Veralto Corp (VLTO)

Veralto tests water quality and prints codes on packaging — two businesses spun out of an industrial group.

The water line is instruments and reagents with which utilities and industrial plants check what is in the water. The instrument is installed once, the reagents are bought continuously, and the test method is written into regulations — changing supplier means revalidating the method.

The second line is equipment printing an expiry date and a code on every pack on the line. It costs little relative to the production line, but stopping that line costs the customer far more, so service and consumable inks are bought from the same supplier. Both halves produce recurring revenue at high margins. The company pays a small dividend.