A maker of essential water quality and product quality solutions, Veralto serves municipal and industrial customers through two segments. Its Water Quality arm offers analytics, treatment, and digital tools under brands like Hach, ChemTreat, and Trojan Technologies, while its Product Quality & Innovation arm provides marking, coding, and color management under brands like Videojet, Esko, X-Rite, and Pantone for consumer goods and pharmaceutical makers. The company has grown by acquiring more than 85 businesses over two decades.
Veralto's Q2 operating margin fell 140 bps to 21.4% as restructuring charges offset a 120 bps gross margin gain from tariff recoveries.
Restructuring costs reshaped Veralto's second quarter. rose 6.8% to $1,422 million and reached 60.1%, but grew only 5.0% as restructuring charges compressed the to 23.8%. The company is spending to reshape itself even as demand holds steady.
Key takeaways
contracted 40 to 23.8%, as restructuring charges absorbed the benefit of a that held at 60.1% — the filing notes that gross margin was aided by and positive pricing.
rose 6.8% to $1,422 million, with of 4.2%, led by a 10.1% increase in the Water Quality driven by chemical treatment and analytical instrumentation.
The Product Quality & Innovation returned to growth with a 3.8% sales increase on 2.0% core growth, as marking and coding gains were partially offset by declines in packaging and color solutions.
Section summaries
Management's Discussion and Analysis
Q2 2026 revenue rose 7.6% to $1.47B on Water Quality strength; margins compressed by restructuring costs.
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Total sales grew 7.6% (core +4.2%) in Q2, led by a 10.1% increase in the Water Quality driven by chemical treatment and analytical instrumentation.
expanded 120 to 61.2% on positive pricing and IEEPA tariff recoveries, but fell 140 bps to 21.4% due to restructuring charges.
rose 12.9% to $254 million, helped by higher sales and a lower of 16.6%, which benefited from discrete tax items and tax law changes.
The company deployed $620 million on acquisitions of In-Situ and GlobalVision during the quarter and issued $725 million in senior notes, while year-to-date reached $522 million.
Management expects Water Quality to benefit from steady municipal demand and PQI growth to accelerate in the second half, while noting uncertainty around tariffs and Middle East conflict.
What changed
PQI returned to positive territory at 2.0%, after the posted a 1.0% core decline in Q1 2026 — the In-Situ acquisition contributed to the segment's return to growth.
expanded 70 sequentially to 60.1%, reversing the 30-basis-point contraction reported in Q1, as provided a new .
The restructuring risk factor added in Q1 2026 materialized into actual charges this quarter, driving the 140-basis-point compression that management's discussion highlights.
Capital deployment accelerated: after spending $726 million in Q1 on the In-Situ acquisition and buybacks, the company spent another $620 million on acquisitions this quarter and issued $725 million in new debt, shifting the balance sheet from deleveraging toward growth investment.
What to watch
Restructuring charges: track whether these costs are concentrated in Q2 or continue into the second half, and whether they begin to generate the intended in subsequent quarters.
PQI core growth trajectory: monitor whether the 2.0% core growth rate accelerates in H2 as management expects, particularly in packaging and color solutions which declined this quarter.
Tariff recoveries and costs: the aided this quarter — watch whether these are recurring or one-time, and whether underlying tariff costs begin to pressure margins once recoveries fade.
and capital allocation: with $725 million in new senior notes issued and $620 million deployed on acquisitions, monitor whether the debt-to- ratio rises and whether further M&A or activity follows.
Product Quality & Innovation sales rose 3.8% (core +2.0%), with marking and coding growth partially offset by declines in packaging and color solutions.
increased to $241M from $222M, helped by higher sales and tariff recoveries, while the dropped to 16.6% on discrete benefits and tax law changes.
improved to $522M year-to-date; the company issued $725M in senior notes and deployed $620M on acquisitions of In-Situ and GlobalVision.
Management expects Water Quality to benefit from steady municipal demand and PQI growth to accelerate in H2, while noting uncertainty around tariffs and Middle East conflict.
Quantitative and Qualitative Disclosures About Market Risk
Quantitative and qualitative disclosures about market risk appear in “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Financial Instruments and Risk Management,” within the 2025 Annual Report on Form 10-K. There were no material changes duri…
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Quantitative and qualitative disclosures about market risk appear in “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Financial Instruments and Risk Management,” within the 2025 Annual Report on Form 10-K. There were no material changes during the three-month period ended July 3, 2026 to this information as reported in the 2025 Annual Report on Form 10-K.
For additional information regarding legal proceedings, refer to the section titled “Legal Proceedings” in the MD&A section of the Company’s 2025 Annual Report on Form 10-K.
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For additional information regarding legal proceedings, refer to the section titled “Legal Proceedings” in the MD&A section of the Company’s 2025 Annual Report on Form 10-K.
There were no material changes during the quarter ended July 3, 2026 to the risk factors previously disclosed in the “Item 1A. Risk Factors” section of the 2025 Annual Report on Form 10-K, and as updated in the Company’s Form 10-Q for the period ended April 3, 2026.
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There were no material changes during the quarter ended July 3, 2026 to the risk factors previously disclosed in the “Item 1A. Risk Factors” section of the 2025 Annual Report on Form 10-K, and as updated in the Company’s Form 10-Q for the period ended April 3, 2026.