Vontier Reports Strong Third Quarter 2024 Results
- Sales of $750 million, down 2% vs. prior year; Core sales increased 3%
- GAAP diluted net EPS of $0.60; Adjusted diluted net EPS of $0.73
- Operating cash flow was $122 million; Adjusted free cash flow was $109 million, representing 98% Adjusted free cash flow conversion
- Initiates Q4 2024 guidance for adjusted diluted net EPS of ~$0.79
- Narrows full year 2024 adjusted diluted net EPS to midpoint of ~$2.90
RALEIGH, N.C.–(BUSINESS WIRE)–Vontier Corporation (NYSE: VNT), a leading global provider of critical technologies and solutions to connect, manage and scale the mobility ecosystem, today announced results for the third quarter ended September 27, 2024.
Reported sales in the third quarter declined 2.0% year-over-year to $750.0 million, reflecting the absence of sales from divested businesses. Core sales increased 2.8% reflecting improved demand for retail fueling equipment and continued strong demand for convenience retail payment and enterprise productivity solutions, partially offset by ongoing macroeconomic pressures on the car wash and auto repair markets. Operating profit of $131.5 million declined 7.8% from the prior year, and operating profit margin decreased approximately 110 basis points, to 17.5%. Adjusted operating profit of $159.6 million declined 6% from the prior year and adjusted operating profit margin decreased approximately 80 basis points, to 21.3%. Net earnings were $91.8 million, and adjusted net earnings were $111.1 million, resulting in GAAP diluted net earnings per share of $0.60 and adjusted diluted net earnings per share of $0.73.
“Vontier delivered solid third quarter results overall, with performance that exceeded our expectations as we continue to capitalize on strong momentum across our Convenience Retail and Fueling end markets, where we are gaining traction on new product introductions,” said Mark Morelli, President and Chief Executive Officer. “Most of our end markets remain constructive, and we are seeing encouraging signs of market stabilization in the parts of our businesses impacted by softer market demand.”
“We continue to advance our Connected Mobility strategy through innovative solutions that enable our customers’ digital transformation journey,” Morelli continued. “Vontier is uniquely positioned to lead this evolution, and I am confident we are on the right trajectory.”
Segment Results
|
Environmental & Fueling Solutions |
Q3 2024 |
Q3 2023 |
Change |
|||||
|
Sales ($M) |
$ |
349.9 |
|
$ |
331.6 |
|
5.5 |
% |
|
Segment Operating Profit ($M) |
$ |
103.0 |
|
$ |
95.7 |
|
7.6 |
% |
|
Segment Operating Profit Margin |
|
29.4 |
% |
|
28.9 |
% |
50bps |
|
Environmental & Fueling Solutions reported sales increased 5.5% from the prior year. Core sales increased 8.5%, driven by strong growth in North America and International dispenser equipment, aftermarket parts and environmental equipment. Segment operating profit margin expanded 50 basis points resulting from positive price contribution and ongoing productivity savings.
|
Mobility Technologies |
Q3 2024 |
Q3 2023 |
Change |
|||||
|
Sales(a) ($M) |
$ |
257.4 |
|
$ |
247.7 |
|
3.9 |
% |
|
Segment Operating Profit ($M) |
$ |
46.6 |
|
$ |
51.4 |
|
(9.3 |
)% |
|
Segment Operating Profit Margin |
|
18.1 |
% |
|
20.8 |
% |
-270bps |
|
|
(a) Includes $9.4 million of intersegment sales for Q3 2024 that are eliminated in consolidation. |
||||||||
Mobility Technologies reported sales increased 3.9% from the prior year. Core sales also increased 4.2% year-over-year, as continued demand for convenience retail payment and enterprise productivity solutions were partially offset by lower demand for car wash technologies, as anticipated. Segment operating profit margin declined 270 basis points year-over-year, the result of unfavorable mix and higher R&D investments at Invenco by GVR.
|
Repair Solutions |
Q3 2024 |
Q3 2023 |
Change |
|||||
|
Sales ($M) |
$ |
152.1 |
|
$ |
160.2 |
|
(5.1 |
)% |
|
Segment Operating Profit ($M) |
$ |
32.6 |
|
$ |
43.3 |
|
(24.7 |
)% |
|
Segment Operating Profit Margin |
|
21.4 |
% |
|
27.0 |
% |
-560bps |
|
Repair Solutions reported sales declined 5.1% from the prior year. Core sales also declined 5.1%, as a result of ongoing macroeconomic pressures among service technicians, which impacts discretionary spending on high ticket items. Segment operating profit margin declined 560 basis points on lower volumes, sales mix, and the timing of bad debt reserves.
Other Items
- Repurchased ~$105 million, or ~3.1 million shares during the quarter (~$165 million year-to-date)
- Net leverage ratio ended Q3 at 2.7x
2024 Outlook
- Total sales $2,955 to $2,985 million; Core sales +0.7% to +1.7%
- Adjusted operating profit margin approximately flat year-over-year
- Adjusted diluted net earnings per share in the range of $2.86 to $2.92
- Adjusted free cash flow conversion of ~90%
Q4 2024 Outlook
- Total sales approximately $770 million; Core sales approximately +1.5%
- Adjusted operating profit margin down approximately 20 basis points year-over-year
- Adjusted diluted net earnings per share approximately $0.79
Conference Call Details
Vontier will discuss results and outlook during its quarterly investor conference call today starting at 8:30 a.m. ET. The call and an accompanying slide presentation will be webcast on the “Investors” section of Vontier’s website, www.vontier.com, under “Events & Presentations.” A replay of the webcast will be available at the same location shortly after the conclusion of the presentation.
The call can be accessed via webcast or by dialing +1 800-549-8228, along with the conference ID: 47424. A replay of the webcast will be available at the same location shortly after the conclusion of the presentation, or by dialing +1 888-660-6264, along with the passcode 47424 or under the “Investors” section of the Vontier website under “Events & Presentations.”
ABOUT VONTIER
Vontier (NYSE: VNT) is a global industrial technology company uniting productivity, automation and multi-energy technologies to meet the needs of a rapidly evolving, more connected mobility ecosystem. Leveraging leading market positions, decades of domain expertise and unparalleled portfolio breadth, Vontier enables the way the world moves – delivering smart, safe and sustainable solutions to our customers and the planet. Vontier has a culture of continuous improvement and innovation built upon the foundation of the Vontier Business System and embraced by colleagues worldwide. Additional information about Vontier is available on the Company’s website at www.vontier.com.
NON-GAAP FINANCIAL MEASURES
In addition to the financial measures prepared in accordance with generally accepted accounting principles (GAAP), this earnings release also references “core sales growth,” “adjusted operating profit,” “adjusted operating profit margin,” “segment operating profit,” “segment operating profit margin,” “adjusted net earnings,” “adjusted diluted net earnings per share,” “free cash flow,” “adjusted free cash flow,” “adjusted free cash flow conversion,” “EBITDA,” “adjusted EBITDA” and “net leverage ratio,” which are non-GAAP financial measures. The reasons why we believe these measures, when used in conjunction with the GAAP financial measures, provide useful information to investors, how management uses such non-GAAP financial measures, a reconciliation of these measures to the most directly comparable GAAP measures and other information relating to these measures are included in the supplemental reconciliation schedule attached. The non-GAAP financial measures should not be considered in isolation or as a substitute for the GAAP financial measures, but should instead be read in conjunction with the GAAP financial measures. The non-GAAP financial measures used by Vontier in this release may be different from similarly-titled non-GAAP measures used by other companies.
FORWARD-LOOKING STATEMENTS
This release contains forward-looking statements within the meaning of the federal securities laws. These statements include, but are not limited to statements regarding Vontier Corporation’s (the “Company’s”) business and acquisition opportunities and anticipated earnings, and any other statements identified by their use of words like “anticipate,” “expect,” “believe,” “outlook,” “guidance,” or “will” or other words of similar meaning. There are a number of important risks and uncertainties that could cause actual results, developments and business decisions to differ materially from those suggested or indicated by such forward-looking statements and you should not place undue reliance on any such forward-looking statements. These risks and uncertainties include, among other things, deterioration of or instability in the economy, the markets we serve, international trade policies and the financial markets, contractions or lower growth rates and cyclicality of markets we serve, competition, changes in industry standards and governmental regulations that may adversely impact demand for our products or our costs, our ability to successfully identify, consummate, integrate and realize the anticipated value of appropriate acquisitions and successfully complete divestitures and other dispositions, our ability to develop and successfully market new products, software, and services and expand into new markets, the potential for improper conduct by our employees, agents or business partners, impact of divestitures, contingent liabilities relating to acquisitions and divestitures, impact of changes to tax laws, our compliance with applicable laws and regulations and changes in applicable laws and regulations, risks relating to global economic, political, war or hostility, legal, compliance and business factors, risks relating to potential impairment of goodwill and other intangible assets, currency exchange rates, tax audits and changes in our tax rate and income tax liabilities, the impact of our debt obligations on our operations, litigation and other contingent liabilities including intellectual property and environmental, health and safety matters, our ability to adequately protect our intellectual property rights, risks relating to product, service or software defects, product liability and recalls, risks relating to product manufacturing, our relationships with and the performance of our channel partners, commodity costs and surcharges, our ability to adjust purchases and manufacturing capacity to reflect market conditions, reliance on sole sources of supply, security breaches or other disruptions of our information technology systems, adverse effects of restructuring activities, impact of changes to U.S. GAAP, labor matters, and disruptions relating to man-made and natural disasters. Additional information regarding the factors that may cause actual results to differ materially from these forward-looking statements is available in our SEC filings, including our Form 10-K for the year ended December 31, 2023. These forward-looking statements represent Vontier’s beliefs and assumptions only as of the date of this release and Vontier does not assume any obligation to update or revise any forward-looking statement, whether as a result of new information, future events and developments or otherwise.
|
VONTIER CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (in millions) (unaudited) |
|||||||
|
|
September 27, 2024 |
|
December 31, 2023 |
||||
|
ASSETS |
|
|
|
||||
|
Current assets: |
|
|
|
||||
|
Cash and cash equivalents |
$ |
330.9 |
|
|
$ |
340.9 |
|
|
Accounts receivable, net |
|
531.4 |
|
|
|
497.5 |
|
|
Inventories |
|
333.0 |
|
|
|
296.6 |
|
|
Prepaid expenses and other current assets |
|
147.7 |
|
|
|
141.4 |
|
|
Current assets held for sale |
|
— |
|
|
|
56.1 |
|
|
Total current assets |
|
1,343.0 |
|
|
|
1,332.5 |
|
|
Property, plant and equipment, net |
|
123.5 |
|
|
|
102.3 |
|
|
Operating lease right-of-use assets |
|
50.2 |
|
|
|
47.0 |
|
|
Long-term financing receivables, net |
|
288.4 |
|
|
|
276.2 |
|
|
Other intangible assets, net |
|
508.6 |
|
|
|
568.3 |
|
|
Goodwill |
|
1,743.9 |
|
|
|
1,742.4 |
|
|
Other assets |
|
249.5 |
|
|
|
225.3 |
|
|
Total assets |
$ |
4,307.1 |
|
|
$ |
4,294.0 |
|
|
LIABILITIES AND EQUITY |
|
|
|
||||
|
Current liabilities: |
|
|
|
||||
|
Short-term borrowings and current portion of long-term debt |
$ |
5.4 |
|
|
$ |
106.6 |
|
|
Trade accounts payable |
|
370.2 |
|
|
|
366.8 |
|
|
Current operating lease liabilities |
|
16.1 |
|
|
|
14.0 |
|
|
Accrued expenses and other current liabilities |
|
426.5 |
|
|
|
435.8 |
|
|
Current liabilities held for sale |
|
— |
|
|
|
32.1 |
|
|
Total current liabilities |
|
818.2 |
|
|
|
955.3 |
|
|
Long-term operating lease liabilities |
|
39.9 |
|
|
|
37.1 |
|
|
Long-term debt |
|
2,191.1 |
|
|
|
2,189.0 |
|
|
Other long-term liabilities |
|
214.5 |
|
|
|
217.0 |
|
|
Total liabilities |
|
3,263.7 |
|
|
|
3,398.4 |
|
|
Commitments and Contingencies |
|
|
|
||||
|
Equity: |
|
|
|
||||
|
Preferred stock |
|
— |
|
|
|
— |
|
|
Common stock |
|
— |
|
|
|
— |
|
|
Treasury stock |
|
(567.6 |
) |
|
|
(403.4 |
) |
|
Additional paid-in capital |
|
75.8 |
|
|
|
56.8 |
|
|
Retained earnings |
|
1,419.3 |
|
|
|
1,132.1 |
|
|
Accumulated other comprehensive income |
|
107.1 |
|
|
|
104.9 |
|
|
Total Vontier stockholders’ equity |
|
1,034.6 |
|
|
|
890.4 |
|
|
Noncontrolling interests |
|
8.8 |
|
|
|
5.2 |
|
|
Total equity |
|
1,043.4 |
|
|
|
895.6 |
|
|
Total liabilities and equity |
$ |
4,307.1 |
|
|
$ |
4,294.0 |
|
|
VONTIER CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF EARNINGS (in millions, except per share amounts) (unaudited) |
|||||||||||||||
|
|
Three Months Ended |
|
Nine Months Ended |
||||||||||||
|
|
September 27, 2024 |
|
September 29, 2023 |
|
September 27, 2024 |
|
September 29, 2023 |
||||||||
|
Sales |
$ |
750.0 |
|
|
$ |
765.4 |
|
|
$ |
2,202.2 |
|
|
$ |
2,306.2 |
|
|
Operating costs and expenses: |
|
|
|
|
|
|
|
||||||||
|
Cost of sales, excluding amortization of acquisition-related intangible assets |
|
(395.8 |
) |
|
|
(406.4 |
) |
|
|
(1,140.5 |
) |
|
|
(1,246.1 |
) |
|
Selling, general and administrative expenses |
|
(157.0 |
) |
|
|
(157.2 |
) |
|
|
(478.7 |
) |
|
|
(481.6 |
) |
|
Research and development expenses |
|
(45.7 |
) |
|
|
(39.1 |
) |
|
|
(135.3 |
) |
|
|
(120.4 |
) |
|
Amortization of acquisition-related intangible assets |
|
(20.0 |
) |
|
|
(20.1 |
) |
|
|
(60.0 |
) |
|
|
(61.1 |
) |
|
Operating profit |
|
131.5 |
|
|
|
142.6 |
|
|
|
387.7 |
|
|
|
397.0 |
|
|
Non-operating income (expense), net: |
|
|
|
|
|
|
|
||||||||
|
Interest expense, net |
|
(18.9 |
) |
|
|
(22.8 |
) |
|
|
(56.2 |
) |
|
|
(70.7 |
) |
|
Gain on sale of business |
|
— |
|
|
|
0.3 |
|
|
|
37.2 |
|
|
|
34.4 |
|
|
Other non-operating expense, net |
|
(0.3 |
) |
|
|
(0.2 |
) |
|
|
(1.6 |
) |
|
|
(1.6 |
) |
|
Earnings before income taxes |
|
112.3 |
|
|
|
119.9 |
|
|
|
367.1 |
|
|
|
359.1 |
|
|
Provision for income taxes |
|
(20.5 |
) |
|
|
(29.3 |
) |
|
|
(68.4 |
) |
|
|
(88.4 |
) |
|
Net earnings |
$ |
91.8 |
|
|
$ |
90.6 |
|
|
$ |
298.7 |
|
|
$ |
270.7 |
|
|
|
|
|
|
|
|
|
|
||||||||
|
Net earnings per share: |
|
|
|
|
|
|
|
||||||||
|
Basic |
$ |
0.60 |
|
|
$ |
0.59 |
|
|
$ |
1.94 |
|
|
$ |
1.74 |
|
|
Diluted |
$ |
0.60 |
|
|
$ |
0.58 |
|
|
$ |
1.93 |
|
|
$ |
1.73 |
|
|
Weighted average shares outstanding: |
|
|
|
|
|
|
|
||||||||
|
Basic |
|
152.4 |
|
|
|
154.8 |
|
|
|
153.8 |
|
|
|
155.3 |
|
|
Diluted |
|
153.2 |
|
|
|
155.8 |
|
|
|
154.7 |
|
|
|
156.1 |
|
|
VONTIER CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (in millions) (unaudited) |
|||||||
|
|
Nine Months Ended |
||||||
|
|
September 27, 2024 |
|
September 29, 2023 |
||||
|
Cash flows from operating activities: |
|
|
|
||||
|
Net earnings |
$ |
298.7 |
|
|
$ |
270.7 |
|
|
Non-cash items: |
|
|
|
||||
|
Depreciation expense |
|
34.5 |
|
|
|
32.7 |
|
|
Amortization of acquisition-related intangible assets |
|
60.0 |
|
|
|
61.1 |
|
|
Stock-based compensation expense |
|
25.3 |
|
|
|
24.1 |
|
|
Gain on sale of business |
|
(37.2 |
) |
|
|
(34.4 |
) |
|
Change in deferred income taxes |
|
(11.4 |
) |
|
|
(16.1 |
) |
|
Other non-cash items |
|
5.0 |
|
|
|
2.4 |
|
|
Change in accounts receivable and long-term financing receivables, net |
|
(46.2 |
) |
|
|
(33.6 |
) |
|
Change in other operating assets and liabilities |
|
(69.3 |
) |
|
|
(16.8 |
) |
|
Net cash provided by operating activities |
|
259.4 |
|
|
|
290.1 |
|
|
Cash flows from investing activities: |
|
|
|
||||
|
Proceeds from sale of business, net of cash provided |
|
68.4 |
|
|
|
107.5 |
|
|
Payments for additions to property, plant and equipment |
|
(62.6 |
) |
|
|
(43.5 |
) |
|
Proceeds from sale of property, plant and equipment |
|
1.3 |
|
|
|
4.3 |
|
|
Cash paid for equity investments |
|
(2.3 |
) |
|
|
(2.7 |
) |
|
Proceeds from sale of equity securities |
|
0.2 |
|
|
|
20.4 |
|
|
Net cash provided by investing activities |
|
5.0 |
|
|
|
86.0 |
|
|
Cash flows from financing activities: |
|
|
|
||||
|
Repayment of long-term debt |
|
(100.0 |
) |
|
|
(240.0 |
) |
|
Net (repayments of) proceeds from short-term borrowings |
|
(1.2 |
) |
|
|
1.4 |
|
|
Payments of common stock cash dividend |
|
(11.5 |
) |
|
|
(11.7 |
) |
|
Purchases of treasury stock |
|
(164.6 |
) |
|
|
(61.6 |
) |
|
Proceeds from stock option exercises |
|
14.4 |
|
|
|
6.0 |
|
|
Other financing activities |
|
(13.9 |
) |
|
|
(7.4 |
) |
|
Net cash used in financing activities |
|
(276.8 |
) |
|
|
(313.3 |
) |
|
Effect of exchange rate changes on cash and cash equivalents |
|
2.4 |
|
|
|
(3.7 |
) |
|
Net change in cash and cash equivalents |
|
(10.0 |
) |
|
|
59.1 |
|
|
Beginning balance of cash and cash equivalents |
|
340.9 |
|
|
|
204.5 |
|
|
Ending balance of cash and cash equivalents |
$ |
330.9 |
|
|
$ |
263.6 |
|
|
VONTIER CORPORATION AND SUBSIDIARIES SEGMENT FINANCIAL SUMMARY (in millions) (unaudited) |
|||||||||||||||
|
|
Three Months Ended |
|
Nine Months Ended |
||||||||||||
|
|
September 27, 2024 |
|
September 29, 2023 |
|
September 27, 2024 |
|
September 29, 2023 |
||||||||
|
Sales |
|
|
|
|
|
|
|
||||||||
|
Mobility Technologies |
$ |
257.4 |
|
|
$ |
247.7 |
|
|
$ |
737.7 |
|
|
$ |
732.4 |
|
|
Repair Solutions |
|
152.1 |
|
|
|
160.2 |
|
|
|
485.3 |
|
|
|
500.0 |
|
|
Environmental & Fueling Solutions |
|
349.9 |
|
|
|
331.6 |
|
|
|
992.1 |
|
|
|
984.7 |
|
|
Other |
|
— |
|
|
|
25.9 |
|
|
|
1.3 |
|
|
|
89.1 |
|
|
Intersegment eliminations |
|
(9.4 |
) |
|
|
— |
|
|
|
(14.2 |
) |
|
|
— |
|
|
Total Vontier Sales |
$ |
750.0 |
|
|
$ |
765.4 |
|
|
$ |
2,202.2 |
|
|
$ |
2,306.2 |
|
|
|
|
|
|
|
|
|
|
||||||||
|
Operating Profit (GAAP) |
$ |
131.5 |
|
|
$ |
142.6 |
|
|
$ |
387.7 |
|
|
$ |
397.0 |
|
|
|
|
|
|
|
|
|
|
||||||||
|
Segment & Adjusted Operating Profit |
|
|
|
|
|
|
|
||||||||
|
Mobility Technologies |
$ |
46.6 |
|
|
$ |
51.4 |
|
|
$ |
135.4 |
|
|
$ |
144.0 |
|
|
Repair Solutions |
|
32.6 |
|
|
|
43.3 |
|
|
|
109.4 |
|
|
|
132.2 |
|
|
Environmental & Fueling Solutions |
|
103.0 |
|
|
|
95.7 |
|
|
|
289.6 |
|
|
|
271.6 |
|
|
Other |
|
— |
|
|
|
2.2 |
|
|
|
(0.4 |
) |
|
|
8.2 |
|
|
Segment Operating Profit (Non-GAAP) |
|
182.2 |
|
|
|
192.6 |
|
|
|
534.0 |
|
|
|
556.0 |
|
|
Corporate & Other Unallocated Costs |
|
(22.6 |
) |
|
|
(23.5 |
) |
|
|
(66.1 |
) |
|
|
(65.6 |
) |
|
Adjusted Operating Profit (Non-GAAP) |
$ |
159.6 |
|
|
$ |
169.1 |
|
|
$ |
467.9 |
|
|
$ |
490.4 |
|
|
|
|
|
|
|
|
|
|
||||||||
|
Segment & Adjusted Operating Profit Margin |
|
|
|
|
|
|
|
||||||||
|
Mobility Technologies |
|
18.1 |
% |
|
|
20.8 |
% |
|
|
18.4 |
% |
|
|
19.7 |
% |
|
Repair Solutions |
|
21.4 |
% |
|
|
27.0 |
% |
|
|
22.5 |
% |
|
|
26.4 |
% |
|
Environmental & Fueling Solutions |
|
29.4 |
% |
|
|
28.9 |
% |
|
|
29.2 |
% |
|
|
27.6 |
% |
|
Other |
|
— |
% |
|
|
8.5 |
% |
|
|
(30.8 |
%) |
|
|
9.2 |
% |
|
Segment Operating Profit Margin (Non-GAAP) |
|
24.3 |
% |
|
|
25.2 |
% |
|
|
24.2 |
% |
|
|
24.1 |
% |
|
Adjusted Operating Profit Margin (Non-GAAP) |
|
21.3 |
% |
|
|
22.1 |
% |
|
|
21.2 |
% |
|
|
21.3 |
% |
VONTIER CORPORATION AND SUBSIDIARIES
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES
AND OTHER INFORMATION
Core Sales Growth
We define core sales growth as the change in total sales calculated according to GAAP but excluding (i) sales from acquired and certain 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 or exited 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 core sales which do not have an impact on the current or comparable period.
Core sales growth 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 core sales growth 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 certain 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 core sales because these items are either not under management’s control or relate to items not directly correlated to core sales growth. Management believes the exclusion of these items from core sales growth may facilitate assessment of underlying business trends and may assist in comparisons of long-term performance.
Adjusted Operating Profit and Adjusted Operating Profit Margin
Adjusted operating profit refers to operating profit calculated in accordance with GAAP, but excluding amortization of acquisition-related intangible assets, costs associated with restructurings including one-time termination benefits and related charges and impairment and other charges associated with facility closure, contract termination and other related activities, and the related impact of certain divested or exited businesses or product lines not considered discontinued operations (“Restructuring- and divestiture-related adjustments”), transaction- and deal-related costs, asbestos-related adjustments associated with certain divested businesses, one-time costs related to the separation, amortization of acquisition-related inventory fair value step-up, gains and losses on sale of property, and other charges which represent charges incurred that are not part of our core operating results (“Other charges”). Adjusted operating profit margin refers to adjusted operating profit divided by GAAP sales.
Segment Operating Profit and Segment Operating Profit Margin
Segment operating profit is used by Vontier’s management in determining how to allocate resources and assess performance. Segment operating profit represents total segment sales less operating costs attributable to the segment, which does not include unallocated corporate costs and other operating costs not allocated to the reportable segments as part of management’s assessment of reportable segment operating performance, including stock-based compensation expense, amortization of acquisition-related intangible assets and other costs shown in the reconciliation to GAAP operating profit below. As part of management’s assessment of the Repair Solutions segment, a capital charge based on the segment’s financing receivables portfolio is assessed by Corporate. Segment operating profit margin refers to segment operating profit divided by GAAP sales.
Adjusted Net Earnings and Adjusted Diluted Net Earnings per Share
Adjusted net earnings refers to net earnings calculated in accordance with GAAP, but excluding on a pretax basis amortization of acquisition-related intangible assets, Restructuring- and divestiture-related adjustments, transaction- and deal-related costs, asbestos-related adjustments associated with certain divested businesses, one-time costs related to the separation, amortization of acquisition-related inventory fair value step-up, gains and losses on sale of property, Other charges, non-cash write-offs of deferred financing costs, gains and losses on sale of businesses and gains and losses on investments, including the tax effect of these adjustments and other tax adjustments. The tax effect of such adjustments was calculated by applying our estimated adjusted effective tax rate to the pretax amount of each adjustment. Adjusted diluted net earnings per share refers to adjusted net earnings divided by the weighted average diluted shares outstanding.
Free Cash Flow, Adjusted Free Cash Flow and Adjusted Free Cash Flow Conversion
Free cash flow refers to cash flow from operations calculated according to GAAP but excluding capital expenditures. Adjusted free cash flow refers to free cash flow adjusted for cash received from the sale of property, plant and equipment and cash paid for Restructuring- and divestiture-related adjustments, transaction- and deal-related costs and Other charges.
Contacts
INVESTOR RELATIONS:
Ryan Edelman
Vice President, Investor Relations
+1 (984) 238-1929
MEDIA:
Nicole Beck
Vontier Corporation
