Vontier Corporation Common Stock

If at any time during this call you require immediate assistance, please press star zero for the operator. This call is being recorded on Thursday, February 15, 2024, and the replay will be made available shortly after. I would now like to turn the conference over to Ryan Edelman, Volunteer's Vice President of Investor Relations. Please go ahead.

Thank you. Good morning, everyone, and thank you for joining us on the call this morning to discuss our fourth quarter results. With me today are Mark Morelli, our president and chief executive officer, and Anshuman Agha, our senior vice president and chief financial officer. You can find both our press release as well as our slide presentation that we will refer to during today's call on the investor relations section of our website at investors.vonteer.com. Please note that during today's call, we will present certain non-GAAP financial measures. We will also 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 risks and uncertainties. Actual results might differ materially from any forward-looking statements that we make today, and we do not assume any obligation to update them. Information regarding these factors that may cause actual results to differ materially from the forward-looking statements is available on our website and in our SAC filings. With that, I'd like to turn the call over to Mark.

Thanks, Ryan, and good morning, everyone. Thank you for joining us to discuss our fourth quarter results. I'll start with some of the highlights of the quarter beginning on slide five. Our teams delivered a solid finish to a year marked by strong operational execution and significant progress on our strategic initiatives and portfolio transformation. Overall, Q4 played out largely as we anticipated. We delivered baseline core sales growth of 5% toward the higher end of our guidance range and strong performance on top of the 10% growth in the prior year. We saw continued momentum across the portfolio, including strength within our alternative energy, DRB, Matco, U.S. dispenser, and fueling aftermarket businesses. End market demand remains constructive, supported by continued investment in the mobility ecosystem, especially for solutions that deliver enhanced productivity and automation and multi-energy solutions that enable decarbonization. We continue to see evidence of these demand trends in our order funnel and in direct conversations with our customers, distributors, and channel partners. Encouraging signs as we now move past the EMV comparison issues and channel inventories continue to normalize, our book to bill will inflect above one. We delivered another quarter of strong underlying margin performance, reflecting the power of VBS and our culture of continuous improvement to drive increased productivity savings and execute on our restructuring initiatives, as well as favorable price costs. As N. Schumann will share with you in a few minutes, we are initiating our 2024 guidance, which is the first time post-spend we will be free from any EMV-related adjustments. After three full years of headwinds, we are thrilled to have this comparison issue behind us and eager to demonstrate the strength of the VONTIER portfolio and tangible shareholder value creation potential. We are confident in our outlook, not only for 2024, but also in our longer term financial targets. I'm encouraged by the trends we are seeing in our sales funnels. We're gaining significant traction on our connected mobility strategy. We are well aligned with the secular tailwinds benefiting our industry for the next decade plus. Turning to slide six. Monteer is well positioned to capitalize on underlying secular tailwinds that are driving significant investments to modernize infrastructure that enables the way the world moves. We serve the mobility ecosystem, which as we shared with you during our investor day last year, unites all the infrastructure critical to the movement of people, goods, data, and energy. We size our addressable market at approximately $30 billion, which is growing at a mid single digit rate over the next several years. This ecosystem is evolving rapidly, motivated by new technologies that enable more connected, more sustainable mobility. We believe Vontir is uniquely positioned in this end market with a clear right to lead this evolution, leveraging a large installed base and track record of innovation. As a result, as we continue to execute our connected mobility strategy, we expect this TAM to expand even further. Our growth framework is supported by three secular tailwinds that will positively impact our end markets over the next decade and cut across all three segments. The energy transition influenced by more prevalent decarbonization and compliance, increased complexity driven by industry consolidation, changing consumer preferences, and increasing regulation, and global labor challenges related to the availability of a skilled workforce. These secular trends are already driving significant investment by our customers as the industry consolidates and the benefits are going to those that are more productive and better able to attract consumers. We believe the solutions to these challenges require outcomes that enhance productivity across our customers' asset base, as well as a multi-energy approach to refueling all vehicle types. While the secular trends cut across our entire portfolio, customer needs are unique to the individual end market, which underscores our rationale for aligning our segment structure to capitalize with the differentiated solutions. On the bottom of the page are common sets of end market needs for each segment, which highlight the necessity for more advanced technologies and solutions that solve unique challenges. These needs have been identified by years' worth of customer back market research and have been embedded within our engineering and product development process since shortly after the spin. Mobility technologies represents just over one-third of our revenue. This segment focuses on integrated solutions for mobility hubs, including connected hardware and software packages tailored to specific mobility verticals, that enable our customers to manage the complexities inherent in their businesses. It also includes solutions that enable our commercial and industrial fleet operators and EV charging network operators to meet their decarbonization goals. Repair Solutions is incredibly well positioned for the energy transition, with an agile business model capable of providing tools for any vehicle type, while also focusing on developing advanced tools to deal with the increased complexity of repair and manage the widening technician shortage and skills gap. Environmental and fueling solutions, where we have significant competitive advantages in above ground and below ground equipment, is capitalizing on the build out and modernization of the global convenience retail and fueling footprint, as well as environmental sensing and monitoring devices to achieve regulatory compliance. Our connected mobility strategy on slide seven provides us with a clear template for how we deploy resources to capitalize on the customer needs we just discussed. When combined with unmatched portfolio depth and breadth and deep domain expertise, our strategy to connect, manage, and scale assets across the mobility ecosystem represents a unique value proposition for our customers who are dealing with a number of challenges that are increasing their operating costs and the complexity of managing their assets. What they're looking for is a way to keep their operations running smoothly while maintaining high asset uptime at the lowest total cost of ownership while optimizing revenue and profitability. Our strategy strikes at the heart of this challenge by connecting the physical infrastructure, managing it through our leading digital platforms, and then scaling it through high valued applications. Ultimately, most value delivery happens through physical systems. Because our incredible install base interacts with a vast majority of the mobility ecosystem, we're able to create customer benefits through network effects. Decades of established domain expertise in the verticals we serve, unmatched breadth and depth of the portfolio, and the fact that our growth strategy is well aligned with the largest enterprise customers are all keys to our sustainable competitive advantage. By combining our domain knowledge with agile digital platforms, we have an opportunity to disrupt our markets, evolving from historically siloed systems to an integrated architecture. When we apply connectivity and digital applications we can fundamentally change the way our systems utilize and interact with their infrastructure. Some of the more common outcomes we can deliver with our solutions are listed here on the page. I won't go through each of these, but the key message is these outcomes would not be possible without digital platforms. This strategy is the culmination of several years of increased focus post-BIN. On slide eight, Through focus, engineering, and R&D rigor and VBS, we have flipped our spend profile, doubling the amount spent on new product development since 2020. The result has been a six times increase in the number of new products launched since then, with 20 new to market products or solutions launched in 2023. This is giving us an ability to capitalize on secular drivers to improve organic growth. Let me turn the call over to Ann Schuman to walk you through the details of the quarter. Ann Schuman?