Veralto Corp

Previous wording

You should read this discussion along with the Company’s MD&A and audited financial statements and Notes thereto as of and for the year ended December 31, 2024, included within the 2024 Annual Report on Form 10-K, and the unaudited financial statements and related Notes as of and for the three and six-month periods ended July 4, 2025 included in this Quarterly Report on Form 10-Q (this “Report”).

Current wording

You should read this discussion along with the Company’s MD&A and audited financial statements and Notes thereto as of and for the year ended December 31, 2024, included within the 2024 Annual Report on Form 10-K, and the unaudited financial statements and related Notes as of and for the three and nine-month periods ended October 3, 2025 included in this Quarterly Report on Form 10-Q (this “Report”).

Previous wording

•Changes in our tax rates or exposure to additional income tax liabilities or assessments could affect our earnings. In addition, audits by tax authorities could result in additional tax payments for prior periods.

Current wording

•Changes in our tax rates or exposure to additional income tax liabilities or assessments could affect our earnings. In addition, challenges to tax positions taken through audits by tax authorities could result in additional tax payments for prior periods.

Previous wording

•Certain of Veralto’s executive officers and directors may have actual or potential conflicts of interest because of their equity interest in Danaher. Also, certain of Danaher’s current directors and a current Danaher officer and current Danaher employee have joined Veralto’s Board, which may create conflicts of interest or the appearance of conflicts of interest.

Current wording

•Certain of Veralto’s executive officers and directors may have actual or potential conflicts of interest because of their equity interest in Danaher. Also, certain of Danaher’s current directors and a former Danaher officer and former Danaher employee are part of Veralto’s Board, which may create conflicts of interest or the appearance of conflicts of interest.

Previous wording

Veralto operates through two segments – Water Quality (“WQ”) and Product Quality & Innovation (“PQI”). Our businesses within these segments have strong globally recognized brands as a result of our leadership in served markets over several decades. Our WQ segment provides innovative products and services that improve the quality and reliability of water with leading brands including Hach, Trojan Technologies and ChemTreat. Our PQI segment enables our customers to promote consumer trust in their products and help enable product innovation with leading brands including Videojet, Linx, Esko, X-Rite and Pantone. We believe our leading positions result from the strength of our commercial organizations, our legacy of innovation, and our close and long-term connectivity to our customers and knowledge of their workflows, underpinned by our culture of continuous improvement. This has resulted in a large installed base of instruments that drive ongoing consumables and software sales to support our customers. As a result, our business generates recurring sales which represented approximately 61% of total sales during thesix months ended July 4, 2025. Our business model also supports a strong margin profile with limited capital expenditure requirements and has generated attractive cash flows. We believe these attributes allow us to deliver financial performance that is resilient across economic cycles.

Current wording

Veralto operates through two segments – Water Quality (“WQ”) and Product Quality & Innovation (“PQI”). Our businesses within these segments have strong globally recognized brands as a result of our leadership in served markets over several decades. Our WQ segment provides innovative products and services that improve the quality and reliability of water with leading brands including Hach, Trojan Technologies and ChemTreat. Our PQI segment enables our customers to promote consumer trust in their products and help enable product innovation with leading brands including Videojet, Linx, Esko, X-Rite and Pantone. We believe our leading positions result from the strength of our commercial organizations, our legacy of innovation, and our close and long-term connectivity to our customers and knowledge of their workflows, underpinned by our culture of continuous improvement. This has resulted in a large installed base of instruments that drive ongoing consumables and software sales to support our customers. As a result, our business generates recurring sales which represented approximately 62% of total sales during thenine months ended October 3, 2025. Our business model also supports a strong margin profile with limited capital expenditure requirements and has generated attractive cash flows. We believe these attributes allow us to deliver financial performance that is resilient across economic cycles.

Previous wording

During the three-month period ended July 4, 2025, overall revenues increased 6.4% and core sales increased 4.8% compared to the comparable period in 2024 with growth in both segments. Currency exchange rates and acquisitions, net of divestitures increased reported sales by 1.5% and 0.1%, respectively, during the three-month period ended July 4, 2025 compared to the comparable period in 2024. For the six-month period ended July 4, 2025, overall revenues increased 6.6% and core sales increased 6.3%, compared to the comparable period in 2024. Currency exchange rates and acquisitions, net of divestitures increased reported sales by 0.1% and 0.2%, respectively during the six-month period ended July 4, 2025 compared to the comparable period in 2024. For the definition of “core sales” refer to “—Results of Operations” below.

Current wording

During the three-month period ended October 3, 2025, overall revenues increased 6.9% and core sales increased 5.1% compared to the comparable period in 2024 with growth in both segments. Currency exchange rates and acquisitions, net of divestitures increased reported sales by 1.5% and 0.3%, respectively, during the three-month period ended October 3, 2025 compared to the comparable period in 2024. For the nine-month period ended October 3, 2025, overall revenues increased 6.7% and core sales increased 5.9%, compared to the comparable period in 2024. Currency exchange rates and acquisitions, net of divestitures increased reported sales by 0.5% and 0.3%, respectively during the nine-month period ended October 3, 2025 compared to the comparable period in 2024. For the definition of “core sales” refer to “—Results of Operations” below.

Previous wording

Geographically, the Company’s sales in the six-month period ended July 4, 2025 in developed markets increased year-over-year by 7.6%, driven by increased sales of 7.5% in North America, 8.3% in Western Europe, and 3.6% in other developed markets. Sales in high-growth markets increased 4.2% year-over-year. For the same period, core sales in developed markets increased 7.1% driven by increased core sales of 6.7% in North America and 8.5% in Western Europe. Core sales in high-growth markets increased 6.1% driven by high-single digit increases in Latin America.

Current wording

Geographically, the Company’s sales during the three-month period ended October 3, 2025 in developed markets increased year-over-year by 7.8%, driven by increased sales of 7.8% in North America and 8.4% in Western Europe. Sales in high-growth markets increased 4.4% year-over-year. For the same period, core sales in developed markets increased 5.5% driven by increased core sales of 6.9% in North America and 2.5% in Western Europe. Core sales in high-growth markets increased 4.3% driven by mid-single digit increases in Latin America.

Previous wording

Geographically, the Company’s sales in the three-month period ended July 4, 2025 in developed markets increased year-over-year by 7.0%, driven by increased sales of 6.3% in North America and 9.2% in Western Europe. Sales in high-growth markets increased 5.0% year-over-year. For the same period, core sales in developed markets increased 5.6% driven by increased core sales of 5.6% in North America and 6.3% in Western Europe. Core sales in high-growth markets increased 6.1% driven by high-single digit increases in Latin America.

Current wording

Geographically, the Company’s sales during the nine-month period ended October 3, 2025 in developed markets increased year-over-year by 7.7%, driven by increased sales of 7.6% in North America, 8.4% in Western Europe, and 2.4% in other developed markets. Sales in high-growth markets increased 4.3% year-over-year. For the same period, core sales in developed markets increased 6.3% driven by increased core sales of 6.8% in North America and 5.6% in Western Europe. Core sales in high-growth markets increased 5.2% driven by high-single digit increases in Latin America.

Previous wording

The Company’s net earnings for the three and six-month periods ended July 4, 2025 totaled $222 million and $447 million, respectively, compared to $203 million and $387 million, respectively, for the three and six-month periods ended June 28, 2024. The increase in net earnings during the three and six-month periods ended July 4, 2025 as compared to the three and six-month periods ended June 28, 2024 was primarily driven by increased sales, resulting from higher volumes and positive pricing actions. Refer to “—Results of Operations” for further discussion of the year-over-year changes in net earnings for the three and six-month periods ended July 4, 2025.

Current wording

The Company’s net earnings for the three and nine-month periods ended October 3, 2025 totaled $239 million and $686 million, respectively, compared to $219 million and $606 million, respectively, for the three and nine-month periods ended September 27, 2024. The increase in net earnings during the three and nine-month periods ended October 3, 2025 as compared to the three and nine-month periods ended September 27, 2024 was primarily driven by increased sales, resulting from higher volumes and positive pricing actions, partially offset by higher cost of sales. Refer to “—Results of Operations” for further discussion of the year-over-year changes in net earnings for the three and nine-month periods ended October 3, 2025.

Previous wording

The Company’s outlook for 2025 reflects its current assessment of the global macro-economic environment, including enacted tariffs and the Company’s actions to mitigate adverse financial impacts, and fluctuations in currency exchange rates. The Company’s ability to meet its expectations are subject to numerous risks, including, but not limited to, those described in “Item 1A. Risk Factors” within the Company’s 2024 Annual Report on Form 10-K and any subsequent updates in “Item 1A. Risk Factors” within Quarterly Reports on Form 10-Q.

Current wording

The Company’s outlook for 2025 reflects its current assessment of the global macro-economic environment, trends in consumer-packaged goods demand, and fluctuations in currency exchange rates, including enacted tariffs and the Company’s actions to mitigate adverse financial impacts. The Company’s ability to meet its expectations are subject to numerous risks, including, but not limited to, those described in “Item 1A. Risk Factors” within the Company’s 2024 Annual Report on Form 10-K and any subsequent updates in “Item 1A. Risk Factors” within Quarterly Reports on Form 10-Q.

Previous wording

Total sales increased 6.4% and 6.6% during the three and six-month periods ended July 4, 2025, respectively, compared to the comparable periods in 2024, primarily as a result of core sales growth driven by the factors discussed below by segment.

Current wording

Total sales increased 6.9% and 6.7% during the three and nine-month periods ended October 3, 2025, respectively, compared to the comparable periods in 2024, primarily as a result of core sales growth driven by the factors discussed below by segment.

Previous wording

Currency exchange rates and acquisitions, net of divestitures increased reported sales by 1.5% and 0.1%, respectively, during the three-month period ended July 4, 2025, compared to the comparable period in 2024. Currency exchange rates and acquisitions, net of divestitures increased reported sales by 0.1% and 0.2%, respectively, during the six-month period ended July 4, 2025, compared to the comparable period in 2024. Price increases contributed 1.7% and 1.5% to sales growth on a year-over-year basis during the three and six-month periods ended July 4, 2025, respectively, and are reflected as a component of core sales growth above.

Current wording

Currency exchange rates and acquisitions, net of divestitures increased reported sales by 1.5% and 0.3%, respectively, during the three-month period ended October 3, 2025, compared to the comparable period in 2024. Currency exchange rates and acquisitions, net of divestitures increased reported sales by 0.5% and 0.3%, respectively, during the nine-month period ended October 3, 2025, compared to the comparable period in 2024. Price increases contributed 2.4% and 1.8% to sales growth on a year-over-year basis during the three and nine-month periods ended October 3, 2025, respectively, and are reflected as a component of core sales growth above.

Previous wording

Cost of sales increased by $35 million or 6.8% and by $63 million or 6.2% on a year-over-year basis during the three and six-month periods ended July 4, 2025, respectively, as compared to the comparable periods in 2024, driven primarily by higher year-over-year sales volumes.

Current wording

Cost of sales increased by $29 million or 5.5% and by $92 million or 6.0% on a year-over-year basis during the three and nine-month periods ended October 3, 2025, respectively, as compared to the comparable periods in 2024, driven primarily by higher year-over-year sales volumes.

Previous wording

Gross profit margins decreased 10 basis points on a year-over-year basis during the three-month period ended July 4, 2025 as compared to the comparable period in 2024, due primarily to incremental year-over-year labor costs and the impact of product mix. The gross profit margin decline was partially offset by positive pricing actions and higher volume, the impact of foreign currency exchange rates, and the net positive impact from the gross profit margin of recent acquisitions. Gross profit margins increased 20 basis points on a year-over-year basis during the six-month period ended July 4, 2025, as compared to the comparable period in 2024, driven by positive pricing actions and higher volume along with the net positive impact from the gross profit margin of recent acquisitions.

Current wording

Gross profit margins increased 50 basis points on a year-over-year basis during the three-month period ended October 3, 2025 as compared to the comparable period in 2024, due primarily to positive pricing actions and higher volume, and the net positive impact from the gross profit margin of recent acquisitions. Gross profit margins increased 30 basis points on a year-over-year basis during the nine-month period ended October 3, 2025, as compared to the comparable period in 2024, driven by positive pricing actions and higher volume, and the net positive impact from the gross profit margin of recent acquisitions. The gross profit margin increase was partially offset by incremental year-over-year labor costs and the impact of product mix.

Previous wording

SG&A expenses as a percentage of sales increased by 10 basis points during the three-month period ended July 4, 2025 as compared to the comparable period in 2024, driven by the increase in the Company’s SG&A expenses exceeding the increase in the Company’s sales. SG&A expenses as a percentage of sales were flat during the six-month period ended July 4, 2025 as compared to the comparable period in 2024.

Current wording

SG&A expenses as a percentage of sales increased by 70 basis points and by 20 basis points during the three and nine-month periods ended October 3, 2025, respectively, as compared to the comparable periods in 2024, driven by an increase in the Company’s SG&A expenses exceeding the increase in the Company’s sales. The increase in SG&A expenses during the three and nine-month periods ended October 3, 2025 is attributable to incremental labor costs and sales and marketing growth initiatives,

Previous wording

Operating profit margins were 23.5% for the six-month period ended July 4, 2025 as compared to 23.4% for the six-month period ended June 28, 2024. The following factors impacted year-over-year operating profit margin comparisons:

Current wording

Operating profit margins were 23.2% for the three-month period ended October 3, 2025 as compared to 23.4% for the three-month period ended September 27, 2024. The following factors impacted year-over-year operating profit margin comparisons:

Previous wording

Second quarter 2025 vs. second quarter 2024 operating profit margin comparisons were favorably impacted by:

Current wording

Third quarter 2025 vs. third quarter 2024 operating profit margin comparisons were unfavorably impacted by:

Previous wording

•Costs incurred during the second quarter of 2025 related to certain strategic initiatives - 20 basis points

Current wording

•Costs incurred during the third quarter of 2025 related to certain strategic initiatives - 10 basis points

Previous wording

•Incremental labor costs and research and development growth initiatives, partially offset by higher second quarter 2025 core sales - 140 basis points

Current wording

•Incremental labor costs and sales and marketing growth initiatives, partially offset by higher third quarter 2025 core sales - 10 basis points

Previous wording

•Costs incurred during 2025 related to certain strategic initiatives - 20 basis points

Current wording

•Costs incurred during 2025 related to certain strategic initiatives - 10 basis points

Previous wording

Total Water Quality segment sales increased 6.2% and 6.1% year-over-year during the three and six-month periods ended July 4, 2025, respectively, as compared to the comparable periods in 2024, primarily as a result of core sales growth driven by the factors discussed below. Geographically, sales growth was driven by North America, which saw increases of 5.6% and 6.7%, and Western Europe, which saw increases of 12.9% and 10.3% for the three and six-month periods ended July 4, 2025, respectively, compared to the comparable periods in 2024.

Current wording

Total Water Quality segment sales increased 7.0% and 6.4% year-over-year during the three and nine-month periods ended October 3, 2025, respectively, as compared to the comparable periods in 2024, primarily as a result of core sales growth driven by the factors discussed below. Geographically, sales growth was driven by North America, which saw increases of 6.0% and 6.4%, and Western Europe, which saw increases of 8.8% and 9.8% for the three and nine-month periods ended October 3, 2025, respectively, compared to the comparable periods in 2024.

Previous wording

Price increases in the segment contributed 1.4% and 1.2% to sales growth on a year-over-year basis during the three and six-month periods ended July 4, 2025, respectively, and are reflected as a component of the change in core sales growth.

Current wording

Price increases in the segment contributed 1.7% and 1.4% to sales growth on a year-over-year basis during the three and nine-month periods ended October 3, 2025, respectively, and are reflected as a component of the change in core sales growth.

Previous wording

Core sales in the Product Quality & Innovation segment increased 4.6% and 6.4% year-over-year during the three and six-month periods ended July 4, 2025, respectively. Geographically, core sales growth was driven by increases of 5.3% in North America and 2.1% in Western Europe during the three-month period ended July 4, 2025 compared to the comparable period in 2024. For the same period, core sales in high-growth markets increased 7.6%, driven by mid-single digit increases in Latin America and low-double digit increases in China. Geographically, core sales growth was driven by increases of 6.1% in North America and 6.0% in Western Europe during the six-month period ended July 4, 2025 compared to the comparable period in 2024. For the same period, core sales in high-growth markets increased 8.3%, driven by mid-single digit increases in Latin America and low-double digit increases in China.

Current wording

Core sales in the Water Quality segment increased 5.3% and 5.9% year-over-year during the three and nine-month periods ended October 3, 2025, respectively. Geographically, core sales growth was driven by increases of 6.0% in North America and 1.3% in Western Europe during the three-month period ended October 3, 2025 compared to the comparable period in 2024. For the same period, core sales in high-growth markets increased 7.1%, driven by mid-single digit increases in Latin America and low-single digit increases in China. Geographically, core sales growth was driven by increases of 6.6% in North America and 6.0% in Western Europe during the nine-month period ended October 3, 2025 compared to the comparable period in 2024. For the same period, core sales in high-growth markets increased 4.6%, driven by high-single digit increases in Latin America, partially offset by mid-single digit decreases in China.

Previous wording

The increase in core sales during the three and six-month periods ended July 4, 2025 was driven by the chemical treatment solutions business and, to a lesser extent, the analytical instrumentation business. Core sales in the chemical treatment solutions business increased 4.8% and 7.8% year-over-year in the three and six-month periods ended July 4, 2025, respectively, as a result of increased core sales across most major end-markets. Core sales in the analytical instrumentation business increased 4.4% and 5.1% year-over-year for the three and six-month periods ended July 4, 2025, respectively, as a result of increased core sales across Western Europe and North America.

Current wording

The increase in core sales during the three and nine-month periods ended October 3, 2025 was driven by the chemical treatment solutions business and, to a lesser extent, the analytical instrumentation business. Core sales in the chemical treatment solutions business increased 5.3% and 6.9% year-over-year in the three and nine-month periods ended October 3, 2025, respectively, as a result of increased core sales across most major end-markets. Core sales in the analytical instrumentation business increased 4.3% and 4.8% year-over-year for the three and nine-month periods ended October 3, 2025, respectively, as a result of increased core sales across Western Europe and North America.

Previous wording

Operating profit margins were 25.6% for the three-month period ended July 4, 2025 as compared to 24.2% for the three-month period ended June 28, 2024. The following factors impacted year-over-year operating profit margin comparisons:

Current wording

Operating profit margins were 25.5% for the nine-month period ended October 3, 2025 as compared to 24.2% for the nine-month period ended September 27, 2024. The following factors impacted year-over-year operating profit margin comparisons:

Previous wording

•Incremental labor costs, sales and marketing growth initiatives, and the impact of product mix, partially offset by higher 2025 core sales - 20 basis points

Current wording

•Higher 2025 core sales, partially offset by incremental labor costs, sales and marketing growth initiatives and the impact of product mix - 130 basis points

Previous wording

Total Product Quality & Innovation segment sales increased 6.8% and 7.5% year-over-year during the three and six-month periods ended July 4, 2025, respectively, primarily as a result of changes in core sales driven by the factors discussed below. Geographically, sales growth was driven by North America which saw increases of 8.2% and 9.5% and Western Europe which saw increases of 5.9% and 6.6% during the three and six-month periods ended July 4, 2025, respectively, compared to the comparable periods in 2024. Sales in high-growth markets increased 6.2% and 6.4% during the three and six-month periods ended July 4, 2025, respectively, compared to the comparable periods in 2024.

Current wording

Total Product Quality & Innovation segment sales increased 6.9% and 7.3% year-over-year during the three and nine-month periods ended October 3, 2025, respectively, primarily as a result of changes in core sales driven by the factors discussed below. Geographically, sales growth was driven by North America which saw increases of 13.1% and 10.7% and Western Europe which saw increases of 8.1% and 7.1% during the three and nine-month periods ended October 3, 2025, respectively, compared to the comparable periods in 2024. Sales in high-growth markets increased 0.5% and 4.4% during the three and nine-month periods ended October 3, 2025, respectively, compared to the comparable periods in 2024.

Previous wording

Price increases in the segment contributed 2.2% and 1.9% to sales growth on a year-over-year basis during the three and six-month periods ended July 4, 2025, respectively, and are reflected as a component of the change in core sales growth.

Current wording

Price increases in the segment contributed 3.3% and 2.4% to sales growth on a year-over-year basis during the three and nine-month periods ended October 3, 2025, respectively, and are reflected as a component of the change in core sales growth.

Previous wording

Core sales in the Water Quality segment increased 5.0% and 6.2% year-over-year during the three and six-month periods ended July 4, 2025, respectively. Geographically, core sales growth was driven by increases of 5.7% in North America and 11.4% in Western Europe during the three-month period ended July 4, 2025 compared to the comparable period in 2024. For the same period, core sales in high-growth markets increased 4.7%, driven by high-single digit increases in Latin America, partially offset by high-single digit decreases in China. Geographically, core sales growth was driven by increases of 7.0% in North America and 11.3% in Western Europe during the six-month period ended July 4, 2025 compared to the comparable period in 2024. For the same period, core sales in high-growth markets increased 4.0%, driven by high-single digit increases in Latin America, partially offset by high-single digit decreases in China.

Current wording

Core sales in the Product Quality & Innovation segment increased 4.6% and 5.8% year-over-year during the three and nine-month periods ended October 3, 2025, respectively. Geographically, core sales growth was driven by increases of 9.2% in North America and 3.7% in Western Europe during the three-month period ended October 3, 2025 compared to the comparable period in 2024. For the same period, core sales in high-growth markets increased 1.6%, driven by high-single digit increases in Latin America and low-single digit increases in China. Geographically, core sales growth was driven by increases of 7.1% in North America and 5.2% in Western Europe during the nine-month period ended October 3, 2025 compared to the comparable period in 2024. For the same period, core sales in high-growth markets increased 5.9%, driven by high-single digit increases in Latin America and China.

Previous wording

From a product line perspective, core sales in the marking and coding business increased 3.5% and 5.9% year-over-year during the three and six-month periods ended July 4, 2025, driven by higher demand across most major end-markets and geographies. Core sales in the packaging and color solutions business increased 7.0% and 7.6% year-over-year during the three and six-month periods ended July 4, 2025, respectively, driven by continued demand for digital workflow solutions in most major end-markets.

Current wording

From a product line perspective, core sales in the marking and coding business increased 5.9% year-over-year during both the three and nine-month periods ended October 3, 2025, driven by higher demand across most major end-markets and geographies. Core sales in the packaging and color solutions business increased 1.6% and 5.6% year-over-year during the three and nine-month periods ended October 3, 2025, respectively, driven by continued demand for digital workflow solutions in most major end-markets.

Previous wording

Second quarter 2025 vs. second quarter 2024 operating profit margin comparisons were favorably impacted by:

Current wording

Third quarter 2025 vs. third quarter 2024 operating profit margin comparisons were unfavorably impacted by:

Previous wording

•The net dilutive impact during 2025 of acquisitions and dispositions - 30 basis points

Current wording

•The net dilutive impact in 2025 of acquisitions and dispositions - 30 basis points

Previous wording

Operating profit margins were 25.3% for the six-month period ended July 4, 2025 as compared to 24.2% for the six-month period ended June 28, 2024. The following factors impacted year-over-year operating profit margin comparisons:

Current wording

Operating profit margins were 25.3% for the nine-month period ended October 3, 2025 as compared to 26.6% for the nine-month period ended September 27, 2024. The following factors impacted year-over-year operating profit margin comparisons:

Previous wording

Other income (expense), net included a loss on the disposition of a product line of $6 million during the six-month period ended July 4, 2025, and a $15 million loss on the disposition of a product line net of $1 million net periodic benefit costs related to non-contributory defined benefit pension plans and other postretirement employee benefit plans, which includes the assumed rate of return on plan assets, partially offset by amortization of actuarial losses and interest during the six-month period ended June 28, 2024.

Current wording

Other income (expense), net included a loss on the disposition of a product line of $6 million, net of$1 million net periodic benefit costs, during the nine-month period ended October 3, 2025, and a $10 million net loss on the disposition of two product lines, net of $1 million net periodic benefit costs, during the nine-month period ended September 27, 2024. Net periodic benefit costs during both periods are related to non-contributory defined benefit pension plans and other postretirement employee benefit plans, which includes the assumed rate of return on plan assets, partially offset by amortization of actuarial losses and interest.

Previous wording

Net interest expense of $28 million and $55 million was recorded for thethree and six-month periods ended July 4, 2025, respectively, compared to net interest expenseof $30 million and $58 million for the three and six-month periods ended June 28, 2024, respectively, arising from our outstanding indebtedness, which was incurred in September 2023.

Current wording

Net interest expense of $21 million and $76 million was recorded for thethree and nine-month periods ended October 3, 2025, respectively, compared to net interest expenseof $27 million and $85 million for the three and nine-month periods ended September 27, 2024, respectively, arising from our outstanding indebtedness, which was incurred in September 2023, partially offset by interest income from larger average cash balances in 2025.

Previous wording

Income tax expense and deferred tax assets and liabilities reflect management’s assessment of future taxes expected to be paid on items reflected in the Company’s Consolidated Condensed Financial Statements. The

Current wording

Income tax expense and deferred tax assets and liabilities reflect management’s assessment of future taxes expected to be paid on items reflected in the Company’s Consolidated Condensed Financial Statements. The Company records the tax effect of discrete items and items that are reported net of their tax effects in the period in which they occur.

Previous wording

The effective tax rate for the three-month period ended July 4, 2025 differs from the U.S. federal statutory rate of 21% principally due to the geographic mix of earnings described above.

Current wording

The effective tax rate for the three-month period ended October 3, 2025 differs from the U.S. federal statutory rate of 21% principally due to the geographic mix of earnings described above and a net discrete provision of $1 million related primarily to the impact of uncertain tax positions, partially offset by the impact of a German tax rate change on deferred taxes. The net discrete provision increased the effective tax rate by 0.3% for the three-month period ended October 3, 2025.

Previous wording

The effective tax rate for the six-month period ended July 4, 2025 differs from the U.S. federal statutory rate of 21% principally due to the geographic mix of earnings described above, the unfavorable impact of a non-deductible loss on the sale of a product line of $2 million, and a net discrete benefit of $2 million related primarily to the impact of excess tax benefits from stock-based compensation, partially offset by the impact of uncertain tax positions. The net discrete benefit decreased the effective tax rate by 0.3% for the six-month period ended July 4, 2025.

Current wording

The effective tax rate for the nine-month period ended October 3, 2025 differs from the U.S. federal statutory rate of 21% principally due to the geographic mix of earnings described above, the unfavorable impact of a non-deductible loss on the sale of a product line of $2 million, and a net discrete benefit of $1 million related primarily to the impact of a German tax rate change on deferred taxes, partially offset by the impact of uncertain tax positions. The net discrete benefit decreased the effective tax rate by 0.1% for the nine-month period ended October 3, 2025.

Previous wording

The effective tax rate for the three-month period ended June 28, 2024 differs from the U.S. federal statutory rate of 21% principally due to the geographic mix of earnings described above, net discrete expense of $3 million related primarily to the impact of uncertain tax positions, partially offset by excess tax benefits from stock-based compensation. The net discrete expense increased the effective tax rate by 1.1% for the three-month period ended June 28, 2024.

Current wording

The effective tax rate for the three-month period ended September 27, 2024 differs from the U.S. federal statutory rate of 21% principally due to the geographic mix of earnings described above, net discrete expense of $1 million related primarily to the impact of uncertain tax positions, partially offset by excess tax benefits from stock-based compensation. The net discrete expense increased the effective tax rate by 0.3% for the three-month period ended September 27, 2024.

Previous wording

The effective tax rate for the six-month period ended June 28, 2024 differs from the U.S. federal statutory rate of 21% principally due to the geographic mix of earnings described above, the unfavorable impact of a non-deductible loss on the sale of a product line of $3 million, and a net discrete expense of $4 million related primarily to the impact of uncertain tax positions, partially offset by excess tax benefits from stock-based compensation. The net discrete expense increased the effective tax rate by 1.3% for the six-month period ended June 28, 2024.

Current wording

The effective tax rate for the nine-month period ended September 27, 2024 differs from the U.S. federal statutory rate of 21% principally due to the geographic mix of earnings described above, the unfavorable impact of a non-deductible loss on the sale of a product line of $3 million, and a net discrete expense of $5 million related primarily to the impact of uncertain tax positions, partially offset by excess tax benefits from stock-based compensation. The net discrete expense increased the effective tax rate by 1.0% for the nine-month period ended September 27, 2024.

Previous wording

On July 4, 2025, an act to provide for reconciliation to title II of H. Con. Res. 14 (known commonly as the One Big Beautiful Bill Act (“OBBBA”) was enacted into law. The OBBBA includes eliminating the requirement to capitalize U.S. R&D, permanent extension of certain provisions of the Tax Cuts & Jobs Act of 2017 and other corporate tax impacts. As the Company’s fiscal quarter ended July 4, 2025 included the enactment date, the Company has considered the impact on the condensed consolidated financial statements and concluded it is immaterial. The Company is in the process of evaluating the financial statement impact of these provisions effective in future periods, however, the Company does not expect the OBBBA to have a material impact on the consolidated financial statements.

Current wording

On July 4, 2025, an act to provide for reconciliation to title II of H. Con. Res. 14 (known commonly as the One Big Beautiful Bill Act (“OBBBA”)) was enacted into law. The OBBBA includes eliminating the requirement to capitalize U.S. R&D, permanent extension of certain provisions of the Tax Cuts & Jobs Act of 2017 and other corporate tax impacts. The Company has considered the impact on the condensed consolidated financial statements and concluded it is immaterial.