Vontier Corp [VNT] Filings

10-Q 1 vnt-20240628.htm 10-Q vnt-20240628

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

________________________________________________

FORM 10-Q


(Mark One)
x			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 28, 2024


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, including zip code)

Registrant’s telephone number, including area code: (984) 275-6000

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common stock, par value $0.0001 per share	VNT	New 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 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 x 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 (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x 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 filer

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

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 x

As of July 29, 2024, there were 153.7 million shares of the Registrant’s common stock outstanding.

TABLE OF CONTENTS


		Page
PART I	FINANCIAL INFORMATION
Item 1.	Financial Statements (unaudited)	3
	Consolidated Condensed Balance Sheets as of June 28 , 2 024 and December 31, 2023	3
	Consolidated Condensed Statements of Earnings and Comprehensive Income for the Three and Six Months Ended June 28 , 2024 and June 30 , 2023	4
	Consolidated Condensed Statements of Changes in Equity for the Three and S ix Months Ended June 28 , 2024 and June 30 , 2023	5
	Consolidated Condensed Statements of Cash Flows for the Six M onths Ended June 28 , 2024 and June 3 0 , 2023	7
	Notes to the Consolidated Condensed Financial Statements	8
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	23
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	33
Item 4.	Controls and Procedures	33

PART II	OTHER INFORMATION
Item 1.	Legal Proceedings	34
Item 1A.	Risk Factors	34
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	34
Item 3.	Defaults Upon Senior Securities	34
Item 4.	Mine Safety Disclosures	34
Item 5.	Other Information	35
Item 6.	Exhibits	35
	Signatures	36

PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

VONTIER CORPORATION AND SUBSIDIARIES

CONSOLIDATED CONDENSED BALANCE SHEETS

(in millions, except per share amounts)


	June 28, 2024		December 31, 2023
	(unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	331.3	$	340.9
Accounts receivable, less allowance for credit losses of $35.3 million and $35.7 million as of June 28, 2024 and December 31, 2023, respectively	496.8		497.5
Inventories	323.1		296.6
Prepaid expenses and other current assets	141.4		141.4
Current assets held for sale	—		56.1
Total current assets	1,292.6		1,332.5
Property, plant and equipment, net	115.9		102.3
Operating lease right-of-use assets	45.7		47.0
Long-term financing receivables, less allowance for credit losses of $32.9 million and $33.7 million as of June 28, 2024 and December 31, 2023, respectively	287.2		276.2
Other intangible assets, net	526.5		568.3
Goodwill	1,728.9		1,742.4
Other assets	239.1		225.3
Total assets	$	4,235.9	$	4,294.0
LIABILITIES AND EQUITY
Current liabilities:
Short-term borrowings and current portion of long-term debt	$	5.9	$	106.6
Trade accounts payable	367.7		366.8
Current operating lease liabilities	14.7		14.0
Accrued expenses and other current liabilities	378.3		435.8
Current liabilities held for sale	—		32.1
Total current liabilities	766.6		955.3
Long-term operating lease liabilities	36.9		37.1
Long-term debt	2,190.4		2,189.0
Other long-term liabilities	217.7		217.0
Total liabilities	3,211.6		3,398.4
Commitments and Contingencies (Note 9)
Equity:
Preferred stock, 15.0 million shares authorized; no par value; no shares issued and outstanding	—		—
Common stock, 2.0 billion shares authorized; $0.0001 par value; 171.8 million and 170.8 million shares issued, and 153.8 million and 154.3 million outstanding as of June 28, 2024 and December 31, 2023, respectively	—		—
Treasury stock, at cost, 18.0 million and 16.5 million shares as of June 28, 2024 and December 31, 2023, respectively	(463.8)		(403.4)
Additional paid-in capital	70.6		56.8
Retained earnings	1,331.3		1,132.1
Accumulated other comprehensive income	78.0		104.9
Total Vontier stockholders’ equity	1,016.1		890.4
Noncontrolling interests	8.2		5.2
Total equity	1,024.3		895.6
Total liabilities and equity	$	4,235.9	$	4,294.0

See the accompanying Notes to the Consolidated Condensed Financial Statements.

VONTIER CORPORATION AND SUBSIDIARIES

CONSOLIDATED CONDENSED STATEMENTS OF EARNINGS AND COMPREHENSIVE INCOME

(in millions, except per share amounts)

(unaudited)


	Three Months Ended				Six Months Ended
	June 28, 2024		June 30, 2023		June 28, 2024		June 30, 2023
Sales	$	696.4	$	764.4	$	1,452.2	$	1,540.8
Operating costs and expenses:
Cost of sales, excluding amortization of acquisition-related intangible assets	(360.9)		(416.3)		(744.7)		(839.7)
Selling, general and administrative expenses	(156.3)		(166.9)		(321.7)		(324.4)
Research and development expenses	(45.1)		(40.3)		(89.6)		(81.3)
Amortization of acquisition-related intangible assets	(20.0)		(20.3)		(40.0)		(41.0)
Operating profit	114.1		120.6		256.2		254.4
Non-operating income (expense), net:
Interest expense, net	(18.4)		(23.9)		(37.3)		(47.9)
(Loss) gain on sale of business	(2.6)		34.1		37.2		34.1
Other non-operating expense, net	(1.1)		(0.5)		(1.3)		(1.4)
Earnings before income taxes	92.0		130.3		254.8		239.2
Provision for income taxes	(21.9)		(33.0)		(47.9)		(59.1)
Net earnings	$	70.1	$	97.3	$	206.9	$	180.1

Net earnings per share:
Basic	$	0.45	$	0.63	$	1.34	$	1.16
Diluted	$	0.45	$	0.62	$	1.33	$	1.15
Weighted average shares outstanding:
Basic	154.4		155.4		154.4		155.5
Diluted	155.5		156.3		155.5		156.2

Net earnings	$	70.1	$	97.3	$	206.9	$	180.1
Other comprehensive income (loss), net of income taxes:
Foreign currency translation adjustments	(4.7)		(8.3)		(27.0)		(12.1)
Other adjustments	—		—		0.1		0.1
Total other comprehensive loss, net of income taxes	(4.7)		(8.3)		(26.9)		(12.0)
Comprehensive income	$	65.4	$	89.0	$	180.0	$	168.1

See the accompanying Notes to the Consolidated Condensed Financial Statements.

VONTIER CORPORATION AND SUBSIDIARIES

CONSOLIDATED CONDENSED STATEMENTS OF CHANGES IN EQUITY

(in millions, except per share amounts)

(unaudited)


	Common Stock			Treasury Stock			Additional Paid-In Capital		Retained Earnings		Accumulated Other Comprehensive Income		Noncontrolling Interests		Total
	Shares	Amount		Shares	Amount
Balance, December 31, 2023	170.8	$	—	16.5	$	(403.4)	$	56.8	$	1,132.1	$	104.9	$	5.2	$	895.6
Net earnings	—	—		—	—		—		136.8		—		—		136.8
Dividends on common stock ($0.025 per share)	—	—		—	—		—		(3.9)		—		—		(3.9)
Other comprehensive loss, net of income taxes	—	—		—	—		—		—		(22.2)		—		(22.2)
Stock-based compensation expense	—	—		—	—		7.0		—		—		2.5		9.5
Common stock-based award activity, net of shares for tax withholding	0.9	—		—	—		2.7		—		—		—		2.7
Purchase of treasury stock	—	—		0.6	(21.9)		—		—		—		—		(21.9)
Other	—	—		—	—		(4.0)		—		—		—		(4.0)
Balance, March 29, 2024	171.7	—		17.1	(425.3)		62.5		1,265.0		82.7		7.7		992.6
Net earnings	—	—		—	—		—		70.1		—		—		70.1
Dividends on common stock ($0.025 per share)	—	—		—	—		—		(3.8)		—		—		(3.8)
Other comprehensive loss, net of income taxes	—	—		—	—		—		—		(4.7)		—		(4.7)
Stock-based compensation expense	—	—		—	—		7.3		—		—		0.6		7.9
Common stock-based award activity, net of shares for tax withholding	0.1	—		—	—		0.8		—		—		—		0.8
Purchase of treasury stock	—	—		0.9	(38.5)		—		—		—		—		(38.5)
Change in noncontrolling interests	—	—		—	—		—		—		—		(0.1)		(0.1)
Balance, June 28, 2024	171.8	$	—	18.0	$	(463.8)	$	70.6	$	1,331.3	$	78.0	$	8.2	$	1,024.3

See the accompanying Notes to the Consolidated Condensed Financial Statements.

VONTIER CORPORATION AND SUBSIDIARIES

CONSOLIDATED CONDENSED STATEMENTS OF CHANGES IN EQUITY (continued)

(in millions, except per share amounts)

(unaudited)


	Common Stock			Treasury Stock			Additional Paid-In Capital		Retained Earnings		Accumulated Other Comprehensive Income		Noncontrolling Interests		Total
	Shares	Amount		Shares	Amount
Balance, December 31, 2022	169.7	$	—	13.7	$	(328.0)	$	27.6	$	770.8	$	106.1	$	3.0	$	579.5
Net earnings	—	—		—	—		—		82.8		—		—		82.8
Dividends on common stock ($0.025 per share)	—	—		—	—		—		(3.9)		—		—		(3.9)
Other comprehensive loss, net of income taxes	—	—		—	—		—		—		(3.7)		—		(3.7)
Stock-based compensation expense	—	—		—	—		6.1		—		—		0.7		6.8
Common stock-based award activity, net of shares for tax withholding	0.5	—		—	—		(3.1)		—		—		—		(3.1)
Purchase of treasury stock	—	—		0.9	(18.4)		—		—		—		—		(18.4)
Balance, March 31, 2023	170.2	—		14.6	(346.4)		30.6		849.7		102.4		3.7		640.0
Net earnings	—	—		—	—		—		97.3		—		—		97.3
Dividends on common stock ($0.025 per share)	—	—		—	—		—		(3.9)		—		—		(3.9)
Other comprehensive loss, net of income taxes	—	—		—	—		—		—		(8.3)		—		(8.3)
Stock-based compensation expense	—	—		—	—		7.0		—		—		1.5		8.5
Common stock-based award activity, net of shares for tax withholding	0.1	—		—	—		0.2		—		—		—		0.2
Purchase of treasury stock	—	—		1.1	(32.1)		—		—		—		—		(32.1)
Change in noncontrolling interests	—	—		—	—		—		—		—		(0.3)		(0.3)
Balance, June 30, 2023	170.3	$	—	15.7	$	(378.5)	$	37.8	$	943.1	$	94.1	$	4.9	$	701.4

See the accompanying Notes to the Consolidated Condensed Financial Statements.

VONTIER CORPORATION AND SUBSIDIARIES

CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS

(in millions)

(unaudited)


	Six Months Ended
	June 28, 2024		June 30, 2023
Cash flows from operating activities:
Net earnings	$	206.9	$	180.1
Non-cash items:
Depreciation expense	22.5		21.7
Amortization of acquisition-related intangible assets	40.0		41.0
Stock-based compensation expense	17.4		15.3
Gain on sale of business	(37.2)		(34.1)








Change in deferred income taxes	(9.2)		(9.3)
Other non-cash items	4.1		1.3
Change in accounts receivable and long-term financing receivables, net	(15.5)		11.5
Change in other operating assets and liabilities	(91.4)		(69.0)
Net cash provided by operating activities	137.6		158.5
Cash flows from investing activities:
Proceeds from sale of business, net of cash provided	68.4		106.8

Payments for additions to property, plant and equipment	(44.0)		(26.1)
Proceeds from sale of property, plant and equipment	1.0		4.3
Cash paid for equity investments	(1.5)		(1.9)
Proceeds from sale of equity securities	—		20.4

Net cash provided by investing activities	23.9		103.5
Cash flows from financing activities:

Repayment of long-term debt	(100.0)		(165.0)
Net (repayments of) proceeds from short-term borrowings	(1.1)		3.8

Payments of common stock cash dividend	(7.7)		(7.8)
Purchases of treasury stock	(59.7)		(50.0)
Proceeds from stock option exercises	13.7		3.1
Other financing activities	(12.7)		(6.7)
Net cash used in financing activities	(167.5)		(222.6)
Effect of exchange rate changes on cash and cash equivalents	(3.6)		0.1
Net change in cash and cash equivalents	(9.6)		39.5
Beginning balance of cash and cash equivalents	340.9		204.5
Ending balance of cash and cash equivalents	$	331.3	$	244.0

See the accompanying Notes to the Consolidated Condensed Financial Statements.

VONTIER CORPORATION AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

(unaudited)

NOTE 1. BUSINESS OVERVIEW AND BASIS OF PRESENTATION

Nature of Business

Vontier Corporation (“Vontier” or the “Company”) is a global industrial technology company uniting productivity, automation and multi-energy technologies to meet the needs of a rapidly evolving, more connected mobility ecosystem. The Company operates through three reportable segments which align to the Company’s three operating segments: (i) Mobility Technologies, which provides digitally enabled equipment and solutions to support efficient operations across the mobility ecosystem, including point-of-sale and payment systems, workflow automation solutions, telematics, data analytics, software platform for electric vehicle charging networks, and integrated solutions for alternative fuel dispensing; (ii) Repair Solutions, which manufactures and distributes aftermarket vehicle repair tools, toolboxes, automotive diagnostic equipment and software through a network of mobile franchisees; and (iii) Environmental & Fueling Solutions, which provides environmental and fueling hardware and software, and aftermarket solutions for global fueling infrastructure. The Company’s Global Traffic Technologies and Coats businesses, which were divested during April 2023 and January 2024, respectively, are presented in Other for periods prior to the divestitures.

Basis of Presentation and Unaudited Interim Financial Information

The accompanying Consolidated Condensed Financial Statements present the Company’s 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 Vontier and its subsidiaries. All intercompany balances and transactions have been eliminated upon consolidation. The Consolidated Condensed Financial Statements also reflect the impact of noncontrolling interests. Noncontrolling interests do not have a significant impact on the Company’s consolidated results of operations, therefore, net earnings and net earnings per share attributable to noncontrolling interests are not presented separately in the Company’s 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.

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 Financial Statements and related notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023 (the “2023 Annual Report on Form 10-K”).

Foreign Currency Translation and Transactions

Exchange rate adjustments resulting from foreign currency transactions are recognized in Net earnings, whereas effects resulting from the translation of financial statements are reflected as a component of Accumulated other comprehensive income within equity. Assets and liabilities of subsidiaries operating outside the United States with a functional currency other than U.S. dollars are translated into U.S. dollars using period-end exchange rates and income statement accounts are translated at weighted average exchange rates. Net foreign currency transaction gains or losses were not material in any of the periods presented.

Reclassifications

Certain prior year amounts have been reclassified to conform to the current year presentation.

Recently Issued Accounting Standards Not Yet Adopted

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures (“ASU 2023-09”), which requires consistent categories and greater disaggregation of information in the rate reconciliation and disaggregation of income taxes paid by jurisdiction. ASU 2023-09 is effective for the Company’s annual financial statements for the year ended December 31, 2025, with early adoption permitted. Prospective application is required, with retrospective application permitted. The Company is currently assessing the impact ASU 2023-09 will have on its consolidated financial statements.

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures (“ASU 2023-07”), which enhances segment disclosures primarily by requiring disclosure of significant segment expenses. ASU 2023-07 is effective for the Company’s annual financial statements for the year ended December 31, 2024, and for its interim financial statements beginning with the first fiscal quarter of the year ended December 31, 2025, with early adoption permitted. Retrospective application is required. The Company is currently assessing the impact ASU 2023-07 will have on its consolidated financial statements.

NOTE 2. FINANCING AND TRADE RECEIVABLES

The Company’s financing receivables are comprised of commercial purchase security agreements originated between the Company’s franchisees and technicians or independent shop owners that are assumed by the Company (“PSAs”) and commercial loans to the Company’s franchisees (“Franchisee Notes”) in the Repair Solutions segment. 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 on the Consolidated Condensed Balance Sheets and was insignificant as of June 28, 2024 and December 31, 2023.

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.

The components of financing receivables with payments due in less than twelve months that are presented in Accounts receivable, less allowance for credit losses on the Consolidated Condensed Balance Sheets were as follows:


($ in millions)	June 28, 2024		December 31, 2023
Gross current financing receivables:
PSAs	$	97.5	$	100.7
Franchisee Notes	24.0		23.1
Current financing receivables, gross	$	121.5	$	123.8

Allowance for credit losses:
PSAs	$	13.4	$	12.8
Franchisee Notes	7.4		7.3
Total allowance for credit losses	$	20.8	$	20.1

Net current financing receivables:
PSAs, net	$	84.1	$	87.9
Franchisee Notes, net	16.6		15.8
Total current financing receivables, net	$	100.7	$	103.7

The components of Long-term financing receivables, less allowance for credit losses, which consists of financing receivables with payments due beyond one year, were as follows:


($ in millions)	June 28, 2024		December 31, 2023
Gross long-term financing receivables:
PSAs	$	256.3	$	245.7
Franchisee Notes	63.8		64.2
Long-term financing receivables, gross	$	320.1	$	309.9

Allowance for credit losses:
PSAs	$	28.0	$	28.7
Franchisee Notes	4.9		5.0
Total allowance for credit losses	$	32.9	$	33.7

Net long-term financing receivables:
PSAs, net	$	228.3	$	217.0
Franchisee Notes, net	58.9		59.2
Total long-term financing receivables, net	$	287.2	$	276.2

As of June 28, 2024 and December 31, 2023, the net unamortized discount on our financing receivables was $18.3 million and $17.6 million, respectively.

Credit score and distributor tenure are the primary indicators of credit quality for the Company’s financing receivables. The amortized cost basis and current period gross write-offs of PSAs and Franchisee Notes by origination year as of and for the six months ended June 28, 2024, is as follows:


($ in millions)	2024		2023		2022		2021		2020		Prior		Total
PSAs
Credit Score:
Less than 400	$	6.7	$	10.7	$	4.6	$	2.4	$	1.0	$	0.1	$	25.5
400-599	17.2		19.6		8.9		4.2		1.9		0.5		52.3
600-799	35.2		40.9		18.4		10.0		3.8		0.9		109.2
800+	60.5		61.5		27.6		12.0		4.5		0.7		166.8
Total PSAs	$	119.6	$	132.7	$	59.5	$	28.6	$	11.2	$	2.2	$	353.8

Franchisee Notes
Active distributors	$	20.5	$	18.3	$	11.9	$	9.6	$	4.6	$	6.8	$	71.7
Separated distributors	—		0.9		3.2		3.9		1.7		6.4		16.1
Total Franchisee Notes	$	20.5	$	19.2	$	15.1	$	13.5	$	6.3	$	13.2	$	87.8

Current Period Gross Write-offs
PSAs	$	0.2	$	8.5	$	7.0	$	3.4	$	1.7	$	0.9	$	21.7
Franchisee Notes	—		0.1		0.6		0.9		0.7		1.5		3.8
Total current period gross write-offs	$	0.2	$	8.6	$	7.6	$	4.3	$	2.4	$	2.4	$	25.5

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 due		60-90 days past due		Greater than 90 days past due		Total past due		Total not considered past due		Total		Greater than 90 days past due and accruing interest
June 28, 2024	$	3.4	$	1.7	$	6.8	$	11.9	$	341.9	$	353.8	$	6.8
December 31, 2023	3.7		1.9		7.2		12.8		333.6		346.4		7.2

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 June 28, 2024 and December 31, 2023.

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.

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:


	June 28, 2024
($ in millions)	PSAs		Franchisee Notes		Total
Allowance for credit losses, beginning of year	$	41.5	$	12.3	$	53.8
Provision for credit losses	20.7		3.8		24.5
Write-offs	(21.7)		(3.8)		(25.5)
Recoveries of amounts previously charged off	0.9		—		0.9
Allowance for credit losses, end of period	$	41.4	$	12.3	$	53.7

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)	June 28, 2024
Cost basis of trade accounts receivable	$	410.6

Allowance for credit losses balance, beginning of year	15.6
Provision for credit losses	1.2
Write-offs	(2.0)

Foreign currency and other	(0.3)
Allowance for credit losses balance, end of period	14.5
Net trade accounts receivable balance	$	396.1

NOTE 3. INVENTORIES

The classes of inventory as of June 28, 2024 and December 31, 2023 are summarized as follows:


($ in millions)	June 28, 2024		December 31, 2023
Finished goods	$	150.4	$	132.8
Work in process	20.3		20.1
Raw materials	152.4		143.7
Total	$	323.1	$	296.6

NOTE 4. FINANCING

The Company had the following debt outstanding as of:


($ in millions)	June 28, 2024		December 31, 2023
Short-term borrowings:
Short-term borrowings and bank overdrafts	$	5.9	$	6.6

Long-term debt:
Three-Year Term Loans due 2024	$	—	$	100.0
Three-Year Term Loans due 2025	600.0		600.0
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
Revolving Credit Facility due 2026	—		—
Total long-term debt	2,200.0		2,300.0
Less: current portion of long-term debt	—		(100.0)
Less: discounts and debt issuance costs	(9.6)		(11.0)
Total long-term debt, net	$	2,190.4	$	2,189.0

The Company’s long-term debt requires, among others, that the Company maintains certain financial covenants, and the Company was in compliance with all of these covenants as of June 28, 2024.

Credit Facilities

Revolving Credit Facility

The Revolving Credit Facility bears interest at a variable rate equal to SOFR plus an 11.4 basis points SOFR adjustment, plus a ratings-based margin which was 117.5 basis points as of June 28, 2024. As of June 28, 2024, there were no borrowings outstanding and $750.0 million of available borrowing capacity under the Revolving Credit Facility.

Three-Year Term Loans Due 2024

The Three-Year Term Loans Due 2024 were to mature on October 28, 2024. The Company was not obligated to make repayments prior to the maturity date but did voluntarily repay the remaining $100.0 million outstanding as of December 31, 2023 during the six months ended June 28, 2024.

Three-Year Term Loans Due 2025

The Three-Year Term Loans Due 2025 (“Term Loans”), which mature on December 30, 2025, bear interest at a variable rate equal to SOFR plus a 10.0 basis points credit spread adjustment, plus a ratings-based margin which was 125.0 basis points as of June 28, 2024. The interest rate was 6.69% per annum as of June 28, 2024. There was no material difference between the carrying value and the estimated fair value of the debt outstanding as of June 28, 2024.

Senior Unsecured Notes

The Company’s senior unsecured notes (collectively, the “Registered Notes”) consist of the following:

•$500.0 million aggregate principal amount of senior notes due April 1, 2026 bearing interest at the rate of 1.800% per year;

•$500.0 million aggregate principal amount of senior notes due April 1, 2028 bearing interest at the rate of 2.400% per year; and

•$600.0 million aggregate principal amount of senior notes due April 1, 2031 bearing interest at the rate of 2.950% per year.

The estimated fair value of the Registered Notes was $1.4 billion as of June 28, 2024. 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 Registered Notes may be attributable to changes in market interest rates and/or the Company’s credit ratings subsequent to the incurrence of the borrowing.

Short-term Borrowings

As of June 28, 2024, certain of the Company’s businesses were in a cash overdraft position, and such overdrafts are included in Short-term borrowings and current portion of long-term debt on the Consolidated Condensed Balance Sheets. 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 and current portion of long-term debt on the Consolidated Condensed Balance Sheets. Given the nature of the short-term borrowings, the carrying value approximates fair value as of June 28, 2024.

NOTE 5. 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 June 28, 2024:
Balance, March 29, 2024	$	84.2		$	(1.5)	$	82.7
Other comprehensive loss before reclassifications, net of income taxes	(4.7)			—		(4.7)





Net current period other comprehensive loss, net of income taxes	(4.7)			—		(4.7)
Balance, June 28, 2024	$	79.5		$	(1.5)	$	78.0

For the Three Months Ended June 30, 2023:
Balance, March 31, 2023	$	104.0		$	(1.6)	$	102.4
Other comprehensive loss before reclassifications, net of income taxes	(8.6)			—		(8.6)
Amounts reclassified from accumulated other comprehensive income:
Sale of business	0.3		(b)	—		0.3
Amounts reclassified from accumulated other comprehensive income, net of income taxes	0.3			—		0.3
Net current period other comprehensive loss, net of income taxes	(8.3)			—		(8.3)
Balance, June 30, 2023	$	95.7		$	(1.6)	$	94.1


(a) Includes balances relating to defined benefit plans and supplemental executive retirement plans.
(b) Reclassified to (Loss) gain on sale of business in the Consolidated Condensed Statements of Earnings and Comprehensive Income.


($ in millions)	Foreign Currency Translation Adjustments			Other Adjustments (b)			Total
For the Six Months Ended June 28, 2024:
Balance, December 31, 2023	$	106.5		$	(1.6)		$	104.9
Other comprehensive loss before reclassifications, net of income taxes	(28.0)			—			(28.0)
Amounts reclassified from accumulated other comprehensive income:
Sale of business	1.0		(c)	—			1.0
Increase	—			0.1		(a)	0.1

Amounts reclassified from accumulated other comprehensive income, net of income taxes	1.0			0.1			1.1
Net current period other comprehensive (loss) income, net of income taxes	(27.0)			0.1			(26.9)
Balance, June 28, 2024	$	79.5		$	(1.5)		$	78.0

For the Six Months Ended June 30, 2023:
Balance, December 31, 2022	$	107.8		$	(1.7)		$	106.1
Other comprehensive loss before reclassifications, net of income taxes	(12.4)			—			(12.4)
Amounts reclassified from accumulated other comprehensive income:
Sale of business	0.3		(c)	—			0.3
Increase	—			0.1		(a)	0.1
Amounts reclassified from accumulated other comprehensive income, net of income taxes	0.3			0.1			0.4
Net current period other comprehensive (loss) income, net of income taxes	(12.1)			0.1			(12.0)
Balance, June 30, 2023	$	95.7		$	(1.6)		$	94.1

(a) This accumulated other comprehensive income component is included in the computation of net periodic pension cost.
(b) Includes balances relating to defined benefit plans and supplemental executive retirement plans.
(c) Reclassified to (Loss) gain on sale of business in the Consolidated Condensed Statements of Earnings and Comprehensive Income.

NOTE 6. SALES

Contract Assets

In certain circumstances, contract assets are recorded 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 rather than subject only to the passage of time. Contract assets were $7.5 million and $6.8 million as of June 28, 2024 and December 31, 2023, respectively, and are included in Prepaid expenses and other current assets in the accompanying Consolidated Condensed Balance Sheets.

Contract Costs

The Company incurs direct incremental costs to obtain and fulfill certain contracts, typically costs associated with assets used by our customers in certain sales arrangements and sales-related commissions. As of June 28, 2024 and December 31, 2023, the Company had $100.1 million and $90.9 million, respectively, in revenue-related capitalized contract costs primarily related to assets used by the Company’s 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.

Contract Liabilities

The Company’s contract liabilities consist of deferred revenue generally related to customer deposits, 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 where applicable. 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)	June 28, 2024		December 31, 2023
Deferred revenue, current	$	108.2	$	132.4
Deferred revenue, noncurrent	59.4		53.6
Total contract liabilities	$	167.6	$	186.0

During the three and six months ended June 28, 2024, the Company recognized $26.0 million and $76.5 million of revenue related to the Company’s contract liabilities at December 31, 2023, respectively. The change in contract liabilities from December 31, 2023 to June 28, 2024 was primarily due to the timing of cash receipts and sales of PCS and extended warranty services.

Remaining Performance Obligations

Remaining performance obligations represent the transaction price allocated to performance obligations which are unsatisfied as of the end of the period. The Company has excluded performance obligations with an original expected duration of one year or less and amounts for variable consideration allocated to wholly-unsatisfied performance obligations. Remaining performance obligations as of June 28, 2024 were $500.1 million, the majority of which are related to software-as-a-service and extended warranty and service contracts. The Company expects approximately 65 percent of the remaining performance obligations will be fulfilled within the next two years, 80 percent within the next three years, and 90 percent within four years.

Disaggregation of Revenue

Revenue from contracts with customers is disaggregated by sales of products and services and geographic location for each of our reportable segments, 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 for the three months ended June 28, 2024:


($ in millions)	Mobility Technologies		Repair Solutions		Environmental & Fueling Solutions		Eliminations		Total
Sales:
Sales of products	$	196.2	$	150.1	$	274.1	$	—	$	620.4
Sales of services	38.2		0.7		37.1		—		76.0
Intersegment sales	3.2		—		—		(3.2)		—
Total	$	237.6	$	150.8	$	311.2	$	(3.2)	$	696.4

Geographic:
North America (a)	$	156.0	$	150.8	$	192.6	$	—	$	499.4
Western Europe	20.4		—		39.5		—		59.9
High growth markets	39.6		—		65.6		—		105.2
Rest of world	18.4		—		13.5		—		31.9
Intersegment sales	3.2		—		—		(3.2)		—
Total	$	237.6	$	150.8	$	311.2	$	(3.2)	$	696.4

(a) Includes total sales in the United States of $478.0 million.

Disaggregation of revenue was as follows for the three months ended June 30, 2023:


($ in millions)	Mobility Technologies		Repair Solutions		Environmental & Fueling Solutions		Other		Total
Sales:
Sales of products	$	207.1	$	157.8	$	296.0	$	21.6	$	682.5
Sales of services	31.7		0.6		43.3		6.3		81.9
Total	$	238.8	$	158.4	$	339.3	$	27.9	$	764.4

Geographic:
North America (a)	$	161.4	$	158.4	$	214.3	$	27.5	$	561.6
Western Europe	25.1		—		40.5		—		65.6
High growth markets	33.0		—		69.1		0.4		102.5
Rest of world	19.3		—		15.4		—		34.7
Total	$	238.8	$	158.4	$	339.3	$	27.9	$	764.4

(a) Includes total sales in the United States of $522.5 million.

Disaggregation of revenue was as follows for the six months ended June 28, 2024:


($ in millions)	Mobility Technologies		Repair Solutions		Environmental & Fueling Solutions		Other		Eliminations		Total
Sales:
Sales of products	$	402.7	$	332.0	$	571.4	$	0.9	$	—	$	1,307.0
Sales of services	72.8		1.2		70.8		0.4		—		145.2
Intersegment sales	4.8		—		—		—		(4.8)		—
Total	$	480.3	$	333.2	$	642.2	$	1.3	$	(4.8)	$	1,452.2

Geographic:
North America (a)	$	317.9	$	333.2	$	402.7	$	1.3	$	—	$	1,055.1
Western Europe	41.9		—		77.6		—		—		119.5
High growth markets	76.5		—		137.2		—		—		213.7
Rest of world	39.2		—		24.7		—		—		63.9
Intersegment sales	4.8		—		—		—		(4.8)		—
Total	$	480.3	$	333.2	$	642.2	$	1.3	$	(4.8)	$	1,452.2

(a) Includes total sales in the United States of $1,015.4 million.

Disaggregation of revenue was as follows for the six months ended June 30, 2023:


($ in millions)	Mobility Technologies		Repair Solutions		Environmental & Fueling Solutions		Other		Total
Sales:
Sales of products	$	422.3	$	338.7	$	568.1	$	49.8	$	1,378.9
Sales of services	62.4		1.1		85.0		13.4		161.9
Total	$	484.7	$	339.8	$	653.1	$	63.2	$	1,540.8

Geographic:
North America (a)	$	335.0	$	339.8	$	405.4	$	62.2	$	1,142.4
Western Europe	44.0		—		83.1		—		127.1
High growth markets	65.6		—		136.5		1.0		203.1
Rest of world	40.1		—		28.1		—		68.2
Total	$	484.7	$	339.8	$

Vontier Corp [VNT] Filings
10-Q	[2024-08-01]
10-Q	[2024-05-02]
10-K	[2024-02-15]
10-Q	[2023-11-02]
10-Q	[2023-08-03]
10-Q	[2023-05-05]
10-K	[2023-02-17]
10-Q	[2022-11-04]
10-Q	[2022-08-05]
10-Q	[2022-05-06]
10-K	[2022-02-24]
10-Q	[2021-11-05]
10-Q	[2021-08-06]
10-Q	[2021-05-07]
10-K	[2021-02-25]
S-1	[2020-12-28]
10-Q	[2020-10-30]
S-1	[2020-02-14]