Veralto Corp · NYSE:VLTO
Veralto — Q4 2023 Earnings Presentation
37 slides from Veralto's earnings presentation, Feb 7, 2024
Slide 1: Fourth Quarter and Full Year 2023 Results
Fourth Quarter and Full Year 2023 Results February 6, 2024
Slide 2: Forward Looking Statements
Forward Looking Statements Certain statements in this presentation, including statements regarding the Company's first quarter and full year 2024 guidance, the Company’s differentiation and positioning to continue delivering sustainable, long-term shareholder value and any other statements regarding
Slide 3: Opening Remarks
Opening Remarks Jennifer L. Honeycutt President and Chief Executive Officer Q4 and FY 2023 Results | February 6, 2024
Slide 4: Full Year 2023 key consolidated and combined financial results
Veralto / Full Year 2023 key consolidated and combined financial results ADJUSTED OPERATING ADJUSTED ADJUSTED FREE CASH SALES PROFIT* EPS* EBITDA* FLOW* $5,021m $1,170m $3.19 $1,209m $911m core sales 23.3% adjusted +7% year-over-year 24.1% adjusted 109% free cash growth*of +2.6% operating margin* EB
Slide 5: Q4 2023 key consolidated financial results
Veralto / Q4 2023 key consolidated financial results ADJUSTED OPERATING ADJUSTED ADJUSTED FREE CASH SALES PROFIT* EPS* EBITDA* FLOW* $1,288m $306m $0.87 $316m $241m core sales 23.8% adjusted +9% year-over-year 24.5% adjusted 121% free cash growth*of +1.7% operating margin* EBITDA margin flow convers
Slide 6: Core sales growth by region for Q4 and FY 2023
Veralto / Core sales growth by region for Q4 and FY 2023 NORTH AMERICA (46% of Q4 sales) WESTERN EUROPE (22% of Q4 sales) HIGH GROWTH MARKETS (29% of Q4 sales) Q4 2023 Commentary China Q4 2023 WQ +6.4% WQ (0.2%) WQ +0.2% +4.7% (1.7%) +2.3% down PQI +0.3% PQI (3.0%) PQI +4.8% LSD North America: WQ:
Slide 7: Financial Review
Financial Review Sameer Ralhan SVP and Chief Financial Officer Q4 and FY 2023 Results | February 6, 2024
Slide 8: Q4 2023 consolidated performance
Veralto / Q4 2023 consolidated performance $ millions, except per share data Q4 2022 Q4 2023 YOY Sales grew +3.3% year-over-year: Variance Core sales* +1.7% Sales $1,248 $1,288 +3.3% Currency: +1.6% Acquisitions & divestitures: 0% Core Sales Growth* 5.6% 1.7% Gross profit increased 5%, wit
Slide 9: Water Quality Q4 and FY 2023 performance
Water Quality / Q4 and FY 2023 performance ($ millions, variances versus prior year period) Q4 SALES Q4 ADJUSTED OPERATING PROFIT * +3.4% +9.1% $782 $203 $756 YOY Change in Sales Q4’22 Q4’23 $186 Price +4.2% Core Growth* +9.5% +2.1% 26.0% 24.5% +150 bps Adj. operating profit Currency (4.0%) +1.3% M&
Slide 10: Product Quality & Innovation Q4 and FY 2023 performance
Product Quality & Innovation / Q4 and FY 2023 performance ($ millions, variances versus prior year period) Q4 SALES Q4 ADJUSTED OPERATING PROFIT * +2.9% (3.2%) $506 Note: The Q4 2023 year-over-year impact of $492 YOY Change in Sales Q4’22 Q4’23 $127 $123 the Argentine Peso devaluation to operating p
Slide 11: Q4 2023 Cash Flow and Balance Sheet
Veralto / Q4 2023 Cash Flow and Balance Sheet ($ millions) Q4 2023 Cash from operations $263 Financial position summary: Capital expenditures ($22) Free Cash Flow* $241 • Strong cash generation Free Cash Flow Conversion* 121% • Resilient and capital-light business model Year End 2023 • Gross leverag
Slide 12: Q1 and FY 2024 Guidance
Veralto / Q1 and FY 2024 Guidance Q1 2024E FY 2024E Annual Sales and Core Sales Growth* ~$5.1b Core Sales Growth* ~flat +LSD $5.0b $4.9b 23.0% to +50 to +75 Adjusted Operating Profit Margin* $4.7b 23.5% basis points Core sales +7.9% +8.1% +2.6% +LSD $0.73 to $3.20 to growth* rate Adjusted EPS* $0.78
Slide 13: Closing Remarks
Closing Remarks Jennifer L. Honeycutt Q4 & FY 2023 Results | February 6, 2024
Slide 14: Well-positioned to drive compounding earnings and free cash flow growth
Veralto / Well-positioned to drive compounding earnings and free cash flow growth ATTRACTIVE SECULAR GROWTH DRIVERS PREMIER FINANCIAL PROFILE and DURABLE BUSINESS MODEL PROVEN VALUE CREATION PLAYBOOK SAFEGUARDING THE WORLD’S MOST VITAL RESOURCES™ 14 Q 4 & F Y 2 0 2 3 R E S U L T S | 14
Slide 15: Appendix
Appendix Q4 & FY 2023 Results | February 6, 2024
Slide 16: Reconciliation of GAAP to Non-GAAP Financial Measures
VERALTO CORPORATION RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES AND SUPPLEMENTAL FORWARD-LOOKING INFORMATION THREE-MONTH PERIODS AND YEARS ENDED DECEMBER 31, 2023 AND DECEMBER 31, 2022
Slide 17: Table of Contents
TABLE OF CONTENTS Page 1 Sales Growth (Decline) by Segment, Core Sales Growth (Decline) by Segment 3 Forecasted Core Sales (Decline) Growth, Adjusted Operating Profit Margin, and Adjusted Diluted Net Earnings per Share 4 Segment Sales, Operating Profit, Adjusted Operating Profit, Operating Profit Ma
Slide 18: Sales Growth by Segment, Core Sales Growth by Segment
VERALTO CORPORATION Sales Growth by Segment, Core Sales Growth (Decline) by Segment % Change Three-Month Period Ended December 31, 2023 vs. Comparable 2022 Period Segments Product Quality Total Company Water Quality & Innovation Total sales growth (GAAP) 3.3 % 3.4 % 2.9 % Impact of: Currency exchang
Slide 19: Sales Growth (Decline) by Segment, Core Sales Growth 2022
VERALTO CORPORATION Sales Growth (Decline) by Segment, Core Sales Growth (Decline) by Segment % Change Three-Month Period Ended December 31, 2022 vs. Comparable 2021 Period Segments Product Quality Total Company Water Quality & Innovation Total sales growth (decline) (GAAP) 1.5 % 5.5 % (4.2)% Impact
Slide 20: Forecasted Core Sales Growth, Adjusted Operating Profit Margin, and Adjusted EPS
VERALTO CORPORATION Forecasted Core Sales (Decline) Growth, 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 tran
Slide 21: Segment Sales, Operating Profit, Adjusted Operating Profit and Margins
VERALTO CORPORATION Segment Sales, Operating Profit, Adjusted Operating Profit, Operating Profit Margin, and Adjusted Operating Profit Margin ($ in millions) Three-Month Period Ended Year Ended December 31, 2023 December 31, 2022 December 31, 2023 December 31, 2022 Sales (GAAP) Water Quality $ 782 $
Slide 22: Segment Sales, Operating Profit, Adjusted Operating Profit and Margins (continued)
VERALTO CORPORATION Segment Sales, Operating Profit, Adjusted Operating Profit, Operating Profit Margin, and Adjusted Operating Profit Margin ($ in millions) Three-Month Period Ended Year Ended December 31, 2023 December 31, 2022 December 31, 2023 December 31, 2022 Other Operating Profit Adjustments
Slide 23: Net Earnings, Operating Profit, Adjusted EBITDA: Three-Month Period 2023
VERALTO CORPORATION Net Earnings, Operating Profit, Adjusted EBITDA, Net Earnings Margin, Operating Profit Margin and Adjusted EBITDA Margin ($ in millions) Three-Month Period Ended December 31, 2023 Product Quality Water Quality & Innovation Other Total Company Net Earnings (GAAP) $ 200 Interest Ex
Slide 24: Net Earnings, Operating Profit, Adjusted EBITDA: Three-Month Period 2022
VERALTO CORPORATION Net Earnings, Operating Profit, Adjusted EBITDA, Net Earnings Margin, Operating Profit Margin and Adjusted EBITDA Margin ($ in millions) Three-Month Period Ended December 31, 2022 Product Quality Water Quality & Innovation Other Total Company Net Earnings (GAAP) $ 216 Other Nonop
Slide 25: Net Earnings, Operating Profit, Adjusted EBITDA: Year 2023
VERALTO CORPORATION Net Earnings, Operating Profit, Adjusted EBITDA, Net Earnings Margin, Operating Profit Margin and Adjusted EBITDA Margin ($ in millions) Year Ended December 31, 2023 Product Quality Water Quality & Innovation Other Total Company Net Earnings (GAAP) $ 839 Interest Expense , net 30
Slide 26: Net Earnings, Operating Profit, Adjusted EBITDA: Year 2022
VERALTO CORPORATION Net Earnings, Operating Profit, Adjusted EBITDA, Net Earnings Margin, Operating Profit Margin and Adjusted EBITDA Margin ($ in millions) Year Ended December 31, 2022 Product Quality Water Quality & Innovation Other Total Company Net Earnings (GAAP) $ 845 Other Nonoperating (Incom
Slide 27: Trailing Twelve Month Adjusted EBITDA, Gross Leverage, and Net Leverage
VERALTO CORPORATION Trailing Twelve Month Adjusted EBITDA, Gross Leverage, and Net Leverage ($ in millions) Three-Month Period Ended December 31, 2023 September 29, 2023 June 30, 2023 March 31, 2023 Net Earnings (GAAP) 200 205 209 225 Interest, Net 6 25 5 — — Other Nonoperating (Income) Expense — —
Slide 28: Other Non-GAAP Adjusted P&L Measures: Three-Month Period 2023
VERALTO CORPORATION Other Non-GAAP Adjusted P&L Measures ($ in millions, except per share data) Three-Month Period Ended December 31, 2023 Net earnings for Diluted net Earnings calculation of earnings per Gross profit Operating Operating before diluted earnings common Sales Cost of sales margin prof
Slide 29: Other Non-GAAP Adjusted P&L Measures: Three-Month Period 2022
VERALTO CORPORATION Other Non-GAAP Adjusted P&L Measures ($ in millions, except per share data) Three-Month Period Ended December 31, 2022 Net earnings for calculation of Diluted net Earnings adjusted diluted earnings per Gross profit Operating Operating before income net earnings per common Sales C
Slide 30: Other Non-GAAP Adjusted P&L Measures: Year 2023
VERALTO CORPORATION Other Non-GAAP Adjusted P&L Measures ($ in millions, except per share data) Year Ended December 31, 2023 Net earnings for Diluted net Earnings calculation of earnings per Gross profit Operating Operating before diluted earnings common Sales Cost of sales margin profit profit marg
Slide 31: Other Non-GAAP Adjusted P&L Measures: Year 2022
VERALTO CORPORATION Other Non-GAAP Adjusted P&L Measures ($ in millions, except per share data) Year Ended December 31, 2022 Net earnings for Adjusted calculation of diluted net Earnings adjusted diluted earnings per Gross profit Operating Operating before net earnings per common Sales Cost of sales
Slide 32: Other Non-GAAP Adjusted P&L Measures: Footnotes
VERALTO CORPORATION Other Non-GAAP Adjusted P&L Measures ($ in millions, except per share data) 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): Thr
Slide 33: Operating Profit Margins and Year-Over-Year Core Operating Margin Changes
VERALTO CORPORATION Operating Profit Margins and Year-Over-Year Core Operating Margin Changes Segments Product Quality Total Company Water Quality & Innovation Three-Month Period Ended December 31, 2022 Operating Profit Margins from Continuing Operations (GAAP) 23.60 % 24.20 % 25.20 % Fourth quarter
Slide 34: Cash Flow, Free Cash Flow, Operating Cash Flow to Net Earnings Ratio
VERALTO CORPORATION Cash Flow, Free Cash Flow, Operating Cash Flow to Net Earnings Ratio and Free Cash Flow to Net Earnings Conversion Ratio ($ in millions) Three-Month Period Ended Year Ended December 31, December 31, Year-over-Year December 31, December 31, Year-over-Year 2023 2022 Change 2023 202
Slide 35: Statement Regarding Non-GAAP Measures
VERALTO CORPORATION 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. M
Slide 36: Statement Regarding Non-GAAP Measures (continued)
VERALTO CORPORATION Statement Regarding Non-GAAP Measures ◦ We calculate adjusted EBITDA by adding to operating profit amounts equal to depreciation and amortization and making the other adjustments reflected in the applicable tables above, which allows us to calculate and disclose such measure by s
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