VNT - Earnings call transcript Q2 2021

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Operator

My name is Britney and I will be your conference facilitator this morning. At this time, I would like to welcome everyone to the Vontier Corporation's Second Quarter 2021 Earnings Results Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. [Operator Instructions] I would now like to turn the call over to Ms. of President Vice Curran, Investor Relations. Lisa Ms. may you begin your conference. Curran,

Lisa Curran

Morelli, Good Thank With thank Mark Vice Chief President morning, our you Financial Dave Britney. Officer; me President and Executive for are and call. and Senior the everyone, you, Naemura, and on joining today Officer. Chief our us

www.vontier.com, certain is measures Regulation website, on present year-over-year to these the available relating of G the under non-GAAP call. section Information will measures or increases Please unless We measures Financials. today's non-GAAP financial financial on Investors decreases. the reflect SEC note required otherwise and heading by presented our that financial noted,

developments call, Mark. of federal forward-looking are these obligation speak subject or uncertainties might actual anticipate please that meaning regarding will not to we in and statements report forward-looking differ will of or today. the forward-looking statements. these that, may on results turn from forward-looking from subsequent securities within in make future. are With that results statements XX-Q. any any filings is cause I'm the made. to including available Form And risks These statements factors we materially occur These forward-looking the call statements of our as quarterly they to and only we SEC actual to that the or forward-looking materially Information assume statements may date and we During statements over do update any the laws, the to expect make events number a differ regarding

Mark Morelli

good And Lisa. Thanks, everyone. morning,

retail growth rigorous We of team’s basis second share all with points adjusted growth. quarter repair our XX% solutions our were than delivered operating Orders the expected We earnings adjusted largely excluding guidance revenue nearly core strong in quarter core were of Vontier solutions strong, growth pleased execution was non-EMV The very XX%. to are growth revenue system. XX% We better by increasing our achieved solutions. EMV performance. growth Core metrics. margin exceeding than expansion and XXX and results and on XX% per greater driven another business with year-over-year. application and auto Thanks

year-over-year with sequentially. high nearly remains growth XX% growth backlog and XX% Our

operational to navigating I'd to supplier inflation. offset prices of Once of recognize also increased supply been to this priority the network top Our our successfully has again challenges. availability. tight our tireless like efforts than also leveraged We've manage I'd business quarter, chain system the more teams. Vontier we've thank like to partners.

most to profitable continue focus initiatives. our critical growth on We

our momentum. saw solutions retail focus the to also addition accelerated with announced gives million and the technology DRB of we secular The new we complements core scale, In focused growth, margin We're This DRB, also are long-term This and and better point-of-sale solution acquisition portfolio existing our prioritization cash addition the drivers on gaining profitability revenue critical innovation a meaningful front portfolio. and establishing an progress on software attractive enhances across payment our We've months platforms targeted is us growth making ago. free recently profile, particular, expansion in first our towards and made high diagnostic in growth the who's growth recurring macros progress markets. of Maximus and X.X operational offerings. launch our market software. goals of diversifying step flow important In generation. $XXX strategic separation we towards since consistently all and of and offerings, only nine through

per XXXX. customary regulatory us closing conditions, to anticipate to share mid-to-high this in While including is review, the transaction we approximately closing giving the cents third subject acquisition quarter teens accretion

of done has products. competitive a portfolio. of advantage by expanding built a We've years, Vontier remarkable suite offering strategically the job team the broader Over a our

We the convenience on electronic focus software provider with XXXXs, workflows. connecting and As more the hardware focused the forecourt. of on our In In and of the workflows, value components we part acquired systems early and highest intelligent system more deeply systems. site these store control the the the we embed offerings solutions customers leading in of leveraging a we and XXXX, software site strategically on point-of-sale focused systems, retail automation. systems ourselves

Our The and bright systems the upgrade benefit are cycles. from store of now more regular is profitable and transforming. future convenience

While in infrastructure clear services support our car offerings. DRB diversify customers positions they fueling acquisition including for sustainable customers it's that need decades, investing will increasingly to like washes. non-fuel continue well operators as maintain The our will their to retail us to be

today see DRB I'm into including this details our can DRB host coming more to plan you for So that strategy. a fits tuned this Stay retail virtual November. solutions, share why we dive happy event. to on deep

revenue developed expansion the increase Moving margin net basis to raising XXX This of high share per million to per growth, $XX at adjusted guidance growth core to the includes reflects full we're our headwind non-EMV outlook, $X.XX XXXX This adjusted XXXX than at to EMV GVR core year of core growth and demand a our markets, $X.XX in to diluted includes operating improved improved favorable and more outlook Matco mid-teens for points. EPS assumptions greater $XXX view million. single-digit share. of

impact, be second EMV challenging comps in low-teens core half. is the revenue to the despite expected growth Excluding the

of reminder, in this a halves tale guide pandemic dynamics. reflects EMV year's a the two given comparisons As

Dave results. net which core the guidance flattish $X.XX are includes initiating provide quarter operating of assumptions EPS financial third to to to adjusted margin. essentially With turn of I'll Dave? that, and diluted core over $X.XX, revenue, We our it

Dave Naemura

impact. quarter. XX% second QX second to XX% than had that quarter, and more expansion markets net second XX% Mark. height This cents, the core year increase the non-EMV the revenue translated America. revenue in significant This period. growth earnings greater earnings than while contributor an core augmented $XX by in led period. $XXX than grew core million was operating were primarily from the Core in High XX% led earnings XX% pandemic prior also respectively, million in to the revenue revenue in more of points XX% of year-over-year, growth driven the prior net and The by continued in of In EMV and broad-based core in of Matco share in strong of a bookings GVR, strength growth Latin roll-out growth, bookings adjusted for and prior XX% by continued $X.XX $X.XX progress more year in than and broad-based North which the the by quarter basis year the declined was cents the XX% Thanks to America. increase driven growth. adjusted against volume the double-digit per was XXX India than growth on growing margin Adjusted quarter more compared were

our the XX margin million our execution the we on operating almost margin management strong In of cash expansion have Importantly, temporary items growth quarter, and QX. core to call second year prior core -- $XXX free portfolio we returned points QX to this Though of approximately rate, QX to of saw the million for inflationary This of expansion profitable of chain points last We of quarter -- business continue that demand conversion initiatives the offsetting was Adjusted profit drove our which reflects of compared strong dynamic flow expected for a the of driven prior to communicated more actions in gross adjusted $XX adjusted and conversion year cost second environments. end than execution revenue XX%. basis XXX uncharacteristically basis the team's teams year. the low operating we supply which in and generated continued XX% of $XX two point growth. million, growth low market by primarily is year quarter. period, be the reduction

working which paid strong First, we at federal of to built spin million was while QX incremental $XX conditions dollars capital payment, increase XX of in approximately was conversion payment satisfy free net the approximately a the flow adjusted And X.X% from sales capital in impact XX% But demand levels in We and at of tax of and XXXX. for we working tax our of levels. continuing approximately $XX low outstanding last working QX capital, quarter, our extra dynamic level Adjusting of an quarter. ended million with very months cash capital the QX X.X%. still second, federal a working from run historically. the

is Our XXXX. consistent year-to-date adjusted with cash XX%, our flow free for conversion guidance communicated

the at and Additionally, October conversion. EBITDA our first quarter down X.X net times of free year. the times from been spin earnings in enabled flow in time by times down at has and deleveraging strong This of X.X leverage stands last our from growth cash X.X adjusted

XX%, saw The of in markets. demand growth in following continue EMV at environmental core two XX% America offset sales, And single-digit by immediately platforms, see in and Looking we deadline. than in after-market the more high by and in growth performance primarily growth XX% greater to North We partially had strength continues from than growth our and core than driven multifaceted. solutions, core solutions, core mobility retail XX% non-EMV GVR the and growth decline to strong revenue due technologies be Teletrac more Navman. in months to GTT, low of GVR the

that in platform driven core by base, on pandemic. of and the EMV basis. dollars primarily growth. year-over-year franchisee XX%, pause fourth height a and Hennessy. Matco As XX% diagnostics demand strong Core continued distribution our of driven sequentially demand grow additions, revenue did but consecutive QX, continued environment This a Matco the reflecting expected strong that from more than during net and our technologies experience strong growing declined growth was the quarter following saw repair we by was

broad-based. total Looking again was regionally, sales the at growth truly company

core in greater grew greater America in markets growth total and As than I Western XX% Europe. XX% revenue growth North revenue had than XX%. high growth than developed core in double-digit growth low mentioned, our more led markets And by

charge the to restructuring recognize This of on that approximately is profit position continue continue of adjusted million our is improvement charge make We actions XXXX. better to in operating quarter. company excluded and $X net progress this will full in second that the in anticipate the from back profit. This $XX the year charge of we half year. part the our for the We million

these actions have expect to the to substantially full complete in positioning XXXX. benefit the year, to of continue exit actions our rate We achieve in these

Before EMV want outlook and assumptions, the I outlook. to provide color additional discussing our on

to We the of estimate prior full $XXX be in $XX million headwind associated the million. million As VVS extremely booking manage our we as strength, and by agile previously very well a strength continued backlog our by situation, to of we stated expect $XXX to from year evidenced fluid million currently to supply EMV our execute range have down the constraints. with and ability for powered is continue to and XXXX $XXX

referred to our updates of that by will to just the of In prior provide we the XXXX. the to these of houses the we completed share that of highlighted that we revenue translates said growth be mentioned. growth XXXX, Taking XXXX tale factors be XX% with dynamics shaped are V strength half The a expect the adoption recovery growth to related into our half in comparison prior Mexico growth, roll-off per is negative we adjusted core quarter. to This seasonality period, assumptions, approximately Matco, revenue performance, to first higher two in in the $X.XX year the with our than and highly that the entered single-digit to we expect decline that, year closer quarter, net at pass operating But directionally in Fiscal earnings We deadline, business. period. look tail earnings as EMV contract the consistent XX dynamics core Regulation assess starting margin of the of EPS per we half basis we to we compounding the EMV impacted compared a to adjusted two of the situation it. reflecting quarterly high appropriate. see adjusted continue $X.XX be expect share we dynamic year-over-year would I the contrast the half earnings the halves and the the last second that year third by and adjusted When first of Having and difficult and we is demonstrated impact year, the to in primarily to points. second the expect percent to trend slightly as the impacted two flat comps our and of outlook would by strength

than low-to-mid-single-digit For growth, favorable our EMV full solutions expected our we the the demand increasing of outlook. and to XXXX, growth guide core to which year high reflects are in revenue better our outlook equally compared prior single-digit revision the to non-EMV

reflecting inflationary margin points manageable expansion core by and on an partially Additionally, in mix. and translates increasing basis this growth prior to pressures, greater mid-point supply chain year-over-year adjusted our persistent to cost than initiatives, XXX and offset at execution our are profitable our told EPS management $X.XX XX% guide. XXXX the All approximately target to in of we of growth $X.XX X% constraints operating of but XX% continued raise

business to to capped-off Mark. We capital approximately and our for XX%, XXXX adjusted and XXXX the working full cash conversion earnings to year of all growth, turn With meaningful I'll robust a the raise capital Overall, quarter, and intensity growth. that, half free expect flow first model. second expansion management time another margin back will be supports expectations it core of levels reflecting of continue our continued low low

Mark Morelli

Dave. priorities financially drive profitable of on advancing quarter ahead progress and up, this we wrap initiatives our M&A. are Profitable to Thanks, delivering and strategically made significant To growth critical plan. growth on beneficial

to value turn Our our with continues. acquisition diversifies upon your we to DRB work get the momentum discipline strategy us. we it's and capital our remain presents building and headwind tail We're of I'll driving Lisa solution runway our and of the so over Recognizing a creating of opportunities EMV earnings. call committed deployment we at Yet expansion portfolio accelerated the now growth our questions. Friday as offsets can retail compelling end know aligned transformation. to continue

Lisa Curran

Britney, ready questions. now for comments. we Thanks, are concludes formal our Mark. That

Operator

[Operator Instructions] yourself first follow from ask and up. We We'll to question one take of America. with Obin question you that limit please one our do Andrew Bank

Andrew Obin

Yes, good morning.

Mark Morelli

Hey, good morning, Andrew.

Andrew Obin

to headwinds of million grow from the it's year XXXX greater million $XXX million. effectively, But when face $XXX $XX Just to headwind. that million question EMV $XXX will million means getting sort $XX this million been to we've this $XX to

we year? larger than So I appreciate thought? about total go the think demand the ‘XX of providing you. you're better that not opportunity this But it same guidance. is Or EMV forward should opportunity? Is you total Thank

Dave Naemura

Dave. Hey, Andrew, it's

a Just million, of and ‘XX adopt impact the that. take continue increasing we and people favorable dispenser of more said the kit said, see our to do million size in retrofits. the like seeing seeing Generally see points. speaking, that, we we to less EMV pie sales we're for as couple share, of mix we are $XX just we Having to year with updated the $XXX how guide similar

had more said pie overall many how I the get that the that past opinion to is And we EMV. will this us little Thanks to least which clarity, see happen rapid than a see many, at beginning what deadline So customers probably increasing adopt how at bit. But we or the adoption also question. think you would to the historically point we've get a little needed on previously is for anticipated. some small

Andrew Obin

did Can in what with guys imply XX% growth just see question it. sales, you still turn you teens have can appreciate if for half? to the just help help Really comps, for guidance fact but pretty You that Matco, mid-to-high but this order quickly the orders business, us highlight in to into Matco. seems that? growth a you. is I Got you. second And Thank guess the a us you

Mark Morelli

mentioned remember, strength -- there A the underlying continues about -- things which is America the yet that's other you our unique by great. Canada penetrated continue having the our is way, back. new and the And ads, the no doing keeping really on be little in that technicians of of to territory on conditions phone there's to are we do And we our offering market North thing the question, are one and products market well XX% strong not franchisee is franchisee franchisee the with keeps them in encouraging. there as we're and distribution the Look Sure. I'll coming here to lines. vitality, some that that Adding give take bit very buy, market. in that good really net really I franchise may couple here driving a And Andrew. a we're sales question us product us course the ads. is customers and net we're interested of just continue to really think encouragement to today. And

We Expo also in had QX Matco QX person. our in

[legs] so to demand it. also we good And we And think think there's there's is there.

Operator

JP Morgan. from And Steve question with we'll Tusa take next our

Steve Tusa

Hi, good morning.

Mark Morelli

morning, good Steve. Hey,

Steve Tusa

you maybe talk free of puts Can just takes? those of and about forward some just going -- the moving and cash that in in some of some parts

Dave Naemura

Sure.

coming of XXXX in we in extra year only kind had back we'll to little the payment payments knew a the tax in quarter having We tax five So second three XXXX. bit. the have versus

million saw $XX incremental payment that we coming. So

low Our otherwise, that than tax capital. working conversion thinking lower were was payment, a -- build that little we were given even in some with

levels we So -- was X.X% QX, capital. sales we've just I mentioned in of think of at working unsustainably were low LTM which

we part it bigger So the we $XX of to year be the little thought. But rest was built hold these and back saw we that come a levels. capital the our real about will ability million, mover working in, probably than of just for

flow And be what mid think the that sixes here. conversion will around for kind we're going materially range that's free half. I of second to ultimately cash drive

what half, for remarks, anticipating First prepared XX% year. was we're the I the conversion, as saying that's in

to very doing that of good well, anticipate us being capital. a job levels So we which as working would around continuing historically maintain level low the second contemplates half these

Steve Tusa

sense. going the you just total business telematics on in about wise? what's makes it talk Yes, trend Can

Mark Morelli

is Yes, Mark. certainly this

the in progress telematics make We business. will continue to

scale growing of revenue. focused annual good also churn. a in on course, of profitable which on that recurring business to a ARR, important Samaha, is pretty the in up is driving the veteran for as focus his build departure reduction years M&A. expansion and that we a as opportunity TNXXX margin progress think to business reframe an we trend the And measuring that We're At on business we it same is the Because and we've the we're more is time, out in software, organic past growth five-month we're which of and ability he pretty to on reframing make growth. One on name this our We've been continue pick the as well is is new that light, Alain some of ARR, has us. added President, industry that big areas offering.

So we're He's really on now But is settled. we're happy this, we you a keep to turnaround on and we just Board. believe have very attractive space him the continues. posted believe going getting to

Steve Tusa

lot. Thanks Appreciate Great. it. a

Mark Morelli

Thanks.

Operator

our And will Research. next Wolfe take with Nigel we Coe question from

Brian Lau

on this morning Nigel. Good Brian everybody, is Lau for

wanted first maybe the backlog bit. talk So little to about a

Matco maybe So year-over-year I baking the guidance reconcile quarter-over-quarter. I'm flattish in couple single-digit it's maybe for high the some Or conservatism quarter-over-quarter you XX% weighted the up towards quarters, chain the of kind imply XQ growth? growth are unforeseen and last quarter-over-quarter just you has backlog of more some supply versus headwinds? backlog and And build. can sales, curious, think just revenue been implied

Dave Naemura

year the say high Yes, first bookings we've I backlog outpace is now, half, high. And continued Yes, to see entered thanks. that in right would the definitely we revenue.

the And which through goes anticipate approximately will backlog a levels moderate we we down this at right the high are level as will we entered now. year. that and So that year very to at bring

see that There's back call high we of Matco first half, So continue course to kind particularly reduction it of parts I think don't still of the manage the is levels. the the with second again, we're and other the we realistic and think conservatism building that the definitely over in, -- I supply in where EMV year would we I so have pretty a the balanced, clearly across demand profile but in constraints board. as strong and some chain we're GVR enter year. it's that But, but to we

reduce So that and it's and the progresses. order backlog build have as pretty plans the based year to the we broad build

Brian Lau

the And you franchisee Great. Matco. briefly then on had just touching

onboard an is And franchisees it the trending? that can then all added of on on give seen how tracking pandemic So, during where number kind update have that you for ramps having their us historically? percentage KPIs the basis? virtually are are to year-to-date also, -- How their you how you've would

Dave Naemura

part, to Mark. Yes, hand well, take then the I'll first it

at for to first than And So you I if ads. One, the to see, more XX the reasons. additions. in a -- we're see positive a we're the year about where we half usually few franchisee we were in quarter. quarter that's have net franchisee important think additions attrition of little that's first a And

well. we're then last which look additions last that's XX rolling at target we months, strong. strong quarter very So If usually XX plus as great. a And the back had is kind second XX really a we in We of for quarters, the over XX four period. months

So as the to that pass I for it a we strong Mark see result. other very will half.

Mark Morelli

Yes.

out and a of imagine part building the work there you and virtual quite we used that to So across can franchisees. on do was, to change had that sit to table sign this how actually kitchen question bit, up we’ve environment, we going your

a for to it's it's deploying that us. but it's traction really to a virtual we're the we've that had given model. had on more working that very and the And so virtual, out format. think more there clearly issue And be is, more effective is we to deploy make And it's growth to digitally, able

Brian Lau

Great, thanks.

Operator

take will with we question Citigroup. next from Andrew Kaplowitz And our

Andrew Kaplowitz

Hey, good morning, guys.

Mark Morelli

morning Andy. good Hey

Andrew Kaplowitz

mean of came and back. plan of XX% growth delivered you obviously you the you ahead you quarter, your past more this low incremental, ahead profitable businesses what as know around cost maybe then even mentioned is such But across I that. a Mark, as Navman. you what Teletrac detail could actually that portfolio, temporary little us improving already give plan, by mentioned initiatives are

closer about to that? to than do the said think your XX%. deliver So when at consistently you this term, potential better point, you've Do think you incrementals, is have think longer which you I

Mark Morelli

take And I'll Yes, over second Dave, first so part. part. turn the me for let the

by question way. that for you thank the So

behind We growth, you non-EMV have those profitable initiatives. read of is growth, pay-off momentum it. really down sort repair also business got as that really, revenue seeing that question, those as we and a and critical on if specifically Matco selected the and both you're pays-off, of But it's Hennessy your kind compare historically, growth actually build on a high we very is out growth is kind markets, well few and to clearly at really lot some a below Hennessy. you say through how our and which of And I what solutions, in growth of couple has one of as diagnostic And seen know, strong retail their of the fleet is reframing margins. think some

so we're there. good And traction really seeing

around doing critical and pretty share well have also a gaining think EMV one as we're initiative well. on with We that I

Dave Naemura

Hey I am Dave.

you in On run. year, have XX%, the cost second in around would the you incrementals outs for if obviously right would incrementals, low in quarter, seen where of we've kind incremental the prior kind closer take historically of one-time that, of that to the XX%, because had we normalize is

contribute and financial the sustainable of I this I that's continue longer And profitable sorry, to to we that kind XXs company. do we And continue accretive the initiatives. we where little lot can these think of think as to that, incrementals to metrics add acquisitive, push of and do particularly the on be than deals progress of a deals been term, higher business we've growth get a for kind rate. mid-to-high in and -- talked about

future. we'll I think sustainability see there in improvement the or

Andrew Kaplowitz

detail of in think margin I this you EPS That's Mark, grow save or What ‘XX. helpful And color accretion But ‘XX? in I how years? business? for to fast your few the maybe growing give could we us have term said teens in how shorter little so the is the XX% of margin by give us guys. get growing kind more potential business the decently to incremental, is you then next can the on the generate high X%, mid-to-high over know regarding more and or GRV a in fast business incremental would ROI the have to

Mark Morelli

single-digit things. Yes, thanks rate we around And place. is for really high out couple that built that a question. growth think plus -- there that's believe that's a We in

on and of they through First And around then layer infrastructure That into of where controls to layer sweating a is that off workflows. their includes they customers productivity primary high that's through system, business. very And sale leveraging what all, workflows models. about the payments, a arrange talk also for our they putting analytics business very accretive initiatives retentive customer and customer really digital point is for there. they where their embedding data in a they which business assets, drag have recurring margin that more a growth sticky type

Andrew Kaplowitz

Thanks, guys.

Operator

And next we will ISI. Evercore with take our question from David Raso

David Raso

of versus the some speaking time. that pie, the EMV you're is profitability a business larger the part early incremental of curious, the of [indiscernible]? how opportunity, for EMV I you thank was Hi, the of

Mark Morelli

Hey, thanks, not even it's some Yes, similar, maybe better. Dave. cases in

that agreements. have some adoption, volume based better EMV obviously, some through adopted customers move of earlier, we have As the largest

customer remains increases, profitability earlier we stages. in that of parts better experienced, latter solid. pie through this average, the is I'd the through adoption of So this, here, work little the we than And say the if kind profitability as kind what bit as we the not on move a the of same,

David Raso

that to being way quarterly. plays surprise, trying would ‘XX, to decline it way pleasant just similar I'm XXXX, out that understand a in but a

pick can or the [indiscernible] even almost through a bit there. are what of they And math you steady sales the are get second up ‘XX reaccelerating. year's But Next little half ‘XX, sequentially. expect in almost ‘XX do sales EMV

Dave Naemura

position good feel here are gotten shape as the for game you think I the the of next we in think a the year, smaller to we've deadline, the year, not Yes, a in we EMV. David, behavior give I I think, this at the within customers. have of past stage

giving think this the part at I back this the year that, So folks forward an think stage, best call we're able and to wouldn't kind look than we But at next we of year further it of in we stage. second dimensionalize I update. as to can coming

David Raso

to looking at. lastly, But the be was next next seem kind came year margins on DRB came And does you're clear, for Okay. just like This of a of agreements and improvement. right. last year, just in margin obviously than credit DRB night for at a kind similar to acquisition it margins equal growth assuming of in, the what more what

improved? this get So this does next and line, year about to not expansion top just is on type DRB, that need that number, margin margin is accretion

Dave Naemura

near-term, in play a capabilities from Yes, Dave. of this well. as had should margin are put-off, that do play. a We benefits a right with will We growth opportunity. good the this that But get there play. well. see opportunity I before as we opportunities kind we not a over that is margin as the here. And -- been mentioned see got some There's you're that. synergy and some good think well. is growth growth good new with growth as time, exciting This But business this products expansion should some as help

nice that in all things overtime five-year of kind conspire, kind pretty those So a to window, think. we us result, of deliver help

David Raso

for the Thank time. you

Mark Morelli

David. Thanks,

Operator

question Barclays. next with And we will our from take Mitchell Julian

Julian Mitchell

some that how XX a question just be leverage in us acquisitions level Maybe morning. pro months and give following you'll of of what to post the thoughts and are capital at DRB. you acquisitions, close DRB? forma comfortable on think Maybe deployment as good the doing Hi, you with kind

Dave Naemura

its Hey Julian. Dave. Hi,

and below that around anticipate assuming And the there. We've within pipeline could said doing of sight objectives times reasonable sheet a to in above capacity with three balance three to that we've But deals, about continue post times a also of we about. existing without closes, cultivate in well by kind M&A, always we we would we below here, out third, types the be do different to de-lever time. continue come would have times here, that sizes be we the within we our year-end. three that, decent of DRB, said stated as clearly leverage three remains of line we back within that amount times that go be and to again the M&A having talked further So metrics talked additional should to

amount of number done. of not to a starting deal, properties capital in we think on of with out we we're a that known the business, this space in And asset. get it's any a but different talked that, start sizes And have about deployed a we've how Having not something and diversifies the this us we always There's by near continue creative that's market to said kind types would thrilled that's very work great for attractive we're to stretch. it So the right the is of of adjacency. through. consistent

Mark Morelli

Let in that me just jump on too. one,

think pipeline along we we're I just our I great I on building we about strategy. our that we're got the what is and it. think business in here. think really cultivate in been It's our continue we're reinvigorate, spot continuing this to some have but our all think financials. is pleased we And lead. anything, shows, sweet to I fits think in we've of strategy we pipeline continue had And pipeline. have in here, near-end, really really momentum you out telling things what of kind that off the other keep our it's this But it if mind, here, I indicative on that in we're there's work it's making of progress And good to and kind it to that that things build

Julian Mitchell

that the and about of the in just how on maybe first just second then normalizing you the diagnostics year-on-year, those you're you're clarify, overall, Thanks overall maybe half growth and so forecasting growth the to very in business, of or when sort what's year-on-year, sort piece secondly, XX% of me for think I second pace thinking technologies, and half about of of versus trying dynamics And that base how for repair had much. of revenue think you're types dialed half XXXX it? sort

Mark Morelli

a businesses half it's We distributors very number quarter. part franchisees, of good is and not shaped haven't well. saw a first ever, number at the obviously, really this our but we third high the growth high the growth where very are set back quarter of out level credit adding look the the in said V road, in only the last high single-digit year, as -- is having of at growth single-digit with we where This metrics saw consumer returning on the of and end And to what quarter we very greater snapped that, is we good year, end strong. that fourth Matco, the market recovery than distributors are working historically tough this of particularly Julian, of there is is seen, where after really second really they

round we the that growth said very kind mid-single lower that's last digit compares. anticipating But strong some difficult off trip will year. over market end this that. second were but year against to anticipate low type continue. growth businesses compare, we've tough think and think of I still normalize those fourth frankly, we I that what So think businesses, these growing half. time, quarter, always But the decent I even back will we're for to And very of strong And was in

Julian Mitchell

Great, thank you.

Mark Morelli

you. Thank

Operator

take And with Walsh from Credit our question we John will Suisse. next

John Walsh

morning. good Hi,

Mark Morelli

Hey good John. morning

Dave Naemura

morning. Good

John Walsh

Hey, wonder little if bit tech we as come at a we forward. mobility the look differently question can

talked strong you about orders. non-EMV So the

create little order that bit to just should obviously And to there had sales better of we that the the about wanted year? a a Mexico EMV conversion business. of So about we update on for as there issue? EMV next part remodeling understand comp Are countries headwind. Is appreciate think outside looks year, year we've anything any the this look then, next the how as

Mark Morelli

John. there, points of couple a Yes,

we is I kind non-EMV very activity have brush. has the tax, within of the about talk place when see is think But And America. faster advent GVR, here most EMV the in just probably a with of I so of conversion that given So backlog. North within mobility this we'll we think where little think broad let's a do GVR to

little North turn So otherwise faster we backlog I a to bit able America outside than will be think would.

As far in shape as XXXX, region. compare had items it's just it. a to vary pretty the last And least by year [indiscernible] odd at XXXX,

North talked about. fourth we tale a or we come India. with back quarter, lot this come But that fast particularly the activity two of And saw both market EMV Matco. of market dynamic back in of high in we've some growth So then creates very saw emerging kind that quickly, America halves and

XXXX. got QX you've that So Mexico and kind of of flowed QX, QX, again through

recovery growth, had As flow we think we course to pent-up overall shape. of shipped demand saw about you own dynamic we the XX% then India the where And fourth quarter through. in strong out, year that very of core some its I last in EMV going is had have

we compare about. within think I think the need those mobility the items to are tech arena big

John Walsh

Great.

if So be I all to them you mean, together, expect up year? mobility should we next put

Mark Morelli

to far of year. getting on dimensionalized, until want I nature too look, we've the next And Well, hold-off into EMV.

XXXX more as towards into So of the get to here. come the we on year end

John Walsh

shot. from that hopefully type we you. taking, think to Is Great, And get How you excess able some some worth when of to about of talk we're about like levels When think component today? actions a related is in you commodity it -- should at are might capture surcharge you hold? or of we Thank to the the strategic pricing inflation about this price maybe deflation more inflation. you pricing the price then be think you're back? you'll these have give inflation

Dave Naemura

Yes, thanks that question. for

tailwind we gone started -- big even by last think thing it, I saw in year, it. the activities, I this of we really much or inflationary before strategic started pricing strategic we very what out gained sort with saw it's and me we've some think pricing. headwind QX excuse because to to way, of We're --

not don't actions related. taking we're that that spot sort I just there's there So of out -- are

ways a more think, been pretty think what's sort But I increase. absolutely And seen here we through this is thought I quite is of very pressure appropriate. think as inflationary strategic. strategic. And couple I responsible, there's

imagine I So amount of a would it. to there's stickiness fair

John Walsh

for taking Great. Thanks the questions.

Mark Morelli

Thank you.

Operator

take [Rob Mason] question And from our next with we'll Barrett.

Unidentified Analyst

Yes, good morning.

missed as Just maybe the you get quantify And second second on that what quarter? up last it. like price what price. contributed through half? we curve to did question in I'm looks I around that just, But follow the

Mark Morelli

the in quarterly then Yes, get comment And the XXXX. you X.X%. price to our here about on And currently in then on We're than guidance X%. let give the we'll last all is quarterly up greater based for pricing a for basis XX here, a number me full And second. points, of of this second. pricing year. forecasting we'll

Dave Naemura

Yes, time there it wasn't December too that in to X.X%.

Unidentified Analyst

Okay.

how around DRB, about industry. the -- positioned to business, within I work competitive your I how that as went you around just due you question [indiscernible] there, could to define perhaps a Mark, Just doing speak if the work, see they're and diligence wanted up and you landscape that follow

Mark Morelli

really $XXX is what Sure, number very they is distant sticky get And market to at they're question and in a customer to to that. they're you in which there is of and which -- they they build layer get do that is a specifically player offerings on strong, how do, leader is And and digital the are about million analytics, -- industry arranging more they're And Tam, if then your what the what the the make to about so build share. point-of-sale I to number a payments. about as well most system, two productive, really onto the have, assets, retention, their does related they spoke be excellent the XX% revenue, the whether recurring two. look [Kleenex] brand that as they that brand, very they with they out they

it's, model. So business a great

Operator

And Andrew we will from open. with Berenberg, Your question next take [indiscernible] now our is line

Unidentified Analyst

guys. Good morning,

Mark Morelli

morning. Good

Dave Naemura

Good morning.

Unidentified Analyst

you M&A? XX% that are capital going to achieve assuming To you're DRB, is make assume invested have to with on return -- your

Mark Morelli

as the from of asset. be to that opposed No, within just that would M&A, incremental the asset purchase

Unidentified Analyst

Okay.

Mark Morelli

price get, purchase without we clear, less asset it's be piece we're that tax for using To -- value off so the XXX that of the is the tax total calculated XXX piece. the also carving to we the

investment XXX, got is which consider residual we of the ROIC. the we what to measure So

Unidentified Analyst

in maybe with Okay. year player to compared business -- competing POS and business of that fits this obviously some will those be does about Can bigger two of well deals -- number And your then, on talk them? you this one existing then synergies, some how you this quite business. with the

Dave Naemura

remarks, one, you of in about out Yes, of sure. business get in building terms from our see washes. the and we spoke is existing the that like one convenience I The store on those services, prepared leverage is car

we synergy can imagine the wash, the also of it's which like on you synergy wash, light. so same also, thing is distributed, even faster. it's car there. out to in us it's excites into perhaps the transactions sales synergies, infrastructure the play but store piece, there but convenience fairly of sell just we there's car we're growing a in that kind is in So wash, tunnel as kind springboards There's to really some the but not customers sense the which terms that space really the the car get that And and of that cost capability is a of your But some store. the it's us in in think some convenience used you local neighborhood I there,

play that on very, -- is it's very them exercise a and can so this we to familiar And us. growth. something that with work And

your what can that remind of me that the you liked was a second lot. question, we And please? So part

Unidentified Analyst

Just to your and compares to -- then you how it be compared sorry competing it – yes, get with whether too? deals -- can competitor yes, on them,

Dave Naemura

Yes.

you capability of in there software, in regardless at of you're controls brushes, means competitor, automation, specifically marketplace. that as going of makes go the is agnostic, a And we out the our hardware the which think since that do controls that's to hardware, there's when folks what we in unique, wash. compete all, of the that. put a But and and are hardware us look certainly think in car the first So

the owns number in owned by hardware and Our somebody that actually software. market is competitor two

is a this product which got we launching market. the we called is we've that unique course, based quite And makes the Pantheon, there on us market. sell out of we they're this a think got to the also can you've for speaking an unique outstanding offering you've that capability think And, us scale broadly of currently new lot to cloud-based so we got, So offering. that the more have general

good there's lot DRB. of things happening at So a

Unidentified Analyst

the the you automated like of and say -- And you're more tunnel, driver, talking there's just an in archaic industry? when washes, that's sort last tunnel car just upgrades technology about those year,

Dave Naemura

car States tunnel you like is of which a It favor, more strongly faster. they're leading kind yes, is industry, format specifically of the strong the standalone to strong with but growing the market. convenience a fragmented very in -- because convenience larger also part more store where some of stand actually you stronger a I is, similar And wash strategic that that There's any the is might consolidation -- the is in United would position to alone, players in like the buying car which format of the other footprint the actually DRBs there. is even recognize we what up some said, -- plays that wash drive in position tunnel players more smaller, are not and store this we see have one more that a and

Unidentified Analyst

Got right. it. Thank All you.

Operator

will time. questions And we turn program remarks. I the any have closing or no Mark additional with this back further Morelli to over at

Mark Morelli

I just have participation our Appreciate and driven Britney. weekend. momentum want to strong thank our a good now. and you, team Certainly embracing Vontier it. value the today Yes, thank for win. your appreciate for a core Bye

Operator

today's you conclude participation. program. Thank does your This for

time. any at disconnect may You

Vontier (VNT) 8 Aug 212021 Q2 Earnings call transcript