Veralto VLTO · USD

SEGMENT INFORMATION The Company operates and reports its results in two separate business segments consisting of the Water Quality and Product Quality & Innovation segments. The Company’s Water Quality segment provides proprietary precision instrumentation, consumables, software, services and advanced water treatment technologies to help measure, analyze and treat the world’s water in municipal, industrial, commercial, residential, research and natural resource applications. The Company’s Product Quality & Innovation segment provides equipment, consumables, software and services for various marking and coding, traceability, printing, packaging design and quality management, packaging converting and color and appearance management applications for consumer packaged goods and industrial products.Resources are allocated and performance is assessed by the President & Chief Executive Officer (CEO), whom the Company has determined to be the Chief Operating Decision Maker (“CODM”). The CODM evaluates the performance of its segments and allocates resources to them based on operating profit. The CODM also compares actual results to expectations in assessing performance of the segments. Operating profit represents total revenues less operating expenses, excluding nonoperating income and expense and income taxes. Operating profit amounts in the Other segment consist of unallocated corporate costs and other costs not considered part of management’s evaluation of reportable segment operating performance. The identifiable assets by segment are those used in each segment’s operations. Intersegment amounts are not significant and are eliminated to arrive at combined totals.

REVENUE The following table presents the Company’s revenues disaggregated by geographical region and revenue type. Sales taxes and other usage-based taxes collected from customers are excluded from revenues. ($ in millions)Water QualityProduct Quality & InnovationTotalYear ended December 31, 2025:Geographical region:North America(a)$1,895 $744 $2,639 Western Europe598 643 1,241 Other developed markets65 53 118 High-growth markets(b)763 742 1,505 Total$3,321 $2,182 $5,503 Revenue type:Recurring$1,966 $1,393 $3,359 Nonrecurring1,355 789 2,144 Total$3,321 $2,182 $5,503 Year ended December 31, 2024:Geographical region:North America(a)$1,804 $689 $2,493 Western Europe546 603 1,149 Other developed markets65 50 115 High-growth markets(b)723 713 1,436 Total$3,138 $2,055 $5,193 Revenue type:Recurring$1,846 $1,303 $3,149 Nonrecurring1,292 752 2,044 Total$3,138 $2,055 $5,193 Year ended December 31, 2023:Geographical region:North America (a)$1,694 $659 $2,353 Western Europe536 584 1,120 Other developed markets65 53 118 High-growth markets (b)744 686 1,430 Total$3,039 $1,982 $5,021 Revenue type:Recurring$1,727 $1,227 $2,954 Nonrecurring1,312 755 2,067 Total$3,039 $1,982 $5,021 (a) The Company defines North America as the United States and Canada.(b) The Company defines high-growth markets as developing markets of the world which include Asia (with the exception of Japan, Australia and New Zealand), Latin America (including Mexico), the Middle East, Eastern Europe and Africa. The Company defines developed markets as all markets of the world that are not high-growth markets. The Company sells equipment to customers as well as consumables and services, some of which customers purchase on a recurring basis. Consumables sold for use with the equipment sold by the Company are typically critical to the use of the equipment and are typically used on a one-time or limited basis, requiring frequent replacement in the customer’s operating cycle. Examples of these consumables include chemistries for water testing instruments and cartridges for marking and coding equipment. Additionally, some of the Company’s consumables are used on a standalone basis, such as water treatment solutions. The Company separates its goods and services between those typically sold to a customer on a recurring basis and those typically sold to a customer on a nonrecurring basis. Recurring revenue includes revenue from consumables, services, spare parts and OTLs.

COMMITMENTS WarrantiesThe Company generally accrues estimated warranty costs at the time of sale. In general, manufactured products are warranted against defects in material and workmanship when properly used for their intended purpose, installed correctly and appropriately maintained. Warranty periods depend on the nature of the product and range from the date of such sale up to twenty years. The amount of the accrued warranty liability is determined based on historical information such as past experience, product failure rates or number of units repaired, estimated cost of material and labor and in certain instances estimated property damage. As of December 31, 2025 and 2024, the Company had accrued warranty liabilities of $30 million as of the end of both periods. Purchase ObligationsThe Company has entered into agreements to purchase goods or services that are enforceable and legally binding on the Company and that specify all significant terms, including fixed or minimum quantities to be purchased, fixed, minimum or variable price provisions and the approximate timing of the transaction. Purchase obligations exclude agreements that are cancellable at any time without penalty. As of December 31, 2025, the aggregate amount of the Company’s purchase obligations totaled approximately $166 million and the majority of these obligations are expected to be settled during 2026.

INCOME TAXES Prior to the Separation, the Company’s operating results were included in Danaher’s various consolidated U.S. federal and certain state income tax returns, as well as certain foreign returns. For periods prior to the Separation, the Company’s Consolidated and Combined Financial Statements reflect income tax expense and deferred tax balances as if the Company had filed tax returns on a standalone basis separate from Danaher. The separate return method applies the accounting guidance for income taxes to the standalone financial statements as if the Company was a separate taxpayer and a standalone enterprise for periods prior to the Separation. Earnings from operations before income taxes for the years ended December 31 were as follows:($ in millions)202520242023United States$697 $555 $484 Non-U.S.476 531 612 Total$1,173 $1,086 $1,096 The provision for income taxes for the years ended December 31 were as follows:($ in millions)202520242023Current:Federal U.S.$109 $116 $86 Non-U.S.136 184 169 State and local37 27 27 Deferred:Federal U.S.(34)(45)(19)Non-U.S.(12)(29)(4)State and local(3)— (2)Income tax provision$233 $253 $257 The Company has determined that certain foreign earnings that have been previously taxed in the United States are not considered permanently reinvested. The cost to repatriate these earnings is limited to potential foreign withholding and state income taxes and is not expected to be material and has not been provided for. The Company intends to permanently reinvest its foreign earnings that have not previously been subject to U.S. income tax. The potential tax implications of repatriating unremitted earnings are driven by the facts at the time of distribution and therefore not practicable to determine. We regularly review our plans for reinvestment or repatriation of unremitted foreign earnings and any future change in our plans would require us to provide for the net tax impacts of these amounts. The effective income tax rate from operations for the years ended December 31 varies from the U.S. statutory federal income tax rate as follows. Periods presented that are prior to the adoption of ASU 2023-09 have not been adjusted. 2025 ($ in millions, except % of pretax earnings)$ Value% of Pretax EarningsStatutory federal income tax rate$246 21.0 %Increase (decrease) in tax rate resulting from:State income taxes (net of Federal income tax benefit) (a)26 2.2 Foreign tax effects:Germany:Statutory rate difference14 1.2 Other9 0.

LEASES The Company has operating leases for office space, warehouses, distribution centers, research and development facilities, manufacturing locations and certain equipment, primarily automobiles. Many leases include one or more options to renew, some of which include options to extend the leases for up to 15 years, and some leases include options to terminate the leases within 30 days. In certain of the Company’s lease agreements, the rental payments are adjusted periodically to reflect actual charges incurred for common area maintenance, utilities, inflation and/or changes in other indexes. The Company’s finance leases were not material as of December 31, 2025 and 2024. Right-of-use (“ROU”) assets arising from finance leases are included in property, plant and equipment, net and the liabilities are included in accrued expenses and other liabilities and other long-term liabilities in the accompanying Consolidated Balance Sheets.The Consolidated and Combined Financial Statements include the following amounts related to operating leases where the Company is the lessee:($ in millions)202520242023Consolidated and Combined Statements of EarningsFixed operating lease expense (a)$59 $51 $43 Variable operating lease expense20 18 12 Total operating lease expense$79 $69 $55 Consolidated and Combined Statements of Cash FlowsCash paid for amounts included in the measurement of operating lease liabilities$57 $49 $41 ROU assets obtained in exchange for operating lease obligations52 47 52 Consolidated Balance SheetsDecember 31, 2025December 31, 2024Lease Assets and LiabilitiesClassificationOperating lease ROU assetsOther long-term assets$195 $159 Operating lease liabilities - currentAccrued expenses and other liabilities$48 $39 Operating lease liabilities - long-termOther long-term liabilities158 129 Total operating lease liabilities$206 $168 Weighted average remaining lease term7 years7 yearsWeighted average discount rate4.6 %4.6 %(a) Includes short-term leases and sublease income, both of which were immaterial.The following table presents the maturity of the Company’s operating lease liabilities as of December 31, 2025 ($ in millions):2026$55 202743 202832 202925 203019 Thereafter64 Total operating lease payments238 Less: imputed interest(32)Total operating lease liabilities$206 As of December 31, 2025, the Company had no additional significant operating or finance leases that had not yet commenced.

ACQUISITIONSThe Company continually evaluates potential acquisitions that either strategically fit with the Company’s existing portfolio or expand the Company’s portfolio into a new and attractive business area. The Company has completed a number of acquisitions that have been accounted for as purchases and have resulted in the recognition of goodwill in the Company’s Consolidated and Combined Financial Statements. This goodwill arises because the purchase prices for these businesses exceed the fair value of acquired identifiable net assets due to the purchase prices reflecting a number of factors including the future earnings and cash flow potential of these businesses, the multiple to earnings, cash flow and other factors at which similar businesses have been purchased by other acquirers, the competitive nature of the processes by which the Company acquired the businesses, the avoidance of the time and costs which would be required (and the associated risks that would be encountered) to enhance the Company’s existing product offerings to key target markets and enter into new and profitable businesses and the complementary strategic fit and resulting synergies these businesses bring to existing operations.The Company makes an initial allocation of the purchase price at the date of acquisition based upon its understanding of the fair value of the acquired assets and assumed liabilities. The Company obtains the information used for the purchase price allocation during due diligence and through other sources. In the months after closing, as the Company obtains additional information about the acquired assets and liabilities, including through tangible and intangible asset appraisals, and learns more about the newly acquired business, it is able to refine the estimates of fair value and more accurately allocate the purchase price. The fair values of acquired intangibles are determined based on estimates and assumptions that are deemed reasonable by the Company. Significant assumptions include the discount rates and certain assumptions that form the basis of the forecasted results of the acquired business, including revenue, revenue growth rates, royalty rates and technology obsolescence rates. These assumptions are forward-looking and could be affected by future economic and market conditions.

The Company takes a risk-based approach to cybersecurity and has implemented cybersecurity policies throughout its operations that are designed to address cybersecurity threats and incidents.The Company’s cybersecurity program and policies articulate the expectations and requirements with respect to acceptable use, risk management, data privacy, education and awareness, security incident management and reporting, identity and access management, vendor due diligence, security (with respect to physical assets, products, networks, and systems), security monitoring and vulnerability identification. The cybersecurity program and policies are operated by a dedicated cybersecurity operations team. The program and policies are aligned with the Company’s enterprise risk management program. The Company’s cyber risk management program identifies, tracks, escalates, remediates, and reports risks at the corporate level and across each operating company. These risk areas include internal, product, vendor, supply chain, and external services leveraged across the Company. These risks are assessed, prioritized, and both tactically and strategically addressed via process, technology, and personnel improvements to help ensure ongoing mitigation and tracking. The Company’s cybersecurity strategy is guided by prioritized risk, identified areas for improvement based on the National Institute for Standards and Technology (NIST) Cybersecurity Framework, and emerging business needs. This strategy is shared with the executive leadership at least annually. The Company maintains a global incident response plan, coupled with a global continuous monitoring program. This plan and program include incident alerting, comprehensive incident criticality assessments, and escalation processes to support teams, senior leadership, and the Board. This escalation process also includes cross-functional materiality determinations and applicable reporting requirements.The Company’s cybersecurity operations team manages all facets of the security monitoring and global incident program, coordinating with a sourced managed services security provider and internal analysts across our operating companies. Applicable company employees are provided cybersecurity awareness training, which includes topics on the Company’s policies and procedures for reporting potential incidents.

FINANCING The components of the Company’s debt as of December 31, less unamortized debt discounts and debt issuance costs, were as follows:($ in millions)Outstanding AmountDescription and Aggregate Principal Amount202520245.50% senior unsecured notes due 9/18/2026 ($700 million) (the “2026 Notes”)$700 $697 5.35% senior unsecured notes due 9/18/2028 ($700 million) (the “2028 Notes”)696 696 4.15% senior unsecured notes due 9/19/2031 (€500 million) (the “2031 Notes”)584 513 5.45% senior unsecured notes due 9/18/2033 ($700 million) (the "2033 Notes")693 693 Total Debt2,673 2,599 Less: current portion of long-term debt(700)— Long-term debt$1,973 $2,599 Senior Unsecured NotesIn September 2023, and in connection with the Separation, the Company issued approximately $2.1 billion aggregate principal amount of USD senior unsecured notes in three series with maturity dates ranging from 2026 through 2033 (collectively, the “U.S. Dollar Notes”). Additionally, the Company issued €500 million principal amount of senior unsecured notes (“Euro Notes”) with a maturity date of 2031.Interest payments on the U.S. Dollar Notes are due semi-annually until maturity. Interest payments on the Euro Notes are due annually until maturity. In the event of a change in control and a related downgrade of the ratings of the U.S. Dollar Notes and Euro Notes (collectively, the "Notes") below investment grade, the indentures governing the Notes requires that the Company make an offer to each holder of the Notes to repurchase all or any part of that holder's notes at a repurchase price equal to 101% of the aggregate principal amount of the Notes repurchased, plus any accrued and unpaid interest. The indentures also include a limitation on liens incurred by the Company and its wholly owned U.S. subsidiaries. The indentures do not restrict the Company or its subsidiaries from incurring indebtedness, nor does it require any financial covenants. All the covenants are subject to a number of exceptions, limitations, and qualifications.Upon issuance, the Notes became guaranteed by Danaher. Following the completion of the Separation on September 30, 2023, Danaher was automatically and unconditionally released and discharged from all obligations under its guarantees. The Company recorded $24 million of debt discounts and debt issuance costs related to the Notes.