Free cash flow margin improved to 22.3% in Q2 2026, with cumulative operating cash flow of $2.47B exceeding net income of $2.27B over ten quarters, underscoring high earnings quality.
Veralto Corporation (VLTO) cash flow statement — 5-year operating, investing & financing cash flows
| Metric | TTM | Dec'25 | Dec'24 | Dec'23 | Dec'22 | Dec'21 |
|---|
| Cash from Operations | 1.1B | 1.08B | 875M | 963M | 870M | 896M |
| Operating CF Margin % | - | 19.57% | 16.85% | 19.18% | 17.86% | 19.06% |
| Operating CF Growth % | 45.88% | 23.09% | -9.14% | 10.69% | -2.9% | - |
| Net Income | 988M | 940M | 833M | 839M | 845M | 861M |
| Depreciation & Amortization | 93M | 78M | 78M | 87M | 90M | 106M |
| Stock-Based Compensation | 74M | 74M | 65M | 55M | 41M | 34M |
| Deferred Taxes | 0 | 0 | 0 | 0 | -44M | -11M |
| Other Non-Cash Items | -1M | 12M | 15M | 15M | 44M | 3M |
| Working Capital Changes | -51M | -27M | -116M | -33M | -106M | -97M |
| Change in Receivables | -30M | -50M | 3M | 2M | -88M | -14M |
| Change in Inventory | 1M | -6M | 3M | 52M | -38M | -75M |
| Change in Payables | 11M | 8M | -29M | -1M | 23M | 65M |
| Cash from Investing | -692M | -98M | -434M | -55M | -89M | -97M |
| Capital Expenditures | -56M | -63M | -55M | -54M | -34M | -54M |
| CapEx % of Revenue | 0.98% | 1.14% | 1.06% | 1.08% | 0.7% | 1.15% |
| Acquisitions | -620M | 0 | -363M | 2M | -55M | -34M |
| Investments | - | - | - | - | - | - |
| Other Investing | -16M | -35M | -16M | -3M | 0 | -9M |
| Cash from Financing | 165M | -102M | -65M | -135M | -781M | -799M |
| Debt Issued (Net) | 0 | 0 | 0 | 2.61B | 0 | 0 |
| Equity Issued (Net) | -420M | 22M | 24M | -147M | -781M | -800M |
| Dividends Paid | -119M | -109M | -89M | 0 | 0 | 0 |
| Share Repurchases | -434M | 0 | 0 | -147M | -781M | -800M |
| Other Financing | 704M | -15M | 0 | -2.6B | 0 | 1M |
| Net Change in Cash | 560M | 930M | 339M | 762M | 0 | 0 |
| Free Cash Flow | 1.05B | 1.01B | 820M | 909M | 836M | 842M |
| FCF Margin % | 18.38% | 18.43% | 15.79% | 18.1% | 17.17% | 17.91% |
| FCF Growth % | 11.03% | 23.66% | -9.79% | 8.73% | -0.71% | - |
| FCF per Share | 4.26 | 4.05 | 3.29 | 3.69 | 3.40 | 3.42 |
| FCF Conversion (FCF/Net Income) | 1.06x | 1.15x | 1.05x | 1.15x | 1.03x | 1.04x |
| Interest Paid | 138M | 138M | 137M | 0 | 0 | 0 |
| Taxes Paid | 270M | 235M | 293M | 113M | 0 | 0 |
Quick answers to the most common questions about buying VLTO stock.
Veralto Corporation (VLTO) generated $1.08B in net cash from operating activities in 2025. This reflects the cash generated directly from core business operations.
Veralto Corporation (VLTO) generated $1.01B in free cash flow in 2025. Free cash flow is the cash left over after capital expenditures, which can be used to pay dividends, repurchase shares, or pay down debt.
Veralto Corporation (VLTO) spent $63.0M on capital expenditures in 2025. CapEx represents the cash invested in physical assets like property, plant, and equipment to maintain or grow the business.
In 2025, Veralto Corporation (VLTO) returned $109.0M to shareholders via cash dividends. This shows the company's commitment to returning capital to its equity investors.
Key Metrics
Top Statement Risk
Debt and integration risks
Metrics are mathematically derived from official filings.
Cash Conversion Volatility Persists
Veralto's operating cash flow to net income ratio swung from 0.62 in Q1 2024 to 1.41 in Q2 2026, per SEC filings, indicating earnings quality is solid but working capital timing drives quarterly noise.
The OCF/NI ratio averaged above 1.0 over the last ten quarters, but the first quarter of each year consistently shows a ratio below 0.75, reflecting seasonal working capital outflows. This pattern suggests that reported net income is a reliable indicator of underlying cash generation, yet investors should expect significant quarterly volatility due to timing of collections and payments. The Q2 2026 ratio of 1.41, supported by a $46 million working capital inflow, underscores the company's ability to convert earnings into cash when working capital normalizes.
FCF Margin Expansion on Track
Free cash flow margin improved from 8.2% in Q1 2024 to 22.3% in Q2 2026, as reported in financial statements, with trailing twelve-month FCF reaching approximately $1.1 billion, outpacing net income growth.
The FCF margin has trended upward, with Q2 2026 marking the highest quarterly margin in the dataset, driven by strong operating cash flow and minimal capex. This trajectory suggests that the company's asset-light model is generating increasing cash returns, consistent with its high gross margins and recurring revenue base. The gap between FCF and net income has widened in favor of FCF, indicating that reported earnings understate the cash-generating power of the business.
Minimal Capital Intensity Supports Cash
Capital expenditure averaged just 1.0% of revenue over the past ten quarters, per company filings, reflecting a highly asset-light model where maintenance capex is minimal and growth is funded by working capital and intangibles.
CapEx/Revenue has remained consistently below 1.6%, with Q2 2026 at 0.8%, indicating that the business requires very little fixed asset investment to sustain operations. This low capital intensity is a key driver of the high FCF conversion and suggests that the company's competitive advantage lies in its consumables and software, not physical assets. The modest capex also implies that depreciation is low relative to revenue, which supports the sustainability of high operating margins.
Seasonal Working Capital Swings
Working capital changes ranged from -$120 million in Q1 2024 to +$74 million in Q2 2025, as per financial statements, indicating a pronounced seasonal pattern that drives quarterly cash flow volatility.
The first quarter of each year consistently shows a significant working capital outflow, likely due to annual incentive payments and inventory builds, while the second quarter typically sees a recovery. This pattern is consistent across all three years, suggesting a predictable seasonal cycle that investors should incorporate into their quarterly estimates. The magnitude of these swings (up to 10% of quarterly revenue) underscores the importance of monitoring working capital efficiency, though the overall trend appears stable.
Capital Deployment Shifts to M&A
Veralto initiated buybacks and acquisitions in 2026, with $134 million in buybacks and $194 million in acquisitions in Q2 alone, according to recent filings, signaling a shift from pure dividend payouts to active capital deployment.
Prior to 2026, the company returned capital solely through dividends, but the first half of 2026 shows a significant ramp in both share repurchases and M&A activity. This shift aligns with the company's $2.03 billion cash balance and suggests management is confident in its ability to deploy capital accretively. The pace of buybacks and acquisitions, if sustained, could enhance per-share metrics, but investors should monitor the quality of acquisitions to ensure they do not erode the high ROIC of the core business.
Cumulative Cash Exceeds Earnings
Over the past ten quarters, cumulative operating cash flow of $2.47 billion exceeded cumulative net income of $2.27 billion, as reported in financial statements, indicating high earnings quality with no persistent accrual gap.
The cumulative OCF/NI ratio of 1.09 suggests that the company's earnings are more than fully backed by cash generation, with the excess driven by non-cash charges like D&A and SBC. This divergence is a positive signal, as it implies that management is not relying on aggressive accruals to boost reported income. The consistency of this relationship across multiple quarters reinforces the view that Veralto's earnings are of high quality and that the business model is inherently cash-generative.
SBC and Carve-out Costs Obscure Cash
Stock-based compensation totaled $179 million over the last ten quarters, per SEC filings, and carve-out accounting may understate standalone costs, potentially masking the true cash-generative capacity of the business.
While SBC is a non-cash expense, it dilutes shareholders and should be considered when evaluating cash flow quality. Additionally, the historical financials reflect Veralto as a segment of Danaher, so certain corporate costs may not be fully captured, which could overstate operating cash flow in the early quarters. As the company establishes its standalone infrastructure, investors should monitor for any increases in cash operating expenses that could narrow the gap between OCF and net income.