Vontier Corporation · NYSE:VNT
Vontier — Non-Deal Roadshow (October 2020)
82 slides from Vontier's roadshow presentation, Oct 5, 2020
Slide 1: Roadshow Webcast
Roadshow Webcast October 5, 2020
Slide 2: Forward-Looking Statements
Forward-Looking Statements This presentation contains forward-looking statements within the meaning of the federal securities laws. These statements include, but are not limited to statements regarding Vontier Corporation’s (the “Company’s”) business and acquisition opportunities, anticipated revenu
Slide 3: Disclaimer
Disclaimer This presentation may contain statistics or other data that in some cases has been contained or compiled from information made available by third-party service providers. The Company makes no representations or warranties, express or implied, with respect to the accuracy, reasonableness,
Slide 4: Non-GAAP Financial Measures
Non-GAAP Financial Measures This presentation contains references to “core revenue,” “core revenue growth,” “free cash flow,” “adjusted free cash flow,” “adjusted normalized free cash flow,” “adjusted normalized free cash flow conversion,” “adjusted operating profit,” “adjusted normalized operating
Slide 5: Key Facts and Dates
Key Facts and Dates Structure: Tax-free pro rata distribution to Fortive shareholders of 80.1% of Vontier, a new publicly-traded company Exchange: NYSE Ticker: VNT Distribution Ratio: 2 shares of VNT for every 5 shares of Fortive Declaration Date September 15 Record Date September 25 Distribution Da
Slide 6: Agenda
Agenda I. Introduction to Vontier Mark Morelli, President & CEO II. M&A Playbook and Portfolio Transformation Elizabeth Cheever, Vice President, Corporate Development Q&A III. Mobility Technologies Mark Morelli, President & CEO Q&A IV. Diagnostics & Repair Technologies Mark Morelli, President & CEO
Slide 7: Today’s Presenters
Today’s Presenters Mark Elizabeth David Morelli Cheever Naemura President & Vice President, Chief Financial Officer Chief Executive Officer Corporate Development 7
Slide 8: I. Introduction to Vontier
|. Introduction to. Vontier q&
Slide 9: Establishing a New Premier Industrial Technology Company
Establishing a New Premier Industrial Technology Company By Geography¹ Key Financials RoW Market Leader in Mobility Technologies Europe 10% 4% $2.8bn 2019 Sales High-Growth Large, Global Installed Base with Markets GDP+ (HGMs) Historically Low Cyclicality 18% North Core Revenue Growth America 68% At
Slide 10: United by Our Shared Purpose
We are BILIZING ‘UTURE to create a better world. United by Our Shared Purpose
Slide 11: Defined by Our Values
Defined by Our Values VBS Powers Every Aspect of our Culture and Performance
Slide 12: Strategically Positioned in Attractive Mobility Infrastructure Markets
Strategically Positioned in Attractive Mobility Infrastructure Markets Mobility Technologies Diagnostics & Repair Technologies A leading worldwide provider of integrated fueling infrastructure solutions, Vontier Value Broad product offering of automotive diagnostic and c-store software and payment s
Slide 13: Global Footprint and Broad Installed Base
Global Footprint and Broad Installed Base Provide Strong Foundation for Continued Growth 2019 Sales: ~$2.8 Billion ~8,300 ~700 Employees Engineers United States Europe 100+ ~75 yrs yrs India China 20 >260,000 Middle East & ~10 Africa ~30 Manufacturing Retail Fueling yrs yrs Facilities Customer Sites
Slide 14: Key Secular Growth Trends
Key Secular Growth Trends That Provide Stability Through Economic Cycles Growing Population & Safety, Security, & Clean, Efficient Increased Vehicle Increasing Complexity Traffic Congestion Regulation Mobility Solutions Complexity of Supply Chain • Growing populations • Changing fiscal • Need for ef
Slide 15: Resilient Business Model with Strong Performance
Resilient Business Model with Strong Performance Through the Cycle Sales CAGR (%) ‘05 – ‘19 6% ‘08 – ‘10 3% Last 3 Years (‘16 – ‘19) 5% 2005 – 2019 Sales Over Time Last 5 Years (‘14 – ‘19) 5% US$ in Billions $2.8 $2.7 $2.5 $2.4 $2.2 $2.1 $1.9 $1.7 $1.6 $1.6 $1.5 $1.4 $1.4 $1.4 $1.2 2005 2006 2007 20
Slide 16: Attractive Financial Profile with Strong Free Cash Flow
Attractive Financial Profile with Strong Free Cash Flow 2017 – 2019 Adj. Normalized 2017 – 2019 Adj. Normalized 2017 – 2019 Gross Profit Operating Profit Free Cash Flow Stable Gross Margin Profile ~20% Adj. Normalized Operating Margin Strong Cash Generation $1,191 $556 $1,135 $423 $1,073 $481 $487 $
Slide 17: Proven Business System Drives Growth & Margin Improvement
Proven Business System Drives Growth & Margin Improvement Vontier Business System is our culture and a set ~8,300 employees steeped in proven business of tools and processes that support our values system & culture... ... and >30 year legacy of operational Leadership improvement inherited from Danah
Slide 18: VBS Drives our Business
VBS Drives our Business Core Value Drivers VBS Selected Tools • Core Growth • Voice of Customer • OMX • Agile Program Shareholders Management • Cash Flow Growth • Funnel Management Tools • ROIC • Digital Marketing • Visual Project Management • Quality (External PPM) Fundamentals • Lean Conversion Cu
Slide 19: Successful Track Record of Growth and Strategic Evolution
Successful Track Record of Growth and Strategic Evolution Through M&A and Organic Expansion Separation creates opportunity to re-engage in M&A as <5% of Fortive’s historical capital was deployed in mobility infrastructure Early 2000s → TAM: $1bn 2019 → TAM: $27bn 2000s Hardware & Sensors Late 2000s
Slide 20: $27bn Market with Large Runway for Earnings Growth
$27bn Market with Large Runway for Earnings Growth Total Addressable Market1 | Estimated Market Growth2 Retail / Commercial Fueling $7bn | MSD Expand Footprint EV Workflow Software in HGMs Infrastructure Smart City Solutions Telematics $8bn | MSD $5bn | HSD Intersection IoT Devices Automation Adv. T
Slide 21: Vontier Will Build on its Danaher and Fortive Heritage
Vontier Will Build on its Danaher and Fortive Heritage vs. Premium vs. Fortive Industrials2 at Spin Core Growth GDP+ ✓ + Recurring Sales Mid-20% ✓ + Adj. Normalized OM1 ~20% ✓ ✓ FCF Conv. >100% + ✓ + = Better ✓ = In-Line Fortive Heritage for Performing Portfolio Transformation Vontier’s Similar Play
Slide 22: Experienced and Proven Leadership Team
Experienced and Proven Leadership Team Name Background Name Background Board of Directors Name Background Mark Morelli President & CEO, Aaron Saak Board Nominee President of GVR Karen Francis Chair David Naemura Tim Gilmore CFO President of Matco Martin Gafinowitz Elizabeth Cheever Jens Meggers Boar
Slide 23: II. M&A Playbook & Portfolio Transformation
II. M&A Playbook & Portfolio Transformation
Slide 24: Proven Playbook for Exceptional Growth Through M&A
Proven Playbook for Exceptional Growth Through M&A Opportunities to Accelerate Strategic What We Look For Objectives are the Priority for M&A Capital \ • Secular / structural growth drivers Market Strategic Alignment • High barriers to entry / low risk of disruption • Runway for future M&A \ • Attra
Slide 25: Multiple Vectors For Growth Through M&A
Multiple Vectors For Growth Through M&A • Scale new technology by leveraging our installed base Successful Track Record of Growth Through M&A Bolt-ons • Acquire channel / commercial capabilities • Expand geographic reach 2000s Late 2000s Early 2010s • Leverage strength in existing markets Adjacencie
Slide 26: GVR Growth & Transformation Formula
GVR Growth & Transformation Formula $0.4bn $1.9bn Sales in 2002 Sales in 2019 Software, VBS Mobility Hardware Analytics, & & New Infrastructure ~5% >20% & Sensors HGMs Products Solutions OM in 2002 OM in 2019 + Acquisitions + Growth / Improvement = >$0.7bn Deployed for M&A ~14% Sales CAGR in since 2
Slide 27: Q&A
Q&A 27
Slide 28: III. Mobility Technologies
III. Mobility Technologies
Slide 29: Mobility Technologies
Mobility Technologies Key Financials Overview Leading Global Supplier of 2019 Sales Leading Global SaaS Leading Provider of Intelligent Mobility Infrastructure Telematics Provider Traffic Control Systems Solutions ~$2.1bn Customers Service, Transport, & Retail Fuel Stations & Emergency Response and
Slide 30: Gilbarco Veeder-Root
Gilbarco Veeder-Root wy, ag bi = E =
Slide 31: Gilbarco Veeder-Root Overview
Gilbarco Veeder-Root Overview Overview Strategic Advantages • #1 global supplier of solutions for mobility infrastructure Leader in technology for regulatory and • Customers include the world’s leading convenience stores and commercial fleet brands infrastructure build-out cycles • Products include
Slide 32: GVR is the Only Global Provider of Full-Site Solutions
GVR is the Only Global Provider of Full-Site Solutions Why GVR Wins POINT-OF-SALE SOFTWARE HEAD & BACK OFFICE Large Installed Base SOFTWARE EV CHARGERS DISPENSERS Strong HGM Exposure PAYMENT SOLUTIONS FORECOURT CONTROLLER Technology Leadership Market Leading Software & Workflow Solutions AUTOMATED T
Slide 33: Key Market Dynamics Underpinning Long-Term Growth for GVR
Key Market Dynamics Underpinning Long-Term Growth for GVR Continued Security & HGM Retailer Growth in the Environmental Infrastructure Sophistication Global Car Parc Regulations Build-Out • The global car parc of • Electronic tampering of • Growing car parc • Strategic change in ~1.2bn vehicles is p
Slide 34: Long History of Regulatory Waves Driving Growth
Long History of Regulatory Waves Driving Growth Regulatory Environment U.S. EMV Update Italy SEA • Extended deadline for EMV compliance Payments Payments standards to April 2021 Regulation Nordics AUS • Payment Brazil Fraud/Tax EMV expected to support strong growth in Payments Pay@Pump 2020, with 70
Slide 35: EMV has Provided Above Historical Growth
EMV has Provided Above Historical Growth Pre-EMV Mandate EMV Roll-Out Near-Term Forecast GVR historically EMV accelerated GVR sales growth EMV providing strong growth in 2020 grew at ~5% annually during the roll-out period ’11 – 13: CAGR: ~5% ’14 – 19 CAGR (incl. EMV): ~6% Pandemic causing dynamic d
Slide 36: Strategic Initiatives Support Growth Post-EMV Transition
Strategic Initiatives Support Growth Post-EMV Transition Drive Profitable Grow Digital Expand Expand Growth Solutions High-Growth Markets E-Mobility Solutions • Leverage VBS toolkit • Deploy suite of software • Capitalize on infrastructure • Investments in global focused on: offerings to improve sto
Slide 37: Productivity Programs Designed to Accelerate Profitable Growth
Productivity Programs Designed to Accelerate Profitable Growth Drive Profitable Growth Driving Top and Bottom-Line Growth Through: Streamlining organization post-EMV Simplifying product line Expanding recurring revenue opportunities Enhancing the customer experience Europe MEA Multiple opportunities
Slide 38: Opportunity for Continued Growth in Retail Solutions
Opportunity for Continued Growth in Retail Solutions Grow Digital Solutions USA In-store Sales at C-Stores ($bn) Market Dynamics • Customer strategic mindset shift from “gas station” to “retailer” across all geographies $250 • Expansion of in-store offerings to increase sales and improve profitabili
Slide 39: Case Study: Expanding Share-of-Wallet with Retail Solutions
Case Study: Expanding Share-of-Wallet with Retail Solutions Grow Digital Solutions The Challenge The Solution The Impact • Customer needed integrated suite of • Converted dispensers from competitor solutions that spanned POS solutions to Additional Sales at dispensers • Upgraded point-of-sale softwa
Slide 40: HGMs Driven by Infrastructure Build-Out and Site Modernization
HGMs Driven by Infrastructure Build-Out and Site Modernization Expand High Growth Markets Fueling Station Demand Technology Upgrades 229 US 100 Doubling station count over next 5 years Gas Kiosk Modern C-Store Europe 33 24 14 China India Investment in technology driven by need to improve productivit
Slide 41: The Internal Combustion Engine Leads the Car Parc
The Internal Combustion Engine (“ICE”) Leads the Car Parc Global Passenger Vehicle Market Billion 1.8 1.6 Battery • Global car parc continues to increase electric 1.4 1.2 Plug-in • Fleet age rising hybrid 1.0 0.8 • EVs represent <1% of car parc in 2020 Fuel cell 0.6 0.4 Internal • ICE expected to be
Slide 42: GVR’s Opportunity Set and Early-Stage Investments in EV Charging
GVR’s Opportunity Set and Early-Stage Investments in EV Charging Expand E-Mobility Solutions Opportunity Overview • EV charging market is a highly • A global leader in DC fast charging • Leading provider of EV charging network attractive space for long-term solutions management software growth • Agn
Slide 43: Summary of GVR
Summary of GVR #1 global provider of technology solutions for mobility infrastructure Track record of organic growth, disciplined M&A, and margin expansion Continued tailwinds from substantial car parc and regulatory drivers Large runway of improvement opportunities; Longer-term growth from HGMs and
Slide 44: Teletrac Navman
Teletrac Navman
Slide 45: Teletrac Navman Overview
Teletrac Navman Overview Overview Strategic Advantages • Leading software-as-a-service (SaaS) telematics provider that leverages location- based technology and services for managing mobile assets Expansive product portfolio with offerings • Resulted from the acquisitions of Navman Wireless in 2012 a
Slide 46: Go Forward Strategy for Teletrac Navman
Go Forward Strategy for Teletrac Navman Recent Business Challenges What Are We Changing? Impact Operational & Stabilizing Software Issues Fixed software and Churn hardware problems Established leading customer service Aging Launched TN360 U.S. Platform In 3Q20 Launched the first AI-based platform St
Slide 47: Case Study: TN360 New Technology Platform
Case Study: TN360 New Technology Platform Complex Challenges The Solution The Impact • First AI-powered platform that delivers real-time telematics +30% • Designed to tell you what you don’t know. Average Revenue Per Unit Connect. Collect. Analyze. Predict • Realtime analytics uncovers trends via na
Slide 48: Summary of Teletrac Navman
Summary of Teletrac Navman a Multi-geography telematics leader with over 480,000 subscribed units Fixed hardware, software, and customer service issues Launched TN360 – a new AI-based, differentiated technology platform Increasing demand for digitization, automation and freight visibility provides c
Slide 49: Global Traffic Technologies
Global Traffic Technologies
Slide 50: Global Traffic Technologies Overview
Global Traffic Technologies Overview Overview Strategic Advantages • Manufacturer of priority control systems delivering safe and reliable Trusted brand with large installed base and traffic solutions for emergency response and transit agencies for over 50 years entrenched relationships • Market lea
Slide 51: Smart Cities is a Compelling Market Opportunity
Smart Cities is a Compelling Market Opportunity Size1 • At intersection sensing and AI for more efficient traffic flow Traffic Management $3bn • Dual use to public safety applications • Overlap with GTT customer base • Metering and electric charging for on-street and off-street parking Parking $1bn
Slide 52: Q&A
Q&A 52
Slide 53: IV. Diagnostics & Repair Technologies
IV. Diagnostics & Repair Technologies
Slide 54: Diagnostics & Repair Technologies
Diagnostics & Repair Technologies Key Financials 2019 Sales Leading Manufacturer and Distributor One of the World’s Leading of Vehicle Repair Tools & Diagnostic Manufacturers of Aftermarket Equipment through ~1,800 Franchisees Wheel-Service Equipment ~$0.6bn Market Size1 ~$7bn Estimated Market Growt
Slide 55: Matco Overview
Matco Overview Overview Strategic Advantages • An Entrepreneur Top 500 Franchise based in Stow, OH Renowned brand strength • Leading manufacturer and distributor of vehicle repair tools, toolboxes, and and customer loyalty automotive diagnostic equipment and software through a network of >1,800 fran
Slide 56: Broad Product Offering with Loyal Customer Base
Broad Product Offering with Loyal Customer Base Matco’s Broad Product Offerings Matco Differentiators Calling on over 140,000 Diagnostics Premium Quality automotive repair shops and 600,000 technicians Financing & Flexible Payment Terms Power Tools Storage Lifetime Warranty / Return Policy Hardline
Slide 57: Matco is Positioned to Generate Steady Organic Growth
Matco is Positioned to Generate Steady Organic Growth New Product Enhance Digital Grow Drive Margin Innovation Workflow Solutions Franchisee Base Improvement • Continued innovation to address • Matco Tools App to deliver the • Target select attractive • Shift product mix towards complex customer nee
Slide 58: Accelerating Innovation in Traditional Tool Categories
Accelerating Innovation in Traditional Tool Categories New Product Innovation Ball Joint Press AC Recyclers • Replaces decades old product with • Touch screen interface patented design • Remote access via Wi-Fi and an extensive • Significantly easier use and greater service network functionality 20
Slide 59: Development of Matco Tools App
Development of Matco Tools App Enhance Digital Workflow Solutions Opportunity Overview • Currently, most products are sold via traditional sales method (weekly visits, in-store purchases) • Mechanics are looking for additional touchpoints and the ability to buy products in between franchisee visits
Slide 60: Responding to Vehicle Diagnostics & Repair Dynamics
Responding to Vehicle Diagnostics & Repair Dynamics Enhance Digital Workflow Solutions Opportunity Overview What We Are Doing • Today’s cars feature 100mm lines of code which is expected to grow to • Designing a broader set of user-friendly solutions to between 200mm and 300mm lines complete repairs
Slide 61: Expanding into Digital Workflows Via Key Partnerships
Expanding into Digital Workflows Via Key Partnerships Enhance Digital Workflow Solutions Independent Mechanic Digital Workflow Opportunity Customer Relationship Mgmt / ERP • Independent mechanics are struggling with repair workflow given technician shortage and increasing vehicle complexity Shop Dia
Slide 62: Franchisee Base Growth Over Time
Franchisee Base Growth Over Time Grow Franchisee Base Franchisees Over Time Steady year over year growth 1,834 in franchises over time 2010 – 2019 1,793 1,779 CAGR: 2.5% 1,758 1,688 Remote Presentation Method >30% open territories in North America 1,580 Territory Support MMP Custom Specialist Mappin
Slide 63: Case Study: Driving Continued Margin Expansion in Mature Business
Case Study: Driving Continued Margin Expansion in Mature Business Drive Margin Improvement The Challenge The Solution The Impact • Total Process Improvement deployed in • Tariffs creating cost pressures warranty screening process to drive out waste +20 bps Margin Expansion • Slower growth due to tec
Slide 64: Hennessy Overview
Hennessy Overview Overview Strategic Advantages • With facilities in the U.S. and Canada, Hennessy Industries is one of the world’s foremost manufacturers of aftermarket wheel- service equipment Trusted brand with customer loyalty • Designs, builds and markets equipment, accessories, and consumables
Slide 65: Summary of Diagnostics & Repair Technologies
Summary of Diagnostics & Repair Technologies Businesses with leading brands and significant opportunities for growth Loyal base of franchisees, with room to add Increasing vehicle complexity supports increased product demand Large runway to drive growth in vehicle diagnostics and digital workflows P
Slide 66: V. Financial Overview
V. Financial Overview wer a 7 i a ek e OU a Wa te att
Slide 67: Vontier Financial Highlights
Vontier Financial Highlights GDP+ Revenue Growth Bolstered Through M&A | 2017 – 2019 sales CAGR of 5.3%; sales growth of ~4.5% estimated for 3Q20 Strong Margins with Track Record of Expansion | 43% Gross Margin and 20% Adjusted Normalized Operating Margin in LTM Jun20 Robust Free Cash Flow Generatio
Slide 68: Strong Execution During the COVID-19 Pandemic
Strong Execution During the COVID-19 Pandemic Operating Company Select Actions Taken By Vontier • Miles driven has recovered to 80%+ of pre-COVID-19 levels globally ✓ Implemented safety protocols to ensure continued production of essential goods and services • Recovery rates vary by region • EMV con
Slide 69: 3Q Performance Commentary
3Q Performance Commentary Operating Company Regional • EMV demand remains strong, with large customers • Increased outlook reflects continued strong demand from continuing to drive adoption GVR EMV adoption and regulatory tailwinds in Mexico North America • Matco demonstrated a sharp recovery follow
Slide 70: Strong Historical Financial Performance
Strong Historical Financial Performance Summary Financials Management Commentary '17 – ‘19 LTM • Mobility Technologies sales grew at ($US in millions) 2017 2018 2019 CAGR Jun20 1H20 HSD rate from 2017 – 2019 Net Sales $ 2,498 $ 2,666 $ 2,772 5.3 % $ 2,601 $ 1,143 Net Sales • Diagnostics & Repair Tec
Slide 71: Strong Balance Sheet to Support M&A
Strong Balance Sheet to Support M&A Balance Sheet Overview 1 Capital Structure Highlights ($US in millions) At Close $750mm revolving credit facility $0 ~$1.5bn of M&A Capacity over the ✓ next 2–3 years Total Debt $1,800 Cash $200 ✓ $950mm of Total Liquidity Net Debt $1,600 Debt / LTM Q2 Adjusted EB
Slide 72: FY 2020 Outlook
FY 2020 Outlook Anticipating FY 2020 Core Revenue decline of (LSD) based on current COVID-19 environment • Expected growth of ~4.5% in 3Q20 assumes a strong recovery driven by strength in GVR and Matco • EMV expected to support strong growth in 2020, with 70%+ penetration of our customer base by end
Slide 73: Value Creation Flywheel
Value Creation Flywheel Core Revenue Margin Expansion Growth 25-50 bps core OMX GDP+ Growth Investment Grade Through M&A Style Balance Sheet >100% FCF conversion to Fund Growth Note: Represents general target measures Deploying Proven Model for Earnings Growth 73
Slide 74: VI. Closing Comments
We are BILIZING ‘UTL JRE to create a better world. VI. Closing Comments
Slide 75: Priorities to Unleash Earnings Growth Potential
Priorities to Unleash Earnings Growth Potential Profitable Organic Growth Initiatives M&A to Accelerate Core Growth Strategy Increase Profitability Through VBS ~$1.5bn of Balance Sheet Flex Over Next 2-3 Years • VBS -- focus and simplification to drive • Fragmented, growth markets with near in opera
Slide 76: Vontier: A Compelling Investment Opportunity
Vontier | A Compelling Investment Opportunity Industrial technology leader with outstanding brands and strong installed base levered to attractive $27bn mobility market Strong performance and limited cyclicality, supported by recurring sales Robust free cash flow generation and investment grade styl
Slide 77: Q&A
Q&A 77
Slide 78: Appendix
Appendix Additional Financial Detail
Slide 79: Reconciliation of Vontier Non-GAAP Figures
Reconciliation of Vontier Non-GAAP Figures Reconciliation of Cash Flow from Operations Free Cash Flow to Adjusted Reconciliation of Operating Profit Adjusted Operating Profit to Adjusted Free Cash Flow to Adjusted Normalized Free Cash Flow and Conversion Normalized Operating Profit and Margin 2017 2
Slide 80: Reconciliation of Vontier Non-GAAP Figures
Reconciliation of Vontier Non-GAAP Figures Reconciliation of Net Earnings to Adjusted Net Earnings to Adjusted Reconciliation of Net Earnings to EBITDA to Adjusted EBITDA to Normalized Normalized Net Earnings and Margin Adjusted EBITDA and Margin LTM Jun LTM Jun 2017 2018 2019 2020 1H 2020 2017 2018
Slide 81: Supplemental Financials
Supplemental Financials https://investors.vontier.com/files/doc_downloads/2020/10/Supplemental- Financials-Final.pdf 81
Slide 82: NION TIER
NION TIER