Veralto Corporation Q1 2026 Earnings Call - Raised Full-Year EPS Guidance Amid Strong Core Demand

Andrew Kaplowitz, Analyst, Citi0: Good morning, everyone. My name is Beau, and I will be your conference operator this morning. At this time, I would like to welcome everyone to Veralto Corporation’s first quarter 2026 conference call. All lines have been placed on mute to prevent any background noise. After the speaker’s remarks, there will be a question-and-answer session. If you would like to ask a question during that time, simply press star then 1 on your telephone. If you would like to withdraw your question, please press star 2. I would now like to turn the call over to Mr. Ryan Taylor, Vice President, Investor Relations. Please go ahead, sir.

Andrew Kaplowitz, Analyst, Citi1: Good morning, everyone, and thanks for joining us on the call. With me today are Jennifer Honeycutt, our President and Chief Executive Officer, and Samir Ralhan, our Senior Vice President and Chief Financial Officer. Today’s call is simultaneously being webcast. A replay of the webcast will be available on the Investors section of our website later today under the heading Events and Presentations. A replay of this call will be available until May 29th. Yesterday, we issued our first quarter 2026 news release, earnings presentation, prepared remarks, and supplemental materials, including information required by the SEC relating to adjusted or non-GAAP financial measures. We hope you had the opportunity to review them last night. These materials are available in the Investors section of our website, www.veralto.com, under the heading Quarterly Earnings. Reconciliations of all non-GAAP measures are also provided in the appendix of the webcast slides.

Unless otherwise noted, all references to variances are on a year-over-year basis. During the call, we will make forward-looking statements within the meaning of the federal securities laws, including 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, and we do not assume any obligation to update any forward-looking statements except as required by law. With that, I’ll turn the call over to Jennifer, who will share a few brief comments before we open the floor to Q&A.

Jennifer Honeycutt, President and Chief Executive Officer, Veralto Corporation: Thanks, Ryan. We are off to a strong start in 2026, reflecting the effectiveness of the Veralto Enterprise System, the essential role of our products and services in customers’ operations, and the resilience of our end markets. In the first quarter, we delivered approximately 7% total sales growth and 13% adjusted earnings per share growth while continuing to invest in commercial execution, productivity, and innovation. Looking ahead, we expect core sales growth to accelerate as the year progresses. Reflecting this momentum and our strong first quarter, we raised our full year adjusted earnings per share guidance to a range of $4.20-$4.28 per share. Thus far this year, we have invested approximately $1 billion across two strategic acquisitions, In-Situ in our water quality segment and GlobalVision in our PQI segment, and also made opportunistic share repurchases.

I’m excited to welcome our new associates from these outstanding organizations to Veralto. Additionally, we initiated a new cost optimization program designed to streamline our business and enhance operating efficiency. These actions underscore the strength of our free cash flow profile and our ability to create shareholder value through multiple disciplined levers. Going forward, our balance sheet remains strong, providing flexibility to pursue additional acquisitions and share repurchases. I’m proud of our team for a strong start to the year and for the actions we’ve taken to drive growth and continuous improvement as this year progresses and into next year. That concludes my opening remarks, and at this time, we are happy to take your questions.

Andrew Kaplowitz, Analyst, Citi0: Thank you, Ms. Honeycutt. We’ll go first this morning to Deane Dray with RBC Capital Markets.

Deane Dray, Analyst, RBC Capital Markets: Thank you. Good morning, everyone, and I really appreciate that innovation to release your prepared remarks after the close. Makes things a lot easier to digest and go through the slides very thoughtfully. What I’d like to do is start on water quality and can we talk about the upside in core sales, certainly better than your peers this quarter. How much do you attribute this upside to Veralto’s higher bias or higher mix in OpEx versus CapEx? Just on the CapEx side, give us an update on Trojan and quote activity. Thank you.

Jennifer Honeycutt, President and Chief Executive Officer, Veralto Corporation: Good morning, thanks for the question, Deane Dray. Yeah, we see strong and stable demand across both our muni and industrial markets. To your point, the Veralto products and services really sit within customer operations, where the cost of failure is high for them, right? Using our equipment is part and parcel to ensuring public safety, public health, and so on. From a municipal standpoint, you know, we see this really as a mid-single-digit grower with incrementally stronger growth in muni wastewater due to recycle, reclaim, and reuse secular drivers. We are seeing great uptake there. I would say on the industrial side, you know, we see mid-to-high single-digit growth there with strength in the common cast of characters around data centers.

That would include semiconductor, power and mining. PMI trends have been positive here, right? We feel really good about our water businesses, both across municipal markets and industrial markets. That’s, again, really on the back of being integral to that customer operating environment. Relative to your question around Trojan and UV, you know, activity here in terms of quoting and bidding remains strong. This business has, you know, some nice bolt-on acquisitions that we’ve done here with AQUAFIDES. I think it is important to remember there’s a little bit longer cycle business, right? The bookings that we would see now would be, you know, shipping largely in Q4 2027. Great order book activity there on the back of the secular drivers I discussed.

Deane Dray, Analyst, RBC Capital Markets: Great. Just a quick follow-up. With reference to the muni outlook for 2026, what are you assuming for kind of the spending growth? If you can separate, you know, what that CapEx growth would be versus OpEx larger equipment projects, that would be great. Thanks.

Andrew Kaplowitz, Analyst, Citi2: Hey, Deane Dray. Thanks for the question. With respect to the muni view that we have baked into the guidance, think of pretty steady from the analytics perspective. On the CapEx side, really, it’s all driven by predominantly for us from a Trojan perspective. As you know, we are not in the majority in the CapEx cycle. We’re tied to the OpEx cycle. It’s really pretty steady on both sides, Deane Dray, as you kind of think about this. Like, steady in muni business going into analytics side, Trojan side really strong as Jennifer L. Honeycutt just laid out.

Deane Dray, Analyst, RBC Capital Markets: Great to hear. Thank you.

Andrew Kaplowitz, Analyst, Citi2: Thanks, Deane.

Andrew Kaplowitz, Analyst, Citi0: Thank you. We go next now to Jeff Sprague with Vertical Research.

Jeff Sprague, Analyst, Vertical Research: Hey, thanks. Good morning, everyone. Jennifer, I was wondering if you could just elaborate a little bit more on kind of the cost program, sort of the catalyst behind it. You know, maybe some things here that you weren’t able to do pre-separation, et cetera. Just maybe a little more color on some of the levers you’re looking to pull there.

Jennifer Honeycutt, President and Chief Executive Officer, Veralto Corporation: Thanks for the question, Jeff. You know, our cost optimization program here is just part and parcel to our continuous improvement mindset. We are always looking to drive continuous improvement, and this is really a natural evolution to make our cost structure more competitive in our journey to enhance EPS growth. This will really allow us to leverage kind of certain functional attributes across the enterprise that improve both our efficiency but also maintain our accountability within our decentralized operating model. We will stay true to that decentralized operating model with the operating companies retaining accountability and quick decision-making and service to their customers. You know, it’s been a three-year journey here, right?

The first part of getting the business stood up was to reinvigorate the innovation and R&D engine, get the right commercial architecture going in our operating companies, which basically provide the operating room to do everything else. Secondly, we really focus on accelerating our capital allocation flywheel and have that going now with some strong strategic bolt-ons, creating significant long-term value and also with our share repurchase activity. Cost optimization was a natural next step, right? We’re really focused on simplifying our business processes to improve operating efficiency and further strengthen the competitive position. Some of these things, you know, you can’t fully account for when you’re part of a $30 billion enterprise.

You know, from a timing perspective, this is really the right time for us to look at this sort of structural allocation of costs and make sure that we’re right-sized for the size business that we are today and what will be scalable in the future.

Jeff Sprague, Analyst, Vertical Research: You didn’t mention any benefits in 2026. We should expect this gearing up in 2026 for things to flow in 2027 and 2028?

Andrew Kaplowitz, Analyst, Citi2: Yeah, Jeff. Most of the actions that we have laid out in this pretty detailed plan are oriented towards end of this year. That’s in Q4, you’re gonna see a lot of the actions. We haven’t baked any benefit from the program in 2026 in the guidance. You should expect roughly 50% of the run rate savings in 2027 and full run rate in 2028. That’s how we can, you can model the savings.

Jeff Sprague, Analyst, Vertical Research: Okay, great. I’ll leave it there. Thank you.

Andrew Kaplowitz, Analyst, Citi0: Thanks, Jeff.

Jennifer Honeycutt, President and Chief Executive Officer, Veralto Corporation: Thanks, Jeff.

Andrew Kaplowitz, Analyst, Citi0: We’ll go next now to Andrew Kaplowitz at Citi.

Andrew Kaplowitz, Analyst, Citi: Hey, good morning, everyone.

Jennifer Honeycutt, President and Chief Executive Officer, Veralto Corporation: Good morning, Andy.

Andrew Kaplowitz, Analyst, Citi: Jennifer, I think in your prepared remarks, you mentioned packaging color within PQI, down high single digits as a non-recurring impact in Q1. Maybe just give a little more color around that. You know, what are CPG companies telling you? Are they worried at all about inflation or is this really lumpiness? That’s really the explanation, and I do think you’re still forecasting good growth for the rest of the year in PQI.

Jennifer Honeycutt, President and Chief Executive Officer, Veralto Corporation: It’s a little bit tale of two cities here relative to the PQI story. You know, at a high level we see continued strong demand across our CPG customer base. It remains steady in terms of our quoting and sales activity relative to coding and marking, and we’ve seen that for several quarters. Complementing that really is our digital packaging and ingredient solutions brought in here with a combination of Esko and TraceGains, which continues also to be strong, and we would expect that to continue with the addition of GlobalVision. GlobalVision obviously strengthens the value proposition here in terms of building a comprehensive workflow.

You know, when you look at Q1 here relative to packaging and color, as you noted, we do see sales down high single digits here, primarily due to the non-recurring revenue, including sales of color testing and packaging inspection equipment. This was really focused in a few discrete industrial end markets, so automotive, textiles, building materials driven by housing market and so on. That’s where we’re seeing some of the demand weakness, but certainly, you know, going forward we feel strong about, you know, incremental recovery here. Certainly we don’t see any changes relative to CPG demand, which would indicate, you know, our confidence in the marketing and coding business continuing to be strong and in fact accelerate throughout the year.

Andrew Kaplowitz, Analyst, Citi: Thanks for that, Jennifer. Then maybe the same kind of question on PQI margins. I mean, obviously they’ve been at a high level for the last few years, but they’ve been a bit lumpy. I know mix matters, which, you know, I think you said is gonna impact your Q2 PQI margin. Structurally, do you see PQI margin having the same opportunity that you have in sort of water quality and consistent with the long-term incremental margin framework you have?

Andrew Kaplowitz, Analyst, Citi2: Yeah, absolutely, Andy. As you can look at PQI, right, on a sequential basis, we have very nice improvement in the margins. mix health, but at the same time, some of the rollover from the tariff actions that we kind of talked about is gonna roll off as well. Overall, if you’re gonna look at the opportunity in the second half of this year and moving forward into 2027, absolutely we see same level of opportunity.

Andrew Kaplowitz, Analyst, Citi: Good to hear. Thanks, guys.

Andrew Kaplowitz, Analyst, Citi2: Thanks, Andy.

Andrew Kaplowitz, Analyst, Citi0: We’ll go next now to John McNulty with BMO Capital Markets.

John McNulty, Analyst, BMO Capital Markets: Yeah, thanks for taking my question. Maybe just one on the waterfront. I mean, in particular, you know, some of your competitors in the ChemTreat arena have put through some really chunky price hikes and/or surcharges, you know, 10%-14% for one, 8%-14% for the other. I guess, can you speak to your thoughts on pricing and if you see a need for it at this point, just given what’s going on from a raw material perspective, around the Iran conflict?

Jennifer Honeycutt, President and Chief Executive Officer, Veralto Corporation: Yeah, thanks for the question, John. You know, we take a disciplined approach to pricing within sort of all of our operating kind of big companies, but I think particularly, you know, you’re referring here to ChemTreat. We, by virtue of our 75% sales direct to customers, we’ve got a lot of, you know, customer intimacy and insight as to how to support their operations through this dynamic macro environment. We partner with them to achieve pricing that is gonna offset the headwinds from rising costs, but we do this sort of very surgically. We feel that this approach has been, you know, disciplined in the way we execute it. It served us well to achieve that mid to high single-digit core sales growth. We’ve done this since the spin.

We would expect this approach to continue.

John McNulty, Analyst, BMO Capital Markets: Got it. Okay, thanks. Then, maybe just a little bit of color. You know, given the challenging environment with inflation and, you know, at least in some cases there may be a little bit of demand destruction, are you seeing any interesting assets that maybe weren’t available to you in the market now coming to the market, or is it really just too early for that, given what’s been going on?

Andrew Kaplowitz, Analyst, Citi2: Yeah. John, maybe I’ll take this one. If you look at from the assets perspective, you know, market conditions change, but we always gonna stay true to our, you know, market company valuation algorithm as we kind of look at all the strategic opportunities. Again, things do open up in these kind of market conditions, but it’s too early to say at this point. Overall pipelines look pretty active, and pretty excited about the opportunities that are here in the near term for us.

John McNulty, Analyst, BMO Capital Markets: Great. Thanks very much for the color.

Andrew Kaplowitz, Analyst, Citi2: Thanks, John.

Andrew Kaplowitz, Analyst, Citi0: We’ll go next now to William Griffin with Barclays.

Andrew Kaplowitz, Analyst, Citi4: Great. Thank you for the time. Just wanted to come back to the cost optimization plan that you’ve laid out here. Just wanna make sure we’re thinking about that correctly. Is that should we view that as sort of upside to your long-term margin expansion algorithm, or does this sort of just keep you on track with that algorithm?

Andrew Kaplowitz, Analyst, Citi2: Yeah. Will, thanks for the question. The short answer is yes, right? If you look at our value creation algorithm, it’s unchanged, mid-single digit core sales growth with 30%-35% fall-through. From a modeling perspective, as we kind of start thinking about 2027, 2028, it is logical to assume that we will use the 30%-35% fall-through on the core sales growth and then add the savings from the cost optimization program on top of that. Think of it as a step change in 2027 and 2028. As far as particular, for the exact details for 2027, of course, we’ll talk when we give that guidance.

Andrew Kaplowitz, Analyst, Citi4: Perfect. Appreciate that. Then wanted to touch on capital allocation here and just how you’re thinking about the mix of that going forward. I think you’ve clearly executed on M&A recently, as well as significantly ramped up the repurchase activity and I think spent, you know, a pretty good majority of or a good chunk of the $750 million authorization. How do you think about that sort of going forward over the balance of the year, maybe into 2027? Could we potentially see an increase in the authorization or maybe what would be a trigger point for that?

Jennifer Honeycutt, President and Chief Executive Officer, Veralto Corporation: Yeah. Thanks for the question, Will. You know, I think it’s safe to say that we’re gonna continue to be disciplined here. We do have a bias for M&A relative to capital allocation, and I think you’ve seen that bias read through here with our $1 billion of capital deployed thus far in the year. The M&A engine is running well and, you know, to Sameer’s point, we’ve got active funnels on both sides of the house and engaged in several cultivation activities. Our bias will remain M&A. We think that’s going to create the best long-term value creation over time. We reserve the right, as you’ve seen, to utilize that capital when we see market dislocations relative to the business performance.

We plan to continue to take advantage of that. You know, as far as whether that would be increased, that’s gonna be a board decision and in due course, we will take that on at whatever time is appropriate.

Andrew Kaplowitz, Analyst, Citi4: Appreciate the color. Thanks very much.

Jennifer Honeycutt, President and Chief Executive Officer, Veralto Corporation: Thanks, Will.

Andrew Kaplowitz, Analyst, Citi0: Thank you. We’ll go next now to Michael Halloran with Baird.

Michael Halloran, Analyst, Baird: Good morning, everyone.

Jennifer Honeycutt, President and Chief Executive Officer, Veralto Corporation: Morning, Mike.

Michael Halloran, Analyst, Baird: A clarification. Good morning. A clarification on the early. How does the OpEx program layer between the two segments?

Andrew Kaplowitz, Analyst, Citi2: If you look at the cost optimization program, Mike, it’s pretty broad-based across both the businesses and, as well as corporate functions. Overall, I would say there’s a little bit more bias towards PQI, but it’s pretty balanced across the company if you look particularly.

Michael Halloran, Analyst, Baird: Got it. Just from a guidance perspective, maybe help me understand what you’re embedding in terms of seasonality, end market improvement versus end market stability here. Is there any expectation for an acceleration in end markets as we sit here today? Or is it relatively normal seasonality as it plays out? If you are assuming any acceleration, any areas that we should be thinking about specifically?

Andrew Kaplowitz, Analyst, Citi2: Yeah. Overall, as we kind of think about the end market dynamics, Mike, that we built into the guidance, from a CPG perspective, pretty steady. Frankly, it tends to be less seasonal. Same for the global food and beverage markets. These are pretty non-discretionary demands, we expect the markets and the demand to be pretty steady over here. Similarly, on the water side, I would say is the mini side, as Jennifer said earlier, it’s pretty steady that what we are seeing given where we operate. We operate in the OpEx side of our customers. The risk of failure is very high, so it’ll be a pretty well embedded in the high value part of the workflows. Overall demand, pretty steady.

In the second half, as you know, especially as we get into Q4, the comps get a little easier as well, so that kind of helps as you kind of think about the core growth. Sequentially, we should see core growth kind of moving up as we go through the year.

Michael Halloran, Analyst, Baird: Appreciate it. Thank you.

Andrew Kaplowitz, Analyst, Citi2: Thanks, Mike.

Andrew Kaplowitz, Analyst, Citi0: We’ll go next now to Andrew Buscaglia with BNP Paribas.

Andrew Buscaglia, Analyst, BNP Paribas: Hey, good morning, everyone.

Jennifer Honeycutt, President and Chief Executive Officer, Veralto Corporation: Morning, Andrew.

Andrew Buscaglia, Analyst, BNP Paribas: Just wanted to check on the water quality. Just the number of drivers, including data centers. I’m just wondering if you could parse out how influential that data center contribution was to growth. I don’t know how you wanna do it, but maybe just talk a little more about that, please.

Jennifer Honeycutt, President and Chief Executive Officer, Veralto Corporation: Yeah. I mean, our Water Quality team had a fantastic quarter, just in terms of, you know, execution, driving hard across the enterprise. You know, relative to sort of which markets are, you know, faster growers, we do see strong growth in data centers. As a reminder, data center revenue is still overall a very small portion of our total sales in Water Quality. You know, we don’t spell out sort of market sizes, you know, growth rates separately here publicly, but we will say that, you know, we’re getting great traction here, lot of uptake and demand, and, you know, that’s benefiting essentially all of our water businesses.

Andrew Buscaglia, Analyst, BNP Paribas: Yeah. Okay. You know, M&A wise, you know, it certainly sounds like you’re still interested in moving forward with capital allocation towards that. I’m wondering, you know, we saw Pure on the treatment side move into the data center space a little bit more aggressively. Does that market interest you in terms of increasing, you know, maybe increasing in terms of the hierarchy of where your interests lie?

Jennifer Honeycutt, President and Chief Executive Officer, Veralto Corporation: Yeah. I mean, I think you’ll see us stay true to our algorithm of market, company and valuation. We like businesses that look like us, right? We like razor blade businesses. We like being in the operating cycle of the customer’s operations, and we find that this gives us long-term durability, and you know, good confidence in sort of, you know, the steady state that we’ve been able to create here. I wouldn’t say, you know, we’re taking anything off the table here, but I do think there are profiles of companies that we like and we will stay true to relative to those that create long-term advantage and allow us to apply VES to make them better.

Andrew Buscaglia, Analyst, BNP Paribas: All right. Thank you.

Andrew Kaplowitz, Analyst, Citi0: We’ll go next now to Jacob Levinson with Melius Research.

Jacob Levinson, Analyst, Melius Research: Good morning, everyone.

Jennifer Honeycutt, President and Chief Executive Officer, Veralto Corporation: Morning, Jake.

Jacob Levinson, Analyst, Melius Research: I don’t think we’ve touched on China yet, and I know some of your peers have had some challenges there on sort of the water infrastructure side of things. I know there are different business mixes with your portfolio, but maybe you can just give us some color on how you’d characterize that market today if there are any puts and takes around specific verticals.

Jennifer Honeycutt, President and Chief Executive Officer, Veralto Corporation: Yeah. You know, China, you know, continues to behave like a more mature market. Our China sales here in the first quarter were up low single digits, generally in line with the past couple of quarters, not really any material change to what we’re seeing there. PQI did lead that growth with double digit growth here. Now we’ve lapped some comps here, which make it a little bit easier to post some growth. Water quality was down just slightly here, low single digits in China, and that is reflective of kind of the funding environment for municipalities with, you know, money still not flowing from the government to prop up that particular industry. We continue to have opportunistic sales into industrial segments.

Still waiting for water funding to break loose here on the muni side in China, but have strong opportunities that continue within PQI.

Jacob Levinson, Analyst, Melius Research: Okay. That’s good color. Just a quick follow-up for Sameer. I think your tax rate has been gone down a little bit over the last couple of years, and just be helpful to understand how much of that is maybe just related to geographic mix or whether there’s some planning activity you’ve been able to do over the last few years since the spin.

Andrew Kaplowitz, Analyst, Citi2: Yeah. Thanks, Jacob, for that. If you look at the tax rate is definitely we have made a pretty nice move from where we started from 24.5%-ish kind of a percent when we kind of spun off now in the 20s. I would say, Jacob, it’s a balance, but I would say majority is skewed towards some of the really great work by the tax team and from a planning perspective to get us to the right place.

Jacob Levinson, Analyst, Melius Research: Okay. Appreciate it. Thank you. I’ll pass it on.

Andrew Kaplowitz, Analyst, Citi2: Thanks, Jake.

Andrew Kaplowitz, Analyst, Citi0: We’ll go next now to Brian Lee with Goldman Sachs. Mr. Lee, your line is open. You might be on mute. Hearing no response, we’ll circle back to Brian. We’ll go next now to Andrew Krill with Deutsche Bank.

Andrew Krill, Analyst, Deutsche Bank: Hi. Thanks. Good morning, everyone. I was hoping you could give us an update on tariffs. You know, there’s been a variety of updates with the Supreme Court ruling, the changes in Section 232 rules, and then also, you know, general cost inflation from higher oil. Could you give us an update, you know, how you’re viewing the tariff headwinds and cost inflation headwinds this year and if that’s changed at all versus last quarter? Thanks.

Andrew Kaplowitz, Analyst, Citi2: Thanks, Andrew, for that. If you kind of look at on the tariff side, the 3 layers, right? The stuff that happened last year, effectively, we’ve taken the pricing actions. All the line moves have happened. Those things should start rolling o- impact of those should start rolling over as you kind of get into the second half. We’re pretty well positioned on that front. As far as the new Section 232 kind of stuff, we’ve baked the impact of that in the guidance that we provided. Overall impact, as you can think about for us, is actually much smaller. This is not like last year. If you can actually start thinking whether, you know, the steel or aluminum kind of components into a product, it’s pretty small.

Those are the impact of those is pretty small for us. As far as the Middle East and the current conflict and the impact that we’re seeing on the oil side, again, baked into the guidance, at least based on the work we see right now. As you can imagine, some really active discussions with the customers on the pricing side. Jennifer touched on the country side earlier. You know, the impact that we’re seeing on the chemicals and packaging side, that’s kind of, you know, baked in. Overall, we’re pretty well positioned as we kind of think about the rest of the year. It’s pricing, there’s a lot of productivity stuff as well, part of it.

Andrew Krill, Analyst, Deutsche Bank: Great. That’s very helpful. On a related note, just with prices still fair, we should be thinking about the company realizing, you know, about 2% price or so, I think PQI was kind of trending a bit higher than water quality. Is that a reasonable approach still?

Andrew Kaplowitz, Analyst, Citi2: Yeah, that’s a pretty reasonable approach. Just kind of think of the pricing 100, 200 basis points. Frankly, with the price increases that we did last year, we’re still lapping those up, and then we had further price increases as part of this year’s cycle. You should expect this year, in aggregate to be at the high end of the range, with PQI even exceeding that a little bit.

Jennifer Honeycutt, President and Chief Executive Officer, Veralto Corporation: Okay. Thanks so much.

Andrew Kaplowitz, Analyst, Citi2: Thank you.

Andrew Kaplowitz, Analyst, Citi0: Thank you. We’ll go next now to Brian Lee with Goldman Sachs.

Andrew Kaplowitz, Analyst, Citi3: Hey, guys, sorry about that. This is Tyler Bissett on for Brian. Thanks for taking our question. Just wanted to go back to the high growth markets. You discussed how acquisitions of GlobalVision and In-Situ should help support growth here. But it was actually a little weak for both water quality and PQI during the quarter. Any reason for the weakness in the quarter? You know, how do you expect growth to trend going forward? Just, I guess, looking to 2Q, are you expecting any, like, material impact from the war in Iran?

Andrew Kaplowitz, Analyst, Citi2: Yeah. Thanks for the question, Tyler. If you just wanna make sure I get the question right. You know, high growth market versus GlobalVision, right? Let’s bifurcate those two. GlobalVision does not have any sort of a meaningful impact as we kind of think about the growth on the high growth market side. High growth market side, effectively, you know, we grew, you know, the low single digits or rather, sorry, a slight decline this year. Water quality was down low single digits, really, more on the impact that we saw in China. Overall, PQI is in a, you know, a little bit of a low single-digit decline as well. Nothing material.

Majority of the impact that you’re seeing is more sort of timing-driven, especially in Latin America. Otherwise, we’re pretty well-placed.

Jennifer Honeycutt, President and Chief Executive Officer, Veralto Corporation: I would say as well we’ve got a pretty, you know, big prior year comp in India, right? We had a Q1 in India, it was about 20% last year. We do see some impact here in Middle East, small portion of our overall revenue, the sales there were down about 10%.

Andrew Kaplowitz, Analyst, Citi3: Great. Super helpful. I’ll turn it over. Thanks.

Andrew Kaplowitz, Analyst, Citi0: Thank you. We’ll go next now to Josh Spector with UBS.

Josh Spector, Analyst, UBS: Yeah. Hey, good morning. I wanted to ask just about similar on some of the regional impacts here in PQI. I mean, there’s a pretty decent diversion between Europe and North America. I don’t know if Europe was more impacted by some of the one-timer larger equipment sales or if it was something else. If you could help, you know, what that looks like in 2Q, if any of that reverses at all.

Jennifer Honeycutt, President and Chief Executive Officer, Veralto Corporation: Relative to Western Europe, you know, PQI had a really tough comp in 2025. They were up 10.3% last year. You know, and this is on the back of, you know, our recurring revenue model, where 3 extra days matters a lot in the first quarter of 2025. You know, very, very high comps relative to prior year. I would say here in Q1, our marking and coding businesses grew core sales low single digits, right? That’s on the back of a pretty healthy, you know, sizable comp prior year. We did see, you know, an offset here by delays in shipments of certain hardware lines in our packaging and color businesses, which we referred to earlier.

You know, relative to sort of broad-based global CPG demand, we see it stable. We see it stable in Europe, we see it stable in North America. Little bit of a mixed bag in some of the high growth markets, largely because of, you know, little bit of impact from, obviously China, you know, India. You know, we’ve got some timing issues and then certainly the impact of Middle East and Africa.

Josh Spector, Analyst, UBS: Okay. No, that’s helpful. I guess if I kind of flip that the other way, if I look later this year, you have 6% and 9% comps in North America in 3Q and 4Q. Are those gonna be characterized as tough comps to go against, or should we expect you guys to be able to grow on that level later this year?

Andrew Kaplowitz, Analyst, Citi2: Yeah. As you kind of get into the second half, you’re gonna see the growth despite the comps. In fact, yeah, I would say from the PQI perspective, the comps is going a little easier, as we get into Q4. Overall since given the demand dynamic that Jennifer just talked about on the marking and coding side, from the CPG side, we feel pretty good about the second half of the year, and that’s kind of baked into the guidance. Nothing sort of material, the deviation that you wanna see.

Josh Spector, Analyst, UBS: All right. Thank you.

Andrew Kaplowitz, Analyst, Citi2: Thanks.

Andrew Kaplowitz, Analyst, Citi0: We’ll go next now to Joseph Giordano with TD Cowen.

Andrew Kaplowitz, Analyst, Citi5: Hi, good morning. This is Chris on for Joe. The EPS guide moved higher, even though you know, the operational framework appears to be largely consistent. Could you walk us through the specific bridge items that are driving the revision, and how much of that is operational versus capital structure below the line? Thank you.

Andrew Kaplowitz, Analyst, Citi2: Thanks, Chris, for that question. Overall as you kind of think about the increase in the EPS guide, it’s predominantly raised because of the operating stuff. The share buyback that we’ve done so far is already kind of baked in. Overall, what’s kind of driving this thing is really a few things. You know, the strength of Q1 and the way we’re coming out in terms of the order books out of the quarter into April. Second one is we’re going to talk about the pricing at the higher end, so that’s kind of giving us the confidence as we kind of think about the full year EPS.

Third, I would say, is really the execution that we are seeing across the board in both the businesses and across the regions. Those are kind of really the things that are kind of driving. Otherwise, the demand patterns are pretty steady at this point. Given where we are now with almost four months behind, gives us more confidence on that front.

Andrew Kaplowitz, Analyst, Citi5: Thank you very much.

Andrew Kaplowitz, Analyst, Citi2: Thanks, Chris.

Andrew Kaplowitz, Analyst, Citi1: Thanks for the questions. This is Ryan. That concludes our question queue for the call. We appreciate everybody’s time and engagement this morning and preparation with the earlier materials. As usual, I’ll be available for any kind of follow-ups that might be necessary. Thank you so much for joining us. We’ll talk to you next time.

Andrew Kaplowitz, Analyst, Citi0: Thank you again, ladies and gentlemen. This will conclude today’s Veralto Corporation’s first quarter 2026 earnings call. Again, thanks so much for joining us, everyone. We wish you all a great day. Goodbye.