Vontier Corporation Q1 FY2026 earnings call

• FONTIER delivered solid sales and orders growth, continuing to gain traction on the connected mobility strategy. They are expanding integrated offerings and seeing strong momentum in the convenience retail end market. - Announced the sale of the global fleet telematics business Teletrac for $220 million, which had undergone a successful multi-year turnaround. - Reorganized around three core end markets: convenience retail, fleet, and repair, streamlining operations and setting the foundation for greater scale. - Confident in the full-year outlook, with the underlying fundamentals of the business intact and plans to achieve $15 million in savings related to simplification and 80-20 efforts.

Environmental and fueling solutions: Started the year strongly, with total dispenser sales increasing low double digits globally, led by North America. Segment margin was flat at nearly 30%, with volume leverage and productivity actions offset by less favorable mix. Mobility technologies: Core sales declined by about 1% due to a headwind from higher shipments of a vehicle identification solution in the prior year. The consolidated mobility technology segment margin declined 260 basis points, driven by unfavorable mix and higher operating expense. Repair solutions: Sales performance was in line with expectations, with progress on a growth initiative offsetting pressure on technicians' discretionary spending. The lower segment margin was attributed to unfavorable product mix and a discrete bad debt reserve related to delayed collections.

• Full-year guidance was adjusted to remove the results of Teletrac, with sales losing about $110 million, bringing the midpoint of the new range to just over $3 billion. Teletrac divestiture is accretive to margin rate by about 50 basis points. Operating margin is expected to expand by about 130 basis points to approximately 22.5 percent. The full-year EPS range remains unchanged at $3.35 to $3.50. Adjusted free cash flow conversion is expected at around 95%. - For Q2, sales are expected in the range of $730 to $740 million, with core sales down about 1% at the midpoint. Margins will begin to accelerate, expanding approximately 80 basis points, and EPS will be in the range of 78 to 81 cents, including a one penny headwind from the divestiture.

• Forward-looking statements are subject to risks and uncertainties where actual results might differ materially. - The tariff environment is dynamic, impacting various aspects such as import and supplier records, memory chip pricing, oil and gas prices, and transportation costs. - Memory chip pricing and related redesign work in R&D can affect expenses.

Q: About mobility mix moving forward, margin decline year over year, and share buyback; A: Mix and higher R&D expenses impacted Q1 mobility tech margins. The rest of the year mix is expected to normalize, with $15 million in savings in place. About $150 million of buybacks are expected for the year, with the proceeds from the Teletrac divestiture likely going towards buybacks.

Q: Longer-term portfolio options, short-term operating margins; A: Management takes a step-by-step approach with the portfolio. Q2 margins are expected to be up 80 bps sequentially, with core business up 60 bps. Mobility tech margin expansion is expected to be north of 120 basis points, EFS margin expansion around 80 basis points, and repair down year on year due to lower price point tools.

Q: Mobility comps, wins ramp up in second half, EFS growth; A: The end market is resilient, second half compares are easier, bookings are solid, and EFS growth is expected to be in line with projections.

Q: Customer reception of new outdoor payment terminal, impact on connected mobility strategy; A: The uptake of the new outdoor payment terminal has been favorable, and it extends the addressable market as part of the connected mobility strategy.

Q: Consolidation activity and capital spending in convenience retailers; A: Consolidation tends to be net positive, and customers plan their CapEx two or three years in advance.

Q: Internal cost initiatives, Matco customer spending; A: On track for $15 million in-year savings, with $3 million in savings expected in Q2. Matco is driven by the aging car park, complexity, and productivity items.

Q: Mobility tech organic growth, impact of tariffs and memory chips; A: Mobility tech growth is expected to be low to mid-single digits. There is no material change to the tariff impact view, and memory chips cost in the mid to high single-digit million dollars, which is not material overall.

Q: Second quarter core growth across segments, minority stake in telematics business; A: EFS is expected to have low single-digit growth, mobility tech down low to mid single digits, and repair expected to have low single-digit growth. Retaining a minority stake in the telematics business gives upside on its trajectory.