Q1 2024 Vontier Corp Earnings Call

Operator: Good morning, ladies and gentlemen, and welcome to the Vontier First Quarter 2024 Earnings Call. At this time, all lines are in listen-only mode.

Yes.

Speaker Change: Good morning, ladies and gentlemen, and welcome to the volunteer first quarter 'twenty 'twenty four earnings call.

Speaker Change: At this time all lines are in listen only mode. Following the presentation. We will conduct a question and answer session. If at any time during this call and you require immediate assistance. Please press star zero for operator.

Operator: Following the presentation, we will conduct a question-and-answer session. 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, May 2, 2024, and a replay will be made available shortly after. I would now like to turn the conference over to Ryan Edelman, Vontier's Vice President of Investor Relations. Please go ahead.

Speaker Change: This call is being recorded on Thursday may two 'twenty 'twenty four and the replay will be made available shortly after.

Speaker Change: I'd now like to turn the conference over to Ryan Edelman Volunteers, Vice President of Investor Relations. Please go ahead.

Ryan Edelman: Thank you.

Ryan Edelman: Thank you. Good morning, everyone.

Ryan Edelman: Thank you good morning, everyone and thank you for joining us on the call. This morning to discuss our first quarter results with me today are Mark Morelli, our President and Chief Executive Officer, and then Schuman AGA, our senior Vice President and Chief Financial Officer.

Ryan Edelman: And thank you for joining us on the call this morning to discuss our first court results. With me today are Mark Morelli, our President and Chief Executive Officer, and Anshooman Aga, our Senior Vice President and Chief Financial Officer. You can find both our press release as well as the slide presentation that we will refer to during today's call in the Investor Relations section of our website at investors.vontier.com. Please note that during today's call, we will present certain non-GAAP financial measures.

Speaker Change: You can find both our press release as well as a slide presentation that we'll refer to during today's call on the Investor Relations section of our website at investors <unk> volunteer Dot com.

Speaker Change: Please note that during today's call, we will present certain non-GAAP financial measures.

Ryan Edelman: We'll 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. Such forward-looking statements are subject to risks and uncertainty. 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 these forward-looking statements is available on our website and in our SEC filings.

Speaker Change: Also make forward looking statements within the meetings of the federal securities laws, including statements regarding events or developments that we expect or anticipate will or may occur in the future.

Speaker Change: 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.

Speaker Change: Information regarding these factors that may cause actual results to differ materially from these forward looking statements is available on our website and in our SEC filings with that I'd like to turn the call over to Mark.

Ryan Edelman: With that, I'd like to turn the call over to Mark.

Mark D. Morelli: Thanks, Ryan. And good morning, everyone.

Mark D. Morelli: Thanks, Ryan and good morning, everyone. Thank you for joining us to discuss our Q1 results.

Mark D. Morelli: Thank you for joining us to discuss our Q1 results. I'll start with some high-level commentary on the quarter, beginning on slide three. Our teams delivered a solid start to 2024 with first quarter results that achieved the high end of our core guidance and exceeded our profitability target. Course sales increased 4%, and we delivered 130 basis points of margin expansion. Volumes contributed the bulk of our core growth, although price remains positive. We continue to capitalize on the momentum we are seeing across most of our key growth verticals, particularly within convenience retail, fueling, fleet management, and alternative energy.

Mark D. Morelli: I'll start with some high level commentary on the quarter beginning on slide three.

Mark D. Morelli: Our teams delivered a solid start to 2024 with first quarter results that achieved the high end of our core guidance and exceeded our profitability targets.

Mark D. Morelli: Core sales increased 4% and we delivered 130 basis points of margin expansion volumes.

Mark D. Morelli: Volume contributed the bulk of our core growth, although price remains positive.

Mark D. Morelli: We continue to capitalize on the momentum we're seeing across most of our key growth verticals, particularly within convenience retail fueling fleet management and alternative energy.

Mark D. Morelli: Successful convenience store chains and fleet operators are engaged in multi-year expansion plans and accelerating a transition to a more modern mobility infrastructure. Vontier's deep domain expertise and broad portfolio of innovative solutions allow us to leverage connected hardware and application software to deliver enhanced productivity and automation, as well as multi-energy solutions that enable decarbonization.

Mark D. Morelli: Successful convenience store chains and fleet operators are engaged in multi year expansion plans and accelerating a transition to a more modern mobility infrastructure.

Mark D. Morelli: Volunteers deep domain expertise and broad portfolio of innovative solutions allow us to leverage connected hardware and application software to deliver enhanced productivity and automation as well as multi energy solutions that enabled the carbonization.

Mark D. Morelli: The results of our impact are most evident in our environmental fueling solution segment, which drove a majority of the outperformance in the quarter, as well as in our Invenco business. EF-S core growth of 10% was broad-based across the portfolio, benefiting from strong new build activity and ongoing industry consolidation, as well as environmental compliance and traction on our aftermarket parts growth initiative. Order momentum at Invenco accelerated, led by strength in our payment business.

Mark D. Morelli: The results of our impact are most evident in our environmental fueling solutions segment, which drove a majority of the outperformance in the quarter as well as in our <unk> business.

Mark D. Morelli: Yeah as core growth of 10% was broad based across the portfolio benefiting from strong new build activity and ongoing industry consolidation as well as environmental compliance and traction on our aftermarket parts growth initiatives.

Mark D. Morelli: Order momentum that in Vanco accelerated led by strength in our payment business. We also saw strong demand within our enterprise productivity business, which includes connected hardware and software offerings that help C store and fueling operators automate workflows across their footprint.

Mark D. Morelli: We also saw strong demand within our enterprise productivity business, which includes connected hardware and software offerings that help C-store and fueling operators automate workflows across their footprint. We are seeing ongoing demand within most of our end markets. Leading indicators for our businesses suggest that momentum continues. Our book to bill inflected above one in the quarter earlier than anticipated, with mobility technologies and repair solutions comfortably above one.

Mark D. Morelli: We are seeing ongoing demand within most of our end markets.

Mark D. Morelli: Leading indicators for our business is suggests that momentum continues.

Mark D. Morelli: Our book to Bill inflicted above one in the quarter earlier than anticipated with mobility technologies and repair solutions comfortably above one.

Mark D. Morelli: Total Vontier orders increased mid-single digits on a core basis. We're encouraged by the sequential and year-over-year order momentum across the portfolio, particularly in our first quarter post-EMV. One exception is the market for car wash solutions.

Mark D. Morelli: Total volunteer orders increased mid single digits on a core basis, we're encouraged by the sequential and year over year order momentum across the portfolio, particularly in our first quarter post Mb.

Mark D. Morelli: One exception is the market for car wash solutions D. R.

Mark D. Morelli: DRB decelerated faster than we anticipated in Q1. Specifically, our larger enterprise-level customers have adopted a more selective approach to deploying capital towards acquisitions and greenfield projects year to date. Despite normalizing volumes after a prolonged period of growth, car wash remains an attractive market long term. Sales at DRB increased over 50% over the last two years, and we're confident this business will return to growth. DRB is still one year ahead of our original acquisition case, both from a revenue and returns perspective, and we expect that to continue.

Mark D. Morelli: Our be decelerated faster than we anticipated in Q1, specifically our larger enterprise level customers have adopted a more selective approach to deploying capital towards acquisitions and greenfield projects year to date.

Mark D. Morelli: Aspire normalizing volumes after a prolonged period of growth Carwash remains an attractive market long term sales.

Mark D. Morelli: Sales of DRP increase over 50% over the last two years and we're confident this business will return to growth.

Mark D. Morelli: Derby is still one year ahead of our original acquisition case, both from a revenue and returns perspective, and we expect that to continue.

Mark D. Morelli: We completed our annual CEO Kaizen event recently, bringing together eight cross-functional teams and leveraging the Vontier business system. The teams this year were split evenly between both revenue growth and margin expansion categories. I'm always encouraged by the collective spirit of our teams to come together to problem solve and apply VBS to identify root causes and countermeasures. We focus on impact potential, not the quantity of events, and this year was no different.

Mark D. Morelli: We completed our annual CEO Kaizen event recently, bringing together a cross functional teams and leveraging the volunteer business system.

Mark D. Morelli: The teams this year were split evenly between both revenue growth and margin expansion categories. I'm always encouraged by the collective spirit of our teams to come together to problem solve and applied DBS to identify root causes and countermeasures.

Mark D. Morelli: We focus on the impact potential not the quantity of events and this year was no different.

Mark D. Morelli: As a result, we have a track record of delivering tangible results from this event. Last year, for example, we built a roadmap for scaling the Invenco business model and bringing to market the NFX microservices software platform, which is already capturing significant market share and positively impacting growth this year. Last year, we also identified a market need for our next-gen CNI dispenser platform for fleet customers that allows us to capture share in a $300 million addressable market. We then entered into a rapid product development process and recently launched our new dispenser, the Atlas X, in just 10 months and with greater than 80% standardized components.

Mark D. Morelli: As a result, we have a track record of delivering tangible results from this event last year. For example, we built a roadmap for scaling the <unk> business model and bringing to market. The NSX micro services software platform, which is already capturing significant market share and positively impacting growth this year.

Mark D. Morelli: Last year, we also identified a market need for our Nextgen C&I dispenser platform for fleet customers that allows us to capture share in a $300 million addressable market.

Mark D. Morelli: We then entered into a rapid product development process and recently launched our new dispenser, the outlets sacks, and just 10 months and with greater than 80% standardized components.

Mark D. Morelli: This year, we identified new opportunities, and we're already implementing several actions to capture incremental growth and productivity savings. One of the more exciting opportunities coming out of this year's event was an initiative to deliver incremental revenue growth via more aggressive cross-selling efforts between several key shared accounts by Invenco, GVR, and DRB. Just a quick update on our outlook.

Mark D. Morelli: This year, we identified new opportunities and we are already implementing several actions to capture incremental growth and productivity savings.

Mark D. Morelli: One of the more exciting opportunities coming out of this year's event was an initiative to deliver incremental revenue growth by a more aggressive cross selling efforts between several key shared accounts by in Banco <unk> in DRP.

Mark D. Morelli: Based on our performance in Q1, we're maintaining our guidance for the full year. Industry fundamentals remain strong, and Vontier is well positioned to continue to capitalize on the secular tailwinds benefiting the mobility ecosystem. I'm confident in our ability to execute, and our teams remain committed to delivering top quartile financial performance. Please turn to slide four.

Mark D. Morelli: Just a quick update on our outlook.

Mark D. Morelli: On our performance in Q1, we're maintaining our guidance for the full year industry fundamentals remained strong and volunteer is well positioned to continue to capitalize on the secular tailwind benefiting the mobility ecosystem.

Mark D. Morelli: I'm confident in our ability to execute and our teams remain committed to delivering top quartile financial performance.

Mark D. Morelli: Please turn to slide four.

Mark D. Morelli: Convenience retail and retail fueling are core end markets for Vontier, in which we play a critical role as a leading supplier of best-in-class equipment, innovative software solutions, and aftermarket parts and service that enable this infrastructure to function efficiently. Historically, convenience retail in-store sales have demonstrated a resilient and attractive growth profile. Over the last 24 years, this revenue stream has grown at a 5% CAGR with consistent performance throughout major economic disruptions. That growth has accelerated over the last three years.

Mark D. Morelli: Convenience retail and retail fueling our core end markets for volunteer in which we play a critical role as a leading supplier of best in class equipment innovative software solutions and aftermarket parts and service that enables this infrastructure to function efficiently.

Mark D. Morelli: Historically convenience retail in store sales have demonstrated a resilience and attractive growth profile.

Mark D. Morelli: Over the last 24 years. This revenue stream has grown at a 5% CAGR with consistent performance throughout major economic disruptions.

Mark D. Morelli: That growth has accelerated over the last three years.

Mark D. Morelli: A few key secular themes are impacting CISRA operators, all of which align well with our Connected Mobility Strategy. First, consumer preferences continue to evolve, with consumers increasingly looking at C-stores for their everyday needs, including healthier, more cost-effective on-the-go food options. Growing categories such as food service sales were up 12% last year and carry higher margins than other categories.

Mark D. Morelli: A few key secular themes are impacting C store operators, all of which align well with our connected mobility strategy.

Mark D. Morelli: First consumer preferences continue to evolve with consumers increasingly looking at C stores for their everyday needs, including healthier more cost effective on the go food options.

Mark D. Morelli: Growing categories, such as foodservice sales were up 12% last year and carry higher margins than other categories.

Mark D. Morelli: Naturally, C-stores are looking for ways to optimize their more profitable revenue streams to continue to attract higher traffic inside the store. Second, consumers are also looking for a more frictionless, seamless transaction experience, which creates demand for technologies that facilitate in-store ordering and self-checkout systems, as well as loyalty programs and order-at-the-pump options. For example, our FlexPay 6 offering from Evenco offers fuel retailers greater flexibility to drive top-line growth via targeted consumer engagement. It links media, loyalty, and payment features, like ordering at the Pump and Curb site pickup. It also streamlined security and payment compliance, lowers the total cost of ownership, and maximizes uptime with over-the-air software update capability.

Mark D. Morelli: Naturally C stores are looking for ways to optimize their more profitable revenue streams to continue to attract higher traffic inside the store.

Mark D. Morelli: Second consumers are also looking for a more frictionless seamless transaction experience, which creates demand for technologies that facilitate in store ordering and self checkout systems as well as the loyalty programs and order at the pump options.

Mark D. Morelli: For example, our flex pay six offering from event go offers fuel retailers greater flexibility to drive topline growth via targeted consumer engagement.

Mark D. Morelli: It links media loyalty and payment features like ordering at the pump incurred site pickup.

Mark D. Morelli: It also streamlines security and payment compliance lowers the total cost of ownership and maximizes uptime with over the year software update capabilities.

Mark D. Morelli: We believe FlexSpace 6 is a significant competitive advantage for us, particularly as it relates to payment retrofit kits, our ability to scale in effect, and explore cross-selling opportunities into other verticals like EV charging, CNG, and hydrogen refueling. Consolidation will continue to play a major role beyond the end of this decade. The C-store industry remains highly fragmented, with nearly 70% of the market comprised of operators with fewer than 50 stores, and more than 60% own fewer than 10 stores. Last year, there were nearly 1,800 site acquisitions in North America, the vast majority of which were acquired by larger operators.

Mark D. Morelli: We believe flex phase six is a significant competitive advantage for us, particularly as it relates to payment retrofit kit, our ability to scale and effects and explore cross selling opportunities into other verticals like EV charging CMG and hydrogen refueling.

Mark D. Morelli: Consolidation will continue to play a major role beyond the end of this decade.

Mark D. Morelli: The C store industry remains highly fragmented with nearly 70% of the market comprised of operators with fewer than 50 stores more than 60% on fewer than 10 stores last year. There were nearly 1800 site acquisitions in North America. The vast majority of which were acquired by larger operators.

Mark D. Morelli: We enjoy strong share positions with large national and regional CSTOR operators. They're acting as consolidators. This means we benefit from the uplift associated with the equipment replacement and new solutions added when a smaller operator is acquired or a new site is established. I met with presidents and CEOs of major convenience retail companies recently, and the general theme from our time together was how to capitalize on growth opportunities. C-Store growth has outpaced general retail over the last year, and these winning C-Store formats continue to invest in solutions that accelerate revenue growth and drive productivity. When it comes to the energy transition, CSORs are likely to benefit from the build-out of EV charging infrastructure. Operators worldwide are already considering the path forward for a more integrated and seamless charging experience.

Mark D. Morelli: We enjoy strong share positions with large national and regional C store operators, they're acting as consolidators.

Mark D. Morelli: This means we benefit from the uplift associated with the equipment replacement and new solutions added one of the smaller operators acquired or a new site is established.

Speaker Change: I met with President and CEO for major convenience retail companies recently and the general theme from our time together with how to capitalize on growth opportunities.

Mark D. Morelli: C store growth has outpaced general retail over the last year and these winning C store formats continue to invest in solutions that accelerate revenue growth and drive productivity.

Mark D. Morelli: When it comes to the energy transition C stores are likely to benefit from the build out of EV charging infrastructure operators worldwide are already considering the path forward for more integrated and seamless charging experiences.

Mark D. Morelli: As evidenced, in the U.S., C-Stores have been the recipient of nearly 60% of all NEVI funding awarded so far, and there is significant room for that funding to increase, as only $400 million of the $7.5 billion has been awarded. The takeaway from all of this is that successful C-store and retail fueling footprints are seeing increased utilization and becoming more complex. This drives the need for upgrades to the infrastructure with more connected, smart hardware, increased use of data analytics, and vertical-specific application software. Vontier is uniquely positioned to deliver.

Mark D. Morelli: As evidenced in the U S. C stores have been the recipient of nearly 6% of all Navy funding awarded so far and they are a significant room for that funding to increase as the only $400 million of the seven 5 billion has been awarded.

Mark D. Morelli: The takeaway from all of this is that successful C store and retail fueling footprints are seeing increased utilization and becoming more complex.

Mark D. Morelli: This drives the need for upgrades to the infrastructure with more connected smart hardware increased use of data analytics and vertical specific application software volunteer is uniquely positioned to deliver more.

Mark D. Morelli: More specifically, as it pertains to these particular verticals, Invenco, by GVR's portfolio products, increasingly centered around our connected solutions like NFX, offers a modular architecture that enables rapidly growing CISRO operators to scale easier, faster, and with lower costs. Please turn to slide five to spotlight retail fueling solutions. Some of the same trends benefiting convenience retail, consolidation, new builds, and modernization, are driving growth in the forecourt as well, both above ground and below ground.

Mark D. Morelli: Typically as it pertains to these particular verticals invesco by <unk> portfolio of products increasingly centered around our connected solutions like an FX offers a modular architecture, which enables rapidly growing C store operators to scale easier faster and with lower cost.

Mark D. Morelli: Please turn to slide five to spotlight retail fueling solutions.

Mark D. Morelli: Some of the same trends benefiting convenience retail consolidation new builds and modernization are driving growth in the four corners as well both above ground and below ground.

Mark D. Morelli: In addition to that, there are several unique growth drivers we believe will support the long-term health of this business. Peak fuel consumption demand and EV adoption forecasts are pushing to the right again. Using prior industry forecasts, in 2040, approximately 70% of the global car park will still have a traditional combustion engine that will require refueling stations.

Mark D. Morelli: In addition to that there are several unique growth drivers, we believe will support the long term health of this business.

Mark D. Morelli: Peak fuel consumption demand in EV adoption forecast are pushing to the right again.

Mark D. Morelli: Using prior industry forecast in 2040, approximately 70% of the global car Park will still have a traditional combustion engine that will require a refueling stations.

Mark D. Morelli: In other words, demand for retail and fleet fueling equipment for petroleum, biofuels, as well as CNG, RNG, and hydrogen is likely to remain stronger for longer. In addition to ongoing new build and refresh activity, we continue to see consistent replacement demand for North American dispenser equipment, with a large portion of the U.S. dispenser and stall base having been replaced during the EMV super cycle. Based on an analysis of the North American installed base, we see a solid uptick in replacement demand over the next 10 years.

Mark D. Morelli: In other words demand for retail and fleet fueling equipment for petroleum Biofuels as well as CMG R&D and hydrogen is likely to remain stronger for longer in.

Mark D. Morelli: In addition to ongoing Newbuild and refresh activity, we continue to see consistent replacement demand for North American dispense equipment.

Mark D. Morelli: With a large portion of the U S dispenser installed base, having been replaced during the ENV Super cycle.

Mark D. Morelli: Based on an analysis of the North American installed base, we see a solid uptick in replacement demand over the next 10 years.

Mark D. Morelli: Regulation is another long-term growth driver for our above and underground businesses, both in the US and international markets. Complying with evolving payment and environmental standards forces equipment replacement and upgrades for both payment technology as well as pull-through dispenser sales. Additionally, we remain in the early innings of a multi-year upgrade cycle for underground tanks in the U.S., which will pull through our VITA route sensing and monitoring equipment and software. Additionally, expanding our aftermarket parts business is an attractive opportunity to drive profitable growth for GVR.

Mark D. Morelli: Regulation is another long term growth driver for our above and underground businesses, both in the U S and international markets.

Mark D. Morelli: With evolving payment and environmental standards force equipment replacement and upgrades for both payment technology as well as pull through dispenser sales.

Mark D. Morelli: Additionally, we remain in the early innings of a multiyear upgrade cycle for underground tanks in the U S, which pulls through our veeder root sensing and monitoring of equipment and software.

Mark D. Morelli: Expanding our aftermarket parts business is an attractive opportunity to drive profitable growth for DVR.

Mark D. Morelli: We have a large installed base of dispensers and a significant chair position from which we can leverage. We believe our strategy to expand and align our channel partnerships while broadening our product offering can deliver a mid single-digit plus growth trajectory over the longer term. Lastly, increasing site complexity is accelerating technology adoption with a move toward more connected forecourts to improve asset health and efficiency, as well as drive higher traffic inside the store. Now, I'll turn the call over to Anshooman to walk you through the details of the quarter.

Mark D. Morelli: We have a large installed base of dispensers and significant share position from which we can leverage we believe our strategy to expand and align our channel partnerships, while broadening our product offering can deliver a mid single digit plus growth trajectory longer term.

Mark D. Morelli: Lastly, increasing site complexity is accelerating technology adoption with the move towards more connected for courts to improve asset health and efficiency as well as drive higher traffic inside the store.

Mark D. Morelli: Let me turn the call over to Ann Schuman to walk you through the details of the quarter.

Anshooman Aga: Thanks, Mark, and good morning, everyone. I'll start off with a summary of our consolidated results for the quarter on slide 6. I'm pleased with our performance in the first quarter. Core growth of 4% was at the top end of our range and included solid volume growth as price contributed about 160 basis points. Adjusted operating profit margins expanded 130 basis points year over year, primarily as a result of a positive product and geographic mix and strong operational record.

Ann Schuman: Thanks, Mark and good morning, everyone.

Ann Schuman: I'll start off with a summary of our consolidated results for the quarter on slide six.

Ann Schuman: I am pleased with our performance in the first quarter.

Ann Schuman: Core growth of 4% was at the top end of our range and included solid volume growth as price contributed about 160 basis points.

Ann Schuman: Adjusted operating profit margins expanded 130 basis points year over year, primarily the result of positive product and geographic mix and strong operational rigor.

Anshooman Aga: The strong profitability resulted in adjusted EPS of 74 cents, up 9% from the prior year and above the high end of our guidance range. Pre-cash flow of $78 million is in line with the prior year, reflecting 68% conversion or 10% of sales.

Ann Schuman: This strong profitability resulted in adjusted EPS of <unk> 74.

Ann Schuman: Up 9% from the prior year and above the high end of our guidance range.

Ann Schuman: Free cash flow of 78 million is in line with the prior year, reflecting 68% conversion or 10% of sales.

Anshooman Aga: Let's review our segment results starting on slide 7. Environmental and Fueling Solutions' core growth of 10% was driven by broad-based strength across the portfolio as we continue to leverage our market-leading positions and innovative solutions to drive higher volumes. North America dispenser sales increased in the high teens this quarter with continued strength and new build activity from large national and regional players, where we maintain a leading market share. Refresh and rebuild and normal replacement activity was also solid, as was growth from smaller operators. Aftermarket pot sales were up in the low teens, leveraging a large and expanding installed base.

Speaker Change: Let's review our segment results starting on slide seven.

Ann Schuman: Environmental and fueling solutions core growth of 10% was driven by broad based strength across the portfolio as we continue to leverage our market, leading positions and innovative solutions to drive higher volumes.

Ann Schuman: North America dispenser sales increased high teens this quarter with continued strength in newbuild activity from large national and regional players.

Ann Schuman: We maintain a leading market share.

Ann Schuman: Refresh and rebuild our normal replacement activity was also solid as well as growth from smaller operators.

Ann Schuman: Aftermarket part sales were up low teens, leveraging our large and expanding installed base.

Anshooman Aga: Environmental solutions also experienced healthy growth, up high single digits year over year. We continue to benefit from a dynamic regulatory landscape and continue our emphasis on new product development, which contributed to growth in the quarter. Pegment operating profit increased nearly 21% year over year, with margins up 370 basis points, resulting from favorable mix related to the timing of shipment, carryover benefits from prior cost actions, and positive price costs. EFS results are a terrific example of VBF in action.

Ann Schuman: Environmental solutions also experienced healthy growth up high single digits year over year.

Ann Schuman: We continue to benefit from a dynamic regulatory landscape and continuing our emphasis on new product development, which contributed to growth in the quarter.

Ann Schuman: Segment operating profit increased nearly 21% year over year with margins up 370 basis points, resulting from favorable mix related to the timing of shipments.

Ann Schuman: Carryover benefits from prior cost actions and positive price cost.

Ann Schuman: <unk> results are a terrific example of Bbs and action.

Anshooman Aga: I'm confident in the team's ability to continue driving margin expansion. Turning to slide eight, mobility technologies, core sales increased slightly against a tough prior comparison of 12% core growth, which had benefited from normalizing supply chains. Demand for alternative energy solutions continues to contribute to the segment, with energy up 10% in the quarter, on nearly 50% on a two-year stack, as fleet operators actively seek out lower emission fueling solutions, including CNG and RNG. Invenco by GVR reported low single-digit core growth on top of strong prior year performance supported by a robust convenience retail market.

Ann Schuman: I am confident in the team's ability to continue driving margin expansion.

Ann Schuman: Turning to slide eight.

Ann Schuman: <unk> technologies core sales increased slightly against the tough prior year comparison of 12% core growth.

Ann Schuman: Which had benefited from normalizing supply chains.

Ann Schuman: Demand for alternative energy solutions continue to contribute to this segment with LNG up 10% in the quarter are nearly 50% on a two year stack as fleet operators actively seek out lower emission fueling solutions, including CMG and RMG.

Ann Schuman: <unk> reported low single digit core growth on top of strong prior year performance supported by a robust convenience retail market.

Anshooman Aga: Sales for our enterprise productivity solutions, which include NFX and other asset management and site automation offerings, were driven by strong demand for security of payment solutions in our international market. I am encouraged by the pace of orders across the Invenco portfolio. As Mark referred to earlier, DRB sales declined approximately 10% in the quarter, in part due to a tough comparison of 25% core growth in the prior year, but also lower new site builds and conversions with our large enterprise customers. However, new build plans for the small and medium sized operators remain intact.

Ann Schuman: Sales for our enterprise productivity solutions, which includes an FX and other asset management and site automation offerings were driven by strong demand for security of payment solutions and our international markets.

Ann Schuman: Im encouraged by the pace of orders across the <unk> portfolio.

Ann Schuman: As Mark referred to earlier <unk> sales declined approximately 10% in the quarter in part due to a tough comparison of 25% core growth in the prior year, but also lower new site builds and conversions with our large enterprise customers.

Ann Schuman: Newburg plants for the small and medium sized operators remain intact.

Ann Schuman: As a result, we have shifted more of our attention to supporting existing Greenfield project pipelines and this important customer segment.

Anshooman Aga: As a result, we have shifted more of our attention to supporting existing Greenfield project pipelines in this important customer segment. Additionally, we remain focused on converting our install base to a new cloud-connected Pathion software and on expanding our recurring revenue base, which accounts for over 40% of DRB's total revenues and grew high single digits in Q1. Segment operating profit margin of 19.6% was up slightly versus the prior year, despite incrementally higher investments in R&D and growth opportunities across the segment. Our connected mobility strategy is at the forefront of enabling the digital transformation of the mobility ecosystem.

Ann Schuman: Additionally, we remain focused on converting our installed base to a new cloud connected <unk> software and on expanding our recurring revenue base, which accounts for over 40% of <unk> total revenues and grew high single digits in Q1.

Ann Schuman: Segment operating profit margin of 19, 6% was up slightly versus the prior year, despite incrementally higher investments into R&D and growth opportunities across the segment.

Ann Schuman: Our connected mobility strategy is at the forefront of enabling the digital transformation of the mobility ecosystem.

Anshooman Aga: Not only to reduce complexity for our customers' operations but also optimize revenue yield and enhance productivity. Looking forward, we see a significant opportunity for accelerating profitable growth within the segment and continue to invest accordingly. And our final segment on slide nine.

Ann Schuman: Not only to reduce complexity for our customers operations, but also optimize revenue yield and enhanced productivity.

Ann Schuman: Looking forward we.

Ann Schuman: See significant opportunity to accelerating profitable growth within this segment and continue to invest accordingly.

Ann Schuman: And our final segment on slide nine.

Anshooman Aga: Repair solutions core growth increased just under 1% in the quarter on top of the 11% core growth we experienced in the prior year, which was driven by normalizing supply chain conditions. Madco's Q1 same-store sales increased in low single digits, led by continued strong demand for tool storage and diagnostic equipment, both of which were both in the low teens in the quarter. This was offset by the anticipated moderation in hardline, where we saw 20% growth in the prior year, as well as a lower franchisee count.

Ann Schuman: Repair solutions core growth increased just under 1% in the quarter on top of the 11% core growth we experienced in the prior year, which was driven by normalizing supply chain conditions.

Ann Schuman: <unk> Q1 same store sales increased low single digits led by continued strong demand for tool storage and diagnostic equipment, both up low teens in the quarter.

Ann Schuman: This was offset by the anticipated moderation in hard line, where we saw a 20% growth in the prior year as well as lower franchisee count.

Anshooman Aga: The agility of the Madco business model is a significant competitive advantage, particularly as it relates to new product vitality. A great example of this is our specialty product line, where our commitment to innovation was showcased at this year's Expo event, introducing over 50 new tools to the lineup, directly reflecting customer feedback and market trends. This new product vitality contributed to over 25% of Specialty Tools' Q1 sales. However, segment operating profit declined just over $2 million year-over-year with higher operating expenses, including a headwind related to the timing of bad debt reserves.

Ann Schuman: The agility of the medical business model is a significant competitive advantage.

Ann Schuman: Early as it relates to new product vitality.

Ann Schuman: A great example of this is a specialty product line.

Anshooman Aga: Our commitment to innovation was showcased at this year's Expo event, introducing over 50, new tools to the lineup directly reflecting customer feedback and market trends.

Anshooman Aga: This new product vitality contributed to over 25% or specialty tools Q1 sales.

Ann Schuman: Segment operating profit declined just over $2 million year over year with higher operating expenses, including a headwind related to the timing of bad debt reserves.

Anshooman Aga: As we have experienced over the last few quarters, stronger growth in high-ticket items typically drives increased reserves, as our finance receivables portfolio grew approximately 6%. These reserves, while immediately dilutive from a margin perspective, over the next five years contribute three to three and a half times the reserve amount in interest income. Moving to the balance sheet detail on slide 10, during the quarter, we fully deployed the proceeds from the divestiture of courts, repaying $50 million in debt, reducing our net debt ratio to 2.6 times, a significant improvement from 3.1 times a year ago.

Ann Schuman: As we have experienced over the last few quarters stronger growth in high ticket items typically drives increased reserves as a financed receivables portfolio grew approximately 6%.

Anshooman Aga: These reserves, while immediately dilutive from a margin perspective over the next five years contribute 3% to three five times the reserve amount in interest income.

Okay.

Okay, turning to the balance sheet detail on slide 10.

Anshooman Aga: During the quarter, we fully deployed the proceeds from the divestiture of court prepaying 50 million in debt, reducing our net debt ratio to two six times a significant improvement from three one times a year ago.

Anshooman Aga: We also completed approximately $22 million and share repurchases in the quarter.

Anshooman Aga: At current valuations, we view share repurchase as an attractive use of capital and we now expect to complete at least $75 million in repurchases for the full year.

Anshooman Aga: We also completed approximately $22 million in share repurchases in the quarter. At current valuations, we view share repurchase as an attractive use of capital, and we now expect to complete at least $75 million in repurchases for the full year. Turning to our updated outlook assumptions for Q2 and the full year, on slide 11, for the second quarter, we are projecting total revenues in the range of 735 to 750 million, or 2 to 4% core growth.

Anshooman Aga: Turning to our updated outlook assumptions for Q2, and the full year on slide 11.

Anshooman Aga: For the second quarter, we are projecting total revenues in the range of $735 to $750 million.

Anshooman Aga: <unk>, 2% to 4% core growth.

Anshooman Aga: We expect an adjusted operating margin expansion of 20 to 60 basis points, resulting in adjusted EPS in the range of 67 to 71 cents. Our first half outlook is consistent with what we mentioned last quarter. Typically, seasonality would suggest our first half revenue would equate to 48 to 49% of the full year and earnings at approximately 45% of the full year, and our current outlook is consistent with those ranges. Turning to the full year, as Mark mentioned at the start of the call, we are maintaining our previously issued guidance.

Anshooman Aga: We expect adjusted operating margin expansion of 20 to 60 basis points, resulting in adjusted EPS in the range of 67 to 71.

Anshooman Aga: Our first half outlook is consistent with what we mentioned last quarter.

Anshooman Aga: Typical seasonality would suggest our first half revenue would equate to 48% to 49% of the full year and earnings at approximately 45% of the full year and.

Anshooman Aga: And our current outlook is consistent with those ranges.

Anshooman Aga: Turning to the full year as Mark mentioned at the start of the call. We are maintaining our previously issued guidance.

Anshooman Aga: We have made a modest adjustment to a reported sales range to reflect an incremental $10 million FX headwind compared to a prior range based on the strength of the U.S. dollar year-to-date. We are maintaining our outlook for core growth of 4 to 6% overall, and we have a high degree of confidence around the midpoint of that range. We are also maintaining our adjusted margin expansion and adjusted ETS ranges. We believe our outlook for the year represents an attractive growth and profitability profile.

Anshooman Aga: We have made a modest adjustment to our reported sales range to reflect an incremental $10 million FX headwind compared to our prior range based on the strength of the U S dollar year to date.

Anshooman Aga: We are maintaining our outlook for core growth of 4% to 6% overall and we have a high degree of confidence around the midpoint of that range.

Anshooman Aga: We are also maintaining our adjusted margin expansion and adjusted EPS ranges.

Anshooman Aga: We believe our outlook for the year represents an attractive growth and profitability profile.

Anshooman Aga: I'm confident in our ability to leverage the power of VBS and our leading positions across our end markets to capitalize on the robust secular tailwinds supporting growth to deliver on our financial commitments. With that, I'd like to pass the call back over to Mark for some closing comments.

Anshooman Aga: <unk> and our ability to leverage the power of Bbs.

Mark: Our leading positions across our end markets to capitalize on the robust secular tailwind supporting growth to deliver on our financial commitments.

Anshooman Aga: With that I'd like to pass the call back over to Mark for some closing comments.

Mark D. Morelli: Thanks, Anshooman. I'd like to wrap up with three key takeaways. First, we're off to a strong start in 2024. I'm proud of the way our team executed in the quarter, driving attractive core growth and margin expansion, demonstrating traction on our strategy and our ability to deliver differentiated solutions for our customers. Our end markets are constructive, underpinned by strong secular drivers, and we're advantaged by our leading share positions with the largest players in the mobility ecosystem.

Mark: Thanks, Ann Chairman I'd like to wrap up with three key takeaways.

Mark D. Morelli: First we're off to a strong start in 2024 I'm proud of the way our teams executed in the quarter driving attractive core growth and margin expansion demonstrating traction on our strategy and our ability to deliver differentiated solutions for our customers.

Mark D. Morelli: Our end markets are constructive underpinned by strong secular drivers and we're advantaged by our leading share positions with the largest players in the mobility ecosystem.

Mark D. Morelli: As our customers aggressively expand their footprint they increasingly need our integrated solutions that improve site productivity and profitability.

Mark D. Morelli: Second volunteer has a unique competitive advantage within the mobility ecosystem, which puts us in a solid position for attractive mid single digit growth and strong free cash flow generation.

Mark D. Morelli: Lastly, our balance sheet is healthy and our strong cash generation provides plenty of optionality for accretive capital deployment.

Mark D. Morelli: Our outlook for 2024 puts us squarely on the path to achieving our long term targets I.

Mark D. Morelli: I am confident we have the right strategy in place to continue to deliver differentiated solutions for our customers and unlock significant value for our shareholders.

Mark D. Morelli: As our customers aggressively expand their footprints, they increasingly need our integrated solutions that improve site productivity and profitability. Second, Vontier has a unique competitive advantage within the mobility ecosystem, which puts us in a solid position for attractive mid-single-digit growth and strong free cash flow generation. Lastly, our balance sheet is healthy, and our strong cash generation provides plenty of optionality for accretive capital deployment. Our outlook for 2024 puts us squarely on the path to achieving our long-term target. I am confident we have the right strategy in place to continue to deliver differentiated solutions for our customers and unlock significant value for our shareholders. With that operator, we're ready to open the line to questions.

Speaker Change: With that operator, we're ready to open the line for questions.

Operator: Ladies and gentlemen, we will now begin the question and answer session. Should you have a question, please press star followed by the number one on your touchtone phone. You will hear a prompt that your hand has been raised. Should you wish to decline from the polling process, please press star followed by the number 2. If you are using a speakerphone, please lift the handset before pressing any key.

Speaker Change: Ladies and gentlemen.

Speaker Change: We will now begin the question and answer session should you have a question. Please press star followed by the number one on your Touchtone phone you will hear a prompt that their hand has been raised should you wish to decline from the polling process. Please press star followed by the number too.

Operator: If you are using a speaker phone please lift the handset before pressing any keys.

Nigel Edward Coe: Your first question comes from the line of Nigel Coe from Wolf Research. Please go ahead.

Operator: Your first question comes from the line of Nigel Coe from Wolfe Research. Please go ahead.

Nigel Edward Coe: Thanks, good morning, and thanks for the question. I appreciate it.

Nigel Edward Coe: Thanks, Good morning, and thanks for the question I appreciate it.

Nigel Edward Coe: Maybe thanks for the detailed very comprehensive overview, maybe talk about <unk> in a bit more detail.

Nigel Edward Coe: Maybe, thanks for the details, a very comprehensive overview. Maybe talk about 2Q in a bit more detail. It looks like margins are ticking down by about 80 base points QEQ. I think we just seem to think that perhaps margins would pick up sequentially, so maybe just talk about, you know, what we need to bear in mind for the second quarter.

Nigel Edward Coe: It looks like margins ticking down by about <unk>.

Nigel Edward Coe: 80 basis points Q O Q.

Nigel Edward Coe: I think we would assume that margins would pick up sequentially. So maybe just talk about.

Nigel Edward Coe: What we need to bear in mind, the second quarter.

Anshooman Aga: Thanks, Nigel. As we communicated last quarter, Q2 should be in line with our Q1 guide, and it's largely playing out as anticipated. From a historical perspective, the seasonality is in line with half one being about 48 to 49% of revenue and 45% of EPS. Also, keep in mind from a sequential perspective, Madco has their Expo event, which is the largest stocking event of the year, and there's about a 20 to 25 million decline in revenue sequentially because Q1 has incremental revenue from Expo, and the Madco margins are pretty attractive. So that does impact seasonality between Q1 and Q2.

Speaker Change: Thanks, Nigel as we'd communicated last quarter Q2 should be in line with our Q1 guidance and is largely playing out as anticipated from a historical perspective, the seasonality is in line with <unk>.

Anshooman Aga: Half, one being about 48% to 49% of revenue and 45% of EPS also keep in mind from a sequential perspective Mapco has their expo event, which is the largest stocking event of the year.

Anshooman Aga: And there is about a $20 million to $25 million decline in revenue sequentially. Because Q1 has incremental revenue from Expo and the macro margins are pretty attractive margins, so that doesn't impact seasonality between Q1 and Q2.

Nigel Edward Coe: Okay, so it sounds pretty stable for the two segments of repair where we should see some pressure. Okay, that's, that's really helpful.

Speaker Change: Okay. So it sounds like pretty pretty stable for.

Speaker Change: Uh huh.

Nigel Edward Coe: Two segments I'd say.

Nigel Edward Coe: Repair, where we should see some pressure cubic here, okay thats really helpful.

Mark D. Morelli: And then obviously, the strength we've seen in North America. Retail Fielding is really impressive, and it seems that you're gaining a fair amount of share here. So I'm just wondering what you think is driving those share gains, and I'm actually more curious if perhaps the Evenco acquisition is maybe helping some of the go-to-market there.

Nigel Edward Coe: And then just the obviously the strength we're seeing in.

Nigel Edward Coe: North American.

Mark D. Morelli: Retailing retail fielding is really impressive and it seems that youll, gaining a fair amount of share here. So I'm. Just wondering what you think is driving those share gains and I'm actually more curious if perhaps the.

Mark D. Morelli: <unk> acquisition is maybe helping some of the go to market there yes.

Nigel Edward Coe: Yeah, good morning, Nigel. It's Mark.

Mark D. Morelli: Yes, good morning, Nigel it's mark Thanks.

Speaker Change: Thanks for the question I.

Mark D. Morelli: Thanks for the question. You know, I think we're really happy about the results in EFS. It's really our first quarter that we're reporting without the EMV comparison.

Mark: I think we're really happy about the results and it's really our first quarter that we're reporting without the E&P compare and so I think you can see some pretty clean numbers, there and that I do think that the team is doing a great job. We've got a lot going on with the build out of the convenience store operators.

Mark D. Morelli: And so I think you can see some pretty clean numbers there. And I do think that the team is doing a great job. We've got a lot going on with the buildout of convenience store operators. The successful formats are continuing to plow forward. And I think the folks in that business are looking at new build sites that are either greenfield, or they're doing more acquisitions, as we said in some of our prepared remarks.

Mark D. Morelli: Yeah.

Mark D. Morelli: The successful formats are continuing to plow forward and I think the folks in that business.

Mark D. Morelli: Looking at new build sites that are either greenfield or theyre doing more acquisitions as we said in some of our prepared remarks and these folks are looking out.

Mark D. Morelli: And these folks are looking out, you know, well beyond this year with buying up real estate and putting capital to play. You see a very successful franchise like Wawa, as an example, making announcements. So I think it's pretty easy for people to follow. And the reason why that's highly relevant is that we have the majority share, both above ground and below ground.

Mark D. Morelli: Beyond this year with buying up real estate and and putting capital to play AUC.

Mark D. Morelli: A very successful franchise like Wawa as an example, making announcements so I think pretty easy for people to follow and the reason why that's highly relevant is that we have the majority share both above ground and below ground and as they are building out their formats.

Mark D. Morelli: And as they're building out their formats, you know, fueling is a part of that, and a modern convenience store format is clearly benefiting from that. And then on the retail solution side, with solutions like what we call enterprise productivity or payment solutions with our Invenco by GBR business, they're providing more site management capabilities as many of these operators look for digital transformation to manage their assets better. It's a very complex footprint. And so as they manage that better with the enterprise productivity solutions that we offer, as well as payment solutions, and also the new FlexPay 6, which is a great offering that's coming out as well.

Mark D. Morelli: Fueling is a part of that.

Mark D. Morelli: In our modern convenience store format is clearly benefiting there and then on the retail solution side with solutions like we call enterprise productivity or payment solutions.

Mark D. Morelli: With with our <unk> business, they're providing more site management capabilities as many of these operators look for digital transformation to manage their assets better. It's a very complex footprint and so as they manage that better with enterprise productivity solutions that we offer.

Mark D. Morelli: As well as payment solutions also the new flex phase six which is a great offering that's coming out as well and the thing that they are also really trying to do is they're trying to be more.

Mark D. Morelli: And the thing that they're also really trying to do is to be more consumer friendly. And the words that they use around that are they really want personalized guest experiences. And so we enable that with our technology. So it's a really integrated approach. And I think OK.

Mark D. Morelli: Consumer friendly and the words that they use around that is they really want to be personalized guest experiences and so we enable that with our technology. So it's a really integrated approach and I think that thats really bearing fruit.

Mark D. Morelli: Okay. Thanks, Mark. See you later.

Speaker Change: Okay. Thanks Mark.

Andrew Burris Obin: Your next question comes from the line of Andrew Obin from Bank of America. Please go ahead.

Mark D. Morelli: Your next question comes from the line of Andrew <unk> from Bank of America. Please go ahead.

David Emerson Ridley: Morning, this is David Ridley laying on for Andrew. Could you talk a little bit more about the National Electric Vehicle Infrastructure Program, how you see that funding playing out over the next years, and how you are, you know, positioning to capture your pretty good share of it?

Speaker Change: Good morning. This is David Ridley Lane on for Andrew.

David Emerson Ridley: Could you talk about a little bit more about the national electric vehicle infrastructure program, how you see that funding playing out over the next years and how you are.

David Emerson Ridley: Positioning to capture.

David Emerson Ridley: Pretty good share of it.

Mark D. Morelli: Yeah, so thank you for that question. About $400 million of the NEBI funding has been awarded so far for about $7.5 billion, so it's in the very early innings. If you track that and follow that, you're able to see that 60% of the awards so far have gone to convenience store operator footprints, and I think that shows the viability of the convenience store in a multi-fuel future. And what's really interesting, too, if you peel the onion even further, you'll notice that we're also picking up a really good share because we provide network software to charge point operators, whether it's a convenience store operator like Circle K that chooses to be a charge point operator or Shell that chooses to be a charge point operator or charge point operators like EVgo or Francis Energy, examples in the United States, of course.

David Emerson Ridley: Yes. So thank you for that question about $400 million of the Navy funding had been awarded so far at about $7 5 billion. So it's very early innings.

Mark D. Morelli: If you track that and follow that.

Mark D. Morelli: You are able to see that 60% of the awards so far have gone to.

Mark D. Morelli: Convenience store, operator, footprints and I think that shows really the viability of the convenience store in a multi fuel future and what's really interesting too if you peel the onion, even further you'll notice that that.

Mark D. Morelli: We're also picking up really good share because we provide network software to charge point operators, whether it's a convenience store operator like circle K that chooses to be a charge point, operator or shell that chooses to be a charge point, operator or charge point operators like E V go or Francis energy.

Mark D. Morelli: Examples in the United States of course.

Mark D. Morelli: Our United States centric these folks can either decide to develop their own network software or they can decide to outsource system. We are the leading provider when folks look at outsourcing that and I think it's because our solution really works well with high reliability and so.

Mark D. Morelli: These folks can either decide to develop their own network software, or they can decide to outsource this, and we are the leading provider when folks look at outsourcing that, and I think it's because our solution really works well with high reliability. And so we've got about 60,000 plugs under management for high-speed charging, and just to put that in comparison, that's about the number of charge points or charge plugs, excuse me, not charge points. That's the number of charge plugs that Tesla has.

Mark D. Morelli: We've got about 60000 plugs on our management for high speed charging and just to put that in comparison, that's about the number of charge points. Our chart chart plug excuse me not charge points. That's a number of charge plugs that Tesla has so we've got about the same number of high speed charging points under management and I think.

Mark D. Morelli: So we've got about the same number of high-speed charging points under management, and I think we see a multi-fuel future with a lot of different charging operators that are going to grow worldwide, so I think we're really positioned well to pick up and be an indirect beneficiary of the net refunding because we are a supplier to that, and also on a worldwide basis, we're about doubling our plugs under management every year, and I think you'll see our Evolve business with Drive's platform being one of them, start being accretive to revenue growth this year.

Mark D. Morelli: We see a multi fuel future with a lot of different charging operators that are going to grow worldwide. So I think we're really positioned well to pick up and be the indirect.

Mark D. Morelli: Beneficiary than having funding because we are a supplier to that and also on a worldwide basis, we're about doubling our plugs under management every year and I think youll see our evolved business with drives platform being one of them.

Mark D. Morelli: Start being accretive to revenue growth this year.

Anshooman Aga: And then, as a quick follow-up on Invinco, how do you see the revenue trend as you go through the year, i.e., do you expect it to accelerate from here, and also any update on the pipeline?

Speaker Change: Excellent and then as a quick follow up on <unk>, how do you see the revenue trend as you go through the year.

Anshooman Aga: Do you expect to accelerate from here and also any update on the pipeline.

Anshooman Aga: Yes, Evid, Invenco revenue should accelerate from Q1 onwards, Q2 will be higher, and Q3 roughly in line with Q2, and then a strong end of the year, so some sequential improvement through the year. The pipeline at Invenco continues to be strong, both for the enterprise productivity solutions where NFX sits in there, and also from a payments perspective, including security of payment opportunities in an international market. On NFX, as we have previously said, we're in pilots with a handful of customers, both in the U.S. and outside of the U.S., and we expect this year to have a couple of announcements about the successful completion of pilots and move towards a fuller rollout.

Speaker Change: Yes, David.

Anshooman Aga: <unk> revenue should accelerate from Q1 onwards.

Anshooman Aga: <unk> will be higher.

Anshooman Aga: Q3, roughly in line with Q2, and then a strong end to the year saw some sequential improvement through the year the pipeline and when Coke continues to be strong both for the enterprise productivity solutions, where in effect sits in there and also from a payments perspective.

Anshooman Aga: Including security of payment opportunities in international market on FX as we have previously said we are in pilots with a handful of customers both in the U S and outside of the U S. And we expect this year to have a couple of announcements of success.

Anshooman Aga: Successful completion of pilots and move towards.

Anshooman Aga: <unk> rollout.

David Emerson Ridley: Good. Thank you very much.

Speaker Change: Good thank you very much.

Joseph J. Donahue: Your next question is from the line of Joseph Donahue from Baird. Please go ahead.

David Emerson Ridley: Your next question is from the line of Joseph Donoghue from Baird. Please go ahead.

Joseph J. Donahue: Hey, guys how are you doing.

Joseph J. Donahue: Hey, Joe.

Joseph J. Donahue: Could you just walk through your expectations by segment for the second quarter? I know we kind of went over MACCO, but could you cover environmental, fueling, and mobility tech?

Joseph J. Donahue: Could you just walk through your expectations by segment for the second quarter I know, we kind of went up <unk>, but could you cover environmental and fueling and mobility Tech.

Anshooman Aga: Sure. So starting off with mobility tech, we expect revenue to be mid-single digits up year on year. Operating profit should be down slightly versus the prior year on a tough compare. Repair solutions revenue from a revenue perspective should be flat to low single digits up in the quarter, margins up sequentially slightly but down year on year, and then fueling should be up low single digits to mid-single digits, and margins should expand 50 basis points. Plus, in that second,

Joseph J. Donahue: Sure so starting off with mobility Tac, we expect revenue to be mid single digits.

Anshooman Aga: Up year on year operating profit should be down slightly versus prior year on a tough compare.

Anshooman Aga: <unk> solutions showed from a revenue perspective should be flat.

Anshooman Aga: Low single digits up in the quarter margins up sequentially slightly down year on year, and then fueling should be up low single digits to mid single digits and margins should expand 50 basis points.

Anshooman Aga: Plaza in that segment.

Joseph J. Donahue: Great, great. Okay, thank you.

Speaker Change: Great great. Okay. Thank you.

Speaker Change: Then digging into <unk> performance.

Joseph J. Donahue: And then digging into NACO's performance, obviously, pretty impressed this quarter, but you guys outperformed your main competitor there pretty notably. We see the same things that you do on end-customer health, but have you seen kind of what they discussed in terms of any turn in sentiment or anything like that?

Speaker Change: Obviously pretty impressive this quarter, but you guys outperformed your main competitor there pretty notably we see the same things that you do on and customers healthy, but have you seen kind of what you discussed in terms of.

Joseph J. Donahue: In terms of any turn ins or anything like that.

Joseph J. Donahue: Can you repeat that last bit again in terms of what?

Joseph J. Donahue: Can you repeat that last bit again in terms of what in terms of like end customer sentiment.

Joseph J. Donahue: In terms of like end customer sentiment, that was kind of something that got cited a lot there.

Joseph J. Donahue: That was kind of something that got signed a lot there.

Mark D. Morelli: Sure, you know, we're just coming off our Matco Expo in Q1, so spending a lot of time with our franchisees as well as some service technicians as well. Look, the backdrop for repair, no question, is strong. There are vehicle models traveled is up, the age of the car park is aging even more as people are maybe not buying as many new cars and they're stretching out their cars for longer, which adds to the sweet spot of the repair segment. And these things bode well.

Speaker Change: Sure, we're just coming off our macro Expo in Q1, so spending a lot of time with our franchisees as well as some service technicians as well.

Mark D. Morelli: <unk> looked up the backdrop for a repair no question is strong there is vehicle miles traveled is up the age of the car Park is aging even more as people are maybe not buying as many new cars and theyre stretching out their car for longer which adds to the sweet spot of the repair segment.

Mark D. Morelli: And these things bode well, we know the complexity of repair is also up which add to the size of the toolbox. So some really good drivers there I think at the same time when you look at service technicians.

Mark D. Morelli: We know the complexity of repair is also up, which adds to the size of the toolbox. There are some really good drivers out there. I think at the same time, when you look at service technicians, you know, they're also, you know, in the United States. These folks have to, you know, pay more for food with inflation; their cost of housing is up. So there's more competing demands for the service technician in terms of where they're going to spend their money.

Mark D. Morelli: Also in the United States these folks have to.

Mark D. Morelli: Pay more for food with inflation there their cost of housing is up so theres more competing demands for the service technician in terms of where theyre going to spend their money I think what we found from the macro Expo coming right out of that is that if you have a good lineup, we had a strong expo really strong bookings and.

Mark D. Morelli: I think what we found from the Matco Expo coming right out of that is that if you have a good lineup, we had a strong expo, really strong bookings, and when you have things to offer of value, and we lead the industry in product vitality, which means that we're constantly refreshing our product line and trying to be really in tune with what service No question to the toolkit with capability on providing productivity solutions for a technician, and that category's up, and that's appreciable part of our sales, as well as, you know, our new Max 5 Diagnostics, which is a high ticket item that we launched in December, and that sold really well in Q1 as well, and we're still selling toolboxes at a pretty good clip in Q1. So, I think that net-net, we see low single-digit growth out of MACO this year with a little bit softening environment for the service technician, but I think we're pretty happy and very proud of the team's results here to continue with high vitality and be really compelling to our service technicians. Great.

Mark D. Morelli: When you have things to offer a value and we lead the industry in product vitality, which means that we're constantly refreshing our product line and trying to be really in tune with what service technicians need and they will spend money.

Mark D. Morelli: They if they find it compelling.

Mark D. Morelli: Compelling and I'll give you a couple of great examples of human talked about specialty products, which certainly adds no question to the toolkit with capability on providing productivity solutions for our technician and that categories up and Thats appreciable part of our sales as well as our new Max.

Mark D. Morelli: <unk> diagnostics, which is a high ticket item that we launched in December and that sold really well in Q1, as well and we're still selling toolboxes.

Mark D. Morelli: At a pretty good clip in Q1, so I think that net net we see low single digit growth at a macro this year with a little bit softening environment for the service technician, but I think we're pretty happy and very proud of the team's results here to continue with high vitality and be really compelling.

Mark D. Morelli: Two our service technicians.

Speaker Change: Great. Thank you.

Speaker Change: Thanks Joseph.

Mark D. Morelli: Okay.

Julian C.H. Mitchell: Ladies and gentlemen, as a reminder, if you have a question, please press star then the number one on your telephone pad. Your next question comes from the line of Julian Mitchell from Barclays. Please go ahead.

Mark D. Morelli: Ladies and gentlemen, as a reminder, if you have a question. Please press Star then the number one on your telephone keypad.

Julian C.H. Mitchell: Your next question comes from the line of Julian Mitchell from Barclays. Please go ahead.

Julian C.H. Mitchell: Hi, good morning. You gave a lot of detail on Q2, and I understand that I think a lot of people sort of missed the sequential comments you gave on the last call for Q2. So, you know, just focusing maybe on the second half for a minute to try and avoid the same thing happening. Should we think about the sequential earnings cadence within the back half as being a step up in earnings sequentially, both Q3 and Q4, but with a sort of a much heavier weighting step up in Q3 versus the fourth quarter? Just wanted to make sure that was the right way to think about the sort of second half here.

Julian C.H. Mitchell: Hi, good morning.

Julian C.H. Mitchell: So you gave a lot of detail on Q2 and understand that I think a lot of people sort of missed somehow the sequential comments you gave on the last call for Q2 so.

Julian C.H. Mitchell: Just focusing maybe on the second half.

Julian C.H. Mitchell: For a minute to try and avoid the same thing happening.

Julian C.H. Mitchell: Should we think about the sequential earnings cadence within that cough as being of.

Julian C.H. Mitchell: Step up in earnings sequentially, both Q3, and Q4, but with a sort of a much heavier weighting step up in Q3 versus the fourth quarter. Just wanted to make sure is that the right way to think about the sort of second half here.

Anshooman Aga: Thanks, Julian, and thanks for the comment. So our fourth quarter will be our strongest quarter, both from a revenue and operating profit margin perspective. This is typical seasonality for us. So we'll see a step up from Q2 into Q3, and then another step up from Q3 into Q4. A lot of it is tied to the timing of the rollout of some of the projects. For example, the Shell and Chevron NFX rollouts continue with stronger revenue in Q4 on those, but also the timing of some other projects, including some larger projects and backlog for our energy business.

Speaker Change: Thanks, Julian and thanks for the comment.

Anshooman Aga: That's helpful. Thank you.

Anshooman Aga: So our fourth quarter will be our strongest quarter, both from a revenue and operating profit margin perspective typical seasonality for us. So we will see a step up from Q2 into Q3 and then another step up from Q3 into Q4, a lot of it is tied to the timing of rollout of some of the projects for example, the shuttle launch.

Anshooman Aga: Ron.

Anshooman Aga: And FX Rollouts continue.

Anshooman Aga: Stronger revenue in Q4 on those but also the timing of some other projects, including some larger projects in backlog for our LNG business.

Julian C.H. Mitchell: And then just as we're thinking about the organic growth rates for the year as a whole, particularly, I suppose, you know, mobility, just wanted to check sort of the latest thoughts on the organic guide for the year. And within that, what's assumed for DRB after that 10% drop in the first quarter and EFS, you know, a very strong start to the year on organic growth that moderates in Q2, as you mentioned, is it sort of a mid single-digit growth rate? for the rest of the year, aside from just Q2.

Speaker Change: That's helpful. Thank you and then just.

Speaker Change: As we're thinking about the <unk>.

Julian C.H. Mitchell: Ganic growth rates for the year as a whole, particularly I suppose.

Julian C.H. Mitchell: Mobility.

Julian C.H. Mitchell: Just wanted to check sort of the latest thoughts on the organic guide for the year and within that what's assumed for.

Julian C.H. Mitchell: Dr. B after that 10% drop in the first quarter.

Julian C.H. Mitchell: First very strong start to the year on organic growth moderates in Q2 as you mentioned is it sort of a mid single digit growth rates.

Julian C.H. Mitchell: For the rest of the year aside from just Q2.

Anshooman Aga: Yeah, thanks, Julian. On mobility technologies, we're expecting the full year to be mid-single digit. We're seeing continued strength in the convenience store, as Mark talked about in his prepared remarks, and we're seeing good uptake of our Invenco by GVR solutions, so we expect good growth out there. Also, our alternative energies business, which is really our CNG, RNG business, and is starting to see some hydrogen. We see a continued demand as our fleet customers continue to think about sustainability.

Speaker Change: Yeah. Thanks, Julien on mobility technologies, we're expecting the full year to be mid single digits. We're seeing continued strength in the convenience store as mark talked about in the prepared remarks.

Anshooman Aga: And we're seeing good uptake of our <unk> solutions. So we expect good growth out. There also are alternative energies business, which is <unk>.

Anshooman Aga: Really our <unk> business and starting to see some hydrogen.

Anshooman Aga: Continued demand as our fleet customers continue to think about sustainability.

Anshooman Aga: Business is growing double digit and we have strong growth for the back half of the year also in that business and then also evolve but driven by drives who are starting to see that starting to add.

Anshooman Aga: That business is growing double-digits, and we have strong growth for the back half of the year also in that business. And then also Evolve, which is driven by drives, we're starting to see that starting to add as it continues to scale to our growth rates. So, overall, mid-single digit growth in that business. Our fueling business, that should be growing mid-single digit, or mid-single digit plus this year. We see continued strong build-out of convenience stores, but also, as Mark said in his prepared remarks, the replacement cycle is also going to be supportive for the long term in that business.

Anshooman Aga: Continues to scale to our growth rate so overall mid single digits.

Anshooman Aga: Growth in that business are fueling business that should be growing mid single digits mid single digits plus this year.

Anshooman Aga: We see continued strong build out of convenience stores, but also as Mark said in the prepared remarks. The replacement cycle is also going to be supportive for long term in that business. So we're seeing good growth after market parts continues to grow well and also good legs in our environmental business.

Anshooman Aga: So, we're seeing good growth. Aftermarket parts continues to grow well, and we also have good legs in our environmental business, which grew high single digits in Q1. Q2 in environmental is a tough compare, but then again, growth in Q3 and Q4 in environmental. Yeah, Julian, I just want to jump in on the back of that. I think one of the things that

Anshooman Aga: Which grew high single digits in Q1, Q2, and environmental had a tough compare but then again growth in Q3, and Q4 and environmental.

Mark D. Morelli: Yeah, Julian, I just want to jump in on the back of that. I think one of the things that's happening this year is that we're seeing the benefit of some new product introductions. They're really on the gaining scale, particularly as we progress into the year. I think we've, with our Q1, de-risked our year a bit, and we feel like, with the investments we've been putting in, we're really driving significant new product development in environmental, in the EF business, as well as in Benco, and I think that traction, we're definitely seeing an uptake with customers, so that should certainly build through the year.

Speaker Change: Yeah, Julian I, just want to jump in on the back of that I think one other thing thats happening. This year as we're seeing the benefit of some new product introductions that really are gaining scale, particularly as we progress into the year I think we've with our Q1, we've kind of Derisked our year.

Mark D. Morelli: A bit and we feel like with the investments we've been putting in.

Mark D. Morelli: We're really driving.

Mark D. Morelli: Significant new product development and environmental.

Mark D. Morelli: The <unk> business.

Mark D. Morelli: As well as in Banco and I think that traction, we're definitely seeing an uptick with customers. So that should certainly built in the year.

Speaker Change: Great. Thank you.

Speaker Change: Thanks Julien.

Operator: There are no further questions at this time, and I would like to hand the call back to Mark Morelli for some closing comments.

Mark D. Morelli: There are no further questions at this time and I would like to hand, the call over back to Mark Morelli for some closing comments.

Mark D. Morelli: Yeah, thanks, Operator. Thank you for joining us on today's call. You know, I'm really encouraged by the start that we've had to the year, and I'm confident in our ability to execute on growth and margin expansion. And we continue to progress what we're calling the Connected Mobility Strategy. I think it's great for growth, but it's also highly differentiated.

Mark D. Morelli: Yes, thanks operator.

Mark D. Morelli: Thank you for joining us on today's call and I'm really encouraged by the start that we've had to the year and I am confident in our ability to execute on growth and margin expansion and we continue to progress what we're calling the connected mobility strategy I think it's.

Mark D. Morelli: Great for growth, but it's also highly differentiated and I want to thank our teams for our continued.

Mark D. Morelli: And I want to thank our teams for our continued strong progress, their dedication to achieving results and executing our vision. So we look forward to seeing many of you in the coming weeks in person. Have a great day.

Mark D. Morelli: Strong progress their dedication to achieving results energy in executing our vision. So we look forward to seeing many of you in the coming weeks in person have a great day.

Operator: Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect.

Speaker Change: Ladies and gentlemen, this concludes today's conference call. Thank you for your participation you may now disconnect.

Operator: Okay.

Operator: Okay.

Operator: Yes.

Operator: Yes.

Operator: Sure.