Veralto Q1 2025 Earnings Report

Veralto EPS Results

• Actual EPS: $0.95
• Consensus EPS: $0.87
• Beat/Miss: Beat by +$0.08
• One Year Ago EPS: $0.84

Veralto Revenue Results

• Actual Revenue: $1.33 billion
• Expected Revenue: $1.28 billion
• Beat/Miss: Beat by +$52.95 million
• YoY Revenue Growth: +6.90%

Veralto Announcement Details

• Quarter: Q1 2025
• Date: 4/29/2025
• Time: After Market Closes
• Conference Call Date: Wednesday, April 30, 2025
• Conference Call Time: 8:30AM ET

Veralto (NYSE:VLTO) provides water analytics, water treatment, marking and coding, and packaging and color services worldwide. It operates through two segments, Water Quality (WQ) and Product Quality & Innovation (PQI). The WQ segment offers precision instrumentation and water treatment technologies to measure, analyze, and treat water in residential, commercial, municipal, industrial, research, and natural resource applications through the Hach, Trojan Technologies, and ChemTreat brands. This segment provides water solutions, including chemical reagents, services, and digital solutions. The PQI segment offers inline printing solutions for products and packaging with marking and coding systems; marking and coding for packaged goods and related consumables; design software and imaging systems for the creation of new packaging designs; color management solutions for printed packages and consumer and industrial products; color standard services for the design industry; and a software solution that provides digital asset management, marketing resource management, and product information management. This segment sells its products and services through the Videojet, Linx, Esko, X-Rite, and Pantone brands to regulated industries, including municipal utilities, food and beverage, pharmaceutical, and industrials. The company was formerly known as DH EAS Holding Corp. and changed its name to Veralto Corporation in February 2023. Veralto Corporation was incorporated in 2022 and is headquartered in Waltham, Massachusetts.

Veralto Q1 2025 Earnings Call Transcript

Presentation

[Operator]

Please press 0. My name is Margo, I'll be your conference operator this morning. At this time, I'd like to welcome everyone to Veralto's Corporation's First Quarter twenty twenty five Conference Call.

[Operator]

All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session. I will now turn the call over to Ryan Taylor, Vice President of Investor Relations. Mr. Taylor, you may begin your program.

[Ryan Taylor, Vice President - IR at Veralto]

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 Investors section of our website later today under the heading Events and Presentations.

[Ryan Taylor, Vice President - IR at Veralto]

A replay of this call will be available until May 9. Yesterday, we issued our first quarter twenty twenty five news release, earnings presentation and supplemental materials, including information required by the SEC relating to adjusted or non GAAP financial measures. In addition, we reaffirmed our full year 2025 earnings per share guidance, which now includes our current assessment of the macroeconomic environment, including tariffs and related countermeasures. These materials are available in the Investors section of our website, veralta.com, under the heading Quarterly Earnings. Reconciliations of all non GAAP measures are also provided in the appendix of our webcast slides.

[Ryan Taylor, Vice President - IR at Veralto]

Unless otherwise noted, all references to variances are on a year over year basis. On that note, I'd like to point out that year over year sales growth in the first quarter of twenty twenty five benefited from three additional shipping days as compared to the first quarter of twenty twenty four. 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.

[Ryan Taylor, Vice President - IR at Veralto]

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.

[Jennifer Honeycutt, President & CEO at Veralto]

Thank you, Ryan, and thank you all for joining our call today. Before discussing our first quarter results, I'd like to take a moment to recognize our 17,000 associates across the world for their commitment to serving customers, driving continuous improvement and safeguarding the world's most vital resources. As stewards of some of the world's most essential resources, we help ensure billions of people have access to clean water, safe food and trusted essential goods each and every day. Dynamic business environments such as the one we are currently experiencing provide us with the opportunity to demonstrate the essential nature of our products, the durability of our business model and the power of the Veralto enterprise system. Our team embraces challenges as opportunities to drive differentiated winning outcomes for our customers, associates and shareholders.

[Jennifer Honeycutt, President & CEO at Veralto]

That mindset has propelled us to a strong start in 2025 and prepared us to navigate this dynamic macroeconomic environment we are facing in the near term. In the first quarter, we delivered excellent results across the enterprise driven by disciplined execution in both segments. And we are actively deploying several countermeasures to mitigate changes in the global trade and tariff landscape and enhance our operational flexibility. I'm proud of our team and our collective performance thus far in 2025. Looking at the first quarter results in detail, building off the operating momentum generated last year, we delivered 7.8% core sales growth, 50 basis points of adjusted operating margin expansion and double digit adjusted EPS growth.

[Jennifer Honeycutt, President & CEO at Veralto]

Our commercial teams executed on strategic initiatives to gain new customer wins and increase market penetration while also capitalizing on favorable demand across our key end markets and geographies. Our core sales growth was driven primarily by volume and was broad based across both segments with PQI delivering 8.3 core sales growth and water quality 7.4% core sales growth. In PQI, positive trends in consumer packaged goods markets supported growth across all key product categories in our Marketing and Coding business and across our digital workflow solutions in packaging and color. Notably, in our marking and coding business, Q1 marked our fourth consecutive quarter with year over year growth in both consumables and equipment. In water quality, we continue to drive robust growth of our water treatment solutions in North America, complemented by steady growth in water analytics sales globally, including double digit growth in Europe.

[Jennifer Honeycutt, President & CEO at Veralto]

Adjusted operating profit margin expanded 50 basis points year over year to 25%, an all time high. We expanded operating margin in both segments with incremental margins in line with our long term framework. Driven by high quality sales growth and efficient operating leverage, adjusted earnings per share grew 13% year over year to $0.95 This exceeded our guidance primarily due to better than expected sales volumes. I'm proud of our team's disciplined execution to deliver a high quality performance in the first quarter in service to our customers. In addition to our strong organic growth performance, we continue to make great progress on recent acquisitions.

[Jennifer Honeycutt, President & CEO at Veralto]

The integration of TRACEGANS is on track. Sales are growing in line with our expectations and we continue to invest in future growth. And in February, we signed a definitive agreement to acquire AquaFetus, an Austria based provider of ultra violet water treatment for $20,000,000 AquaFetus treatment systems are used in drinking water, wastewater and a variety of industrial applications that require high purity water, including food and beverage and pharmaceuticals. This is a fantastic addition to our Trojan business. It expands our ability to serve European customers with local engineering support and service, while also expanding our UV treatment portfolio with high quality, efficient fit for purpose solutions.

[Jennifer Honeycutt, President & CEO at Veralto]

We look forward to welcoming the Aquafetus team to Veralto and unlocking new growth opportunities together. Looking at core sales growth by geography and end market, growth was broad based across key verticals and regions. Our commercial teams executed well leveraging VES tools and capitalizing on the investments made last year to expand our sales, marketing and innovation efforts. Sales growth in Western Europe was robust at nearly 11% with double digit growth in both segments. In North America, sales grew approximately 8% with high single digit growth in both segments.

[Jennifer Honeycutt, President & CEO at Veralto]

And sales in high growth markets were up 6% year over year with PQI sales up high single digits and water quality up low single digits. Taking a closer look, in Western Europe, water quality grew 11.3%. Our Water Analytics team in Western Europe continued to deliver exceptional growth through rigorous lead generation, funnel management and VES catalyzed commercial execution. And in PQI, sales into Western Europe grew 10.3% driven by double digit growth in Packaging and Color and high single digit growth in Marking and Coding. In Packaging and Color, we saw strong software growth across most packaging applications, including increased mid market penetration.

[Jennifer Honeycutt, President & CEO at Veralto]

This reflects increased focus on account management and fit for purpose solutions to accelerate software growth. And in Marketing and Coding, growth was driven across equipment, consumables and spares. Moving to North America, core sales growth was led by water quality with 8.3% growth. We continue to capitalize on increasing demand for our chemical water treatment solutions, which grew double digits in North America. Our chemical treatment growth was broad based across several industries with the strongest growth in power generation, food and beverage and chemical processing.

[Jennifer Honeycutt, President & CEO at Veralto]

And we continue to see growth from new data centers as they become operational. Also, sales of Trojan's UV systems to municipalities primarily related to water reuse contributed to our growth in North America. The economic benefits of water conservation, reclamation and reuse continue to provide opportunities for us to expand our business and support our customers' objectives to efficiently manage their water usage. Over the long term, continued North American growth in water quality is supported by attractive secular trends such as water scarcity, water reuse, more frequent severe weather events and increasing demand from heavy water consumption applications such as data centers and power generation. We also continue to benefit from positive market trends across PQI in North America during the first quarter with core sales up 6.9 year over year.

[Jennifer Honeycutt, President & CEO at Veralto]

This was primarily driven by double digit growth in recurring revenue, specifically consumables and software. This reflects a combination of improved end market demand from CPG customers, VES driven commercial excellence and market penetration from our strategic initiatives. In high growth markets, core sales grew 6.1% highlighted by strong growth in Latin America, India and The Middle East. In China, sales grew low single digits with strong growth in PQI, partially offset by a decline in water quality sales related to timing of ultraviolet treatments installations, which were strong in Q1 twenty twenty four. Overall, we delivered strong broad based growth in the first quarter across all of our operating companies.

[Jennifer Honeycutt, President & CEO at Veralto]

We believe the essential nature of our products, our durable business model and the secular growth drivers across our end markets position us to create value for our stakeholders over both the short and long term. We remain confident that the Varelto enterprise system will enable us to navigate ongoing changes in the macroeconomic environment with agility and discipline. In addition to delivering a strong first quarter, we implemented several countermeasures to help mitigate the impact of recent tariff hikes and enhance our operational flexibility. This includes strategic pricing roadmaps, targeted sourcing and supply chain initiatives and shifts in manufacturing footprint, including the addition of Trojan's first U. S.

[Jennifer Honeycutt, President & CEO at Veralto]

Factory in Grand Rapids, Michigan. This factory opened in February and is designed to support consumables and light assembly for our domestic UV water treatment customers. This expansion creates manufacturing and supply chain flexibility for Trojan to support its U. S. Customer base.

[Jennifer Honeycutt, President & CEO at Veralto]

We leveraged BES tools to prioritize and accelerate the opening of this facility by about four months ahead of schedule to help offset potential tariff headwinds. With greater flexibility and the exemption of product imports covered by the USMCA, our current exposure to Canadian tariffs has been reduced significantly. This is a great example of how well equipped our team is to navigate the current macro environment with focus, agility and speed. And we have several levers to pull to mitigate risk while supporting our customers and maintaining business continuity. Our decentralized operating model empowers our business leaders who are closest to our customers to make decisions quickly.

[Jennifer Honeycutt, President & CEO at Veralto]

Our diverse global footprint and flexible supply chain give us agility and optionality to maneuver quickly. And our leading market positions, direct sales force and the essential nature of our products give us the ability to be thoughtful with strategic pricing actions. Confidence in our ability to deliver on our commitments is in large part grounded in the Veralto enterprise system, our proven system for driving growth, operational improvements and leadership development. A core tenet of VES is continuous improvement or Kaizen. As we do annually in the first quarter each year, we completed Veralto's second CEO Kaizen week in February.

[Jennifer Honeycutt, President & CEO at Veralto]

CEO Kaizen week is a long standing tradition of our enterprise system and personally one of my favorite weeks of the year. This event is culturally important as it helps us stay close to the businesses and understand both their struggles and opportunities, helping to catalyze decision making and prioritize allocation of capital and resources. For one week, we immersed 20 cross functional teams at Gemba where the real work happens at 10 locations across the world to address our biggest impact opportunities with the participation of Veralto executives. Building off our success last year, this year's CEO Kaizen Week was designed to help us accelerate growth and reinforce that at Veralto, we are all practitioners of continuous improvement. Among other opportunities, a few of this year's most strategic and impactful events focused on increasing adoption of packaging and color software within mid market CPG customers, accelerating capture of design input requirements for new product development and water analytics and reducing lead time for consumables in one of our marking and coding product lines.

[Jennifer Honeycutt, President & CEO at Veralto]

The benefits of any Kaizen week include immediate solutions that are rapidly implemented and yield real time results. Success is proven by sustaining these results, which we track following the Kaizen events. That concludes my opening remarks.

[Jennifer Honeycutt, President & CEO at Veralto]

And at this time, I'll turn the call over to Sameer.

[Sameer Ralhan, Senior VP & CFO at Veralto]

Thanks, Jennifer, and good morning, everyone. I'll begin with our consolidated results for the first quarter. Total sales grew 6.9% on a year over year basis to over $1,300,000,000 Currency was a 130 basis points or 16,000,000 headwind year over year. And acquisitions contributed 40 basis points of growth, primarily from trace gains.

[Sameer Ralhan, Senior VP & CFO at Veralto]

Core sales grew 7.8%, led by broad based volume gains across both segments. We did point 3% growth in the quarter, in line with historical levels. Our recurring revenue grew high single digits year over year and comprised 61% of our total sales. As Ryan mentioned, the first quarter of twenty twenty five had three more shipping days as compared to the first quarter of twenty twenty four. If we exclude the estimated benefit of those extra days, core sales growth in Q1 was still above 5%, solidly in the mid single digits and our highest core sales growth quarter since becoming a public company.

[Sameer Ralhan, Senior VP & CFO at Veralto]

Gross profit increased 8% year over year to $8.00 $5,000,000 Gross profit margin improved 40 basis points year over year to 60.4%, primarily driven by volume leverage and to a lesser extent, pricing. Adjusted operating profit increased 9% year over year and adjusted operating profit margin expanded 50 basis points to 25%, an all time high. Looking at EPS for Q1, adjusted earnings per share grew 13% year over year to $0.95 per share. As compared to our guidance, adjusted EPS came in stronger, primarily due to higher sales volumes at both segments. Looking at cash flow in the first quarter, we generated 142,000,000 of free cash flow, an increase of $40,000,000 year over year.

[Sameer Ralhan, Senior VP & CFO at Veralto]

This increase was primarily driven by the growth in earnings. I'll now cover the segment results, starting with Water Quality on the next page. Our Water Quality segment delivered seven ninety four million dollars of sales, up 6% on a year over year basis. Currency was a 130 basis points headwind, and divestitures resulted in a modest 10 basis points reduction in sales versus the prior year period. Core sales grew 7.4% year over year, including 100 basis points from price and six forty basis points from volume.

[Sameer Ralhan, Senior VP & CFO at Veralto]

Water quality's volume growth was driven by strong demand for water treatment solutions in our industrial end markets and UV treatment systems in municipal end markets. We also saw good volume growth in sales of analytical instruments, reagents and chemistries to municipalities. Water Quality's recurring sales grew high single digits year over year, and equipment growth was up mid single digits. Adjusted operating profit increased 7.5% year over year to $200,000,000 and adjusted operating profit margin was 25.2, up 40 basis points versus the prior year. Overall, it was a strong quarter for Water Quality.

[Sameer Ralhan, Senior VP & CFO at Veralto]

We expect to see steady growth over the balance of this year, given our products are critical to our customers' ongoing operations and generate high level of recurring sales. Moving on to our PQI segment on the next page. Sales in our PQI segment grew 8.3% year over year to $538,000,000 in the first quarter. Currency was a 130 basis points headwind. The currency headwinds were offset by 130 basis points of growth from acquisitions, primarily trace gains.

[Sameer Ralhan, Senior VP & CFO at Veralto]

Core sales grew 8.3%, led by volume growth of 6.7% and price increases contributing 1.6% to core sales growth. CQI's core sales growth was driven by both recurring revenue and equipment shipments. Recurring revenue grew high single digits year over year, led by consumables and software. Equipment growth also grew high single digits, led by marking and coding equipment. PQI's adjusted operating profit was $153,000,000 in the first quarter, up $14,000,000 over the prior year period, resulting in adjusted operating profit margin of 28.4%, an increase of 40 basis points year over year.

[Sameer Ralhan, Senior VP & CFO at Veralto]

The increased profitability was primarily driven by strong operating leverage on volume growth and to a lesser extent pricing. Turning now to our balance sheet and cash flow. In the first quarter, we generated $157,000,000 of cash from operations. We invested $15,000,000 in capital expenditures. As a result, free cash flow was $142,000,000 in the quarter, up 39% over the prior year, primarily driven by the increase in earnings.

[Sameer Ralhan, Senior VP & CFO at Veralto]

At the end of the first quarter, gross debt was $2,600,000,000 and cash on hand was over $1,200,000,000 Net debt was $1,400,000,000 resulting in net leverage of 1.1 times. Our financial position is very strong and provides us the flexibility to be opportunistic in how we deploy capital to create long term shareholder value. Having said that, we plan to be prudent and disciplined as we navigate this current economic environment. Over the long term, our goal is to continue to create shareholder value with a bias towards M and A. And we have an attractive pipeline of opportunities in both water quality and PQI.

[Sameer Ralhan, Senior VP & CFO at Veralto]

Turning now to our guidance. Yesterday, we reaffirmed our twenty twenty five full year adjusted EPS guidance of $3.6 per share to $3.7 per share. Our underlying assumptions have been updated to reflect currency rates and current assessment of tariffs and trade policies. Our full year guidance now assumes an estimated gross impact from the announced tariff increases of approximately 3.5% of full year sales on an annualized basis. And we expect our countermeasures to largely offset tariff impacts.

[Sameer Ralhan, Senior VP & CFO at Veralto]

For the full year 2025, our year over year core sales growth target remains low to mid single digits, consistent with our prior guidance. Furthermore, we expect neutral impact to the full year sales growth from both currency translation and acquisitions net of divestitures. We expect sales contributions from trace gains and Aqua Fiddies to be largely offset by the AVT divestiture. We are now assuming corporate expense at about $100,000,000 as we control discretionary spending in light of the macroeconomic environment. Given the impact and timing of tariff increases and related countermeasures, we expanded our target range of adjusted operating profit margin.

[Sameer Ralhan, Senior VP & CFO at Veralto]

We are now targeting full year adjusted operating profit margin to be flat to up 50 basis points or approximately 25 basis points expansion at the midpoint. We believe this is prudent given the dynamic macroeconomic landscape. And we are targeting free cash flow conversion between 90% to 100% of GAAP net income, in line with prior guidance. Looking now at our second quarter guidance, we expect core sales to grow in the low to mid single digit range year over year across both segments. And our second quarter twenty twenty five guidance for adjusted EPS is $0.84 to $0.88 per share.

[Sameer Ralhan, Senior VP & CFO at Veralto]

That concludes my prepared remarks. At this point, I'll turn the call over to Jennifer for closing remarks.

[Jennifer Honeycutt, President & CEO at Veralto]

Thanks, Sameer. In summary, we're off to a strong start in 2025. We are confident in our ability to navigate a more dynamic macroeconomic environment in the near term and are prepared to do so. We believe that the essential need for our technology solutions, our durable business model and the secular growth drivers across our end markets will support our financial performance this year. We continue to leverage the power of the Veralto enterprise system to drive continuous improvement and bolster our agility.

[Jennifer Honeycutt, President & CEO at Veralto]

Our financial position remains strong and we continue opportunities to create shareholder value within our disciplined capital allocation framework. We are excited about the bright future ahead for Veralto and the opportunities in front of us to help customers solve some of the world's biggest challenges in delivering clean water, safe food and trusted essential goods. That concludes our prepared remarks. And at this time, we are happy to take your questions.

[Operator]

Thank you. Again, we'll go first to Scott Davis with Melius Research. Please go ahead.

[Scott Davis, CEO & Chairman at Melius Research LLC]

Hey, good morning, Jennifer, Samir and Ryan. Congrats on the start of the year.

[Jennifer Honeycutt, President & CEO at Veralto]

Good morning, Scott.

[Scott Davis, CEO & Chairman at Melius Research LLC]

I hate to do it, but I have to ask on tariffs because that's just so much of our incomings and you guys seem pretty confident in your ability to mitigate. But perhaps maybe provide a little bit more color on the sequencing. I imagine you can't mitigate overnight. This is going to take some time. But I'll keep that as kind of an open ended question that just help us understand how the mechanics behind mitigation and kind of the timing and when you would expect to be fully offsetting the tariffs?

[Jennifer Honeycutt, President & CEO at Veralto]

Thanks for the question, Scott. Yes, I think we feel very confident here. Our gross exposure to tariffs is about 3.5% of our sales. And bear in mind that in terms of running Veralto and using VES, we are constantly looking for opportunities to optimize the business, be that operational footprint, pricing, supply chain and strategic sourcing kinds of opportunities. And so in effect, we always have this going on.

[Jennifer Honeycutt, President & CEO at Veralto]

We've accelerated some of the actions just purely around derisking what we see today. But I would reiterate, as I said in the comments, we're well positioned here. So pricing actions have been and will continue to be undertaken. We additionally derisked our Trojan manufacturing facility based in Canada by pulling forward some redundant manufacturing capability into their new manufacturing facility and distribution center in Grand Rapids, Michigan. And we continually work to align our supply chain and our sourcing strategies relative to derisking our tariff situation.

[Jennifer Honeycutt, President & CEO at Veralto]

So bear in mind, too, that we are effectively an asset manufacturing operation. Most of our business here is subassemblies and kitting, circuit boards, plastic enclosures, optics and so on. So there's no additional capital needed to create redundant lines or, in fact, move manufacturing lines. And we do that regularly in the normal course of business. On average, we can move a line within a six month time frame.

[Jennifer Honeycutt, President & CEO at Veralto]

Some take longer, but we feel like we're really well positioned here.

[Scott Davis, CEO & Chairman at Melius Research LLC]

Okay. No, that's helpful. And then if you just think about second derivative demand impacts, I would think video jet would be a pretty good real time demand indicator for really just customer confidence and such. Have you seen anything in Videojet in April that would lead you to be a little bit concerned about the customer confidence and folks' plans on spending money in 2Q and beyond here in 'twenty five?

[Jennifer Honeycutt, President & CEO at Veralto]

We really haven't, Scott. Demand remains strong for our PQI business and particularly coating and marking as well. So we don't see any demand change in the order patterns. We have just completed four consecutive quarters of growth for both equipment and consumables, which follows a good trajectory of consumer confidence and recovery in the CPG markets. The trends between different types of consumer product goods are variable, right?

[Jennifer Honeycutt, President & CEO at Veralto]

Beverages are up, salty snacks are down. And we stay close to the data. This is a volume game for us, right? And so we look at volume on regular basis in terms of number of codes printed. And we'll continue to watch the market closely.

[Jennifer Honeycutt, President & CEO at Veralto]

But at this point, we don't have any indication of that softening.

[Sameer Ralhan, Senior VP & CFO at Veralto]

And Scott, if I may add, as you're to look at April, the order patterns are still pretty normal at this point.

[Scott Davis, CEO & Chairman at Melius Research LLC]

Interesting. Okay, helpful. I'll pass it on. Thank you and best of luck this year.

[Scott Davis, CEO & Chairman at Melius Research LLC]

Thanks.

[Jennifer Honeycutt, President & CEO at Veralto]

Thanks, Scott.

[Operator]

Our next question comes from Deane Dray with RBC Capital Markets. Please go ahead.

[Deane Dray, Managing Director at RBC Capital Markets]

Love to get started here on the tariffs follow-up to Scott's questions. And just can you talk about the price elasticity? I mean, it's really you've got high switching costs for your customers, especially on the water quality side. Can you just talk about the difference between consumables elasticity versus equipment? And where would be the most risk that you have in increasing prices just if you think about your product line?

[Jennifer Honeycutt, President & CEO at Veralto]

Thanks for the question, Deane. This is a dynamic situation that we continue to operate in. We're relatively surgical in our approach to pricing. So it's going to depend based on the products, the customers and the regions that we're operating in. And so there's really not a one size fits all approach.

[Jennifer Honeycutt, President & CEO at Veralto]

I will say, as you know, that 80% of our sales goes into food, water and essential goods, and our products are essential to customer operations where the risk of failure is high and the overall spend relative to their operating budget is low. So it's well worth the investment here. And I would say that with 60% of our revenue tied to the consumables business, it's a pretty sticky relationship, as you know. So we've got the razor razorblade relationship here. But as you know, our decentralized operating model empowers our business leaders to effectively take pricing actions where they best see fit.

[Jennifer Honeycutt, President & CEO at Veralto]

And that's going to vary by operating company and product line.

[Deane Dray, Managing Director at RBC Capital Markets]

Great. Just can you clarify if you're using surcharges in addition to pricing?

[Jennifer Honeycutt, President & CEO at Veralto]

Like I said, Deane, it's going to vary. In some cases, we're using surcharges. In some cases, it's pricing. It just depends upon the business, the product line and the region in which we're operating. But I can say we remain confident in our ability to have our pricing actions, be those surcharges or permanent increases to stick, and we believe we're well covered in terms of addressing any tariff impact going forward.

[Deane Dray, Managing Director at RBC Capital Markets]

Great. And just a follow-up and this is away from tariffs. Do you have any high level observations on the EPA announcement this week regarding PFAS? There was a lot of hand wringing worrying that there might be some pullback from the enforcement here, especially the four parts per trillion. But it looks like it was a full endorsement of the enforcement

[Deane Dray, Managing Director at RBC Capital Markets]

of

[Deane Dray, Managing Director at RBC Capital Markets]

PFAS? And just any commercial implications for you all? And would love to hear, again, just high level thoughts.

[Jennifer Honeycutt, President & CEO at Veralto]

Yes. Thanks for the question. As you know, we remain excited about PFAS in terms of both analysis and treatment, particularly in the area of destruction. We remain active with our minority investment in Axine Technologies, which is a destruction technology for PFAS. Our teams are constantly canvassing the market looking for opportunities to innovate and particularly democratize tests so that they can be fit for purpose for utilities and municipalities.

[Jennifer Honeycutt, President & CEO at Veralto]

So we think we're well positioned here. And as a reminder, there's nothing in our forecast going forward that has any component of PFAS sales, either treatment or destruction in it. I think it remains early days here in terms of how to go solve for this problem, but there's effectively no impact if the EPA decides pull their four parts per trillion or increase it to some other minimum contamination level. We remain committed to this space, and we think there's going to be a need to solve for this in the future.

[Deane Dray, Managing Director at RBC Capital Markets]

Great. I appreciate all that color. Thank you.

[Operator]

Our next question comes from Mike Halloran with Baird. Please go ahead.

[Michael Halloran, Associate Director of Research at Robert W. Baird & Co]

Hey, good morning everyone.

[Jennifer Honeycutt, President & CEO at Veralto]

Good morning Mike.

[Michael Halloran, Associate Director of Research at Robert W. Baird & Co]

So

[Michael Halloran, Associate Director of Research at Robert W. Baird & Co]

I just want to make sure I understand how you guys are thinking about the year and how everything came to this out. First, the selling days, does that come out of

[Michael Halloran, Associate Director of Research at Robert W. Baird & Co]

the second quarter or when does

[Michael Halloran, Associate Director of Research at Robert W. Baird & Co]

it where does that balance out over the course of the year? And then how are you thinking about the seasonality embedded in guidance, all else equal, relatively normal? Any change more of a top line question there than a bottom line question?

[Sameer Ralhan, Senior VP & CFO at Veralto]

Hey, Mike, thanks for the question. As you kind of think about the three extra days, it's really the impact that's going to be in the Q4. So for the full year, there's not any impact, but for second quarter and third quarter on a year over year basis, there should not be any change on number of days. So that's how you should think about that. Despite that, our Q1 was really strong.

[Sameer Ralhan, Senior VP & CFO at Veralto]

So we feel really good about the execution of our team and greater than 5% of the core growth, even if we perform on average basis for the extra three days. So really solid quarter. From a seasonality perspective, as you know, our business really does not have a lot of seasonality. You may see a little bit of movement in the Q4 based on the budgets that the municipalities may have, things like that. But really from a seasonality perspective, our business is pretty steady.

[Michael Halloran, Associate Director of Research at Robert W. Baird & Co]

Thanks for that. And then probably this is almost two questions squeezed into one, which I admit ahead of time. But can you help us bridge between 1Q and 2Q relative to the strength of 1Q, even excluding the number

[Michael Halloran, Associate Director of Research at Robert W. Baird & Co]

of selling days and the benefit, was still

[Michael Halloran, Associate Director of Research at Robert W. Baird & Co]

a really good quarter. It seems like a little bit of a change going into second quarter. Is that the timing of how the tariffs roll through? And then the second question embedded in that is, how does the tariff mitigation work through the years? Is heaviest in 2Q and pretty light, if at all, in the fourth quarter?

[Michael Halloran, Associate Director of Research at Robert W. Baird & Co]

So if you could just kind of square those two dynamics for me.

[Sameer Ralhan, Senior VP & CFO at Veralto]

Yes. Mike, let's yes, the two definitely two questions. So let's parse them out. I think first, let's look at from a growth perspective on the guidance. Look, think Q1 was really strong, again, greater than 5% core growth, even if you perform on average for three days three extra shipping days.

[Sameer Ralhan, Senior VP & CFO at Veralto]

The order patterns in April seem normal. But having said that, there's just a lot of geographical uncertainty from the trade policies. So what we've done is look at a lot of scenarios as we kind of try to rebalance between price and volume. Where we are is we feel pretty good about the low single digits to mid single digits kind of overall core growth. As you know, we don't guide between the price and volume.

[Sameer Ralhan, Senior VP & CFO at Veralto]

So that's how we kind of think about core growth side at this point. I think it makes sense for us to be stable, judicious from a growth perspective. On the margin side, and that's where your tariff question comes in and how the impact will roll in. Look, we modeled in a little bit of a timing difference between the tariff increases and the related countermeasures. So that's kind of driving and why we've expanded the margin range a little bit.

[Sameer Ralhan, Senior VP & CFO at Veralto]

Also in the near term, what we have seen is, look, Q1 was really good on equipment sales, and of course, that sows a seed for the future growth. So that's really great outcome in Q1. We modeled in the equipment sales growing in Q2 as well. So that's impacting a lot of the margin side in the second quarter. And lastly, Mike, is really math, right?

[Sameer Ralhan, Senior VP & CFO at Veralto]

The quantum of the numbers that you're looking at from a cost and then the price to offset that is going to we're trying to protect the OP dollars, right? That's where the EPS we feel pretty good about $3.60 to $3.70. But when you try to protect the OP dollars, you're going have a little bit of an impact just on a percent of the margin side. So that's kind of like really playing into the guide as well. But overall, we feel really good about at this point on the countermeasures and how we are looking at the demand at least sitting here today.

[Michael Halloran, Associate Director of Research at Robert W. Baird & Co]

Great. Really appreciate it. Thanks for the detail.

[Sameer Ralhan, Senior VP & CFO at Veralto]

Thanks, Mike.

[Jennifer Honeycutt, President & CEO at Veralto]

Thanks, Mike.

[Operator]

Our next question comes from John McNulty with BMO Capital Markets. Please go ahead.

[John McNulty, MD - Chemicals Analyst at BMO Capital Markets]

Good morning. Thanks for taking my question.

[John McNulty, MD - Chemicals Analyst at BMO Capital Markets]

Good morning, So 1Q obviously

[John McNulty, MD - Chemicals Analyst at BMO Capital Markets]

good morning. 1Q, a lot stronger I think than even you all expected or at least guided to. At the same time, it doesn't sound like there was any pull forward or anything like that around the tariff side. So I guess, first, can you help us to understand where that strength surprised you? I mean, business is normally pretty predictable and yet it really came in a lot better than expected.

[John McNulty, MD - Chemicals Analyst at BMO Capital Markets]

So I guess where were

[John McNulty, MD - Chemicals Analyst at BMO Capital Markets]

the big surprises would you say?

[Jennifer Honeycutt, President & CEO at Veralto]

Thanks for the question, John. Post spin, and we've been out of the starting blocks now eighteen months or so, really had the benefit of reinvigorating VES and doubling down on commercial execution, new product development and making sure that we are operating out of the strongest positions for each of our businesses. And I think what you see coming out of the fourth quarter here is just sustained momentum, right? We made a number of investments in commercial execution. We did some re architecting of our commercial teams in some of the businesses.

[Jennifer Honeycutt, President & CEO at Veralto]

We doubled down really in terms of driving new product development and delivering fit for purpose products and solutions into the space. And I think what you see there is the ongoing momentum in just being disciplined in driving VES and ensuring that we're blocking and tackling each and every day. I don't know that we were necessarily surprised by anything in particular. I think probably Europe came in a little bit stronger, particularly on on the on the water side that we benefited from. But again, that's on the back of really solid leadership, commercial execution of blocking and tackling every day.

[John McNulty, MD - Chemicals Analyst at BMO Capital Markets]

Got it. Okay. No, that's helpful. And I guess maybe somewhat related to that. So the margins overall for the first quarter were pretty much at a record level.

[John McNulty, MD - Chemicals Analyst at BMO Capital Markets]

And I think that was despite what you thought was going to be some pretty heavy equipment, lower margin type business coming in and you had the trace gains kind of weight of some of the investments there. So I guess how should we be thinking about the margin level that we're at right now and how that progresses through the year? I guess there may be some puts and takes around the tariff timing, but maybe you can help us to think about some of those levers that you're pulling there.

[Sameer Ralhan, Senior VP & CFO at Veralto]

Yes, John, as you're going to look at the Q1 margin, absolutely, really great execution driving the 25% adjusted OP margins. So I feel really great about that. Some of the things in the Q1 that you're going look at from a margin perspective, it's really the fall through from the volume side. It's the volume leverage that has a big role played a big role in driving the operating margin uplift. I would say as you kind of move on and look at the rest of the year, we've been a little we want to make sure that we build in the lag for any timing differences between the tariff increases and the countermeasures.

[Sameer Ralhan, Senior VP & CFO at Veralto]

That's going to play it in. Equipment sales, as I said earlier, kind of a role into that as well. And rest is math. So those are some of the reasons at this point, given there are so many moving pieces, frankly, a lot of the stuff happening real time, as you know, on daily basis with things changing. So we just wanted to be judicious and cautious at this point as you're to think about the market side.

[Sameer Ralhan, Senior VP & CFO at Veralto]

Got it.

[John McNulty, MD - Chemicals Analyst at BMO Capital Markets]

Great. Thanks very much and congratulations on a great quarter.

[Sameer Ralhan, Senior VP & CFO at Veralto]

Thanks, John.

[Jennifer Honeycutt, President & CEO at Veralto]

Thanks, John.

[Operator]

We'll next go to Nathan Jones with Stifel. Please go ahead.

[Nathan Jones, Managing Director at Stifel Financial Corp]

Good morning, everyone.

[Jennifer Honeycutt, President & CEO at Veralto]

Good morning, Nathan.

[Nathan Jones, Managing Director at Stifel Financial Corp]

I guess my tariff question is going to be around the competitive advantage or disadvantage that you might see from this. Obviously, there's certain competitors maybe in Marketing and Coding where you're pretty similarly positioned, but maybe some other businesses where you have some competitive advantages or disadvantages. Just based on where supply chain is positioned, where your manufacturing is positioned, etcetera, I would imagine being the big dog on the block in most of these businesses that it's more advantaged than disadvantaged. But are places where you see this as an opportunity to either use that better positioning to gain market share or to use that better positioned supply chain to look for price or any areas like that? Thanks.

[Jennifer Honeycutt, President & CEO at Veralto]

I love the question, Nathan. We actually look forward to market dislocations. This is an area where I think we can perform really, really well, and that's on the back of just our multi decade heritage around the Varelto enterprise system. As I mentioned, we are an asset light manufacturing business in most cases, and that gives us really a lot of great optionality as to where we manufacture for the benefit of both our customers and to defray certain market impacts like tariffs. So we feel very good about our position and being advantaged at this time.

[Jennifer Honeycutt, President & CEO at Veralto]

We feel like we've got great direct to customer sales strength with our 75% direct to sales model. It gives us great insight as to what our customers are thinking and and doing the problems that they're facing, how we can help solve those problems with them. And likewise, we're always working supply chain. That's just part and parcel to running a global business. And we got a lot of reps here, right?

[Jennifer Honeycutt, President & CEO at Veralto]

This is reflective memory for us. So we're blocking and tackling, we're using VES, we're remaining nimble. And then when we see opportunities, we seize them with speed and agility.

[Sameer Ralhan, Senior VP & CFO at Veralto]

And Nathan, if I can just add, our the speed and agility is really demonstrated by how we've been able to set up the closing facility in Grand Rapids, Michigan, right? So that's a great proof point of what Jennifer just said.

[Nathan Jones, Managing Director at Stifel Financial Corp]

I guess follow-up then is, you said 3.5% of sales across the portfolio, but your business is like half U. S. Or a little bit under half U. S. Does that imply that you need 7% price in The U.

[Nathan Jones, Managing Director at Stifel Financial Corp]

S? Or are you defraying that across other parts of the business? And then is it relatively homogenous? Or are there parts that significantly more than that, significantly less than that? And do you believe you can mitigate a significant portion of what's that 3.5% total today?

[Nathan Jones, Managing Director at Stifel Financial Corp]

And what could you get it down to?

[Sameer Ralhan, Senior VP & CFO at Veralto]

Yes. Nathan, if you're going look at the 3.5%, it's really a sort of a growth estimate. And when you look at that number, effectively it reflects the export as well as the imports, right, and imports into China. And majority of this is tied to China, as we talked about that. Overall, say we should be able to defray pretty much all of it, Nathan.

[Sameer Ralhan, Senior VP & CFO at Veralto]

And it's really three things. The sourcing strategy, supply chain stuff that Jennifer talked about. Second is all the manufacturing footprint. Given our light manufacturing, we can move things around very fast. All those things are happening to make sure we're a geographic location where we can serve our customers, maintain the continuity of serving the customers at the same time, we can do it very fast.

[Sameer Ralhan, Senior VP & CFO at Veralto]

And then lastly, would say the pricing. So it's a combination of all three is how you should be thinking about deferring this 3.5% that we laid out like a gross conservative view. This shouldn't this is not all pricing.

[Nathan Jones, Managing Director at Stifel Financial Corp]

Got it. Thanks very much for taking my questions.

[Operator]

We'll go next to Jeff Sprague with Vertical Research. Please go ahead.

[Jeffrey Sprague, Founder and Managing Partner at Vertical Research Partners]

Hey, thank you. Good morning, I'm a bit late, but I think my team's updated me on what you said so far, but pardon any duplication here. But first, just on the asset light comment though, Jennifer. A lot of that derives right from not being vertically integrated and sourcing and the like. Do you see, for example, kind of electronic sources of supply where you divert out of China to other places to kind of quickly deal with input costs on that side of the equation?

[Jennifer Honeycutt, President & CEO at Veralto]

Yes. Let me clarify. Just because we say asset light doesn't mean we're not leveraging collective spend for certain commodities, okay? What we mean when we say asset light is that we don't have any big heavy monuments for manufacturing equipment that has to be duplicated or rooftops that need to be built in order for us to be able to move supply chain. We have a very capable strategic sourcing team centralized within our corporate organization that works directly with our sourcing teams within the operating companies to create that shared leverage.

[Jennifer Honeycutt, President & CEO at Veralto]

So that shared leverage shows up in collective circuit board purchases, in chemicals commodities, in plastics, injection molded parts, optics, etcetera. So we think we're well advantaged here in terms of being able to leverage the collective spend, but also being nimble and swift when we want to diversify our manufacturing footprint.

[Sameer Ralhan, Senior VP & CFO at Veralto]

Jeff, one more point I would add is, as you're going think from the suppliers' perspective, right, there's a lot more flexibility on the supplier footprint as well right now versus the first round of tariffs six, eight years back, right? So it's a little different situation as well. So all of us have been working in building that resiliency into a supplier base as well. That is a driver in our ability to move fast as well

[Sameer Ralhan, Senior VP & CFO at Veralto]

right now.

[Jeffrey Sprague, Founder and Managing Partner at Vertical Research Partners]

And thinking about what you can do versus what you will do, I mean, is there like a real list of sort of no regrets footprint changes that you make here? Or are we still kind of tactically maybe leaning more on price at the beginning to see if some of this stuff goes away? Just interested in how you're kind of playing that potential arbitrage there.

[Sameer Ralhan, Senior VP & CFO at Veralto]

Yes. If you think it from the supply chain and the manufacturing footprint perspective, Jeff, these are no regret moves for us. I think like Trojan One is a great example because of the BABA, were already working towards and had a strategy to move have a footprint here in U. S. The tariff situation just helped kind of accelerate that.

[Sameer Ralhan, Senior VP & CFO at Veralto]

So a number of these things that we have in play and we are working on pretty close to getting done. They were a big part of our overall strategy for the longer term as well from a physical footprint perspective. So I would say these are no regret moves, Jeff.

[Jeffrey Sprague, Founder and Managing Partner at Vertical Research Partners]

And then maybe just finally on the days, I

[Jeffrey Sprague, Founder and Managing Partner at Vertical Research Partners]

think you addressed it in your opening comments. But could you just elaborate if again or if you didn't on the impact on the total enterprise consumables business versus maybe sort of product and projects? Assume there are some notable differences there.

[Sameer Ralhan, Senior VP & CFO at Veralto]

Yes, Jeff. This extra three days, right, even if you perform off of that, the core sales growth should be solid above 5%. The impact, as you can imagine, primarily comes through consumables. That's where you would see it, not in the equipment side. And frankly, if you boil it down all the way to the EPS based on average margins, all that kind of stuff, it's really impact.

[Sameer Ralhan, Senior VP & CFO at Veralto]

So net net, if you look at that, I think having seen sitting here, if you were delivering high single digit growth and 90 plus EPS, I think we'll all be feeling pretty good. So it's pretty solid execution. Thank you. Thank you.

[Operator]

We'll go next to Andrew Buscaglia with BNP Paribas. Please go ahead.

[Andrew Buscaglia, Executive Director at BNP Paribas]

Hey, good morning, everyone.

[Jennifer Honeycutt, President & CEO at Veralto]

Good morning, Andrew.

[Andrew Buscaglia, Executive Director at BNP Paribas]

I wanted to check-in on the M and A front. Seems like you guys are you got another deal over the finish line, a small one.

[Nathan Jones, Managing Director at Stifel Financial Corp]

But I'm curious if tariffs are impacting things either positively or negatively in terms of your discussions.

[Jennifer Honeycutt, President & CEO at Veralto]

Yes, they really aren't, Andrew. We remain excited about the opportunities that we have in M and A. Both of our funnels for both sides of the house in terms of the two segments are full and actively being worked where we continue to look at a number of strategic investment areas, and we will stay disciplined in our approach. We absolutely will stay close to ensuring that it's a market that we like with the most attractive company assets that play in that space and to ensure that we get them at the right valuation. So we are undeterred in our approach to M and A and we still have that as a bias for our capital deployment.

[Andrew Buscaglia, Executive Director at BNP Paribas]

Okay.

[Andrew Buscaglia, Executive Director at BNP Paribas]

And on the tariff side, can you just clarify, are you exporter out of China to The U. S?

[Sameer Ralhan, Senior VP & CFO at Veralto]

It's kind of a balance. Let me take a lot of stuff as well, that's kind of reflected in the 3.5 number. So I wouldn't call it like it's a one way or the other.

[Andrew Buscaglia, Executive Director at BNP Paribas]

Okay. Thank you.

[Operator]

We'll next go to Andrew Kaplowitz with Citigroup. Please go ahead.

[Natalia Bak, Equity Research Associate at Citigroup]

Hey, good morning.

[Jennifer Honeycutt, President & CEO at Veralto]

Good morning, Andrew.

[Natalia Bak, Equity Research Associate at Citigroup]

This is Dahlia Dock on behalf of Andy Kaplowitz. Hey, Dahlia. Maybe just first question first question, just focusing on the volume component. So Q1 benefited from 6.5% volume growth, but how do you think about volume normalization in the second quarter and second half particularly in light of like macrotariff uncertainties and any inventory normalization in your channels?

[Sameer Ralhan, Senior VP & CFO at Veralto]

Yes. Thanks, Natalia. Look, think as you know, we are majority direct, right, almost 70% direct to our customers. So we generally have a pretty good feel from the inventory perspective. There are not a whole lot of distribution channels in between, the buffers in between.

[Sameer Ralhan, Senior VP & CFO at Veralto]

So generally, we have pretty good line of sight and doesn't feel like there's any inventory built at this point. And It's also not reflected in the order patterns. So inventory is a less of an issue as we kind of think about the second quarter and the rest of the year. From a volume perspective, look, as you know, we don't provide any specific guide for volume and price. As we drive the price, there could be some impact on the volume.

[Sameer Ralhan, Senior VP & CFO at Veralto]

Yes, we run all through the different kind of scenarios. Our goal is always to rebalance to make sure we are optimizing the core growth. So from a core growth perspective, low single digit mid single digit for the second quarter and the rest of the year is where we feel really good about at this point.

[Natalia Bak, Equity Research Associate at Citigroup]

Got it. That's helpful. And then I noted sourcing optimization and standard work improvements in CEO Kaizen Week. I'm just curious, can you quantify any expected annualized run rate savings from these initiatives? And how and when do you think you'll be able to reinvest and such or these initiatives flow to the bottom line?

[Sameer Ralhan, Senior VP & CFO at Veralto]

Yes. Look, mean, these things, the first of all, the fundamental of any Kaizen event is, right, we want to see the impact now, right? So these are the kind of things that we do execute. We start seeing the results. Look, as part of the budgeting process, every operating company has an operating margin expansion.

[Sameer Ralhan, Senior VP & CFO at Veralto]

So we fully expect to conduct continuous improvement, Kaizen events to actually deliver on the commitments that are in the budget that's in the forecast. So these are all kind of part of the guidance that we give to you guys and the internal budgets all kind of reflected in that. Overall, from a supply chain perspective, again, Natalia, I would say, if we do this thing every day, right, I can tell you there are a number of supply chain initiatives as well just around the sourcing side and the procurement side. But those benefits, we are reflected in the guidance reflecting in the internal budgets we have with each operating company. So there's nothing additional up to that.

[Natalia Bak, Equity Research Associate at Citigroup]

That's helpful. Thanks for the clarification and thank you so much.

[Sameer Ralhan, Senior VP & CFO at Veralto]

Antonia. Thanks,

[Operator]

take our last question from Brian Lee from Goldman Sachs. Please go ahead.

[Brian Lee, Vice President at Goldman Sachs]

Hey, everyone. Good morning. Thanks for squeezing me in. I know we're nearing the end of the call here, so maybe I'll just combine my two questions into one to be efficient. As you said multiple times, Seth, I know you guys don't like to break out volume and price from an outlook perspective.

[Brian Lee, Vice President at Goldman Sachs]

But when we look at Q1, maybe it's a little bit lighter, 1% for water quality, 1.6% for PQI. Seems like at least directionally that's going to go higher given the tariff impacts moving through the year. So just curious if you can, without giving us the numbers, give us some sense of the cadence as you layer that in over the course of the next few quarters and into year end. And then I guess related to that, you mentioned no pull forward in Q1, but are you seeing any signs of any slowdown real time with all the macro uncertainty and tariff impacts? And sort of what are you budgeting for the expectations around demand elasticity as you see some price increases moving through the year?

[Brian Lee, Vice President at Goldman Sachs]

There any feedback real time from customers around whether that might limit some volume upside as we move through the rest of the year? Thank you.

[Sameer Ralhan, Senior VP & CFO at Veralto]

Thanks, Brian. I'll start with the second question from a pull forward perspective. No, we haven't seen anything of notice of note rather, I should say, Brian. This is overall, the demand has been pretty good. And I would say, as you kind of look at the order patterns in April, as I said at the beginning of the call, this still seemed normal at this point.

[Sameer Ralhan, Senior VP & CFO at Veralto]

So we haven't seen any change in the order patterns yet. And from more forward inventory perspective, as I said earlier, we sell mostly direct. So we have pretty good line of sight in the inventories at the end users. I think things seems to be normal at this point. Now we all see what's happening in the macro and we prepared for that and we run different scenarios as we're going to think about how we move as we increase the pricing, how it may impact volume and all that is reflected in other core growth the low single digits to mid single digits depending on the scenario.

[Sameer Ralhan, Senior VP & CFO at Veralto]

Price and volume is going to have a little bit of elasticity, but within the range of low single digits to more mid single digit core growth. Overall pricing, when you look at, Brian, historically, we have delivered one one hundred to 200 basis points. So net net on average, have 1.3 in Q1. You're absolutely right. As we're pushing the pricing, will it move towards the higher end of the range?

[Sameer Ralhan, Senior VP & CFO at Veralto]

Absolutely, that will happen. But that's we've been very surgical, right? At the end of the day, the goal is to optimize position the business for success for the longer term and help our customers maintain business continuity as well. So we've been very surgical, very methodical in how we're kind of pushing. And pricing, as you kind of think of it, lastly, I would say, is one of the levers as you kind of think about offsetting the as part of the countermeasures to offset the tariff impacts.

[Sameer Ralhan, Senior VP & CFO at Veralto]

We have a lot of things in our own control, right? As you kind of think about the manufacturing footprint changes, that's going to have a very meaningful impact on the tariff countermeasures. You think about the supply chain side, those things are in our control. So we are executing on all those things as well. So think of pricing as one of the three elements here.

[Sameer Ralhan, Senior VP & CFO at Veralto]

The other two elements are within our control, and we're executing on those.

[Brian Lee, Vice President at Goldman Sachs]

Awesome. Appreciate all the color. Thank you.

[Ryan Taylor, Vice President - IR at Veralto]

Thanks, Brian. Thanks, Brian, and thanks for everybody that joined us on the call today. We appreciate the questions and the engagement. As usual, this is Ryan. I'll be available for follow ups today and over the next several days.

[Ryan Taylor, Vice President - IR at Veralto]

Thanks again for joining us, and this concludes the end of our Q1 earnings call.

[Sameer Ralhan, Senior VP & CFO at Veralto]

Thank you.

Participants

Executives

• Ryan Taylor, Vice President - IR
• Jennifer Honeycutt, President & CEO
• Sameer Ralhan, Senior VP & CFO

Analysts

• Scott Davis, CEO & Chairman at Melius Research LLC
• Deane Dray, Managing Director at RBC Capital Markets
• Michael Halloran, Associate Director of Research at Robert W. Baird & Co
• John McNulty, MD - Chemicals Analyst at BMO Capital Markets
• Nathan Jones, Managing Director at Stifel Financial Corp
• Jeffrey Sprague, Founder and Managing Partner at Vertical Research Partners
• Andrew Buscaglia, Executive Director at BNP Paribas
• Natalia Bak, Equity Research Associate at Citigroup
• Brian Lee, Vice President at Goldman Sachs