Vontier Corp (VNT) 2025 Q4 法說會逐字稿

Good morning, ladies and gentlemen, and welcome to Vontier's fourth quarter 2025 earnings call. (Operator Instructions) This call is being recorded on Thursday, February 12, 2026, and a replay will be made available shortly after. I would now like to turn the conference over to Ryan Edelman, Vontier's Vice President of Investor Relations. Please go ahead.

Thank you. Good morning, everyone, and thank you for joining us on the call this morning to discuss our fourth quarter results. With me today are Mark Morelli, our President and Chief Executive Officer; and Anshooman Aga, our Senior Vice President and Chief Financial Officer.

You can find both our press release as well as our slide presentation that we will refer to during today's call on the Investor Relations section of our website at investors.vontier.com. Please note that during today's call, we will present certain non-GAAP financial measures. We will also make forward-looking statements within the meaning of the federal securities laws, including statements regarding events or developments that we expect or anticipate will or may occur in the future.

These forward-looking statements are subject to risks and uncertainties. Actual results might differ materially from any forward-looking statements that we make today, and we do not assume any obligation to update them. Information regarding these factors that may cause actual results to differ materially from these forward-looking statements is available on our website and in our SEC filings.

With that, please turn to slide 3, and I'll turn the call over to Mark.

Thanks, Ryan. Good morning, everyone, and thank you for joining us. Let's get started with a quick walk-through of the key takeaways from the quarter and the year and why I'm confident we're entering 2026 on firm footing. The headline here is that we finished the year strong, strengthened our foundation and built meaningful momentum across the portfolio.

We delivered 5% core growth in Q4, led by high single-digit growth in both our Mobility Tech and Environmental & Fueling segments, underpinned by robust demand in our convenience retail end market. For the full year, organic sales grew nearly 4% and EPS finished up 11%. Strong cash generation is one of the hallmarks of performance at Vontier. And in 2025, we generated over $460 million in adjusted free cash flow, which equated to about 15% of our annual sales. Q4 adjusted EPS was at the high end of our guide despite the impact of a onetime inventory reserve adjustment related to the Invenco acquisition and by higher health care costs at corporate. Underlying operational performance was in line with our expectations.

2025 was a year of strategic repositioning and strong execution. I'm proud of the discipline our teams demonstrated in what turned out to be a dynamic macro environment. We're now more focused and better aligned around our connected mobility strategy, which fundamentally enables profitable growth and underpins innovation across Vontier.

We're consistently demonstrating the power of having a synergistic portfolio, unmatched domain expertise and global scale. We made significant progress on simplifying and focusing our organization. These actions unlock growth, enable us to be easier to do business with and allow further efficiency across the organization.

This next phase of simplifying our business will result in $15 million of incremental in-year cost savings. Anshooman will share more details on timing and phasing in his prepared remarks. We maintained a focus on innovation in 2025, deploying multiple new solutions and creating more durable competitive advantages. We're deploying unique value propositions that leverage integrated solutions and capitalize on strong secular tailwinds, including digitalization and the energy expansion.

We're entering 2026 with good momentum, a stronger portfolio and healthy balance sheet. We're well positioned to deliver on our financial commitments and expect more benefits from our simplification efforts to drop through to the bottom line. As Anshooman will share with you our guidance for 3% core growth and attractive operating margin expansion of 80 basis points at the midpoint is in line with the framework we shared with you in October. I'm confident in our ability to execute and to continue building sustainable above-market growth.

Let's turn to slide 4 for a quick walk-through on some of the high-level growth drivers by segment. Let's start with EFS. Fueling has been a dependable growth engine over the last two years, growing at roughly 6% organic CAGR. Market growth has been broad-based with increased new site builds retrofit activity and equipment replacement all driving investment. We see sustained high levels of capital investment for both above ground and below ground fueling equipment, particularly in North America.

A recent industry report from NAC shows that while the US convenience store count remained relatively flat year-over-year, the number of fueling sites grew approximately 1%.

An important takeaway from this is the larger national and regional chains with whom we have majority share positions are growing at faster than average rates. Environmental will finish the year with growth in the low teens, supported by strong upgrade activity for our connected automatic tankages and incremental share gains in submersible pumps with our new 4 horse power offering. Both of these are a result of traction in new product development.

For 2026, we expect growth to be in line with our longer-term targets of low to mid-single digits despite the tougher compares, especially in the first half. Mobility Tech and Invenco, in particular, was another standout. Invenco closed the year with revenues of nearly $650 million, up 22% organically versus the prior year. This reflects strong demand for our innovative payment technologies, including those that leverage our NFX micro services architecture, the rollout of new products and disciplined execution on a healthy order pipeline.

Our new product introductions, FlexPay 6, vehicle identification system and the NFX payment server, all contributed meaningfully to our growth last year. We've also been expanding our integrated offerings. And in Q4, we rounded out our unified payment solution by launching an indoor payment terminal that shares software across all devices.

I'll unpack unified payments in a moment because it's a strategic priority for us. The Convenience retail end market is growing at a mid-single-digit CAGR, which is being fueled by strategic investments in food service and technology. Store formats are evolving to meet changing consumer needs and increased competition and, as a result, are becoming more complex and costly to run.

Our innovative portfolio positions us well to continue delivering above-market growth in this end market over the medium and longer term. PRB's growth accelerated in Q4, driven primarily improved pipeline conversion from ramping our new Patheon software. PRB inflected positive in the second half and grew high single digits in Q4, almost entirely due to -- adoption. Customers who have upgraded are seeing growth in memberships, declines in churn and mid-teens revenue growth on average.

Repair solutions gained momentum as we got traction with growth initiatives. Sales grew sequentially in Q4 and what historically has been our slowest quarter. Our initiatives drove low double-digit growth for our diagnostic scan tools in Q4.

On slide 5, as I mentioned, I want to spend a minute on unified payment because it ties a number of teams together and will be a key enabler of the value creation flywheel for our customers. We shared this with some of our investor event last fall. Over the last decade, payment complexity has increased rapidly. More devices, tighter security requirements and a growing need to integrate payment across fuel dispensers, car washes and in-store point-of-sale and EV chargers. The biggest pain point customers face is payment certification.

It consumes significant amounts of their OpEx budgets and scarce engineering resources. Certification costs can range from hundreds of thousands to millions of dollars annually, and those costs only rise as new offerings are added.

Our unified payment solution addresses that head on by delivering integrated solutions, including outdoor payment terminals for multiple devices, the NFX electronic payment server that links terminals to payment processors and the indoor payment terminals we launched in Q4 that are the same software as our outdoors devices. In other words, customers can cover every transaction on their sites with a single common platform. That common software architecture materially reduces certification costs future deployment and delivers a seamless consumer experience.

Additionally, it enables our customers to drive revenue growth through offerings like media and loyalty. Perhaps most critical for Vontier, all of these opportunities pull through additional equipment and recurring revenues. We recently entered an agreement for a full unified payment solution with a global C-store customer one with whom we've built a strong technology partnership, and their early feedback has been positive.

With that, I'll turn the call over to Anshooman to walk you through the quarter's financial details and take you through our outlook.

Thanks, Mark, and good morning, everyone. Let me start off with a summary of our consolidated results for the fourth quarter on slide 6. The total sales were $809 million, with core growth of 5%, reflecting disciplined operational performance and continued resilience across our end markets. Adjusted EPS was at the high end of our guidance at $0.86, up 8% year-over-year. Operating profit margin was 21.3% and on onetime costs related to Invenco inventory adjustments and higher health care gains.

Underlying margin performance was in line with our expectations. In Q4, we delivered record free cash flow. On a full year basis, this was 98% adjusted free cash flow cover, representing an attractive 15% of sales and underscoring the strength of our cash generation model.

Turning to our segment results, beginning on slide 7. Environmental & Fueling Solutions delivered a strong finish to the year with above market growth demonstrating our strong share position with large national and regional operators. Total dispenser sales increased high single digits in the quarter. Environmental Solutions grew double digits, supported by ongoing upgrade activity and share gains related to new products.

Fourth quarter segment margins expanded 90 basis points, the result of strong volume leverage and ongoing productivity actions. For the full year, EFS delivered 6% core growth on top of 6% growth in the prior year, with dispensers growing mid-single digits and environmental up low double digits. Full year operating margin expanded 40 basis points, ending the year over 29%.

Moving to Mobility Technologies on slide 8. Core sales increased 8.5% for the quarter, with relatively broad-based growth across all business lines. At Invenco, we continue to execute on a new product development road map with Q4 sales up 9%, following six quarters of double-digit growth attest to our team and proof of the strategic value of our suite of solutions is driving for our customers.

DRB continued its growth trajectory, building on the momentum began to see in Q3 and ended the fourth quarter up high single digits. Although down high single digits for the full year, DRB recent return to growth and the order momentum you're seeing positions us well for 2026.

Overall, segment margins declined 220 basis points for the quarter, mainly impacted by the onetime inventory adjustment at Invenco.

Finally, turning to Repair Solutions on slide 9. Sales increased sequentially as the growth initiatives helped offset macro pressures on technician spending. Distributors' sell-through off the truck inflected positive for the first time all year in Q4 and high-ticket items like tool storage and diagnostics returned to growth. Fourth quarter sales declined 2% with lower volumes pressuring margins.

Turning to the balance sheet on slide 10. As I mentioned earlier, we had another strong year of free cash flow generation, which provides meaningful flexibility as we execute on our 2026 priorities. In the quarter, we deployed an additional $125 million towards share repurchases, bringing total buybacks for the year to $300 million, equating to over 5% of our shares outstanding. Given the valuation disconnect relative to our long-term fundamentals, we continue to view buybacks as compelling use of capital. We ended the year with nearly $500 million in cash on the balance sheet and closed the year with a net leverage ratio of 2.3 times, down from 2.6 times at the start of the year.

Regarding our upcoming $500 million bond maturity, we intend to use cash on hand to repay $200 million and plan to enter into a $300 million 364-day term loan agreement of the remaining balance. We believe this option meets our current financing needs minimizes the interest headwind and gives us ability to address future maturities.

Turning to our outlook assumptions for the full year 2026 and Q1 on slide 11. Our full year guidance is consistent with the framework we provided you on our Q3 call. We expect sales in the range of $3.1 billion to $3.15 billion. At the midpoint, this assumes core growth of about 3% and supported by low to mid-single-digit growth within Environmental and Fueling Solutions, mid-single-digit growth at Mobility Technologies and flattish growth at repair solutions.

We expect adjusted operating profit margins to expand 80 basis points at the midpoint, reflecting strong incrementals. As Mark disclosed at the start of the call, we expect to generate an additional $15 million of in-year savings. These are the results of our simplification efforts along with improved efficiency and velocity of product development with adoption of AI tools. A majority of the necessary actions are being implemented in Q1 with a modest ramp into the second half.

Adjusted EPS is expected to be in the range of $3.35 to $3.50, representing high single-digit growth year-over-year. This is due to repurchases of less than $50 million for the year and does not include any additional capital deployment benefits. Adjusted free cash flow conversion is expected to be about 95% which would equate to roughly 15% of sales for the year.

Looking at our guide for Q1, we expect sales in the range of $730 million to $740 million, with core growth of about 1% at the midpoint. Margins will be relatively flat to start the year, reflecting year-over-year timing differences in R&D and other operating expenses as well as less favorable mix. EPS will be in the range of $0.78 to $0.81 in line with our normal seasonality.

With respect to the shape of the year, we would expect first half sales at just over 48% of the full year and EPS approaching 47%, both in line with our normal historical seasonality. I would also note that the year-over-year organic growth rates will look better in the second half, which embeds the first half compare issues at EFS and Mobility Czech and the timing of shipments of projects and backlog which favor Q3 and Q4. This is the same view we shared with you on our last call.

As always, we've included some other modeling assumptions on the right-hand side of this slide. Just to highlight a couple of those. We do have some divestiture impacts to consider on the top line and the higher interest expense we noted last quarter, which steps off signing in Q2.

With that, I'll pass the call back to Mark for his closing comments.

Thanks, Anshooman. We finished the year strong with meaningful progress strengthening our foundation and advancing our connected mobility strategy. That progress reflects disciplined execution across the organization. I couldn't be more proud of what we've been able to accomplish in the last 12 months. I'm extremely grateful to our employees for their continued hard work and dedication.

I'm genuinely excited about the setup for 2026 and the way Team Vontier is engaged to create value for all our stakeholders.

Looking ahead on slide 13, I remain confident in the fundamentals we've built and the outlook for the year ahead. We have strong leadership positions in attractive and resilient end market that offers significant opportunities. We have the right strategy in place to capitalize on the key secular trends shaping our industries, and we're executing that strategy thoughtfully and with purpose.

Innovation has become another hallmark of Vontier and our focus on product vitality is translating into stronger offerings, deeper customer engagement and measurable commercial momentum. We have a solid runway ahead on our 80/20 journey, combined with a culture center around VDS, we have a very visible path to expanding margins.

Our business generates strong free cash flow consistently in the mid-teens on a percent of sales basis, which gives us flexibility to continue driving above-market growth and returning capital to shareholders. We will continue to apply the same discipline to capital deployment that has served us well over the past several years.

With that, operator, please open the line for questions.

(Operator Instructions) Andy Kaplowitz, Citigroup.

Could you give us more clear on what's going on in Mobility Tech? I think Anshooman you thought mobility's growth might be flattish in Q4 '25 came in at 8.5%. I think you were concerned regarding the timing of projects and we could deliver hardware. Did that pull forward at all into Q4? And then you obviously have an expected back-end loaded guide in mobility.

Can you remind us the level of visibility you have? And maybe give us a little more color on the Invenco reserve and what happened there?

Yes. Andy, I'll start off, and I'll turn it over to Anshooman. Look, I think the really good news on Mobility Tech is our innovation-driven growth is really reading through. I think when you look at the FlexBase 6 offering, combined with the in effects that's the version of the unified payment. And the good news is that we've had better uptake on that.

It's a product line that requires some level of not only certification, but piloting with our customers and the ramps a little bit hard to predict, but I think the backdrop here, the momentum here is pretty clear. And I think the real issue then is when you look at the outlook into the year, what do we see? I think you know that we've got a first half a bit of a compare issue but we see overall really strong growth coming from our Mobility Tech product lines, including the turnaround with DRB that is feeding into that and more visibility there. So overall, we're pretty happy with what we see. Anshooman?

Yes, Andy, thanks for the question. From a linearity perspective, for 2026 linearity is in line with what we've typically had -- Q1 is at the midpoint of our guide, above 23.5% of our total sales for the year, which if you look at our historical sales of Q1 and adjust for Matco Expo, which moved from Q1 to Q2 and that's typically where we end the year from a sales perspective. So seasonality is in line with what we've typically done last year because of some larger projects, which were in the first half weighted. It was a little bit front-end loaded to sales.

The other thing, we do have some larger wins, both in indoor pits and wholesale, which is part of our unified payment offering and also the vehicle identification system, another win out there, which the projects take some time for going through the customer certification as Mark mentioned. So that revenue ramps up in the second half of the year. So we feel pretty comfortable with our guys the way it is Mobile Tech still growing mid-single digits on really a strong off in 2024 and 2025.

Related to the inventory reserve, we did have an inventory reserve of $4 million at Invenco. This is for legacy inventory prior to acquisition. Now keep in mind back at the time of acquisition, supply chains were disruptive. Companies were keeping higher inventory levels. And then as we bought the business, we have spent quite a bit of time and effort on innovation and bringing in new versions of the product, which, as you can see from our Q4 results, there's a very strong uptick in the market for this new version and as a result, we wrote off some inventory that we had on hand from pre-acquisition time.

Got it. And maybe a similar question for EFS. I mean it grew strongly in Q4 against tough comps. So maybe you can comment on the longevity and strength of the retail fueling cycle this turnaround? Because I think, Mark, as you said channel checks seem good.

I think I remember a slide maybe in the original Vontier Investor Day, where historically retail fueling does tend to clip along to mid-single digits. So why can't you continue to do that?

Yes. A lot of confidence in that. We're at the NACS Leadership Summit this week. And so I'm hearing directly from CEO, C-suite officers of our convenience store customers. And as you may know, we have about two-third share with the largest regional and national and international players.

And when you really look at the backdrop in some of my prepared remarks, I also spoke about this and the color that I'm getting directly from our customers this week, there's no question that they are advancing their footprints. Many times, when you ask folks about their build-out plans, they're looking 3 years out on average.

Some are even looking longer than that because of the certifications, the footprint build outs, real estate transactions, building a new store doesn't take that long, but doing all the permitting, setting all that up and they're very planful and really cash flow positive. They're not seeing anything in the economy right now. So that's about two-third of our business is really associated with that very constructive backdrop.

So I think we are pretty bullish on what we're seeing. The new technologies that we're offering really help them solve high-value problems as they build out their infrastructure also as they do M&A and they combine with each other.

It's a more complex backdrop for them to be able to manage. They're looking at new solutions such as low key and media to be able to drive more revenue, and they're seeing some really successful endeavors there. So yes, we're very excited on the backdrop and what we see in our position in the market with number one, number two of our strong brands, and we're doing it in a more unified concerted way that really helps them solve some high-value problems. So yes, we see a continuation of this.

Julian Mitchell, Barclays.

So I heard you on the sort of the phasing of the year, but maybe flesh out a little bit more, I guess, in that first quarter 1 point of organic growth. How are we thinking about the various segments because you had a very strong fourth quarter. Was there an of pull forwards you could flesh out? Or is it something around comps? Maybe help us understand this Q1 core growth across the segments, please?

Yes, Julian, thanks for the questions. So just from a segment perspective, we expect our EFS segment to continue to grow probably in the low single-digit growth range. Mobility Technologies will be flattish. That's really off the very strong compare in that. And then repair solution, again, we expect it to be relatively flat Q1, as we said in the prepared remarks, the turnaround continues in that business with stabilization.

Sales off the truck were up for the first time in Q4. So we're starting to feel incrementally better about the business, and we expect Q1 to be relatively flat year-on-year.

And then on the operating margins year-on-year in the first quarter, up 80 points for the year. When we think about kind of what's changing as we go through the year, I suppose there's some volume leverage that builds. It also sounds like that $15 million savings number is sort of year-on-year, a bigger weighting in the back half. Just maybe help us understand kind of how the drivers of that improved margin year-on-year split between those two? And then price cost, anything changing there first half versus second half, just as tariffs anniversary.

Yes. So some of the things you mentioned, Julian, but I'll start off by saying Q1 margins last year were the highest for the whole year, we were at 21.7% in Q1 last year and which was about 40 to 60 basis higher than all the other three quarters. So it was the highest margin quarter and typically our typical seasonality to volume leverage. Q4 is usually the highest margin quarter for us. We will get volume leverage as the business continues to perform better.

Incrementals are relatively good in the business, but also a lot of the $15 million in-year savings, a lot of those actions are in flight right now. So the savings start ramping in Q2 but really fully ramped in the back half of the year, Q3, Q4. So definitely that will add to it also.

Got it. And price cost, is that pretty steady through the year?

Yes, price cost is pretty steady through the year. We ended 2025 a little over 1%. For 2026, again, I think we'll be somewhere around 1.3% average price increase. Tariffs hopefully, are behind us from a lumpiness perspective and we can go to our normal cadence of price increases.

Nigel Coe of Wolfe Research.

So yes, another question on phasing. So Anshooman, the first half, second half sort of implies, I think, flattish core in 2Q very similar EPS to 1Q. Just want to make sure that's the case. And then you've got a much, much tougher comp in the second quarter given the pull forward. So I just want to make sure you're confident that flat core is about the right number?

Yeah, we feel pretty good, given the visibility we have in the business around our framework that we provided with half one being little over 40% -- 48% of our total sales, EPS being a little under 47% of our total Europe. It's in line with our typical seasonality, also how our businesses are shaping up our backlog shipping up our orders come in, in January, all gives us confidence and the framework we've provided.

Okay. Good. And then the Patheon sort of penetration, can you just remind us where we are with that? It seems like there's some really good moment there. And then I'm just wondering, the car wash business seems to be maybe an industry that might benefit from the or rather the tax incentives out there sort of like might incentivize some investment.

I'm just wondering if you've seen any return to activity in the tunnels. .

Yes. The Patheon software, I think, is a real success for us. It's a product we've been working on for a bit, trying to bring it to market in the right way. And I think what we're seeing now are real proof points that helps the folks that are the larger operators in the market, how do they run a better car wash. How do they also attract consumers to their site.

It's also -- they have very high labor turnover and the ability for them for ease of use and training of employees and managing a network of carwash is certainly a real selling feature here. The way we're getting traction in the market and the turnaround in BRB, which you see real momentum building in the second half of this past year is not off new tunnel fills, new tunnels or haven't been coming to market. As you know, the business overall was really impacted by interest rates where folks were building out tunnels at a very rapid rate and it slowed down.

As we projected this year, we have a view that tunnel builds is probably going to be year-over-year and with that assumption, we will definitely make progress on Patheon because it takes a while for folks to get into that new software. And so we've got a pipeline, and we've got really good pilots out there and the great news is they have proof points of that, a system working with other blue-chip customers in the space.

So I think we'll continue to see momentum. If we get any benefit from tax benefits, both on the car wash side or in Mako or how that how that drops through. I think it's a little bit of a question mark on how that will play through.

I think we're all to watching that to see if that will have some impact, but that's not included in our guide.

And Nigel, I'll add that Patheon pretty early in this upgrade cycle. We've had some early adopters and larger customers that have deployed it, but we still have a pretty big installed base of our legacy solutions site watch out there. So there are a lot of good opportunities to continue to sell Patheon in the marketplace. Also, the recurring revenue on Patheon is higher than our legacy solution, given its higher capability and advantages that provides our customers.

Katie Fleischer, KeyBanc Capital Markets.

Just go back to the onetime adjustment in Invenco. Is there a way for us to think about what margins would have looked like this past quarter without the impact of that adjustment?

Yes. The inventory adjustment was $4 million. So that's about 130 basis point impact to Invenco's margins for the fourth quarter. So underlying margins would have been down slightly still year-on-year. Now Q4 last year at Mobility Tech a was a pretty tough compare from a margin perspective, and we did have some mix also that we called out between the different product lines that basis.

But underlying margins for Mobility Tech would have been around 20% for Q4.

Okay. Great. And then on repair, how conservative do you feel like the outlook is for flattish growth in 2026. I know it's still really early to call on inflection in that business, but just given some of the improving trends that you're seeing there and some potential help from the macro environment, what's the upside to that growth outlook?

Yes. Katy, thanks for the question on repair. Look, the good news is we're definitely seeing some traction on the areas that make the most amount of sense given the K-shaped economy that's been playing out is for repair technicians to be more productive. I think we all recognize the backdrop on the repair market is pretty healthy. You've got a car park now that's almost 13 years old.

I mean, that's ridiculous to see how many older cars are actually on the road, and that's really good for the sweet spot of repair and vehicle miles traveled are up.

Overall, it's a pretty good environment for repair. I think the problem we all recognize is that folks might be holding back from some of those repairs as well as the technicians are part of the working class it is also under pressure. And so if they can be more productive on the job site, then they're going to be willing to spend money in two areas that we've definitely made progress on our in the diagnostic area, where we have not sold to our potential on diagnostics.

We've got a really good lineup and really good price point on the diagnostic line, and it's a very capable multiyear product line, and we're being a lot more effective with training and selling that. And you saw that happen in Q4. We think there's like that.

And then we've actually done really well on these productivity cards where you're able to organise your tools, bring them right into the job site right into work that's being done and the technician can be a lot more productive there. And so those are the two general categories we're seeing the uplift occurring. And I think when you look at that going into the year, it's a little bit hard to predict what's going to happen. I think we don't really know what's going on with the consumer this year. It's a little bit hard to predict how tax breaks might affect.

And so I think from what we see right now, I think it's a prudent guide.

(Operator Instructions) Andrew Obin, Bank of America.

This is David Ridley-Lane on for Andrew. Just two quick questions and then a longer one. So just housekeeping what was book-to-bill in the quarter? And then also, just to confirm, it sounds like Matco Expo timing is again in second quarter of 2026.

Yes. So our orders were up low single digits on the back of a pretty strong Q4 last year. And book-to-bill was just under one for the year. For Matco Expo, yes, the sales will come in Q2. It's actually at the very tail end of Q1 for the last three, four days of Q1. So the sales -- the bookings will start coming in, in Q1, but the actual sales from Matco Expo will be in Q2.

Yes. And David, we hope not to change that. I think it was a very painful for investors to kind of follow the changing of the timing from Q1 to Q2. So we're -- we promise you we're not going to flip back and forth on the macro timing. And the reason why we did push Q2 is that our franchisees, our distributors are really fond of better weather.

Sometimes they bring their families on vacation there. And they were looking at a little bit better weather to do that, and it was something we really did a bit of hand ringing on, but we think it's more customer-friendly and distributor friendly. And so that's why we changed it, but we promised not to change it again.

Got it. Understood. We all like better weather. And then maybe I'm not understanding some of the dynamics here for gas stations, but I know the merchant acquirers will sometimes give these payment terminals the in-store terminals away as part of a multiyear agreement. So like First Data, we'll give you a Clover terminal, Elvan, et cetera.

I get why you need to have the full suite of payments and hardware but this is -- is the right way to think about this kind of like a low average hardware product that allows you to win the above-average margin recurring revenue and sort of offer the full suite. How would you kind of size that up?

No. These aren't below average. We do definitely the hardware that we're providing, like [space X6], both outside on the dispenser, but also inside the store are good margin products. Usually, when a payment processor gives away hardware for freight, the swipe fee of the transaction fees that they're charging the merchant is a lot higher because they have to make up the money. Most of our larger customers and even the smaller ones take benefit of industry, the next association has an agreement with merchant processors.

So usually, they take advantage of lower rates, so they aren't getting the hardware for free.

And then really, when you start thinking about the connectivity between the different payment terminals on site, whether it's inside the store, outside the store, on the car wash, on an EV charger -- and really, you started bridging that to functionality like order of the pump when you start bridging it to functionality like loyalty, media, having that common payment device is extremely important, and that was what Mark was covering in the prepared remarks around unified payment layer that in with NFX and customers like Shell, where we've deployed this are seeing significant advantage with managing the complexity of payment regulation and other customers, which speed is very important to seeing significant improvement in speed of the transactions and increasing the throughput from a that perspective. So significant advantages to our unified payment solution.

One of the areas that we're hearing also at the event they're at this week is clearly the complexity of managing their assets and these are very successful storefronts that are going in. And sometimes, these customers had a pretty fast cliff and it's how do you manage your costs going forward? So whether somebody might get a free piece of hardware here or there, that's not predominantly what they're interested in. They're interested in the cost of that infrastructure and what that caused them the complexity by which it's being managed, the ability for a microservices software platform also be modular in a way where that can enable loyalty.

Loyalty is a big deal if they can engage with that. If they can engage through media to bring people inside the stores. There's big uplift that can happen from that. And then they're also predominantly really interested in the life cycle costs. These folks hang on to these people.

These pieces of equipment for long periods of time, and they look at the life cycle cost management capability, it's not first cost that wins in the market segment that we're mostly focused on, it's really the life cycle cost that wins. And I think when you look at our offerings, we have real competitive advantages here.

Got it. And if I could squeeze just one more in. Can you -- I know there was part of your simplification plan, your decrease in the number of dispensers, the variance, the SKUs. Can you buy a GVR fueling dispenser in the United States without an Invenco hardware?

Can you repeat it again, maybe so I can understand.

I know you're decreasing the variance of fueling dispensers as part of your simplification efforts. And I'm just wondering for US gas station, is there a with Invenco option and a without Invenco option? Or is Invenco now just there in the base?

SPWell, Invenco is the name that we use for that technology suite and the payment kits. And I think it is a differentiating solution that we offer as part of this unified payment, and that's what customers get with that unified payment offering. So it's really part of the suite that we offer.

But we sell dispensers with payment integrated. There is no option in the US to buy a dispenser without our payments.

There are no further questions at this time. I would now like to turn the call back over to Mark Morelli for his closing remarks.

Yes. Thank you. Thanks again for joining us on the call today. We're entering 2026 with some really clear strong momentum and we have a solid path above-market growth and attractive margin expansion in front of us, and I'm confident our teams will continue to execute along that path. We appreciate your continued interest in Vontier and look forward to engaging with many of you over the next several weeks.

Have a great day.

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