Good morning, everyone, and 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 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 on 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.

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 to $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 Global Vision 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.

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?

Then just on the CAPEX side, give us an update on Trojan and quote activity. Thank you.

Good morning and thanks for the question, Deane. 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, 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, we see mid- to high-single-digit growth there with strengths 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, and that's again really on the back of being integral to that customer operating environment.

Relative to your question around Trojan and UV, activity here in terms of quoting and bidding remains strong. This business has, some nice bolt-on acquisitions that we've done here with Aquafides.

I think it is important to remember this is a little bit longer-cycle business, right? The bookings that we would see now would be, shipping largely in the Q4 2027.

Great order book activity there on the back of the secular drivers I discussed.

Great, and just a quick follow-up. With reference to the muni outlook for '26, what are you assuming for the spending growth, and if you can separate, what that CAPEX growth would be versus OPEX larger equipment projects, that would be great.

Thanks.

Hey, Deane, thanks for the question. With respect to the muni view that we 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 probably we're not in the majority in the CAPEX cycle.

We're tightly OPEX cycle. It's pretty steady on both sides, Deane, as you kind of think about this thing.

Steady in muni business going into analytics side, Trojan side really strong as Jennifer just laid out.

Great to hear. Thank you.

Thanks, Deane.

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 catalysts behind it, maybe some things here that you weren't able to do pre-separation, etc. Just and maybe a little more color on some of the levers you're looking to pull there.

Thanks for the question, Jeff. 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 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. 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 can't fully account for when you're part of a $30 billion enterprise, but, from a timing perspective, this is really the right time for us to look at this sort of structural allocation of cost and make sure that we're right-sized for the size business that we are today and what will be scalable in the future.

You didn't mention any benefits in 2026. We should expect just gearing up in '26 for things to flow in '27 and '28?

Jeff, most of the actions that we have laid out in this pretty detailed plan are oriented towards end of this year, so that in Q4, you're going to see one 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 '27 and full run rate in 2028. That's how you can model the savings.

Great. I'll leave it there.

Thank you.

Thanks, Jeff.

Thanks, Jeff. Thank you.

Hey, good morning, everyone.

Good morning, Andy.

Jennifer, I think in your prepared remarks, you mentioned packaging and color within PQI down high-single digits as a nonrecurring impact in Q1. Maybe just give a little more color around that.

What are CPG companies telling you? Are they worried at all about inflation, or is this really lumpiness and that's really the explanation, and I do think you're still forecasting good growth for the rest of the year in PQI?

Yeah.

It's a little bit tale of two cities here relative to the PQI story. At a high level, we see continued strong demand across our CPG customer base, and 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 Global Vision. Global Vision obviously strengthens the value proposition here in terms of building a comprehensive workflow.

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 nonrecurring revenue, including sales of color testing and packaging inspection equipment. This was really focused in a few discrete industrial end markets, automotive, textiles, building materials driven by housing market, and so on.

That's where we're seeing some of the demand weakness, but certainly, going forward, we feel strong about incremental recovery here, and certainly, we don't see any changes relative to CPG demand, which would indicate, our confidence in the marking and coding business continuing to be strong and in fact, accelerate throughout the year.

Thanks for that, Jennifer. Then maybe the same kind of question on PQI margins.

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 think you said is going to impact Q2 PQI margin.

Structurally, do you see PQI margin having the same opportunity that you have in sort of Water Quality, consistent with the long-term incremental margin framework you have?

Absolutely, Andy. As you can look at PQI, right, on a sequential basis, we had very nice improvement in the margins.

Mix helped, but at the same time, some of the rollover from the tariff actions that we kind of talked about is going to roll off as well. Overall, if you kind of look at the opportunity in the second half of this year and moving forward into '27, absolutely, we see same level of opportunity.

Good to hear. Thanks, guys.

Thanks, Andy.

Thanks for taking my question. Maybe just one on the water front.

In particular, some of your competitors in the ChemTreat arena have put through some really chunky price hikes and/or surcharges, 10% to 14% for one, 8% to 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?

Thanks for the question, John. We take a disciplined approach to pricing within all of our operating companies, but I think particularly, you're referring here to ChemTreat.

We by virtue of our 75% sales direct to customers, we've got a lot of 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 going to offset the headwinds from rising costs, but we do this very surgically.

We feel that this approach has been disciplined in the way we execute it. It served us well to achieve that mid- to high-single-digit core sales growth, and we've done this since the spin, and we would expect this approach to continue.

Got it. Thanks.

Then maybe just a little bit of color, given the challenging environment with inflation and, 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?

Yeah. John, maybe I'll take this one.

If you look at from the assets perspective, the market conditions change, but we always going to stay true to our market company valuation algorithm as we 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.

Great, thanks very much for the color.

Thanks, John.

Great, thank you for the time. Just wanted to come back to the cost optimization plan that you've laid out here.

Just want to 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?

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% to 35% fall-through. From a modeling perspective, as you can start thinking about '27, '28, it is logical to assume that we will use the 30% to 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 '27 and '28. As far as particular of the exact details for '27, of course, we'll talk when we get that guidance.

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, a pretty good majority of or 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 '27, and could we potentially see an increase in the authorization or maybe what would be a trigger point for that?

Yeah. Thanks for the question, Will.

I think it's safe to say that we're going to 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 billion dollars of capital deployed thus far in the year.

The M&A engine is running well, and, 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. As far as whether that would be increased, that's going to be a board decision, and in due course, we will take that on at whatever time is appropriate.

Appreciate the color. Thanks very much.

Thanks, Will.

Good morning, everyone.

Morning, Mike.

Clarification Good morning. A clarification on the early, how does the cost out program layer between the two segments?

If you can 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 of more bias towards PQI, but it's pretty balanced across the company if you're going to look think of it.

Got it. Then 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 relative to normal seasonality as it plays out? If you are assuming any acceleration, any areas that we should be thinking about specifically?

Overall, if you're going to think about the end market dynamics, Mike, that we've 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 market and the demand to be pretty steady over here.

Similarly, on the water side, I would say is the muni 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. To be a pretty well embedded in the high value part of the workflows.

Overall, demand pretty steady, but in the second half, as especially as we get into Q4, the comps get a little easier as well, so that kind of helps as you're going to think about the core growth. Sequentially, we should see core growth kind of moving up as we go through the year.

Appreciate it. Thank you.

Thanks, Mike.

Hey, good morning, everyone.

Morning, Andrew.

Just wanted to check on the Water Quality. You've seen just a number of drivers, including data centers.

I'm just wondering if you could tease out how influential that data center contribution was to growth. I don't know how you want to do it, but maybe just talk a little more about that, please.

Our water team had a fantastic quarter just in terms of execution, driving hard across the enterprise. Relative to which markets are faster growers, we do see a strong growth in data centers, but as a reminder, data center revenue is still overall a very small portion of our total sales in Water Quality.

We don't spell out market sizes, growth rates separately here publicly, but we will say that we're getting great traction here, a lot of uptake and demand, and that's benefiting essentially all of our water businesses.

Okay. Then, M&A-wise, it certainly sounded like you're still interested in moving forward with capital allocation towards that.

I'm wondering, we saw a peer on the treatment side move into the data center space a little bit more aggressively. Does that market interest you in terms of increasing, maybe increasing in terms of the hierarchy of where your interests lie?

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-razorblade businesses. We like being in the operating cycle of the customer's operations, and we find that this gives us long-term durability and good confidence in the steady state that we've been able to create here.

I wouldn't say 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.

All right, thank you.

good morning, everyone.

Morning, Jacob.

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 they're different business mixes with your portfolio, but maybe you can just give us some color on how you'd characterize that market today and if there are any puts and takes around specific verticals.

China 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 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.

Have strong opportunities that continue within PQI.

That's good color. Just a quick follow-up for Sameer.

I think that your tax rate has been going 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.

Thanks, Jacob, for that. If you look at the tax rate, it's definitely we made a pretty nice move from where we started, from 24.

24 and 1/2-ish kind of a percent when we spun off, now in the 20s. I would say, Jacob, it's a balance, but I would say majority is skewed towards all the really great work by the tax team and from a planning perspective to get us to the right place.

Appreciate it. Thank you.

I'll pass it on.

Thanks, Jacob.

Hi, thanks. Good morning, everyone.

I was hoping you could give us an update on tariffs. There have been a variety of updates sort of Supreme Court ruling, the changes in Section 232 rules, and then also, general cost inflation from higher oil.

Could you give us an update, how you're viewing the tariff headwinds and cost inflation headwinds this year, and if that's changed at all versus last quarter? Thanks.

Thanks thanks, Andrew, for that. If you're going to look at on the tariff side, there's three layers, right?

The stuff that happened last year, effectively we've taken the pricing actions, all align moves have happened, those things should start rolling o- impact of those should start rolling over as you kind of get in the second half, we're pretty well-positioned on on that front. As far as the new Section 232 kind of stuff, we've baked the impact of that on in the guidance that we provided.

Overall impact as you kind of think about for us is actually much smaller. This is not like last year.

If you're going to really start thinking about the, the steel and aluminum kind of components into our products, it's it's pretty small. Those the impact of those is is pretty small for us.

As far as the the Middle East and the current current conflict and the impact that we're seeing on the commodities all on the oil side, again, baked into the guidance. It is based on the what we see right now, but as you can imagine, some really active discussions with the customers on the pricing side.

Jennifer touched on the ChemTreat side earlier. The impact that we're seeing on the chemicals and back packaging side, that's kind of, baked in.

Overall, we're pretty well-positioned as you're going to think about the the re- the rest of the year. This pricing and there's a lot of productivity stuff as well, part of it.

Great, that's very helpful. On a related note, just with price, is it still fair we should be thinking about the company realizing about 2% price or so?

I think PQI was trending a bit higher than Water Quality. Is that a reasonable approach still?

That's a pretty reasonable approach. Just kind of take it on the pricing 100, 200 basis points, but 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.

Okay. Thanks so much.

Thank you.

Hey, guys, sorry about that. This is Tyler Bisset on for Brian.

Thanks for taking our question. Just wanted to go back to the high-growth markets.

You discussed how acquisitions of Global Vision and In-Situ should help support growth here, but was actually a little weak for both Water Quality and PQI during the quarter. Any reason for the weakness in the quarter?

How do you expect growth to trend going forward? Then just I guess looking to 2Q, are you expecting any material impact from the war in Iran?

Thanks for the question, Tyler. If you just want to make sure I get the question right, high-growth market versus Global Vision, right?

Let's bifurcate those two. Global Vision does not have any sort of a meaningful impact as we start to think about the growth on the high-growth market side.

High-growth market side effectively, we grew the low-single digits. 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 little bit of a low-single-digit decline as well.

Nothing material. Majority of this impact that you're seeing is more sort of timing driven, especially in Latin America.

That's kind of driving that impact. Otherwise, we're pretty well-placed.

I would say as well, we've got a pretty, big prior-year comp in India, right? We had a Q1 in India that was about 20% last year.

We do see some impacts here in Middle East, small portion of our overall revenue, but the sales there were down about 10%.

Great, super helpful. I'll turn it over.

Thanks.

Hi. Good morning.

I wanted to ask just about similar on some of the regional impacts here in PQI. There's a pretty decent divergence 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, and if you can help, what that looks like in 2Q, if any of that reverses at all.

Relative to Western Europe, PQI had a really tough comp in 2025. They were up 10.3% last year.

This is on the back of our recurring revenue model where three extra days matters a lot in the first quarter of 2025. 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, and that's on the back of a pretty healthy sizable comp prior year. we did see, an offset here by delays in shipments of certain hardware lines in our packaging and color businesses, which we referred to earlier.

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, little bit of impact from obviously China, India. we got some timing issues and then certainly the impact of Middle East and Africa.

No, that's helpful. I guess if I 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 going to 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?

As you're going to get into the second half, you're going to see the growth despite the comps. In fact, I would say from the PQI perspective, the comps get a little easier as we get into Q4.

Overall, since the demand given the demand dynamic that Jennifer just talked about from the on the marking and coding side from the CPG side, we feel pretty good about the second half of the year, and that's going to bake into the guidance. Nothing sort of a material deviation that you're going to see.

All right, thank you.

Thanks.

Hi, good morning. This is Chris on for Joe.

The EPS guide moves higher even though 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.

Thanks, Chris, for that question. Overall, if you're going to think about the increase in the EPS guide, it's predominantly raised because of the operating stuff.

There the share buyback that we have done so far is already kind of baked in. Overall, what's kind of driving this thing is really a few things.

The strength of Q1 and the way we are coming out in terms of the order books in for out of the quarter and into April. Second one is talk to the pricing, 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 all the both the businesses and across the region. Those are kind of really the things that are kind of driving.

Otherwise, the demand patterns are pretty steady at this point, and given where we are now with almost four months behind, gives us more confidence on that front.

Thank you very much.

Thanks, Chris.

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.