Vontier Corporation (NYSE: VNT), a leading global provider of critical technologies and solutions to connect, manage and scale the mobility ecosystem, today announced results for the second quarter en...
RALEIGH, N.C.: Vontier Corporation (NYSE: VNT), a leading global provider of critical technologies and solutions to connect, manage and scale the mobility ecosystem, today announced results for the second quarter ended June 28, 2024.
Reported sales in the second quarter declined 9% year-over-year to $696.4 million, reflecting the absence of sales from divested businesses. Core sales declined 3% due to the timing of order and shipment delays within the Environmental and Fueling segment and Alternative Energy business, as well as the impact of ongoing macroeconomic pressures on the Repair Solutions segment. Operating profit of $114.1 million declined 5% from the prior year, and operating profit margin increased approximately 60 basis points, to 16.4%. Adjusted operating profit of $141.6 million declined 12% from the prior year and adjusted operating profit margin decreased approximately 60 basis points, to 20.3%. Net earnings were $70.1 million, and adjusted net earnings were $97.6 million, resulting in GAAP diluted net earnings per share of $0.45 and adjusted diluted net earnings per share of $0.63.
“Second quarter results were below our expectations,” said Mark Morelli, President and Chief Executive Officer. “Delayed customer project timing and reduced discretionary spending, impacted sales at the tail-end of the quarter. Our teams responded well, recovering a large part of the revenue shortfall in the month of July.”
“Given the current macro environment, we are lowering our 2024 outlook to reflect slower market growth in the second half,” Morelli continued. “Despite these short-term headwinds, we remain confident in our strategic positioning. Our portfolio is well-aligned in attractive end markets with strong secular tailwinds. Our Connected Mobility strategy enables us a competitive advantage to deliver differentiated value propositions, drive long-term customer success and unlock shareholder value.”
Segment Results
Q2 2024 Segment Results Summary | ||||||||
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| Environmental & Fueling Solutions | Mobility Technologies(a) | Repair Solutions | Total Vontier | ||||
Sales ($M) | $311.2 |
| $237.6 |
| $150.8 |
| $696.4 | |
Segment Operating Profit ($M) | $89.3 |
| $41.2 |
| $32.1 |
| $162.6 | |
Segment Operating Profit % | 28.7% |
| 17.3% |
| 21.3% |
| 23.3% | |
(a) Includes $3.2 million of intersegment sales that are eliminated in consolidation. |
Environmental & Fueling Solutions reported sales declined 8% from the prior year. Core sales declined 5%, impacted by shipment delays which resulted in a decline in North America dispenser sales, offset in part by continued growth in aftermarket service offerings, and environmental solutions. Segment operating profit declined 6% from the prior year. Segment operating profit margin expanded 60 basis points resulting from positive price contribution and ongoing productivity savings.
Mobility Technologies reported sales declined 1% from the prior year. Core sales increased 1% year-over-year, as continued demand for convenience store enterprise productivity and payment solutions was offset by lower demand for car wash technologies, as anticipated, and shipment delays at alternative energy fueling solutions. Segment operating profit margin declined 140 basis points year-over-year, the result of higher R&D investments at Invenco by GVR and unfavorable mix.
Repair Solutions reported sales declined 5% from the prior year. Core sales also declined 5%, as a reduction in discretionary spending among service technicians, driven by current macroeconomic conditions, impacted sales on large ticket items including tool storage, and hardlines. Segment operating profit margin declined 500 basis points, on lower volumes and the timing of bad debt reserves.
Other Items
2024 Outlook
Q3 2024 Outlook
Conference Call Details
Vontier will discuss results and outlook during its quarterly investor conference call today starting at 8:30 a.m. ET. The call and an accompanying slide presentation will be webcast on the “Investors” section of Vontier’s website, www.vontier.com, under “Events & Presentations.” A replay of the webcast will be available at the same location shortly after the conclusion of the presentation.
The call can be accessed via webcast or by dialing +1 800-549-8228, along with the conference ID: 92715. A replay of the webcast will be available at the same location shortly after the conclusion of the presentation, or by dialing +1 888-660-6264, conference ID: 92715 and passcode 92715 or under the “Investors” section of the Vontier website under “Events & Presentations.”
ABOUT VONTIER
Vontier (NYSE: VNT) is a global industrial technology company uniting productivity, automation and multi-energy technologies to meet the needs of a rapidly evolving, more connected mobility ecosystem. Leveraging leading market positions, decades of domain expertise and unparalleled portfolio breadth, Vontier enables the way the world moves – delivering smart, safe and sustainable solutions to our customers and the planet. Vontier has a culture of continuous improvement and innovation built upon the foundation of the Vontier Business System and embraced by colleagues worldwide. Additional information about Vontier is available on the Company’s website at www.vontier.com.
NON-GAAP FINANCIAL MEASURES
In addition to the financial measures prepared in accordance with generally accepted accounting principles (GAAP), this earnings release also references “core sales growth,” “adjusted operating profit,” “adjusted operating profit margin,” “segment operating profit,” “segment operating profit margin,” “adjusted net earnings,” “adjusted diluted net earnings per share,” “free cash flow,” “adjusted free cash flow”, “adjusted free cash flow conversion”, “EBITDA”, “adjusted EBITDA” and “net leverage ratio” which are non-GAAP financial measures. The reasons why we believe these measures, when used in conjunction with the GAAP financial measures, provide useful information to investors, how management uses such non-GAAP financial measures, a reconciliation of these measures to the most directly comparable GAAP measures and other information relating to these measures are included in the supplemental reconciliation schedule attached. The non-GAAP financial measures should not be considered in isolation or as a substitute for the GAAP financial measures, but should instead be read in conjunction with the GAAP financial measures. The non-GAAP financial measures used by Vontier in this release may be different from similarly-titled non-GAAP measures used by other companies.
FORWARD-LOOKING STATEMENTS
This release contains forward-looking statements within the meaning of the federal securities laws. These statements include, but are not limited to statements regarding Vontier Corporation’s (the “Company’s”) business and acquisition opportunities and anticipated earnings, and any other statements identified by their use of words like “anticipate,” “expect,” “believe,” “outlook,” “guidance,” or “will” or other words of similar meaning. There are a number of important risks and uncertainties that could cause actual results, developments and business decisions to differ materially from those suggested or indicated by such forward-looking statements and you should not place undue reliance on any such forward-looking statements. These risks and uncertainties include, among other things, deterioration of or instability in the economy, the markets we serve, international trade policies and the financial markets, contractions or lower growth rates and cyclicality of markets we serve, competition, changes in industry standards and governmental regulations that may adversely impact demand for our products or our costs, our ability to successfully identify, consummate, integrate and realize the anticipated value of appropriate acquisitions and successfully complete divestitures and other dispositions, our ability to develop and successfully market new products, software, and services and expand into new markets, the potential for improper conduct by our employees, agents or business partners, impact of divestitures, contingent liabilities relating to acquisitions and divestitures, impact of changes to tax laws, our compliance with applicable laws and regulations and changes in applicable laws and regulations, risks relating to global economic, political, war or hostility, legal, compliance and business factors, risks relating to potential impairment of goodwill and other intangible assets, currency exchange rates, tax audits and changes in our tax rate and income tax liabilities, the impact of our debt obligations on our operations, litigation and other contingent liabilities including intellectual property and environmental, health and safety matters, our ability to adequately protect our intellectual property rights, risks relating to product, service or software defects, product liability and recalls, risks relating to product manufacturing, our relationships with and the performance of our channel partners, commodity costs and surcharges, our ability to adjust purchases and manufacturing capacity to reflect market conditions, reliance on sole sources of supply, security breaches or other disruptions of our information technology systems, adverse effects of restructuring activities, impact of changes to U.S. GAAP, labor matters, and disruptions relating to man-made and natural disasters. Additional information regarding the factors that may cause actual results to differ materially from these forward-looking statements is available in our SEC filings, including our Form 10-K for the year ended December 31, 2023. These forward-looking statements represent Vontier’s beliefs and assumptions only as of the date of this release and Vontier does not assume any obligation to update or revise any forward-looking statement, whether as a result of new information, future events and developments or otherwise.
VONTIER CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (in millions) (unaudited) | |||||||
| June 28, 2024 |
| December 31, 2023 | ||||
ASSETS |
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Current assets: |
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Cash and cash equivalents | $ | 331.3 |
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| $ | 340.9 |
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Accounts receivable, net |
| 496.8 |
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| 497.5 |
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Inventories |
| 323.1 |
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| 296.6 |
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Prepaid expenses and other current assets |
| 141.4 |
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| 141.4 |
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Current assets held for sale |
| — |
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| 56.1 |
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Total current assets |
| 1,292.6 |
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| 1,332.5 |
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Property, plant and equipment, net |
| 115.9 |
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| 102.3 |
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Operating lease right-of-use assets |
| 45.7 |
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| 47.0 |
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Long-term financing receivables, net |
| 287.2 |
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| 276.2 |
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Other intangible assets, net |
| 526.5 |
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| 568.3 |
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Goodwill |
| 1,728.9 |
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| 1,742.4 |
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Other assets |
| 239.1 |
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| 225.3 |
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Total assets | $ | 4,235.9 |
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| $ | 4,294.0 |
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LIABILITIES AND EQUITY |
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Current liabilities: |
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Short-term borrowings and current portion of long-term debt | $ | 5.9 |
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| $ | 106.6 |
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Trade accounts payable |
| 367.7 |
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| 366.8 |
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Current operating lease liabilities |
| 14.7 |
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| 14.0 |
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Accrued expenses and other current liabilities |
| 378.3 |
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| 435.8 |
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Current liabilities held for sale |
| — |
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| 32.1 |
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Total current liabilities |
| 766.6 |
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| 955.3 |
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Long-term operating lease liabilities |
| 36.9 |
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| 37.1 |
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Long-term debt |
| 2,190.4 |
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| 2,189.0 |
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Other long-term liabilities |
| 217.7 |
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| 217.0 |
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Total liabilities |
| 3,211.6 |
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| 3,398.4 |
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Commitments and Contingencies |
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Equity: |
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Preferred stock |
| — |
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| — |
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Common stock |
| — |
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| — |
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Treasury stock |
| (463.8 | ) |
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| (403.4 | ) |
Additional paid-in capital |
| 70.6 |
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| 56.8 |
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Retained earnings |
| 1,331.3 |
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| 1,132.1 |
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Accumulated other comprehensive income |
| 78.0 |
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| 104.9 |
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Total Vontier stockholders’ equity |
| 1,016.1 |
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| 890.4 |
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Noncontrolling interests |
| 8.2 |
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| 5.2 |
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Total equity |
| 1,024.3 |
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| 895.6 |
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Total liabilities and equity | $ | 4,235.9 |
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| $ | 4,294.0 |
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VONTIER CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF EARNINGS (in millions, except per share amounts) (unaudited) | |||||||||||||||
| Three Months Ended |
| Six Months Ended | ||||||||||||
| June 28, 2024 |
| June 30, 2023 |
| June 28, 2024 |
| June 30, 2023 | ||||||||
Sales | $ | 696.4 |
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| $ | 764.4 |
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| $ | 1,452.2 |
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| $ | 1,540.8 |
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Operating costs and expenses: |
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Cost of sales, excluding amortization of acquisition-related intangible assets |
| (360.9 | ) |
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| (416.3 | ) |
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| (744.7 | ) |
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| (839.7 | ) |
Selling, general and administrative expenses |
| (156.3 | ) |
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| (166.9 | ) |
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| (321.7 | ) |
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| (324.4 | ) |
Research and development expenses |
| (45.1 | ) |
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