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 UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
________________________________________________
FORM 10-Q
 ________________________________________________
(Mark One) 
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended: April 1, 2022
Or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from            to            
Commission file number 001-39483
 ________________________________________________
Vontier Corporation
(Exact name of registrant as specified in its charter)
________________________________________________ 
 
Delaware 84-2783455
(State or other jurisdiction of
incorporation or organization)
 (I.R.S. employer
identification number)
5438 Wade Park Boulevard, Suite 600
Raleigh, NC 27607
(Address of principal executive offices)
Registrant’s telephone number, including area code: (984) 275-6000

Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading symbolName of each exchange on which registered
Common stock, par value $0.0001 per shareVNTNew York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 (the “Exchange Act”) during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes  No 
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes  No 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filerAccelerated filer
Non-accelerated filerSmaller reporting company
Emerging growth company
1



If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined by Rule 12b-2 of the Exchange Act). Yes  No 
The number of shares of common stock outstanding at April 29, 2022 was 161,006,543.

2




VONTIER CORPORATION
INDEX
FORM 10-Q
 
Page

3




PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS

VONTIER CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
(in millions, except share and per share amounts)
 April 1, 2022December 31, 2021
(unaudited)
ASSETS
Current assets:
Cash and cash equivalents$145.1 $572.6 
Accounts receivable, less allowance for credit losses of $37.9 million and $38.9 million as of April 1, 2022 and December 31, 2021, respectively
434.2 481.3 
Inventories:
Finished goods114.0 104.7 
Work in process44.6 34.4 
Raw materials166.8 147.9 
Total inventories325.4 287.0 
Prepaid expenses and other current assets137.3 137.3 
Equity securities measured at fair value215.1  
Total current assets1,257.1 1,478.2 
Property, plant and equipment, net of accumulated depreciation of $256.4 million and $256.3 million as of April 1, 2022 and December 31, 2021, respectively
100.6 100.6 
Operating lease right-of-use assets45.5 45.4 
Long-term financing receivables, less allowance for credit losses of $40.8 million and $42.5 million as of April 1, 2022 and December 31, 2021, respectively
243.3 241.7 
Other intangible assets, net696.5 615.9 
Goodwill1,809.8 1,667.2 
Other assets147.3 200.8 
Total assets$4,300.1 $4,349.8 
LIABILITIES AND EQUITY
Current liabilities:
Short-term borrowings$4.2 $3.7 
Trade accounts payable407.9 424.9 
Current operating lease liabilities13.1 12.8 
Accrued expenses and other current liabilities423.1 492.0 
Total current liabilities848.3 933.4 
Long-term operating lease liabilities35.3 35.6 
Long-term debt2,584.5 2,583.8 
Other long-term liabilities280.1 223.3 
Commitments and Contingencies
Equity:
Preferred stock -- 15,000,000 authorized shares; no par value and none issued and outstanding
  
Common stock, $0.0001 par value -- 1,985,000,000 shares authorized; 169,453,678 and 169,168,285 shares issued; and 161,002,143 and 169,168,285 shares outstanding as of April 1, 2022 and December 31, 2021, respectively
  
Treasury stock, at cost — 8,451,535 and no shares at April 1, 2022 and December 31, 2021, respectively
(207.0) 
Additional paid-in capital5.6 1.5 
Retained earnings582.9 386.7 
Accumulated other comprehensive income166.7 181.7 
Total Vontier stockholders’ equity548.2 569.9 
Noncontrolling interests3.7 3.8 
Total stockholders’ equity551.9 573.7 
Total liabilities and equity$4,300.1 $4,349.8 
See the accompanying Notes to the Consolidated Condensed Financial Statements.
4






VONTIER CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF EARNINGS AND COMPREHENSIVE INCOME
(in millions, except per share amounts)
(unaudited)
 Three Months Ended
 April 1, 2022April 2, 2021
Sales of products$670.3 $644.6 
Sales of services77.8 62.8 
Total sales748.1 707.4 
Cost of product sales(365.4)(345.5)
Cost of service sales(47.4)(50.1)
Total cost of sales(412.8)(395.6)
Gross profit335.3 311.8 
Operating costs:
Selling, general and administrative expenses(166.0)(145.7)
Research and development expenses(34.5)(33.2)
Operating profit134.8 132.9 
Non-operating income (expense), net:
Interest expense, net(12.9)(10.4)
Write-off of deferred financing costs (3.2)
Gain on previously held equity interests from combination of business32.7  
Unrealized gain on equity securities measured at fair value163.0  
Other non-operating expense, net(0.1)(0.2)
Earnings before income taxes317.5 119.1 
Provision for income taxes(67.3)(28.1)
Net earnings$250.2 $91.0 
Net earnings per share:
Basic$1.51 $0.54 
Diluted$1.50 $0.54 
Average common stock and common equivalent shares outstanding:
Basic165.9 168.7 
Diluted166.5 169.7 
Net earnings$250.2 $91.0 
Other comprehensive income (loss), net of income taxes:
Foreign currency translation adjustments(15.1)(15.7)
Other adjustments0.1 0.1 
Total other comprehensive loss, net of income taxes(15.0)(15.6)
Comprehensive income$235.2 $75.4 
See the accompanying Notes to the Consolidated Condensed Financial Statements.
5




VONTIER CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
($ and shares in millions)
(unaudited)
 
Common StockTreasury StockAdditional Paid-In CapitalRetained EarningsAccumulated Other Comprehensive IncomeNoncontrolling
Interests
Total
SharesAmountSharesAmount
Balance, December 31, 2021169.2 $  $ $1.5 $386.7 $181.7 $3.8 $573.7 
Net earnings— — — — — 250.2 — — 250.2 
Dividends on common stock ($0.025 per share)
— — — — — (4.0)— — (4.0)
Other comprehensive loss, net of income taxes— — — — — — (15.0)— (15.0)
Stock-based compensation expense— — — — 6.1 — — — 6.1 
Exercise of common stock options and stock award distributions, net of shares for tax withholding0.3 — — — (2.0)— — — (2.0)
Purchase of treasury stock— — (8.5)(207.0)— (50.0)— — (257.0)
Change in noncontrolling interests— — — — — — — (0.1)(0.1)
Balance, April 1, 2022169.5 $ (8.5)$(207.0)$5.6 $582.9 $166.7 $3.7 $551.9 
See the accompanying Notes to the Consolidated Condensed Financial Statements.





6




VONTIER CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
($ and shares in millions)
(unaudited)
Common StockAdditional Paid-In CapitalRetained Earnings (Accumulated Deficit)Accumulated Other Comprehensive IncomeNoncontrolling
Interests
Total
SharesAmount
Balance, December 31, 2020168.5 $ $7.6 $(13.6)$193.8 $3.9 $191.7 
Net earnings— — — 91.0 — — 91.0 
Other comprehensive loss, net of income taxes— — — — (15.6)— (15.6)
Stock-based compensation expense— — 6.6 — — — 6.6 
Exercise of common stock options and stock award distributions, net of shares for tax withholding0.3 — (1.4)— — — (1.4)
Acquisition of noncontrolling interest— — (2.0)— — 0.1 (1.9)
Non-cash separation-related adjustments and other— — (2.1)— — — (2.1)
Change in noncontrolling interests— — — — — (0.3)(0.3)
Balance, April 2, 2021168.8 $ $8.7 $77.4 $178.2 $3.7 $268.0 
See the accompanying Notes to the Consolidated Condensed Financial Statements.
7




VONTIER CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
($ in millions)
(unaudited)
 Three Months Ended
 April 1, 2022April 2, 2021
Cash flows from operating activities:
Net earnings$250.2 $91.0 
Non-cash items:
Depreciation and amortization expense29.1 19.8 
Stock-based compensation expense6.1 6.6 
Write-off of deferred financing costs 3.2 
Amortization of debt issuance costs0.9 0.8 
Gain on previously held equity interests from combination of business(32.7) 
Unrealized gain on equity securities measured at fair value(163.0) 
Change in deferred income taxes32.6 (1.0)
Change in accounts receivable and long-term financing receivables, net33.7 61.5 
Change in other operating assets and liabilities(115.6)(18.6)
Net cash provided by operating activities41.3 163.3 
Cash flows from investing activities:
Cash paid for acquisitions, net of cash received(184.9) 
Payments for additions to property, plant and equipment(12.9)(11.0)
Proceeds from sale of asset0.2  
Cash paid for equity investments (5.8)(4.6)
Net cash used in investing activities(203.4)(15.6)
Cash flows from financing activities:
Proceeds from issuance of long-term debt 1,586.5 
Repayment of long-term debt (1,400.0)
Payment for debt issuance costs (1.2)
Payment of common stock cash dividend(4.0) 
Purchase of treasury stock(257.0) 
Net borrowings (repayments) of short-term borrowings0.4 (4.0)
Net transfers to Former Parent (31.5)
Proceeds from stock option exercises  1.5 
Acquisition of noncontrolling interest (1.9)
Other financing activities(3.0)(3.9)
Net cash provided by (used in) financing activities(263.6)145.5 
Effect of exchange rate changes on cash and cash equivalents(1.8)(3.4)
Net change in cash and cash equivalents(427.5)289.8 
Beginning balance of cash and cash equivalents572.6 380.5 
Ending balance of cash and cash equivalents$145.1 $670.3 
See the accompanying Notes to the Consolidated Condensed Financial Statements.


8




VONTIER CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(unaudited)
NOTE 1. BUSINESS OVERVIEW AND BASIS OF PRESENTATION

Nature of Business
Vontier Corporation (“Vontier,” the “Company,” “we,” “us,” or “our”) is a global industrial technology company that focuses on critical technical equipment, components, software and services for manufacturing, repair, and servicing in the mobility infrastructure industry worldwide. The Company supplies a wide range of mobility technologies and diagnostics and repair technologies solutions spanning advanced environmental sensors; fueling equipment; field payment hardware; point-of sale, workflow and monitoring software; vehicle tracking and fleet management; software solutions for traffic light control; and vehicle mechanics’ and technicians’ equipment. The Company markets its products and services to retail and commercial fueling operators, convenience store and in-bay car wash operators, tunnel car wash businesses, commercial vehicle repair businesses, municipal governments and public safety entities and fleet owners/operators on a global basis.
Vontier operates through one reportable segment comprised of two operating segments: (i) mobility technologies, which is a leading worldwide provider of solutions and services focused on fuel dispensing, remote fuel management, point-of-sale and payment systems, environmental compliance, workflow software and control solutions, vehicle tracking and fleet management (“telematics”) and traffic management (“smart city solutions”), and (ii) diagnostics and repair technologies, which manufactures and distributes vehicle repair tools, toolboxes and automotive diagnostic equipment and software and a full line of wheel-service equipment. Given the interrelationships of the products, technologies and customers and the resulting similar long-term economic characteristics, we meet the aggregation criteria and have combined our two operating segments into a single reportable segment.

Basis of Presentation and Unaudited Interim Financial Information
The accompanying Consolidated Condensed Financial Statements present our historical financial position, results of operations, changes in equity and cash flows in accordance with generally accepted accounting principles in the United States of America (“GAAP”) and are unaudited.
The interim Consolidated Condensed Financial Statements include the accounts of the Company and its subsidiaries and affiliates in which the Company has a controlling financial interest or is the primary beneficiary. All intercompany accounts and transactions have been eliminated upon consolidation.
In the opinion of the Company’s management, all adjustments of a normal recurring nature necessary for a fair presentation have been reflected. Certain financial information that is normally included in annual financial statements prepared in accordance with GAAP, but that is not required for interim reporting purposes, has been omitted. The accompanying interim Consolidated Condensed Financial Statements and the related notes should be read in conjunction with the Company’s Consolidated and Combined Financial Statements and related notes included in the Company’s 2021 Annual Report on Form 10-K.
The Consolidated Condensed Financial Statements also reflect the impact of noncontrolling interests. Noncontrolling interests do not have a significant impact on our consolidated results of operations, therefore net earnings and net earnings per share attributable to noncontrolling interests are not presented separately in our Consolidated Condensed Statements of Earnings and Comprehensive Income. Net earnings attributable to noncontrolling interests have been reflected in selling, general and administrative expenses (“SG&A”) and were insignificant in all periods presented.

Recently Issued Accounting Standards

In March 2020, the FASB issued Accounting Standards Update (“ASU”) No. 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting and in January 2021 issued ASU No. 2021-01, Reference Rate Reform (Topic 848): Scope. These ASUs provide temporary optional expedients and exceptions to existing guidance on contract modifications and hedge accounting to facilitate the market transition from existing reference rates, such as the London Interbank Offered Rate (“LIBOR”) which is being phased out beginning at the end of 2021, to alternate reference rates, such as the Secured Overnight Financing Rate. These standards were effective upon issuance and allowed application to contract changes as early as January 1, 2020. These provisions may impact the Company as contract modifications and other changes occur during the LIBOR transition period. The Company continues to evaluate the optional relief guidance provided
9




within these ASUs, has reviewed its debt securities and continues to evaluate commercial contracts that may utilize LIBOR as the reference rate. We will continue the assessment and monitor regulatory developments during the LIBOR transition period.

In March 2022, the FASB issued ASU No. 2022-02, Financial Instruments – Credit Losses (Topic 326) – Troubled Debt Restructurings and Vintage Disclosures, which requires enhanced disclosure of certain loan refinancings and restructurings by creditors when a borrower is experiencing financial difficulty while eliminating certain current recognition and measurement accounting guidance. This ASU also requires the disclosure of current-period gross write-offs by year of origination for financing receivables and net investments in leases. ASU No. 2022-02 is effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years; this ASU allows for early adoption in any interim period after issuance of the update. The Company is currently assessing the impact this ASU will have on its consolidated financial statements.

NOTE 2. ACQUISITIONS

DRB Systems, LLC

On September 13, 2021, the Company acquired all of the outstanding equity interests of DRB Systems, LLC (“DRB”), a leading provider of point of sale, workflow software and control solutions to the car wash industry, for $955.8 million in cash. This acquisition aligns with the Company’s portfolio diversification strategy and enables opportunities in new end markets. With this acquisition, the Company expects to grow its retail solutions portfolio.

The acquisition of DRB was accounted for as a business combination and, accordingly, the assets acquired and the liabilities assumed have been recorded at their respective fair values as of the acquisition date. The goodwill is attributable to the workforce of the acquired business, future market opportunities and the expected synergies with the Company’s existing operations. The majority of goodwill derived from this acquisition is expected to be deductible for tax purposes.

The purchase price allocation has not been finalized as the analysis of the assets and liabilities acquired has not been completed. The procedures to finalize may result in further adjustments to our purchase accounting that could result in additional measurement period adjustments, which could have a material effect on the consolidated financial statements. The accounting for the acquisition will be completed no later than one year from the acquisition date, in accordance with GAAP.

The Company’s estimate of the purchase price allocation is as follows:

($ in millions)Preliminary Purchase Price AllocationMeasurement Period AdjustmentsAdjusted Preliminary Purchase Price AllocationWeighted Average Amortization Period
Accounts receivable$17.3 $(3.1)$14.2 
Inventories21.0 — 21.0 
Prepaid and other current assets3.8 — 3.8 
Technology142.1 0.5 142.6 9.0
Customer relationships227.0 — 227.0 11.0
Trade names36.0 — 36.0 14.0
Goodwill587.4 (2.5)584.9 
Other assets14.9 0.1 15.0 
Trade accounts payable(5.8)— (5.8)
Accrued expenses and other current liabilities(44.6)1.7 (42.9)
Other long-term liabilities(43.6)3.6 (40.0)
Purchase price, net of cash acquired$955.5 $0.3 $955.8 

To determine the fair value of the acquired intangible assets included above, management utilized significant unobservable inputs (Level 3 in the fair value hierarchy) and was required to make judgements and estimates about future results such as revenues, margin, net working capital and other valuation assumptions such as useful lives, royalty rates, attrition rates and discount rates. These assumptions are forward looking and could be affected by future economic and market conditions.
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Driivz

On February 7, 2022, the Company acquired the remaining 81% of the outstanding shares of Driivz Ltd. (“Driivz”) for $152.6 million, net of cash received. Driivz, which is based in Israel, is a cloud-based subscription software platform supporting electric vehicle charging infrastructure (“EVCI”) providers with operations management, energy optimization, billing and roaming capabilities, as well as driver self-service apps. The acquisition of Driivz accelerates the Company’s portfolio diversification and e-mobility strategies and positions the Company to capitalize on the global EVCI market opportunities.

The acquisition of Driivz was accounted for as a business combination and, accordingly, the assets acquired and the liabilities assumed have been recorded at their respective fair values as of the acquisition date. The consideration paid was allocated as follows: (i) $90.0 million to definite-lived intangible assets consisting of developed technology, customer relationships and a trade name with a weighted average amortization period of approximately 9 years, (ii) $130.9 million to goodwill and (iii) $25.3 million to other net liabilities. The goodwill is attributable to the workforce of the acquired business, future market opportunities and the expected synergies with the Company’s existing operations. The majority of the goodwill derived from this acquisition is not expected to be deductible for tax purposes.

The carrying value of the Company’s approximately 19% interest in Driivz prior to the acquisition was $10.3 million, which historically was carried at cost. In connection with the acquisition, this investment was remeasured to a fair value of $43.0 million resulting in the recognition of an aggregate noncash gain of $32.7 million during the first quarter of 2022, which was included in Gain on previously held equity interests from combination of business in the Company’s Consolidated Condensed Statements of Earnings and Comprehensive Income. The preliminary fair value of the historical cost method investment was determined using a market approach. The key assumptions and estimates utilized in this approach included market data and market multiples as well as future levels of revenue growth and operating margins.

Acquisition-related costs related to Driivz are included in Selling, general and administrative expenses in the Consolidated Condensed Statement of Earnings and were $0.8 million.

The Company has not disclosed post-acquisition or pro-forma revenue and earnings attributable to Driivz as it did not have a material effect on the Company’s results.

The purchase price allocation has not been finalized for Driivz as the analysis of the assets acquired and liabilities assumed has not been completed. The procedures to finalize may result in further adjustments to our purchase accounting that could result in additional measurement period adjustments, which could have a material effect on the consolidated financial statements. The accounting for the acquisition will be completed no later than one year from the acquisition date, in accordance with GAAP.

To determine the preliminary fair value of the acquired intangible assets included above for Driivz, management utilized significant unobservable inputs (Level 3 in the fair value hierarchy). The assumptions used are forward looking and could be affected by future economic and market conditions.
NOTE 3. FINANCING AND TRADE RECEIVABLES
The Company’s financing receivables are comprised of commercial purchase security agreements with the Company’s end customers (“PSAs”) and commercial loans to the Company’s franchisees (“Franchisee Notes”). Financing receivables are generally secured by the underlying tools and equipment financed.
PSAs are installment sales contracts originated between the franchisee and technicians or independent shop owners which enable these customers to purchase tools and equipment on an extended-term payment plan. PSA payment terms are generally up to five years. Upon origination, the Company assumes the PSA by crediting the franchisee’s trade accounts receivable. As a result, originations of PSAs are non-cash transactions. The Company records PSAs at amortized cost.
Franchisee Notes have payment terms of up to 10 years and include financing to fund business startup costs including: (i) installment loans to franchisees used generally to finance inventory, equipment, and franchise fees; and (ii) lines of credit to finance working capital, including additional purchases of inventory.
Revenues associated with the Company’s interest income related to financing receivables are recognized to approximate a constant effective yield over the contract term. Accrued interest is included in Accounts receivable less allowance for credit losses and is insignificant as of April 1, 2022 and December 31, 2021.
Product sales to franchisees and the related financing income is included in Cash flows from operating activities in the accompanying Consolidated Condensed Statements of Cash Flows.
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The components of financing receivables with payments due in less than twelve months that are recorded in Accounts receivable less allowance for credit losses on the Consolidated Condensed Balance Sheets were as follows:
($ in millions)April 1, 2022December 31, 2021
Gross current financing receivables:
PSAs$96.8 $98.4 
Franchisee Notes15.4 15.5 
Current financing receivables, gross$112.2 $113.9 
Allowance for credit losses:
PSAs$16.1 $16.9 
Franchisee Notes6.6 6.5 
Total allowance for credit losses22.7 23.4 
Total current financing receivables, net$89.5 $90.5 
Net current financing receivables:
PSAs, net$80.7 $81.5 
Franchisee Notes, net8.8 9.0 
Total current financing receivables, net$89.5 $90.5 

The components of financing receivables with payments due beyond one year were as follows:

($ in millions)April 1, 2022December 31, 2021
Gross long-term financing receivables:
PSAs$220.5 $219.7 
Franchisee Notes63.6 64.5 
Long-term financing receivables, gross$284.1 $284.2 
Allowance for credit losses:
PSAs$35.5 $37.2 
Franchisee Notes5.3 5.3 
Total allowance for credit losses40.8 42.5 
Total long-term financing receivables, net$243.3 $241.7 
Net long-term financing receivables:
PSAs, net$185.0 $182.5 
Franchisee Notes, net58.3 59.2 
Total long-term financing receivables, net$243.3 $241.7 

Net deferred origination costs were insignificant as of April 1, 2022 and December 31, 2021. As of both April 1, 2022 and December 31, 2021, we had a net unamortized discount on our financing receivables of $16.7 million.
It is the Company’s general practice to not engage in contract or loan modifications of existing arrangements for troubled debt restructurings. In limited instances, the Company may modify certain impaired receivables with customers in bankruptcy or other legal proceedings, or in the event of significant natural disasters. Restructured financing receivables as of April 1, 2022 and December 31, 2021 were insignificant.
Credit score and distributor tenure are the primary indicators of credit quality for the Company’s financing receivables. Depending on the contract, payments for financing receivables are due on a monthly or weekly basis. Weekly payments are converted into a monthly equivalent for purposes of calculating delinquency. Delinquencies are assessed at the end of each month following the monthly equivalent due date and are considered delinquent once past due.
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The amortized cost basis of PSAs and Franchisee Notes by origination year as of April 1, 2022, is as follows:
($ in millions)20222021202020192018PriorTotal
PSAs
Credit Score:
Less than 400$5.3 $14.7 $6.9 $4.0 $1.6 $0.6 $33.1 
400-5997.8 20.1 11.5 5.9 2.7 1.0 49.0 
600-79917.4 41.8 22.2 11.4 4.8 1.7 99.3 
800+26.7 58.6 29.0 14.2 5.9 1.5 135.9 
Total PSAs$57.2 $135.2 $69.6 $35.5 $15.0 $4.8 $317.3 
Franchisee Notes
Active distributors$9.0 $26.2 $11.3 $10.7 $5.5 $6.3 $69.0 
Separated distributors0.1 0.3 0.8 2.1 1.6 5.1 10.0 
Total Franchisee Notes$9.1 $26.5 $12.1 $12.8 $7.1 $11.4 $79.0 

Past Due
PSAs are considered past due when a contractual payment has not been made. If a customer is making payments on its account, interest will continue to accrue. The table below sets forth the aging of the Company’s PSA balances as of:
($ in millions)30-59 days past due60-90 days past dueGreater than 90 days past dueTotal past dueTotal not considered past dueTotalGreater than 90 days past due and accruing interest
April 1, 2022$3.1 $1.6 $6.1 $10.8 $306.5 $317.3 $6.1 
December 31, 20213.3 1.7 6.5 11.5 306.6 318.1 6.5 
Franchisee Notes are considered past due when payments have not been made for 21 days after the due date. Past due Franchisee Notes (where the franchisee had not yet separated) were insignificant as of April 1, 2022 and December 31, 2021.
Uncollectable Status
PSAs are deemed uncollectable and written off when they are both contractually delinquent and no payment has been received for 180 days.
Franchisee Notes are deemed uncollectable and written off after a distributor separates and no payments have been received for one year.
The Company stops accruing interest and other fees associated with financing receivables when (i) a customer is placed in uncollectable status and repossession efforts have begun; (ii) upon receipt of notification of bankruptcy; (iii) upon notification of the death of a customer; or (iv) other instances in which management concludes collectability is not reasonably assured.
Allowance for Credit Losses Related to Financing Receivables
The Company calculates the allowance for credit losses considering several factors, including the aging of its financing receivables, historical credit loss and portfolio delinquency experience and current economic conditions. The Company also evaluates financing receivables with identified exposures, such as customer defaults, bankruptcy or other events that make it unlikely it will recover the amounts owed to it. In calculating such reserves, the Company evaluates expected cash flows, including estimated proceeds from disposition of collateral, and calculates an estimate of the potential loss and the probability of loss. When a loss is considered probable on an individual financing receivable, a specific reserve is recorded.
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The following is a rollforward of the PSAs and Franchisee Notes components of the Company’s allowance for credit losses related to financing receivables as of:
April 1, 2022December 31, 2021
($ in millions)PSAsFranchisee NotesTotalPSAsFranchisee NotesTotal
Allowance for credit losses, beginning of year$54.1 $11.8 $65.9 $54.3 $12.5 $66.8 
Provision for credit losses5.7 1.3 7.0 24.9 4.2 29.1 
Write-offs(8.7)(1.2)(9.9)(27.5)(5.6)(33.1)
Recoveries of amounts previously charged off0.5  0.5 2.4 0.7 3.1 
Allowance for credit losses, end of period$51.6 $11.9 $63.5 $54.1 $11.8 $65.9 
The ending balance as of April 1, 2022 of $63.5 million is included in the Consolidated Condensed Balance Sheets in Accounts receivable less allowance for credit losses and Long-term financing receivables less allowance for credit losses in the amounts of $22.7 million and $40.8 million, respectively. The ending balance as of December 31, 2021 of $65.9 million is included in the Consolidated Condensed Balance Sheets in Accounts receivable less allowance for credit losses and Long-term financing receivables less allowance for credit losses in the amounts of $23.4 million and $42.5 million, respectively.
Allowance for Credit Losses Related to Trade Accounts Receivables
The following is a rollforward of the allowance for credit losses related to the Company’s trade accounts receivables (excluding financing receivables) and the Company’s trade accounts receivable cost basis as of:
($ in millions)April 1, 2022December 31, 2021
Cost basis of trade accounts receivable$359.9 $406.3 
Allowance for credit losses balance, beginning of year15.5 18.1 
Provision for credit losses0.9 7.7 
Write-offs(1.2)(10.2)
Foreign currency and other (0.1)
Allowance for credit losses balance, end of period15.2 15.5 
Net trade accounts receivable balance$344.7 $390.8 

NOTE 4. GOODWILL
The following is a rollforward of our carrying value of goodwill:
($ in millions)
Balance, December 31, 2021$1,667.2 
Measurement period adjustments for prior period acquisition0.2 
Addition to goodwill for current year acquisitions152.6 
FX translation(10.2)
Balance, April 1, 2022$1,809.8 

Accumulated impairment charges were $85.3 million as of April 1, 2022 and December 31, 2021. No impairment charges were recorded during the three months ended April 1, 2022.
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NOTE 5. FINANCING
The Company had the following debt outstanding as of:
($ in millions)April 1, 2022December 31, 2021
Short-term borrowings:
India Credit Facility$1.1 $1.5 
Other short-term borrowings and bank overdrafts3.1 2.2 
Total short-term borrowings$4.2 $3.7 
Long-term debt:
Two-Year Term Loans due 2023$600.0 $600.0 
Three-Year Term Loans due 2024400.0 400.0 
1.800% senior unsecured notes due 2026
500.0 500.0 
2.400% senior unsecured notes due 2028
500.0 500.0 
2.950% senior unsecured notes due 2031
600.0 600.0 
Total long-term debt2,600.0 2,600.0 
Less: discounts and debt issuance costs(15.5)(16.2)
Total long-term debt, net$2,584.5 $2,583.8 
Debt issuance costs that have been netted against the aggregate principal amounts of the components of debt in the short-term borrowings section above are immaterial. Given the nature of the short-term borrowings, the carrying value approximates fair value at both April 1, 2022 and December 31, 2021.
Credit Facilities
Revolving Credit Facility

On April 28, 2021, the Company refinanced its existing credit agreement. The amended and restated credit agreement (the “A&R Credit Agreement”) extended the term of the $750.0 million senior unsecured multi-currency revolving credit facility (the “Revolving Credit Facility”) from September 29, 2023 to April 28, 2026 and reduced the interest rate.

The Revolving Credit Facility bears interest at a variable rate equal to LIBOR plus a ratings-based margin which was 117.5 basis points as of April 1, 2022.

There were no amounts outstanding under the Revolving Credit Facility as of April 1, 2022.

Three-Year Term Loans Due 2024

The A&R Credit Agreement also extended the term of the $400.0 million Three-Year Term Loans Due 2024 from October 6, 2023 to October 28, 2024 and reduced the interest rate. The Three-Year Term Loans bear interest at a variable rate equal to LIBOR plus a ratings-based margin which was 112.5 basis points as of April 1, 2022. The interest rate was 1.58% per annum as of April 1, 2022. We are not obligated to make repayments prior to the maturity date. There was no material difference between the carrying value and the estimated fair value of the debt outstanding.
Two-Year Term Loans Due 2023
The Two-Year Term Loans Due 2023 bear interest at a variable rate equal to LIBOR plus a ratings-based margin which was 75.0 basis points as of April 1, 2022. The interest rate was 1.21% per annum as of April 1, 2022. The Two-Year Term Loans Due 2023 mature on September 13, 2023. We are not obligated to make repayments prior to the maturity date. There was no material difference between the carrying value and the estimated fair value of the debt outstanding.
The A&R Credit Agreement requires, among others, that we maintain certain financial covenants, and we were in compliance with all of these covenants as of April 1, 2022.
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Senior Unsecured Notes
On March 10, 2021, we completed the private placement of each of the following series of senior unsecured notes (collectively, the “Notes”) to qualified institutional buyers under rule 144A of the Securities Act of 1933, as amended (the “Securities Act”) and outside the United States to non-U.S. persons in compliance with Regulation S under the Securities Act:
$500.0 million aggregate principal amount of senior notes due April 1, 2026 (the “2026 Notes”) issued at 99.855% of their principal amount and bearing interest at the rate of 1.800% per year;
$500.0 million aggregate principal amount of senior notes due April 1, 2028 (the “2028 Notes”) issued at 99.703% of their principal amount and bearing interest at the rate of 2.400% per year; and
$600.0 million aggregate principal amount of senior notes due April 1, 2031 the (the “2031 Notes”) issued at 99.791% of their principal amount and bearing interest at the rate of 2.950% per year.
In connection with the issuance of the Notes, we entered into a registration rights agreement, pursuant to which we are obligated to use commercially reasonable efforts to file with the U.S. Securities and Exchange Commission, and cause to be declared effective within 365 days, a registration statement with respect to an offer to exchange (the “Registered Exchange Offer”) each series of Notes for registered notes with terms that are substantially identical to the Notes of each series. We completed the Registered Exchange Offer on January 18, 2022. Substantially all of the Notes were tendered and exchanged for the corresponding Registered Notes in the Registered Exchange Offer.
The Registered Notes are fully and unconditionally guaranteed (the “Guarantees”), on a joint and several basis, by Gilbarco Inc. and Matco Tools Corporation, two of our wholly-owned subsidiaries (the “Guarantors”). Interest on the Registered Notes is payable semi-annually in arrears on April 1 and October 1 of each year, and commenced on October 1, 2021. The Registered Notes and the Guarantees are the Company’s and the Guarantors’ general senior unsecured obligations.
The Registered Notes contain customary covenants, including limits on the incurrence of certain secured debt and sale-leaseback transactions. None of these covenants are considered restrictive to our operations and as of April 1, 2022 we were in compliance with all of the covenants under the Registered Notes.
The estimated fair value of the Registered Notes was $1.4 billion as of April 1, 2022. The fair value of the Registered Notes was determined based upon Level 2 inputs including indicative prices based upon observable market data. The difference between the fair value and the carrying amounts of the Notes may be attributable to changes in market interest rates and/or our credit ratings subsequent to the incurrence of the borrowing.
Short-term Borrowings
India Credit Facility
The Company has a credit facility with Citibank, N.A. with borrowing capacity of up to 850.0 million Indian Rupees (or $11.2 million as of April 1, 2022) to facilitate working capital needs for certain businesses in India. As of April 1, 2022, the Company had $10.1 million borrowing capacity remaining. The effective interest rate associated with outstanding borrowings was 5.20% as of April 1, 2022.
Other
As of April 1, 2022, certain of our businesses were in a cash overdraft position, and such overdrafts are included in Short-term borrowings on the Consolidated Condensed Balance Sheet. Additionally, the Company has other short-term borrowing arrangements with various banks to facilitate short-term cash flow requirements in certain countries also included in Short-term borrowings on the Consolidated Condensed Balance Sheet.

Interest payments associated with the above short-term borrowings were not significant for the three months ended April 1, 2022 and April 2, 2021.
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NOTE 6. ACCUMULATED OTHER COMPREHENSIVE INCOME

Foreign currency translation adjustments are generally not adjusted for income taxes as they relate to indefinite investments in non-U.S. subsidiaries.
The changes in Accumulated other comprehensive income by component are summarized below:
($ in millions)Foreign Currency Translation Adjustments
Other Adjustments (a)
Total
For the Three Months Ended April 1, 2022:
Balance, December 31, 2021$184.9 $(3.2)$181.7 
Other comprehensive income (loss) before reclassifications, net of income taxes(15.1) (15.1)
Amounts reclassified from accumulated other comprehensive income:
Increase 0.1 0.1 
Income tax impact   
Amounts reclassified from accumulated other comprehensive income, net of income taxes 0.1 
(b)
0.1 
Net current period other comprehensive income (loss), net of income taxes(15.1)0.1 (15.0)
Balance, April 1, 2022$169.8 $(3.1)$166.7 
For the Three Months Ended April 2, 2021:
Balance, December 31, 2020$198.3 $(4.5)$193.8 
Other comprehensive income (loss) before reclassifications, net of income taxes(15.7)0.1 (15.6)
Net current period other comprehensive income (loss), net of income taxes(15.7)0.1 (15.6)
Balance, April 2, 2021$182.6 $(4.4)$178.2 
(a) Includes balances relating to defined benefit plans and supplemental executive retirement plans.
(b) This accumulated other comprehensive income component is included in the computation of net periodic pension cost.
NOTE 7. SALES
Revenue is recognized when control of promised products or services is transferred to customers in an amount that reflects the consideration we expect to be entitled to in exchange for those products or services. 
Contract Assets
In certain circumstances, we record contract assets which include unbilled amounts typically resulting from sales under contracts when revenue recognized exceeds the amount billed to the customer, and right to payment is subject to contractual performance obligations and not only subject to the passage of time. Contract assets were $12.1 million and $10.4 million as of April 1, 2022 and December 31, 2021, respectively, and are included in Prepaid expenses and other current assets in the accompanying Consolidated Condensed Balance Sheets.
Contract Costs
We incur direct incremental costs to obtain certain contracts, typically sales-related commissions and costs associated with assets used by our customers in certain service arrangements. As of April 1, 2022 and December 31, 2021, we had $81.0 million and $78.4 million, respectively, in net revenue-related capitalized contract costs primarily related to assets used by our customers in certain software contracts, which are recorded in Prepaid expenses and other current assets, for the current portion, and Other assets, for the noncurrent portion, in the accompanying Consolidated Condensed Balance Sheets. These assets have estimated useful lives between 3 and 5 years and are amortized on a straight-line basis.
Impairment losses recognized on our revenue-related contract assets were insignificant during the three months ended April 1, 2022 and April 2, 2021.
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Contract Liabilities
The Company’s contract liabilities consist of deferred revenue generally related to post contract support (“PCS”) and extended warranty sales. In these arrangements, the Company generally receives up-front payment and recognizes revenue over the support term of the contracts. Deferred revenue is classified as current or noncurrent based on the timing of when revenue is expected to be recognized and is included in Accrued expenses and other current liabilities and Other long-term liabilities, respectively, in the accompanying Consolidated Condensed Balance Sheets.
The Company’s contract liabilities consisted of the following:
($ in millions)April 1, 2022December 31, 2021
Deferred revenue - current$140.5 $133.7 
Deferred revenue - noncurrent58.4 56.3 
Total contract liabilities$198.9 $190.0 
During the three months ended April 1, 2022, we recognized $51.5 million of revenue related to the Company’s contract liabilities at December 31, 2021. The change in contract liabilities from December 31, 2021 to April 1, 2022 was primarily due to the timing of cash receipts and sales of PCS and extended warranty services as well as the impact of the acquisition of Driivz and inclusion of the acquired contract liabilities.
Remaining Performance Obligations
Remaining performance obligations represent the transaction price of firm, noncancelable orders and the annual contract value for software-as-a-service contracts with expected customer delivery dates beyond one year from April 1, 2022 for which work has not been performed. The Company has excluded performance obligations with an original expected duration of one year or less. Performance obligations as of April 1, 2022 are $371.8 million, the majority of which are related to the annual contract value for software-as-a-service contracts. The Company expects approximately 35 percent of the remaining performance obligations will be fulfilled within the next two years, 70 percent within the next three years, and substantially all within four years.
18




Disaggregation of Revenue
The Company disaggregates revenue from contracts with customers by sales of products and services, geographic location, solution and major product group, as it best depicts how the nature, amount, timing, and uncertainty of revenue and cash flows are affected by economic factors.
Disaggregation of revenue was as follows:
Three Months Ended
($ in millions)April 1, 2022April 2, 2021
Sales:
Sales of products$670.3 $644.6 
Sales of services77.8 62.8 
Total$748.1 $707.4 
Geographic:
North America (a)
$559.4 $508.5 
Western Europe63.7 55.0 
High growth markets93.9 111.8 
Rest of world31.1 32.1 
Total$748.1 $707.4 
Solution:
Retail fueling hardware$180.6 $196.5 
Auto repair177.4 164.7 
Service and other recurring revenue126.9 123.9 
Environmental61.7 61.6 
Retail solutions122.5 91.4 
Software-as-a-service45.0 47.0 
Alternative energy (b)
21.3 9.7 
Smart cities10.3 8.3 
Other (b)
2.4 4.3 
Total$748.1 $707.4