Veralto Corporation

My name is Erica and I will be your conference operator this morning. At this time, I would like to welcome everyone to Veralto Corporation's third 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 the 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. Please go ahead Mr. Taylor, you may now begin.

Good morning everyone. Thanks for joining us on the call. With me today are Jennifer Honeycutt, our President and Chief Executive Officer, and Sameer 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 investor section of our website later today under the heading events and presentations. A replay of this call will be available until November 9th. Yesterday we issued our third quarter 2026 earnings news release earnings presentation prepared remarks 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. 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. And with that, I'll turn the call over to Jennifer.

Thanks, Ryan. I want to start by thanking our 17,000 associates for delivering an outstanding third quarter. We continue to build on our track record of meeting or exceeding our financial commitments through rigorous execution in support of our customers. In Q3, total sales grew 7.5% year over year, adjusted EPS increased 19.2%, and we generated robust free cash flow of $304 million. We delivered 5.1% core sales growth, Thank you for joining us. We expect core sales growth of 5.5 to 6.5% and approximately 5% growth from acquisitions, resulting in total sales growth of approximately 10 to 11%. Based on our third quarter performance, fourth quarter outlook and early gains from our cost optimization program, We raised our full year adjusted EPS guidance to $4.49 to $4.52 per share, representing 15% to 16% growth over the prior year. Our 2026 guidance includes benefits from our disciplined capital deployment. Year-to-date, we've deployed more than $1.65 billion across four strategic bolt-on acquisitions and the repurchase of 2.4% of our outstanding shares. Our most recent acquisition of Clean Water One expands our capabilities in water treatment solutions, and I'm excited to welcome the Clean Water One associates to Veralto. With our strong balance sheet and robust cash generation, we have ample flexibility to act decisively on attractive new opportunities. This year's performance and disciplined capital deployment reflects the stronger Veralto 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 the first three years, we have simplified VES and bolstered our execution, accelerated innovation, and strengthened our portfolio through disciplined M&A. These actions have accelerated our core sales growth, driven consistent margin expansion, VES growth. I'm incredibly proud of what our team has accomplished. 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. That concludes my prepared remarks, and at this time, we will now take your questions.