VNT

• Overall Quarterly Performance

  • Delivered Q2 2026 results ahead of management expectations on both top and bottom lines, with core sales flat year-over-year (ahead of guidance) against a tough 2025 comparison that included 11% year-over-year growth in the prior year quarter.
  • Orders grew low single digits, with book-to-bill ratio above 1, driven by strength in both Mobility Technologies and EFS.
  • Adjusted consolidated operating margin increased 190 basis points year-over-year; underlying margin (excluding tariff refunds) expanded 70 basis points.
  • Delivered $4 million in year-over-year cost savings in Q2, ahead of plan, and is on track to exceed the full-year $15 million cost savings commitment.

• Strategic and Operational Progress

  • Completed the divestiture of Teletrac and announced the tuck-in acquisition of ECOS after quarter-end, repositioning the portfolio to align with Vontier's connected mobility strategy and returns-focused capital philosophy. 80% of the current portfolio is aligned to high-demand end markets (convenience retail, fleets) with favorable secular trends.
  • Advanced product simplification initiatives: EFS is nearly finished rationalizing 32 dispenser platforms down to 8, with completion expected in H2 2026. A new multi-year platform rationalization program was launched for Mobility Technologies, and 1,400 SKUs were rationalized in H1 2026.
  • Connected mobility offerings are gaining strong traction: Year-to-date connected assets managed via Vontier's platforms are up 20%+ year-over-year; Q2 added 2,000 new connected sites, with customer QuickTrip reporting an 80% reduction in service truck rolls after deploying Vontier's asset management platform.
  • Rollout of the new FlexPay 6 next-generation payment terminal is underway, with ~25% of new factory dispensers already equipped with the product in Q2, with adoption expected to accelerate.

• Capital Allocation

  • Increased share repurchase authorization to $1 billion and accelerated buyback activity, repurchasing $130 million (4 million shares) in Q2, bringing year-to-date repurchases to $200 million (6 million shares). Management views repurchases as an attractive use of capital at current valuations, supported by strong free cash flow.
  • Acquired ECOS for a $43 million cash purchase price plus an earn-out tied to future ARR growth; ECOS is expected to deliver double-digit ROIC by year 3 and ~20% ROIC by year 5.

Vontier updated its full-year 2026 guidance, raising adjusted EPS while maintaining core sales growth expectations:

• Q3 2026 Guidance: Total sales expected between $720 million and $735 million, with core sales growth of ~5% at the midpoint, driven by mid-single-digit-plus growth in both EFS and Mobility Technologies (tough comparison headwinds are now behind the business). Adjusted operating margin is expected to expand 110 basis points at the midpoint, and adjusted EPS is expected between $0.82 and $0.86, representing 6% to 11% year-over-year growth.
• Full-Year 2026 Guidance: The midpoint of total sales was increased by $10 million, with core sales growth still expected to be ~3% at the midpoint, reflecting the net impact of acquisitions/divestitures and a modest FX headwind. Operating margin is expected to expand ~100 basis points at the midpoint to over 22%, including a 40 basis point tailwind from the Teletrac divestiture. Full-year adjusted EPS guidance was raised to $3.45 to $3.55, representing 8% to 11% year-over-year growth. Adjusted free cash flow conversion is still expected to hit 95% (15% of sales). The guide assumes ~$250 million in full-year share repurchases, with $40 million completed in Q3 to date.
• Segment-level guidance changes: EFS full-year core growth guidance was raised to mid-single digits (from low-to-mid single digits), while Mobility Technologies full-year core growth was lowered to low single digits (from low-to-mid single digits) due to slower-than-expected deployment of the new Pathion car wash software platform.

1. Environmental and Fueling Solutions (EFS): Core revenue grew 5% year-over-year, driven by healthy double-digit growth in global dispenser sales from new equipment investment, upgrade, and replacement activity. Segment operating margin increased 240 basis points, 220 basis points of which came from a one-time IEPA tariff refund. EFS accounts for an unstated but large portion of Vontier's 80% portfolio share aligned to favorable secular trends.
2. Mobility Technologies: Core sales declined year-over-year due to a tough comparison against $25 million in elevated vehicle identification solution shipments in Q2 2025, which created a 10 percentage point growth headwind. Excluding this comparison impact, underlying core sales grew mid-single digits, driven by strong adoption of integrated payment, point of sale, and asset management solutions. Segment operating margin expanded 190 basis points (170 basis points core, 20 basis points from tariff refunds) to ~21%.
3. Repair Solutions: Same-store sales were flat year-over-year, reflecting stable overall demand but constrained technician spending focused on high-payback products. Segment operating margin decreased 180 basis points, even with a 130 basis point tailwind from tariff refunds. Profitability faced pressure from unfavorable price/mix and incremental investments in sales and the recent leadership transition, creating a $1.5 million margin headwind versus guidance.

• Repair Solutions continues to underperform on profitability, with full-year 2026 operating profit expected to be $7 to $8 million below prior guidance, representing a 150 basis point full-year margin decline. While management is implementing turnaround actions, sustained margin underperformance could pressure overall consolidated results.
• Migration of DRB car wash customers from legacy technology to the new cloud-based Pathion platform is progressing slower than anticipated, with some deployments slipping out of 2026, creating a headwind for Mobility Technologies full-year results.
• Memory chip prices are creating a high single-digit cost headwind for the business, though this has been largely offset by implemented price increases to date.
• All forward-looking results are subject to general macroeconomic risks and uncertainties that could cause actual outcomes to differ materially from guidance, per standard SEC disclosures.

Q: What is driving the downward revision to full-year operating margin expansion guidance, and what are the segment-level margin outlooks and price/cost dynamics? / A: The full-year operating margin basis point expansion guidance was lowered from 130 to 100 basis points entirely due to underperformance in Repair Solutions, which will come in $7 to $8 million below prior margin expectations. Mobility Technologies is still expected to deliver 150 basis points of year-over-year margin expansion, down from 200 basis points prior, due to slower Pathion platform deployments in the car wash segment. While memory chip prices create a high single-digit cost headwind, implemented price increases leave net price-cost slightly positive for H1 2026.

Q: What turnaround actions are planned for Repair Solutions under new management, and what is the expected margin trajectory? / A: New leadership is focused on four key improvement areas: streamlining strategic supplier management to cut supply chain waste and costs, further SKU rationalization to reduce inventory and fulfillment costs, top-grading district management talent (with 20% of roles already upgraded), and tightening operational oversight. Management expects Repair Solutions margins to stabilize around 19% in H2 2026, a slight step-up from current levels, and sees additional upside potential beyond that as turnaround actions take effect.

Q: What is the strategic rationale for the ECOS acquisition, and what are its expected financial contributions? / A: ECOS is a tuck-in acquisition that complements Vontier's connected mobility strategy by expanding the company's capabilities in private fleet fueling networks, adding high-margin recurring revenue. ECOS was already a strategic partner, so its fleet energy management software integrates seamlessly with Vontier's existing hardware and site management offerings. ECOS is expected to generate $15 million to $17 million in revenue (mostly recurring) in 2027, with mid-teens operating margins.

Q: What is the progress and upside potential of Vontier's multi-year cost-out program? / A: The program is tracking ahead of plan, with $4 million in cost savings delivered in Q2, putting the company on track to deliver slightly more than the $15 million full-year target. Cost reduction is not a one-time initiative, but a continuous structural improvement process focused on product line simplification and 80/20 portfolio optimization. The company is only in the third or fourth inning of the multi-year program, with a long runway of remaining margin expansion opportunity.