Vontier(US:VNT)2022-02-17 18:28Financial Data and Key Metrics Changes - For the full year 2021, adjusted earnings per share (EPS) was $2.88, reflecting a 17% increase driven by 6% sales growth, including 7.4% core revenue growth and 160 basis points of adjusted core operating margin expansion [7][8] - Adjusted net earnings for Q4 2021 were $141 million, a decrease of 4% from $147 million in the prior-year period, translating to adjusted net earnings per share of $0.83 [21] - Adjusted operating profit for Q4 was $194 million, a decrease of 3% compared to the prior year, primarily driven by lower revenue volumes [23] Business Line Data and Key Metrics Changes - eMobility Technology's core revenue declined 11%, reflecting a low double-digit decline at TBR, while the acquisition of DRB contributed high-teen sales growth [25][26] - Core revenue growth in the Diagnostics and Repair Technologies platform was 2%, driven by low single-digit growth at Matco, despite supply and labor constraints [27] - The mobility technologies total revenue declined 4.5% in Q4, with DRB's performance being a highlight [26] Market Data and Key Metrics Changes - Developed markets core revenue declined mid-single-digits due to EMV impacts in North America, while high-growth markets saw a decline of about 20% compared to mid-teens growth in the prior-year Q4 [28] - The company remains confident in long-term growth opportunities in regions such as India, the Middle East, Africa, and Latin America [28] Company Strategy and Development Direction - The company is focused on portfolio diversification and has committed to invest over $500 million in energy transition initiatives over the next five years [13][14] - The acquisition of Driivz, a provider of EV charging and energy management software, is part of the strategy to capitalize on global EV charging growth [14] - The company anticipates a full-year 2022 adjusted diluted net EPS guidance range of $3.05 to $3.15, reflecting core revenue growth expectations of low to mid-single digits [17][31] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the ability to offset EMV headwinds and expects earnings and cash flow growth through this period [19][35] - The company is optimistic about underlying demand for its solutions and order growth, despite supply chain challenges [35] - Management noted that supply chain impacts are expected to improve in the second half of the year [20] Other Important Information - The company achieved adjusted free cash flow conversion of 96% for the year, with a cash balance of $573 million at the end of Q4 [8][25] - The company is committed to reducing greenhouse gas emissions by 45% by 2030 and achieving net zero by 2050 [11] Q&A Session Summary Question: Clarification on EMV revenue trajectory - Management clarified that EMV revenue was in the low $600 million range for 2021, with a projected decline of $25 million to $50 million in 2022 and a further decline of $300 million to $350 million in 2023 [43][44] Question: Expectations for 2022 growth - Management indicated that they expect low-to-mid single-digit growth for 2022, driven by improvements in supply chain and backlog [60][61] Question: Pricing actions in Q4 and expectations for 2022 - Management reported a price increase of approximately 3% in Q4 and anticipates continued pricing for inflation in 2022 [67][68] Question: Capital redeployment discussions - Management acknowledged the dislocation of value in the stock and indicated that share repurchase and M&A opportunities are not mutually exclusive [75][76] Question: Status of Tridium commercial agreement - Management confirmed that the lock-up for Tridium ends in July and expressed support for Tridium's value proposition [86] Question: Margin expansion at Teletrac Navman - Management attributed the 200 basis points margin expansion to improvements in churn and repositioning for profitable growth [89]