April 24, 2024 14:52 GMT
Veralto (Baa1/BBB): 1Q24 Results
BASIC INDUSTRIES
Veralto reported after the US close. Equity is lower today post conference call despite a headline beat and upgraded EPS outlook. Potential M&A was mentioned on the call with the market possibly concerned about margin dilution there. For credit, M&A seems the likely credit driver from here, they likely have room on leverage for the rating.
• Revenue and adj. EBITDA beat by 2% and 7%.
• Thin financials in the company’s first year post spinoff, with no operating cash flow breakdown. Cash flow appears to have missed, but we can’t comment on the drivers.
• Net leverage at 1.5x. Management see flexibility on capital deployment with a bias towards M&A.
• FY24 sales growth and operating margin forecasts were reaffirmed.
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