PresentationGreat. Well, next up, it's my pleasure to have Vontier Corporation, Mark Morelli, President and CEO; and Anshooman Aga, CFO. So I appreciate both of you coming down here. Maybe start off with a topic that's generated a lot of discussion in the last sort of month or so, in particular, around your software exposure, maybe kind of frame for us the scale of that software business in the overall sort of Vontier revenue mix? And help us understand why you think AI-related concerns are probably not mer ...

Vontier Corporation FY Conference Summary Company Overview - **Company**: Vontier Corporation (NYSE: VNT) - **Date of Conference**: February 18, 2026 Key Industry Insights - **Software Exposure**: Vontier's software business constitutes approximately 10% to 12% of total sales, emphasizing that it is not a generic enterprise software company but rather provides industrial software tightly linked to hardware [2][3] - **Mission-Critical Applications**: The software is essential for operations in sectors like convenience stores and fleet management, requiring multiple levels of certification for reliability [3][4] - **AI Integration**: Vontier's software platforms are AI-enabled, enhancing uptime and operational efficiency, with applications in various sectors including payment processing and vehicle identification [4][10] Financial Performance and Guidance - **Revenue Guidance**: The company anticipates a back-end loaded revenue model for Q1 and Q2, with a historical trend showing approximately 48% of revenue generated in the first half of the year [19][20] - **Cost Savings**: Vontier is executing a $15 million in-year savings plan, with most benefits expected to materialize in Q2 and Q3 [20][22] - **Market Performance**: The company is experiencing growth above market levels in convenience retail and fleet sectors, with a strong exit rate from the previous year [22][23] Product and Service Innovations - **Unified Payment Solutions**: Vontier is focusing on unified payment systems that enhance transaction efficiency for convenience store operators [5][24] - **Fleet Management Solutions**: The vehicle identification system is highlighted as a secure payment application, with ongoing projects expected to deliver in the latter half of the year [23][24] - **Telematics and EV Charging**: The telematics segment has shown improvement with reduced churn rates and increased operating profit, while the EV charging business is positioned for growth despite current market challenges [40][52] Strategic Initiatives - **R&D Investments**: Vontier has over 1,200 software engineers, with a significant portion utilizing AI to enhance productivity and reduce costs in R&D [12][14] - **Service Network**: The company boasts a best-in-class service network, crucial for supporting the rollout of new technologies and maintaining customer trust [37][39] - **Market Expansion**: Vontier is exploring opportunities in developing countries, where modern fueling solutions are in demand, indicating a long-term growth potential [58][59] Challenges and Considerations - **Repair Margin Pressures**: The repair segment has seen margins decline to around 20%, attributed to volume deleverage and increased costs, though gross margins remain stable [62][64] - **Capital Allocation**: Vontier maintains a dynamic capital allocation policy, focusing on stock buybacks and disciplined M&A strategies to maximize shareholder returns [71][73] Conclusion Vontier Corporation is strategically positioned in the industrial software and hardware market, with a focus on AI integration, innovative payment solutions, and a robust service network. The company anticipates growth driven by its investments in R&D and market expansion, while navigating challenges in margin pressures and capital allocation.

Question-and-Answer SessionSo guys, as I kind of walk over here, I'll start with my first question. I think you guys have talked about Connected Mobility for a while now, and it does seem to be gaining additional traction, particularly in the year 2025. I think we've seen how Invenco seems to be helping to bridge your 2 segments, 2 larger segments in EFS and Mobility with innovations such as FlexPay 6. So could you talk a little bit more about the progress you've made? How the solutions you're offering goin ...

Summary of Vontier Corporation Conference Call Company Overview - **Company**: Vontier Corporation - **Key Participants**: Mark Morelli (President and CEO), Anshooman Aga (SVP and CFO) Industry Focus - **Industry**: Connected mobility and convenience retail - **Key Segments**: - Convenience retail (70% of business) - Fleets and fleet depot (10%) - Repair and repair solutions (20%) [3][4] Core Insights and Arguments 1. **Connected Mobility Strategy**: - 2025 marked significant progress in the connected mobility strategy, showcasing innovations at the NACS show [2][4] - The company has reorganized into three verticals to enhance integrated solutions [3][4] 2. **Pricing Power and Market Dynamics**: - Vontier operates in competitive but disciplined markets, maintaining price-cost margins while enhancing productivity [6][10] - The company anticipates greater than 60% incremental margins for 2026, with a long-term target of 30%-35% [7][10] 3. **80/20 Business Model**: - The 80/20 initiative has led to significant reductions in product lines, improving operational efficiency and cost management [8][9] - The company has eliminated 1 million square feet of real estate, contributing to better supply chain leverage [9][10] 4. **AI Integration**: - Over 90% of software engineers utilize AI, leading to increased R&D velocity and reduced costs of poor quality by 20%-25% [12][13] - AI is also being implemented in internal IT support and cybersecurity, with expectations of handling 30% of helpdesk tickets [15][16] 5. **Revenue Growth and Market Visibility**: - The company is guiding for 1% core growth in Q1 2026 and 3% organic revenue growth for the full year [17][18] - Customers are planning long-term capital expenditures, indicating a robust pipeline for future growth [18][21] 6. **Recurring Revenue Streams**: - Vontier has four streams of recurring revenue: software subscriptions, maintenance, aftermarket parts, and payments [34] - The Patheon platform has a current market penetration of 10%, with significant growth potential [37] 7. **Environmental and Fueling Solutions**: - The company anticipates low- to mid-single-digit growth in environmental solutions, supported by integrated offerings [24][25] - Recent innovations in unified payments and vehicle identification systems are expected to drive growth [25][45] 8. **Repair Market Dynamics**: - The aging vehicle fleet and increasing complexity of repairs are expected to boost the repair market [51][52] - The company is focusing on enhancing productivity solutions for repair technicians [53][56] 9. **Driivz and EV Strategy**: - The Driivz platform is progressing towards profitability, with a focus on providing a seamless experience for EV drivers [57][60] - The company is leveraging AI for energy management and network uptime, positioning itself well in the EV market [60] 10. **Cash Flow and Capital Deployment**: - Vontier targets over 90% adjusted free cash flow conversion, with a strong cash generation profile [61][62] - The company is evaluating M&A opportunities while maintaining a disciplined approach to capital deployment [66][67] Additional Important Insights - **Market Positioning**: Vontier is positioned to capitalize on the growing mobility ecosystem, which is valued at $30 billion [74][75] - **Investor Perception**: The company trades at lower multiples compared to peers, despite a solid growth outlook, indicating potential undervaluation [69][70] - **Innovation and Structural Changes**: The integration of AI and connected hardware is seen as a key differentiator for future growth [75][76]

For 2025, management said organic sales grew nearly 4% and EPS increased 11%. Morelli emphasized cash generation, stating Vontier produced more than $460 million in adjusted free cash flow for the year, about 15% of annual sales. Aga said full-year free cash flow conversion was 98% on an adjusted basis.Adjusted EPS for the quarter was $0.86, up 8% year-over-year and “at the high end of our guide,” Chief Financial Officer Anshooman Aga said. He added that adjusted operating profit margin was 21.3%, reflectin ...

Financial Condition and Debt - The company has outstanding indebtedness of approximately $2.1 billion and can incur an additional $750 million under the Revolving Credit Facility[66]. - The company may not be able to generate sufficient cash flows to service all of its indebtedness, leading to potential liquidity problems[68]. - The company may incur significant debt related to acquisitions, investments, or joint ventures, potentially leading to a deterioration of credit ratings and increased borrowing costs[76]. - As of December 31, 2025, the company had $500.0 million in outstanding debt subject to variable interest rates, with a hypothetical 100 basis points increase in market interest rates potentially increasing annual interest expense by approximately $5.0 million[190][191]. - The company maintains compliance with all financial covenants related to long-term debt as of December 31, 2025[200]. - The company believes it has sufficient liquidity to satisfy cash needs, supported by available cash and internally generated funds[220]. Revenue and Sales Performance - The company’s revenue is increasingly generated through software maintenance and subscription services, which are subject to customer renewal rates[62]. - The company's sales for the year ended December 31, 2025, were $3,075.6 million, an increase from $2,979.0 million in 2024[158]. - Total sales growth for 2025 was 3.2%, with core sales growth at 3.7%[159]. - Mobility Technologies segment sales increased by 10.8% to $1,123.9 million, driven by strong demand for retail payment solutions[160]. - Repair Solutions segment sales decreased by 6.9% to $589.9 million, primarily due to reduced volume in tool storage and power tools[161]. - Environmental & Fueling Solutions segment sales grew by 5.7% to $1,436.7 million, supported by a 6.4% increase in core sales[162]. Operational Risks and Challenges - The company may face production interruptions and inefficiencies due to reliance on sole or limited sources of supply for certain materials and components[54]. - The company may face unexpected liabilities from indemnification provisions in acquisition agreements[64]. - The company may face challenges in achieving anticipated cost savings or synergies from acquisitions, which could affect financial results[76]. - The company’s operations are vulnerable to catastrophic events, which could disrupt production and lead to significant costs[89]. - The company is exposed to risks from key distributors and channel partners, which could impact financial performance if relationships deteriorate[80]. Economic and Market Conditions - The company’s financial condition may be adversely affected by general economic conditions and market volatility[75]. - Adverse general economic conditions could lead to instability in capital and credit markets, affecting the company's ability to execute business plans and strategies[77]. - The company continues to monitor macroeconomic conditions, including the impact of tariffs on imports into the United States[157]. Regulatory and Compliance Issues - Compliance with complex and evolving regulations may increase operational costs and impact demand for products and services, potentially leading to revenue declines[97]. - The company is subject to extensive regulations, including import/export laws and data privacy regulations, which may restrict operations and increase compliance costs[100]. - The introduction of new regulations, such as those addressing greenhouse gas emissions, could significantly affect production costs and financial performance[99]. - Non-compliance with data privacy laws, such as GDPR, could lead to fines up to €20 million or 4% of total annual turnover, impacting financial stability[106]. - Regulatory enforcement actions can disrupt business operations and lead to reputational damage, impacting overall financial performance[107]. Cybersecurity and Data Privacy - Cybersecurity incidents and data breaches could disrupt operations and result in significant legal and financial repercussions[104]. - The company has a robust cybersecurity program to manage risks from cybersecurity threats, which have not materially affected its business to date[129]. - The company has developed information security policies informed by the NIST Cybersecurity Framework and conducts ongoing assessments of third-party providers[132][134]. - The evolving landscape of privacy and data security legislation may complicate compliance efforts and increase regulatory risks[107]. Employee and Talent Management - The ability to attract and retain key employees is critical for the company's success, and losing such talent could adversely affect financial performance[90]. Financial Performance Metrics - Operating profit for 2025 was $561.6 million, which is 18.3% of sales, up from 18.0% in 2024[158]. - Interest expense decreased by $14.9 million to $59.8 million, attributed to lower debt obligations and interest rates[177]. - Comprehensive income increased by $108.6 million for the year ended December 31, 2025, compared to the prior year, driven by a favorable foreign currency translation adjustment of $75.8 million[187]. - Net cash provided by operating activities was $511.0 million for the year ended December 31, 2025, an increase of $83.5 million compared to the prior year[204]. Shareholder Returns and Stock Performance - The company has a share repurchase program with a total authorization of $500.0 million, with $267.4 million remaining as of December 31, 2025[145][146]. - The company repurchased 8.0 million shares for $300.2 million in the open market during the year ended December 31, 2025[202]. - The closing price of the company's common stock ranged from $28.04 to $43.71 per share during the fiscal year ended December 31, 2025[119].

Financial Data and Key Metrics Changes - The company reported total sales of $809 million for Q4 2025, reflecting a core growth of 5% and an adjusted EPS of $0.86, which is an 8% increase year-over-year [13][4] - For the full year, organic sales grew nearly 4% and EPS finished up 11% [4][5] - Adjusted free cash flow for 2025 was over $460 million, equating to about 15% of annual sales [4][13] Business Line Data and Key Metrics Changes - Environmental and Fueling Solutions (EFS) segment delivered 6% core growth for the full year, with dispenser sales increasing high single digits in Q4 [14] - Mobility Technologies saw core sales increase by 8.5% in Q4, with Invenco achieving a revenue base of nearly $650 million, up 22% organically [15][8] - Repair Solutions experienced a sequential sales increase in Q4, although overall sales declined 2% due to lower volumes [16] Market Data and Key Metrics Changes - The convenience retail end market is growing at a mid-single-digit CAGR, driven by strategic investments in food service and technology [9] - The fueling market has shown broad-based growth, with sustained high levels of capital investment in fueling equipment, particularly in North America [7] Company Strategy and Development Direction - The company is focused on a connected mobility strategy that enables profitable growth and innovation [5] - Simplification efforts are expected to yield $15 million in incremental cost savings, enhancing operational efficiency [6][18] - The unified payment solution is a strategic priority, addressing payment complexity and driving additional revenue opportunities [11][12] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in entering 2026 with strong momentum and a healthy balance sheet, expecting core growth of about 3% for the full year [18][24] - The company anticipates attractive operating margin expansion of 80 basis points at the midpoint for 2026 [18] - Management highlighted the importance of innovation and product vitality in driving customer engagement and commercial momentum [24] Other Important Information - The company ended the year with nearly $500 million in cash and a net leverage ratio of 2.3 times [17] - Share repurchases totaled $300 million for the year, equating to over 5% of shares outstanding [17] Q&A Session Summary Question: Insights on Mobility Tech growth - Management noted that innovation-driven growth in Mobility Tech exceeded expectations, with better uptake on new products like FlexPay 6 and iNFX [30] Question: Longevity of retail fueling cycle - Management expressed confidence in the retail fueling cycle, citing strong demand from convenience store customers and ongoing capital investments [35][38] Question: Q1 core growth expectations across segments - Management expects EFS to grow in the low single-digit range, Mobility Technologies to be flattish, and Repair Solutions to remain relatively flat [42] Question: Impact of one-time inventory adjustment on margins - The inventory adjustment at Invenco was $4 million, impacting margins by approximately 130 basis points for Q4 [58] Question: Outlook for Repair Solutions growth - Management indicated a healthy backdrop for repair, with potential upside from improving trends and macroeconomic factors [60]

Vontier (NYSE:VNT) Q4 2025 Earnings call February 12, 2026 08:30 AM ET Company ParticipantsAnshooman Aga - CFOMark Morelli - CEORyan Edelman - VP of Investor RelationsConference Call ParticipantsAndy Kaplowitz - AnalystDavid Ridley-Lane - AnalystJulian Mitchell - AnalystKatie Fleischer - AnalystNigel Coe - AnalystOperatorGood morning, ladies and gentlemen, and welcome to Vontier fourth quarter 2025 earnings call. At this time, all lines are in listen-only mode. Following the presentation, we will conduct a ...

Financial Data and Key Metrics Changes - The company reported total sales of $809 million for Q4 2025, reflecting a core growth of 5% and an adjusted EPS of $0.86, which is an 8% increase year-over-year [14][15] - For the full year, organic sales grew nearly 4% and EPS finished up 11% [4][5] - Adjusted free cash flow for 2025 was over $460 million, equating to about 15% of annual sales [4][15] Business Line Data and Key Metrics Changes - Environmental and Fueling Solutions (EFS) segment delivered 6% core growth for the full year, with dispenser sales increasing high single digits in Q4 [16] - Mobility Technologies saw core sales increase by 8.5% in Q4, with Invenco achieving a revenue base of nearly $650 million, up 22% organically [9][17] - Repair Solutions experienced a sequential sales increase in Q4, although overall sales declined by 2% due to lower volumes [18] Market Data and Key Metrics Changes - The fueling market has shown a broad-based growth with a 6% organic CAGR over the last two years, driven by increased capital investment in fueling equipment, particularly in North America [8] - Environmental sales finished the year with growth in the low teens, supported by strong upgrade activity for connected automatic tank gauges [9] - The convenience retail end market is growing at a mid-single-digit CAGR, fueled by strategic investments in food service and technology [10] Company Strategy and Development Direction - The company is focused on a connected mobility strategy that enables profitable growth and innovation across its portfolio [5] - Simplification efforts are expected to yield $15 million in incremental cost savings, enhancing operational efficiency [6][20] - The unified payment solution is a strategic priority, addressing payment complexity and driving additional revenue opportunities for customers [12][13] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in entering 2026 with strong momentum and a healthier portfolio, expecting core growth of about 3% and operating margin expansion of 80 basis points [6][20] - The company anticipates challenges in the first half of 2026 due to tougher comparisons but expects stronger growth in the second half [22] - Management highlighted the importance of innovation and product vitality in driving customer engagement and commercial momentum [25] Other Important Information - The company ended the year with nearly $500 million in cash and a net leverage ratio of 2.3 times, down from 2.6 times at the start of the year [19] - Share repurchases totaled $300 million for the year, equating to over 5% of shares outstanding [19] Q&A Session Summary Question: Insights on MobilityTech growth - Management noted that innovation-driven growth in MobilityTech exceeded expectations, with strong uptake on new products like FlexPay 6 and NFX [29][31] - There was a $4 million inventory reserve adjustment at Invenco due to legacy inventory prior to acquisition [33] Question: Longevity of retail fueling cycle - Management expressed confidence in the retail fueling cycle, citing positive feedback from convenience store customers and ongoing capital investments [35][37] Question: Q1 core growth expectations across segments - EFS is expected to grow in the low single-digit range, while Mobility Technologies and Repair Solutions are anticipated to be relatively flat [42] Question: Operating margins and cost drivers - Q1 margins are expected to be flat year-over-year, with significant savings from simplification efforts ramping up in the second half of the year [44][46] Question: Dynamics of payment terminals - Management clarified that their payment terminals are not below average products; they provide significant advantages in managing payment complexity and lifecycle costs [70][72]

Vontier Corporation (VNT) came out with quarterly earnings of $0.86 per share, beating the Zacks Consensus Estimate of $0.85 per share. This compares to earnings of $0.8 per share a year ago. These figures are adjusted for non-recurring items.This quarterly report represents an earnings surprise of +1.18%. A quarter ago, it was expected that this company would post earnings of $0.76 per share when it actually produced earnings of $0.78, delivering a surprise of +2.63%.Over the last four quarters, the compan ...