01—Abstract
Summary
Summary of the 10-Q filed July 26, 2024. Cited figures are marked; the original filing is the authoritative source.
Veralto Corporation's Form 10-Q for the quarter ended June 28, 2024 reports sales of $1,288 milliona for the three-month period, up 2.8% from $1,253 million a year earlier, and $2,534 million for the six-month period, up 2.3% from $2,478 million.
Core sales grew 3.8% in the quarter and 2.8% year-to-date, with price increases contributing 2.0% and 2.1% to sales growth. Gross profit margin rose to 60.1% in the quarter from 57.8%, while SG&A expenses rose to 32.1% of sales from 30.2%, which the filing attributes to sales and marketing growth initiatives and the costs of operating as a stand-alone company. Net earnings were $203 millionb for the quarter, down from $209 million, and diluted EPS was $0.81 versus $0.85.
Six-month net earnings were $387 millionc, down from $434 million, and diluted EPS was $1.55 versus $1.76. The balance sheet strengthened in cash, with cash and cash equivalents of $1,043 million at June 28, 2024, up from $762 million at December 31, 2023. Long-term debt was $2,615 million, and the company had no amounts outstanding under its credit facility or commercial paper program.
Net interest expense was $30 milliond for the quarter and $58 million for the six months, reflecting indebtedness incurred in September 2023 in connection with the separation from Danaher Corporation, completed September 30, 2023. Operating cash flow was $366 million for the six months, down from $457 million, driven by cash interest payments of $57 million and cash tax payments of $142 million. The company declared a regular quarterly dividend of $0.09 per share payable July 31, 2024.
The filing states that the company expects positive secular growth drivers in industrial markets, particularly in North America, steady demand at municipalities, and a steady, modest recovery in consumer packaged goods markets over the balance of 2024. The filing also records a $15 million loss on the divestiture of a Water Quality product line during the six months.
02—Key points
Key Highlights
- Quarterly sales rose 2.8% to $1,288 million, with core sales up 3.8%, and both segments grew: Water Quality to $777 million and Product Quality & Innovation to $511 million.
- Gross profit margin expanded to 60.1% from 57.8% in the prior-year quarter, driven primarily by positive pricing actions and, to a lesser extent, lower material costs and improved productivity.
- SG&A expenses rose to 32.1% of sales from 30.2%, reflecting sales and marketing growth initiatives and stand-alone public company costs.
- Quarterly net earnings declined to $203 million from $209 million, and diluted EPS was $0.81 versus $0.85, driven by standalone public company costs, interest expense after the Danaher separation, and sales and marketing investments.
- Cash and cash equivalents increased to $1,043 million from $762 million at year-end 2023, while long-term debt was $2,615 million and no credit facility or commercial paper borrowings were outstanding.
- Six-month operating cash flow decreased to $366 million from $457 million, primarily due to cash interest payments of $57 million and cash tax payments of $142 million.
- A $15 million loss was recorded on the divestiture of a Water Quality product line during the six months ended June 28, 2024.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q2 FY2024, Veralto kept $0.16.
- Revenue$1.29B100.0%
- Cost of revenue−$514.0M39.9%
- Gross profit$774.0M60.1%
- Operating costs−$475.0M36.9%
- Operating income$299.0M23.2%
- Interest, other & tax−$96.0M7.5%
- Net income$203.0M15.8%
04—Financials
Financial Highlights
Figures from 10-QQ2 FY2024filed July 26, 2024Financial Statements
Q2 FY2024 against Q2 FY2023
| Line item | Q2 FY2024Q2 FY2023 | Change |
|---|---|---|
| Revenue | $1.29B$1.25B | +2.8% |
| Cost of Revenue | $514.00M$529.00M | −2.8% |
| Gross Profit | $774.00M$724.00M | +6.9% |
| R&D Expenses | $61.00M$57.00M | +7.0% |
| SG&A Expenses | $414.00M$378.00M | +9.5% |
| Operating Income | $299.00M$289.00M | +3.5% |
| Interest Expense | $30.00M$0 | — |
| Net Income | $203.00M$209.00M | −2.9% |
| EPS (Basic) | $0.82$0.85 | −3.5% |
| EPS (Diluted) | $0.81$0.85 | −4.7% |
| Shares Outstanding (Basic) | 247.20M246.30M | +0.4% |
| Shares Outstanding (Diluted) | 249.30M246.30M | +1.2% |
05—Questions
Frequently Asked Questions
How did Veralto perform in the second quarter of 2024?
Sales increased 2.8% to $1,288 million, and core sales grew 3.8%, with growth in both segments. Net earnings were $203 million, or $0.81 per diluted share, compared with $209 million, or $0.85 per diluted share, in the prior-year quarter.
What drove the change in profitability?
Gross profit margin improved to 60.1% from 57.8%, mainly from positive pricing actions. Offsetting this, SG&A rose to 32.1% of sales from 30.2%, due to sales and marketing growth initiatives and costs of operating as a stand-alone company, and net interest expense of $30 million was recorded after the separation from Danaher.
How is the company's debt and liquidity position?
Long-term debt totaled $2,615 million at June 28, 2024, and cash and cash equivalents were $1,043 million. The company had no amounts outstanding under its credit facility or commercial paper program and stated it was in compliance with all debt covenants.
What is the company's outlook for 2024?
The company expects positive secular growth drivers in industrial markets, particularly in North America, and steady demand at municipalities in Water Quality. In Product Quality & Innovation, it expects steady, modest recovery in consumer packaged goods markets as the year progresses.
What is the dividend policy?
The company declared a regular quarterly dividend of $0.09 per share, payable July 31, 2024, to holders of record as of June 28, 2024. Dividend payments totaled $44 million for the six months ended June 28, 2024.
06—Continue