Q3 2025 Veralto Corp Earnings Call

Speaker #4: Please stand by. We're about to begin. Good morning, everyone. My name is Bo, and I will be your conference operator this morning.

Operator: Please stand by. We're about to begin. Good morning everyone. My name is Bo and I will be your conference operator this morning. At this time I would like to welcome everyone. Welcome everyone to Veralto Corporation's third quarter 2025 conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during that time, simply press Star, then the number one on your telephone. If you would like to withdraw your question, press Star and then the number two. I will now turn the call over to Mr. Ryan Taylor, Vice President of Investor Relations. Please go ahead, sir.

Speaker #4: At this time , I would like to welcome everyone to Veralto Corporation's Third Quarter 2025 conference call . All lines have been placed on mute to prevent any background noise .

Speaker #4: After the speakers remarks , there will be a question and answer session . If you would like to ask a question during that time , simply press star .

Speaker #4: Then the number one on your telephone . If you would like to withdraw your question , press star and then the number two .

Speaker #4: I will now turn the call over to Mr. Ryan Taylor , Vice President of Investor Relations . Please go ahead , sir .

Speaker #5: Good morning , everyone , and thanks for joining us on the call with me today are Jennifer Honeycutt , our president and Chief Executive Officer .

Sameer Ralhan: Good morning everyone and 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 Investor section of our website later today under the heading Events and Presentations. A replay of this call will also be available until November 7. Yesterday we issued our third quarter 2025 news release, earnings presentation, and supplemental materials including information required by the SEC relating to adjusted or non-GAAP financial measures. These materials are available in the Investors section of our website, www.veralto.com, under the heading Quarterly Earnings. Reconciliations of all non-GAAP measures are also provided in the appendix of the webcast slides. Unless otherwise noted, all references to variances are on a year-over-year basis.

Speaker #5: 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 investor section of our website later today.

Speaker #5: Under the heading events and Presentations . A replay of this call will also be available until November 7th . Yesterday we issued our third quarter 2025 news release earnings presentation and supplemental materials including information required by the relating to adjusted or non-GAAP financial measures .

Speaker #5: These materials are available in the investor section of our website . WWE . Under the heading Quarterly Earnings . Reconciliations of all non-GAAP measures are also provided in the appendix of the webcast slides , unless otherwise noted , all references to variances are on a year over year basis .

Speaker #5: 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 .

Sameer Ralhan: 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. 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. With that, I'll turn the call over to Jennifer.

Speaker #5: 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 SEC .

Speaker #5: 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 .

Speaker #5: And with that , I'll turn the call over to Jennifer .

Speaker #6: Thank you . Ryan , and thank you all for joining our third quarter earnings call today . During the third quarter , we continued to drive consistent growth through strong top line performance , disciplined operational execution and rigorous deployment of the Veralto enterprise system for both the third quarter and year to date .

Jennifer Honeycutt: Thank you, Ryan, and thank you all for joining our third quarter earnings call today. During the third quarter, we continue to drive consistent growth through strong top line performance, disciplined operational execution, and rigorous deployment of the Veralto Enterprise system. For both the third quarter and year to date, our team delivered mid single digit core sales growth, double digit adjusted EPS growth, and over 100% free cash flow conversion. These results underscore our ability to successfully navigate a dynamic macro environment, particularly with respect to changes in global trade policies. Our steady growth and improvement this year is a testament to our durable business model and the critical role our technologies and services play in supporting the daily operations of our customers.

Speaker #6: Our team delivered mid-single digit core sales growth , double digit adjusted earnings per share growth , and over 100% free cash flow conversion .

Speaker #6: These results underscore our ability to successfully navigate a dynamic macro environment , particularly with respect to changes in global trade policies . Our steady growth and improvement this year is a testament to our durable business model and the critical role our technologies and services play in supporting the daily operations of our customers .

Speaker #6: Given the strength of our third quarter results , we raised our full year adjusted earnings per share guidance to a range of $3.82 to $3.85 per share , and we raised our full year free cash flow conversion guidance to approximately 100% .

Jennifer Honeycutt: Given the strength of our third quarter results, we raised our full year adjusted EPS guidance to a range of $3.82 to $3.85 per share, and we raised our full year free cash flow conversion guidance to approximately 100%. Our financial position continues to strengthen, giving us ample flexibility to evaluate opportunities to deploy capital within our proven framework. Our capital allocation bias is towards acquisitions, and our pipeline of opportunities is comprised of a mosaic of attractive targets across Water Quality and PQI. We continue to take a prudent approach to evaluating opportunities consistent with our disciplined market company valuation framework. I also want to highlight that during the quarter, we published our annual sustainability report. We have approached our commitment to sustainability with the same rigor and discipline that we apply to operating our businesses.

Speaker #6: Our financial position continues to strengthen, giving us ample flexibility to evaluate opportunities to deploy capital within our proven framework. Our capital allocation bias is towards acquisitions, and our pipeline of opportunities is comprised of a mosaic of attractive options.

Speaker #6: Targets across both water quality and pcci . We continue to take a prudent approach to evaluating opportunities consistent with our disciplined market company valuation framework .

Speaker #6: I also want to highlight that during the quarter , we published our annual sustainability report . We have approached our commitment to sustainability with the same rigor and discipline that we apply to operating our businesses by leveraging our VS tools for continuous improvement to drive results .

Jennifer Honeycutt: By leveraging our VES tools for continuous improvement to drive results, we have achieved significant milestones in developing innovative and sustainable products that not only meet the needs of our customers, but also support the health of our environment. Our commitment to excellence in product design and functionality ensures that we contribute positively to the world we share. In 2024, our products and services helped provide daily access to clean water for 3.4 billion people, treat and recycle 14 trillion gallons of water, save 85 billion gallons of water, and ensure product authenticity and safety by helping customers mark and code over 10 billion products each and every day. Additionally, we are making progress on reducing our own carbon footprint, an important commitment for many of our stakeholders. We are proud of the steps we are taking to support our environment and help our customers progress their sustainable journeys.

Speaker #6: We have achieved significant milestones in developing innovative and sustainable products that not only meet the needs of our customers , but also support the health of our environment .

Speaker #6: Our commitment to excellence in product design and functionality ensures that we contribute positively to the world we share . In 2024 , our products and services helped provide daily access to clean water for 3.4 billion people .

Speaker #6: Treat and recycle 14 trillion gallons of water , save 85 billion gallons of water and ensure product authenticity and safety by helping customers mark and code over 10 billion products each and every day .

Speaker #6: Additionally , we are making progress on reducing our own carbon footprint and important commitment for many of our stakeholders . We are proud of the steps we are taking to support our environment and help our customers progress their sustainable journeys .

Speaker #6: The work we do helps customers deliver higher quality , accelerate time to market , minimize resource consumption and ensure compliance with relevant standards to improve overall operating efficiency .

Jennifer Honeycutt: The work we do helps customers deliver higher quality products, accelerate time to market, minimize resource consumption, and ensure compliance with relevant standards to improve overall operating efficiency. The essential need for our technology solutions, our durable business model, and the secular growth drivers across our end markets fortified by the Veralto Enterprise system enable us to deliver long term sustainable growth.

Speaker #6: The essential need for our technology solutions are durable business model and the secular growth drivers across our end markets . Fortified by the Veralto enterprise system enable us to deliver long term sustainable growth , the third quarter of 2025 marked our fifth consecutive quarter of mid-single digit core products sales growth , consistent with our long term value creation algorithm .

Sameer Ralhan: The.

Jennifer Honeycutt: Third quarter 2025 marked our fifth consecutive quarter of mid single digit core sales growth consistent with our long term value creation algorithm. I am proud of our global team for the steady growth and improvement we have achieved while embracing our purpose, a reflection of our high performance culture. Looking at our third quarter results in detail, we delivered 5.1% core sales growth and 11% adjusted EPS growth. Our commercial teams continue to drive outstanding execution, leveraging their applications expertise to deliver growth through new customer wins and increased market penetration while also capitalizing on steady demand across our key markets. Our core sales growth came in at the high end of our expectations and was broad based across geographies. In both segments, Water Quality delivered 5.3% core sales growth and PQI 4.6% core sales growth in PQI.

Speaker #6: I am proud of our global team for the steady growth and improvement we have achieved . While embracing our purpose . A reflection of our high performance culture .

Speaker #6: Looking at our third quarter results in detail , we delivered 5.1% core sales growth and 11% adjusted EPs growth . Our commercial teams continue to drive outstanding execution , leveraging their applications expertise to deliver growth through new customer wins and increased market penetration .

Speaker #6: While also capitalizing on steady demand across our key markets . Our core sales growth came in at the high end of our expectations and was broad based across geographies in both segments .

Speaker #6: Water quality delivered 5.3% , core sales growth and 4.6% core sales growth in Pcci . Our marking and coating business continued to see strong year over year core sales growth in both consumables and equipment and in packaging and color .

Jennifer Honeycutt: Our marking and coding business continued to see strong year over year core sales growth in both consumables and equipment and in packaging and color. Our Esko team continued to drive core sales growth by expanding software solutions in the mid market CPG sector. In Water Quality, we delivered mid single digit growth across both water treatment and water analytics with particularly strong growth in North America. Moving on to margin performance, adjusted operating profit margin came in at 23.9% in line with our underlying guidance assumption. Adjusted EPS grew 11% year over year to $0.99, $0.04 above the high end of our guidance range. Looking at sales by geography and end market, growth was broad based across key verticals and regions.

Speaker #6: Our ESCO team continued to drive core sales growth by expanding software solutions in the mid-market CPG segment . In water quality , we delivered mid-single digit growth across both water treatment and water analytics with particularly strong growth in North America .

Speaker #6: Moving on to margin performance . Adjusted operating profit margin came in at 23.9% . In line with our underlying assumption . Adjusted earnings per share grew 11% year over year to $0.99 , $0.04 above the high end of our guidance range .

Speaker #6: Looking at sales by geography and end market growth was broad , based across key verticals and regions in North America , which accounts for 50% of our business .

Jennifer Honeycutt: In North America, which accounts for 50% of our business, core sales grew 6.9% led by high single digit growth in PQI and strong mid single digit growth in Water Quality. Core sales in high growth markets were up 4.3% and core sales into Western Europe grew 2.5%. Taking a closer look at North America, core sales in PQI grew 9.2% over the prior year period. This growth reflects strategic pricing adjustments related to tariffs that were implemented in the second quarter along with higher volumes of marking and coding equipment related consumables and Esko software solutions. From an end market perspective, demand trends in PQI were in line with our expectations. During the third quarter, PQI's volume growth through the first nine months this year has been strong relative to the market.

Speaker #6: Core sales grew 6.9% , led by high single digit growth in Pcci and strong mid-single digit growth in water quality . Core sales in high growth markets were up 4.3% and core sales into Western Europe grew 2.5% , taking a closer look at North America core sales and Pcci grew 9.2% over the prior year period .

Speaker #6: This growth reflects strategic pricing adjustments related to tariffs that were implemented in the second quarter, along with higher volumes of marketing and coding equipment-related consumables and ESCO software solutions.

Speaker #6: From an end market perspective , demand trends in Pcci were in line with our expectations during the third quarter . Tkis volume growth through the first nine months this year has been strong relative to the market .

Speaker #6: This reflects the disciplined , cross-functional execution and rigorous application of these tools to deliver on our strategic initiatives and overall CPG demand was also in line with our expectations at water quality , core sales in North America grew 6% year over year , with broad based growth across water treatment and water analytics in our water treatment business , we continue to capitalize on strong demand for our chemical treatment solutions , where core sales grew mid-single digits year over year .

Jennifer Honeycutt: This reflects the disciplined cross-functional execution and rigorous application of VES tools to deliver on our strategic initiatives, and overall CPG demand was also in line with our expectations at Water Quality. Core sales in North America grew 6% year over year with broad-based growth across water treatment and water analytics. In our water treatment business, we continued to capitalize on strong demand for our chemical treatment solutions where core sales grew mid-single digits year over year. This growth was broad-based across most of the industrial markets we serve and was most pronounced in chemical processing and technology-related industries supporting artificial intelligence, including data centers. We are well positioned to capitalize on the rapid growth of infrastructure required to support AI growth. Our application expertise in water treatment is essential to helping deliver efficient water utilization and reduced energy consumption for hyperscalers and data center operators.

Speaker #6: This growth was broad based across most of the industrial markets we serve , and was most pronounced in chemical processing and technology related industries , supporting artificial intelligence , including data centers .

Speaker #6: We are well positioned to capitalize on the rapid growth of infrastructure required to support AI growth . Our application expertise in water treatment is essential to helping deliver efficient water utilization and reduced energy consumption for hyperscalers and data center operators .

Speaker #6: We are also well positioned to capitalize on adjacent industries supporting AI growth , such as semiconductors and power generation in our water analytics business .

Jennifer Honeycutt: We are also well positioned to capitalize on adjacent industries supporting AI growth, such as semiconductors and power generation. In our water analytics business, core sales into North America grew mid-single digits with growth across both municipal and industrial verticals. Our water analytics growth was primarily driven by demand for our laboratory instrumentation and related chemistries. In Western Europe, core sales grew 2.5% with both segments up year over year. PQI grew 3.7% driven by marking and coding, and Water Quality grew 1.3% driven by water analytics. In high-growth markets, core sales grew 4.3% highlighted by strong growth in the Middle East, Latin America, and India. Core sales into China grew low single digits in both segments. Overall, we continue to deliver consistent top and bottom line growth in the third quarter.

Speaker #6: Core sales into North America grew mid-single digits , with growth across both municipal and industrial verticals . Our water analytics growth was primarily driven by demand for our laboratory instrumentation and related chemistries .

Speaker #6: In Western Europe , for sales grew 2.5% , with both segments up year over year . Pcci grew 3.7% , driven by marketing and coding and water quality grew 1.3% , driven by water analytics in high growth markets , core sales grew 4.3% , highlighted by strong growth in the Middle East , Latin America and India .

Speaker #6: Poor sales into China grew in the low single digits in both segments. Overall, we continue to deliver consistent top and bottom line growth in the third quarter.

Speaker #6: At this time , I'll turn the call over to Samir for a detailed review of our financial results and an update on our guidance .

Jennifer Honeycutt: At this time, I'll turn the call over to Sameer for a detailed review of our financial results and an update on our guidance.

Speaker #7: Thanks , Jennifer , and good morning , everyone . I'll begin with our consolidated results for the third quarter . Total sales grew 6.9% on a year over year basis to $1.4 billion .

Sameer Ralhan: Thanks Jennifer and good morning everyone. I'll begin with our consolidated results for the third quarter. Total sales grew 6.9% on a year over year basis to $1.4 billion. Currency was 150 basis points or about a $20 million tailwind year over year. Acquisition and standard divestitures contributed 30 basis points of growth, primarily from TraceGains and Aquafeedis. Core sales grew 5.1% with both volume and price up year over year in both segments. Volume grew 2.7% year over year and price contributed 2.4% to core sales growth in the quarter. Recurring revenue grew high single digits year over year and comprised 62% of our total sales. Gross profit increased 8% year over year to $844 million. Gross profit margin expanded 50 basis points to 60.1%, reflecting the benefit of our strategic pricing actions and strong procurement and supply chain efforts related to the tariff environment.

Speaker #7: Currency was 150 basis points , or about a $20 million tailwind year over year . Acquisitions , net of divestitures , contributed 30 basis points of growth , primarily from trace gains and Aquafeeds .

Speaker #7: Core sales grew 5.1% , with both volume and price up year over year in both segments , volume grew 2.7% year over year and price contributed 2.4% to core sales growth in the quarter .

Speaker #7: Recurring revenue grew high single digits year over year , and comprised 62% of our total sales . Gross profit increased 8% year over year to $844 million .

Speaker #7: Gross profit margin expanded 50 basis points to 60.1% , reflecting the benefit of our strategic pricing actions and strong procurement and supply chain efforts related to the tariff environment .

Speaker #7: Adjusted operating profit increased 6% year over year , and adjusted operating profit margin was 23.9% . In line with our expectations . Strong year over year margin expansion in a water quality segment in the quarter was offset by acquisition , dilution , strategic growth investments and tariff mitigation costs .

Sameer Ralhan: Adjusted operating profit increased 6% year over year and adjusted operating profit margin was 23.9%, in line with our expectations. Strong year over year margin expansion in our Water Quality segment in the quarter was offset by acquisition dilution, strategic growth investments, and tariff mitigation costs at PQI. Additionally, corporate expenses were up year over year, reflecting our full run rate costs. Looking at EPS for Q3, adjusted earnings per share grew 11% year over year to $0.99 per share as compared to our guidance. Adjusted EPS came in $0.04 above the high end of our range. This was primarily driven by stronger volume growth in both segments, higher operating margin in our Water Quality segment, and lower net interest expense. Our free cash flow generation was strong. In the third quarter, we generated $258 million of free cash flow, a 20% or $43 million increase year over year.

Speaker #7: At . Additionally , corporate expenses were up year over year , reflecting our full run rate costs . Looking at EPs for Q3 adjusted earnings per share grew 11% year over year to $0.99 per share as compared to our guidance .

Speaker #7: Adjusted EPs came in $0.04 above the high end of our range . This was primarily driven by strong volume growth in both segments , higher operating margin in our water quality segment , and lower net interest expense .

Speaker #7: Our free cash flow generation was strong in the third quarter . We generated $258 million of free cash flow , a 20% or $43 million increase year over year .

Speaker #7: I'll cover the segment results , starting with water quality on the next page . Sales in our water quality segment were $856 million , up 7% on a year over year basis .

Sameer Ralhan: I'll cover the segment results starting with Water Quality on the next page. Sales in our Water Quality segment were $856 million, up 7% on a year over year basis. Currency was a 140 basis point tailwind and acquisitions contributed 30 basis points of growth, driven by Aquafeedis. Core sales grew 5.3% year over year. Higher volume drove 360 basis points of core sales growth and price contributed 170 basis points. Water Quality's volume growth was driven by strong demand for water analytics at municipalities and water treatment solutions in our industrial end markets, and to a lesser extent, we also saw growth in UV treatment installations. Water Quality's recurring sales grew high single digits year over year and equipment sales were up more than 3% year over year.

Speaker #7: Currency was a 140 basis points tailwind and acquisitions contributed 30 basis points of growth , driven by Aquafeeds . Core sales grew 5.3% year over year .

Speaker #7: Higher volume drove 360 basis points of core sales growth and price contributed 170 basis points . Water quality , volume growth was driven by strong demand for water analytics and municipalities , and water treatment solutions in our industrial end markets and to a lesser extent , we also saw growth in UV treatment installations .

Speaker #7: Water quality is recurring . Sales grew high single digits year over year , and equipment sales were up more than 3% year over year .

Speaker #7: Adjusted operating profit increased 13% over the prior year period to $225 million , and adjusted operating profit margin was 26.3% , up 150 basis points versus the prior year .

Sameer Ralhan: Adjusted operating profit increased 13% over the prior year period to $225 million and adjusted operating profit margin was 26.3%, up 150 basis points versus the prior year. Overall, it was a very strong quarter for Water Quality, reflecting the attractive secular growth drivers in our end markets and the ability of our Water Quality team to create value through VES-driven executions. Moving to our PQI segment on the next page, sales in our PQI segment grew 6.9% year over year to $548 million in the third quarter. Currency was a 200 basis points tailwind. Contribution from acquisitions was 30 basis points year over year, primarily driven by TraceGains. This was net of the AVT divestiture, which was completed in Q1 2025. Core sales grew 4.6%, with price contributing 3.3% growth, helping offset tariff-related cost increases. Volume contributed 1.3% to core sales growth.

Speaker #7: Overall , it was a very strong quarter for water quality , reflecting the attractive secular growth drivers . In our end markets and the ability of our water quality team to create value through vs driven execution .

Speaker #7: Moving to our segment on the next page , sales in our segment grew 6.9% year over year to $548 million in the third quarter .

Speaker #7: Currency was a 200 basis points tailwind contribution from acquisitions was 30 basis points year over year , primarily driven by Tracegains . This was net of the divestiture , which was completed in Q1 2025 .

Speaker #7: Core sales grew 4.6% , with price contributing 3.3% growth , helping offset tariff related cost increases . Volume contributed 1.3% to core sales growth .

Speaker #7: BQE core sales growth was broad based across most of our key end market verticals and geographies . Recurring revenue grew high single digits year over year , led by consumables and software and equipment sales were up just over 3% , driven by sales of marketing and coding equipment .

Sameer Ralhan: PQI's core sales growth was broad-based across most of our key end market verticals and geographies. Recurring revenue grew high single digits year over year, led by consumables and software, and equipment sales were up just over 3%, driven by sales of marking and coding equipment. We continue to see strong demand for Videojet's refreshed technology portfolio. Equipment sales were strong across Continuous Inkjet and laser technologies, with particularly high customer demand for the UV laser marking system that we introduced at the end of last year. Our UV laser is an attractive alternative to thermal transfer overlay technology. Additionally, it is helping our customers transition to more sustainable flexible film packaging solutions. From an acquisition perspective, core sales growth for TraceGains continued to exceed 20% year over year. We continue to invest in TraceGains to scale the business and further penetrate the CPG sector to create long-term value.

Speaker #7: We continue to see strong demand for video refresh technology portfolio . Equipment sales were strong across continuous inkjet and laser technologies , with particularly high customer demand for the UV laser marking system that we introduced at the end of last year .

Speaker #7: Our UV laser is an attractive alternative to thermal transfer overlay technology . Additionally , it is helping our customers transition to more sustainable , flexible film packaging solutions from an acquisition perspective .

Speaker #7: Core sales growth for Tracegains continued to exceed 20% year over year . We continue to invest in Tracegains to scale the business and further penetrate the CPG market to create long term value .

Speaker #7: We believe the transition to digital connected workflows in the food and beverage industry is poised for strong growth over the next decade . The combination of ESCO and Tracegains provides us a unique opportunity to deliver value to our consumer brands .

Sameer Ralhan: We believe the transition to digital connected workflows in the food and beverage industry is poised for strong growth over the next decade. The combination of Esko and TraceGains provides us a unique opportunity to deliver value to our consumer brands as they digitize workflows with connected data across product development, compliance, and packaging. Looking at PQI's profitability for the third quarter, we reported $139 million of adjusted operating profit, resulting in adjusted operating profit margin of 25.4% year over year. Change in PQI's profitability reflects the impact from acquisitions, strategic growth investments, and to a lesser extent, tariff mitigation costs. Specifically, we continue to enhance our manufacturing agility with new production lines in strategic locations to improve our ability to serve customers in every region. We are in the final stages of completing these product line shifts.

Speaker #7: As they digitize workflows with connected data across product development , compliance and packaging . Looking at Pci's profitability for the third quarter , we reported $139 million of adjusted operating profit , resulting in adjusted operating profit margin of 25.4% .

Speaker #7: The year over year change in Pkos profitability reflects the impact from acquisitions , strategic growth , investments and to a lesser extent , tariff mitigation costs .

Speaker #7: Specifically , we continue to enhance our manufacturing agility with new production lines and strategic locations to improve our ability to serve customers in every region .

Speaker #7: We are in the final stages of completing these product line shifts . Overall , we are pleased with the growth at PKI and progress on our strategic investments during the quarter .

Sameer Ralhan: Overall, we are pleased with the growth at PQI and progress on our strategic investments during the quarter. Turning now to our balance sheet and cash flow, in the third quarter we generated $270 million of cash from operations. We invested $12 million in capital expenditures. As a result, free cash flow was $258 million in the quarter, or 108% conversion of net income. At the end of the third quarter, gross debt was about $2.7 billion and cash on hand was nearly $1.8 billion. Net debt was just under $900 million, resulting in net leverage of 0.7 times. Our financial position is strong and provides us flexibility in how we deploy capital to create long-term shareholder value. We will remain prudent and disciplined in our approach to capital allocation. Over the long term, our goal is to continue to create shareholder value with a bias towards M&A.

Speaker #7: Turning now to our balance sheet and cash flow in the third quarter, we generated $270 million of cash from operations. We invested $12 million in capital expenditures.

Speaker #7: As a result , free cash flow was $258 million in the quarter , or 108% conversion of net income at the end of the third quarter .

Speaker #7: Gross debt was about $2.7 billion , and cash on hand was nearly $1.8 billion . Net debt was just under $900 million , resulting in net leverage of 0.7 times our financial position is strong and provides us the flexibility in how we deploy capital to create long term shareholder value .

Speaker #7: We will remain prudent and disciplined in our approach to capital allocation over the long term. Our goal is to continue to create shareholder value with a bias towards M&A.

Speaker #7: As Jennifer mentioned , we have an attractive pipeline of opportunities in both water quality and PKI . Looking now at our guidance for the fourth quarter and full year , our underlying assumptions have been updated to reflect our current view of demand in our end markets .

Sameer Ralhan: As Jennifer Honeycutt mentioned, we have an attractive pipeline of opportunities in both Water Quality and PQI. Looking now at our guidance for the fourth quarter and full year, our underlying assumptions have been updated to reflect our current view of demand in our end markets and our most recent assessment of trade policies and currency rates as of October 3rd. Beginning with sales for the fourth quarter, we are targeting total sales growth in the mid-single digits year over year. On a sequential basis, we expect total sales to be roughly in line with the third quarter, even with fewer shipping days. This assumes a year over year currency benefit of approximately 3% and core sales growth in the low single digits. Core sales growth is expected to be negatively impacted by 3 fewer shipping days versus the prior year period.

Speaker #7: Our most recent assessment of trade policies and currency rates as of October 3rd , beginning with sales for the fourth quarter , we are targeting total sales growth in the mid-single digits year over year .

Speaker #7: On a sequential basis , we expect total sales to be roughly in line with the third quarter . Even with fewer shipping days .

Speaker #7: This assumes a year over year currency benefit of approximately 3% and core sales growth in the low single digits . Core sales growth is expected to be negatively impacted by three fewer shipping days versus the prior year period , three fewer shipping days represent a little more than 2.5% impact on Q4 core sales , versus the prior year period for the full year 2025 , our assumption for core sales growth remains mid-single digits for the total company .

Sameer Ralhan: Three fewer shipping days represent a little more than 2.5% impact on Q4 core sales versus the prior year period. For the full year 2025, our assumption for core sales growth remains mid-single digits. For the total company, this assumes approximately 5% core sales growth in each segment for the full year. Favorable currency rates are expected to benefit full year sales growth by a little more than 1%, and the impact from acquisitions and divestitures is expected to be neutral on the top line for the full year. Looking at adjusted operating profit margin in the fourth quarter, we expect to deliver approximately 30 basis points of margin expansion versus the prior year period, and for the full year we expect adjusted operating profit margin in the range of flat to up 25 basis points year over year.

Speaker #7: This assumes approximately 5% core sales growth in each segment . For the full year . Favorable currency rates are expected to benefit full year sales growth by a little more than 1% , and the impact from acquisitions and divestitures is expected to be neutral on the top line .

Speaker #7: For the full year . Looking at adjusted operating profit margin in the fourth quarter , we expect to deliver approximately 30 basis points of margin expansion versus the prior year period and for the full year , we expect adjusted operating profit margin in the range of flat to up 25 basis points year over year for adjusted earnings per share .

Sameer Ralhan: For adjusted earnings per share, our fourth quarter guidance is $0.95 to $0.98 per share, and we raised our full year adjusted EPS guidance to $3.82 per share to $3.85 per share. We are now expecting adjusted EPS to grow high single digits for the full year. Finishing up our guidance update with free cash flow conversion, based on our strong conversion through the first nine months, we raised our guidance for free cash flow conversion to approximately 100% of GAAP net income. That concludes my prepared remarks. At this point, I'll turn the call over to Jennifer for closing remarks.

Speaker #7: Our fourth quarter guidance is 95 to $0.98 per share , and we raised our full year adjusted EPs guidance to $3.82 per share to $3.85 per share .

Speaker #7: We are now expecting adjusted EPs to grow high . Single digits for the full year . Finishing up our guidance update with free cash flow conversion based on our strong conversion through the first nine months , we raised our guidance for free cash flow conversion to approximately 100% of GAAP net income .

Speaker #7: That concludes my prepared remarks . At this point , I'll turn the call over to Jennifer for closing remarks .

Speaker #6: Thanks , Samir . In summary , we continue to demonstrate Veralto ability to successfully navigate dynamic macroeconomic environments with confidence . Our high performance culture , grounded in vezt , has helped to deliver mid-single digit core sales growth and double digit growth in adjusted earnings per share through the first nine months of 2025 .

Jennifer Honeycutt: Thanks, Sameer. In summary, we continue to demonstrate Veralto's ability to successfully navigate dynamic macroeconomic environments with confidence. Our high performance culture grounded in VES has helped to deliver mid single digit core sales growth and double digit growth in adjusted EPS through the first nine months of 2025. We expect to deliver another quarter of year over year growth in the fourth quarter. Given the essential need for our technology solutions, our durable business model, and the secular growth drivers across our end markets, our financial position continued to strengthen in the third quarter and we are prudently evaluating opportunities to create shareholder value within our disciplined capital allocation framework. We are excited about the bright future ahead for Veralto, its associates, 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.

Speaker #6: We expect to deliver another quarter of year over year growth in the fourth quarter , given the essential need for our technology solutions , our durable business model and the secular growth drivers across our end markets , our financial position continued to strengthen in the third quarter , and we are prudently evaluating opportunities to create shareholder value within our disciplined capital allocation framework .

Speaker #6: We are excited about the bright future ahead for Veralto . Its associates 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 .

Speaker #6: That concludes our prepared remarks . And at this time , we are happy to take your questions .

Jennifer Honeycutt: That concludes our prepared remarks and at this time we are happy to take your questions.

Speaker #4: Thank you , Miss Honeycutt . Ladies and gentlemen , at this time , if you would like to ask a question , please press Star One on your telephone .

Operator: Thank you, Ms. Honeycutt. Ladies and gentlemen, at this time, if you would like to ask a question, please press Star one on your telephone. You can always remove yourself from the queue by pressing Star two. We'll go first this morning to Dean Dray of RBC Capital Markets.

Speaker #4: You can always remove yourself from the queue by pressing star two . We'll go first this morning to Deane Dray of RBC Capital Markets .

Speaker #8: Thank you . Good morning everyone .

Sameer Ralhan: Thank you. Good morning, everyone.

Speaker #6: Good morning Dean .

Jennifer Honeycutt: Good morning, Dean.

Speaker #8: Hey, nice job on margins and free cash flow. Really good to see that quality coming through. Just start off with a couple of nuanced questions regarding the macro.

Sameer Ralhan: Hey, nice job on margins and free cash flow. Really good to see that quality coming through. Just start off with a couple kind of nuanced questions regarding the macro. Can you clarify about tariffs? You know you were, there was a bit of a mismatch on the last quarter on the timing of pricing. Do you feel like you've caught up there and then anything about the government shutdown that you may be seeing on the Water Quality side? Any ripple effects? Yeah. Dean, if you're going to look at, on the pricing side at this point, the teams have taken really good actions from a strategic perspective, really working with the customers on the pricing front, and you started seeing that flowing through the numbers, PQI a little bit more than Water Quality.

Speaker #8: Can you clarify about tariffs . You know you were there was a bit of a mismatch on the last quarter on the timing of pricing .

Speaker #8: So do you feel like you've caught up there and then anything about the government shutdown that you may be seeing on the water quality side , any ripple effects ?

Speaker #8: Thanks .

Speaker #7: Yeah . Dean is going to look at the pricing side at this point . The teams have taken a really good actions from a strategic perspective , really working with the customers .

Speaker #7: On the pricing front . And you've started seeing that flowing through the numbers . You know , a little bit more than water quality .

Speaker #7: So, at this point, I think on the pricing front, we feel like we're in a good place to help offset the tariff.

Sameer Ralhan: At this point, I think on the pricing front we feel like we're in a good place to help offset the tariff, any kind of headwinds. Pricing is one of the elements. As you know, we've been working on the supply chain production changes as well to help offset any of the impact on the tariffs. At this point, in a pretty good place. The environment is volatile and we're staying on top.

Speaker #7: Any kind of headwinds . But again , pricing is one of the elements . As you know , we've been working on the supply chain production changes as well to help offset any of the impact of tariffs .

Speaker #7: At this point in a in a pretty good place . But the you know , the environment is volatile and we're staying on top .

Speaker #6: Yeah . And I would say relative to your second question , Dean , you know , we watched the the government environment closely at this point .

Jennifer Honeycutt: Yeah. I would say relative to your second question, Dean, we watch the government environment closely. At this point we've really not seen any material impact. It's steady as she goes. We're running the business, continue to have critical needs for clean water, safe food, and trusted essential goods.

Speaker #6: We've really not seen any material impact, so it's steady as she goes. We're running the business and continue to have critical needs for clean water, safe food, and essential goods.

Speaker #8: Good to hear . And then just a follow up on the regions . Any specific comments about China pace of demand ? There's been some of your peers have had some softness .

Sameer Ralhan: Good to hear. Just a follow up on the regions. Any specific comments about China pace of demand? Some of your peers have had some softness there.

Speaker #8: There .

Speaker #6: Yeah . I mean China is effectively performing as we expected it to . You know , we we had a an easier comp here relative in Q3 .

Jennifer Honeycutt: Yeah, I mean China is effectively performing as we expected it to. We had an easier comp here relative in Q3, but sequentially, if you look Q2, Q3, we're not really seeing any meaningful changes to our total sales in China. I would say our team continues to do a great job of executing well in what has really become a more mature market.

Speaker #6: But sequentially if you look Q2 , Q3 , we're not really seeing any meaningful changes to our total sales in China . And I would say , you know , our team continues to do a great job of executing well in what is really become a more mature market .

Speaker #8: Got it. I appreciate it. Thank you.

Sameer Ralhan: Got it. Appreciate it. Thank you. Thanks, Dean.

Speaker #7: Thanks , Dean .

Speaker #4: Thank you . We go next now to Andy Kaplowitz at Citi .

Operator: Thank you. We go next now to Andy Kapowitz at Citi.

Speaker #9: Hey good morning everyone .

Sameer Ralhan: Hey, good morning everyone.

Speaker #6: Good morning Andy .

Jennifer Honeycutt: Good morning, Andy.

Speaker #9: So Jennifer you've had many quarters in a row of strengthening your industrial focused water quality business . So could you talk about the durability of that strength into 26 , especially given your comments regarding data center related growth ?

Sameer Ralhan: Jennifer, you've had many quarters in a row of strengthening your industrial focused Water Quality business. Could you talk about the durability of that strength into 2026, especially given your comments regarding data center related growth? Can you size that particular business at this point and its impacts that you expect moving forward?

Speaker #9: Can you size that particular business at this point and its impacts that you expect moving forward ?

Speaker #6: Yeah , data centers for us continue to remain a strategic priority . We're seeing strong double digit growth here from sales to both existing customers and new builds , mostly driven by the big five tech companies .

Jennifer Honeycutt: Yeah, data centers for us continue to remain a strategic priority. We're seeing strong double-digit growth here from sales to both existing customers and new builds, mostly driven by the big five tech companies. As you know, data centers tend to consume large amounts of water, and operators are looking to us to maintain uptime while reducing both water and power consumption. Our involvement really starts as early as pre-construction with consulting services that we provide to maximize energy efficiency and water conservation, including the design of the water treatment train. There is a great opportunity here in data centers themselves. If you zoom out, data centers are just part of the AI value chain water treatment that we provide to the market. These technologies play a critical role in chip manufacturing, power generation, mining, and other critical raw materials needed to build and operate these data centers.

Speaker #6: As you know , data centers tend to consume large amounts of water , and operators are looking to us to maintain uptime while reducing both water and power consumption .

Speaker #6: And so our involvement really starts as early as pre-construction with consulting services that we provide to maximize energy efficiency and water conservation , including the design of the water treatment train .

Speaker #6: So great opportunity here in data centers themselves . But I would also say if you zoom out data centers are just part of the AI value chain .

Speaker #6: Water treatment that we provide to the market . These technologies play a critical role in chip manufacturing , power generation , mining and other critical raw materials needed to build and operate these data centers .

Speaker #6: So we play in a broad space here in terms of the entire value chain leading up to data centers , I would say relative to , to , to the opportunity , very big opportunity for us .

Jennifer Honeycutt: We play in a broad space here in terms of the entire value chain leading up to data centers. I would say relative to the opportunity, very big opportunity for us. We'll remain strategically focused on it. It is a smaller portion of our business, but it's got substantial runway for growth going forward.

Speaker #6: We'll remain strategically focused on it. It is a smaller portion of our business, but it's got substantial runway for growth going forward.

Speaker #9: It's helpful . And then , Samir , you lowered the 25 margin guidance slightly . Was that all PKI tariff related pass through or was it was it the incremental investments you're making when you look out a bit into 26 , would you expect to resume more normal incrementals at least you know well into the 30s , as per your algorithm ?

Sameer Ralhan: That's helpful. Sameer, you lowered the 25 margin guidance slightly. Was that all PQI tariff-related pass through or was it the incremental investments you're making? When you look out a bit into 26, would you expect to resume more normal incrementals, at least well into the 30% as per your algorithm? Yes. Andy, as you look at the full year margin guide, it does reflect the first nine months of the performance and what we expect for Q4. You're absolutely right. As we look at Q4 at this point, the tariff stuff should be lapping, but there's a little bit of a math impact just from the price and cost side given we are offsetting the dollar impact. As you know, in Q4 we typically tend to make some investments as we drive the efficiency set up for the next year.

Speaker #7: Yeah , Andy , as you're going to look at the full , full year margin guide , it does reflect the first nine months of the performance .

Speaker #7: And what we expect for for Q4 . You're absolutely right . We're going to look at Q4 at this point . The tariff stuff .

Speaker #7: You know , should be lapping , but there's a little bit of a math impact just from the price and cost side , given we're offsetting the dollar impact .

Speaker #7: as you And know , in Q4 , we typically tend to make some investments as we kind of drive the efficiency set up for the next year .

Speaker #7: So some of that timing will hit us in in Q4 as well . So that's really kind of driving . But most of that , Andy , as you're absolutely right , will pull from the PKI side than on the water side .

Sameer Ralhan: Some of that timing will hit us in Q4 as well. That's really driving it. Most of that, Andy, as you're absolutely right, will pro from the PQI side than on the Water side. Water has had a great year with a great fall through and we expect that to continue. As you look at the margin side for the full year from an EPS perspective, Andy, as you look down the P&L, we feel really good. There's a little higher assumption on the sales volume, interest expense, and some of the below the line tax rate should be a benefit to us as well. That's why we felt confident despite the margin raising the EPS guide. Thank you guys. Thanks Andy.

Speaker #7: Water has a great year with a great fall through . And we expect that to continue . But as going to look at the margin side right for the full year from a EPs perspective , Andy , as we're going to look down the PNL , really good .

Speaker #7: There's a little higher assumption we feel on the sales volume , interest expense and some of the below the line tax rate should be benefit to us as well .

Speaker #7: So that's why we felt confident despite the margin raising the EPs guide .

Speaker #9: Thank you guys .

Speaker #7: Thanks , Andy .

Speaker #4: Thank you . We go next . Now to Andrew Buscaglia at BNP Paribas .

Operator: Thank you. We go next now to Andrew Buscaglia at BNP Paribas.

Speaker #10: Hey good morning everyone .

Sameer Ralhan: Hey, good morning everyone.

Speaker #6: Hey good morning .

Jennifer Honeycutt: Hey, good morning.

Speaker #10: I just wanted to check on , you know , some of your trends were really strong in the quarter , especially in North America , especially within North America .

Sameer Ralhan: I just wanted to check on, you know, that some of your trends were really strong in the quarter, especially in North America, especially PQI within North America. I was surprised to see that. How much of this would you attribute to pull forward? Clearly, I mean there's a lot of noise into Q4, but what's your sense on sequential trends in PQI if you're seeing any impact one way or the other from CPG markets?

Speaker #10: I was surprised to see that . How much of this would you attribute to pull forward ? And clearly , I mean , there's a lot of noise into Q4 , but what's your sense on sequential trends in PKI ?

Speaker #10: If you're seeing any impact one way or the other from CPG markets ?

Speaker #6: Yeah , we really don't see any meaningful pull forward . We've had exceptionally strong commercial execution in our PKI businesses in North America , particularly from Videojet and , you know , video jets performance is has not only been on the back of strong commercial execution , but also on the back of the products launched in the last year .

Jennifer Honeycutt: Yeah, we really don't see any meaningful pull forward. We've had exceptionally strong commercial execution in our PQI businesses in North America, particularly from Videojet. You know, Videojet's performance has not only been on the back of strong commercial execution, but also on the back of the products launched in the last year. We're seeing strong CIJ and laser sales as well as sales into secondary packaging. Customers are needing increased case-level traceability tied to the Food Safety Act that's driving some of that strength. We're just seeing higher share of wallet with existing customer base really driven by new technologies and go-to-market strategies on their part. It's a great job by our commercial teams executing on their strategic price initiatives as well.

Speaker #6: So we're seeing strong CI and laser sales , as well as sales into secondary packaging . So , you know , customers are needing increased case level traceability tied to the food Safety Act .

Speaker #6: That's driving some of that strength . And we're just seeing higher share of wallet with existing customer base , really driven by new technologies and go to market strategies on their part .

Speaker #6: So it's a great job by our commercial teams executing on their strategic initiatives as well .

Speaker #10: Yeah , okay . Okay . Great . And in water quality margins there have exceeded my expectations at least this year . And it seems like past investments are paying off .

Sameer Ralhan: Yeah, okay. Okay, great. In Water Quality, margins there have exceeded my expectations at least this year and it seems like past investments are paying off. I'm wondering, this kind of was the case last year in PQI, but I'm wondering going forward, do we need to see more increased investments in either segment or is this sort of a sustainable run rate for both segments in terms of margins into 2026. Yes. Andrew, let's start with the Water Quality comment first. On the Water Quality side, you're absolutely right. Great execution by the team as we think on the margin side, really very disciplined VES-driven execution and you're seeing the benefit of that on the call through side. PQI this year had a little bit of heavy lift as you think about some of the tariff-related moves we had to make. You're seeing that.

Speaker #10: I'm wondering this kind of was the case last year in PKI . But I'm wondering going forward do we need do we need to see more increased investments in either segment , or is this sort of a sustainable run rate for both segments in terms of margins into 2026 ?

Speaker #7: Yeah , Andrew , let's start with water quality . Comment first . On the water quality side , you're absolutely right . A great execution by the team as we think on the margin side , really very disciplined , very driven execution .

Sameer Ralhan: As you move forward, the way to think about the PQI margin is the incremental margins as you move forward should be driving that 30 to 35% kind of a fall through as we laid out in the long-term value creation algorithm. That kind of translates into 25 to 50 bps of OpEx. Right. We expect that now there may be some one-off items that we had this year that should be offset next year. That should benefit. We'll take all the puts and takes and in February talk about the 2026 guidance. Thanks, Sameer. Thanks, Andrew.

Operator: We'll go next now to John McNulty with BMO Capital Markets.

Sameer Ralhan: Good morning. Thanks for taking my question. Maybe the first one just in Water. It seems like on the pricing side you've kind of been gradually creeping higher, I guess. Should we continue to see that pricing accelerate as we go into the back of like into Q4 and into the early part of 2026, and also can you give us a little bit of color as to if there's much variation between the subdivisions in Water?

Jennifer Honeycutt: John, just to clarify, you're inquiring about the pricing differences in the subdivisions in Water Quality.

Sameer Ralhan: That's right, that's right.

Jennifer Honeycutt: Okay. We don't really delineate there at that level, but what we will say is we've had strong price execution on the back of covering for some anticipated tariff activity. Both price and volume on water have been equally balanced, which is pretty fantastic in the environment that we're in. Pricing going forward is going to look a lot like our frame that we have talked about in prior calls relative to 100 to 200 basis points contribution in the growth number coming from price. Having said that, you know, we believe we're going to be in a strong position here to deliver price in the fourth quarter.

Sameer Ralhan: Okay, fair enough. Maybe just with regard to your cash flow. You've, you did incredibly well in Q3. Looks like a solid outlook for Q4. The cash is definitely starting to build on the balance sheet. Your leverage is pretty, is pretty anemic at this point, I guess. Do you see opportunities that you think in the next six to nine months you may be able to actually get across the finish line when it comes to M&A? I know these are hard to time, but your capital efficiency seems like it's starting to maybe drift a little bit lower just given how successful you've been with the cash you've been building up. Maybe a little bit of color on that. Yeah, thanks John, for that. First, on the cash side and the free cash flow side, really proud of all the execution of the teams across our businesses.

Sameer Ralhan: As you kind of think about the quality of the earnings, working capital management and that kind of flowing into the free cash flow. Really great execution is really driving the cash generation and ultimately, as you said, cash is accumulating nicely on the balance sheet. Our intention is to deploy that capital to create long term value. As you heard from us in the past, local pipelines are pretty active. We are very actively looking at a number of opportunities, but we're going to stay in discipline. You know us, you're going to stay true to our framework of market company valuation. More to come. As we're going to think about our cash, we'll look at all the opportunities to deploy it to create value for the shareholders. Got it. Thanks very much for the color. Thanks, John.

Operator: Thank you. We'll go next now to Will Gripen at Barclays.

Sameer Ralhan: Great. Good morning. Thanks for the time here. Just one quick one for me, another one on M&A. I know it's still early, but would be curious if you have any updates on your recent investment in Emerald Ventures and maybe how some of those early discussions or opportunities being presented to you are looking.

Jennifer Honeycutt: Yeah, we remain excited about our partnership with Emerald Ventures, and you know, they are vetting a number of technologies in partnership with us that address treatment, monitoring, and emerging contaminants. It's steady as she goes here. We continue to work with them on vetting and looking at opportunities there, and we'll let you know when we have something to report.

Uh, just 1 quick 1 for me another 1 on m&a. Um, I know it's still early but uh, would be curious if you have any updates on uh, your recent investment in Emerald Ventures and maybe have some of those early discussions or or opportunities um being presented to you uh are looking

yeah, we remain excited about our partnership with emerald and, um, you know, they are, uh, vetting a number of Technologies in partnership with us that address treatment monitoring and emerging contaminants

Um it's uh, it's Steady As She Goes here. We continue to uh to uh to work with them on on vetting and and looking at opportunities there, um, and uh, we'll let you know when we have something uh, to report.

Sameer Ralhan: Appreciate it. Thanks, everybody.

Appreciate it. Thanks everybody.

Operator: Thank you. We'll go next now to Nathan Jones with Stifel.

Sameer Ralhan: Good morning, everyone.

Thank you. We'll go next now to Nathan Jones with Stifel.

Jennifer Honeycutt: Good morning, Nathan.

Good morning, everyone.

Sameer Ralhan: I guess first question, Jennifer, six months ago when tariffs had just been announced, you were pretty excited about the potential for Veralto to use the disruption from tariffs to gain market share. I'm wondering if six months later you can maybe talk about any opportunities that the team have taken advantage of, and you know how that's played out relative to expectations over the last six months.

Good morning, Nathan.

Jennifer 6 months ago, when tariffs had just been announced. You were pretty excited about the potential for veralta to use the disruption uh from tariffs to gain market share. I'm wondering if 6 months later, you can maybe talk about any opportunities that the teens have taken advantage of. Um and you know how that's played out relative to expectations over the last 6 months.

Jennifer Honeycutt: Yeah, I think we were fortunate enough to really get ahead of this relative to our three-pronged strategy of strategic pricing, supply chain and procurement changes, and product line shifts. The product line shifts that we've made are really no-regret moves. Right. Moving product lines closer where customers are offsetting tariff impact is something that we have been nimble in executing. VES has helped support do that. Certainly, if you look at price-volume balance here, it would suggest on the volume side that we're holding up well with regard to being able to continue to penetrate markets regionally where localization provides good strategic competitive advantage for us. As you well know, we've got a warehouse now here in North America for our Trojan business that's headquartered out of Canada.

Yeah, I think we're fortunate enough to really get ahead of this relative to our three-pronged strategy of strategic pricing, supply chain and procurement changes, and product line shifts.

Um, the product line shifts that we've made are really no-regret moves, right? So, moving product lines closer to where customers are, uh, offsetting tariff impact, uh, is something that we have been nimble in executing. Vests have helped support doing that.

Um, you know, certainly if you look at Price volume balance, here it would suggest.

On the volume side, we are holding up well with regard to being able to continue to penetrate markets regionally.

Jennifer Honeycutt: They continue to have great opportunities here in the U.S., and all of these initiatives that we've taken here have gone the way we thought them to, and we're seeing good opportunity closer to our customers and serve them locally.

Um, where, uh, localization provides, um, good strategic competitive advantage for us. So, um, as you well know, we, uh, we've got a warehouse now here in North America for our Trojan business. It's headquartered out of Canada. They continue to have great, uh, opportunities here, uh, in the US. And so, all of these sort of initiatives that we've taken here have gone the way we thought them to, and we're seeing good, good opportunity to be closer to our customers and serve them locally.

Sameer Ralhan: Thanks for that. I guess my follow up is going to be PQI and North America. I mean it's 3.3% of price in PQI. I would assume that's obviously skewed to North America given the tariff environment. There's pretty heavy pricing in PQI there. Maybe you could just talk a little bit more about any opportunities there are for non price mitigation actions in PQI. I guess the tariff impact was a little bit higher than I expected. Does that present opportunity to maybe mitigate some of the tariff impacts, keep some of the price, and have that drop through to margins as we move into 2026. Thanks.

Thanks to that. I guess my follow-up is going to be pqi and North America. Um, I mean it's 3.3% of price and Peak you are. I'm assuming that's obviously skewed to North America given the Tariff environment. So there's a, you know, pretty heavy pricing in pqi there.

Jennifer Honeycutt: Yeah, I would say relative to PQI in North America, we are seeing great balance between price and volume within our marking and coding segment. That is largely on the back of Videojet products launched last year in terms of new CIJ and laser products, including secondary packaging products that actually tie to the Food Safety Act that I spoke about earlier. We're confident in terms of the ongoing sort of demand and stability of these products. I think what we're seeing here in North America is those products that were newly launched last year are really starting to gain traction. Great execution by our commercial teams, and we will continue to monitor the environment as we go forward.

Um, maybe you could just talk a little bit more about any opportunities that are available for non-price mitigation actions in PQI. I guess the power of impact was a little bit higher than I expected, and does that present an opportunity to maybe mitigate some of the tariff impacts, keep some of the price, and have that drop through to margins as we move into 2026? Thanks.

Yeah, I would say relative to pqi in North America, we are seeing great balance between, uh, price and volume within our marketing and coding segment. Um, and that is, you know, largely on the back of, uh, video jet products launched last year, uh, in terms of, uh, CI new CI, uh, and Laser products including secondary packaging products that that actually tie to the food safety act that I spoke about earlier.

Um, so we're

We're, uh, we're, we're confident in terms of the ongoing, uh, sort of demand and stability of these these products. And I think what we're seeing here in North America, is those products that were newly launched last year are really starting to gain traction, so, great execution, by our commercial teams and, um, we will, uh, we will continue to monitor the environment as we go forward.

Sameer Ralhan: Thanks for taking the questions. Thanks, Nathan.

Thank you for taking the questions.

Operator: We'll go next now to Jacob Levinson at Melius Research.

Thanks n.

We'll go next. Now, to Jacob levenson at Milius research.

[Analyst]: Good morning, everyone.

Jennifer Honeycutt: Morning, Jake.

Uh, good morning, everyone.

[Analyst]: Just tacking on Andy's question earlier on the data center side of things, is there any way you could frame for us the content, intensity, or the opportunity that you would have at ChemTreat or Trojan Technologies relative to some of those other types of non-res facilities that they operate in? I'm just trying to get a sense of how a data center would compare to, say, a power plant or a chemical plant. I'm sure they all use a lot of water, but it's not entirely clear which ones would be more intensive for what you sell.

Morning. Jake.

Uh, just attacking on Andy's. Question, earlier on, on the data center side of things, is there any way you could frame for us the content intensity or the opportunity that you would have at chem tree or Trojan relative to to some of those other types of non-res facilities that they operate in and just trying to get a sense of

How a data center would compare to say, uh, you know, a power plant or a chemical plant or uh, I'm sure they all use a lot of water but it's it's not entirely clear which ones would be more intensive for for what you sell.

Jennifer Honeycutt: Yeah, thanks for the question, Jake. I think the way to think about this is our commercial teams are really skilled at pivoting where the opportunities are. In any given quarter or year, we are seeing double-digit growth in data centers and in applications closely tied to data centers. We don't publicly disclose, you know, sales by vertical market, but we can say that we feel very good about our current position and our opportunity to continue to grow double digits in these areas going forward.

Yeah, thanks for the question. Jake. I think the way to think about this is

our commercial teams.

Are really skilled at pivoting where the opportunities are in any given quarter, or, or or year. Um, we are seeing double digit growth in data centers and in applications closely tied to data centers.

um,

Sameer Ralhan: Yeah, Jake, the other way to think about it also is as you kind of think about the applications within the data center, there are multiple touch points where our services can get into the data center. Some of the key issues are around reducing the water and power consumption both. We play a part in both sides of the equation. The other part of the data centers is to really think about the uptime. Maintaining uptime is critical in the data center infrastructure. We all kind of learned based on some of the news that we've seen in the last couple of weeks. As you can think about minimizing corrosion, scaling, biological growth, there are tons of applications you are going to think about and expertise that is needed in making sure the data centers maintain their uptime.

To continue to to grow, uh, double digits in these areas going forward.

Sameer Ralhan: Our ChemTreat team plays a phenomenal role in helping our customers achieve that.

Yeah, I take the other way to think about also is that you're going to think about the applications within the data center. Uh there are multiple touch points where our uh Services kind of uh get into think about the data center. Some of the key issues are around, reducing the water and power consumption both. Uh, so we play a part in both sides of the equation and also the other part of the data centers is to really think about the uptime, right? Maintaining uptime is critical in the data center infrastructure. We all kind of learned based on some of the news that we've seen in the last couple of weeks. Um, so as you're going to think about Mr, minimizing corrosion scaling, biological growth, there are tons of applications that you're going to think about and expertise that is needed in making sure the data centers maintain their uptime, and our chemistry team plays the phenomenal role in in helping our customers, achieve that.

[Analyst]: Okay, that's helpful. Just one quick one. In TraceGains, it sounds like that deal has been working out nicely for you. Maybe you can just help us understand the puts and takes on the deal as we come up. I think you've had it now for almost a year now. I think part of the thesis at least was that there was an opportunity maybe to pull in some of your, you know, your traditional products into that smaller mid size CPG segments. Any color there would be helpful.

Okay, that's helpful. And just uh, 1 quick 1 in Trace scans, it sounds like that deal has been working out nicely for you, uh, maybe you can just help us understand and put some takes uh, on the deal as we come up. I think you've had it now for for, almost a year now. And I think part of the, the thesis is that there was an opportunity maybe to pull in some of your

Um you know, your traditional products into that smaller, mid-size, cpg, segments, uh, any color there would be helpful.

Jennifer Honeycutt: Yeah, we are incredibly happy with TraceGains' performance and the integration here has. They are now at their first year anniversary and their growth rate greater than 20%, which has been in line with expectations, will go into the core growth calculus going forward in terms of opportunity there. Both TraceGains and Esko have been working together to integrate the digital backbone here that will create a single source of truth for all stakeholders in both the packaging and the product development workflow. All of that is on track. We do believe that the CPG market is early in its digitization journey, but there continue to be strong regulatory and consumer safety drivers there, making an attractive place for us. TraceGains is doing great, strong grower for us on track. We continue to invest in building out that business, and they are growth accretive to the profile.

Yeah, we are uh, incredibly happy with uh, Trace games performance and the integration here has gone. Well, they are now at their first year anniversary and so um, their growth rate greater than 20% Which has been in line with with expectations we'll go into the core growth calculus going forward.

In terms of of of opportunity there, um, both Trace gains and Esco have been working together to, uh, to integrate, uh, the digital backbone here.

That will create a single source of Truth, for all stakeholders in both the packaging and the product development workflow. Um, so all of that is on track. We do believe that the cpg market is early in its digitization Journey. Um, but there continue to be strong Regulatory and consumer Safety Drivers there making an attractive place for us. So um, Trace gains is doing great, uh, strong grower for us on track. We continue to uh, to invest uh, in uh, building out that business, uh, but they are growth of creative to the profile.

[Analyst]: Appreciate the color. Thank you. I'll pass it on.

Sameer Ralhan: Thanks, Jake.

Appreciate the color. Thank you. I'll pass it on.

Operator: Thank you. We'll go next to Brian Lee with Goldman Sachs.

Thanks.

Thank you. We'll go next now to Brian Lee with Goldman Sachs.

Sameer Ralhan: Hey, good morning everyone. Thanks for taking my questions. Just a couple more follow ups. I know we've talked a lot about margins and PQI, but if we think about the cadence, it seems like we're two quarters into tariffs hitting margins in this segment. Do we maybe not really fully lap the tariff impact until Q2 of 2026? Is that kind of the way to think about when, from a modeling perspective, we start to see PQI margins start to expand again year on year? Maybe just to add onto that, when you think about pricing and PQI, I would assume it's the biggest lever. Are the increases enough to get back to kind of recapture the 100, 200 basis points of margin declines you've been seeing here to end the year, or do you need productivity gains, mix, other factors to help there as well?

Hey, good morning everyone. Thanks for uh, taking my questions, um, just a couple more follow-ups. I know we we've talked a lot about margins and bqi, um, but if if we think about the Cadence, you know, it seems like we're 2 quarters.

Sameer Ralhan: Just any sense on the puts and takes there. Thank you. Yeah, Brian, there are a lot of questions to unpack there. Let's go one by one. First, I think your instinct is right as we're going to think about when we start lapping up the impact from the tariff side. From all the actions perspective, you're going to start seeing in the second quarter, I think that's a good way to think about that impact. Overall, as you're going to think about the margin expansion, price is one of the impacts. We look at price versus the raw material cost, and we call it the PPV kind of that expansion all the time. That is definitely one of the factors as we're going to move into next year. Productivity is part of it, right?

Into tariffs hitting margins in this segment. So do do, we maybe not really fully lap? The Tariff impact until 2 Q of of 26? And is that, kind of the way to think about when, when from a modeling perspective, we start to see pqi margins, um, start to expand again year on year, then maybe just to add on to that. When, when you think about pricing in pqi is is, is that I mean I would assume it's the, the biggest lever but are the increases enough to get back to kind of recapture, the 100 200 basis points of margin of clients. You've been seeing here to end the year. Or do you need productivity gains mix? Other factors to help there as well. Just any sense on the puts it takes their. Thank you.

Yeah, Brian there. A lot of questions to run back there. So let's go one by one, right? Uh, first, I think, uh, your instinct is right as we're going to think about, uh, when we start lapping up, uh, the impact, uh, from the tariff side, uh, from the, uh, all the actions perspective, you're going to start seeing in the second quarter. I think that's a good way to, uh, to think about, uh, that impact. But overall, as you're going to think about the margin expansion. Look, prices is one of the impacts we look at. Price versus um,

Sameer Ralhan: As we're going to think about the volumes that are coming through, they should be falling through at 30% to 35% kind of a range. That itself should give us 25 to 50 bps kind of a margin expansion as you're going to start looking at things moving forward. There are some one-off things as we talked about, the tariffs and the actions and the costs that come with mitigating those. Some of those one-off things like that should be offsetting next year as well. Lots of moving parts, but we feel really good about where the business is, the new products that come in, the acceptance we're seeing from the customers, and the volume gain that you've seen. Really positive as we can think about our opportunity to expand the margins, to continue to expand the margins, I should say.

Sameer Ralhan: You're going to see us in February talking about that in more detail. Okay. I appreciate all the color. I'll pass it on. Thank you. Thanks, Brian.

Uh, in February, kind of talking about that in more detail.

Okay, I appreciate all the color. I want to pass it on. Thank you.

Operator: Thank you. We'll go next now to Sari Borodisky at Jefferies.

Thanks Brian.

Thank you. With that, I’ll turn it over to Cere Biscay at Jefferies.

Sameer Ralhan: Good morning. This is James on Firsterie. Thanks for taking questions. I wanted to look at some region for Water Quality. I think high-growth markets kind of underperform other regions over the past few quarters, but it outperformed this quarter. What are kind of key factors kind of driving growth in this regions, and how do you see this trajectory going forward for the next several quarters?

Uh, good morning. Uh, this is James on first area, uh, thanks for taking questions. So, I wanted to look at some reason, uh, for water quality. I I think high growth markets kind of underperform at the region so over the past few quarters but it outperformed this quarter. So what are kind of key factors kind of driving growth in this region? And how do you see this? Like trajectory like going forward for the next several quarters?

Jennifer Honeycutt: Yeah, I mean I think we've had good, strong growth really contributing from our high growth markets. Certainly China is no longer a drag here for us. First time in several quarters that we've seen growth from both of our segments there in China, and the team's doing a great job to execute commercially. We see continued strong growth here in Latin America, and I would say there's real upside in double digit growth that we're seeing also from India and the Middle East. India on the back of a rapidly growing middle class, lots of infrastructure development there and so on. India still is a relatively small part of our overall enterprise as a % of sales but rapidly growing. We've got a team on the ground there who's driving some great execution both for Water Quality and for PQI in the Middle East.

Yeah I mean I think we've uh we've had good uh strong growth really contributing from our high growth markets. Certainly uh you know China is uh no longer a drag here for us. Um, first time in several quarters that we've seen

Growth from both of our segments there in China. And the teams doing a great job to execute commercially.

We see continued uh strong growth here in in Latin America. And I would say, uh, there's real, um, you know, upside, uh, and double digit growth that we're seeing also from India and uh the Middle East, um, India on the back of of of uh, you know, a a rapid

The growing middle class, a lot of infrastructure development there, and so on. Uh, India still is a relatively small part of our overall enterprise.

As a percent of sales, but rapidly growing. And, um, we've got a team on the ground there, who's, who's driving some, some great execution, both for for water, quality, and for pqi,

Jennifer Honeycutt: Everyone knows that they have considerable challenges with water and energy utilization and so on and so forth. There's great opportunities there as they look to drive, recycle, reclaim water, as they focus on how to make the water that they do have last longer, recycle more of it and so on. We think the secular drivers here for our high growth markets are going to continue to remain strong. Certainly the focus that we've had on executing commercially in those target regions has gone well.

Sameer Ralhan: Got it. Great color and great to hear that. Moving on to recurring revenue, it kind of grew strongly like high single digit in the quarter. Can you discuss the drivers behind this growth and do you expect recurring revenue to continue to outpace equipment sales growth going forward?

Uh, in the Middle East. Uh, it's everyone knows that, that they have considerable challenges with, uh, with water, uh, and uh, energy utilization, and so on so forth. So there's there's great opportunities there as they look to, you know, Drive uh recycle reclaimed water, um you know, if they focus on uh how to make the water that they do have uh last longer recycle more of it and so on. So uh we think the secular drivers here for our high growth markets are going to continue to remain strong and certainly the focus that we've had on executing commercially in those Target regions. Uh, has gone. Well

Got it. Oh, great caller and great to hear that and kind of moving on to the recurring Revenue. Uh, it kind of grew strongly like high single digit, uh, in the quarter. Can you kind of discuss the drivers behind this growth and do you expect recurring Revenue to continue to outpace equipment, sales growth going forward.

Jennifer Honeycutt: Yeah, I mean I think you've got to look at the relationship between equipment and consumables or recurring revenue over the cycle. There are going to be modest changes in which is the faster grower. I would say in the main we've got strong growth from both right now. As you know, in the case of PQI on our coating and marking business, strong printer placements and the inks and solvents and consumables to go with them. Same thing that we see on the water side. Great instrument placement as well as the consumables that go with them. We've got a very sticky business, as you probably know, with regard to consumables and their relationship to the hardware that they support. I would also say we're starting to see some higher contributions from our software-based businesses.

Yeah. I mean, I think you've got to look at the relationship between equipment and, uh, consumables or recurring revenue over the cycle. Um, there are going to be, you know, modest changes in which is the faster grower. But I would say, in the main,

uh, We've Got Strong growth from both right now as, uh, you know, in the case of of, um,

Jennifer Honeycutt: If you look at our packaging and color side, where you're starting to see our SaaS and annual revenue start clocking in here with both TraceGains and Esko, those are starting to be meaningful contributors as well.

You know, pqi on our coding and marketing business, strong, uh, printer placements. Uh and the and the inks and solvents consumables to go with them. Same thing that we see on the water side rate, great instrument, uh, placement, uh, as well as, um, the consumables that that go with them. So we, we've got a very sticky business as you probably know with regard to, um, consumables, uh, and their relationship to the hardware that they support. I would also say we're starting to see some, some, uh, higher contributions from our software based businesses. So if you look at our packaging color side, where you start to see um, you know, our SAS

Sameer Ralhan: Yeah. The only one more point I would add is as you're going to think about our instrument business as well. I mean there's a finite life and that is a recurring business as well. As you're going to think about from the growth perspective, that's a nice add on as we're going to continue to move forward. Great. Thanks for taking questions. Thank you.

Um, you know, and and you'll Revenue start, uh, clocking in here with both, uh, Trace gains and Esco, those are starting to be meaningful contributors as well.

Yeah. Uh uh, the only 1 more point I would add is that you're going to think about our instrument business as well, right? I mean, there's a finite life and that is a reoccurring business as well. So as you're going to think about that growth, uh, from the growth perspective. So that's a nice add-on as we're going to continue to move forward.

Great, thanks for taking questions.

Operator: We'll go next now to Bobby Zolper of Raymond James.

Thank you.

We'll go next now to Bobby zulfer of Raymond James.

Sameer Ralhan: Thanks. Good morning. Were there any variances?

Thanks, good morning.

Operator: Good morning.

Sameer Ralhan: How are you? Were there any variances relative to your expectations in Water Quality pricing? No, I think, look, pricing in general has been along the expectations. Bobby, as you recall when the tariff environment started earlier this year, we said we are going to be very strategic with respect to our pricing versus one-off items being added tied to tariffs. We work very closely with our customers to make sure ultimately the goal here is to create value through a combination of price and volume, and that's kind of reflected as you think about the overall core growth both in the Water Quality and PQI side as well. We saw a little bit higher pricing in PQI versus Water, but ultimately it's a combination of both that creates long-term value, price and volume. Okay, understood, thank you.

Were there? Good morning. How are you? Um, were there any variances relative to your expectations in water quality pricing?

No, I think look pricing in general, has been along the expectations Bobby. Um, uh, as you recall when we the Tariff environment started earlier this year, we said we are going to be very strategic with respect to a pricing uh versus 1 of items being added tied to tariffs. So we worked very closely with the customers um uh to make sure ultimately the goal here is to create value through a combination of price and volume and that kind of reflected as you're going to think about the overall core growth, both in the water quality and pqi side as well. So, we saw a little bit higher pricing in pqi versus water, but ultimately it's a combination of both that creates long-term value, price, and volume.

Sameer Ralhan: What are your thoughts on the attractiveness of water metering as a platform?

Okay. Understood, thank you. Um, and what are your thoughts on the attractive? The attractiveness of water metering as a platform.

Jennifer Honeycutt: Yeah, I mean I would say, you know we look at the entire value stream of where water is used, analyzed, and consumed. You know metering is part of that value chain. We actually are in the metering business today with mag meters in our micrometer business. Smaller overall portion of our revenue profile, but we're actively in metering today.

yeah, I mean, I would say uh,

You know, we look at the entire value stream of where water is used, uh, analyzed and consumed. Um, you know, metering is, is part of that value chain. We actually are in the metering business today with with mag meters, uh, in our mccrometer business, smaller overall, uh portion of our, our Revenue profile. But we're, we're actively in metering today.

Sameer Ralhan: Understood, thank you.

Understood, thank you.

Operator: Thank you. We'll go next now to Andrew Krill of Deutsche Bank.

Thank you. We'll go next now, to Andrew Krill of Deutsche Bank.

Sameer Ralhan: Hi, thanks. Good morning everyone. I don't think this was explicitly touched on but for Q4 just was hoping you could give some segment level color on margin expectations. Maybe sequentially is the best way to do that. Also anything on core growth for the fourth quarter by segment. I think both around 5% for the full year but just wondering if any big differences for Q4. Thanks. Thanks Andrew. The two distinct questions over there. Let me start with the margins first. For the fourth quarter we expect the margins in aggregate to be around 30 basis points. Both segments should be driving the year over year expansion. On the margin side you're going to see that Water Quality just driven by continued disciplined execution. Frankly they've done a phenomenal job in the first nine months and we expect that to continue in Q4.

Hi, thanks. Good morning, everyone. Um, I don't think this was explicitly touched on but for 4 q. Just was hoping you could give some segment level color on margin expectations. Maybe sequentially is the best way to do that. Um, and also anything on core growth for the fourth quarter by segment. And I said, I think both around 5% for the full year, but just wondering, if any big difference is for 4 to. Thank you. Thanks.

Sameer Ralhan: PQI should start benefiting from the reduced tariff-related costs and some of the operating efficiencies that we've been driving. You're going to see that. PQI should be on a year over year basis up as well. In aggregate we should be in the 30 basis points kind of a zip code on the margin side. As far as the core growth, again, as you know we don't give guidance by segment but both segments are lined up pretty nicely and should be contributing to the growth that we laid out. Andrew, as you know we said core growth around low single digits. Just to highlight and reiterate what we said in the prepared remarks, we do have three less shipping days. If you perform off of that, the core growth across the portfolio is the solid mid single digits range. Great, very helpful.

Thanks Andrew. Um, uh, the 2 distinct questions over there. So let me start with the Martins first, um, uh, for the fourth quarter. We expect the margins in aggregate, uh, to be around 30 basis points. Um, both segments, uh, should be driving the year-over-year expansion in, in the, in the modern side, you're going to see that uh, water quality just driven by continued discipline execution. Uh frankly they've done a phenomenal job in the first 9 months and we expect that to continue in in Q4 pqi should start benefit, start benefiting from the reduced Terrace related costs and some of the operating efficiencies that we've been driving. So you're going to see that. But pqi should be on a year-over-year basis up as well. But in aggregate, uh, we should be in in the 30-day basis points. Kind of a zip code on the Martin side, as far as the core growth again, as you know, we don't give guidance by, um, by segment. But both segments are lined up pretty nicely and should be contributing to the growth that we've laid out.

An address. You know, we said core growth around low single digits, but, um, just to highlight and reiterate, what we said in the prepared remarks, um, we do have 3 less shipping days. So if you perform up for that, uh, the core growth, uh, cross, the portfolio is the solid mid single digit range.

Sameer Ralhan: Then going back to cash conversion, again, you know, impressed, very impressive in the quarter could you expand a little on you know like what went well and as we look forward, I think in the past, you know, you've said Q1 and Q3 often go below 100% conversion as you do your cash interest payments just is there a chance maybe like you can hold the line more consistently going forward or should we still be expecting a more normal outcome of below 100 in Q1 and Q3? Thanks. Yeah Andrew, as you've got to look at the free cash flow I think it makes sense to look at on an annual basis because interest payments are always going to be heavy in Q1 there's always a variable comp in Q1 payout as well and then Q3 we're going to have heavy interest payments as well.

okay, very helpful and then

Could you expand a little on? You know, like what went? Well, um, and as we look forward, I think in the past, you know, you've said long queue and 3 Q, often go below 100% conversion as you do your um, cash interest payments, just is there a chance? Maybe, like you can hold the line where consistently going forward or should we still be expecting? You know, a more normal outcome is below 100 in 1, q and 3 Q. Thanks.

Sameer Ralhan: That's just architecture of how our capital structure is. It's less about the underlying businesses when you look at Andrew, the cash flow generation is very consistent, very strong high quality earnings so I think that's the way to look at it. Great. Thank you. Thanks Andrew.

Yeah, Andrew. It's as you've got to look at the free cash flow. Um, I think it, it makes sense to look at it on, on annual basis because of um you know, interest payments are always going to be heavy and in q1, there's always a variable comp and q1 payout as well and then Q3 is going to have a heavy interest payments as well. That's just uh uh architecture of how the our capital structure is. Um, it's less about the business underlying businesses. When you look at uh, Andrew the cash flow generation is very consistent, very strong high-quality earnings. So um, so uh I I think that's the way to look at it.

Great. Thank you.

Operator: Thank you.

Sameer Ralhan: Thanks, Andrew. Thanks for everyone that joined us on the call today. This is Ryan Taylor. This concludes the Q&A portion of our call. We appreciate everybody's engagement and joining on the call today, and we look forward to talking to you next time. Thank you.

Thanks Andrew.

Thank you, thanks Andrew. And thanks for everyone. Uh, that joined us on the call today. This is Ryan Taylor, um, this uh, concludes the Q&A portion of our call, we appreciate everybody's engagement and joining on the call today.

Operator: Thank you, Mr. Taylor. Again, ladies and gentlemen, that will conclude Veralto Corporation's third quarter 2025 earnings conference call. Again, thanks so much for joining us, everyone, and we wish you all a great day. Goodbye.

And we look forward to talking to you next time. Thank you.

Thank you, Mr. Taylor again ladies and gentlemen that will conclude for alto corporation's. Third quarter 2025 earnings conference call. Again, thanks so much for joining us everyone and we wish you all a great day. Goodbye.

Sameer Ralhan: It.