Vontier Reports Strong Second Quarter 2023 Results and Raises Full Year Guidance

Vontier Corporation (NYSE: VNT), a leading global provider of critical technologies and solutions to connect, manage and scale the mobility ecosystem, today announced results for the second quarter ended June 30, 2023.

Reported sales in the second quarter declined 1.5% year-over-year to $764.4 million, reflecting a decrease in core sales of 1.6%. Continued underlying momentum across the portfolio, supported by strong secular tailwinds, healthy end market demand, improving supply chain conditions and ongoing pricing realization, was more than offset by the expected sunset of EMV-related sales. Operating profit of $120.6 million declined 11.6% versus the prior year, and operating profit margin decreased 180 basis points, to 15.8%. Adjusted operating profit of $160.1 million declined 4.1% versus the prior year and adjusted operating profit margin decreased approximately 60 basis points, to 20.9%. Net earnings were $97.3 million, and adjusted net earnings were $105.4 million, resulting in diluted net earnings per share of $0.62 and adjusted diluted net earnings per share of $0.67.

“Vontier delivered another quarter of solid results, exceeding the high-end of our EPS guidance, led by 9% baseline core sales growth and strong operational execution,” said Mark Morelli, President and Chief Executive Officer. “We continue to advance our connected mobility strategy, resulting in several key customer wins in the quarter and highlighting our distinct capabilities to enable our customers’ decarbonization journeys and provide differentiated operating system software.”

“Demand across our end markets remains constructive, and our team’s growth strategy and cost out execution has been strong, providing confidence in our improved outlook for the full year,” Morelli continued.

“Vontier’s portfolio is uniquely positioned to deliver smart, sustainable solutions as our customers continue to invest in modernizing and expanding their footprints, decarbonizing their fleets and enhancing their asset productivity. We believe no other company across the mobility ecosystem can match our portfolio depth and breadth, product capabilities, domain expertise and channel presence needed to solve our customers’ high-value problems.”

Segment Results

Mobility Technologies reported sales increased 13.4% versus the prior year. Core sales growth of 4.6% was driven by strong performance across car wash technologies and alternative energy solutions, as well as solid growth in telematics. Segment operating profit increased 4.9% versus the prior year. Segment operating profit margin declined 150 basis points year over year, as a result of unfavorable mix related to the Invenco acquisition and continued growth investments.

Repair Solutions reported sales grew 5.8% over the prior year. Core sales growth of 6.0% was driven by robust demand for tool storage, hardline and cordless power tools, as well as higher net franchisee adds. Segment operating profit was in line with prior year results. Segment operating profit margin declined 150 basis points, impacted by year-over-year reserve-related adjustments to the receivables portfolio.

Environmental & Fueling Solutions reported sales declined 9.6% year-over-year. Core sales were down 8.5% as continued strength in U.S. dispensing equipment and aftermarket parts was more than offset by the year-over-year decline in EMV-related volume. Segment operating profit declined 3.4% year over year, while segment operating profit margin expanded 190 basis points, driven by price/cost execution, as well as higher restructuring and productivity savings.

Other Items

• Repurchased ~$32 million, or ~1.1 million shares, during the quarter; Year to date through June, share repurchases total $50 million, or 2.0 million shares.
• Repaid $100 million in debt during the quarter; Year to date through June, debt repayment totaled $165 million. Net debt/Adj. EBITDA ended Q2 at 2.9X.
• The divestiture of Global Traffic Technologies (GTT) closed in April. Gross proceeds were $108 million.

2023 Outlook

• Total sales down low-to-mid-single digits; Core sales down low-to-mid-single digits; Baseline* core sales growth of mid-single digits-plus
• Adjusted operating profit margin down 60 to 80 basis points; Baseline* adjusted operating profit margin expansion of 180 to 200 basis points
• Adjusted diluted EPS in the range of $2.79 to $2.87, compares to the prior range of $2.77 to $2.87
• Adjusted free cash flow conversion of ~90-100%

Q3 2023 Outlook

• Total sales down mid-single digits; Core sales down mid-single digits; Baseline* core sales growth of mid-single digits-plus
• Adjusted operating profit margin down 370 to 420 basis points year over year; Baseline* adjusted operating profit margin down 70 to 100 basis points year-over-year
• Adjusted diluted EPS $0.65 to $0.69

*References to baseline core sales growth and baseline margin expansion exclude the impact of the year over year decline in EMV-related U.S. Dispenser sales (~$300M) and the associated operating profit decline (~$150M), consistent with the framework previously provided.

Conference Call Details

Vontier will discuss results and outlook during its quarterly investor conference call today starting at 8:30 a.m. ET. The call and an accompanying slide presentation will be webcast on the “Investors” section of Vontier’s website, www.vontier.com, under “Events & Presentations.” A replay of the webcast will be available at the same location shortly after the conclusion of the presentation.

The conference call can be accessed by dialing 888-886-7786, along with the conference ID: 72770844. A replay of the webcast will be available by dialing +1 877-674-7070, conference ID: 72770844 and passcode 770844 or under the “Investors” section of the website under “Events & Presentations.”

ABOUT VONTIER

Vontier (NYSE: VNT) is a global industrial technology company uniting critical mobility and multi-energy technologies and solutions to meet the needs of a rapidly evolving, more connected mobility ecosystem. Leveraging leading market positions, decades of domain expertise and unparalleled portfolio breadth, Vontier enables the way the world moves – delivering smart, safe and sustainable solutions to our customers and the planet. Vontier has a culture of continuous improvement built upon the foundation of the Vontier Business System and embraced by over 8,500 colleagues worldwide. Additional information about Vontier is available on the Company’s website at www.vontier.com.

NON-GAAP FINANCIAL MEASURES

In addition to the financial measures prepared in accordance with generally accepted accounting principles (GAAP), this earnings release also references “core sales growth,” “baseline core sales growth”, “adjusted operating profit,” “adjusted operating profit margin,” “segment operating profit,” “segment operating profit margin,” “adjusted net earnings,” “adjusted diluted net earnings per share,” “free cash flow,” “adjusted free cash flow”, “adjusted free cash flow conversion”, “EBITDA”, “adjusted EBITDA” and “net leverage ratio” which are non-GAAP financial measures. The reasons why we believe these measures, when used in conjunction with the GAAP financial measures, provide useful information to investors, how management uses such non-GAAP financial measures, a reconciliation of these measures to the most directly comparable GAAP measures and other information relating to these measures are included in the supplemental reconciliation schedule attached. The non-GAAP financial measures should not be considered in isolation or as a substitute for the GAAP financial measures, but should instead be read in conjunction with the GAAP financial measures. The non-GAAP financial measures used by Vontier in this release may be different from similarly-titled non-GAAP measures used by other companies.

FORWARD-LOOKING STATEMENTS

This release contains forward-looking statements within the meaning of the federal securities laws. These statements include, but are not limited to statements regarding Vontier Corporation’s (the “Company’s”) business and acquisition opportunities and anticipated earnings, and any other statements identified by their use of words like “anticipate,” “expect,” “believe,” “outlook,” “guidance,” or “will” or other words of similar meaning. There are a number of important risks and uncertainties that could cause actual results, developments and business decisions to differ materially from those suggested or indicated by such forward-looking statements and you should not place undue reliance on any such forward-looking statements. These risks and uncertainties include, among other things, deterioration of or instability in the economy, the markets we serve, international trade policies and the financial markets, contractions or lower growth rates and cyclicality of markets we serve, competition, changes in industry standards and governmental regulations that may adversely impact demand for our products or our costs, our ability to successfully identify, consummate, integrate and realize the anticipated value of appropriate acquisitions and successfully complete divestitures and other dispositions, our ability to develop and successfully market new products, software, and services and expand into new markets, the potential for improper conduct by our employees, agents or business partners, impact of divestitures, contingent liabilities relating to acquisitions and divestitures, impact of changes to tax laws, our compliance with applicable laws and regulations and changes in applicable laws and regulations, risks relating to international economic, political, war or hostility, legal, compliance and business factors, risks relating to potential impairment of goodwill and other intangible assets, currency exchange rates, tax audits and changes in our tax rate and income tax liabilities, the impact of our debt obligations on our operations, litigation and other contingent liabilities including intellectual property and environmental, health and safety matters, our ability to adequately protect our intellectual property rights, risks relating to product, service or software defects, product liability and recalls, risks relating to product manufacturing, our relationships with and the performance of our channel partners, commodity costs and surcharges, our ability to adjust purchases and manufacturing capacity to reflect market conditions, reliance on sole sources of supply, security breaches or other disruptions of our information technology systems, adverse effects of restructuring activities, impact of changes to U.S. GAAP, labor matters, and disruptions relating to man-made and natural disasters. Additional information regarding the factors that may cause actual results to differ materially from these forward-looking statements is available in our SEC filings, including our Form 10-K for the year ended December 31, 2022. These forward-looking statements represent Vontier’s beliefs and assumptions only as of the date of this release and Vontier does not assume any obligation to update or revise any forward-looking statement, whether as a result of new information, future events and developments or otherwise.