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]

Core Insights - Vontier reported strong financial performance for 2025, with organic sales growth of nearly 4% and an 11% increase in EPS, alongside over $460 million in adjusted free cash flow, representing about 15% of annual sales [1][5] Financial Performance - Adjusted EPS for Q4 was $0.86, reflecting an 8% year-over-year increase and aligning with the high end of guidance, while adjusted operating profit margin stood at 21.3% [2] - Total sales for Q4 reached $809 million, with a core growth of 5%, driven by high single-digit gains in both Mobility Technologies and Environmental and Fueling segments [2][5] - Vontier ended 2025 with a net leverage ratio of 2.3x, down from 2.6x at the beginning of the year, and plans to repay $200 million of a $500 million bond maturity with cash on hand [14] Segment Performance - Mobility Technologies experienced an 8.5% growth in Q4, with Invenco's revenue base nearing $650 million and achieving 22% organic growth, supported by new product launches [4][7] - Environmental and Fueling Solutions (EFS) reported high single-digit growth in dispenser sales and double-digit growth in Environmental Solutions, with segment margins expanding to over 29% [6][7] - Repair Solutions showed signs of stabilization, with a 2% sales decline in Q4 but sequential sales growth and recovery in higher-ticket categories [10] Strategic Initiatives - The company is focusing on a unified payment platform to reduce customer certification costs and enhance recurring revenue, which includes a $4 million one-time inventory reserve impacting Mobility margins [3][11][12] - Vontier is simplifying its operations to improve efficiency, with expected incremental cost savings of $15 million in 2026 [15] Guidance and Outlook - For 2026, Vontier projects sales between $3.1 billion and $3.15 billion, implying about 3% core growth, with adjusted EPS guidance of $3.30 to $3.35, representing high single-digit growth year-over-year [16][17] - The company anticipates adjusted free cash flow conversion to be around 95%, equating to roughly 15% of sales [18]

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]

Financial Data and Key Metrics Changes - The company reported total sales of $809 million for Q4 2025, with a core growth of 5% and adjusted EPS of $0.86, reflecting an 8% year-over-year increase [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 achieved 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's revenue base 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 U.S. convenience store count remained relatively flat year-over-year, while the number of fueling sites grew approximately 1% [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 [6] - The company aims to leverage integrated solutions to capitalize on digitalization and energy expansion trends [6] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in entering 2026 on firm footing, with strong leadership positions in resilient end markets [23] - The company anticipates core growth of about 3% for 2026, supported by low to mid-single-digit growth in EFS and mid-single-digit growth in Mobility Technologies [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] - Adjusted free cash flow conversion is expected to be about 95% for 2026, equating to roughly 15% of sales [20] Q&A Session Summary Question: Can you provide more color on MobilityTech's growth? - Management noted that innovation-driven growth in MobilityTech was strong, with better uptake on new products like FlexPay 6 and NFX [30] Question: What is the outlook for EFS and the retail fueling cycle? - Management expressed confidence in the retail fueling cycle, citing strong capital investment and positive feedback from convenience store customers [35] Question: How do you expect the various segments to perform in Q1? - 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: What impact did the Invenco inventory adjustment have on margins? - The inventory adjustment of $4 million impacted Invenco's margins by approximately 130 basis points [58] Question: What is the outlook for the repair solutions segment? - Management indicated that the repair market is healthy, with opportunities for growth in diagnostics and productivity tools [60]

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 FY Conference Summary Company Overview - **Company**: Vontier (NYSE: VNT) - **Industry**: Mobility technologies in convenience retailing Key Points and Arguments Market Dynamics - Vontier's revenue is primarily derived from the convenience retail sector, which constitutes two-thirds of its revenue, particularly in environmental and fueling segments [5][6] - The convenience retail market is experiencing growth due to larger national and regional players expanding their storefronts and improving economics by adding fresh food and modernizing formats [5][11] - The gas margins for convenience stores have improved significantly post-COVID, contributing to the sector's attractiveness [11] Digitalization and Innovation - Vontier is driving digitalization in the convenience retail industry, enhancing productivity, asset uptime, and consumer engagement through innovative solutions [6][12] - The company is positioned to address regulatory complexities in the fuel sector, ensuring compliance with environmental and payment standards [12] Capital Expenditure Trends - Large national and regional players are planning capital expenditures (CAPEX) for 2027-2028, indicating good visibility for future investments [14] - Smaller operators are also investing in site renovations to remain competitive, driven by healthy gas margins and the need for modern formats [15][16] International Market Insights - Emerging markets like India and the Middle East present growth opportunities, although they can be lumpy due to the nature of tenders [17][18] - Developed markets like Europe and Australia are stable, with a focus on technology advancements in convenience retail [19] Product Innovations - The Invenco business focuses on unified payment solutions and enterprise productivity, with products like FlexPay 6 enhancing consumer engagement and operational efficiency [22][23] - FlexPay 6 allows for remote software upgrades, reducing operational complexity and improving customer experience [24][25] Growth Projections - The growth profile for the DRB vehicle wash system is expected to stabilize, with significant contributions from the Pantheon point-of-sale automation software [31][32] - The Matco Tools business is focusing on stimulating demand through targeted initiatives despite macroeconomic challenges [34][35] Margin Expansion Strategies - Vontier is implementing an 80/20 program to simplify its product portfolio, which is expected to improve margins by reducing manufacturing costs and enhancing product development [40][41] - The company is leveraging AI in R&D to improve efficiency and reduce costs, contributing to margin expansion [41] Sales and Market Strategy - Vontier is unifying its sales approach to enhance customer engagement and address pain points across its integrated product offerings [42][43] Additional Important Insights - The company is seeing a healthy demand in the convenience retail space, with innovation driving growth [39] - The focus on multi-fuel options, including electric vehicle charging solutions, positions Vontier favorably in the evolving energy landscape [12] This summary encapsulates the key insights from Vontier's FY conference, highlighting the company's strategic positioning, market dynamics, and growth opportunities within the convenience retail sector.