Vontier Corporation Common Stock

Ladies and gentlemen, thank you for standing by. My name is Maria and I'll be your conference facilitator this morning. At this time, I would like to welcome everyone to Vontier Corporation's fourth quarter 2020 earnings results conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during that time, simply press star and the number one on your telephone keypad. If you would like to withdraw your question, press the pound key. I would now like to turn the call over to Ms. Lisa Crenn, Vice President of Investor Relations. Ms. Crenn, you may begin your conference.

Thank you, Maria. Good morning, everyone, and thank you for joining us on the call. With me today are Mark Morelli, our President and Chief Executive Officer, and Dave Lemire, our Senior Vice President and Chief Financial Officer. We will present certain non-GAAP financial measures on today's call. Information required by SEC Regulation G relating to these non-GAAP financial measures is available on the Investors section of our website, www.bondtier.com, under the heading Financials. Please note that unless otherwise noted, the presented financial measures reflect year-over-year increases or decreases relative to the supplemental normalized financial data also posted on our website. under the heading Financials. These supplemental normalized financials are adjusted for estimated standalone public company costs. During the presentation, we will describe certain of the more significant factors that impacted year-over-year performance. The supplemental materials describe additional factors that impacted year-over-year performance. All references to period-to-period increases or decreases in financial metrics are year-over-year. During the call, we will make forward-looking statements within the meaning of the federal securities laws. including statements regarding events or developments that we expect or anticipate will or may occur in the future. These forward-looking statements are subject to a number of risks and uncertainties and actual results might differ materially from any forward-looking statements that we make today. Information regarding these factors that may cause actual results to differ materially from these forward-looking statements is available in our SEC filings and subsequent annual report on Form 10-K. These forward-looking statements speak only as of the date they are made, and we do not assume any obligation to update any forward-looking statements. With that, I'd like to turn the call over to Mark.

Thanks, Lisa. Good morning, everyone, and welcome to our fourth quarter earnings call. Before we get to the results for the quarter, I want to recognize our team's extraordinary performance, marking the end of a truly unprecedented year. The COVID-19 pandemic caused considerable economic, operational, and personal challenges. And so I want to first thank our employees and business partners who made it possible through their dedication and tireless actions and continue to do so with the ongoing pandemic. Not only did the team work through significant headwinds, we are making the most of the opportunities in front of us, as well as posting excellent results. Our team delivered another quarter of double-digit earnings growth and a strong finish to 2020. The bond tier business system continued to drive outstanding adjusted free cash flow conversion of greater than 140%, core revenue growth of 8.5%, and adjusted core operating margin expansion of 240 basis points. These top tier results underscore the resiliency of our portfolio as key secular drivers and market share gains drove outperformance. A proof point of the quality of our business and strategic focus is that even when excluding the benefit of EMV in the quarter, we still delivered high single-digit core growth. Furthermore, we ended the year with backlog growth of 40%, reflecting accelerated EMV adoption at Gilbarco Vida Root as well as continued strong demand across the product lines at Matco. Importantly, we realized these results while continuing to position our portfolio for the future and investing ahead for profitable growth opportunities. Not only were we able to deliver high single digit core revenue growth across the platforms, which exceeded our previous outlook, we also drove structural cost control and working capital productivity, which will continue to provide benefits into 2021. We're also making steady progress improving our innovation efforts by deploying lean portfolio management, launching growth accelerator sprint processes to gain market insights, and adding talent focused on growth and product development. Our portfolio is strategically positioned across attractive markets. As secular drivers evolve towards increasing regulation and the growing need for clean, efficient mobility solutions, Our enduring business model will provide even greater stability and growth through economic cycles. We remain focused on building a better, stronger volunteer by utilizing our balance sheet and deploying our significant acquisition capacity. With that, we are initiating our full year 2021 guide, which includes our core revenue growth expectation ranging from a decline of 1% to growth of 1%, and adjusted core operating margin expansion of greater than 25 basis points. This core growth outlook includes a more favorable view of the 2021 EMV headwind of $100 to $150 million. Excluding the EMV impact, core revenue growth is expected to be mid-single digits despite our more challenging comps in the second half. Additionally, we anticipate full-year adjusted free cash flow conversion of approximately 95%, reflecting the timing of tax payments and working capital headwinds, resulting from a very strong 2020 performance. All this results in our full-year 2021 adjusted diluted net earnings per share guidance range of $2.35 to $2.45. The guide amounts to a tail of two halves, reflecting the The continued first half growth in demand for EMV ahead of the April adoption deadline in Q2, coupled with a favorable comparison due to the impact of the pandemic in the second quarter of last year. Where in the second half, we have basically the opposite dynamic as we benefited from the V-shaped recovery and accelerated demand for EMV and Mexico regulatory solutions. In sum, this equates to expectations of first half adjusted earnings per share growth of greater than 20% and a second half decline in the mid-teens range. As I outlined in October, we identified a number of profitable growth initiatives to help offset the anticipated impact of the EMV sunset. These include simplification and productivity actions, as well as further penetration in high-growth markets, Regulatory and Innovation Strategic Comparatives, and continued improvements in businesses such as Hennessy and Teletrack and Edman. We've made important progress advancing these initiatives, and I'm confident we will deliver. As such, our guide reflects our ability to more than offset the top line in earnings impact from EMV and expectations of inflation. Dave will walk you through the key drivers and assumptions of our full year 2021 guide in his remarks. We're also initiating our first quarter adjusted diluted net earnings per share guidance of 52 to 55 cents, which includes assumptions of high single-digit core revenue growth and adjusted core OMX of greater than 200 basis points. With that, I'll turn it over to Dave to provide the financial results. Dave, take it away.