Vontier(US:VNT)2021-05-08 19:22Financial Data and Key Metrics Changes - Adjusted earnings per share (EPS) for Q1 2021 was $0.63, a 43% increase year-over-year, exceeding guidance by $0.08 [9][20] - Adjusted net earnings for Q1 were $108 million, up 44% from $75 million in the prior year [20] - Core revenue growth in Q1 was 14.3%, driven by approximately 15% growth in non-EMV sales [21] - Adjusted operating profit for Q1 was $151 million, a 41% increase compared to the prior year [22] - Adjusted free cash flow for Q1 was $156 million, representing a conversion rate of 145% [23] Business Line Data and Key Metrics Changes - Mobility Technologies saw core revenue growth of 12.7%, primarily due to mid-teens growth in GVR [26] - Diagnostics and repair technologies platform experienced core revenue growth of 18.6%, driven by strong demand at Matco [27] - High-growth markets grew more than 25% year-over-year, with significant contributions from India and Latin America [21][28] Market Data and Key Metrics Changes - Developed markets grew low double-digits, with mid-teens growth in North America, partially offset by softness in Western Europe [28] - High-growth markets showed strong growth, particularly in India and Mexico [21][28] Company Strategy and Development Direction - The company is focusing on profitable growth initiatives and operational milestones, leveraging the Vontier Business System (VBS) [10][38] - There is a commitment to M&A as a top priority for capital deployment, with a healthy pipeline of non-ICE targets [54][57] - The company is navigating supply chain constraints and inflationary pressures while maintaining a focus on integrity and employee support [14][15][16] Management's Comments on Operating Environment and Future Outlook - Management raised full-year 2021 adjusted diluted net EPS guidance to $2.55 - $2.65, reflecting expectations for low to mid-single-digit core revenue growth [17] - The company anticipates continued challenges with supply chain and inflation but remains confident in managing these headwinds [15][32] - Management expects first-half adjusted EPS growth of approximately 40%, offset by a decline in the second half [36] Other Important Information - The company closed on $1.6 billion of senior notes at an average interest rate under 2.5%, improving its debt structure [24] - Net leverage decreased to 1.9 times from 2.2 times at the end of 2020, positioning the company favorably for M&A [25] Q&A Session Summary Question: Insights on second half 2021 expectations - Management indicated improved top-line visibility due to growth initiatives and better traction in high-growth markets, leading to a slight increase in second half expectations [44][46] Question: Impact of COVID in high-growth markets, particularly India - Management acknowledged the tragic situation in India but remains optimistic about growth in other high-growth markets [48] Question: M&A pipeline details - The company has a healthy pipeline focused on non-ICE targets, with opportunities in retail solutions and smart cities [53][54] Question: EMV backlog and its impact - Management confirmed the backlog remains strong, with expectations of a year-over-year decline impacting the second half of the year [62][65] Question: Margin outlook and restructuring charges - Management expects a significant step-up in second half profitability, with restructuring charges anticipated to be around $20 million for the year [71] Question: Supply chain constraints and inventory management - Management is looking to rebuild inventory while navigating supply chain pressures, indicating a desire for more inventory in the system [126]