net earnings 
 conversion ratio                     1.26               1.32                                    1.05               1.15 
                         =================  =================                       =================  ================= 
 
Free Cash Flow to Net 
Earnings Conversion 
Ratio (non-GAAP): 
----------------------- 
Free cash flow from 
 above (non-GAAP)          $           263    $           241                         $           820    $           911 
Net earnings (GAAP)        $           227    $           200                         $           833    $           839 
                         -----------------  -----------------                       -----------------  ----------------- 
Free cash flow to net 
 earnings conversion 
 ratio (non-GAAP)                     1.16               1.21                                    0.98               1.09 
                         =================  =================                       =================  ================= 
 
We define free cash flow as operating cash flows, less payments for additions to property, plant and equipment ("capital expenditures") plus 
the proceeds from sales of plant, property and equipment ("capital disposals"). 
 

Statement Regarding Non-GAAP Measures

Each of the non-GAAP measures set forth above should be considered in addition to, and not as a replacement for or superior to, the comparable GAAP measure, and may not be comparable to similarly titled measures reported by other companies. Management believes that these measures provide useful information to investors by offering additional ways of viewing Veralto Corporation's ("Veralto" or the "Company") results that, when reconciled to the corresponding GAAP measure, help our investors:

   -- with respect to the profitability-related non-GAAP measures, understand 
      the long-term profitability trends of our business and compare our 
      profitability to prior and future periods and to our peers; 
 
   -- with respect to core sales and related sales measures, identify 
      underlying growth trends in our business and compare our sales 
      performance with prior and future periods and to our peers; and 
 
   -- with respect to free cash flow and related cash flow measures (the "FCF 
      Measure"), understand Veralto's ability to generate cash without external 
      financings, strengthen its balance sheet, invest in its business and grow 
      its business through acquisitions and other strategic opportunities 
      (although a limitation of free cash flow is that it does not take into 
      account the Company's non-discretionary expenditures, and as a result the 
      entire free cash flow amount is not necessarily available for 
      discretionary expenditures). 

Management uses these non-GAAP measures to measure the Company's operating and financial performance.

   -- The items excluded from the non-GAAP measures set forth above have been 
      excluded for the following reasons: 
 
          -- Amortization of Intangible Assets:  We exclude the amortization of 
             acquisition-related intangible assets because the amount and 
             timing of such charges are significantly impacted by the timing, 
             size, number and nature of the acquisitions we consummate.  While 
             we have a history of significant acquisition activity, we do not 
             acquire businesses on a predictable cycle, and the amount of an 
             acquisition's purchase price allocated to intangible assets and 
             related amortization term are unique to each acquisition and can 
             vary significantly from acquisition to acquisition.  Exclusion of 
             this amortization expense facilitates more consistent comparisons 
             of operating results over time between our newly acquired and 
             long-held businesses, and with both acquisitive and 
             non-acquisitive peer companies.  We believe however that it is 
             important for investors to understand that such intangible assets 
             contribute to sales generation and that intangible asset 
             amortization related to past acquisitions will recur in future 
             periods until such intangible assets have been fully amortized. 
 
          -- Restructuring Charges:  We exclude costs incurred pursuant to 
             discrete restructuring plans that are fundamentally different (in 
             terms of the size, strategic nature and planning requirements, as 
             well as the inconsistent frequency, of such plans) from the 
             ongoing productivity improvements that result from application of 
             the Veralto Enterprise System.  Because these restructuring plans 
             are incremental to the core activities that arise in the ordinary 
             course of our business and we believe are not indicative of 
             Veralto's ongoing operating costs in a given period, we exclude 
             these costs to facilitate a more consistent comparison of 
             operating results over time. 
 
          -- Other Adjustments:  With respect to the other items excluded from 
             the profitability-related non-GAAP measures, we exclude these 
             items because they are of a nature and/or size that occur with 
             inconsistent frequency, occur for reasons that may be unrelated to 
             Veralto's commercial performance during the period and/or we 
             believe that such items may obscure underlying business trends and 
             make comparisons of long-term performance difficult. 
 
          -- Standalone Adjustments:  We believe these adjustments provide 
             additional insight into how our businesses are performing, on a 
             normalized basis.  However, these non-GAAP financial measures 
             should not be construed as inferring that our future results will 
             be unaffected by the items for which the measure adjusts. 
   -- With respect to core operating profit margin changes, in addition to the 
      explanation set forth in the bullets above relating to "restructuring 
      charges" and "other adjustments", we exclude the impact of businesses 
      owned for less than one year (or disposed of during such period and not 
      treated as discontinued operations) because the timing, size, number and 
      nature of such transactions can vary significantly from period to period 
      and may obscure underlying business trends and make comparisons of 
      long-term performance difficult. 
 
   -- With respect to core sales related measures, (1) we exclude the impact of 
      currency translation because it is not under management's control, is 
      subject to volatility and can obscure underlying business trends, and (2) 
      we exclude the effect of acquisitions and divested product lines because 
      the timing, size, number and nature of such transactions can vary 
      significantly from period-to-period and between us and our peers, which 
      we believe may obscure underlying business trends and make comparisons of 
      long-term performance difficult. 
 
   -- With respect to the FCF Measure, we exclude payments for additions to 
      property, plant and equipment (net of the proceeds from capital 
      disposals) to demonstrate the amount of operating cash flow for the 
      period that remains after accounting for the Company's capital 
      expenditure requirements. 

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SOURCE Veralto

/CONTACT: Investor Relations Contact: Ryan Taylor, Vice President, Investor Relations, investors@veralto.com; Media Relations Contact: Steve Field, Vice President, Communications, steve.field@veralto.com

(END) Dow Jones Newswires

February 04, 2025 17:17 ET (22:17 GMT)