Earnings Analysis for VLTO
Revenue Analysis
Total and Operating Revenue: VLTO has shown a steady increase in total revenue over the observed periods, moving from $1,225 million in Q1 2023 to $1,288 million in Q4 2023, and eventually to $1,246 million by Q1 2024. Operating Revenue mirrored the Total Revenue, indicating that the core operations are the primary revenue drivers.
Gross Profit Margins: Gross profit followed a similar trend, starting at $708 million in Q1 2023, peaking at $746 million in Q4 2023, and then slightly declining to $747 million by Q1 2024. This indicates a consistent gross margin, reflecting stable pricing and cost management strategies.
Cost Management
Cost of Revenue: The Cost of Revenue has been rising, from $517 million in Q1 2023 to $542 million by Q4 2023, and a small decrease to $499 million by Q1 2024. This fluctuation needs close monitoring to manage profitability.
Operating Expense: Operating expenses have shown a varying trend but generally increased from $416 million in Q1 2023 to $460 million by Q4 2023 and then decreased to $454 million by Q1 2024.
Total Expenses: Total expenses followed a similar trend, indicating that operating costs are a significant component of the company’s total expenses.
Profitability Analysis
EBITDA: EBITDA levels have been relatively stable, oscillating between $283 million in Q1 2023 and $299 million in Q1 2024. This stability in EBITDA despite varying revenues suggests effective ongoing operational control.
Operating Income: Operating income has seen modest growth from $275 million in Q1 2023 to $293 million by Q1 2024, aligning with the overall revenue growth.
Pretax Income: Pretax income increased from $188 million in Q1 2023 to $250 million by Q1 2024, indicating improved profitability before tax influences.
Net Income: Net income metrics show growth from $143 million in Q1 2023 to $184 million in Q1 2024, reflecting improved bottom-line performance.
Cash Flow Indicators
Reconciled Depreciation: Depreciation costs have been consistent, around $22 million, indicating steady capital expense recognition over time.
Interest Expense: Interest expenses have varied, peaking at $73 million in Q2 2023, then stabilizing to around $28 million by Q1 2024. This requires attention as fluctuations in interest expense can impact financial stability.
Taxation
Tax Rate: The effective tax rate has varied slightly but stayed generally around 23-26%, which is typical for corporate operations.
Tax Provision: Tax provisions have adjusted in line with pretax income, from $45 million in Q1 2023 to $66 million by Q1 2024, stress-testing the company’s tax strategy.
Tax Effect of Unusual Items: There were no significant tax effects from unusual items, suggesting straightforward fiscal periods without one-time anomalies.
Shareholder Metrics
Diluted and Basic EPS: Both EPS metrics have shown growth, with diluted EPS increasing from $0.912 in Q1 2023 to $0.74 in Q1 2024. The reduction in EPS from Q4 2023 to Q1 2024 requires scrutiny.
Average Shares: The number of shares remained relatively stable, slightly increasing over the periods, which impacts the EPS calculations.
Net Income Available to Common Stockholders: Consistently increased alongside net income, supporting shareholder value improvement.
Conclusion
VLTO has demonstrated revenue growth and stable operating performance over the analyzed periods. The increase in net income and controlled cost of revenue are positive signs. However, fluctuations in interest expenses and the latest reduction in EPS should be carefully monitored. Strategic focus on enhancing operational efficiencies and maintaining cost controls is recommended to sustain profitability and shareholder value.