. Through the first nine months, we have now received approximately $21.0 million in tariff refunds. 5
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Q3 2026 Earnings Prepared Remarks 10/29/2026 7 Third quarter adjusted operating profit increased 14.9%, or $50 million, year-over-year to $386 million and adjusted operating profit margin expanded by 170 basis points to 25.6%. This margin expansion primarily reflects: ▪ Operational performance: ~130 basis points -- including price execution, leverage from core sales growth and cost efficiency ▪ Cost Optimization Program: ~40 basis points ▪ Tariff refunds: ~30 basis points ▪ (20) to (30) basis points of dilution from acquisitions Adjusted earnings per share grew 19.2% year-over-year to $1.18 per share. As compared to our guidance, adjusted EPS came in $0.09 per share above the high end of our guidance range: ▪ ~$0.06 per share driven by higher adjusted operating profit in the segments ▪ ~$0.02 per share driven by lower corporate expense and effective tax rate ▪ ~$0.01 per share related to tariff refunds Free cash flow in the third quarter was $304 million, up 17.8% versus the prior-year period, primarily driven by the growth in earnings. Through nine months of this year our free cash flow conversion to GAAP net income is 107% and trailing twelve-month free cash flow margin was 18.8%.
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Q3 2026 Earnings Prepared Remarks 10/29/2026 8 Water Quality Q3 2026 Performance Our Water Quality segment delivered $939 million in sales, up 9.8% on a year-over-year basis. Recurring revenue grew high-single digits and sales of instrumentation/treatment equipment grew double-digits. Total sales growth of 9.8% was comprised of: ▪ 6.4% core sales growth: +4.4% volume +2.0% price ▪ 3.0% acquisition growth (primarily In-Situ and Alfaa UV) ▪ 0.4% benefit from currency From a geographic perspective, Water Quality core sales grew: ▪ 8.8% in North America (led by industrial demand for chemical treatment solutions) ▪ 7.3% in Western Europe (led by water analytics) ▪ (1.1%) in High Growth Markets (due to lower sales into China and Latin America) 6 Water Quality Q3 and TD 2026 performance 0.4% 1.4%Currency 3.0% 0.3%M&A 9.8% 7.0%Total Growth 10.0% 11.4% 1.6% 0.4%Currency 3.1% 0.1%M&A 10.0% 6.4%Total Growth See appendix for reconcilia ons of non‐GAAP measures 9.8% 11.1%
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Q3 2026 Earnings Prepared Remarks 10/29/2026 9 Adjusted operating profit increased 11.1%, or $25 million, year-over-year to $250 million, and adjusted operating profit margin was 26.6%, up 30 basis points over the prior year. This includes about 50 basis points of benefit from IEEPA tariff refunds in the quarter, which partially offset about 50 to 60 points of dilution from acquisitions. Excluding these discrete items, adjusted operating margin expanded 40 basis points year- over-year with healthy incremental margins. Water Treatment In water treatment, core sales of chemical treatment grew 11.6% year-over-year in the third quarter, and core sales of UV treatment were up 10.8%. Our growth in chemical water treatment was broad-based across industrial end-markets and concentrated in North America. By vertical: ▪ Sales supporting data center investments more than doubled, ▪ Sales into chemical processing, food & beverage, power and mining applications grew double-digits. ▪ And sales into metals and commercial applications grew high-single-digits. In UV treatment, growth was driven by new UV system installations across municipal, industrial and residential applications. Water Analytics In water analytics, we continued to see steady growth led by service and consumables. Sales of laboratory and process instrumentation also grew year-over-year. Notably, in North America, sales into municipalities grew high-single digits in our flagship analytics business, Hach, reflecting the durable nature of our sales and essential need for our products and services in municipal water applications.
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Q3 2026 Earnings Prepared Remarks 10/29/2026 10 Performance Through Nine Months Through nine months, Water Quality has delivered 10% total sales growth with 40 basis points of adjusted operating profit margin expansion while integrating the acquisitions of In-Situ and Alfaa UV, and acquiring Cleanwater1. Overall, strong growth in Water Quality throughout the first nine months of the year reflects continued positive secular growth drivers including water scarcity, reuse, contamination and severe weather events. We are also capitalizing on significant investments in digital infrastructure -- specifically data centers -- and enabling industries such as power and mining. Broadly speaking, industrial customers are increasingly focused on optimizing water management. They continue to prioritize water efficiency, reuse and reclaim initiatives to address water scarcity, contamination risk and more stringent operating requirements. This includes investments in testing instrumentation and data analytics that help them meet regulatory requirements, gain visibility to treatment needs and ensure continuity of essential operations. These macro drivers, combined with our high-recurring-revenue business model, mission- critical role in customers’ daily operations, flywheel of new product launches, and VES- driven commercial execution, provide a strong foundation for durable growth in our Water Quality segment. These factors underscored our third quarter growth and are expected to continue to support differentiated growth in the fourth quarter.
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Q3 2026 Earnings Prepared Remarks 10/29/2026 11 PQI Q3 2026 Performance PQI’s sales grew 3.9% year-over-year to $570 million in the third quarter. Recurring revenue grew high-single digits and sales of equipment were down low-single-digits. Total sales growth of 3.9% was comprised of: ▪ 3.2% core sales growth: o 2.6% price o 0.6% volume ▪ 1.1% acquisition growth (GlobalVision) ▪ (0.4%) headwind from currency From a geographic standpoint, PQI core sales grew across each main region: ▪ North America +4.4% (driven by Marking & Coding and Packaging & Color) ▪ Western Europe +0.6% (led by Packaging & Color) ▪ High growth markets: +4.7% (driven by Marking & Coding and Packaging & Color – broad-based across high growth markets with strength in China and Latin America) 7 Product Quality & Innova on Q3 and TD 2026 performance ‐0.4% 2.0%Currency 1.1% 0.3%M&A 3.9% 6.9%Total Growth 1.4% 1.0%Currency 0.4% 0.5%M&A 3.2% 7.3%Total Growth See appendix for reconcilia ons of non‐GAAP measures 3.9% 15.8% 3.2% 7.6%
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Q3 2026 Earnings Prepared Remarks 10/29/2026 12 PQI’s adjusted operating profit was $161 million, up 15.8%, or $22 million, over the prior- year period. Adjusted operating profit margin was 28.2% in the third quarter, up 280 basis points year-over-year. The improved profitability in PQI is primarily attributable to strong operational performance and savings from the Cost Optimization Program. Marking and Coding In our marking and coding business, core sales grew 3.0% in the third quarter with growth driven by continuous ink-jet systems, consumables and services. From a geographic perspective, core sales into North America and High Growth Markets grew mid-single digits, offsetting a modest year-over-year sales decline in Western Europe. Packaging and Color In our packaging and color businesses, core sales grew 3.5% year-over-year, driven by growth of our digital workflow solutions and color measurement equipment. Demand for our digital workflow solutions continues to be strong and we expect core sales growth of digital workflow solutions to accelerate meaningfully in the fourth quarter.
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Q3 2026 Earnings Prepared Remarks 10/29/2026 13 Performance Through Nine Months Through nine months, PQI has delivered 3.2% total sales growth with 110 basis points of adjusted operating profit margin expansion while integrating the acquisition of GlobalVision. Overall, demand from the consumer-packaged goods (CPG) end-market for our products and services remains steady sequentially and year-over-year across the segment. CPG brands are facing increasing demands to meet regulatory and brand consistency standards as they introduce new products to market quickly and accurately. They also need to manage faster, more complex changes across their operating system and supply chain. Our PQI businesses provide source-to-shelf technologies that help customers meet these demands with greater speed and accuracy. Since our spinoff, we have accelerated our innovation efforts and acquired strategic technologies to enhance our solutions and help customers solve these challenges. Customer response to our acquisitions and product innovation has been positive, and we’ve seen strong underlying growth in digital workflow solutions orders this year. This momentum supports our fourth-quarter guidance, which assumes a meaningful acceleration in core sales growth for digital workflow solutions.
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Q3 2026 Earnings Prepared Remarks 10/29/2026 14 Q3 2026 Cash Flow and Balance Sheet In the third quarter we generated $323 million in cash from operations and invested $19 million in capital expenditures. Free cash flow was $304 million in the quarter. During the quarter, we: ▪ Acquired Alfaa UV ▪ Repurchased $89 million of shares ▪ Paid $32 million of dividends Additionally, we repaid $700 million in senior notes. As a result of the above, at the end of the third quarter: ▪ Gross debt was $2.9 billion and gross leverage was 2.0x ▪ Cash on hand was $1.8 billion ▪ Net debt was $1.1 billion and net leverage was 0.8x Early in the fourth quarter, we completed the acquisition of Cleanwater1 for a purchase price of $465 million and allocated approximately $27 million to share repurchases thus far in the quarter. Our financial position remains strong and provides us the flexibility in how we deploy capital to create long-term shareholder value. We continue to have an attractive pipeline of acquisition opportunities in both Water Quality and PQI and intend to be opportunistic relative to future share repurchases. 8
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Q3 2026 Earnings Prepared Remarks 10/29/2026 15 9 10 eralto Q4 and ull ear 2026E Modeling Items ($ millions, except per share data)
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Q3 2026 Earnings Prepared Remarks 10/29/2026 16 Full Year 2026 Guidance For the full year 2026, we have updated our underlying assumptions to reflect our third quarter results and fourth quarter outlook. In FY 2026 we expect total sales growth between 7.7% to 8.0%, this assumes: ▪ 4.2% to 4.5% core sales growth (WQ above high end of range, PQI modestly below low end of the range) ▪ ~2.5% acquisition growth, net of divestitures ▪ ~1.0% currency benefit Adjusted operating profit margin is now expected to expand ~50 basis points, up from our prior guidance of 25 to 50 basis points. Full year adjusted EPS guidance was raised $0.12 per share, or 2.6%, at the mid-point: ▪ New Guidance: $4.49 to $4.52 per share ▪ Previous Guidance: $4.35 to $4.43 per share The $0.12 per share increase to full-year guidance is primarily driven by modestly higher core sales growth and an increase in adjusted operating profit. This reflects an increase in incremental margin from VES-driven execution, early gains from our Cost Optimization Program and the $4.6 million IEEPA refunds received in the third quarter. We are now targeting adjusted EPS growth of 15% to 16% year-over-year in 2026. Our revised full year guidance now includes $0.06 per share attributable to the IEEPA tariff refunds received through the first nine months of 2026. Any benefit from additional refunds received in the fourth quarter presents upside to our fourth quarter and full year adjusted EPS guidance. Free cash flow conversion was raised to >105% of GAAP net income.
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Q3 2026 Earnings Prepared Remarks 10/29/2026 17 Q4 2026 Guidance: For Q4 2026, we expect total sales to grow 10.0% to 11.0%. This assumes: ▪ 5.5% to 6.5% core sales growth (PQI at high end, WQ at low end of range) ▪ ~5.0% acquisition growth (primarily Cleanwater1, In-Situ, GlobalVision, Alfaa UV) ▪ ~(0.5%) impact from currency We are targeting adjusted operating profit margin of approximately 24.5% in Q4 2026, broadly in-line with the prior year period. This assumes operating leverage from core sales growth and benefits from the Cost Savings Program are offset by growth investments and acquisition dilution. Q4 2026 adjusted EPS guidance is $1.13 to $1.16 per share. ▪ At the high end, this represents double-digit growth on a year-over-year basis.
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Q3 2026 Earnings Prepared Remarks 10/29/2026 18 Jennifer L. Honeycutt, CEO Closing Remarks In summary, our team delivered outstanding execution through the first nine months of 2026 while remaining firmly focused on our critical few priorities. We are accelerating growth, optimizing our cost structure and deploying capital with discipline to strengthen our position and create long-term value. The essential need for our technology solutions, the durability of our business model and powerful secular growth drivers across our end markets give us confidence in our ability to deliver strong financial performance this year and beyond. We will remain agile in harnessing the Veralto Enterprise System to drive continuous improvement and superior execution. Our strong free cash flow and disciplined capital allocation framework give us multiple levers to create shareholder value, and we will act decisively on the most compelling opportunities. We are energized by the opportunities ahead and confident in our ability to help customers solve some of the world’s most consequential challenges in delivering clean water, safe food and trusted essential goods. 14