Vontier(US:VNT)2022-05-07 16:12Financial Data and Key Metrics Changes - Adjusted earnings per share increased by 11% year-over-year to $0.70, exceeding guidance [6][22] - Adjusted net earnings for Q1 were $116 million, up 7.6% from $108 million in the prior year [22] - Revenue growth of 5.7% was reported, driven by strong performance in non-EMV businesses [22][24] Business Line Data and Key Metrics Changes - Mobility Technologies platform saw core revenue decline by 2.4%, primarily due to lower EMV volume [25] - Diagnostics and Repair Technologies platform achieved core revenue growth of 6.1%, driven by strong demand [27] - DRB acquisition contributed to high teens non-EMV total revenue growth, significantly outperforming expectations [6][22] Market Data and Key Metrics Changes - North America core revenue was flat, with non-EMV revenues offsetting declines in EMV sales [28] - High-growth markets experienced a low double-digit decline, impacted by prior year regulatory drivers and a soft environment in China [28][29] - Developed markets globally grew core revenue in low single digits [28] Company Strategy and Development Direction - The company is focused on profitable growth initiatives and capital allocation to enhance non-ICE business growth [6][9] - A commitment to alternative energy investments, including a $500 million allocation over five years, was highlighted [70] - The company is evaluating its portfolio for potential divestitures to align with long-term strategic goals [44][45] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in offsetting EMV headwinds and delivering earnings growth in 2023 [19][34] - The ongoing supply chain challenges and inflationary pressures were acknowledged, but the company remains optimistic about margin expansion [34] - The demand environment is strong, with non-EMV total orders growth exceeding 20% [15] Other Important Information - The company ended the quarter with a cash balance of $145 million and no borrowings under its credit facility [30] - Adjusted free cash flow conversion was reported at 34%, with expectations to improve over the remaining quarters [33] - The company is maintaining its full-year adjusted diluted net EPS guidance at $3.20 to $3.30 [17][34] Q&A Session Summary Question: What is the cadence of the EMV headwind for the balance of the year? - Management indicated that the biggest headwind will be in Q1, with expectations of improvement in the second half of the year [51] Question: What are the main buckets within the profitable growth initiatives? - Key areas include product line simplification, strategic pricing, and growth in high-growth markets [52][55] Question: How is the company managing supply chain constraints? - The company is focused on continuous improvement and deeper deployment of metrics to address supply chain challenges [64][66] Question: What is the outlook for pricing in the coming quarters? - Pricing remains dynamic, with the company committed to being nimble and responsive to inflationary pressures [67][68] Question: Can you elaborate on the alternative energy investments? - The company is investing in electric charging infrastructure and CNG dispensers, positioning itself for growth in the alternative energy space [70][72] Question: What is the status of the backlog in Diagnostics and Repair Tech? - The backlog has increased significantly, and management is implementing measures to work it down while maintaining strong demand [79] Question: What is the timeline for potential divestitures? - The company is evaluating several smaller businesses, with actions expected in the second half of 2022 into early 2023 [89] Question: How are private market valuations looking for acquisitions? - The environment remains dynamic, with high expectations still prevalent in the market [106]