Veralto Corp impresses with strong growth and robust margins

With impressive financial results, Veralto Corp has once again positioned itself as a significant player in the market in the current fiscal year. Questions about the unusually strong gross margin, which recently reached the 60-percent mark, were addressed by management with references to a rigorous implementation of the VES strategy and consistent revenue from consumables and software. However, the company expects margins to stabilize in the high 50-percent range in the medium term. In the area of mergers and acquisitions, Veralto Corp continues to pursue a thoughtful approach. Particularly active activities are evident in the areas of PQI and water quality, with a keen focus on identifying companies that could benefit from the adoption of VES technologies. The Chinese market remains stable for Veralto Corp, albeit without prospects for short-term recovery. In the long term, China remains promising due to the need for clean water and safe food, although financing for municipal facilities is currently scarce. In the US and Europe, the company benefits significantly from ongoing projects in the water sector. Target markets are experiencing tailwinds from the CHIPS Act and the growing importance of data centers, which especially benefit the business units ChemTreat and Trojan. Investments in expanding commercial resources and R&D remain a focus for Veralto Corp to enable long-term growth of 4% to 6%. The optimization of procurement and manufacturing under the Kaizen culture has strengthened the management's confidence in leveraging the operating profit margin to 24% in the fiscal year. Addressing PFAS remains a challenge, but Veralto is investing heavily in tailored solutions. The area of industrial growth is primarily driven by strong demand for non-optional global growth in the food, water, and pharmaceutical sectors.