Water quality and product testing solutions provider Veralto Corp posted its financial results for the second quarter of fiscal year 2026. Despite market uncertainties, the company achieved strong growth in sales and profits, driven by steady demand across its two main business segments, and subsequently raised its full-year earnings guidance.

According to the report, the company's second-quarter sales increased by 7.6% year-over-year to reach $1.474 billion. Adjusted earnings per share (EPS) came in at $1.11, representing a 19.4% year-over-year increase and surpassing the market consensus estimate of $0.92. The company also generated $328 million in free cash flow during the quarter.

This performance was fueled by both of its business segments. The Water Quality segment saw core sales grow by 5.7%, supported by robust demand for industrial water treatment solutions from sectors such as data centers, chemicals, and oil and gas. Meanwhile, the Product & Quality Innovation segment recorded a 2.0% increase in core sales, driven by the continued growth of its digital workflow solutions in the packaging and color markets.

The company reported an adjusted operating profit margin of 24.6% for the quarter, an improvement of 90 basis points year-over-year. Approximately 110 basis points of this margin expansion was attributed to a one-time benefit from receiving roughly $16 million in tariff refunds during the period. Excluding this impact, the company stated that its core business operations performed in line with expectations.

Looking ahead, Veralto's management anticipates core sales growth to accelerate to between 5% and 6% in the second half of the year. Building on the positive momentum from the first half, the company has raised its full-year 2026 adjusted EPS guidance to a range of $4.35 to $4.43, representing a 12% to 14% year-over-year increase. The core sales growth outlook has also been revised upward to a range of 4.0% to 4.5%.