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Vontier Corp (VNT)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 delivered modest top-line decline but healthy underlying Core growth: revenue $776.8M (-1.5% y/y), Core sales +3.5%; GAAP EPS $0.82 and Adjusted EPS $0.80, a slight beat vs the company’s prior guide of ~$0.79, with operating margin expansion to 19.2% GAAP and flat 22.0% adjusted .
  • Segment performance mixed: strong Environmental & Fueling Solutions (EFS) growth (+8.5% sales; Core +10.8%) and resilient Mobility Technologies (+2.0%), offset by softer Repair Solutions (-2.2%) amid ongoing technician discretionary headwinds; bookings up ~9% organically and book‑to‑bill >1 for the 4th straight quarter, underpinning demand into 2025 .
  • 2025 outlook: revenue $2.97–$3.05B, Core +1.0% to +3.5%, adjusted operating margin +35–50 bps, and adjusted EPS $3.00–$3.15; Q1 2025 revenue $715–$730M and adjusted EPS $0.71–$0.74 reflecting a Matco Expo shift from Q1 to Q2 and tough comps at EFS .
  • Stock reaction catalysts: continued EFS momentum (including India tenders), accelerating Invenco/FlexPay6 adoption, disciplined cost/simplification actions driving 2025 margin expansion, and evidence of stabilization in car wash/repair end markets; watch sequential cadence (Q1 trough, improving through the year) and execution on mix/tariff management .

What Went Well and What Went Wrong

  • What Went Well

    • EFS strength and pricing/mix/productivity offset headwinds; EFS revenue +8.5% (Core +10.8%) with high‑teens aftermarket growth and global dispenser momentum; “segment margin… improved nearly 200 bps over the last 2 years and now sits at an impressive 29% with room to move higher” (CEO) .
    • Invenco momentum in Mobility Tech with double‑digit orders and sales growth; FlexPay6, Unified Payments and iNFX platform gaining traction (Costco Canada rollout) and “game‑changing” positioning; TAS recurring now >1/3 of Invenco revenue base (CEO) .
    • Cash and balance sheet discipline: Q4 operating cash flow $168.1M; adjusted FCF $154.8M (128% conversion); FY24 debt repayment $150M; net leverage 2.6x; term loan refinanced to 2028 with a 22.5 bps spread reduction (>~$1M annual interest savings) .

  • What Went Wrong

    • Repair Solutions softness persisted: sales -2.2% y/y; margin -390 bps to 21.1% on lower volumes/mix; technician discretionary spend still pressured though stabilizing; Matco Expo timing shift will weigh on Q1 2025 .
    • Mix headwinds: despite EFS growth, quarterly EFS margin -30 bps y/y on geography/product mix; Mobility Tech margin +10 bps y/y but still constrained by higher Invenco R&D and DRB mix .
    • External estimates unavailable: Could not retrieve S&P Global consensus due to API limit; thus, third‑party “beat/miss” vs Street estimates cannot be assessed; however, company beat its prior Q4 adjusted EPS guide (~$0.79 vs actual $0.80) .

Financial Results

Consolidated performance (oldest → newest)

MetricQ4 2023Q3 2024Q4 2024
Revenue ($M)$789.0 $750.0 $776.8
Operating Profit ($M, GAAP)$146.4 $131.5 $149.3
Operating Margin (GAAP)18.6% 17.5% 19.2%
Adjusted Operating Profit ($M)$173.9 $159.6 $170.8
Adjusted Operating Margin22.0% 21.3% 22.0%
Net Earnings ($M, GAAP)$106.2 $91.8 $123.5
Diluted EPS (GAAP)$0.68 $0.60 $0.82
Adjusted Diluted EPS$0.80 $0.73 $0.80
Operating Cash Flow ($M)$164.9 $121.8 $168.1
Adjusted Free Cash Flow ($M)$153.0 $108.5 $154.8

Segment breakdown (sales; OP margin) (oldest → newest)

SegmentQ4 2023Q3 2024Q4 2024
Mobility Tech Sales ($M)$271.4 $257.4 $276.8
Mobility Tech OP Margin20.6% 18.1% 20.7%
Repair Solutions Sales ($M)$151.5 $152.1 $148.1
Repair Solutions OP Margin25.0% 21.4% 21.1%
EFS Sales ($M)$339.0 $349.9 $367.7
EFS OP Margin28.9% 29.4% 28.6%
Intersegment Eliminations ($M)$(2.6) $(9.4) $(15.8)
Total Sales ($M)$789.0 $750.0 $776.8

KPIs and balance sheet

KPIQ4 2024
Organic bookings growth+9% (book-to-bill >1, 4th consecutive quarter)
Q4 Adjusted FCF conversion128.1%
Net leverage ratio2.6x
Share repurchases~1.7M shares; ~$60M (Q4); FY24: 6.3M; $225M
Debt repayment$50M (Q4); $150M (FY24)
Term loan refinanced$500M to Feb 2028; spread -22.5 bps (>~$1M annual interest savings)
Direct China sourcingCut to ~$50M; minimal tariff exposure; some pre-buys to bridge transition

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Adjusted EPSQ1 2025N/A$0.71–$0.74Initiated
RevenueQ1 2025N/A$715–$730M; Core (2%) to (4%)Initiated
Adj. Op MarginQ1 2025N/ADown 10–50 bps y/yInitiated
Adjusted EPSFY 2025N/A$3.00–$3.15Initiated
RevenueFY 2025N/A$2,970–$3,050M; Core +1.0% to +3.5%Initiated
Adj. Op MarginFY 2025N/A+35–50 bps y/yInitiated
Adj. FCF ConversionFY 2025N/A90%+Initiated

Note: Company did not quantify FY25 tax rate/OpEx/OI&E in accessible documents; CFO referenced additional modeling assumptions on the webcast slides not included in the transcript .

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2 & Q3 2024)Current Period (Q4 2024)Trend
Invenco payments/iNFXQ2: Invenco orders +~20% two quarters; FlexPay6, iNFX pilots with large retailers; Costco Canada unified payments; focus on SaaS/recurring Continued double‑digit orders/sales; “game‑changing” FlexPay6; Costco Canada ramp; TAS recurring >1/3 of Invenco revenue Improving
EFS demand & marginsQ2: shipment delays; aftermarket high‑teens; simplification driving margin expansion Q4 EFS sales +8.5% (Core +10.8%); margin -30 bps on mix; multiyear simplification driving ~29% margin, +~200 bps vs 2 yrs ago Improving top line; margins strong but mix volatile
India tendersQ3: Won ~$70M tenders; +$15M pumps award; booking policy 12‑mo $25M Execution tailwind through 12–18 months; validates share gains and localization Improving
Car wash (DRB)Q2: greenfield slowdown; DRB new systems down; backlog building for 2025; recurring up Stabilization; expect flat 2025 revenues; push to cloud POS “Patheon”; consolidation benefits Stabilizing
Repair Solutions (Matco)Q2: discretionary pullback; bad debt timing; Expo strong in Q1; macro/interest rate drag Still pressured but stabilizing; Expo shift to Q2 creates Q1 headwind; mix to lower price point tools; margins down y/y Stabilizing (near-term headwinds)
Supply chain/tariffsQ2/Q3: derisking supply; ANGI tornado delay; minimal tariff exposure China direct sourcing cut to ~$50M; Mexico dual-sourced; some pre-buys to bridge; minimal tariff exposure De-risked
R&D & AIQ2: global centers; product vitality focus ~900 Invenco SW engineers; Bangalore center to drive innovation and AI-enabled solutions; R&D % sales expected to drift down Scaling efficiently
Regulatory (PCI)Q3: EMV/PCI cycles underpin upgrades PCI 5 coming; supports sustained dispenser/payment upgrades Supportive tailwinds

Management Commentary

  • “We were encouraged by our fourth quarter performance… delivering top and bottom line results above the midpoint of our guidance… leveraging our portfolio of innovative, industry-leading technologies to gain share” (CEO) .
  • “We now have over 900 software engineers in Invenco alone… The Bangalore Center will focus on driving innovation and AI-enabled solutions” (CEO) .
  • “We proactively derisked our supply chain by cutting our direct sourcing costs from China to a modest $50 million… we do not have material exposure to tariffs” (CEO) .
  • “Fourth quarter adjusted free cash flow was $155 million… We ended the year with a net leverage ratio of 2.6x… refinanced… reducing the effective interest by 22.5 basis points” (CFO) .
  • “For 2025… revenue… ~ $3 billion at the midpoint… operating margin… expand 35 to 50 bps… EPS… $3 to $3.15… Q1… low point of the year… Expo shifts from Q1 to Q2” (CFO) .

Q&A Highlights

  • EFS trajectory and margins: demand momentum continues; Q4 margin -30 bps was mix; 2025 incrementals should align with 30–35% framework (CFO) .
  • Invenco deployments: rollouts with Chevron, Shell progressing; Costco Canada unified payments shows faster transaction times; Invenco to grow high‑single digits in 2025 after mid‑teens 2024 (Mgmt) .
  • Tariffs/supply chain: minimal exposure; China ~$50M direct sourcing; some component pre‑buys during supplier transition; Mexico largely dual‑sourced (CFO) .
  • Seasonality/Q1‑Q2 cadence: Q1 low point; Q2 sequentially up with Expo shift; Mobility Tech mid‑single digit growth; Repair rebounds in Q2; EFS up in Q2 (CFO) .
  • Pricing in 2025: ~+1% price expected; company remains price/cost positive across cycles (CFO) .
  • Margin expansion drivers 2025: largest uplift from Mobility Tech (>100 bps), EFS up slightly after strong 2024, Repair flat to slightly up on flat volumes (CFO) .

Estimates Context

  • Attempt to retrieve Wall Street consensus (S&P Global) for Q4 2024 and Q1/FY 2025 failed due to SPGI daily request limit exceeded; therefore, third‑party “beat/miss” vs Street estimates cannot be determined at this time. Management’s prior Q4 2024 guide called for adjusted EPS of approximately $0.79; reported adjusted EPS was $0.80, a slight beat vs company guidance .

Guidance Changes

See the “Guidance Changes” table above for detailed metrics and ranges; all 2025 and Q1 2025 items were initiated this quarter .

Other Relevant Q4 Press Releases and Strategic Updates

  • India tenders: Additional $15M Red Jacket submersible turbine pump tender with IOCL; delivery over ~12 months, following September dispenser tender; supports EFS international growth .
  • Remote Management: RaceTrac selected Invenco by GVR cloud asset management for 800+ stores, citing avoided 10,000 truck rolls and automated work orders (59% auto-created), highlighting tangible opex savings for customers .
  • NACS portfolio: Broad platform showcase (FlexPay6, Remote Management, Konect EV); underscores connected mobility strategy and C-store EV opportunity .

Key Takeaways for Investors

  • EFS is the near-term growth engine, with multi‑quarter visibility augmented by India tenders and robust aftermarket; expect mix swings but structural margin runway remains via simplification and pricing discipline .
  • Invenco/FlexPay6/iNFX is scaling with marquee wins (Costco Canada) and measurable throughput benefits, supporting recurring revenue expansion and 2025 Mobility Tech margin inflection (>100 bps) .
  • DRB and Repair show stabilization; 2025 set up is flattish top line with potential for margin stabilization/improvement as rates ease and Expo timing normalizes (Q2 uplift) .
  • 2025 algorithm targets mid‑ to high‑single‑digit Adjusted EPS growth and 35–50 bps margin expansion; Q1 will be the trough; sequential acceleration is expected through the year (position sizing and event‑path trading) .
  • Balance sheet optionality intact with leverage at 2.6x and refinancing complete; ongoing buybacks (placeholder $75M in 2025) and reduced interest burden support EPS .
  • Watch items: Q1 mix/margin trough; EFS geographic/product mix; execution on India tenders; cadence of Invenco deployments; tariff/FX headwinds (~$30–$40M FX headwind modeled in 2025) .