UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

________________________________________________


(Mark One)
☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended: April ~~2, 2021~~1, 2022


Or
☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to

Commission file number 001-39483

________________________________________________

Vontier Corporation

(Exact name of registrant as specified in its charter)

________________________________________________


Delaware						84-2783455
(State or other jurisdiction of incorporation or organization)						(I.R.S. employer identification number)

5438 Wade Park Boulevard, Suite 600

Raleigh, NC 27607

(Address of principal executive offices)

Registrant’s telephone number, including area code: (984) 275-6000

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading symbol	Name of each exchange on which registered
Common stock, par value $0.0001 per share	VNT	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 (the “Exchange Act”) during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☐☒

Accelerated filer

☐

Non-accelerated filer

☒☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined by Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

The number of shares of common stock outstanding at April ~~30, 2021~~29, 2022 was ~~168,797,957.~~161,006,543.

VONTIER CORPORATION

INDEX

FORM 10-Q


		Page
PART I	FINANCIAL INFORMATION	4
Item 1.	Financial Statements (unaudited)	4
	Consolidated Condensed Balance Sheets as of April ~~2, 2021~~1, 2022 and December 31, ~~2020~~2021	4
	Consolidated ~~and Combined~~ Condensed Statements of Earnings ~~(Loss)~~ and Comprehensive Income ~~(Loss)~~ for the Three Months Ended April 1, 2022 and April 2, 2021 ~~and March 27, 2020~~	5
	Consolidated ~~and Combined~~ Condensed Statements of Changes in Stockholders' Equity for the Three Months Ended April ~~2, 2021~~1, 2022 and ~~March 27, 2020~~April 2,2021	6
	Consolidated ~~and Combined~~ Condensed Statements of Cash Flows for the Three Months Ended April 1, 2022 and April 2, 2021 ~~and March 27, 2020~~	78
	Notes to Consolidated ~~and~~ ~~Combined~~ Condensed Financial Statements	89
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	2524
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	3233
Item 4.	Controls and Procedures	3233

PART II	OTHER INFORMATION	34
Item 1.	Legal Proceedings	34
Item 1A.	Risk Factors	34
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	34
Item 6.	Exhibits	35
Signatures		36

PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

VONTIER CORPORATION AND SUBSIDIARIES

CONSOLIDATED CONDENSED BALANCE SHEETS

(in millions, except share and per share amounts)

April 2, 2021 December 31, 2020
(unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 670.3 $ 380.5
Accounts receivable, less allowance for credit losses of $42.2 million and $40.5 million as of April 2, 2021 and December 31, 2020, respectively 386.5 447.1
Inventories:
Finished goods 94.3 90.3
Work in process 25.8 19.9
Raw materials 122.6 123.5
Total inventories 242.7 233.7
Prepaid expenses and other current assets 111.7 120.8
Total current assets 1,411.2 1,182.1
Property, plant and equipment, net of accumulated depreciation of $243.2 million and $240.4 million as of April 2, 2021 and December 31, 2020, respectively 98.1 96.8
Operating lease right-of-use assets 35.8 40.1
Long-term financing receivables, less allowance for credit losses of $43.2 million and $44.4 million as of April 2, 2021 and December 31, 2020, respectively 237.0 233.5
Other intangible assets, net 241.1 250.5
Goodwill 1,082.9 1,092.1
Other assets 178.0 177.9
Total assets $ 3,284.1 $ 3,073.0
LIABILITIES AND EQUITY
Current liabilities:
Short-term borrowings $ 6.9 $ 10.9
Trade accounts payable 375.1 367.4
Current operating lease liabilities 11.9 11.9
Accrued expenses and other current liabilities 404.3 448.1
Total current liabilities 798.2 838.3
Long-term operating lease liabilities 26.9 30.5
Long-term debt 1,981.8 1,795.3
Other long-term liabilities 209.2 217.2
Commitments and Contingencies 0 0
Equity:
Preferred stock, 0 par value -- 15,000,000 authorized shares; and NaN issued and outstanding 0 0
Common stock, $0.0001 par value -- 1,985,000,000 shares authorized at April 2, 2021 and December 31, 2020; 168,762,403 and 168,497,098 shares issued and outstanding at April 2, 2021 and December 31, 2020, respectively 0 0
Additional paid-in capital 8.7 7.6
Retained earnings (Accumulated deficit) 77.4 (13.6)
Accumulated other comprehensive income 178.2 193.8
Total Vontier stockholders’ equity 264.3 187.8
Noncontrolling interests 3.7 3.9
Total stockholders’ equity 268.0 191.7
Total liabilities and equity $ 3,284.1 $ 3,073.0

~~See the accompanying Notes to the Consolidated and Combined Condensed Financial Statements.~~


	April 1, 2022		December 31, 2021
	(unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	145.1	$	572.6
Accounts receivable, less allowance for credit losses of $37.9 million and $38.9 million as of April 1, 2022 and December 31, 2021, respectively	434.2		481.3
Inventories:
Finished goods	114.0		104.7
Work in process	44.6		34.4
Raw materials	166.8		147.9
Total inventories	325.4		287.0
Prepaid expenses and other current assets	137.3		137.3
Equity securities measured at fair value	215.1		—
Total current assets	1,257.1		1,478.2
Property, plant and equipment, net of accumulated depreciation of $256.4 million and $256.3 million as of April 1, 2022 and December 31, 2021, respectively	100.6		100.6
Operating lease right-of-use assets	45.5		45.4
Long-term financing receivables, less allowance for credit losses of $40.8 million and $42.5 million as of April 1, 2022 and December 31, 2021, respectively	243.3		241.7
Other intangible assets, net	696.5		615.9
Goodwill	1,809.8		1,667.2
Other assets	147.3		200.8
Total assets	$	4,300.1	$	4,349.8
LIABILITIES AND EQUITY
Current liabilities:
Short-term borrowings	$	4.2	$	3.7
Trade accounts payable	407.9		424.9
Current operating lease liabilities	13.1		12.8
Accrued expenses and other current liabilities	423.1		492.0
Total current liabilities	848.3		933.4
Long-term operating lease liabilities	35.3		35.6
Long-term debt	2,584.5		2,583.8
Other long-term liabilities	280.1		223.3
Commitments and Contingencies	0		0
Equity:
Preferred stock -- 15,000,000 authorized shares; no par value and none issued and outstanding	—		—
Common stock, $0.0001 par value -- 1,985,000,000 shares authorized; 169,453,678 and 169,168,285 shares issued; and 161,002,143 and 169,168,285 shares outstanding as of April 1, 2022 and December 31, 2021, respectively	—		—
Treasury stock, at cost — 8,451,535 and no shares at April 1, 2022 and December 31, 2021, respectively	(207.0)		—
Additional paid-in capital	5.6		1.5
Retained earnings	582.9		386.7
Accumulated other comprehensive income	166.7		181.7
Total Vontier stockholders’ equity	548.2		569.9
Noncontrolling interests	3.7		3.8
Total stockholders’ equity	551.9		573.7
Total liabilities and equity	$	4,300.1	$	4,349.8
See the accompanying Notes to the Consolidated Condensed Financial Statements.

VONTIER CORPORATION AND SUBSIDIARIES

CONSOLIDATED ~~AND COMBINED~~ CONDENSED STATEMENTS OF EARNINGS ~~(LOSS)~~ AND COMPREHENSIVE INCOME ~~(LOSS)~~

(in millions, except per share amounts)

(unaudited)


		Three Months Ended				Three Months Ended
		April 2, 2021		March 27, 2020				April 1, 2022		April 2, 2021
Sales of products	Sales of products	$	644.6	$	547.5		Sales of products	$	670.3	$	644.6
Sales of services	Sales of services	62.8		61.7			Sales of services	77.8		62.8
Total sales	Total sales	707.4		609.2			Total sales	748.1		707.4
Cost of product sales	Cost of product sales	(345.5)		(297.1)			Cost of product sales	(365.4)		(345.5)
Cost of service sales	Cost of service sales	(50.1)		(49.0)			Cost of service sales	(47.4)		(50.1)
Total cost of sales	Total cost of sales	(395.6)		(346.1)			Total cost of sales	(412.8)		(395.6)
Gross profit	Gross profit	311.8		263.1			Gross profit	335.3		311.8
Operating costs:	Operating costs:						Operating costs:
Selling, general and administrative expenses	Selling, general and administrative expenses	(145.7)		(123.1)			Selling, general and administrative expenses	(166.0)		(145.7)
Research and development expenses	Research and development expenses	(33.2)		(32.9)			Research and development expenses	(34.5)		(33.2)
Impairment of goodwill		0		(85.3)

Operating profit	Operating profit	132.9		21.8			Operating profit	134.8		132.9
Non-operating expense, net:
Non-operating income (expense), net:							Non-operating income (expense), net:
Interest expense, net	Interest expense, net	(10.4)		(0.4)			Interest expense, net	(12.9)		(10.4)
Write-off of deferred financing costs	Write-off of deferred financing costs	(3.2)		0			Write-off of deferred financing costs	—		(3.2)

Gain on previously held equity interests from combination of business							Gain on previously held equity interests from combination of business	32.7		—
Unrealized gain on equity securities measured at fair value							Unrealized gain on equity securities measured at fair value	163.0		—
Other non-operating expense, net	Other non-operating expense, net	(0.2)		(0.1)			Other non-operating expense, net	(0.1)		(0.2)
Earnings before income taxes	Earnings before income taxes	119.1		21.3			Earnings before income taxes	317.5		119.1
Provision for income taxes	Provision for income taxes	(28.1)		(25.5)			Provision for income taxes	(67.3)		(28.1)
Net earnings (loss)		$	91.0	$	(4.2)
Net earnings							Net earnings	$	250.2	$	91.0

Net earnings (loss) per share:
Net earnings per share:							Net earnings per share:
Basic	Basic	$	0.54	$	(0.02)		Basic	$	1.51	$	0.54
Diluted	Diluted	$	0.54	$	(0.02)		Diluted	$	1.50	$	0.54
Average common stock and common equivalent shares outstanding:	Average common stock and common equivalent shares outstanding:						Average common stock and common equivalent shares outstanding:
Basic	Basic	168.7		168.4			Basic	165.9		168.7
Diluted	Diluted	169.7		168.4			Diluted	166.5		169.7

Net earnings							Net earnings	$	250.2	$	91.0
Other comprehensive income (loss), net of income taxes:	Other comprehensive income (loss), net of income taxes:						Other comprehensive income (loss), net of income taxes:
Net earnings (loss)		$	91.0	$	(4.2)
Foreign currency translation adjustments	Foreign currency translation adjustments	(15.7)		(46.2)			Foreign currency translation adjustments	(15.1)		(15.7)
Other adjustments	Other adjustments	0.1		1.7			Other adjustments	0.1		0.1
Total other comprehensive loss, net of income taxes	Total other comprehensive loss, net of income taxes	(15.6)		(44.5)			Total other comprehensive loss, net of income taxes	(15.0)		(15.6)
Comprehensive income (loss)		$	75.4	$	(48.7)
Comprehensive income							Comprehensive income	$	235.2	$	75.4

See the accompanying Notes to the Consolidated ~~and Combined~~ Condensed Financial Statements.

VONTIER CORPORATION AND SUBSIDIARIES

CONSOLIDATED ~~AND COMBINED~~ CONDENSED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

($ and shares in millions)

(unaudited)

Common Stock Additional Paid-In Capital Retained Earnings (Accumulated Deficit) Accumulated Other Comprehensive Income Noncontrolling
Interests Total
Shares Amount
Balance, December 31, 2020 168.5 $ 0 $ 7.6 $ (13.6) $ 193.8 $ 3.9 $ 191.7
Net earnings — — — 91.0 — — 91.0
Other comprehensive loss, net of income taxes — — — — (15.6) — (15.6)
Stock-based compensation expense — — 6.6 — — — 6.6
Exercise of common stock options and stock award distributions, net of shares for tax withholding 0.3 — (1.4) — — — (1.4)
Acquisition of noncontrolling interest — — (2.0) — — 0.1 (1.9)
Non-cash separation-related adjustments and other — — (2.1) — — — (2.1)
Change in noncontrolling interests — — — — — (0.3) (0.3)
Balance, April 2, 2021 168.8 $ 0 $ 8.7 $ 77.4 $ 178.2 $ 3.7 $ 268.0

Common Stock Additional Paid-In Capital Retained Earnings (Accumulated Deficit) Former Parent’s Investment Accumulated Other Comprehensive Income Noncontrolling
Interests Total
Shares Amount
Balance, December 31, 2019 0 $ 0 $ 0 $ 0 $ 1,662.5 $ 148.7 $ 4.9 $ 1,816.1
Adoption of accounting standard — — — — (16.9) — — (16.9)
Balance, January 1, 2020 0 0 0 0 1,645.6 148.7 4.9 1,799.2
Net loss — — — — (4.2) — — (4.2)
Other comprehensive loss, net of income taxes — — — — — (44.5) — (44.5)
Stock-based compensation expense — — — — 3.6 — — 3.6
Net transfers to Former Parent — — — — (13.1) — — (13.1)
Non-cash settlement of net related-party borrowings — — — — (1.0) — — (1.0)
Change in noncontrolling interests — — — — — — (1.1) (1.1)
Balance, March 27, 2020 0 $ 0 $ 0 $ 0 $ 1,630.9 $ 104.2 $ 3.8 $ 1,738.9


	Common Stock			Treasury Stock			Additional Paid-In Capital		Retained Earnings		Accumulated Other Comprehensive Income		Noncontrolling Interests		Total
	Shares	Amount		Shares	Amount
Balance, December 31, 2021	169.2	$	—	—	$	—	$	1.5	$	386.7	$	181.7	$	3.8	$	573.7
Net earnings	—	—		—	—		—		250.2		—		—		250.2
Dividends on common stock ($0.025 per share)	—	—		—	—		—		(4.0)		—		—		(4.0)
Other comprehensive loss, net of income taxes	—	—		—	—		—		—		(15.0)		—		(15.0)
Stock-based compensation expense	—	—		—	—		6.1		—		—		—		6.1
Exercise of common stock options and stock award distributions, net of shares for tax withholding	0.3	—		—	—		(2.0)		—		—		—		(2.0)
Purchase of treasury stock	—	—		(8.5)	(207.0)		—		(50.0)		—		—		(257.0)

Change in noncontrolling interests	—	—		—	—		—		—		—		(0.1)		(0.1)
Balance, April 1, 2022	169.5	$	—	(8.5)	$	(207.0)	$	5.6	$	582.9	$	166.7	$	3.7	$	551.9

See the accompanying Notes to the Consolidated ~~and Combined~~ Condensed Financial Statements.

VONTIER CORPORATION AND SUBSIDIARIES

CONSOLIDATED CONDENSED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

($ and shares in millions)

(unaudited)


	Common Stock			Additional Paid-In Capital		Retained Earnings (Accumulated Deficit)		Accumulated Other Comprehensive Income		Noncontrolling Interests		Total
	Shares	Amount
Balance, December 31, 2020	168.5	$	—	$	7.6	$	(13.6)	$	193.8	$	3.9	$	191.7
Net earnings	—	—		—		91.0		—		—		91.0
Other comprehensive loss, net of income taxes	—	—		—		—		(15.6)		—		(15.6)
Stock-based compensation expense	—	—		6.6		—		—		—		6.6
Exercise of common stock options and stock award distributions, net of shares for tax withholding	0.3	—		(1.4)		—		—		—		(1.4)
Acquisition of noncontrolling interest	—	—		(2.0)		—		—		0.1		(1.9)
Non-cash separation-related adjustments and other	—	—		(2.1)		—		—		—		(2.1)
Change in noncontrolling interests	—	—		—		—		—		(0.3)		(0.3)
Balance, April 2, 2021	168.8	$	—	$	8.7	$	77.4	$	178.2	$	3.7	$	268.0

See the accompanying Notes to the Consolidated Condensed Financial Statements.

VONTIER CORPORATION AND ~~COMBINED~~SUBSIDIARIES

CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS

($ in millions)

(unaudited)


		Three Months Ended					Three Months Ended
		April 2, 2021		March 27, 2020			April 1, 2022		April 2, 2021
Cash flows from operating activities:	Cash flows from operating activities:					Cash flows from operating activities:
Net earnings (loss)		$	91.0	$	(4.2)
Net earnings						Net earnings	$	250.2	$	91.0
Non-cash items:	Non-cash items:					Non-cash items:
Depreciation and amortization expense	Depreciation and amortization expense	19.8		19.3		Depreciation and amortization expense	29.1		19.8
Stock-based compensation expense	Stock-based compensation expense	6.6		3.6		Stock-based compensation expense	6.1		6.6
Impairment of goodwill		0		85.3
Write-off of deferred financing costs	Write-off of deferred financing costs	3.2		0		Write-off of deferred financing costs	—		3.2
Amortization of debt issuance costs	Amortization of debt issuance costs	0.8		0		Amortization of debt issuance costs	0.9		0.8

Gain on previously held equity interests from combination of business						Gain on previously held equity interests from combination of business	(32.7)		—
Unrealized gain on equity securities measured at fair value						Unrealized gain on equity securities measured at fair value	(163.0)		—

Change in deferred income taxes	Change in deferred income taxes	(1.0)		(7.0)		Change in deferred income taxes	32.6		(1.0)
Change in accounts receivable and long-term financing receivables, net	Change in accounts receivable and long-term financing receivables, net	61.5		30.5		Change in accounts receivable and long-term financing receivables, net	33.7		61.5
Change in other operating assets and liabilities	Change in other operating assets and liabilities	(18.6)		(71.9)		Change in other operating assets and liabilities	(115.6)		(18.6)
Net cash provided by operating activities	Net cash provided by operating activities	163.3		55.6		Net cash provided by operating activities	41.3		163.3
Cash flows from investing activities:	Cash flows from investing activities:					Cash flows from investing activities:
Cash paid for acquisitions, net of cash received						Cash paid for acquisitions, net of cash received	(184.9)		—
Payments for additions to property, plant and equipment	Payments for additions to property, plant and equipment	(11.0)		(7.5)		Payments for additions to property, plant and equipment	(12.9)		(11.0)
Proceeds from sale of property		0		0.1
Proceeds from sale of asset						Proceeds from sale of asset	0.2		—
Cash paid for equity investments	Cash paid for equity investments	(4.6)		(9.5)		Cash paid for equity investments	(5.8)		(4.6)
Net cash used in investing activities	Net cash used in investing activities	(15.6)		(16.9)		Net cash used in investing activities	(203.4)		(15.6)
Cash flows from financing activities:	Cash flows from financing activities:					Cash flows from financing activities:
Proceeds from issuance of long-term debt	Proceeds from issuance of long-term debt	1,586.5		0		Proceeds from issuance of long-term debt	—		1,586.5
Repayment of long-term debt	Repayment of long-term debt	(1,400.0)		0		Repayment of long-term debt	—		(1,400.0)
Payment for debt issuance costs	Payment for debt issuance costs	(1.2)		0		Payment for debt issuance costs	—		(1.2)
Net repayments of related-party borrowings		0		(23.6)
Net (repayments of) proceeds from short-term borrowings		(4.0)		0.1
Payment of common stock cash dividend						Payment of common stock cash dividend	(4.0)		—
Purchase of treasury stock						Purchase of treasury stock	(257.0)		—
Net borrowings (repayments) of short-term borrowings						Net borrowings (repayments) of short-term borrowings	0.4		(4.0)
Net transfers to Former Parent	Net transfers to Former Parent	(31.5)		(9.5)		Net transfers to Former Parent	—		(31.5)
Proceeds from stock option exercises	Proceeds from stock option exercises	1.5		0		Proceeds from stock option exercises	—		1.5
Acquisition of noncontrolling interest	Acquisition of noncontrolling interest	(1.9)		0		Acquisition of noncontrolling interest	—		(1.9)
Other financing activities	Other financing activities	(3.9)		(1.0)		Other financing activities	(3.0)		(3.9)
Net cash provided by (used in) financing activities	Net cash provided by (used in) financing activities	145.5		(34.0)		Net cash provided by (used in) financing activities	(263.6)		145.5
Effect of exchange rate changes on cash and equivalents		(3.4)		(4.7)
Net change in cash and equivalents		289.8		0
Beginning balance of cash and equivalents		380.5		0
Ending balance of cash and equivalents		$	670.3	$	0
Effect of exchange rate changes on cash and cash equivalents						Effect of exchange rate changes on cash and cash equivalents	(1.8)		(3.4)
Net change in cash and cash equivalents						Net change in cash and cash equivalents	(427.5)		289.8
Beginning balance of cash and cash equivalents						Beginning balance of cash and cash equivalents	572.6		380.5
Ending balance of cash and cash equivalents						Ending balance of cash and cash equivalents	$	145.1	$	670.3

See the accompanying Notes to the Consolidated ~~and Combined~~ Condensed Financial Statements.

VONTIER CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED ~~AND COMBINED~~ CONDENSED FINANCIAL STATEMENTS

(unaudited)

NOTE 1. BUSINESS OVERVIEW AND BASIS OF PRESENTATION

Nature of Business

Vontier Corporation (“Vontier,” the “Company,” “we,” “us,” or “our”) is a global industrial technology company that focuses on critical technical equipment, components, software and services for manufacturing, repair, and servicing in the mobility infrastructure industry worldwide. The Company supplies a wide range of mobility technologies and diagnostics and repair technologies solutions spanning advanced environmental ~~sensors,~~sensors; fueling ~~equipment,~~equipment; field payment ~~hardware, remote management~~hardware; point-of sale, workflow and ~~workflow software,~~monitoring software; vehicle tracking and fleet ~~management software-as-service~~management; software solutions ~~professional~~for traffic light control; and vehicle mechanics’ and technicians’ ~~equipment and traffic priority control systems.~~equipment. The Company markets its products and services to retail and commercial fueling operators, convenience store and in-bay car wash operators, tunnel car wash businesses, commercial vehicle repair businesses, municipal governments and public safety entities and fleet owners/operators on a global basis.

Vontier operates through 1 reportable segment comprised of 2 operating segments: (i) mobility technologies, which is a leading worldwide provider of solutions and services focused on fuel dispensing, remote fuel management, point-of-sale and payment systems, environmental compliance, workflow software and control solutions, vehicle tracking and fleet management (“telematics”) and traffic management (“smart city solutions”), and (ii) diagnostics and repair technologies, which manufactures and distributes vehicle repair tools, toolboxes and automotive diagnostic equipment and software and a full line of wheel-service equipment. Given the interrelationships of the products, technologies and customers and the resulting similar long-term economic characteristics, we meet the aggregation criteria and have combined our 2 operating segments into a single reportable segment. ~~Historically, these businesses had operated as part of Fortive Corporation’s Industrial Technologies reportable segment (the “Vontier Businesses”).~~

~~Separation from Fortive Corporation~~

On October 9, 2020, Fortive Corporation (“Fortive” or “Former Parent”) completed the separation of Fortive’s Industrial Technologies businesses through a pro rata distribution of 80.1% of the outstanding common stock of Vontier to Fortive’s stockholders (the “Separation”). In January 2021, Fortive sold a total of 33.5 million shares of the Company’s common stock as part of a secondary offering. After the secondary offering, Fortive no longer owned any of the Company’s outstanding common stock.

Basis of Presentation and Unaudited Interim Financial Information

The accompanying Consolidated ~~and Combined~~ Condensed Financial Statements present our historical financial position, results of operations, changes in equity and cash flows in accordance with generally accepted accounting principles in the United States of America (“GAAP”)~~. The combined financial statements for periods prior to the Separation were derived from Fortive’s consolidated financial statements~~ and accounting records and prepared in accordance with GAAP for the preparation of carved-out combined financial statements. Through the date of the Separation, all revenues and costs as well as assets and liabilities directly associated with Vontier have been included in the combined condensed financial statements. Prior to the Separation, the combined condensed financial statements also included allocations of certain general, administrative, sales and marketing expenses from Fortive’s corporate office and from other Fortive businesses to the Company and allocations of related assets, liabilities, and the Former Parent’s investment, as applicable. The allocations were determined on a reasonable basis; however, the amounts are not necessarily representative of the amounts that would have been reflected in the financial statements had the Company been an entity that operated independently of Fortive during the applicable periods. Related-party allocations prior to the Separation, including the method for such allocation, are discussed further in Note 11. Related-Party Transactions.

Following the Separation, the consolidated condensed financial statements include the accounts of Vontier and those of our wholly-owned subsidiaries and no longer include any allocations from Fortive. Accordingly:

•~~The Consolidated Condensed Balance Sheets as of April 2, 2021 and December 31, 2020 consist of our balances.~~

•The Consolidated Condensed Statement of Earnings and Comprehensive Income, Consolidated Condensed Statement of Changes in Equity and Consolidated Condensed Statement of Cash Flows for the three months ended April 2, 2021 consist of our consolidated results. The Combined Condensed Statement of Earnings (Loss) and Comprehensive Income (Loss), Combined Condensed Statement of Changes in Equity and Combined Condensed Statement of Cash Flows for the three months ended March 27, 2020 consist of the combined results of the Vontier Businesses.

Our Consolidated and Combined Condensed Financial Statements may not be indicative of our results had we been a separate stand-alone entity throughout the periods presented, nor are the results stated herein indicative of what our financial position, results of operations and cash flows may be in the future.

All significant transactions between the Company and Fortive have been included in the accompanying Consolidated and Combined Condensed Financial Statements for all periods presented. Cash transactions with Fortive prior to the Separation are reflected in the accompanying Consolidated and Combined Condensed Statements of Changes in Stockholders’ Equity as “Net transfers to Former Parent.” Former Parent’s investment, which included Retained earnings (Accumulated deficit) prior to the Separation, represents Fortive’s interest in our recorded net assets prior to the Separation. In addition, the accumulated net effect of intercompany transactions between us and Fortive or Fortive affiliates for periods prior to the Separation are included in Former Parent’s investment.

The Consolidated and Combined Condensed Financial Statements include our accounts and the accounts of our subsidiaries. All intercompany balances and transactions have been eliminated upon consolidation. The Consolidated and Combined Condensed Financial Statements also reflect the impact of noncontrolling interests. Noncontrolling interests do not have a significant impact on our consolidated and combined results of operations, therefore net earnings and net earnings per share attributable to noncontrolling interests are not presented separately in our Consolidated and Combined Condensed Statements of Earnings (Loss) and Comprehensive Income (Loss). Net earnings attributable to noncontrolling interests have been reflected in selling, general and administrative expenses (“SG&A”) and were insignificant in all periods presented.

~~Unaudited Interim Financial Information~~

unaudited.

The interim Consolidated ~~and Combined~~ Condensed Financial Statements include the accounts of the ~~Company. These Consolidated~~Company and ~~Combined Condensed Financial Statements are prepared~~its subsidiaries and affiliates in ~~conformity with GAAP,~~which the Company has a controlling financial interest or is the primary beneficiary. All intercompany accounts and ~~are unaudited.~~ transactions have been eliminated upon consolidation.

In the opinion of the Company’s management, all adjustments of a normal recurring nature necessary for a fair presentation have been reflected. Certain financial information that is normally included in annual financial statements prepared in accordance with GAAP, but that is not required for interim reporting purposes, has been omitted. The accompanying interim Consolidated ~~and Combined~~ Condensed Financial Statements and the related notes should be read in conjunction with the Company’s Consolidated and Combined Financial Statements and related notes included in the Company’s ~~2020~~2021 Annual Report on Form 10-K.

The Consolidated Condensed Financial Statements also reflect the impact of noncontrolling interests. Noncontrolling interests do not have a significant impact on our consolidated results of operations, therefore net earnings and net earnings per share attributable to noncontrolling interests are not presented separately in our Consolidated Condensed Statements of Earnings and Comprehensive Income. Net earnings attributable to noncontrolling interests have been reflected in selling, general and administrative expenses (“SG&A”) and were insignificant in all periods presented.

Recently Issued Accounting Standards

In March 2020, the FASB issued ~~ASU~~Accounting Standards Update (“ASU”) No. 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting and in January 2021 issued ASU No. 2021-01, Reference Rate Reform (Topic 848): Scope. These ASUs provide temporary optional expedients and exceptions to existing guidance on contract modifications and hedge accounting to facilitate the market transition from existing reference rates, such as ~~LIBOR~~the London Interbank Offered Rate (“LIBOR”) which is being phased out beginning at the end of 2021, to alternate reference rates, such as the Secured Overnight Financing ~~Rate (“SOFR”).~~Rate. These standards were effective upon issuance and allowed application to contract changes as early as January 1, 2020. These provisions may impact the Company as contract modifications and other changes occur during the LIBOR transition period. The Company continues to evaluate the optional relief guidance provided

within these ASUs, has reviewed its debt securities and continues to evaluate commercial contracts that may utilize LIBOR as the reference rate. We will continue the assessment and monitor regulatory developments during the LIBOR transition period.

In March 2022, the FASB issued ASU No. 2022-02, Financial Instruments – Credit Losses (Topic 326) – Troubled Debt Restructurings and Vintage Disclosures, which requires enhanced disclosure of certain loan refinancings and restructurings by creditors when a borrower is experiencing financial difficulty while eliminating certain current recognition and measurement accounting guidance. This ASU also requires the disclosure of current-period gross write-offs by year of origination for financing receivables and net investments in leases. ASU No. 2022-02 is effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years; this ASU allows for early adoption in any interim period after issuance of the update. The Company is currently assessing the impact this ASU will have on its consolidated financial statements.

NOTE 2. ACQUISITIONS

DRB Systems, LLC

On September 13, 2021, the Company acquired all of the outstanding equity interests of DRB Systems, LLC (“DRB”), a leading provider of point of sale, workflow software and control solutions to the car wash industry, for $955.8 million in cash. This acquisition aligns with the Company’s portfolio diversification strategy and enables opportunities in new end markets. With this acquisition, the Company expects to grow its retail solutions portfolio.

The acquisition of DRB was accounted for as a business combination and, accordingly, the assets acquired and the liabilities assumed have been recorded at their respective fair values as of the acquisition date. The goodwill is attributable to the workforce of the acquired business, future market opportunities and the expected synergies with the Company’s existing operations. The majority of goodwill derived from this acquisition is expected to be deductible for tax purposes.

The purchase price allocation has not been finalized as the analysis of the assets and liabilities acquired has not been completed. The procedures to finalize may result in further adjustments to our purchase accounting that could result in additional measurement period adjustments, which could have a material effect on the consolidated financial statements. The accounting for the acquisition will be completed no later than one year from the acquisition date, in accordance with GAAP.

The Company’s estimate of the purchase price allocation is as follows:


($ in millions)	Preliminary Purchase Price Allocation		Measurement Period Adjustments		Adjusted Preliminary Purchase Price Allocation		Weighted Average Amortization Period
Accounts receivable	$	17.3	$	(3.1)	$	14.2
Inventories	21.0		—		21.0
Prepaid and other current assets	3.8		—		3.8
Technology	142.1		0.5		142.6		9.0
Customer relationships	227.0		—		227.0		11.0
Trade names	36.0		—		36.0		14.0
Goodwill	587.4		(2.5)		584.9
Other assets	14.9		0.1		15.0
Trade accounts payable	(5.8)		—		(5.8)
Accrued expenses and other current liabilities	(44.6)		1.7		(42.9)
Other long-term liabilities	(43.6)		3.6		(40.0)
Purchase price, net of cash acquired	$	955.5	$	0.3	$	955.8

0To determine the fair value of the acquired intangible assets included above, management utilized significant unobservable inputs (Level 3 in the fair value hierarchy) and was required to make judgements and estimates about future results such as revenues, margin, net working capital and other valuation assumptions such as useful lives, royalty rates, attrition rates and discount rates. These assumptions are forward looking and could be affected by future economic and market conditions.

Driivz

On February 7, 2022, the Company acquired the remaining 81% of the outstanding shares of Driivz Ltd. (“Driivz”) for $152.6 million, net of cash received. Driivz, which is based in Israel, is a cloud-based subscription software platform supporting electric vehicle charging infrastructure (“EVCI”) providers with operations management, energy optimization, billing and roaming capabilities, as well as driver self-service apps. The acquisition of Driivz accelerates the Company’s portfolio diversification and e-mobility strategies and positions the Company to capitalize on the global EVCI market opportunities.

The acquisition of Driivz was accounted for as a business combination and, accordingly, the assets acquired and the liabilities assumed have been recorded at their respective fair values as of the acquisition date. The consideration paid was allocated as follows: (i) $90.0 million to definite-lived intangible assets consisting of developed technology, customer relationships and a trade name with a weighted average amortization period of approximately 9 years, (ii) $130.9 million to goodwill and (iii) $25.3 million to other net liabilities. The goodwill is attributable to the workforce of the acquired business, future market opportunities and the expected synergies with the Company’s existing operations. The majority of the goodwill derived from this acquisition is not expected to be deductible for tax purposes.

The carrying value of the Company’s approximately 19% interest in Driivz prior to the acquisition was $10.3 million, which historically was carried at cost. In connection with the acquisition, this investment was remeasured to a fair value of $43.0 million resulting in the recognition of an aggregate noncash gain of $32.7 million during the first quarter of 2022, which was included in Gain on previously held equity interests from combination of business in the Company’s Consolidated Condensed Statements of Earnings and Comprehensive Income. The preliminary fair value of the historical cost method investment was determined using a market approach. The key assumptions and estimates utilized in this approach included market data and market multiples as well as future levels of revenue growth and operating margins.

Acquisition-related costs related to Driivz are included in Selling, general and administrative expenses in the Consolidated Condensed Statement of Earnings and were $0.8 million.

The Company has not disclosed post-acquisition or pro-forma revenue and earnings attributable to Driivz as it did not have a material effect on the Company’s results.

The purchase price allocation has not been finalized for Driivz as the analysis of the assets acquired and liabilities assumed has not been completed. The procedures to finalize may result in further adjustments to our purchase accounting that could result in additional measurement period adjustments, which could have a material effect on the consolidated financial statements. The accounting for the acquisition will be completed no later than one year from the acquisition date, in accordance with GAAP.

To determine the preliminary fair value of the acquired intangible assets included above for Driivz, management utilized significant unobservable inputs (Level 3 in the fair value hierarchy). The assumptions used are forward looking and could be affected by future economic and market conditions.

NOTE 3. FINANCING AND TRADE RECEIVABLES

The Company’s financing receivables are comprised of commercial purchase security agreements with the Company’s end customers (“PSAs”) and commercial loans to the Company’s franchisees (“Franchisee Notes”). Financing receivables are generally secured by the underlying tools and equipment financed.

PSAs are installment sales contracts originated between the franchisee and technicians or independent shop owners which enable these customers to purchase tools and equipment on an extended-term payment plan. PSA payment terms are generally up to five years. Upon origination, the Company assumes the PSA by crediting the franchisee’s trade accounts receivable. As a result, originations of PSAs are non-cash transactions. The Company records PSAs at amortized cost.

Franchisee Notes have payment terms of up to 10 years and include financing to fund business startup costs including: (i) installment loans to franchisees used generally to finance inventory, equipment, and franchise fees; and (ii) lines of credit to finance working capital, including additional purchases of inventory.

Revenues associated with the Company’s interest income related to financing receivables are recognized to approximate a constant effective yield over the contract term. Accrued interest is included in Accounts receivable less allowance for credit losses and is insignificant as of April ~~2, 2021~~1, 2022 and December 31, ~~2020.~~2021.

Product sales to franchisees and the related financing income is included in Cash flows from operating activities in the accompanying Consolidated ~~and Combined~~ Condensed Statements of Cash Flows.

The components of financing receivables with payments due in less than twelve months that are recorded in Accounts receivable less allowance for credit losses on the Consolidated Condensed Balance Sheets were as follows:


($ in millions)	($ in millions)	April 2, 2021		December 31, 2020		($ in millions)	April 1, 2022		December 31, 2021
Gross current financing receivables:	Gross current financing receivables:					Gross current financing receivables:
PSAs	PSAs	$	97.1	$	98.9	PSAs	$	96.8	$	98.4
Franchisee Notes	Franchisee Notes	15.8		15.5		Franchisee Notes	15.4		15.5
Current financing receivables, gross	Current financing receivables, gross	$	112.9	$	114.4	Current financing receivables, gross	$	112.2	$	113.9

Allowance for credit losses:	Allowance for credit losses:					Allowance for credit losses:
PSAs	PSAs	$	17.1	$	15.8	PSAs	$	16.1	$	16.9
Franchisee Notes	Franchisee Notes	6.7		6.6		Franchisee Notes	6.6		6.5
Total allowance for credit losses	Total allowance for credit losses	23.8		22.4		Total allowance for credit losses	22.7		23.4
Total current financing receivables, net	Total current financing receivables, net	$	89.1	$	92.0	Total current financing receivables, net	$	89.5	$	90.5

Net current financing receivables:	Net current financing receivables:					Net current financing receivables:
PSAs, net	PSAs, net	$	80.0	$	83.1	PSAs, net	$	80.7	$	81.5
Franchisee Notes, net	Franchisee Notes, net	9.1		8.9		Franchisee Notes, net	8.8		9.0
Total current financing receivables, net	Total current financing receivables, net	$	89.1	$	92.0	Total current financing receivables, net	$	89.5	$	90.5

The components of financing receivables with payments due beyond one year were as follows:

($ in millions) April 2, 2021 December 31, 2020
Gross long-term financing receivables:
PSAs $ 219.1 $ 219.3
Franchisee Notes 61.1 58.6
Long-term financing receivables, gross $ 280.2 $ 277.9
Allowance for credit losses:
PSAs $ 37.8 $ 38.5
Franchisee Notes 5.4 5.9
Total allowance for credit losses 43.2 44.4
Total long-term financing receivables, net $ 237.0 $ 233.5
Net long-term financing receivables:
PSAs, net $ 181.3 $ 180.8
Franchisee Notes, net 55.7 52.7
Total long-term financing receivables, net $ 237.0 $ 233.5


($ in millions)	April 1, 2022		December 31, 2021
Gross long-term financing receivables:
PSAs	$	220.5	$	219.7
Franchisee Notes	63.6		64.5
Long-term financing receivables, gross	$	284.1	$	284.2

Allowance for credit losses:
PSAs	$	35.5	$	37.2
Franchisee Notes	5.3		5.3
Total allowance for credit losses	40.8		42.5
Total long-term financing receivables, net	$	243.3	$	241.7

Net long-term financing receivables:
PSAs, net	$	185.0	$	182.5
Franchisee Notes, net	58.3		59.2
Total long-term financing receivables, net	$	243.3	$	241.7

Net deferred origination costs were insignificant as of April ~~2, 2021~~1, 2022 and December 31, ~~2020.~~2021. As of both April ~~2, 2021~~1, 2022 and December 31, ~~2020,~~2021, we had a net unamortized discount on our financing receivables of ~~$17.2 million and $18.4 million, respectively.~~$16.7 million.

It is the Company’s general practice to not engage in contract or loan modifications of existing arrangements for troubled debt restructurings. In limited instances, the Company may modify certain impaired receivables with customers in bankruptcy or other legal proceedings, or in the event of significant natural disasters. Restructured financing receivables as of April ~~2, 2021~~1, 2022 and December 31, ~~2020~~2021 were insignificant.

Credit score and distributor tenure are the primary indicators of credit quality for the Company’s financing receivables. Depending on the contract, payments for financing receivables are due on a monthly or weekly basis. Weekly payments are converted into a monthly equivalent for purposes of calculating delinquency. Delinquencies are assessed at the end of each month following the monthly equivalent due date and are considered delinquent once past due.

The amortized cost basis of PSAs and Franchisee Notes by origination year as of April ~~2, 2021,~~1, 2022, is as follows:


($ in millions)	($ in millions)	2021		2020		2019		2018		2017		Prior		Total		($ in millions)	2022		2021		2020		2019		2018		Prior		Total
PSAs	PSAs															PSAs
Credit Score:	Credit Score:															Credit Score:
Less than 400	Less than 400	$	6.2	$	14.4	$	8.3	$	3.8	$	1.6	$	0.5	$	34.8	Less than 400	$	5.3	$	14.7	$	6.9	$	4.0	$	1.6	$	0.6	$	33.1
400-599	400-599	8.0		21.3		11.5		6.2		2.4		0.9		50.3		400-599	7.8		20.1		11.5		5.9		2.7		1.0		49.0
600-799	600-799	16.5		41.5		22.1		11.5		4.7		1.7		98.0		600-799	17.4		41.8		22.2		11.4		4.8		1.7		99.3
800+	800+	25.5		57.3		29.2		14.8		5.0		1.3		133.1		800+	26.7		58.6		29.0		14.2		5.9		1.5		135.9
Total PSAs	Total PSAs	$	56.2	$	134.5	$	71.1	$	36.3	$	13.7	$	4.4	$	316.2	Total PSAs	$	57.2	$	135.2	$	69.6	$	35.5	$	15.0	$	4.8	$	317.3

Franchisee Notes	Franchisee Notes															Franchisee Notes
Active distributors	Active distributors	$	11.6	$	19.6	$	15.4	$	8.5	$	4.8	$	6.0	$	65.9	Active distributors	$	9.0	$	26.2	$	11.3	$	10.7	$	5.5	$	6.3	$	69.0
Separated distributors	Separated distributors	0		0.4		1.6		1.7		2.2		5.1		11.0		Separated distributors	0.1		0.3		0.8		2.1		1.6		5.1		10.0
Total Franchisee Notes	Total Franchisee Notes	$	11.6	$	20.0	$	17.0	$	10.2	$	7.0	$	11.1	$	76.9	Total Franchisee Notes	$	9.1	$	26.5	$	12.1	$	12.8	$	7.1	$	11.4	$	79.0

Past Due

PSAs are considered past due when a contractual payment has not been made. If a customer is making payments on its account, interest will continue to accrue. The table below sets forth the aging of the Company’s PSA balances as of:

($ in millions) 30-59 days past due 60-90 days past due Greater than 90 days past due Total past due Total not considered past due Total Greater than 90 days past due and accruing interest
April 2, 2021 $ 2.8 $ 1.5 $ 6.5 $ 10.8 $ 305.4 $ 316.2 $ 6.5
December 31, 2020 3.5 1.8 7.2 12.5 305.7 318.2 7.2


($ in millions)	30-59 days past due		60-90 days past due		Greater than 90 days past due		Total past due		Total not considered past due		Total		Greater than 90 days past due and accruing interest
April 1, 2022	$	3.1	$	1.6	$	6.1	$	10.8	$	306.5	$	317.3	$	6.1
December 31, 2021	3.3		1.7		6.5		11.5		306.6		318.1		6.5

Franchisee Notes are considered past due when payments have not been made for 21 days after the due date. Past due Franchisee Notes (where the franchisee had not yet separated) were insignificant as of April ~~2, 2021~~1, 2022 and December 31, ~~2020.~~2021.

Uncollectable Status

PSAs are deemed uncollectable and written off when they are both contractually delinquent and no payment has been received for 180 days.

Franchisee Notes are deemed uncollectable and written off after a distributor separates and no payments have been received for one year.

The Company stops accruing interest and other fees associated with financing receivables when (i) a customer is placed in uncollectable status and repossession efforts have begun; (ii) upon receipt of notification of bankruptcy; (iii) upon notification of the death of a customer; or (iv) other instances in which management concludes collectability is not reasonably assured.

Allowance for Credit Losses Related to Financing Receivables

The Company calculates the allowance for credit losses considering several factors, including the aging of its financing receivables, historical credit loss and portfolio delinquency experience and current economic conditions. The Company also evaluates financing receivables with identified exposures, such as customer defaults, bankruptcy or other events that make it unlikely it will recover the amounts owed to it. In calculating such reserves, the Company evaluates expected cash flows, including estimated proceeds from disposition of collateral, and calculates an estimate of the potential loss and the probability of loss. When a loss is considered probable on an individual financing receivable, a specific reserve is recorded.

The following is a rollforward of the PSAs and Franchisee Notes components of the Company’s allowance for credit losses related to financing receivables as of:

April 2, 2021 December 31, 2020
($ in millions) PSAs Franchisee Notes Total PSAs Franchisee Notes Total
Allowance for credit losses, beginning of year $ 54.3 $ 12.5 $ 66.8 $ 29.4 $ 11.9 $ 41.3
Transition adjustment — — — 17.5 1.0 18.5
Provision for credit losses 8.3 0.9 9.2 29.3 5.9 35.2
Write-offs (8.3) (1.4) (9.7) (32.5) (6.5) (39.0)
Recoveries of amounts previously charged off 0.6 0.1 0.7 2.7 0.2 2.9
Other adjustment 0 0 0 7.9 0 7.9
Allowance for credit losses, end of period $ 54.9 $ 12.1 $ 67.0 $ 54.3 $ 12.5 $ 66.8


	April 1, 2022						December 31, 2021
($ in millions)	PSAs		Franchisee Notes		Total		PSAs		Franchisee Notes		Total
Allowance for credit losses, beginning of year	$	54.1	$	11.8	$	65.9	$	54.3	$	12.5	$	66.8
Provision for credit losses	5.7		1.3		7.0		24.9		4.2		29.1
Write-offs	(8.7)		(1.2)		(9.9)		(27.5)		(5.6)		(33.1)
Recoveries of amounts previously charged off	0.5		—		0.5		2.4		0.7		3.1
Allowance for credit losses, end of period	$	51.6	$	11.9	$	63.5	$	54.1	$	11.8	$	65.9

The ending balance as of April ~~2, 2021~~1, 2022 of ~~$67.0~~$63.5 million is included in the Consolidated Condensed Balance Sheets in Accounts receivable less allowance for credit losses and Long-term financing receivables less allowance for credit losses in the amounts of ~~$23.8~~$22.7 million and ~~$43.2~~$40.8 million, respectively. The ending balance as of December 31, ~~2020~~2021 of ~~$66.8~~$65.9 million is included in the Consolidated Condensed Balance Sheets in Accounts receivable less allowance for credit losses and Long-term financing receivables less allowance for credit losses in the amounts of ~~$22.4~~$23.4 million and ~~$44.4~~$42.5 million, respectively.

Allowance for Credit Losses Related to Trade Accounts Receivables

The following is a rollforward of the allowance for credit losses related to the Company’s trade accounts receivables (excluding financing receivables) and the Company’s trade accounts receivable cost basis as ~~of April 2, 2021:~~of:


~~($ in millions)~~
~~Cost basis of trade accounts receivable as of April 2, 2021~~	$	~~315.8~~

~~Allowance for credit losses balance as of December 31, 2020~~	~~18.1~~
~~Provision for credit losses~~	~~2.5~~
~~Write-offs~~	~~(2.0)~~
~~Foreign currency and other~~	~~(0.2)~~
~~Allowance for credit losses balance as of April 2, 2021~~	~~18.4~~
~~Net trade accounts receivable balance as of April 2, 2021~~	$	~~297.4~~


~~($ in millions)~~
~~Cost basis of trade accounts receivable as of December 31, 2020~~	$	~~373.2~~

~~Allowance for credit losses balance as of December 31, 2019~~	~~15.0~~
~~Adoption of new accounting standard~~	~~3.6~~
~~Provision for credit losses~~	~~7.7~~
~~Write-offs~~	~~(9.1)~~
~~Foreign currency and other~~	~~0.9~~
~~Allowance for credit losses balance as of December 31, 2020~~	~~18.1~~
~~Net trade accounts receivable balance as of December 31, 2020~~	$	~~355.1~~


($ in millions)	April 1, 2022		December 31, 2021
Cost basis of trade accounts receivable	$	359.9	$	406.3

Allowance for credit losses balance, beginning of year	15.5		18.1
Provision for credit losses	0.9		7.7
Write-offs	(1.2)		(10.2)
Foreign currency and other	—		(0.1)
Allowance for credit losses balance, end of period	15.2		15.5
Net trade accounts receivable balance	$	344.7	$	390.8

NOTE 3.4. GOODWILL

The following is a rollforward of our carrying value of goodwill:


($ in millions)
Balance, December 31, ~~2020~~2021	$	~~1,092.1~~1,667.2
Measurement period adjustments for prior period acquisition	0.2
Addition to goodwill for current year acquisitions	152.6

FX translation	~~(9.2)~~(10.2)
Balance, April ~~2, 2021~~1, 2022	$	~~1,082.9~~1,809.8

Accumulated impairment charges were $85.3 million as of April ~~2, 2021~~1, 2022 and December 31, ~~2020. NaN~~2021. No impairment charges were recorded during the three months ended April ~~2, 2021.~~1, 2022.

1314

NOTE 4.5. FINANCING

The Company had the following debt outstanding as of:


($ in millions)	April 1, 2022		December 31, 2021
Short-term borrowings:
India Credit Facility	$	1.1	$	1.5
Other short-term borrowings and bank overdrafts	3.1		2.2
Total short-term borrowings	$	4.2	$	3.7

Long-term debt:
Two-Year Term Loans due 2023	$	600.0	$	600.0
Three-Year Term Loans due 2024	400.0		400.0
1.800% senior unsecured notes due 2026	500.0		500.0
2.400% senior unsecured notes due 2028	500.0		500.0
2.950% senior unsecured notes due 2031	600.0		600.0
Total long-term debt	2,600.0		2,600.0
Less: discounts and debt issuance costs	(15.5)		(16.2)
Total long-term debt, net	$	2,584.5	$	2,583.8

($ in millions) April 2, 2021 December 31, 2020
Short-term borrowings:
India Credit Facility $ 5.4 $ 10.9
Other short-term borrowings and bank overdrafts 1.5 0
Total short-term borrowings $ 6.9 $ 10.9
Long-term debt:
Two-Year Term Loans $ 0 $ 1,000.0
Three-Year Term Loans 400.0 800.0
1.800% senior unsecured notes due 2026 500.0 0
2.400% senior unsecured notes due 2028 500.0 0
2.950% senior unsecured notes due 2031 600.0 0
Total long-term debt 2,000.0 1,800.0
Less: discounts and debt issuance costs (18.2) (4.7)
Total long-term debt, net $ 1,981.8 $ 1,795.3
Debt issuance costs that have been netted against the aggregate principal amounts of the components of debt in the short-term borrowings section above are immaterial. Given the nature of the short-term borrowings, the carrying value approximates fair value at both April 1, 2022 and December 31, 2021.

Credit Facilities

Revolving Credit Facility

~~Credit Facilities~~

On ~~September 29, 2020, we entered into a~~April 28, 2021, the Company refinanced its existing credit agreement. The amended and restated credit agreement (the ~~“Credit~~“A&R Credit Agreement”) ~~with a syndicate~~extended the term of banks, consisting of a three-year, $800.0 million senior unsecured delayed draw term loan facility (the “Three-Year Term Loans”), a two-year, $1.0 billion senior unsecured delayed draw term loan facility (the “Two-Year Term Loans” and together with the ~~Three-Year Term Loans, the “Term Loans”) and a three-year,~~ $750.0 million senior unsecured multi-currency revolving credit facility ~~including a $25.0 million sublimit for swingline loans and a $75.0 million sublimit for the issuance of letters of credit~~ (the “Revolving Credit Facility”) from September 29, 2023 to April 28, 2026 and ~~together with~~reduced the Term Loans, the “Credit Facilities”). We incurred $7.7 million in debt issuance costs which were paid by Fortive. Due to the repayment of the Term Loans in connection with the issuance of the Notes, as discussed below, $3.2 million of these debt issuance costs were expensed and reported in the accompanying Consolidated and Combined Condensed Statement of Earnings (Loss) and Comprehensive Income (Loss) within non-operating expenses as a Write-off of deferred financing costs.

~~In connection with the issuance of the Notes, as discussed below, the Guarantors of the Notes became Guarantors of the Credit Facilities.~~interest rate.

~~Two-Year Term Loans~~The Revolving Credit Facility bears interest at a variable rate equal to LIBOR plus a ratings-based margin which was 117.5 basis points as of April 1, 2022.

~~On March 10, 2021, in connection with~~There were no amounts outstanding under the ~~issuance~~Revolving Credit Facility as of ~~the Notes, as discussed below, we repaid, in full, the Two-Year Term Loans.~~April 1, 2022.

Three-Year Term Loans Due 2024

~~On March 10, 2021, in connection with~~The A&R Credit Agreement also extended the ~~issuance~~term of the ~~Notes, we repaid~~ $400.0 million ~~of our~~ Three-Year Term ~~Loans.~~

Loans Due 2024 from October 6, 2023 to October 28, 2024 and reduced the interest rate. The Three-Year Term Loans bear interest at a variable rate equal to LIBOR plus a ratings-based margin which was ~~162.5~~112.5 basis points as of April ~~2, 2021.~~1, 2022. The interest rate ~~on the Three-Year Term Loans outstanding~~was 1.58% per annum as of April ~~2, 2021, was 1.73% per annum. The Three-Year Term Loans mature on October 6, 2023 and we~~1, 2022. We are not obligated to make repayments prior to the maturity date. ~~We are not permitted to re-borrow once the Three-Year Term Loans are repaid and there is no further ability to draw on the facility.~~ There was no material difference between the carrying value and the estimated fair value of the debt outstanding.

~~Revolving Credit Facility~~

Two-Year Term Loans Due 2023

The $750.0 million Revolving Credit Facility requires the Company to pay lenders a commitment fee of 0.125% to 0.325% based on a ratings grid. As of April 2, 2021, there were no amounts outstanding under the Revolving Credit Facility. The

~~Revolving Credit Facility bears~~Two-Year Term Loans Due 2023 bear interest at a variable rate equal to LIBOR plus a ratings-based margin which was ~~142.5~~75.0 basis points as of April ~~2, 2021.~~1, 2022. The interest rate was 1.21% per annum as of April 1, 2022. The Two-Year Term Loans Due 2023 mature on September 13, 2023. We are not obligated to make repayments prior to the maturity date. There was no material difference between the carrying value and the estimated fair value of the debt outstanding.

The A&R Credit Agreement requires, among others, that we maintain certain financial covenants, and we were in compliance with all of these covenants as of April 1, 2022.

Senior Unsecured Notes

On March 10, 2021, we completed the private placement of each of the following series of senior unsecured notes (collectively, the “Notes”) to qualified institutional buyers under rule 144A of the Securities Act of 1933, as amended (the “Securities Act”) and outside the United States to non-U.S. persons in compliance with Regulation S under the Securities Act:

•$500.0 million aggregate principal amount of senior notes due April 1, 2026 (the “2026 Notes”) issued at 99.855% of their principal amount and bearing interest at the rate of 1.800% per year;

•$500.0 million aggregate principal amount of senior notes due April 1, 2028 (the “2028 Notes”) issued at 99.703% of their principal amount and bearing interest at the rate of 2.400% per year; and

•$600.0 million aggregate principal amount of senior notes due April 1, 2031 the (the “2031 Notes”) issued at 99.791% of their principal amount and bearing interest at the rate of 2.950% per ~~year~~year.

The Notes are fully and unconditionally guaranteed (the “Guarantees”), on a joint and several basis, by Gilbarco Inc. and Matco Tools Corporation, two of our wholly-owned subsidiaries (the “Guarantors”). Interest on the Notes is payable semi-annually in arrears on April 1 and October 1 of each year, commencing on October 1, 2021. The Notes and the Guarantees are the Company’s and the Guarantors’ general senior unsecured obligations.

The Company received approximately $1.6 billion in net proceeds from the issuance of the Notes, which was partially offset by discounts of $3.5 million and debt issuance costs of $13.9 million. The Company used the net proceeds to repay the Two-Year Term Loans in full and $400.0 million of our Three-Year Term Loans with the remainder used for working capital and other general corporate purposes.

In connection with the issuance of the Notes, we entered into a registration rights agreement, pursuant to which we are obligated to use commercially reasonable efforts to file with the U.S. Securities and Exchange Commission, and cause to be declared effective within 365 days, a registration statement with respect to an offer to exchange (the “Registered Exchange Offer”) each series of Notes for registered notes with terms that are substantially identical to the Notes of each series. ~~Alternatively, if~~We completed the exchange offers are not available or cannot be completed, we would be required to use commercially reasonable efforts to file, and cause to become effective, a shelf registration statement to cover resalesRegistered Exchange Offer on January 18, 2022. Substantially all of the Notes ~~under~~were tendered and exchanged for the ~~Securities Act. If we do not comply with these obligations, we will be required to pay additional interest~~corresponding Registered Notes in the Registered Exchange Offer.

The Registered Notes are fully and unconditionally guaranteed (the “Guarantees”), on a joint and several basis, by Gilbarco Inc. and Matco Tools Corporation, two of our wholly-owned subsidiaries (the “Guarantors”). Interest on the ~~Notes.~~

~~We may redeem some or all~~Registered Notes is payable semi-annually in arrears on April 1 and October 1 of each series of the Notes at any time prior to the dates specified in the Notes indenture (the “Call Dates”) at a redemption price equal to the greater of (i) 100% of the principal amount of the Notes of such series to be redeemed,year, and ~~(ii) the sum of the present values of the remaining scheduled payments of principal and interest~~commenced on ~~such series of Notes to be redeemed discounted to the date of redemption on a semi-annual basis at the applicable Treasury Rate plus 20 basis points in the case of the 2026~~October 1, 2021. The Registered Notes and ~~2028 Notes~~the Guarantees are the Company’s and ~~plus 25 basis points in~~ the ~~case of the 2031 Notes, plus the accrued and unpaid interest. Call dates for the 2026 Notes, 2028 Notes and 2031 Notes are March 1, 2026, February 1, 2028 and January 1, 2031, respectively.~~

If a change of control triggering event occurs, we will, in certain circumstances, be required to make an offer to repurchase the Notes at a purchase price equal to 101% of the aggregate principal amount plus accrued and unpaid interest. A change of control triggering event is defined as the occurrence of both a change of control and a rating event, each as defined in the Notes indenture. Except in connection with a change of control triggering event, the Notes do not have any credit rating downgrade triggers that would accelerate the maturity of the Notes.Guarantors’ general senior unsecured obligations.

The Registered Notes contain customary covenants, including limits on the incurrence of certain secured debt and sale-leaseback transactions. None of these covenants are considered restrictive to our operations and as of April ~~2, 2021,~~1, 2022 we were in compliance with all of the covenants under the Registered Notes.

The estimated fair value of the Registered Notes was ~~$1.6~~$1.4 billion as of April ~~2, 2021.~~1, 2022. The fair value of the Registered Notes was determined based upon Level 2 inputs including indicative prices based upon observable market data. The difference between the fair value and the carrying amounts of the Notes may be attributable to changes in market interest rates and/or our credit ratings subsequent to the incurrence of the borrowing.

Short-term Borrowings

India Credit Facility

The Company has a credit facility with Citibank, N.A. with borrowing capacity of up to 850.0 million Indian Rupees (or ~~$11.6~~$11.2 million as of April ~~2, 2021)~~1, 2022) to facilitate working capital needs for certain businesses in India. As of April ~~2, 2021,~~1, 2022, the Company had ~~$6.2~~$10.1 million borrowing capacity remaining. The effective interest rate associated with outstanding borrowings was ~~5.00%~~5.20% as of April ~~2, 2021.~~1, 2022.

Other

As of April ~~2, 2021,~~1, 2022, certain of our businesses were in a cash overdraft position, and such overdrafts are included in Short-term borrowings on the Consolidated Condensed Balance Sheet. Additionally, the Company has other short-term borrowing arrangements with various banks to facilitate short-term cash flow requirements in certain countries also included in Short-term borrowings on the Consolidated Condensed Balance Sheet.

Interest payments associated with the above short-term borrowings were ~~immaterial~~not significant for the three months ended April 1, 2022 and April 2, ~~2021 and March 27, 2020.~~2021.

NOTE 5.6. ACCUMULATED OTHER COMPREHENSIVE INCOME

Foreign currency translation adjustments are generally not adjusted for income taxes as they relate to indefinite investments in non-U.S. subsidiaries.

The changes in Accumulated other comprehensive income by component are summarized below:


($ in millions)	Foreign Currency Translation Adjustments		Other Adjustments (a)			Total
For the Three Months Ended April 1, 2022:
Balance, December 31, 2021	$	184.9	$	(3.2)		$	181.7
Other comprehensive income (loss) before reclassifications, net of income taxes	(15.1)		—			(15.1)
Amounts reclassified from accumulated other comprehensive income:
Increase	—		0.1			0.1
Income tax impact	—		—			—
Amounts reclassified from accumulated other comprehensive income, net of income taxes	—		0.1		(b)	0.1
Net current period other comprehensive income (loss), net of income taxes	(15.1)		0.1			(15.0)
Balance, April 1, 2022	$	169.8	$	(3.1)		$	166.7

For the Three Months Ended April 2, 2021:
Balance, December 31, 2020	$	198.3	$	(4.5)		$	193.8
Other comprehensive income (loss) before reclassifications, net of income taxes	(15.7)		0.1			(15.6)




Net current period other comprehensive income (loss), net of income taxes	(15.7)		0.1			(15.6)
Balance, April 2, 2021	$	182.6	$	(4.4)		$	178.2

(a) Includes balances relating to defined benefit plans and supplemental executive retirement plans.
(b) This accumulated other comprehensive income component is included in the computation of net periodic pension cost.

($ in millions) Foreign Currency Translation Adjustments
Other Adjustments (a)
Total
For the Three Months Ended April 2, 2021:
Balance, December 31, 2020 $ 198.3 $ (4.5) $ 193.8
Other comprehensive income (loss) before reclassifications, net of income taxes (15.7) 0.1 (15.6)
Net current period other comprehensive income (loss), net of income taxes (15.7) 0.1 (15.6)
Balance, April 2, 2021 $ 182.6 $ (4.4) $ 178.2
(a) Includes balances relating to defined benefit plans and supplemental executive retirement plans.

($ in millions) Foreign Currency Translation Adjustments
Other Adjustments (a)
Total
For the Three Months Ended March 27, 2020:
Balance, December 31, 2019 $ 153.7 $ (5.0) $ 148.7
Other comprehensive income (loss) before reclassifications, net of income taxes (46.2) 0 (46.2)
Amounts reclassified from accumulated other comprehensive income:
Increase 0 1.8 1.8
Income tax impact 0 (0.1) (0.1)
Amounts reclassified from accumulated other comprehensive income, net of income taxes 0 1.7 (b) 1.7
Net current period other comprehensive income (loss), net of income taxes (46.2) 1.7 (44.5)
Balance, March 27, 2020 $ 107.5 $ (3.3) $ 104.2
(a) Includes balances relating to defined benefit plans and supplemental executive retirement plans.
(b) This accumulated other comprehensive income component is included in the computation of net periodic pension cost.

NOTE 6.7. SALES

Revenue is recognized when control of promised products or services is transferred to customers in an amount that reflects the consideration we expect to be entitled to in exchange for those products or services.

Contract Assets

In certain circumstances, we record contract assets which include unbilled amounts typically resulting from sales under contracts when revenue recognized exceeds the amount billed to the customer, and right to payment is subject to contractual performance obligations and not only subject to the passage of time. Contract assets were ~~$10.5~~$12.1 million and ~~$9.0~~$10.4 million as of April ~~2, 2021~~1, 2022 and December 31, ~~2020,~~2021, respectively, and are included in Prepaid expenses and other current ~~assets.~~assets in the accompanying Consolidated Condensed Balance Sheets.

Contract Costs

We incur direct incremental costs to obtain certain contracts, typically sales-related commissions and costs associated with assets used by our customers in certain service arrangements. As of April ~~2, 2021~~1, 2022 and December 31, ~~2020,~~2021, we had ~~$78.2~~$81.0 million and ~~$81.2~~$78.4 million, respectively, in net revenue-related capitalized contract costs primarily related to assets used by our customers in certain software contracts, which are recorded in Prepaid expenses and other current assets, for the current portion, and Other assets, for the noncurrent portion, in the accompanying Consolidated Condensed Balance Sheets. These assets have estimated useful lives between 3 and 5 years and are amortized on a straight-line basis.

Impairment losses recognized on our revenue-related contract assets were insignificant during the three months ended April 1, 2022 and April 2, 2021.

Contract Liabilities

The Company’s contract liabilities consist of deferred revenue generally related to post contract support (“PCS”) and extended warranty sales. In these arrangements, the Company generally receives up-front payment and recognizes revenue over the support term of the contracts. Deferred revenue is classified as current or noncurrent based on the timing of when revenue is expected to be recognized and is included in Accrued expenses and other current liabilities and Other long-term liabilities, respectively, in the accompanying Consolidated Condensed Balance Sheets.

The Company’s contract liabilities consisted of the following:

($ in millions) April 2, 2021 December 31, 2020
Deferred revenue - current $ 96.8 $ 87.6
Deferred revenue - noncurrent 57.1 58.3
Total contract liabilities $ 153.9 $ 145.9


($ in millions)	April 1, 2022		December 31, 2021
Deferred revenue - current	$	140.5	$	133.7
Deferred revenue - noncurrent	58.4		56.3
Total contract liabilities	$	198.9	$	190.0

During the three months ended April ~~2, 2021,~~1, 2022, we recognized ~~$23.2~~$51.5 million of revenue related to the Company’s contract liabilities at December 31, ~~2020.~~2021. The change in contract liabilities from December 31, ~~2020~~2021 to April ~~2, 2021~~1, 2022 was primarily due to the timing of cash receipts and sales of PCS and extended warranty ~~services.~~services as well as the impact of the acquisition of Driivz and inclusion of the acquired contract liabilities.

Remaining Performance Obligations

Remaining performance obligations represent the transaction price of firm, noncancelable orders and the annual contract value for software-as-a-service contracts with expected customer delivery dates beyond one year from April ~~2, 2021~~1, 2022 for which work has not been performed. The Company has excluded performance obligations with an original expected duration of one year or less. Performance obligations as of April ~~2, 2021~~1, 2022 are ~~$399.4~~$371.8 million, the majority of which are related to the annual contract value for software-as-a-service contracts. The Company expects approximately 35 percent of the remaining performance obligations will be fulfilled within the next two years, 6570 percent within the next three years, and substantially all within four years.

1718

Disaggregation of Revenue

The Company disaggregates revenue from contracts with customers by sales of products and services, geographic location, solution and major product group, as it best depicts how the nature, amount, timing, and uncertainty of revenue and cash flows are affected by economic factors.

Disaggregation of revenue ~~for the three months ended April 2, 2021 and March 27, 2020 were~~was as follows:

($ in millions) April 2, 2021 March 27, 2020
Sales:
Sales of products $ 644.6 $ 547.5
Sales of services 62.8 61.7
Total $ 707.4 $ 609.2
Geographic:
North America (a)
$ 508.5 $ 438.4
Western Europe 55.0 57.9
High growth markets 111.8 86.2
Rest of world 32.1 26.7
Total $ 707.4 $ 609.2
Solution:
Retail fueling hardware $ 196.5 $ 179.2
Auto repair 164.7 137.7
Service and other recurring revenue 123.9 103.3
Environmental 61.6 53.2
Retail solutions 91.4 68.5
Software-as-a-service 47.0 45.6
Smart cities 8.3 7.6
E-mobility 0.8 2.3
Other 13.2 11.8
Total $ 707.4 $ 609.2
Major Product Group:
Mobility technologies $ 516.9 $ 448.9
Diagnostics and repair technologies 190.5 160.3
Total $ 707.4 $ 609.2


	Three Months Ended
($ in millions)	April 1, 2022		April 2, 2021
Sales:
Sales of products	$	670.3	$	644.6
Sales of services	77.8		62.8
Total	$	748.1	$	707.4

Geographic:
North America (a)	$	559.4	$	508.5
Western Europe	63.7		55.0
High growth markets	93.9		111.8
Rest of world	31.1		32.1
Total	$	748.1	$	707.4

Solution:
Retail fueling hardware	$	180.6	$	196.5
Auto repair	177.4		164.7
Service and other recurring revenue	126.9		123.9
Environmental	61.7		61.6
Retail solutions	122.5		91.4
Software-as-a-service	45.0		47.0
Alternative energy (b)	21.3		9.7
Smart cities	10.3		8.3
Other (b)	2.4		4.3
Total	$	748.1	$	707.4

Major Product Group:
Mobility technologies	$	546.0	$	516.9
Diagnostics and repair technologies	202.1		190.5
Total	$	748.1	$	707.4

(a) Includes sales in the United States of ~~$494.2~~$540.7 million and ~~$424.9~~$494.2 million for the three months ended April 1, 2022 and April 2, 2021, ~~and March 27, 2020,~~ respectively.

(b) Certain prior year amounts were reclassified from “Other” to “Alternative energy” to conform with current year presentation.

NOTE 7.8. INCOME TAXES

Our effective tax rate for the three months ended April ~~2, 2021~~1, 2022 was ~~23.6%~~21.2% as compared to ~~119.7%~~23.6% for the three months ended ~~March 27, 2020.~~April 2, 2021. The year-over-year decrease in the effective tax rate for the three months ended April ~~2, 2021~~1, 2022 as compared to the comparable period in the prior year was primarily due to ~~a non-deductible book goodwill impairment recognized~~an increase in ~~the three months ended March 27, 2020.~~non-taxable income related to our previously held equity interest in Driivz.

Our effective tax rate for ~~2021~~2022 and ~~2020~~2021 differs from the U.S. federal statutory rate of 21% due primarily to the effect of state taxes and foreign taxable earnings at a rate different from the U.S. federal statutory ~~rate. Additionally,~~rate offset by the increase in ~~2020, there was an unfavorable impact~~non-taxable income, which, for 2022, related to ~~a non-deductible book goodwill impairment.~~our previously held equity interest in Driivz.

1819

NOTE 8.9. LEASES

Operating lease cost was ~~$5.9~~$5.4 million and ~~$5.2~~$5.9 million for the three months ended April 1, 2022 and April 2, 2021, ~~and March 27, 2020,~~ respectively. During the three ~~month periods~~months ended April 1, 2022 and April 2, 2021, ~~and March 27, 2020,~~ cash paid for operating leases included in operating cash flows was ~~$4.9~~$4.7 million and ~~$4.7~~$4.9 million, respectively. Right-of-use assets obtained in exchange for operating lease obligations were ~~$3.4~~$1.8 million and ~~insignificant~~$3.4 million for the three months ended April 1, 2022 and April 2, 2021, ~~and March 27, 2020,~~ respectively.

NOTE 9.10. LITIGATION AND CONTINGENCIES

Warranty

We generally accrue estimated warranty costs at the time of sale. In general, manufactured products are warrantied against defects in material and workmanship when properly used for their intended purpose, installed correctly, and appropriately maintained. Warranty period terms depend on the nature of the product and range from ninety days up to the life of the product. The amount of the accrued warranty liability is determined based on historical information such as past experience, product failure rates or number of units repaired, estimated cost of material and labor, and in certain instances estimated property damage. The accrued warranty liability is reviewed on a quarterly basis and may be adjusted as additional information regarding expected warranty costs becomes known.

The following is a rollforward of the Company’s accrued warranty liability:


($ in millions)
Balance, December 31, ~~2020~~2021	$	~~54.6~~49.4
Accruals for warranties issued during the period	~~11.4~~8.1
Settlements made	~~(10.7)~~(8.5)

Effect of foreign currency translation	(0.1)
Balance, April ~~2, 2021~~1, 2022	$	~~55.3~~48.9

Litigation and Other Contingencies

~~Litigation~~The Company is involved in legal proceedings from time to time in the ordinary course of its business. Although the outcome of such matters is uncertain, management believes that these legal proceedings will not have a material adverse effect on the financial condition or results of future operations of the Company.

In accordance with accounting guidance, the Company records a liability in the Consolidated ~~and Combined~~ Condensed Financial Statements for loss contingencies when a loss is known or considered probable and the amount can be reasonably estimated. If the reasonable estimate of a known or probable loss is a range, and no amount within the range is a better estimate than any other, the minimum amount of the range is accrued. If a loss does not meet the known or probable level but is reasonably possible and a loss or range of loss can be reasonably estimated, the estimated loss or range of loss is disclosed. ~~These~~

Our reserves consist of specific reserves for individual claims and additional amounts for anticipated developments of these claims as well as for incurred but not yet reported claims. The specific reserves for individual known claims are quantified with the assistance of legal counsel and outside risk insurance professionals where appropriate. In addition, outside risk insurance professionals may assist in the determination of reserves for incurred but not yet reported claims through evaluation of our specific loss history, actual claims reported, and industry trends among statistical and other factors. Reserve estimates are adjusted as additional information regarding a claim becomes known. While we actively pursue financial recoveries from insurance providers, the Company does not recognize any recoveries until realized or until such time as a sustained pattern of collections is established related to historical matters of a similar nature and magnitude. If the risk insurance reserves the Company has established are inadequate, we would be required to incur an expense equal to the amount of the loss incurred in excess of the reserves, which would adversely affect our net earnings.

In connection with the recognition of liabilities for asbestos related matters, the Company records insurance recoveries that are deemed probable and estimable. In assessing the probability of insurance recovery, we make judgments concerning insurance coverage that we believe are reasonable and consistent with our historical dealings, our knowledge of any pertinent solvency issues surrounding insurers, and litigation and court rulings potentially impacting coverage. While the substantial majority of our insurance carriers are solvent, some of our individual carriers are insolvent, which has been considered in the analysis of probable recoveries. Projecting future events is subject to various uncertainties, including litigation and court rulings potentially impacting coverage, that could cause insurance recoveries on asbestos related liabilities to be higher or lower than those projected and recorded. Given the inherent uncertainty in making future projections, the Company reevaluates projections

concerning the Company’s probable insurance recoveries considering any changes to the projected liabilities, the Company’s recovery experience or other relevant factors that may impact future insurance recoveries.

We recorded gross liabilities associated with known and future expected asbestos claims of ~~$67.4~~$75.5 million and ~~$68.0~~$79.0 million as of April ~~2, 2021~~1, 2022 and December 31, ~~2020,~~2021, respectively. Known and future expected asbestos claims of ~~$16.9~~$18.0 million and ~~$17.5~~

$21.5 million are included in Accrued expenses and other current liabilities on the Consolidated Condensed Balance Sheets as of April ~~2, 2021~~1, 2022 and December 31, ~~2020,~~2021, respectively. Known and future expected asbestos claims of ~~$50.5~~$57.5 million are included in Other long-term liabilities on the Consolidated Condensed Balance Sheets as of both April ~~2, 2021~~1, 2022 and December 31, ~~2020, respectively.~~2021.

We recorded the related projected insurance recoveries of ~~$35.9~~$43.3 million and ~~$36.0~~$45.0 million as of April ~~2, 2021~~1, 2022 and December 31, ~~2020,~~2021, respectively. ~~Insurance~~Projected insurance recoveries in the accompanying Consolidated Condensed Balance Sheets as of April ~~2, 2021~~1, 2022 include ~~$10.7~~$13.0 million in Prepaid expenses and other current assets and ~~$25.2~~$30.3 million in Other assets. ~~Insurance~~Projected insurance recoveries in the accompanying Consolidated Condensed Balance Sheets as of December 31, ~~2020~~2021 include ~~$10.8~~$14.8 million in Prepaid expenses and other current assets and ~~$25.2~~$30.2 million in Other assets.

Guarantees

As of April ~~2, 2021~~1, 2022 and December 31, ~~2020,~~2021, we had guarantees consisting primarily of outstanding standby letters of credit, bank guarantees, and performance and bid bonds of approximately ~~$102.5~~$92.0 million and ~~$84.5~~$92.6 million, respectively. These guarantees have been provided in connection with certain arrangements with vendors, customers, financing counterparties, and governmental entities to secure our obligations and/or performance requirements related to specific transactions. In general, we would only be liable for the amount of these guarantees in the event of default in the performance of our obligations.

Refer to Note 4.5. Financing for information regarding guarantees of the Notes by certain of our wholly-owned subsidiaries.

NOTE ~~10.~~11. FAIR VALUE MEASUREMENTS

Accounting standards define fair value based on an exit price model, establish a framework for measuring fair value where our assets and liabilities are required to be carried at fair value and provide for certain disclosures related to the valuation methods used within a valuation hierarchy as established within the accounting standards. This hierarchy prioritizes the inputs into three broad levels as follows:

•Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities.

•Level 2 inputs are quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets in markets that are not active, or other observable characteristics for the asset or liability, including interest rates, yield curves and credit risks, or inputs that are derived principally from, or corroborated by, observable market data through correlation.

•Level 3 inputs are unobservable inputs based on our assumptions.

A financial asset or liability’s classification within the hierarchy is determined based on the lowest level input that is significant to the fair value measurement in its entirety.

Below is a summary of financial assets and liabilities that are measured at fair value on a recurring basis as of:

($ in millions) Quoted Prices
in Active
Market
(Level 1) Significant Other
Observable Inputs
(Level 2) Significant
Unobservable
Inputs
(Level 3) Total
April 2, 2021
Deferred compensation liabilities $ 0 $ 4.6 $ 0 $ 4.6
December 31, 2020
Deferred compensation liabilities $ 0 $ 3.7 $ 0 $ 3.7


($ in millions)	Quoted Prices in Active Market (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
April 1, 2022
Equity securities measured at fair value	$	215.1	$	—	$	—	$	215.1
Earn-out liabilities	—		—		4.5		4.5
Deferred compensation liabilities	—		5.7		—		5.7
December 31, 2021
Deferred compensation liabilities	$	—	$	4.8	$	—	$	4.8

Certain management employees participate in our nonqualified deferred compensation programs that permit such employees to defer a portion of their compensation, on a pretax basis, until after their termination of employment. All amounts deferred under such plans are unfunded, unsecured obligations and are presented as a component of our compensation and benefits accrual

included in Other long-term liabilities in the accompanying Consolidated Condensed Balance Sheets. Participants may choose among alternative earning rates for the amounts they defer, which are primarily based on investment options within our defined contribution plans for the benefit of U.S. employees (“401(k) Programs”) (except that the earnings rates for amounts contributed unilaterally by the Company are entirely based on changes in the value of our common stock). Changes in the

deferred compensation liability under these programs are recognized based on changes in the fair value of the participants’ accounts, which are based on the applicable earnings rates.

Other Investments

The Company holds a minority interest in Tritium Holdings Pty, Ltd (“Tritium”) ~~of $52.8 million,~~ which ishistorically was recorded at cost in Other assets on the Consolidated Condensed Balance Sheets. On January 13, 2022, Tritium announced that it completed a business combination with Decarbonization Plus Acquisition Corporation II to make Tritium a publicly listed company on NASDAQ under the symbol “DCFC”. As Tritium is now publicly traded, the Company records its investment at fair value in Equity securities measured at fair value on the Consolidated Condensed Balance Sheets at cost. The Company has elected to use the measurement alternative for equity investments without readily determinable fair values and evaluate this investment for indicators of impairment quarterly. The Company did not identify events orwith changes in ~~circumstances that may have a significant effect~~the value recorded in Unrealized gain on equity securities measured at fair value on the ~~fair value~~Consolidated Condensed Statements of Earnings and Comprehensive Income and the ~~investment during the three months ended April 2, 2021. During the three months ended April 2, 2021, we made an additional investment in Tritium~~Consolidated Condensed Statements of ~~$3.8 million.~~Cash Flows.

Nonrecurring Fair Value Measurements

Certain assets and liabilities are carried on the accompanying Consolidated Condensed Balance Sheets at cost and are not remeasured to fair value on a recurring basis. These assets include finite-lived intangible assets, which are tested when a triggering event occurs, and goodwill and identifiable indefinite-lived intangible assets, which are tested for impairment at least annually as of the first day of the fourth quarter or more frequently if events and circumstances indicate that the asset may not be recoverable.

As of April ~~2, 2021,~~1, 2022, assets carried on the balance sheet and not remeasured to fair value on a recurring basis were ~~$1.1~~$1.8 billion of goodwill and ~~$241.1~~$696.5 million of identifiable intangible assets, net.

Refer to Note 4.5. Financing for information related to the fair value of the Company’s borrowings.

NOTE ~~11.~~12. RELATED-PARTY TRANSACTIONS

In connection with the Separation, we entered into the Agreements with Fortive which govern the Separation and provide a framework for the relationship between the parties going forward, including an employee matters agreement, a tax matters agreement, an intellectual property matters agreement, an FBS license agreement and a transition services agreement.

Employee Matters Agreement

The employee matters agreement sets forth, among other things, the allocation of assets, liabilities and responsibilities relating to employee compensation and benefit plans and programs and other related matters in connection with the Separation, including the treatment of outstanding equity and other incentive awards and certain retirement and welfare benefit obligations.

Tax Matters Agreement

The tax matters agreement governs the respective rights, responsibilities and obligations of both Fortive and Vontier after the Separation with respect to tax liabilities and benefits, tax attributes, the preparation and filing of tax returns, the control of audits and other tax proceedings and other matters regarding taxes.

Intellectual Property Matters Agreement

The intellectual property matters agreement sets forth the terms and conditions pursuant to which Fortive and Vontier have mutually granted certain personal, generally irrevocable, non-exclusive, worldwide, and royalty-free rights to use certain intellectual property. Both parties are able to sublicense their rights in connection with activities relating to their businesses, but not for independent use by third parties.

FBS License Agreement

The FBS license agreement sets forth the terms and conditions pursuant to which Fortive has granted a non-exclusive, worldwide, non-transferable, perpetual license to us to use FBS solely in support of our businesses. We are able to sublicense such license solely to direct and indirect wholly-owned subsidiaries.

Transition Services Agreement (“TSA”)

The TSA sets forth the terms and conditions pursuant to which Vontier and our subsidiaries and Fortive and its subsidiaries will provide to each other various services after the Separation. The services to be provided include information technology, facilities, certain accounting and other financial functions, and administrative services. The charges for the transition services

generally are expected to allow the providing company to fully recover all out-of-pocket costs and expenses it actually incurs in connection with providing the service, plus, in some cases, the allocated indirect costs of providing the services, generally without profit.

TSA Payments

In accordance with the TSA, receipts from Fortive were immaterial during the three months ended April 2, 2021. During the three months ended April 2, 2021, we made net payments to Fortive of $48.5 ~~million, which~~million. Net payments during the three months ended April 2, 2021 included approximately $30 million of our share of the transaction taxes related to the Separation.

~~Allocations of Expenses Prior to the Separation~~

The Company has historically operated as part of Fortive and not as a stand-alone company. Accordingly, certain shared costs have been allocated to the Company by Fortive, and are reflected as expenses in these financial statements. Management considers the allocation methodologies used to be reasonable and appropriate reflections of the related expenses attributable to the Company for purposes of the carve-out financial statements; however, the expenses reflected in the accompanying Combined Condensed Financial Statements may not be indicative of the actual expenses that would have been incurred during the periods presented if the Company had operated as a separate stand-alone entity and the expenses that will be incurred in the future by the Company.

~~The amount of related party expenses allocated to the Company from Fortive and its subsidiaries for the three months ended March 27, 2020, were as follows:~~

~~($ in millions)~~

~~Allocated corporate expenses~~

~~10.6~~

~~Directly attributable expenses:~~

~~Insurance programs expenses~~

~~0.6~~

~~Medical insurance programs expenses~~

~~11.3~~

~~Deferred compensation program expenses~~

~~0.3~~

~~Total related-party expenses~~

~~22.8~~

~~Corporate Expenses~~

Certain corporate overhead and other shared expenses incurred by Fortive and its subsidiaries have been allocated to the Company and are reflected in the accompanying Combined Condensed Statements of Earnings (Loss) and Comprehensive Income (Loss) for the three months ended March 27, 2020. These amounts include, but are not limited to, items such as general management and executive oversight, costs to support Vontier information technology infrastructure, facilities, compliance, human resources, and marketing, as well as legal functions and financial management and transaction processing, including public company reporting, consolidated tax filings, and tax planning, Fortive benefit plan administration, risk management and consolidated treasury services, certain employee benefits and incentives, and stock-based compensation administration. These costs have been allocated using a methodology that management believes is reasonable for the item being allocated. Allocation methodologies include the Company’s relative share of revenues, headcount, or functional spend as a percentage of the total. Following the Separation, we independently incur corporate overhead costs and no corporate overhead costs were allocated by Fortive.

~~Insurance Programs Administered by Fortive~~

In addition to the corporate allocations noted above, prior to the Separation, the Company was allocated expenses related to certain insurance programs Fortive administered on behalf of the Company, including automobile liability, workers’ compensation, general liability, product liability, director’s and officer’s liability, cargo, and property insurance. These amounts were allocated using various methodologies, as described below.

Included within the insurance cost allocation are amounts related to programs for which Fortive was self-insured up to a certain amount. For the self-insured component, costs were allocated to the Company based on its incurred claims. Fortive has premium-based policies that cover amounts in excess of the self-insured retentions. Prior to the Separation, the Company was allocated a portion of the total insurance cost incurred by Fortive based on its pro-rata portion of Fortive’s total underlying

exposure base. In connection with the Separation, we established similar independent self-insurance programs to support any outstanding claims going forward and no insurance costs were allocated by Fortive subsequent to the Separation.

~~Medical Insurance Programs Administered by Fortive~~

In addition to the corporate allocations noted above, the Company was allocated expenses related to the medical insurance programs administered on behalf of the Company. These amounts were allocated using actual medical claims incurred during the period for the employees attributable to the Company. In connection with the Separation, we established independent medical insurance programs similar to those previously provided by Fortive.

~~Deferred Compensation Program Administered by Fortive~~

Certain employees of the Company participated in Fortive’s nonqualified deferred compensation programs, which permitted officers, directors and certain management employees to defer a portion of their compensation, on a pretax basis, until after their termination of employment. Participants could have chosen among alternative earnings rates for the amounts they deferred, which were primarily based on investment options within Fortive’s 401(k) program (except that the earnings rates for amounts contributed unilaterally by Fortive were entirely based on changes in the value of Fortive’s common stock). All amounts deferred under this plan are unfunded, unsecured obligations of the Company. In connection with the Separation, we established a similar independent, nonqualified deferred compensation program.

~~Revenue and Other Transactions Entered into in the Ordinary Course of Business~~

Prior to the Separation, we operated as part of Fortive and not as a stand-alone company and certain of our revenue arrangements related to contracts entered into in the ordinary course of business with Fortive and its affiliates. Following the Separation, we continue to enter into arms-length revenue arrangements in the ordinary course of business with Fortive and its affiliates, although certain agreements were entered into or terminated as a result of the Separation.

Certain of our revenue arrangements related to contracts entered into in the ordinary course of business with Fortive and its affiliates. Our revenue from sales to Fortive and its subsidiaries was insignificant Net payments made during the three months ended April ~~2, 2021 and March 27, 2020.~~

~~Purchases from Fortive and Fortive’s subsidiaries~~1, 2022 were ~~immaterial during the three months ended April 2, 2021 and were $3.6 million during the three months ended March 27, 2020.~~not significant.

NOTE ~~12.~~13. CAPITALIZATION AND EARNINGS PER SHARE

Capital Stock

The Company’s authorized capital stock consists of 1,985,000,000 shares of common stock, par value $0.0001 per share, and 15,000,000 shares of preferred stock with 0no par value, all of which shares of preferred stock are undesignated.

Earnings Per Share

Basic earnings per share is calculated by dividing net earnings by the weighted average number of shares of common stock outstanding. Diluted earnings per share is similarly calculated, except that the calculation includes the dilutive effect of the assumed issuance of shares under stock-based compensation plans except where the inclusion of such shares would have an anti-dilutive impact.

Information related to the calculation of net earnings per share of common stock is summarized as follows:


		Three Months Ended					Three Months Ended
($ and shares in millions, except per share amounts)	($ and shares in millions, except per share amounts)	April 2, 2021		March 27, 2020		($ and shares in millions, except per share amounts)	April 1, 2022		April 2, 2021
Numerator:	Numerator:					Numerator:
Net earnings (loss)		$	91.0	$	(4.2)
Net earnings						Net earnings	$	250.2	$	91.0

Denominator:	Denominator:					Denominator:
Basic weighted average common shares outstanding	Basic weighted average common shares outstanding	168.7		168.4		Basic weighted average common shares outstanding	165.9		168.7
Effect of dilutive stock options and RSUs	Effect of dilutive stock options and RSUs	1.0		0		Effect of dilutive stock options and RSUs	0.6		1.0
Diluted weighted average common shares outstanding	Diluted weighted average common shares outstanding	169.7		168.4		Diluted weighted average common shares outstanding	166.5		169.7

Earnings (loss) per share:
Earnings per share:						Earnings per share:
Basic	Basic	$	0.54	$	(0.02)	Basic	$	1.51	$	0.54
Diluted	Diluted	$	0.54	$	(0.02)	Diluted	$	1.50	$	0.54

Anti-dilutive shares	Anti-dilutive shares	2.9		0		Anti-dilutive shares	3.4		2.9

~~NOTE 13. SUBSEQUENT EVENTS~~Share Repurchase Program

On ~~April 28,~~May 19, 2021, ~~(the “Closing Date”),~~the Company’s Board of Directors approved a share repurchase program authorizing the Company ~~refinanced its Credit Agreement.~~to repurchase up to $500 million of the Company’s common stock from time to time on the open market or in privately negotiated transactions. The ~~amended~~timing and ~~restated credit~~amount of shares repurchased will be determined by the Company’s management based on market conditions, share price, applicable legal requirements and other factors. The Company may enter into Rule 10b5-1 plans to facilitate purchases under the share repurchase program. The share repurchase program may be suspended or discontinued at any time and has no expiration date.

In February 2022, the Company entered into an accelerated share repurchase agreement ~~(the “A&R Credit Agreement”~~(“ASR”) ~~extended~~with a third-party financial institution whereupon we provided them with a prepayment of $250.0 million and received an initial delivery of 8.2 million shares of our common stock. The ASR is expected to settle during our second quarter of fiscal 2022. Under the terms of the ASR, the total number of shares delivered and average purchase price paid per share will be determined upon settlement based on the Volume Weighted Average Price (“VWAP”) over the term of the ~~fully drawn $400.0 million senior unsecured term loan facility (the “Term Loan Facility”), from October 6, 2023~~ASR, less an agreed upon discount. At settlement, the financial institution may be required to ~~October 28, 2024. The A&R Credit Agreement also lowered~~deliver additional shares of our common stock to us or, under certain circumstances, we may be required to make a cash payment or deliver shares of our common stock to the ~~Term Loan Facility variable interest rate, determined based upon~~financial institution, with the method of settlement at our election. As of April 1, 2022, a ~~ratings-based pricing grid, by 50 basis points, from LIBOR plus 162.5 basis points under the prior agreement~~portion of our ASR prepayment was evaluated as an unsettled forward contract indexed to ~~LIBOR plus 112.5 basis points as of the Closing Date.~~our own stock, classified within stockholders’ equity.

~~The A&R Credit Agreement extended~~During the ~~term~~three months ended April 1, 2022, the Company repurchased an additional 0.3 million of the ~~undrawn $750.0~~Company’s shares for $7.0 million senior unsecured, multi-currency revolving credit facility (the “Revolving Credit Facility”) from September 29, 2023 to April 28, 2026. The A&R Credit Agreement also lowered the Revolving Credit Facility variable interest rate, determined based upon a ratings-based pricing grid, by 25 basis points, from LIBOR plus 142.5 basis points under the prior agreement to LIBOR plus 117.5 basis points asthrough open market transactions at an average price per share of ~~the Closing Date.~~$24.85.

~~The A&R Credit Agreement also made certain other changes~~As of April 1, 2022, the Company has remaining authorization to ~~the Credit Agreement to address the discontinuation~~repurchase $243 million of ~~LIBOR and~~ its ~~impact on U.S. dollar and multicurrency loans, as well as other immaterial changes. The Company’s two wholly-owned subsidiaries which were Guarantors~~common stock under the ~~Credit Agreement continue to be Guarantors under the A&R Credit Agreement.~~

share repurchase program.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

This Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) is designed to provide a reader of our financial statements with a narrative from the perspective of management and is intended to help the reader understand the results and operations and financial condition of the Company. Our MD&A should be read in conjunction with the MD&A and Consolidated and Combined Financial Statements included in our Annual Report on Form 10-K for the fiscal year ended December 31, ~~2020~~2021 (the ~~“2020~~“2021 Annual Report on Form 10-K”).

INFORMATION RELATING TO FORWARD-LOOKING STATEMENTS

Certain statements included or incorporated by reference in this quarterly report, in other documents we file with or furnish to the Securities and Exchange Commission (“SEC”), in our press releases, webcasts, conference calls, materials delivered to shareholders and other communications, are “forward-looking statements” within the meaning of the United States federal securities laws.

Forward-looking statements are not guarantees of future performance and actual results may differ materially from the results, developments and business decisions contemplated by our forward-looking statements. Accordingly, you should not place undue reliance on any such forward-looking statements. Forward-looking statements speak only as of the date of the Report, document, press release, webcast, call, materials or other communication in which they are made. Important factors that could cause actual results to differ materially from those envisaged in the forward-looking statements include the following:

•The ~~effect~~ongoing effects of the COVID-19 pandemic on our global operations and on the operations of our customers, suppliers, and vendors is having, and is expected to continue to have, a significant impact on our business and results of operations.

•Changes in, or status of implementation of, industry standards and governmental regulations, including interpretation or enforcement thereof, may reduce demand for our products or services, increase our expenses or otherwise adversely impact our business model.

•Our growth depends in part on the timely development and commercialization, and customer acceptance, of new and enhanced products and services based on technological innovation.

•The indemnification provisions of acquisition agreements by which we have acquired companies may not fully protect us and as a result we may face unexpected liabilities.

•Our businesses are subject to extensive regulation; failure to comply with those regulations could adversely affect our financial statements and our business, including our reputation.

•International economic, political, war or hostility, legal, compliance, supply chain, epidemic and business factors could negatively affect our financial statements.

•We may be required to recognize impairment charges for our goodwill and other intangible assets.

•We are party to asbestos-related product litigation that could adversely affect our financial condition, results of operations and cash flows.

•Our restructuring actions could have long-term adverse effects on our business.

•~~Our defined benefit pension plans are subject to financial market risks that could adversely affect our financial statements.~~

•As of ~~the date of this quarterly report,~~May 5, 2022, we have outstanding indebtedness of approximately ~~$2.0~~$2.6 billion and the ability to incur an additional ~~$750.0~~$718.0 million of indebtedness under the Revolving Credit Facility, as defined above, and in the future we may incur additional indebtedness. This indebtedness ~~all of which~~ could adversely affect our businesses and our ability to meet our obligations and pay dividends.

•We may not be able to generate sufficient cash to service all of our indebtedness and may be forced to take other actions to satisfy our obligations under our indebtedness, which may not be successful.

•Any inability to consummate acquisitions at our historical rates and at appropriate prices, and to make appropriate investments that support our long-term strategy, could negatively impact our growth rate and stock price.

•Our acquisition of businesses, investments, joint ventures and other strategic relationships could negatively impact our financial statements.

•Changes in our tax rates or exposure to additional income tax liabilities or assessments could affect our profitability. In addition, audits by tax authorities could result in additional tax payments for prior periods.

•Adverse changes in our relationships with, or the financial condition, performance, purchasing patterns or inventory levels of, key distributors and other channel partners could adversely affect our financial statements.

•Our financial results are subject to fluctuations in the cost and availability of commodities that we use in our operations.

•If we cannot adjust our manufacturing capacity or the purchases required for our manufacturing activities to reflect changes in market conditions and customer demand, our profitability may suffer. In addition, our reliance upon sole or limited sources of supply for certain materials, components and services could cause production interruptions, delays and inefficiencies.

•Potential indemnification liabilities to Fortive pursuant to the ~~Separation~~separation agreement could materially and adversely affect our businesses, financial condition, results of operations and cash flows. In addition, there can be no assurance that Fortive’s performance of its indemnity obligations to us under the separation agreement regarding certain liabilities will be sufficient.

•If there is a determination that the distribution, together with certain related transactions, is taxable for U.S. federal income tax purposes because the facts, assumptions, representations or undertakings underlying Fortive’s private letter ruling from the IRS or tax opinion are incorrect or for any other reason, then Fortive and its stockholders could incur significant U.S. federal income tax liabilities, and we could also incur significant liabilities.

•We may be affected by significant restrictions, including on our ability to engage in certain corporate transactions for a two-year period after the distribution in order to avoid triggering significant tax-related liabilities.

•Fortive may compete with us.

•We may not achieve some or all of the expected benefits of the ~~Separation,~~separation, and the ~~Separation~~separation may adversely affect our businesses.

See “Item 1.A. Risk Factors” in our ~~2020~~2021 Annual Report on Form 10-K and Part II - Item 1A. Risk Factors” in this Form 10-Q for a further discussion regarding reasons that actual results may differ materially from the results, developments and business decisions contemplated by our forward-looking statements. Forward-looking statements speak only as of the date of the report, document, press release, webcast, call, materials or other communication in which they are made. We do 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.

OVERVIEW

General

Vontier Corporation is a global industrial technology company that focuses on critical technical equipment, components, and software and services for manufacturing, repair and servicing in the mobility infrastructure industry worldwide. We supply a wide range of ~~mobility technologies and diagnostics and repair technologies~~ solutions spanning advanced environmental ~~sensors,~~sensors; fueling ~~equipment,~~equipment; field payment ~~hardware, remote management~~hardware; point-of-sale; workflow and ~~workflow software,~~monitoring software; vehicle tracking and fleet ~~management software-as-service~~management; software solutions ~~professional~~for traffic light control; and vehicle mechanics’ and technicians’ ~~equipment and traffic priority control systems.~~equipment. We market our products and services to retail and commercial fueling operators, convenience store and in-bay car wash operators, tunnel car wash businesses, commercial vehicle repair businesses, municipal governments and public safety entities and fleet owners/operators on a global basis.

Our research and development, manufacturing, sales, distribution, service and administrative operations are located in more than 30 countries across North America, Asia Pacific, Europe and Latin America. In addition, we sell our products in these countries and multiple other markets in these regions. We define high-growth markets as developing markets of the world experiencing extended periods of accelerated growth in gross domestic product and infrastructure, which include Eastern Europe, the Middle East, Africa, Latin America, and Asia, with the exception of Japan and Australia.

BUSINESS PERFORMANCE AND OUTLOOK

Business Performance

~~While differences exist among our businesses, on~~On an overall basis, ~~demand for~~sales of our hardware and software products and services increased during the three ~~month period~~months ended April ~~2, 2021.~~1, 2022. As compared to the comparable period of ~~2020,~~2021, aggregate year-over-year total sales increased ~~16.1%~~5.7% for the three months ended April ~~2, 2021.~~1, 2022. Sales from existing businesses ~~increased 14.3%~~decreased 0.1% during the three months ended April ~~2, 2021,~~1, 2022, as compared to the comparable period in ~~2020.~~ 2021.

The increase in total sales ~~and sales from existing businesses~~ during the three months ended April ~~2, 2021~~1, 2022 was primarily driven by ~~broad growth~~our acquisition of DRB Systems, LLC (“DRB”), which is part of our mobility technologies platform. Additionally, total sales increased due to our diagnostics and repair technologies platform which experienced strong demand across most product categories, most notably specialty tools and diagnostics as well as the ~~portfolio including retail and environmental solutions, continued~~impact of price increases by the Company across its portfolio. Our mobility technologies platform had strong demand for ~~and shipments~~alternative energy solutions but was impacted by the lower rate of ~~fuel management systems in North America~~demand related to the enhanced credit card security requirements for outdoor payment systems based on the Europay, Mastercard and Visa (“EMV”) global standards as well as the end of Mexico regulatory demand and dispenser and environmental deliveries in India. Our diagnostics and repair portfolio also experienced strong demand across most product categories, most notably specialty and hardline tools.fiscal regulation upgrades. Changes in foreign currency exchange rates ~~positively~~negatively impacted our sales growth by ~~1.8%~~1.4% during the three months ended April ~~2, 2021~~1, 2022 compared to the comparable period in ~~2020.~~2021.

In developed markets, year-over-year total sales and sales from existing businesses for the three months ended April ~~2, 2021~~1, 2022 increased at a rate in the ~~mid-teens~~high single digits and ~~low-double~~low single digits, ~~respectively, which~~respectively. The increase in total sales was primarily due to ~~growth~~an increase in North America ~~at a rate in~~related to the ~~mid-teens. This~~impact of our acquisition of DRB and was additionally impacted by growth ~~was partially offset by a decline in total sales and sales from existing businesses~~ in Western Europe. High growth markets ~~had~~decreased at a ~~more than 20% increase~~rate in the low double digits primarily due to ~~growth~~declines in ~~India~~Latin America primarily due to the end of Mexico fiscal regulation upgrades.

In February 2022, Russian forces invaded Ukraine resulting in broad economic sanctions being imposed on Russia that has further increased existing global supply chain, logistic, and ~~Latin America.~~inflationary challenges. As of the filing date of this report, we have indefinitely ceased all sales and shipments in Russia. Our business in Russia and Ukraine were not material to our results and accounted for less than 1% of total revenue for the fiscal year ended December 31, 2021. As of April 1, 2022, our net assets in Russia totaled less than $1.0 million.

Outlook

We expect overall sales and sales from existing businesses to grow on a year-over-year basis in ~~2021; however, we are continuing to monitor the impact of the COVID-19 pandemic and geopolitical and regulatory uncertainties and the corresponding impact to our businesses in addition~~2022. Our outlook is subject to the ~~other~~below factors as well as additional uncertainties as identified ~~above~~ in “Information Relating to ~~Forward- Looking Statements.”~~Forward-Looking Statements” above.

We anticipate that supply chain and inflationary pressures will persist throughout 2022 and that although our backlog may decline compared to 2021, it may remain elevated compared to historical levels. We will continue to deploy the Vontier Business System to actively manage production challenges, collaborate with customers and suppliers to minimize disruptions and utilize price increases and other countermeasures to offset inflationary pressures.

We are monitoring the ongoing impact of COVID-19 on the global economy and our business, including government mandated containment measures, such as the lockdown implemented recently in Shanghai, China. Continued implementation or expansion of government mandated containment measures, including shutdowns in countries such as China, could have a material adverse impact on our future results.

We are also monitoring developments in international trade, monetary and fiscal policies and relations between the U.S. and China, as well as evaluating proposed investment and taxation policy initiatives being debated in the United States and by the Organization for Economic Co-operation and Development. We continue to monitor the Russia Ukraine Conflict and the impact on our business and operations. As of the filing date of this report, we do not believe they are material.

RESULTS OF OPERATIONS

Comparison of Results of Operations

Three Months Ended
($ in millions) April 2, 2021 March 27, 2020
Total sales $ 707.4 $ 609.2
Total cost of sales (395.6) (346.1)
Gross profit 311.8 263.1
Operating costs:
Selling, general and administrative expenses ("SG&A") (145.7) (123.1)
Research and development expenses ("R&D") (33.2) (32.9)
Impairment of goodwill — (85.3)
Operating profit $ 132.9 $ 21.8
Gross profit as a % of sales 44.1 % 43.2 %
SG&A as a % of sales 20.6 % 20.2 %
R&D as a % of sales 4.7 % 5.4 %
Operating profit as a % of sales 18.8 % 3.6 %


	Three Months Ended
($ in millions)	April 1, 2022			April 2, 2021
Total sales	$	748.1		$	707.4
Total cost of sales	(412.8)			(395.6)
Gross profit	335.3			311.8
Operating costs:
Selling, general and administrative expenses ("SG&A")	(166.0)			(145.7)
Research and development expenses ("R&D")	(34.5)			(33.2)

Operating profit	$	134.8		$	132.9

Gross profit as a % of sales	44.8		%	44.1		%
SG&A as a % of sales	22.2		%	20.6		%
R&D as a % of sales	4.6		%	4.7		%
Operating profit as a % of sales	18.0		%	18.8		%

Components of Sales Growth


	% Change Three Months Ended April ~~2, 2021~~1, 2022 vs. Comparable ~~2020~~2021 Period
Total revenue growth (GAAP)	~~16.1~~5.7	%
Existing businesses (Non-GAAP)	~~14.3~~ (0.1)	%
Acquisitions (Non-GAAP)	7.2	%
Currency exchange rates (Non-GAAP)	~~1.8~~ (1.4)	%

Total sales ~~and sales from existing businesses~~ within our mobility technologies platform increased ~~at a rate in the mid-teens and a low-double digit rate, respectively,~~mid single digits during the three months ended April ~~2, 2021~~1, 2022 as compared to the comparable period of ~~2020. The year-over-year results during~~2021 which was primarily attributable to our acquisition of DRB. Our sales from existing businesses in our mobility technologies platform were down low single digits primarily due to the ~~three months ended April 2, 2021 were primarily driven by broad growth across the portfolio including retail and environmental solutions, continued strong~~lower rate of demand ~~for and shipments of fuel management systems in North America~~ related to the enhanced credit card security requirements for outdoor payment systems based on the EMV global standards as well as the end of Mexico ~~regulatory~~fiscal regulation upgrades. This was partially offset by the demand ~~and dispenser and environmental deliveries in India.~~for alternative energy solutions.

Total sales and sales from existing businesses within our diagnostics and repair technologies platform increased ~~at a rate in the high-teens~~mid single digits during the three months ended April ~~2, 2021~~1, 2022 as compared to the comparable period in ~~2020.~~2021. The results ~~in the three months ended April 2, 2021~~of our diagnostics and repair technologies platform were driven ~~principally~~primarily by continued strong demand across most product categories, most notably specialty tools and ~~hardline tools.~~diagnostics.

~~Price~~The impact on the Company of price increases are reflected as a component of the change in sales from existing businesses, and year-over-year price increases contributed ~~1.0%~~4.3% to sales growth during the three months ended April ~~2, 2021~~1, 2022 versus the comparable period in ~~2020.~~2021.

Cost of Sales

Cost of sales increased ~~$49.5~~$17.2 million for the three months ended April ~~2, 2021,~~1, 2022, as compared to the comparable period in ~~2020,~~2021, which was due primarily to ~~higher year-over-year sales volumes from existing businesses~~the impact of the acquisition of DRB as well as increased costs ~~of materials~~ due to inflationary pressures.

Gross Profit

~~The year-over-year increase in gross~~

Gross profit increased during the three months ended April ~~2, 2021,~~1, 2022, as compared to the comparable period in ~~2020, is~~2021, which was primarily due to ~~a favorable sales mix which~~the impact of the Company’s price increases and the impact of the acquisition of DRB and was partially offset by the increased costs ~~of materials~~ due to inflationary pressures.

The 9070 basis point increase in gross profit margin during the three months ended April ~~2, 2021~~1, 2022 as compared to the comparable period in ~~2020~~2021 is primarily due to ~~a favorable sales mix.~~price increases and the impact of the DRB acquisition which were partially offset by increased costs due to inflationary pressures.

Operating Costs and Other Expenses

SG&A expenses increased by $20.3 million, or 160 basis points as a percentage of sales, during the three months ended April ~~2, 2021,~~1, 2022, as compared to the comparable period in ~~2020,~~2021, primarily due to the ~~increase~~impact of ~~corporate costs associated with operating as a separate public company.~~

~~On a year-over-year basis, SG&A expenses as a percentage~~the acquisition of sales increased 40 basis points during the three months ended April 2, 2021, as compared to the comparable period in 2020 due to the increase of corporate costs associated with operating as a separate public company which was partially offset by the increase of sales as compared to the same period in 2020.DRB.

R&D expenses (consisting principally of internal and contract engineering personnel costs) ~~were relatively flat~~increased $1.3 million during the three months ended April ~~2, 2021,~~1, 2022 as compared to the comparable period in ~~2020.~~2021, primarily due to the impact of our acquisitions of DRB and Driivz. On a year-over-year basis, R&D expenses as a percentage of sales ~~decreased~~was relatively flat during the three months ended April ~~2, 2021 due to consistent levels of R&D expenses while total sales increased.~~1, 2022.

Operating Profit

Operating profit margin ~~increased 1520~~decreased 80 basis points during the three months ended April ~~2, 2021~~1, 2022 as compared to the comparable period in ~~2020.~~2021.

Year-over-year operating profit margin comparisons were favorably impacted by:

•~~Higher~~The year-over-year impacts of sales volumes, price, ~~increases and a favorable~~ sales mix, other operating impacts and changes in foreign currency exchange rates — favorable ~~700~~160 basis points

•The ~~impact of the prior year goodwill impairment~~year-over-year operating effect of our ~~Telematics business~~acquisition of DRB — favorable ~~1200~~80 basis points

Year-over-year operating profit margin comparisons were primarily impacted by the following unfavorable factors:

•~~Corporate costs associated with~~The year-over-year operating ~~as a separate public company and other operating costs~~effect of our current period acquisitions — unfavorable ~~330~~40 basis points

•Increased costs ~~of materials~~ due to inflationary pressures — unfavorable 50280 basis points

NON-GAAP FINANCIAL MEASURES

Sales from Existing Businesses

We define sales from existing businesses as total sales excluding (i) sales from acquired and divested businesses; (ii) the impact of currency translation; and (iii) certain other items.

•References to sales attributable to acquisitions or acquired businesses refer to GAAP sales from acquired businesses recorded prior to the first anniversary of the acquisition less the amount of sales attributable to certain divested businesses or product lines not considered discontinued operations.

•The portion of sales attributable to the impact of currency translation is calculated as the difference between (a) the period-to-period change in sales (excluding sales from acquired businesses) and (b) the period-to-period change in sales, including foreign operations, (excluding sales from acquired businesses) after applying the current period foreign exchange rates to the prior year period.

•The portion of sales attributable to other items is calculated as the impact of those items which are not directly correlated to sales from existing businesses which do not have an impact on the current or comparable period.

Sales from existing businesses should be considered in addition to, and not as a replacement for or superior to, total sales, and may not be comparable to similarly titled measures reported by other companies.

Management believes that reporting the non-GAAP financial measure of sales from existing businesses provides useful information to investors by helping identify underlying growth trends in our business and facilitating easier comparisons of our sales performance with our performance in prior and future periods and to our peers. We exclude the effect of acquisitions and divestiture-related items because the nature, size and number of such transactions can vary dramatically from period to period

and between us and our peers. We exclude the effect of currency translation and certain other items from sales from existing businesses because these items are either not under management’s control or relate to items not directly correlated to sales from existing businesses. Management believes the exclusion of these items from sales from existing businesses may facilitate assessment of underlying business trends and may assist in comparisons of long-term performance. References to sales volume refer to the impact of both price and unit sales.

INCOME TAXES

General

Income tax expense and deferred tax assets and liabilities reflect management’s assessment of future taxes expected to be paid on items reflected in our financial statements. Our effective tax rate can be affected by, among other items, changes in the mix of earnings in countries with differing statutory tax rates (including as a result of business acquisitions and dispositions), changes in the valuation of deferred tax assets and liabilities, the implementation of tax planning strategies, tax rulings, court decisions, settlements with tax authorities and changes in tax laws.

Prior to the Separation, our operating results were included in Fortive’s various consolidated U.S. federal and certain state income tax returns, as well as certain non-U.S. returns. For periods prior to the Separation, our combined financial statements

reflect income tax expense and deferred tax balances as if we had filed tax returns on a standalone basis separate from Fortive. The separate return method applies the accounting guidance for income taxes to the standalone financial statements as if we were a separate taxpayer and a standalone enterprise for the periods prior to the Separation. For periods prior to the Separation, our pretax operating results include any transactions with Fortive as if it were an unrelated party.

In connection with the Separation, we entered into agreements with Fortive, including a Tax Matters Agreement. The Tax Matters Agreement distinguishes between the treatment of tax matters for “joint” filings compared to “separate” filings prior to the Separation. “Joint” filings are returns, such as the United States federal return, that include operations from both Fortive legal entities and the Company. By contrast, “separate” filings are tax returns (primarily U.S. state returns and non-U.S. returns), that exclusively include either Fortive’s or the Company’s operations, respectively. In accordance with the Tax Matters Agreement, the Company is liable for and has indemnified Fortive against all income tax liabilities involving “separate” filings for periods prior to the Separation.

On March 27, 2020, the U.S. Government passed the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) as an emergency economic stimulus package in response to the COVID-19 outbreak. The CARES Act contains, among other things, numerous income tax provisions. Some of these tax provisions are expected to be effective retroactively for years ended before the date of enactment. The CARES Act did not have a significant impact on our income tax provision.

We are routinely examined by various domestic and international taxing authorities. The amount of income taxes we pay is subject to audit by federal, state and foreign tax authorities, which may result in proposed assessments. The Company is subject to examination in the United States, various states and foreign jurisdictions. In accordance with the Tax Matters Agreement with Fortive, the Company is liable for taxes arising from examinations of the following: (i) the Company’s initial U.S. federal taxable year October 9, 2020 through December 31, 2020; (ii) separate company state tax returns for all periods; (iii) joint state tax returns for the period October 9, 2020 through December 31, 2020; (iv) international separate company returns for all periods; and (v) joint international tax returns that include only Vontier legal entities for all periods. We review our global tax positions on a quarterly basis. Based on these reviews, the results of discussions and resolutions of matters with certain tax authorities, tax rulings and court decisions and the expiration of statutes of limitations reserves for contingent tax liabilities are accrued or adjusted as necessary.

Pursuant to U.S. tax law, the Company’s initial U.S. federal income tax return is for the short taxable year October 9, 2020 through December 31, 2020. We expect to file our initial U.S. federal income tax return for the 2020 short tax year with the Internal Revenue Service (“IRS”) during 2021. Therefore, the IRS has not yet begun examination of the Company. The Company remains subject to tax audit for its separate company tax returns in various U.S. states for the tax years 2011 to 2020. Our operations in certain foreign jurisdictions remain subject to routine examination for the tax years 2007 to 2020.

Comparison of the Three Months Ended April 1, 2022 and April 2, 2021 ~~and March 27, 2020~~

COMPREHENSIVE INCOME

Comprehensive income increased by ~~$124.1~~$159.8 million during the three months ended April ~~2, 2021~~1, 2022 as compared to the comparable period in ~~2020~~2021 due ~~primarily~~ to favorable changes in foreign currency adjustments of $0.6 million and net earnings that were higher by ~~$95.2 million and favorable changes in foreign currency translation adjustments of $30.5~~$159.2 million.

LIQUIDITY AND CAPITAL RESOURCES

Prior to the Separation, we were dependent upon Fortive for all our working capital and financing requirements under Fortive’s centralized approach to cash management and financing of operations of its subsidiaries. With the exception of cash, cash equivalents and borrowings clearly associated with Vontier and related to the Separation, including the financial transactions described below, financial transactions relating to our business operations prior to the Separation were accounted for through Former Parent’s investment. Accordingly, none of the Former Parent’s cash, cash equivalents or debt at the corporate level was assigned to us in the financial statements for periods prior to the Separation.

~~As a result of the Separation, we no longer participate in Fortive’s cash management and financing operations.~~ We assess our liquidity in terms of our ability to generate cash to fund our operating, investing and financing activities. We generate substantial cash from operating activities and believe that our operating cash flow and other sources of liquidity will be sufficient to allow us to continue to invest in existing businesses, consummate strategic acquisitions, make interest payments on our outstanding indebtedness, and manage our capital structure on a short and long-term basis.

~~2021~~2022 Financing and Capital Transactions

During the ~~first quarter of 2021,~~three months ended April 1, 2022, we completed the following financing and capital transactions:

•~~On March 10, 2021,~~Entered into a $250.0 million accelerated share repurchase program under which we ~~completed~~received an initial delivery of 8.2 million shares which are held as Treasury stock. Final settlement of the ~~private placement~~accelerated share repurchase program is expected in the second quarter of $1.6 billion of senior unsecured notes in multiple series (collectively, the “Notes”). The Notes are fully and unconditionally guaranteed (the “Guarantees”), on a joint and several basis, by Gilbarco Inc. and Matco Tools Corporation, two of our wholly-owned subsidiaries (the “Guarantors”). Interest on the Notes is payable semi-annually in arrears on April 1 and October 1 of each year, commencing on October 1, 2021. The Notes and the Guarantees are the Company’s and the Guarantors’ general senior unsecured obligations.2022;

•~~With~~Repurchased 0.3 million shares in the ~~proceeds received from the issuance of the Notes, we repaid $1.4 billion of our Term Loans with the remainder used for working capital and other general corporate purposes.~~open market which are held as Treasury stock.

Our long-term debt requires, among others, that we maintain certain financial covenants, and we were in compliance with all of these covenants as of April ~~2, 2021.~~1, 2022.

Refer also to Note 4.5. Financing to the Consolidated ~~and Combined~~ Condensed Financial Statements for additional information.

Overview of Cash Flows and Liquidity

Following is an overview of our cash flows and liquidity:

Three Months Ended
($ in millions) April 2, 2021 March 27, 2020
Net cash provided by operating activities $ 163.3 $ 55.6
Payments for additions to property, plant and equipment $ (11.0) $ (7.5)
Proceeds from sale of property — 0.1
Cash paid for equity investments (4.6) (9.5)
Net cash used in investing activities $ (15.6) $ (16.9)
Proceeds from issuance of long-term debt $ 1,586.5 $ —
Repayment of long-term debt (1,400.0) —
Payment for debt issuance costs (1.2) —
Net repayments of related-party borrowings — (23.6)
Net (repayments of) proceeds from short-term borrowings (4.0) 0.1
Net transfers to Former Parent (31.5) (9.5)
Proceeds from stock option exercises 1.5 —
Acquisition of noncontrolling interest (1.9) —
Other financing activities (3.9) (1.0)
Net cash provided by (used in) financing activities $ 145.5 $ (34.0)


	Three Months Ended
($ in millions)	April 1, 2022		April 2, 2021
Net cash provided by operating activities	$	41.3	$	163.3

Cash paid for acquisitions, net of cash received	$	(184.9)	$	—
Payments for additions to property, plant and equipment	(12.9)		(11.0)
Proceeds from sale of asset	0.2		—
Cash paid for equity investments	(5.8)		(4.6)
Net cash used in investing activities	$	(203.4)	$	(15.6)

Proceeds from issuance of long-term debt	$	—	$	1,586.5
Repayment of long-term debt	—		(1,400.0)
Payment for debt issuance costs	—		(1.2)
Payment of common stock cash dividend	(4.0)		—
Purchase of treasury stock	(257.0)		—

Net borrowings (repayments) of short-term borrowings	0.4		(4.0)
Net transfers to Former Parent	—		(31.5)
Proceeds from stock option exercises	—		1.5
Acquisition of noncontrolling interest	—		(1.9)
Other financing activities	(3.0)		(3.9)
Net cash provided by (used in) financing activities	$	(263.6)	$	145.5

Operating Activities

Cash flows from operating activities can fluctuate significantly from period-to-period as working capital needs and the timing of payments for income taxes, various employee liabilities, restructuring activities, and other items impact reported cash flows.

Cash flows from operating activities were ~~$163.3~~$41.3 million during the three months ended April ~~2, 2021, an increase~~1, 2022, a decrease of ~~$107.7~~$122.0 million, as compared to the comparable period in ~~2020.~~2021. The year-over-year change in operating cash flows was primarily attributable to the following factors:

•Operating cash flows were impacted slightly by ~~higher net earnings during~~ the ~~three months ended April 2, 2021 as compared to the comparable period in 2020. Net earnings for the three months ended April 2, 2021 were impacted by a~~ year-over-year increase in operating ~~profits of $111.1 million. The year-over-year increase in operating~~ profit which was primarily due to an increase in gross profit of ~~$48.7~~$23.5 million ~~as well as a non-cash goodwill impairment charge of $85.3 million recognized during the three months ended March 27, 2020. These factors were~~and was partially offset by an increase inof Selling, general and administrative expenses of ~~$22.6~~$20.3 million. ~~The goodwill impairment charge was a non-cash expense that decreased earnings without a corresponding impact to the comparable period operating cash flows.~~

•The aggregate of accounts receivable and long-term financing receivables provided ~~$61.5~~$33.7 million of operating cash flows during the three months ended April ~~2, 2021~~1, 2022 compared to providing ~~$30.5~~$61.5 million in the comparable period of ~~2020.~~2021. The amount of cash flow generated from or used by accounts receivable depends upon how effectively we manage the cash conversion cycle and can be significantly impacted by the timing of collections in a period. Additionally, when we originate certain financing receivables, we assume the financing receivable by decreasing the franchisee’s trade accounts receivable. As a result, originations of certain financing receivables are non-cash transactions.

•The aggregate of other operating assets and liabilities used ~~$18.6~~$115.6 million during the three months ended April ~~2, 2021~~1, 2022 compared to using ~~$71.9~~$18.6 million in the comparable period of ~~2020.~~2021. This ~~difference~~change is due primarily to ~~working capital needs and~~ the timing of accruals and payments ~~for compensation and benefits and tax-related amounts.~~as well as working capital needs.

Investing Activities

Net cash used in investing activities ~~decreased~~increased by ~~$1.3~~$187.8 million during the three months ended April ~~2, 2021~~1, 2022 as compared to the comparable period in ~~2020~~2021 primarily due to ~~a decrease in~~the cash paid for ~~equity investments which was partially offset by an increase~~the acquisitions closed in ~~payments for additions to property, plant and equipment.~~the three months ended April 1, 2022.

Financing Activities and Indebtedness

Net cash ~~provided by~~from financing activities ~~increased~~decreased by ~~$179.5~~$409.1 million during the three months ended April ~~2, 2021~~1, 2022 as compared to the comparable period in ~~2020~~2021 primarily due to the ~~issuance~~repurchase of our stock through the ASR and open-market of $257.0 million as well as the impact of net proceeds from borrowings in the prior year comparable period of $186.5 million.

Contractual Obligations

There have been no material changes to the contractual obligations as disclosed in our 2021 Annual Report on Form 10-K.

Supplemental Guarantor Financial Information

As of April 1, 2022, we had $1.6 billion in aggregate principal amount of the ~~$1.6~~Notes and $1.0 billion in aggregate principal amount outstanding of the Term Loans. Our obligations to pay principal and interest on the Notes ~~which was partially offset~~and Term Loans are fully and unconditionally guaranteed on a joint and several basis on an unsecured, unsubordinated basis by the ~~repayment~~Guarantors. Our other subsidiaries do not guarantee any such indebtedness (collectively, “Non-Guarantor Subsidiaries”). Refer to Note 5. Financing to the Consolidated Condensed Financial Statements for additional information regarding the terms of ~~$1.4 billion~~our Notes and the Term Loans.

The Notes and the guarantees thereof are the Company’s and the guarantors’ senior unsecured obligations and:

•rank without preference or priority among themselves and equally in right of ~~Term Loans.~~payment with our existing and any future unsecured and unsubordinated indebtedness, including, without limitation, indebtedness under our credit agreement;

•are senior in right of payment to any of our existing and future indebtedness that is subordinated to the notes;

•are effectively subordinated to any of our existing and future secured indebtedness to the extent of the assets securing such indebtedness; and

•are structurally subordinated to all existing and any future indebtedness and any other liabilities of our non-Guarantor Subsidiaries.

The following tables present summarized financial information for Vontier Corporation and the Guarantor Subsidiaries on a combined basis and after the elimination of (a) intercompany transactions and balances between Vontier Corporation and the Guarantor Subsidiaries and (b) equity in earnings from and investments in the Non-Guarantor Subsidiaries.


Summarized Results of Operations Data ($ in millions)	Three Months Ended April 1, 2022
Net sales (a)	$	407.5
Gross profit (b)	203.1
Net income (c)	$	120.4

(a) Includes intercompany sales of $10.3 million for the three months ended April 1, 2022.
(b) Includes intercompany gross profit of $2.5 million for the three months ended April 1, 2022.
(c) Includes pretax intercompany net income of $25.8 million for the three months ended April 1, 2022.


	April 1, 2022		December 31, 2021
Summarized Balance Sheet Data ($ in millions)
Assets
Current assets	$	368.0	$	364.2
Intercompany receivables	665.0		581.1
Noncurrent assets	603.2		603.7
Total assets	$	1,636.2	$	1,549.0
Liabilities
Current liabilities	$	341.5	$	399.2
Intercompany payables	354.9		400.3
Noncurrent liabilities	2,637.9		2,635.4
Total liabilities	$	3,334.3	$	3,434.9

CRITICAL ACCOUNTING ESTIMATES

There were no material changes to the Company’s critical accounting estimates described in the Company’s ~~2020~~2021 Annual Report on Form 10-K.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Quantitative and qualitative disclosures about market risk appear in “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Financial Instruments and Risk Management,” in the Company’s ~~2020~~2021 Annual Report on Form 10-K. There were no material changes to this information during the quarter ended April ~~2, 2021.~~

1, 2022.

ITEM 4. CONTROLS AND PROCEDURES

Our management, with the participation of the President and Chief Executive Officer, and the Senior Vice President and Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of the end of

the period covered by this report. Based on such evaluation, the President and Chief Executive Officer, and the Senior Vice President and Chief Financial Officer, have concluded that, as of the end of such period, these disclosure controls and procedures were effective.

There have been no changes in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the most recent completed fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

Vontier is party in the ordinary course of business, and may in the future be involved in, legal proceedings, litigation, claims, and government investigations. Although the results of the legal proceedings, claims, and government investigations in which we are involved cannot be predicted with certainty, we do not believe that the final outcome of these matters is reasonably likely to have a material adverse effect on our business, financial condition, or operating results.

Refer to “Note 9.10. Litigation And Contingencies – ~~Litigation”~~Litigation and Other Contingencies” of the Consolidated ~~and Combined~~ Condensed Financial Statements in this Form 10-Q for more information on certain legal ~~proceedings~~proceedings.

ITEM 1A. RISK FACTORS

Information regarding risk factors appears in “Management’s Discussion and Analysis of Financial Condition and Results of Operations - Information Related to Forward-Looking Statements,” in Part I - Item 2 of this Form 10-Q and in “Risk Factors” in Part I - Item 1A of our ~~2020~~2021 Annual Report on Form 10-K. There were no material changes during the three months ended April ~~2, 2021~~1, 2022 to the risk factors reported in our ~~2020~~2021 Annual Report on Form 10-K.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

(a) Not applicable.

(b) Not applicable.

Stock repurchases may be made from time to time in open market transactions, privately negotiated transactions, accelerated share repurchase programs, or by combinations of such methods, any of which may use pre-arranged trading plans that are designed to meet the requirements of Rule 10b5-1(c) of the Securities Exchange Act of 1934. The timing of any repurchases and the actual number of shares repurchased will depend on a variety of factors, including the Company’s stock price, corporate and regulatory requirements, restrictions under the Company’s debt obligations and other market and economic conditions.

In February 2022, the Company entered into an accelerated share repurchase (“ASR”) agreement with a third-party financial institution to repurchase an aggregate of $250 million of the Company’s common stock. Pursuant to the ASR agreement, the Company paid $250 million to the financial institution and received an initial delivery of 8.2 million shares in February 2022. The transaction will be completed during the second quarter of 2022, at which point the Company expects to receive additional shares.

The following table sets forth our share repurchase activity for the three months ended April 1, 2022.


Period	Total Number of Shares Purchased(1)	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Purchased	Approximate Dollar Value of Shares That May Yet Be Purchased Under the Plans or Programs ($ in millions)
January 1, 2022 to January 31, 2022	—	$	—	—	$ 500 (1)
February 1, 2022 to February 28, 2022	8.5 (2)	24.49		8.5	243
March 1 2021 to April 1, 2022	—	—		—	243
Total	8.5			8.5

(1) All shares are covered by the program described above our $500 million share repurchase program. The program was approved on May 19, 2021 and has no expiration date.

(2) Includes 0.3 million shares repurchased in open-market transactions.

ITEM 6. EXHIBITS


		Incorporated by Reference (Unless Otherwise Indicated)

Exhibit Number	Exhibit Index	Form	File No.	Exhibit	Filing Date
10.1	Vontier Corporation Executive Incentive Compensation Plan*	8-K	001-39483	10.1	March 15, 2022
31.1	Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002	—	—		Filed herewith
31.2	Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002	—	—		Filed herewith
32.1	Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002	—	—		Filed herewith
32.2	Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002	—	—		Filed herewith
101.INS	Inline XBRL Instance Document - the Instance Document does not appear in the interactive data file because its XBRL tags are embedded within the Inline XBRL document	—	—		Filed herewith
101.SCH	Inline XBRL Taxonomy Schema Document	—	—		Filed herewith
101.CAL	Inline XBRL Taxonomy Extension Calculation Linkbase Document	—	—		Filed herewith
101.DEF	Inline XBRL Taxonomy Extension Definition Linkbase Document	—	—		Filed herewith
101.LAB	Inline XBRL Taxonomy Extension Label Linkbase Document	—	—		Filed herewith
101.PRE	Inline Taxonomy Extension Presentation Linkbase Document	—	—		Filed herewith
104	Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)	—	—		Filed herewith

Incorporated by Reference (Unless Otherwise Indicated)
Exhibit Number Exhibit Index Form File No. Exhibit Filing Date
4.1
Indenture, dated as of March 10, 2021, among the Company, the guarantors thereto and Wilmington Trust, N.A.
8-K 001-39483 4.1 March 10, 2021
4.2
Form of Global 1.800% Notes due 2026
8-K 001-39483 4.2 March 10, 2021
4.3
Form of Global 2.400% Notes due 2028
8-K 001-39483 4.3 March 10, 2021
4.4
Form of Global 2.950% Notes due 2031
8-K 001-39483 4.4 March 10, 2021
10.1
Registration Rights Agreement, dated as of March 10, 2021, among the Company, the guarantors party thereto and Citigroup Global Markets Inc. and Morgan Stanley & Co. LLC
8-K 001-39483 10.1 March 10, 2021
10.2
Separation Agreement and General Release, by and between Andrew Nash and Vontier Corporation*
8-K 001-39483 10.1 March 26, 2021
31.1
Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
— — Filed herewith
31.2
Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
— — Filed herewith
32.1
Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
— — Filed herewith
32.2
Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
— — Filed herewith
101.INS Inline XBRL Instance Document - the Instance Document does not appear in the interactive data file because its XBRL tags are embedded within the Inline XBRL document — — Filed herewith
101.SCH Inline XBRL Taxonomy Schema Document — — Filed herewith
101.CAL Inline XBRL Taxonomy Extension Calculation Linkbase Document — — Filed herewith
101.DEF Inline XBRL Taxonomy Extension Definition Linkbase Document — — Filed herewith
101.LAB Inline XBRL Taxonomy Extension Label Linkbase Document — — Filed herewith
101.PRE Inline Taxonomy Extension Presentation Linkbase Document — — Filed herewith
104 Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) — — Filed herewith
*Indicates management contract or compensatory plan, contract or arrangement

* Indicates management contract or compensatory plan, contract or arrangement

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


	VONTIER CORPORATION:

Date: May ~~7, 2021~~6, 2022	By:	/s/ David H. Naemura
		David H. Naemura
		Senior Vice President and Chief Financial Officer

Date: May ~~7, 2021~~6, 2022	By:	/s/ ~~Lynn Ross~~Paul V. Shimp
		~~Lynn Ross~~Paul V. Shimp
		Chief Accounting Officer