WALTHAM,
Mass., Feb. 6, 2024 /PRNewswire/ -- Veralto
(NYSE: VLTO) (the "Company"), a global leader in essential water
and product quality solutions dedicated to Safeguarding the World's
Most Vital Resources™ announced results for the fourth quarter
ended December 31, 2023.
Key Fourth Quarter 2023 Results
- Sales increased 3.3% year-over-year to $1,288 million, with non-GAAP core sales growth
of 1.7%
- Operating profit margin was 22.2% and non-GAAP adjusted
operating profit margin was 23.8%
- Net earnings were $200 million,
or $0.81 per diluted common
share
- Non-GAAP, adjusted net earnings were $215 million, or $0.87 per diluted common share
- Operating cash flow was $263
million and non-GAAP free cash flow was $241 million
Key Full Year 2023 Results
- Sales increased 3.1% year-over-year to $5,021 million, with non-GAAP core sales growth
of 2.6%
- Operating profit margin was 22.7% and non-GAAP adjusted
operating profit margin was 23.3%
- Net earnings were $839 million,
or $3.40 per diluted common
share
- Non-GAAP, adjusted net earnings were $787 million, or $3.19 per diluted common share
- Operating cash flow was $963
million and non-GAAP free cash flow was $911 million
Jennifer L. Honeycutt, President
and Chief Executive Officer, stated, "2023 was a historic year for
Veralto as we successfully executed our separation from Danaher and
delivered a record level of sales, high-single digit earnings
growth and strong free cash flow in a dynamic macro-economic
environment. I'm proud of our team for their resilient effort
to grow and improve our business, support our customers and help
ensure the safety of global water, food and medicine supply
chains."
Honeycutt continued, "We finished 2023 with a strong fourth
quarter delivering core sales growth in both segments, solid
operating margin expansion and robust free cash flow
generation. From an end market perspective, we saw continued
growth across industrial markets in our Water Quality segment and
early signs of stabilization in consumer-packaged goods markets in
our Product Quality & Innovation segment during the fourth
quarter."
"As we begin 2024, we are in a strong financial position and are
cautiously optimistic about the recent trends in our end
markets. Over the long term, we remain focused on compounding
earnings and cash flow through steady core sales growth, continuous
operating improvement and value accretive acquisitions that yield
attractive returns. We are unwavering in our commitment to
create value for shareholders by Safeguarding the World's Most
Vital Resources™ and driving an enduring, positive impact on our
world," concluded Honeycutt.
2024 Guidance
The Company provides forecasted sales only on a non-GAAP basis
because of the difficulty in estimating the other components of
GAAP sales, such as currency translation, acquisitions, and
divestitures.
For the first quarter of 2024, Veralto anticipates that non-GAAP
core sales will be approximately flat year-over-year with adjusted
operating profit margin in the range of 23.0% to 23.5% and adjusted
diluted earnings per share in the range of $0.73 to $0.78 per
share.
For the full year 2024, the Company anticipates that non-GAAP
core sales will grow low-single digits year-over-year and that
adjusted operating profit margin will expand 50 to 75 basis points
year-over-year. The Company is targeting adjusted diluted
earnings per share in the range of $3.20 to $3.30 with
free cash flow conversion of approximately 100%.
Conference Call and Webcast Information
Veralto will discuss its fourth quarter results and financial
guidance for 2024 during its quarterly investor conference call
tomorrow starting at 8:30 a.m. (ET).
Access to the call, webcast and an accompanying slide presentation
will be available on the "Investors" section of Veralto's website,
www.veralto.com, under the subheading "News & Events" and
additional materials will be posted to the same section of
Veralto's website. A replay of the webcast will be available in the
same section of Veralto's website shortly after the conclusion of
the call and will remain available until the next quarterly
earnings call.
The conference call can be accessed by dialing +1 (800) 579-2543
(U.S.) or +1 (785) 424-1789 (INTL) (Conference ID: VLTO4Q23).
A replay of the conference call will be available shortly after the
conclusion of the call and until February
21, 2024. You can access the replay dial-in information on
the "Investors" section of Veralto's website under the subheading
"News & Events."
2024 Annual Meeting of Stockholders
The Company expects to host its 2024 annual meeting of
stockholders on May 21, 2024, in
person in Waltham, MA and
online.
ABOUT VERALTO
With annual sales of $5 billion,
Veralto is a global leader in essential technology solutions with a
proven track record of solving some of the most complex challenges
we face as a society. Our industry-leading companies with globally
recognized brands are building on a long-established legacy of
innovation and customer trust to create a safer, cleaner, more
vibrant future. Headquartered in Waltham,
Massachusetts, our global team of 16,000 associates is
committed to making an enduring positive impact on our world and
united by a powerful purpose: Safeguarding the World's Most Vital
Resources™.
NON-GAAP MEASURES AND SUPPLEMENTAL MATERIALS
In addition to the financial measures prepared in accordance
with generally accepted accounting principles (GAAP), this earnings
release also contains non-GAAP financial measures. Calculations of
these measures, the reasons why we believe these measures provide
useful information to investors, a reconciliation of these measures
to the most directly comparable GAAP measures, as applicable, and
other information relating to these non-GAAP measures are included
in the supplemental reconciliation schedule attached.
In addition, this earnings release, the slide presentation
accompanying the related earnings call, non-GAAP reconciliations
and a note containing details of historical and anticipated, future
financial performance have been posted to the "Investors" section
of Veralto's website (www.veralto.com) under the subheading
"Quarterly Earnings."
FORWARD-LOOKING STATEMENTS
Certain statements in this release, including the statement
regarding the Company's anticipated first quarter and full year
2024 financial performance, the Company's differentiation and
positioning to continue delivering sustainable, long-term
shareholder value and any other statements regarding events or
developments that we believe or anticipate will or may occur in the
future are "forward-looking" statements within the meaning of the
federal securities laws. All statements other than historical
factual information are forward-looking statements, including,
without limitation, statements regarding: projections of revenue,
expenses, profit, profit margins, tax rates, tax provisions, cash
flows, pension and benefit obligations and funding requirements,
Veralto's liquidity position or other financial measures; Veralto's
management's plans and strategies for future operations, including
statements relating to anticipated operating performance, cost
reductions, restructuring activities, new product and service
developments, competitive strengths or market position,
acquisitions and the integration thereof, divestitures, spin-offs,
split-offs or other distributions, strategic opportunities,
securities offerings, stock repurchases, dividends and executive
compensation; the effects of the separation or the distribution on
Veralto's business; growth, declines and other trends in markets
Veralto sells into; new or modified laws, regulations and
accounting pronouncements; future regulatory approvals and the
timing thereof; outstanding claims, legal proceedings, tax audits
and assessments and other contingent liabilities; future foreign
currency exchange rates and fluctuations in those rates; general
economic and capital markets conditions; the anticipated timing of
any of the foregoing; assumptions underlying any of the foregoing;
and any other statements that address events or developments that
Veralto intends or believes will or may occur in the future.
Additional information regarding the factors that may cause actual
results to differ materially from these forward-looking statements
is available in our SEC filings, including our Form 10. These
forward-looking statements speak only as of the date of this
release and except to the extent required by applicable law, the
Company does not assume any obligation to update or revise any
forward-looking statement, whether as a result of new information,
future events and developments or otherwise.
|
VERALTO
CORPORATION
CONSOLIDATED AND
COMBINED BALANCE SHEETS
($ in millions,
except per share amount)
(unaudited)
|
|
|
As of December
31
|
|
2023
|
|
2022
|
|
ASSETS
|
|
|
|
|
Current
assets:
|
|
|
|
|
Cash and
equivalents
|
$
762
|
|
$
—
|
|
Trade accounts
receivable, less allowance for doubtful accounts of $36 as of
December 31, 2023 and $34 as of December 31,
2022
|
826
|
|
816
|
|
Inventories
|
297
|
|
345
|
|
Prepaid expenses and
other current assets
|
188
|
|
119
|
|
Total current
assets
|
2,073
|
|
1,280
|
|
Property, plant and
equipment, net
|
262
|
|
247
|
|
Other long-term
assets
|
398
|
|
343
|
|
Goodwill
|
2,533
|
|
2,476
|
|
Other intangible
assets, net
|
427
|
|
479
|
|
Total assets
|
$
5,693
|
|
$
4,825
|
|
|
|
|
|
LIABILITIES AND
EQUITY
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
Trade accounts
payable
|
431
|
|
440
|
|
Accrued expenses and
other liabilities
|
834
|
|
683
|
|
Total current
liabilities
|
1,265
|
|
1,123
|
|
Other long-term
liabilities
|
410
|
|
462
|
|
Long-term
debt
|
2,629
|
|
—
|
|
Equity:
|
|
|
|
|
Preferred stock, $0.00
par value, as of December 31, 2023 and December 31, 2022,
15
million and 100 shares authorized, respectively; and 0 shares
issued and outstanding as of
both dates
|
—
|
|
—
|
|
Common stock - $0.01
par value, as of December 31, 2023 and December 31, 2022,
1.0
billion shares and 100 shares authorized, respectively; and 246.4
million shares and 100
shares issued and outstanding, respectively
|
2
|
|
—
|
|
Net Former Parent
investment
|
—
|
|
4,189
|
|
Additional paid-in
capital
|
2,157
|
|
—
|
|
Retained
earnings
|
178
|
|
—
|
|
Accumulated other
comprehensive loss
|
(954)
|
|
(954)
|
|
Total Veralto
equity
|
1,383
|
|
3,235
|
|
Noncontrolling
interests
|
6
|
|
5
|
|
Total equity
|
1,389
|
|
3,240
|
|
Total liabilities and
equity
|
$
5,693
|
|
$
4,825
|
|
|
This information is
presented for reference only. Final audited financial statements
will include footnotes, which should be referenced when available,
to more fully understand the contents of this
information.
|
|
VERALTO
CORPORATION
CONSOLIDATED AND
COMBINED STATEMENTS OF EARNINGS
($ and shares in
millions, except per share amounts)
(unaudited)
|
|
|
Three-Month Period
Ended
|
|
Year
ended
|
|
December 31,
2023
|
|
December 31,
2022
|
|
December 31,
2023
|
|
December 31,
2022
|
|
Sales
|
$
1,288
|
|
$
1,248
|
|
$
5,021
|
|
$
4,870
|
|
Cost of
sales
|
(542)
|
|
(537)
|
|
(2,120)
|
|
(2,110)
|
|
Gross profit
|
746
|
|
711
|
|
2,901
|
|
2,760
|
|
Operating costs and
other:
|
|
|
|
|
|
|
|
|
Selling, general and
administrative expenses
|
(403)
|
|
(364)
|
|
(1,536)
|
|
(1,431)
|
|
Research and
development expenses
|
(57)
|
|
(53)
|
|
(225)
|
|
(217)
|
|
Operating
profit
|
286
|
|
294
|
|
1,140
|
|
1,112
|
|
Non-operating income
(expense):
|
|
|
|
|
|
|
|
|
Other income
(expense)
|
—
|
|
1
|
|
(14)
|
|
1
|
|
Interest expense,
net
|
(25)
|
|
—
|
|
(30)
|
|
—
|
|
Earnings before income
taxes
|
261
|
|
295
|
|
1,096
|
|
1,113
|
|
Income taxes
|
(61)
|
|
(79)
|
|
(257)
|
|
(268)
|
|
Net earnings
|
$
200
|
|
$
216
|
|
$
839
|
|
$
845
|
|
|
|
|
|
|
|
|
|
Net earnings per
share:
|
|
|
|
|
|
|
|
|
Basic
|
$
0.81
|
|
$
0.88
|
|
$
3.41
|
|
$
3.43
|
|
Diluted
|
$
0.81
|
|
$
0.88
|
|
$
3.40
|
|
$
3.43
|
|
Average common stock
and common equivalent shares outstanding:
|
|
|
|
|
|
|
|
|
Basic
|
246.6
|
|
246.3
|
|
246.4
|
|
246.3
|
|
Diluted
|
248.2
|
|
246.3
|
|
246.8
|
|
246.3
|
|
|
This information is
presented for reference only. Final audited financial
statements will include footnotes, which should be referenced when
available, to more fully understand the contents of this
information.
|
|
VERALTO
CORPORATION
CONSOLIDATED AND
COMBINED STATEMENTS OF CASH FLOWS
($ in
millions)
(unaudited)
|
|
|
Year Ended December
31
|
|
2023
|
|
2022
|
|
Cash flows from
operating activities:
|
|
|
|
|
Net
earnings
|
$
839
|
|
$
845
|
|
Noncash
items:
|
|
|
|
|
Depreciation
|
39
|
|
40
|
|
Amortization
|
48
|
|
50
|
|
Stock-based
compensation expense
|
55
|
|
41
|
|
Impairment of Equity
Method Investment
|
15
|
|
—
|
|
Change in deferred
income taxes
|
(25)
|
|
(44)
|
|
Change in trade
accounts receivable, net
|
2
|
|
(88)
|
|
Change in
inventories
|
52
|
|
(38)
|
|
Change in trade
accounts payable
|
(1)
|
|
23
|
|
Change in prepaid
expenses and other assets
|
(54)
|
|
(5)
|
|
Change in accrued
expenses and other liabilities
|
(7)
|
|
46
|
|
Net cash provided by
operating activities
|
963
|
|
870
|
|
Cash flows from
investing activities:
|
|
|
|
|
Cash paid for
acquisitions
|
—
|
|
(55)
|
|
Payments for additions
to property, plant and equipment
|
(54)
|
|
(34)
|
|
Proceeds from sales of
property, plant and equipment
|
2
|
|
—
|
|
All other investing
activities
|
(3)
|
|
—
|
|
Net cash used in
investing activities
|
(55)
|
|
(89)
|
|
Cash flows from
financing activities:
|
|
|
|
|
Proceeds from the
issuance of common stock in connection with stock-based
compensation
|
4
|
|
—
|
|
Net transfers to
Former Parent
|
(147)
|
|
(781)
|
|
Consideration paid to
Former Parent in connection with Separation
|
(2,600)
|
|
—
|
|
Proceeds from
borrowings
|
2,608
|
|
—
|
|
Net cash used in
financing activities
|
(135)
|
|
(781)
|
|
Effect of exchange rate
changes on cash and equivalents
|
(11)
|
|
—
|
|
Net change in cash and
equivalents
|
762
|
|
—
|
|
Beginning balance of
cash and equivalents
|
—
|
|
—
|
|
Ending balance of cash
and equivalents
|
$
762
|
|
$
—
|
|
|
This information is
presented for reference only. Final audited financial
statements will include footnotes, which should be referenced when
available, to more fully understand the contents of this
information.
|
|
VERALTO
CORPORATION
SEGMENT
INFORMATION
($ in
millions)
(unaudited)
|
|
|
Three-Month Period
Ended
|
|
Year
ended
|
|
December 31,
2023
|
|
December 31,
2022
|
|
December 31,
2023
|
|
December 31,
2022
|
|
Sales:
|
|
|
|
|
|
|
|
|
Water
Quality
|
$
782
|
|
$
756
|
|
$
3,039
|
|
$
2,887
|
|
Product Quality &
Innovation
|
506
|
|
492
|
|
1,982
|
|
1,983
|
|
Total
|
$
1,288
|
|
$
1,248
|
|
$
5,021
|
|
$
4,870
|
|
|
|
|
|
|
|
|
|
Operating
profit:
|
|
|
|
|
|
|
|
|
Water
Quality
|
$
194
|
|
$
183
|
|
$
730
|
|
$
668
|
|
Product Quality &
Innovation
|
116
|
|
124
|
|
472
|
|
488
|
|
Other
|
(24)
|
|
(13)
|
|
(62)
|
|
(44)
|
|
Total
|
$
286
|
|
$
294
|
|
$
1,140
|
|
$
1,112
|
|
|
|
|
|
|
|
|
|
Operating Profit
Margin:
|
|
|
|
|
|
|
|
|
Water
Quality
|
24.8 %
|
|
24.2 %
|
|
24.0 %
|
|
23.1 %
|
|
Product Quality &
Innovation
|
22.9 %
|
|
25.2 %
|
|
23.8 %
|
|
24.6 %
|
|
Total
|
22.2 %
|
|
23.6 %
|
|
22.7 %
|
|
22.8 %
|
|
VERALTO
CORPORATION RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL
MEASURES
|
|
Adjusted Operating
Profit and Adjusted Operating Profit Margin
|
|
|
Three-Month Period
Ended
|
|
December 31,
2023
|
|
December 31,
2022
|
|
Sales
|
|
Operating
profit
|
|
Operating
profit
margin
|
|
Sales
|
|
Operating
profit
|
|
Operating
profit
margin
|
|
Reported
(GAAP)
|
$
1,288
|
|
$
286
|
|
22.2 %
|
|
$
1,248
|
|
$
294
|
|
23.6 %
|
|
Amortization of
acquisition-related intangible assets A
|
—
|
|
12
|
|
0.9
|
|
—
|
|
12
|
|
1.0
|
|
Separation costs
B
|
—
|
|
7
|
|
0.5
|
|
—
|
|
—
|
|
—
|
|
Other items
C
|
—
|
|
1
|
|
0.1
|
|
—
|
|
—
|
|
—
|
|
Standalone Entity
Adjustments D
|
—
|
|
—
|
|
—
|
|
3
|
|
(15)
|
|
(1.2)
|
|
Rounding
|
—
|
|
—
|
|
0.1 %
|
|
—
|
|
—
|
|
(0.1) %
|
|
Adjusted
(Non-GAAP)
|
$
1,288
|
|
$
306
|
|
23.8 %
|
|
$
1,251
|
|
$
291
|
|
23.3 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year
Ended
|
|
December 31,
2023
|
|
December 31,
2022
|
|
Sales
|
|
Operating
profit
|
|
Operating
profit
margin
|
|
Sales
|
|
Operating
profit
|
|
Operating
profit
margin
|
|
Reported
(GAAP)
|
$
5,021
|
|
$
1,140
|
|
22.7 %
|
|
$
4,870
|
|
$
1,112
|
|
22.8 %
|
|
Amortization of
acquisition-related intangible assets A
|
—
|
|
48
|
|
1.0
|
|
—
|
|
50
|
|
1.0
|
|
Separation costs
B
|
—
|
|
7
|
|
0.1
|
|
—
|
|
—
|
|
—
|
|
Other items
C
|
—
|
|
1
|
|
—
|
|
—
|
|
—
|
|
—
|
|
Standalone Entity
Adjustments D
|
6
|
|
(38)
|
|
(0.8)
|
|
9
|
|
(61)
|
|
(1.3)
|
|
Impairments and other
charges F
|
—
|
|
12
|
|
0.2
|
|
—
|
|
10
|
|
0.2
|
|
Rounding
|
—
|
|
—
|
|
0.1
|
|
—
|
|
—
|
|
0.1
|
|
Adjusted
(Non-GAAP)
|
$
5,027
|
|
$
1,170
|
|
23.3 %
|
|
$
4,879
|
|
$
1,111
|
|
22.8 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted Net Earnings
Per Common Share and Adjusted Diluted Net Earnings Per Common
Share
|
|
|
Three-Month
Period Ended
|
Year
Ended
|
|
December 31,
2023
|
December 31,
2022
|
December 31,
2023
|
December 31,
2022
|
|
Diluted Net Earnings
Per Common Share
|
$
0.81
|
$
0.88
|
$
3.40
|
$
3.43
|
|
Amortization of
acquisition-related intangible assets A
|
0.05
|
0.05
|
0.19
|
0.20
|
|
Separation costs
B
|
0.03
|
—
|
0.03
|
—
|
|
Standalone Entity
Adjustments D
|
—
|
(0.20)
|
(0.56)
|
(0.82)
|
|
Fair value losses on
investments E
|
—
|
—
|
0.06
|
—
|
|
Impairments and other
charges F
|
—
|
—
|
0.05
|
0.04
|
|
Tax effect of the above
adjustments G
|
(0.02)
|
0.04
|
0.06
|
0.15
|
|
Discrete tax
adjustments H
|
—
|
0.03
|
(0.05)
|
(0.02)
|
|
Rounding
|
—
|
—
|
0.01
|
0.01
|
|
Adjusted Diluted Net
Earnings Per Common Share (Non-GAAP)
|
$
0.87
|
$
0.80
|
$
3.19
|
$
2.99
|
|
|
Adjusted Net
Earnings
|
|
|
Three-Month
Period Ended
|
Year
Ended
|
|
December 31,
2023
|
December 31,
2022
|
December 31,
2023
|
December 31,
2022
|
|
Reported Net
Earnings (GAAP)
|
$
200
|
$
216
|
$
839
|
$
845
|
|
Amortization of
acquisition-related intangible assets A
|
12
|
12
|
48
|
50
|
|
Separation costs
B
|
7
|
—
|
7
|
—
|
|
Other items
C
|
1
|
—
|
1
|
—
|
|
Standalone Entity
Adjustments D
|
—
|
(50)
|
(138)
|
(201)
|
|
Fair value losses on
investments E
|
—
|
—
|
15
|
—
|
|
Impairments and other
charges F
|
—
|
—
|
12
|
10
|
|
Tax effect of the above
adjustments G
|
(5)
|
11
|
15
|
37
|
|
Discrete tax
adjustments H
|
—
|
7
|
(12)
|
(4)
|
|
Rounding
|
—
|
—
|
—
|
—
|
|
Adjusted Net
Earnings (Non-GAAP)
|
$
215
|
$
196
|
$
787
|
$
737
|
|
Notes to
Reconciliation of GAAP to Non-GAAP Financial
Measures
|
|
|
|
A
|
Amortization of
acquisition-related intangible assets in the following historical
periods ($ in millions) (only the pretax amounts set forth below
are reflected in the amortization line item above):
|
|
|
Three-Month Period
Ended
|
|
Year
Ended
|
|
December 31,
2023
|
|
December 31,
2022
|
|
December 31,
2023
|
|
December 31,
2022
|
|
Pretax
|
$
12
|
|
$
12
|
|
$
48
|
|
$
50
|
|
After-tax
|
9
|
|
10
|
|
36
|
|
38
|
|
|
|
B
|
Costs incurred in the
three-month period and year ended December 31, 2023 related to the
separation of the Company from Danaher primarily related to the
equity award conversion as a result of the separation as well as
other costs the Company incurred to separate from Danaher ($7
million pretax as reported in this line item, $5 million
after-tax)
|
|
|
|
C
|
Costs incurred for
expenses related to strategic initiatives in the three-month and
year ended December 31, 2023 ($1 million pretax as reported in this
line item, $1 million after-tax).
|
|
|
|
D
|
This amount encompasses
management estimates of operating as a standalone entity. The
management estimate includes recurring and ongoing costs required
to operate new functions required for a public company such as
certain corporate functions including finance, tax, legal, human
resources and other general and administrative related
functions. The estimate also includes an adjustment to sales
related to the impact of the framework agreement governing certain
commercial arrangements between subsidiaries of Danaher and
Veralto, the adjustment is calculated by applying the commercial
pricing in the agreement to historical purchases of goods and
services by the Parent from Veralto. This estimate also
includes interest costs associated with the post-separation capital
structure, including the issuance of approximately $2.6 billion of
long-term debt at a weighted average interest rate of 5.2%.
The pretax and after-tax effect of these estimates are summarized
below:
|
|
|
|
Three-Month Period
Ended
|
|
Year
Ended
|
|
December 31,
2023
|
|
December 31,
2022
|
|
December 31,
2023
|
|
December 31,
2022
|
|
Pretax
|
$
—
|
|
$
(50)
|
|
$
(138)
|
|
$
(201)
|
|
After-tax
|
—
|
|
(37)
|
|
(103)
|
|
(150)
|
|
|
|
E
|
Fair value loss related
to an impairment of an equity method investment for the year ended
December 31, 2023 ($15 million pretax as reported in this line
item, $11 million after-tax).
|
|
|
|
F
|
Impairment charge
related to tradenames and customer relationships in the Product
Quality & Innovation segment for the year ended
December 31, 2023 ($12 million pretax as reported in this
line item, $10 million after-tax). Impairment charges
related to technology and customer relationships in the Water
Quality segment for the year ended December 31, 2022
($9 million pretax as reported in this line item,
$7 million after-tax). Additionally, during 2022 charges
incurred primarily related to impairments of accounts receivable
and inventory in Russia in the Product Quality & Innovation
segment ($1 million pretax as reported in this line item,
$1 million after-tax).
|
|
|
|
G
|
This line item reflects
the aggregate tax effect of all nontax adjustments reflected in the
preceding line items of the table. In addition, the footnotes
above indicate the after-tax amount of each individual adjustment
item. Veralto estimates the tax effect of each adjustment
item by applying Veralto's overall estimated effective tax rate to
the pretax amount, unless the nature of the item and/or the tax
jurisdiction in which the item has been recorded requires
application of a specific tax rate or tax treatment, in which case
the tax effect of such item is estimated by applying such specific
tax rate or tax treatment.
|
|
|
|
H
|
Discrete tax matters
relate to changes in estimates associated with prior period
uncertain tax positions, audit settlements and excess tax benefits
from stock-based compensation.
|
|
Sales Growth
(Decline) by Segment, Core Sales Growth (Decline) by
Segment
|
|
|
% Change Three-Month
Period Ended December 31, 2023 vs. Comparable 2022
Period
|
|
|
|
Segments
|
|
Total
Company
|
|
Water
Quality
|
|
Product Quality
&
Innovation
|
|
Total sales growth
(GAAP)
|
3.3 %
|
|
3.4 %
|
|
2.9 %
|
|
Impact of:
|
|
|
|
|
|
|
Currency exchange
rates
|
(1.6) %
|
|
(1.3) %
|
|
(1.8) %
|
|
Core sales growth
(non-GAAP)
|
1.7 %
|
|
2.1 %
|
|
1.1 %
|
|
|
% Change Year Ended
December 31, 2023 vs. Comparable 2022 Period
|
|
|
|
Segments
|
|
Total
Company
|
|
Water
Quality
|
|
Product Quality
&
Innovation
|
|
Total sales growth
(GAAP)
|
3.1 %
|
|
5.3 %
|
|
— %
|
|
Impact of:
|
|
|
|
|
|
|
Acquisitions/divestitures
|
(0.3) %
|
|
— %
|
|
(0.7) %
|
|
Currency exchange
rates
|
(0.2) %
|
|
(0.2) %
|
|
(0.3) %
|
|
Core sales growth
(decline) (non-GAAP)
|
2.6 %
|
|
5.1 %
|
|
(1.0) %
|
Forecasted Core Sales Growth (Decline), Adjusted Operating
Profit Margin, and Adjusted Diluted Net Earnings per Share
The Company provides forecasted sales only on a non-GAAP basis
because of the difficulty in estimating the other components of
GAAP revenue, such as currency translation, acquisitions and
divested product lines. Additionally, we do not reconcile adjusted
operating profit margin (or components thereof) or adjusted diluted
earnings per share to the comparable GAAP measures because of the
difficulty in estimating the other unknown components such as
investment gains and losses, impairments and separation costs,
which would be reflected in any forecasted GAAP operating profit or
forecasted diluted earnings per share.
|
% Change Three-Month
Period
Ending March 29, 2024 vs.
Comparable 2023 Period
|
|
% Change Year
Ending
December 31, 2024 vs.
Comparable 2023 Period
|
|
Core sales growth
(non-GAAP)
|
~ Flat
|
|
+Low-single
digit
|
|
|
|
|
|
Three-Month Period
Ending
March 29, 2024
|
|
Year Ending December
31, 2024
|
|
Adjusted Operating
Profit Margin (non-GAAP)
|
23.0% to
23.5%
|
|
+50 to +75 basis
points
|
|
Adjusted Diluted Net
Earnings per Share (non-GAAP)
|
$0.73 to
$0.78
|
|
$3.20 to
$3.30
|
|
Cash Flow and Free
Cash Flow
($ in
millions)
|
|
|
Three-Month Period
Ended
|
|
Year-over-Year
Change
|
|
Year
Ended
|
|
Year-over-Year
Change
|
|
December 31,
2023
|
|
December 31,
2022
|
|
|
December 31,
2023
|
|
December 31,
2022
|
|
|
Total Cash
Flows:
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by
operating activities (GAAP)
|
$
263
|
|
$
337
|
|
|
|
$
963
|
|
$
870
|
|
|
|
Total cash used in
investing activities (GAAP)
|
$
(22)
|
|
$
(12)
|
|
|
|
$
(55)
|
|
$
(89)
|
|
|
|
Total cash provided by
(used in) financing activities (GAAP)
|
$
97
|
|
$
(325)
|
|
|
|
$
(135)
|
|
$
(781)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Free Cash
Flow:
|
|
|
|
|
|
|
|
|
|
|
|
|
Total cash provided by
operating activities (GAAP)
|
$
263
|
|
$
337
|
|
~(22.0)%
|
|
$
963
|
|
$
870
|
|
~10.5%
|
|
Less: payments for
additions to property, plant & equipment
(capital expenditures) (GAAP)
|
(22)
|
|
(8)
|
|
|
|
(54)
|
|
(34)
|
|
|
|
Plus: proceeds from
sales of property, plant & equipment
(capital disposals) (GAAP)
|
—
|
|
—
|
|
|
|
2
|
|
—
|
|
|
|
Free cash flow
(non-GAAP)
|
$
241
|
|
$
329
|
|
~(26.5)%
|
|
$
911
|
|
$
836
|
|
~9.0%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Cash Flow
to Net Earnings Ratio (GAAP)
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by
operating activities (GAAP)
|
$
263
|
|
$
337
|
|
|
|
$
963
|
|
$
870
|
|
|
|
Net earnings
(GAAP)
|
$
200
|
|
$
216
|
|
|
|
$
839
|
|
$
845
|
|
|
|
Operating cash flow to
net earnings conversion ratio
|
1.32
|
|
1.56
|
|
|
|
1.15
|
|
1.03
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Free Cash Flow to
Net Earnings Conversion Ratio
(non-GAAP):
|
|
|
|
|
|
|
|
|
|
|
|
|
Free cash flow from
above (non-GAAP)
|
$
241
|
|
$
329
|
|
|
|
$
911
|
|
$
836
|
|
|
|
Net earnings
(GAAP)
|
$
200
|
|
$
216
|
|
|
|
$
839
|
|
$
845
|
|
|
|
Free cash flow to net
earnings conversion ratio (non-GAAP)
|
1.21
|
|
1.52
|
|
|
|
1.09
|
|
0.99
|
|
|
|
|
We define free cash
flow as operating cash flows, less payments for additions to
property, plant and equipment ("capital expenditures") plus the
proceeds from sales of plant, property and equipment ("capital
disposals").
|
Statement Regarding Non-GAAP Measures
Each of the non-GAAP measures set forth above should be
considered in addition to, and not as a replacement for or superior
to, the comparable GAAP measure, and may not be comparable to
similarly titled measures reported by other companies.
Management believes that these measures provide useful information
to investors by offering additional ways of viewing Veralto
Corporation's ("Veralto" or the "Company") results that, when
reconciled to the corresponding GAAP measure, help our
investors:
- with respect to the profitability-related non-GAAP measures,
understand the long-term profitability trends of our business and
compare our profitability to prior and future periods and to our
peers;
- with respect to core sales and related sales measures, identify
underlying growth trends in our business and compare our sales
performance with prior and future periods and to our peers;
and
- with respect to free cash flow and related cash flow measures
(the "FCF Measure"), understand Veralto's ability to generate cash
without external financings, strengthen its balance sheet, invest
in its business and grow its business through acquisitions and
other strategic opportunities (although a limitation of free cash
flow is that it does not take into account the Company's
non-discretionary expenditures, and as a result the entire free
cash flow amount is not necessarily available for discretionary
expenditures).
Management uses these non-GAAP measures to measure the Company's
operating and financial performance.
- The items excluded from the non-GAAP measures set forth above
have been excluded for the following reasons:
- Amortization of Intangible Assets: We exclude the amortization
of acquisition-related intangible assets because the amount and
timing of such charges are significantly impacted by the timing,
size, number and nature of the acquisitions we consummate. While we
have a history of significant acquisition activity, we do not
acquire businesses on a predictable cycle, and the amount of an
acquisition's purchase price allocated to intangible assets and
related amortization term are unique to each acquisition and can
vary significantly from acquisition to acquisition. Exclusion of
this amortization expense facilitates more consistent comparisons
of operating results over time between our newly acquired and
long-held businesses, and with both acquisitive and non-acquisitive
peer companies. We believe however that it is important for
investors to understand that such intangible assets contribute to
sales generation and that intangible asset amortization related to
past acquisitions will recur in future periods until such
intangible assets have been fully amortized.
- Restructuring Charges: We exclude costs incurred pursuant to
discrete restructuring plans that are fundamentally different (in
terms of the size, strategic nature and planning requirements, as
well as the inconsistent frequency, of such plans) from the ongoing
productivity improvements that result from application of the
Veralto Enterprise System. Because these restructuring plans are
incremental to the core activities that arise in the ordinary
course of our business and we believe are not indicative of
Veralto's ongoing operating costs in a given period, we exclude
these costs to facilitate a more consistent comparison of operating
results over time.
- Other Adjustments: With respect to the other items excluded
from the profitability-related non-GAAP measures, we exclude these
items because they are of a nature and/or size that occur with
inconsistent frequency, occur for reasons that may be unrelated to
Veralto's commercial performance during the period and/or we
believe that such items may obscure underlying business trends and
make comparisons of long-term performance difficult.
- Standalone Adjustments: We believe these adjustments provide
additional insight into how our businesses are performing, on a
normalized basis. However, these non-GAAP financial measures should
not be construed as inferring that our future results will be
unaffected by the items for which the measure adjusts.
- With respect to core operating profit margin changes, in
addition to the explanation set forth in the bullets above relating
to "restructuring charges" and "other adjustments", we exclude the
impact of businesses owned for less than one year (or disposed of
during such period and not treated as discontinued operations)
because the timing, size, number and nature of such transactions
can vary significantly from period to period and may obscure
underlying business trends and make comparisons of long-term
performance difficult.
- With respect to core sales related measures, (1) we exclude the
impact of currency translation because it is not under management's
control, is subject to volatility and can obscure underlying
business trends, and (2) we exclude the effect of acquisitions and
divested product lines because the timing, size, number and nature
of such transactions can vary significantly from period-to-period
and between us and our peers, which we believe may obscure
underlying business trends and make comparisons of long-term
performance difficult.
- With respect to the FCF Measure, we exclude payments for
additions to property, plant and equipment (net of the proceeds
from capital disposals) to demonstrate the amount of operating cash
flow for the period that remains after accounting for the Company's
capital expenditure requirements.
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SOURCE Veralto