Q1 2025 Vontier Corp Earnings Call
Good morning, ladies and gentlemen, and welcome to this launch of first quarter 2025 earnings call.
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Following the presentation, we will conduct a question and answer session yes.
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This call is being recorded on Thursday may four 2025, and a replay will be made available shortly after.
Speaker Change: I would now like to trying to conference over to Ryan Edelman Bunches, Vice President of Investor Relations.
Go ahead.
Speaker Change: 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 Sherman AGA, our senior Vice President and Chief Financial Officer.
Speaker Change: You can find both our press release as well as our slide presentation, we will refer to during today's call on the Investor Relations section of our website at investors stop volunteer dotcom.
Speaker Change: 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.
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.
Mark Morelli: With that please turn to slide three and I'll turn the call over to Mark.
Mark Morelli: Thanks, Ryan and good morning, everyone. We had a strong start to the year with first quarter sales adjusted EPS and adjusted free cash flow Cassini and expectations.
Mark Morelli: Better than expected performance at environmental in fueling solutions and mobility technologies, which grew low double digits drove core sales above our guidance range. These results demonstrate volunteers unique competitive advantage within the mobility ecosystem with a purpose built portfolio.
Mark Morelli: <unk> hardware and software solutions are.
Mark Morelli: Our connected mobility strategy places us at the forefront of our customers' digital transformation journey and offers optionality for their energy needs.
Mark Morelli: This is most evident today is within our convenience retail and fueling end market, where we continue to capitalize on strong industry Capex our value proposition is clearly resonating with our customers as demonstrated by the success of recent new product introductions, and our leading portfolio of integrated digital.
Mark Morelli: Yes.
Mark Morelli: Underlying demand trends in Q1 were strong slightly ahead of our expectations and we've seen continued momentum through the month of April.
Mark Morelli: We have yet to see any discernible demand impacts from tariffs or trade policy uncertainty with little evidence of material pre buying and our results.
Mark Morelli: Book to Bill in line with our expectations came in slightly under one in the quarter.
Mark Morelli: Based on strong Q1 results and our Q2 outlook first half results are tracking ahead of the plan we laid out for you in mid February.
Mark Morelli: We're maintaining our full year guidance, including the current impacts from tariffs and now reflecting a more cautious demand backdrop in the second half.
Mark Morelli: Our portfolio is resilient with leading positions in attractive end markets convene.
Mark Morelli: Convenience retailing fueling which accounts for about two thirds of our sales has historically grown above GDP and experience only low single digit declines in the last major recession in 2008 2009.
Mark Morelli: We're proactively managing our tariff exposures and we're confident we'll be able to mitigate the estimated costs.
Mark Morelli: Given our confidence in our business our board recently approved a replenishment of our $500 million share repurchase authorization, which gives us ample capacity to prosecute buybacks. So let's turn to slide four.
Mark Morelli: Given the volatility around tariffs and trade policy announcements, we thought it would be helpful to provide a quick update on estimated tariff impact based on what we know today.
Mark Morelli: And the four plus years post spin through ongoing risk management, we have significantly strengthened the agility and resiliency of our global supply chain. The primary focus of our Derisking efforts has been geographically diversifying our supply base with a specific emphasis on reducing our exposure to China.
Mark Morelli: By a factor of more than three times.
Mark Morelli: We continue to transform and strengthen our supply chain with additional initiatives to further reduce our exposure to China.
Mark Morelli: Recognizing the fluidity of the ongoing tariff and trade situation, we estimate the current cost impact at approximately $50 million before any further medications or pricing actions.
Mark Morelli: Note that this represents what we would expect to incur in the balance of the year.
Mark Morelli: As you can see in the table most of the impact is related to products sourced from China, which reflects the aggregate cost of three separate tariff categories on both tier one and tier two suppliers.
Mark Morelli: The remaining approximately $10 million tied to our exposure across the rest of the world primarily represented by a few south Eastern Asia Trade partners. This also includes the impact from section 232 steel and aluminum tariffs.
Mark Morelli: Nearly all of the product sourced from Mexico is compliant with the U S. MCA exemption and therefore does not represent a headwind.
Mark Morelli: We continue to countermeasure the tariff impacts across our businesses. These actions include further supply chain optimization and diversification aggressively negotiating cost reductions with suppliers and passing through price increases we.
Mark Morelli: We expect to offset the estimated tariffs and neutralize the impact to our margins.
It goes without saying that we are closely monitoring developments and we will update you as the situation continues to evolve.
Mark Morelli: Our primary focus is to control our controllable executing on our pillar one initiatives to optimize our core leveraging self help.
Mark Morelli: One. Good example of this is our annual CEO Kaizen event, which took place last month.
Mark Morelli: Cross functional teams from across our businesses came together with a shared purpose of delivering step change improvements to our business.
Mark Morelli: 90% of the projects worked on during the case and we're focused on our FPP 80, 20 process ranging from product line simplification to strategic pricing.
Mark Morelli: As I mentioned previously our largest end market convenience retail fueling has proven to be resilient in prior downturns.
Mark Morelli: This has been corroborated in our channel checks over the last couple of weeks with larger national and regional operators reiterating confidence in their capex plans and expectations for growth Likewise.
Mark Morelli: Likewise, our channel partners are not seen any evidence of project delays or deferrals.
Mark Morelli: As an example of the momentum in the industry 711 recently announced plans to double its north American new store openings to 1300 by 2030, including 500 stores between 2025 and 2027.
Mark Morelli: Most of those stores are expected to leverage seven elevens modern design, which has driven average daily sales, 18% higher than their fleet average.
Mark Morelli: Our macko Expo event in mid April was successful and performed slightly ahead of last year's record event.
Mark Morelli: Better advantage of our business model was on full display.
Mark Morelli: Our market, leading new product vitality allows us to meet the immediate needs of service technicians with a focus on optimizing premium quality with value.
Mark Morelli: At the same time, we're monitoring our repair solutions segment closely, particularly given the impact of inflation and declining consumer sentiment.
Speaker Change: I'm proud of the way our teams executed in an increasingly dynamic environment, demonstrating a strong alignment with the principles of the volunteer business system and a commitment to the three pillars of our value creation framework, optimizing our core accelerating profitable growth across the portfolio and sensibly expanding into.
Mark Morelli: Recent markets.
Mark Morelli: In the current macro environment, we are focused on what we can control and doubling down on our pillar one opportunities.
Speaker Change: With that let me turn the call over to <unk> Chairman.
Thanks, Mark and good morning, everyone I'll start off with a summary of our consolidated results for Q1 on slide five.
Speaker Change: Sales of $741 million exceeded the midpoint of our guidance by just under $20 million with upside in both mobility technologies and environmental in fueling solutions.
Speaker Change: Core sales declined <unk>, 7% year over year better than our guidance range led by low double digit growth at mobility tech driven by strong double digit growth at <unk>.
Speaker Change: Adjusted operating profit margin down 40 basis points was in line with our expectations compared to the full year of 2020 for operating profit margin increased 30 basis points.
Speaker Change: Adjusted EPS increased 4% to 77.
Speaker Change: Above our guidance range of <unk> 71 to 74.
Speaker Change: Free cash flow of $96 million increased over 20% year over year.
Speaker Change: Selecting a seasonally strong 83% conversion to adjusted net income or 13% of sales.
Speaker Change: Turning to our segment results starting on slide six.
Speaker Change: Environmental and fueling solutions achieved core growth of approximately 1% or up 11% on a two year stack basis.
Speaker Change: We continue to see solid demand for both above ground and underground retail fueling equipment.
Speaker Change: Healthy activity for underground equipment, including upgrades to our cutting edge automated tankage solution, the Tls $4 50, plus.
As well as a four horsepower submersible pump is contributing to our topline growth.
Speaker Change: We're also seeing steady above ground dispenser demand tied to new boats retrofit and replacement activity.
Speaker Change: All supported by evolving consumer preferences, advancing technology and ongoing regulatory changes.
Speaker Change: Segment operating profit margin expanded another 20 basis points, driven by productivity and simplification efforts.
Speaker Change: Turning to mobility technologies on slide seven.
Speaker Change: Core sales increased nearly 13% compared to the prior year within Venoco again, demonstrating solid performance up over 20% for the third consecutive quarter.
Speaker Change: Global demand for enterprise productivity and unified payment solutions continues to support growth at <unk>. Our customers are focused on enhancing the consumer experience on site driving increased revenue and streamlining operations all of which are better enabled by <unk> digital solutions and technologies.
Speaker Change: <unk> sales declined double digit year on year, but in line with our forecast and normal seasonality.
Speaker Change: While the tunnel system sales declined in Q1, the outlook for new tunnel builds remains unchanged flat to slightly down for the full year.
Speaker Change: The <unk> team is expanding the recurring revenue base through a number of initiatives, including increased conversion of existing customers to our nextgen Patti on software platform.
Speaker Change: This focus drove low single digit recurring revenue growth in Q1.
Speaker Change: Segment operating profit margin decreased 40 basis points versus the prior year, mainly on a one time settlement.
Speaker Change: Q1, mobile GTECH margins were 20 basis points above the full year 2024 right.
Speaker Change: On slide eight.
Speaker Change: <unk> solution results reflect the impact from the timing shift of Metro Expo, our largest selling event of the year from Q1 to Q2 this year.
Speaker Change: <unk> technicians continue to defer discretionary spending in this environment.
Speaker Change: Large ticket items, such as dual storage continue to face challenges as technicians prioritize quicker payback productivity enhancing tools.
Speaker Change: Segment operating profit margin declined by approximately 280 basis points, reflecting volume and mix headwinds in large part due to the shift and might go export.
Speaker Change: Sequentially margins have remained stable over the last four quarters, which has been an encouraging trend.
Speaker Change: Turning to the balance sheet on slide nine.
Speaker Change: During the quarter, we accelerated our share repurchase activity to take advantage of the market dislocation buying back $55 million worth of stock.
Speaker Change: Given current valuations, we firmly believe that share repurchase remains one of the most attractive uses of our capital.
Speaker Change: In line with this commitment we received board approval to replenish our share repurchase authorization back to $500 million.
Speaker Change: Looking ahead, we anticipate over half of our free cash flow in 2025 to be deployed towards share buybacks.
Speaker Change: Turning to the updated outlook assumptions for Q2, and the full year on slide 10.
Speaker Change: For the second quarter, we are projecting total revenues in the range of $725 million to $745 million. We expect adjusted operating profit margin expansion of 30 to 80 basis points, resulting in adjusted EPS in the range of 70% to 75.
Speaker Change: Turning to the full year as Mark mentioned at the start of the call. We are maintaining our previously issued guidance more specifically, we are not making any changes to the core elements of our guide.
Speaker Change: I would point out that we have updated our modeling assumptions to reflect lower interest and share count for the year.
Speaker Change: Our adjusted EPS range is unchanged at $3 to $3 15.
Speaker Change: Despite the upside in Q1 slightly improved outlook for Q2, and modest tailwind from FX interest and share count.
Speaker Change: It would be prudent to embed contingency into our guide.
Speaker Change: While we are well prepared to execute in any environment. We are taking a more cautious view of the second half demand given continued macro uncertainty.
Speaker Change: The end markets, we operate in have proven to be resilient in prior downturns, and we would expect our portfolio to outperform on a relative basis.
Speaker Change: Our current tariff exposure is manageable and we are confident we can mitigate the impacts.
Speaker Change: Our business is heavily indexed to the U S and our sales exposure to China is less than 1% and our global manufacturing footprint Leverages in region for region.
Speaker Change: We have a solid runway of self help opportunities through a pillow on actions and we are returning capital to shareholders through share buybacks.
Mark Morelli: With that I'll pass the call back over to Mark for his closing comments.
Speaker Change: Thanks, Ann Chairman I'm encouraged by the start to the year and I'm confident in our ability to execute in a challenging environment.
Speaker Change: Our current exposure to kick tariffs is limited and we're actively managing known headwinds.
Speaker Change: I'm also encouraged by the leverage we get from producing in region for region.
Speaker Change: As a reminder, our sales into China are minimal.
Speaker Change: <unk> of us working down exposure to China since spin.
Speaker Change: We have leading positions in resilient end markets that have performed well in downturns.
Speaker Change: While the second half suggests some uncertainty we're positioned well with the strongest players in the market.
Speaker Change: Our leading market positions along with recent innovation solving our customers' high value problems are resulting in share gains.
Speaker Change: Our connected mobility strategy is showing traction and we have significant runway of self help opportunities ahead, both of which position volunteer well for the future.
Speaker Change: With that operator, please open the line for questions.
Speaker Change: Thank you ladies and gentlemen, we will now begin the question and answer session should you have a question. Please press the star followed by the number one on your Touchtone phone.
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Speaker Change: One moment. Please for your first question.
Speaker Change: Your first question comes from Nigel Coe of Wolfe Research LLC. Please go ahead.
Speaker Change: Thanks, Good morning, everyone. Thanks for the question.
Speaker Change: So mark I, just want to pick up your comments on sort of the contingency in the back half of the year.
Speaker Change: Makes total sense, obviously, but number one have you seen any evidence that there was this more of.
Speaker Change: Our macro contingency and perhaps just refresh us on how the 2% organic is changing between price and volume I'm, assuming that's some price increases to offset those tariffs.
Speaker Change: Yes, Thanks, Nigel appreciate the question.
Speaker Change: So first of all.
Speaker Change: We're not seeing any demand destruction the markets have been very resilient. So everything that we see so far and we've been really digging deep into looking at some of the demand signals here.
Speaker Change: And we're fresh off and international Carwash, we're fresh off meeting with some of the Ceos and our next event earlier this week as well as the macro Expo as well as our fleet show called the advanced Clean Technology show all of that is very very recent information.
Speaker Change: Pretty it's pretty deep channel checks, there and so were not seen indication of any demand destruction. So as it leads to your question into the second half pretty resilient markets that we're dealing with and we're able to manage that tariff impact that we articulated with.
Speaker Change: With half of that being through price I think we've been demonstrating from our business as we've been able to get price historically and while obviously in this situation we need to be careful with that.
Speaker Change: The price increases that we do prosecuted in the market I think we feel very confident with what we've got we've also gone out with many of our price increases already.
Speaker Change: So there'll be taken effect here pretty shortly is that leads to the second half question that you asked.
Speaker Change: Right.
Speaker Change: Maybe just some color in terms of the second half.
Speaker Change: Price versus volume looks in that second half.
Speaker Change: Yes, Nigel so if you look we are having a little bit of a stronger half one obviously coming off a solid Q1 and even our guide for Q2 is slightly above the previous implied guide that we've given.
Speaker Change: For half two we basically embedded about a 1% core growth now a lot of that will come from price given the current environment, We're a little more cautious on volume.
Speaker Change: Just yes.
Speaker Change: Given the macro.
Speaker Change: That makes sense and then just a quick quick fabrications Shimon.
Speaker Change: You called out the macro show very successful I think that's maybe $25 million to $30 million.
Speaker Change: <unk> I just want to make sure that's the right number.
Speaker Change: And given your share buyback comments I think it implies maybe $285 million plus of buybacks.
Speaker Change: Getting a lower share count for the full year, so just want to make sure.
Speaker Change: We're kind of getting that properly.
Speaker Change: Yes, so as Mark had mentioned Mapco Expo, we were very pleased with the results.
Speaker Change: In line with the previous year, which was a record Expo, but also we believe given that this was the lowest price point event of the year.
Speaker Change: Given the tariff uncertainty and price increases related to tariffs potentially there might have been some pre buying at the Expo event and the base demand might be a little bit softer given consumer sentiment.
Speaker Change: I Havent turned down negatively.
Speaker Change: <unk>.
Speaker Change: On the share count, Yes, if you think about $400 million to $450 million of free cash flow for the year.
Speaker Change: Little over 200 million in buybacks, usually our cash is pretty backend weighted just from the seasonality perspective, so the buybacks would also.
Speaker Change: Tend to be a little more backend weighted for us and that's kind of what's embedded into the guidance just the average share count based on that.
Speaker Change: Okay, great. Thank you your instrument.
Speaker Change: Yes.
Speaker Change: Thank you.
Speaker Change: Another question comes from Julian Mitchell of Barclays investments, Let's go ahead.
Speaker Change: Okay.
Speaker Change: Maybe just wanted to start off with mobility Tech.
Speaker Change: So I'm just sort of all dynamic in first quarter. It was very very strong sales growth but margins.
Speaker Change: Down.
Speaker Change: Just maybe sort of flesh out how do you see those two items evolving through the year.
Speaker Change: Our ability take please and when we should see the margins to return to growth.
Speaker Change: Yes.
Speaker Change: Having chairman jump in on this one but let me just point out here on mobility Tech that we're seeing a pretty consistent now.
Speaker Change: Above fleet average growth I think it's indicative of the investments that we've been doing in this space a lot of the digital transformation that set a forefront of the C store, you'll see source about 70% of the volume that we serve and I think we're beginning to see pretty consistent payoffs and share gain there and Jim you want to jump in on the question.
Jim: Julien on the margins. If you remember we had guided that margins would be relatively flat for mobility tech in Q1.
Jim: They were down 40 basis points on a one time settlement that we had.
Jim: But compared to last year's average margins mobile to detect margins were up 20 basis points Q1 was unseasonably high last year, just based on some mix for.
Jim: For the full year, we're still expecting good margin expansion for mobility Tech year on year, we expect margins for mobile logitech to be up close to 100 basis points or about 100 basis points for the full year and youll start seeing that read through starting with Q2.
Speaker Change: That's helpful. Thank you and on the repair business.
Jim: It will be the one that in a way has the sort of least visibility.
Speaker Change: Very very short cycle.
Speaker Change: And just sort of help us understand for that piece.
Speaker Change: Are you still thinking you can get to sort of.
Speaker Change: Flattish.
Speaker Change: Sales for the year or is that something where it may be the back costs.
Speaker Change: Now it may be prudent to assume a decline just because of the.
Speaker Change: In Xyrem and <unk>.
When we're looking at.
Speaker Change: Tariffs is there any one segment that Laurie could have a net headwind in 2025 overall.
Speaker Change: Yeah. So there's no question that the macro business is short cycle and we are very cautious on what we're sort of seeing here on the demand picture at.
Speaker Change: At the same time, we're on the case, we're spending a lot of time coming off the macro Expo looking at it by category spending a lot of time with our distributors.
Speaker Change: And with service technicians.
Speaker Change: First of all the macro Expo sort of the pre buy in the <unk>.
Speaker Change: Then itself or in the books, there is a post selling activity.
Speaker Change: It goes on and Thats normally the largest stocking event of the year or so.
Speaker Change: So they do normally taken inventory they started.
Speaker Change: With the truck inventory or the store inventory as we call. It at a really good level. So they didnt start at a high level, which is encouraging and so the fact that they had a pretty solid buy based on the lineup that we offered we introduce another 500 Skus, we tried to be very.
Speaker Change: Sensitive to the fact that people are looking for productivity solutions at better value, but at the same time, we launched a new success toolbox, which is our high end toolbox had also sold quite well.
Speaker Change: But theres no question that.
Speaker Change: We watched the sellout from our stores are from our trucks and we've seen in April.
Speaker Change: Some of that sell off.
Speaker Change: We can as well so we would anticipate.
Speaker Change: More cautious demand environment for macro, but that's factored into our guide. So do you want to add some further color there in Sherman.
Speaker Change: Given the current macro we don't believe might go a repair solutions will be flat. This year I would expect that to be down mid single digit plus.
Speaker Change: But again from a guide perspective keep in mind, we are.
Speaker Change: Continuing to see strength across the vast majority of our portfolio, which is convenience retail.
Speaker Change: Both from the C store and the new builds for the car wash with the channel checks coming in strong so potentially some offset there and then also FX should be a little bit of a tailwind versus the previous guide for the full year in the tune of about $10 million, which can offset some of the.
Speaker Change: Repair solutions weakness, hence we kept guidance intact.
Speaker Change: Thanks Neil.
Speaker Change: <unk> was there isn't a tariff net headwinds repair for the year all in either of the other two segments.
Yes, I think I think.
Speaker Change: <unk> is a little more disproportionately exposed to tariffs and the other businesses, but not it's not a significant issue. If you look at our business, 20% of our business is repair at.
Speaker Change: At the same time.
Speaker Change: We have a lot of mitigating aspects. If you look at our exposure, particularly on macro from a couple of years ago, we were more than three times exposed. So we've been we've been and I'm really proud of the team's work here have been working very diligently prior to April 2nd announcements that were made.
Speaker Change: To be able to manage that supply chain accordingly, particularly out of China and I think they've been very successful in doing that is still more work to do but I think at the same time.
Speaker Change: We've got a good balance a good line up and I think we're on the case and I think it's something that it's certainly manageable and get our arms around from here.
Speaker Change: Thanks, a lot.
Speaker Change: Thank you.
Speaker Change: Our next question comes from Andrew <unk> of Bank of America.
Speaker Change: Please go ahead.
Speaker Change: Sure. This is David Ridley Lane on for Andrew <unk>.
Speaker Change: On the environmental and fueling solutions.
Speaker Change: I know that each one of these projects site modernization and so forth is probably small dollars.
Speaker Change: But I'm wondering is there are you picking up any hesitancy or companies.
Speaker Change: Perhaps phasing in things on a slower basis anything on sort of your customers' capital planning scheduling et cetera.
Speaker Change: Look I really appreciate the question, we paid a lot of attention to that we're looking pretty deep into our customers.
Speaker Change: Our ability to sort of move forward their projects, both what we call NTR new to industry, which are new builds which are brownfield and greenfield as well as what we call refresh and retrofit which are smaller size projects that you were sort of indicating in your question.
Speaker Change: And we're very confident of what we're seeing so far that that folks are are clearly full speed ahead, one of the backdrops here that might be different than some of the other industries is that the convenience retail space is pretty resilient when it comes to downturn. So we ask questions a lot, particularly of our business owners that we serve.
Speaker Change: <unk>.
Speaker Change: That have been around for a long time in the industry, particularly back in the last major recession in 2008 2009 and sell the.
Speaker Change: Our business is not immune to recession, but it is very resilient.
Speaker Change: Slowdowns in the economy and in recessionary periods and one of the major reasons why is that there is a trade down effect that happens.
Speaker Change: Where the C store space benefits from that and also what tends to happen is that oil prices drop and Thats also very good for the industry, particularly in the U S where they are able to make more margin. So theyre very cash flow positive, even though some of the store traffic in some cases it might be spotty.
Speaker Change: At the same time their balance sheets are strong and the venues that that we're serving the largest players in the industry the large regional and national as well as international players are advancing very successful formats and they know that those formats drive greater store traffic for them and so.
Speaker Change: So it's something we're paying a lot of attention to to see if theres any demand signals that do start to drop off but so far everything that we're seeing.
Speaker Change: They're certainly going ahead from even a slowdown that most folks would expect would be hitting some of the markets.
Speaker Change: Got it and then just a quick follow up on sort of the in zinc piped.
Speaker Change: Pipeline.
Speaker Change: Obviously, you are having continued success.
Speaker Change: Just sort of.
Speaker Change: Yes.
Speaker Change: Okay reputation really with some of the remaining large players that haven't converted on how are those conversations ongoing.
Speaker Change: Yes, so were having pretty high level meetings as you can imagine these are long cycle sales opportunities.
Speaker Change: They involve a cutover of critical technology for them and they continue to progress really well I think the.
Speaker Change: Proof points, we have out there.
Speaker Change: Good well for follow on orders I think a lot of folks don't want to be first when you introduce.
Speaker Change: A major technology change like this and you see we're kind of through that initial vanguard of orders in and we're ramping pretty nicely as what you've seen some of our numbers. So I think that that bodes well for the medium longer term here as we continue to work through this no no slowdown in conversations if theres anything there is more conversation more pile.
Speaker Change: What's that are ongoing so we feel really good about the momentum we have there in that business.
Speaker Change: Thank you very much.
Speaker Change: Thank you.
Speaker Change: Next question comes from Andy Kaplowitz of Citigroup. Please go ahead.
Speaker Change: Hey, good morning, everyone. This is actually Jose on for Andy maybe to start could you talk about the progress Youre seeing from your focus and prioritization process and your other simplification initiatives given your gross margins up 45% plus in 2024 and also in the quarter. How are you view.
Speaker Change: The path to the 150 bps margin improvement by 2026 target that you outlined at your Investor day at this point.
Speaker Change: Yes.
Speaker Change: So looked at our FTP processes.
Speaker Change: Most folks with Noah's 80, 20 process with product line simplification customer lists and raving fans.
Speaker Change: I will say, we have a tremendous amount of runway ahead, we're continuing to have very engaging business reviews with with each of our businesses on the opportunities that we have for further simplification.
Speaker Change: We're up.
Speaker Change: High mix.
Speaker Change: Low volume business with engineered products and that complexity is really been conspiring against us for quite a bit of time. So we have a lot of opportunity to clean up. We've also been taking some of those investments in some of those cost savings in recent years and plowing that back into.
Speaker Change: R&D, so we can get growth.
Speaker Change: We're talking about in <unk> is a prime example of spending more on development on a customer high value problem you can see the uptake that we're having on that so we're also not.
Speaker Change: Forgetting the growth element of that but I think from a self help opportunity as we lean into this particularly with <unk>.
Speaker Change: Folks who might be cautious about demand, we're certainly cautious about demand.
Speaker Change: There is a really.
Speaker Change: Solid set of opportunities that we have and very engaging.
Speaker Change: Each of our operating companies, we have our DBS office, where this is sort of run out of centrally as well as finances is very involved with this we've also engaged our data analytics team.
Speaker Change: More effectively.
Speaker Change: Pullout insightful elements here to help us clean up our portfolio you want to comment on the margins in humans.
Speaker Change: Yes, I think we still feel comfortable that we have a box to the 150 basis point margin expansion over the three years that we had laid out.
Speaker Change: So we feel there's a significant runway for opportunity to continue to expand margin.
Speaker Change: Thanks, and then maybe maybe a follow on on mobility Tech you called out in your presentation growth trends could you update us on that business and your current EV strategy. How are you thinking about the potential growth on that side of the business.
Speaker Change: Yeah. So our drives business is a relatively small part of our portfolio but.
Speaker Change: As Vic experiencing very high growth.
Speaker Change: What drives does is it provides.
Speaker Change: The software for anybody who wants to manage a fleet of electric Chargers typically it's high speed Chargers is very difficult to do the tech stack to be able to manage that with very high uptime with great.
Speaker Change: Energy management capabilities, how it backs into the grid as well as how you attract consumers to be able to charge and make that effective.
Speaker Change: We are number two worldwide with the number of blogs on our management with the drive platform with roughly about 110000 plugged in our management at a clip of very high growth rate on a multiyear basis and we're continuing to get very strong demand from some of the largest charge point operators in the world I think if youre going to be.
Speaker Change: A charge point, operator, and more and more you start seeing the convenience store operators looking to be able to do this themselves like circle K is a great example of that.
Speaker Change: As well as others. They want the tools to be able to do that you have a choice to make you either are going to write that tougher yourself.
Speaker Change: And some charges point operators choose to do it but they find that to be very difficult for us.
Speaker Change: Them thing for them to do and so those are some of our best customers that have worked on and tried that for some period of time and then they will convert and we've been converting a large number of these charge point operators as well as new charge point operators at scale, that's something we think bodes really well because it's a SaaS business at very high margin.
Speaker Change: <unk>.
Speaker Change: And it's something we've invested in historically, but now we're beginning to get growth will actually begin to show up at the volunteer level.
Speaker Change: I appreciate the time guys. Thanks.
Speaker Change: Thank you.
Speaker Change: Thank you there any further questions at this time I would now like to turn the call back elevate to Mark Morelli for his closing remarks.
Mark Morelli: Yes. Thank you operator appreciate everybody joining us on the call today I am encouraged by the start that we've had at the beginning of this year as we navigate through this near term uncertainty our teams will continue to execute and advance our strategic initiatives, we're confident in our ability to deliver differentiated solutions that create value for our.
Mark Morelli: <unk> and returns for our shareholders. We appreciate your continued interest in volunteer and look forward to engaging with many of you on the road in the next couple of weeks have a great day.
Mark Morelli: Okay.
Mark Morelli: Ladies and gentlemen, this concludes today's conference call. Thank you for your participation you may now disconnect.
Mark Morelli: [music].
Mark Morelli: Okay.
Mark Morelli: Okay.
Mark Morelli: Yeah.