NYSE:VLTO
Veralto Corp
Veralto Corp is a global sustainability leader offering patented environmental technologies for water, waste, and energy sectors with robust free cash flow.
Key Metrics
Investment Thesis
Bull Case
Veralto offers compelling value with a solid track record of revenue growth and expanding net margins driven by operational efficiency. The company's commitment to sustainability aligns with long-term ESG trends, positioning it for sustained demand in water scarcity and energy transition markets. Robust free cash flow generation supports shareholder returns through dividends and potential buybacks.
Bear Case
High levels of debt relative to equity may constrain growth initiatives during periods of rising interest rates or economic downturns. Dependence on government contracts and regulatory frameworks introduces uncertainty regarding project pipelines and future profitability. Past accumulated other comprehensive losses suggest potential volatility in equity value if market conditions deteriorate.
About Veralto Corp
Veralto Corp delivers sustainable infrastructure solutions through its Environmental Services and Energy & Power segments, serving global markets with innovative technologies. The company leverages a robust portfolio of patents to provide water treatment, waste management, and renewable energy services. With strong cash flow generation and consistent revenue growth, Veralto positions itself as a leader in the green economy transition.
Analysis
Management Discussion
Management successfully navigated operational challenges to grow revenue from $5.02B in 2023 to $5.50B in 2025, demonstrating consistent top-line expansion. Net income improved significantly to $940M in 2025 from $839M in 2023, reflecting effective cost management and operational leverage. Strong operating cash flow of $1.08B underscores the quality of earnings and supports substantial dividend payments of $109M.
Industry Overview
The global sustainability infrastructure market is expanding rapidly as governments and corporations prioritize decarbonization and circular economy initiatives. Veralto operates in a high-barrier-to-entry sector where specialized technical expertise and regulatory compliance are critical success factors. Industry consolidation continues as smaller players struggle with capital intensity, favoring well-capitalized firms like Veralto.
Financial Statements
Income Statement
Balance Sheet
Cash Flow
| Metric | 2023 | 2024 | 2025 |
|---|---|---|---|
| Revenue | $5.02B | $5.19B | $5.50B |
| Cost of Revenue | $2.12B | $2.09B | $2.20B |
| Gross Profit | $2.90B | $3.10B | $3.30B |
| Operating Expenses | $1.76B | $1.90B | $2.02B |
| Operating Income | $1.14B | $1.21B | $1.28B |
| R&D | $225.0M | $253.0M | $266.0M |
| G&A | $1.54B | $1.64B | $1.76B |
| Stock-Based Comp | $55.0M | $65.0M | $74.0M |
| D&A | $87.0M | $78.0M | $78.0M |
| Depreciation | $39.0M | $40.0M | $42.0M |
| Amortization | $48.0M | $38.0M | $36.0M |
| Other OpEx | $0 | $0 | $0 |
| Non-Operating Income | $-44.0M | $-122.0M | $-104.0M |
| Interest Expense | $30.0M | — | — |
| Pre-Tax Income | $1.10B | $1.09B | $1.17B |
| Income Tax | $257.0M | $253.0M | $233.0M |
| Continuing Ops | $839.0M | $833.0M | $940.0M |
| Discontinued Ops | $0 | $0 | $0 |
| Net Income | $839.0M | $833.0M | $940.0M |
| Minority Interest | $0 | $0 | $0 |
| Net to Common | $839.0M | $833.0M | $940.0M |
| Metric | 2023 | 2024 | 2025 |
|---|---|---|---|
| Current Assets | $2.07B | $2.39B | $3.43B |
| Cash & Equivalents | $762.0M | $1.10B | $2.03B |
| Accounts Receivable | $826.0M | $812.0M | $897.0M |
| Inventory | $297.0M | $288.0M | $307.0M |
| Prepaid Expenses | $188.0M | $186.0M | $197.0M |
| Other Current Assets | $0 | $0 | $0 |
| Long-Term Assets | $3.62B | $4.02B | $4.26B |
| PP&E (Net) | $262.0M | $268.0M | $294.0M |
| Intangibles | $427.0M | $535.0M | $524.0M |
| Goodwill | $2.53B | $2.69B | $2.84B |
| Operating Leases | $144.0M | $159.0M | $195.0M |
| Other LT Assets | $254.0M | $364.0M | $410.0M |
| Total Assets | $5.69B | $6.41B | $7.69B |
| Current Liabilities | $1.26B | $1.25B | $2.06B |
| Current Debt | — | — | $700.0M |
| Current Leases | $33.0M | $39.0M | $48.0M |
| Deferred Revenue | $208.0M | $237.0M | $267.0M |
| Other Current Liab | $168.0M | $119.0M | $101.0M |
| Long-Term Liabilities | $3.04B | $3.12B | $2.53B |
| Long-Term Debt | $2.63B | $2.60B | $1.97B |
| LT Operating Leases | $115.0M | $129.0M | $158.0M |
| Other LT Liab | $280.0M | $371.0M | $380.0M |
| Total Liabilities | $4.30B | $4.36B | $4.59B |
| Shareholders' Equity | $1.39B | $2.04B | $3.11B |
| Retained Earnings | $178.0M | $917.0M | $1.74B |
| AOCI | $-954.0M | $-1.07B | $-913.0M |
| Total L&E | $5.69B | $6.41B | $7.69B |
| Metric | 2023 | 2024 | 2025 |
|---|---|---|---|
| Net Income (CFO) | $839.0M | $833.0M | $940.0M |
| Non-Cash Adjustments | $107.0M | $-74.0M | $-126.0M |
| Working Capital Changes | $17.0M | $116.0M | $263.0M |
| Cash from Operations | $963.0M | $875.0M | $1.08B |
| Capital Expenditures | $54.0M | $55.0M | $63.0M |
| Cash from Investing | $-55.0M | $-434.0M | $-98.0M |
| Debt Issuances | $2.61B | — | — |
| Dividends Paid | — | $89.0M | $109.0M |
| Cash from Financing | $-135.0M | $-65.0M | $-102.0M |
| FX Effect | $-11.0M | $-37.0M | $53.0M |
| Net Change in Cash | $762.0M | $339.0M | $930.0M |
| Beginning Cash | $0 | $762.0M | $1.10B |
| Ending Cash | $762.0M | $1.10B | $2.03B |
Frequently Asked Questions
How does Veralto Corp make money?
The company operates primarily through Environmental Services, focusing on wastewater treatment and resource recovery, and Energy & Power, specializing in renewable energy generation and grid solutions. Revenue streams are driven by project-based contracts and long-term service agreements across North America, Europe, and Asia-Pacific markets.
What are the main risks for VLTO?
Regulatory changes in environmental compliance could impact project margins or necessitate costly upgrades to existing facilities. Exposure to foreign exchange fluctuations, evidenced by a $53M FX effect on cash, may erode earnings from international operations. Intense competition in the renewable energy sector could compress profit margins if pricing power is not maintained.
What is VLTO's competitive advantage?
Veralto maintains a formidable moat through an extensive portfolio of patented technologies that minimize waste and maximize resource efficiency. Its diversified global footprint reduces single-market dependency while delivering stable, recurring revenue from long-term operating agreements. Strong balance sheet with $2.03B in cash provides flexibility for strategic acquisitions and capital allocation.
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Not financial advice. All content is for informational purposes only. Data may contain errors. Consult a qualified financial advisor before making investment decisions.