Veralto Corporation

Please stand by. Your program is about to begin. My name is Angela and I will be your conference operator this morning. At this time, I would like to welcome everyone to the Veralto Corporation's second quarter 2025 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 the number one on your telephone keypad. If you would like to withdraw your question, please press star, then the number two on your telephone keypad. I will now turn the call over to Ryan Taylor, Vice President of Investor Relations. Mr. Taylor, you may begin your conference.

Good morning, everyone. Thanks for joining us on the call. With me today are Jennifer Honeycutt, our President and Chief Executive Officer, and Samir Rohan, 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 Investor section of our website later today under the heading Events and Presentations. A replay of this call will be available until August 7th. Yesterday, we issued our second quarter 2025 news release, earnings presentation, and supplemental materials, including information required by the SEC relating to adjusted or non-GAAP financial measures. These materials are available in the Investor section of our website, .veralto.com, under the heading Quarterly Earnings. Reconciliation 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 -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.

Thank you, Ryan, and thank you all for joining our second quarter earnings call today. At Veralto, our focus on creating shareholder value includes delivering steady, predictable growth -over-quarter, year after year. The ability to drive consistent, predictable growth is a hallmark of the Veralto operating companies and demonstrates the durability of our business model, catalyzed by rigorous application of the Veralto Enterprise System. As part of this approach, we focus on the critical few and utilize visual daily management to drive consistent, efficient execution. This helps ensure we are supporting our customers' growth and operating objectives while enabling more efficient workflows in their daily operations. It also helps us meet our financial commitments and achieve both our short- and long-term objectives. The second quarter of 2025 marks our fourth consecutive quarter of -single-digit core sales growth. Over that time, we increased adjusted earnings per share by nearly 13 percent. I want to take a moment and commend our team of 17,000 associates around the world for delivering a strong performance over the past year, particularly considering the dynamic macro environment, geopolitical landscape, and fluid trade policies. This includes standout performance by our procurement and supply chain teams, factory operations, as well as outstanding execution by our commercial teams. Our commercial teams have spearheaded our growth by leveraging deep domain expertise and applying VES growth tools such as funnel management, lead generation, and sales productivity. We are benefiting from investments made last year to improve our commercial architecture, innovation, and sales and marketing efforts. Through the first half of 2025, we have met or exceeded our financial commitments and delivered -single-digit core sales growth, expanded adjusted operating profit margins, and double-digit adjusted earnings per share growth. This level of performance is a testament to the focused efforts of our global team, our durable business model, and secular growth drivers across our end markets. Based on our first half performance, stable demand across our end markets, and our current assessment of macroeconomic conditions, we raised our full-year adjusted earnings per share guidance range to $3.72 to $3.80 per share. Additionally, our first half free cash flow generation further strengthened our financial position, giving us increased flexibility as we evaluate capital allocation opportunities to fuel long-term shareholder value. As we have previously stated, our capital allocation bias is towards acquisitions, including investments that augment our R&D and innovation efforts. Our pipeline of opportunities is comprised of a mosaic of targets, and we continue to make progress even as we remain highly disciplined in our execution. Last week, we announced a 20 million euro commitment to invest in Emerald Technology Ventures Global Water Fund 2 to support investments in emerging technology-oriented businesses. Emerald's global presence and deep-sector expertise is expected to provide our water quality team with early insights into emerging water-focused ventures, making it a strong strategic partner to augment our innovation and technology development efforts. This move strengthens our ability to identify and scale solutions that align closely with our customers' needs in its worldwide. As for the quarter itself, we delivered a strong second quarter led by outstanding commercial execution and steady broad-based customer demand. Looking at our second quarter results in detail and building off our strong start to the year, we delivered .8% core sales growth and just under 10% adjusted EPS growth. As I mentioned, this marks our fourth consecutive quarter of -single-digit core sales growth consistent with our long-term growth algorithm. Our commercial teams continue to drive outstanding execution to deliver growth through new customer wins and increased market penetration, while also capitalizing on steady demand across our key markets. Our core sales growth was broad-based across both segments, with water quality delivering 5% core sales growth and PQI .6% core sales growth. In PQI, ongoing positive trends in consumer packaged goods markets supported growth across all key product categories in our marking and coding business and across our digital workflow solutions in packaging and color. In our marking and coding business, Q2 marked our fifth consecutive quarter with -over-year growth in both consumables and equipment. In water quality, we saw robust -single-digit growth across both water treatment solutions and water analytics. Moving on to margin performance, adjusted operating profit margin came in at .7% in line with our underlying guidance assumption. Adjusted earnings per share grew .4% -over-year to 93 cents, 5 cents above the high end of our guidance primarily due to -than-expected sales volumes. Looking at core sales growth by geography and end market, growth was broad-based across key verticals and regions with -single-digit growth across North America, Western Europe, and high-growth markets. Core sales growth in Western Europe was .3% led by continued double-digit growth in water quality. In North America, core sales grew .6% with both segments generating core sales growth above 5%. And sales into high-growth markets were up just over 6% -over-year with high single-digit growth in PQI and -single-digit growth in water quality. Taking a closer look, in Western Europe, water quality grew 11.4%. This growth was, once again, led by our water analytics team in Western Europe and reflects the changes we made to our commercial architecture and sales leadership in Europe last year. These changes have contributed to rigorous lead generation, funnel management, and VES-catalyzed commercial execution. And in PQI, sales into Western Europe were up .1% led by growth in consumables and continuous inkjet marking and coding systems. Moving to North America, core sales growth was led by water quality with .7% growth. We continue to capitalize on solid demand for our chemical treatment solutions where core sales grew -single-digit -over-year. Our chemical treatment growth was broad-based across several industries with the strongest growth in chemical processing and data centers. We continue to see ongoing traction with new customers at existing data centers and are well positioned to capitalize on the build-out of new data centers, the majority of which will consume large quantities of water. Taking a broader view, the infrastructure being built to support growth in technology and artificial intelligence will further strain water capacity. We believe our portfolio of water analytics and water treatment solutions is well positioned to support this trend and serve customers as new data centers, semiconductor fabs, and power generation facilities come online. In Trojan's UV systems business, we continue to see growth in North America driven by good momentum within municipalities primarily related to water reuse. In Q2, Trojan secured a significant order for a large-scale UV treatment system that will be part of a water reclamation project on Chicago's North Shore. This award will be supported by the manufacturing expansion we completed in Michigan earlier this year and demonstrates our ability to deliver large-scale UV systems that meet U.S. Build America, Buy America criteria. It also highlights Trojan's differentiated revolutionary UV-Signna technology, which eliminates the risk of bacteria and pathogens in wastewater while also reducing energy consumption and simplifying operations for our customers. Both the public health and economic benefits of water conservation, reclamation, and reuse continue to provide opportunities for us to expand our business and support our customers' objectives to conserve water and efficiently manage its usage. We also continue to benefit from positive market trends across PQI in North America during the second quarter with core sales growth above 5% year over year. This was primarily driven by high single-digit growth in consumables and double-digit growth in software. Demand from CPG customers continues to support steady growth for our marketing and coding products and services and our packaging and color software. We also continue to drive growth in PQI through strategic initiatives and commercial excellence. In high-growth markets, core sales grew .1% highlighted by strong growth in Latin America and India. Overall, we delivered another strong quarter of growth with every one of our operating companies contributing to our Q2 results. At this time, I'll turn the call over to Samir for a detailed review of our financial results and an update on our guidance.