Vontier Corporation (NYSE:VNT) Q1 2025 Earnings Call Transcript

Vontier Corporation (NYSE:VNT) Q1 2025 Earnings Call Transcript May 1, 2025

Vontier Corporation beats earnings expectations. Reported EPS is $0.77, expectations were $0.71.

Operator: Good morning, ladies and gentlemen, and welcome to the Vontier’s First Quarter 2025 Earnings Call. At this time, all lines are in listen-only mode. Following the presentation, we will conduct a question-and-answer session. [Operator Instructions]. This call is being recorded on Thursday, May 1, 2025, 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.

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

Mark Morelli: Thanks, Ryan, and good morning, everyone. We had a strong start to the year with first quarter sales, adjusted EPS and adjusted free cash flow exceeding expectations. Other than expected performance at Environmental & Fueling Solutions and Mobility Technologies, which grew low-double digits, drove core sales above our guidance range. These results demonstrate Vontier’s unique competitive advantage within the mobility ecosystem with a purpose-built portfolio of connected hardware and software solutions. Our connected mobility strategy places us at the forefront of customers’ digital transformation journey and offers optionality for their energy needs. Where this is most evident today is within our Convenience Retail & Fueling end market, where we continue to capitalize on strong industry CapEx. Our value proposition is clearly resonating with our customers and demonstrated by the success of recent new product introductions and our leading portfolio of integrated digital solutions.

Underlying demand trends in Q1 were strong, slightly ahead of our expectations, and we’ve seen continued momentum through the month of April. We have yet to see any discernible demand impact from tariffs or trade policy uncertainty with little evidence of material prebuying in our results. Book-to-bill, in line with our expectations, came in slightly under one in the quarter. Based on strong Q1 results and our Q2 outlook, first half results are tracking ahead of the plan we laid out for you in mid-February. We’re maintaining our full-year guidance, including the current impacts from tariffs and now reflecting a more cautious demand backdrop in the second half. Our portfolio is resilient with leading positions in attractive end markets. Convenience Retail & Fueling, which accounts for about two-thirds of our sales, has historically grown above GDP and experienced only low-single digit decline in the last major recession in 2008, 2009.

We’re proactively managing our tariff exposures, and we’re confident we’ll be able to mitigate the estimated cost. Given the confidence in our business, our Board recently approved the replenishment of our $500 million share repurchase authorization, which gives us ample capacity to prosecute buyback. Let’s turn to Slide 4. Given the volatility around tariff and trade policy announcements, we thought it would be helpful to provide a quick update on the estimated tariff impact based on what we know today. In the four plus years post spin through ongoing risk management, we have significantly strengthened the agility and resiliency of our global supply chain. The primary focus of our derisking efforts has been geographically diversifying our supply base with a specific emphasis on reducing our exposure to China by a factor of more than 3x.

We continue to transform and strengthen our supply chain with additional initiatives to further reduce our exposure to China. Recognizing the fluidity of the ongoing tariff and trade situation, we estimate the current cost impact at approximately $50 million before any further mitigations or pricing actions. Note that this represents what we would expect to incur in the balance of the year. As you can see in the table, most of the impact is related to product sourced from China, which reflects the aggregate cost of three separate tariff categories on both Tier 1 and Tier 2 suppliers. The remaining approximately $10 million tied to our exposure across the rest of the world, primarily represented by a few Southeastern Asian trade partners. This also includes the impact from Section 232 steel and aluminum tariffs.

Nearly all of the product sourced from Mexico is compliant with the USMCA exemption and therefore does not represent a headwind. We continue to countermeasure the tariff impacts across our businesses. These actions include further supply chain optimization and diversification, aggressively negotiating cost reductions with suppliers and passing through price increases. We expect to offset the estimated tariffs and neutralize the impact to our margins. It goes without saying that we are closely monitoring developments, and we will update you as the situation continues to evolve. Our primary focus is to control our controllables, executing on our Pillar 1 initiatives to optimize our core, leveraging self-help. One good example of this is our annual CEO Kaizen event, which took place last month.

Cross functional teams from across our businesses came together with the sheer purpose of delivering the step change improvements to our business. 90% of the projects worked on during the Kaizen were focused on our FPP 80/20 process, ranging from product line simplification to strategic pricing. As I mentioned previously, our largest end market Convenience Retail & Fueling has proven to be resilient in prior downturns. This has been collaborated in our channel checks over the last couple of weeks with larger national and regional operators reiterating confidence in their CapEx plans and expectations for growth. Likewise, our channel partners are not seeing any evidence of project delays or deferrals. As an example of the momentum in the industry, 7-Eleven recently announced plans to double its North American new store openings to 1,300 by 2030, including 500 stores between 2025 and 2027.

Most of those stores are expected to leverage 7-Eleven’s modern design, which has driven average daily sales 18% higher than their fleet average. Our Matco Expo event in mid-April was successful and performed slightly ahead of last year’s record event. The competitive advantage of our business model was on full display. Our market leading new product vitality allows us to meet the immediate needs of service technicians with a focus on optimizing premium quality with value. At the same time, we’re monitoring our Repair Solutions segment closely, particularly given the impact of inflation and declining consumer sentiment. I’m proud of the way our teams executed in an increasingly dynamic environment, demonstrating a strong alignment with the principles of the Vontier Business System and a commitment to the three pillars of our value creation framework, optimizing our core, accelerating profitable growth across the portfolio and sensibly expanding into adjacent markets.

In the current macro environment, we are focused on what we can control and doubling down on our Pillar 1 opportunities. With that, let me turn the call over to Anshooman.

Anshooman Aga: Thanks, Mark, and good morning, everyone. I’ll start off with a summary of our consolidated results for Q1 on Slide 5. Sales of $741 million exceeded the midpoint of our guide by just under $20 million with upside at both Mobility Technologies and Environmental & Fueling solutions. Core sales declined 0.7% year-over-year, better than our guidance range, led by low-double digit growth at mobility tech driven by strong double-digit growth at Invenco. Adjusted operating profit margin, down 40 basis points, was in line with our expectations. Compared to the full-year 2024, operating profit margin increased 30 basis points. Adjusted EPS increased 4% to $0.77, above our guidance range of $0.71 to $0.74. Free cash flow of $96 million increased over 20% year-over-year, reflecting a seasonably strong 83% conversion to adjusted net income or 13% of sales.

Turning to our segment results starting on Slide 6. Environmental & Fueling Solutions achieved core growth of approximately 1% or up 11% on a 2-year stack basis. We continue to see solid demand for both aboveground and underground retail fueling equipment. Healthy activity for underground equipment including upgrades to our cutting-edge automated tankage solution, the TLS-450 Plus as well as our 4-horsepower submerged [Technical Difficulty]. We’re also seeing steady above ground dispenser demand tied to new build, retrofit and replacement activity, all supported by evolving consumer preferences, advancing technology and ongoing regulatory changes. Segment operating profit margin expanded another 20 basis points, driven by productivity and simplification efforts.

Turning to Mobility Technologies on Slide 7. Core sales increased nearly 13% compared to the prior year, with Invenco, again demonstrating solid performance, up over 20% for the third consecutive quarter. Global demand for enterprise productivity and unified payment solutions continues to support growth at Invenco. Our customers are focused on enhancing the consumer experience on site, driving increased revenue and streamlining operations, all of which are better enabled by Invenco’s digital solutions and technologies. DRB sales declined double-digits year-on-year, but in line with our forecast and normal seasonality. While tunnel system sales declined in Q1, the outlook for new tunnel build remains unchanged, flat to slightly down for the full year.

The DRB team is expanding the recurring revenue base through a number of initiatives, including increased conversion of existing customers to a next-gen Patheon software platform. This focus drove low single-digit recurring revenue growth in Q1. Segment operating profit margin decreased 40 basis points versus the prior year, mainly on a onetime settlement. Q1 mobility tech margins were 20 basis points above the full year 2024 rate. On Slide 8, Repair Solution results reflect the impact from the timing shift of Matco Expo, our largest selling event of the year from Q1 to Q2 this year. Service technicians continued to defer discretionary spending in this environment. Large ticket items such as tool storage continue to face challenges as technicians prioritize quicker payback, productivity-enhancing tools.

Segment operating profit margin declined by approximately 280 basis points, reflecting volume and mix headwinds in large part due to the shift in Matco Expo. Sequentially, margins have remained stable over the last four quarters which has been an encouraging trend. Turning to the balance sheet on Slide 9. During the quarter, we accelerated our share repurchase activity to take advantage of the market dislocation, buying back $55 million worth of stock. Given current valuations, we firmly believe that share repurchase remains one of the most attractive uses of our capital. In line with this commitment, we received Board approval to replenish our share repurchase authorization back to $500 million. Looking ahead, we anticipate over half of our free cash flow in 2025 to be deployed towards share buybacks.

Turning to the updated outlook assumptions for Q2 and the full year on Slide 10. For the second quarter, we are projecting total revenues in the range of $725 million to $745 million. We expect adjusted operating profit margin expansion of 30 to 80 basis points, resulting in adjusted EPS in the range of $0.70 to $0.75. Turning to the full-year. As Mark mentioned at the start of the call, we are maintaining our previously issued guidance. More specifically, we are not making any changes to the core elements of our guide. I would point out that we have updated our modeling assumptions to reflect lower interest and share count for the year. Our adjusted EPS range is unchanged at $3 to $3.15. Despite the upside in Q1, slightly improved outlook for Q2 and modest tailwinds from FX, interest and share count, we thought it would be prudent to embed contingency into our guide.

While we are well prepared to execute in any environment, we are taking a more cautious view of the second half demand given the continued macro uncertainty. The end markets we operate in have proven to be resilient in prior downturns, and we would expect our portfolio to outperform on a relative basis. Our current tariff exposure is manageable, and we are confident we can mitigate the impact. Our business is heavily indexed to the U.S. and our sales exposure to China is less than 1%, and our global manufacturing footprint leverages in region for region. We have a solid runway of self-help opportunities through our Pillar 1 actions, and we’re returning capital to shareholders through share buybacks. With that, I’ll pass the call back over to Mark for his closing comments.

Mark Morelli: Thanks, Anshooman. I’m encouraged by the start to the year, and I’m confident in our ability to execute in a challenging environment. Our current exposure to tariffs is limited, and we’re actively managing known headwinds. I’m also encouraged by the leverage we get from producing in region for region. As a reminder, our sales into China are minimal, a result of us working down exposure to China since then. We have leading positions in resilient end markets that have performed well in downturns. While the second half suggests some uncertainty, we’re positioned well with the strongest players in the market. Our leading market positions, along with recent innovation solving our customers’ high-value problems are resulting in share gains.

Our connected mobility strategy is showing traction, and we have significant runway of self-help opportunities ahead, both of which position Vontier well for the future. With that, operator, please open the line for questions.

Operator: Thank you. Ladies and gentlemen, we will now begin the question-and-answer session. [Operator Instructions]. Your first question comes from Nigel Coe of Wolfe Research LLC. Please go ahead.

Q&A Session

Nigel Coe: Thanks, good morning everyone. Thanks for the questions. So Mark, I just want to pick up your comments on sort of contingency in the back half of the year, mixed to a sense obviously. But number one, have you seen any evidence for that? Or was this more of a macro contingency? And perhaps just refresh us on how the chips in organic is changing between price and volume? I’m assuming that’s some price increase as well those tariffs.

Mark Morelli: Yes. Thanks, Nigel. Appreciate the question. So first of all, we’re not seeing any demand disruption. The markets have been very resilient. So everything that we see so far, and we’ve been really digging deep into looking at some of the demand signals here. And we’re fresh off an international car wash. We’re fresh off meeting with some of the CEOs in NACS event earlier this week as well as the Matco Expo as well as a fleet show called the Advanced Clean Technology Show. All of that is very, very recent information with pretty deep channel checks there. And so we’re not seeing indication of any demand disruption. So as at leads to your question into the second half, pretty resilient markets that we’re dealing with and we’re able to manage that tariff impact that we articulated with half of that being through price.

I think we’ve been demonstrating from our businesses, we’ve been able to get price historically. And while obviously, in this situation, we need to be careful with the price increases that we do prosecute in the market, I think we feel very confident that with what we’ve got, we’ve gone out with many of our price increases already. And so they’ll be taking effect here pretty shortly as that leads to the second half question that you asked.

Nigel Coe: Right. And maybe just some covered in terms of the second half, how the price versus volume looks in that second half?

Anshooman Aga: Yes, Nigel, so if you look, we are having a little bit of a stronger half one, obviously, coming off a solid Q1 and even our guide for Q2 is slightly above the previous implied guide that we’ve given. For half two, we basically embedded about a 1% core growth. Now a lot of that will come from price. Given the current environment, we are a little more cautious on volume just given the macro.

Nigel Coe: That makes sense. And then just a couple of quick clarifications, Anshooman. You called out the Matco show very successful. I think that’s maybe $25 million, $30 million from 1Q to 2Q. Just want to make sure that’s the right number. And given your share buyback comment, I think it implies maybe $225 million plus of buybacks. I’m getting a lower share count for the full-year. So I just want to make sure we’re calculating that properly.

Anshooman Aga: Yes. So as Mark had mentioned, Matco Expo, we were very pleased with the results. It was in line with the previous year, which was a record expo. But also, we believe, given that this was the lowest price point event of the year, given the tariff uncertainty and price increases related to tariffs potentially, there might have been some pre-buying at Expo events and the base demand be a little bit softer, given consumer sentiment haven’t turned down negatively. On the share count, yes, if you think about $400 million to $450 million of free cash flow for the year, then a little over $200 million in buybacks. Usually, our cash is pretty back-end weighted just from the seasonality perspective. So the buybacks would also tend to be a little more back-end weighted for us. And that’s kind of what’s embedded into the guidance. It’s just average share count based on that.

Nigel Coe: Okay. Great. Thank you, Anshooman.

Operator: Thank you. Another next question comes from Julian Mitchell of Barclays Investment Bank. Please go ahead.

Julian Mitchell: Maybe I just wanted to start off with mobility tech. So the sort of odd dynamic in the first quarter with very, very strong sales growth, but margins down. Just maybe sort of flesh out how do you see those two items evolving through the year for mobility tech, please, and when we should see the margins return to growth?

Mark Morelli: Yes, we’ll have Anshooman jumping on this one, but let me just point out here on mobility tech that we’re seeing a pretty consistent now average growth. I think it’s indicative of the investments that we’ve been doing in this space, a lot of the digital transformation that’s at the forefront of the C-store. C-store is about 70% of the volume that we serve. And I think we’re beginning to see pretty consistent payoff and share gain there. Anshooman, do you want to jump in on the question?

Anshooman Aga: Yes. Julian, on the margins if you remember, we’ve guided that margins would be relatively flat for mobility tech in Q1. They were down 40 basis points on a one-time settlement that we had. But compared to last year’s average margins mobility tech margins were up 20 basis points. Q1 was unseasonably high last year just based on some mix. For the full-year, we’re still expecting good margin expansion for mobility tech year-on-year. We expect margins for mobility tech to be up close to 100 basis points or about 100 basis points for the full-year, and you’ll start seeing that read through starting with Q2.

Julian Mitchell: That’s helpful. Thank you. And on the repair business, that’s probably the one that in a way has the sort of least visibility very, very short cycle. And just sort of help us understand for that piece. Are you still thinking you can get to sort of flattish sales for the year? Or is that something where maybe the back half, now it may be prudent to assume a decline just because of the environment? And when we’re looking at tariffs, is there any one segment that you are worried could have a net headwind in 2025 overall?

Mark Morelli: Yes. So there’s no question that the Matco business is short cycle. And we are very cautious on what we’re sort of seeing here on a demand picture. At the same time, we’re on the case. We’re spending a lot of time coming off the Matco Expo, looking at a buy category, spending a lot of time with our distributors and with service technicians. The — first of all, the Matco Expo sort of the prebuy and then itself or in the books, there is a post-selling activity that goes on. And that’s normally the largest stocking event of the year. So they do normally take in inventory. They started with the truck inventory or the store inventory, as we call it, at a really good level. So they didn’t start at a high level, which is encouraging and so the fact that they had a pretty solid buy based on the lineup that we offered.

So we introduced another 500 SKUs. We tried to be very sensitive to the fact that people were looking for productivity solutions at a better value. But at the same time, we launched a new success toolbox, which is our high-end toolbox. It also sold quite well. But there’s no question that we watched this sell-out from our stores or from our trucks. And we’ve seen in April some of that sell-off weaken as well. So we would anticipate a more cautious demand environment for Matco. But that’s factored into our guide. So do you want to add some further color there, Anshooman?

Anshooman Aga: Yes, given the current macro, we don’t believe Matco or Repair Solutions will be flat this year. I would expect that to be down mid-single digit plus, but again, from a guide perspective, keep in mind, we’re continuing to see strength across the vast majority of our portfolio, which is convenience retail, both from the C-store and the new builds for the car wash with the channel checks coming in strong. So potentially some offset there. And then also FX should be a little bit of a tailwind versus the previous guidance for the full-year in the tune of about $10 million, which can offset some of the Repair Solutions weakness, hence, we kept the guide intact.

Julian Mitchell: Thanks. And your point was there isn’t a tariff net headwind for repair for the year or and either of the other two segments?

Mark Morelli: Yes. I think Matco is a little more disproportionately exposed to the tariff than the other businesses, but not — it’s not a significant issue. If you look at our business, 20% of our business is repair. At the same time, we have a lot of mitigating aspects. If you look at our exposure, particularly on Matco from a couple of years ago, we were more than 3x exposed. So we’ve been — and I’m really proud of the team’s work here, been working very diligently prior to the April 2nd announcements that were made to be able to manage that supply chain accordingly, particularly out of China. And I think they’ve been very successful doing that, still more work to do. But I think at the same time, we’ve got a good balance, a good lineup. And I think we’re on the case, and I think it’s something that it’s certainly manageable and we get our arms around from here.

Julian Mitchell: Thanks a lot.

Operator: Our next question comes from Andrew Obin of Bank of America. Please go ahead.

David Ridley-Lane: This is David Ridley-Lane on for Andrew Obin. On the Environmental & Fueling Solutions, I know that each one of these projects site modernization and so forth is it’s probably small dollars. But I’m wondering, is there — are you picking up any hesitancy or companies perhaps facing in things on a slower basis? Anything on sort of your customers’ capital planning, scheduling, et cetera?

Mark Morelli: Yes. Look, I really appreciate the question. We paid a lot of attention to that, looking pretty deep into our customers’ ability to sort of move forward their projects, both what we call NTR or new to industry which are new builds, which are brownfield and greenfield as well as what we call refresh and retrofit, which are smaller sized projects that you were sort of indicating in your question. And we’re very confident of what we’re seeing so far that folks are clearly full speed ahead. One of the backdrops here that might be different than some of the other industries is that the community retail space is pretty resilient when it comes to downturns. So we ask questions a lot, particularly of our business owners that we serve that have been around for a long time in the industry, particularly back in the last major recession in 2008, 2009.

And so the — our business is not immune to recessions, but it’s very resilient in a slowdown in the economy and in recessionary periods. And one of the major reasons why is that there is a trade down effect that happens where the C-store space benefits from that. And also what tends to happen is that oil prices drop, and that’s also very good for the industry, particularly in the U.S. where they able to make more margins. So they’re very cash flow positive, even though some of the store traffic, in some cases, it might be spotty. At the same time, their balance sheets are strong and the venues that we’re serving, the largest players in the industry, the large regional and national as well as international players are advancing very successful formats, and they know that those formats drive greater store traffic for them.

And so it’s something we’re paying a lot of attention to, to see if there’s any demand signal that do start to drop off. But so far, everything that we’re seeing is they’re certainly going ahead from even a slowdown that most folks would expect to be hitting some of the markets.

David Ridley-Lane: Got it. And then just a quick follow-up on sort of the Invenco pipeline. Obviously, you’re having continued success. Just sort of reputationally with some of the remaining large players that haven’t converted on, how are those conversations ongoing?

Mark Morelli: Yes. So we’re having pretty high-level meetings. As you can imagine, these are long-cycle sales opportunities. They involve a cutover of critical technology for them, and they continue to progress really well. I think the proof points we have out there bode well for follow-on orders. I think a lot of folks don’t want to be first when you introduce a major technology change like this, and you see we’re kind of through that initial vanguard of orders and we’re ramping pretty nicely as what you see in some of our numbers. So I think that bodes well for the medium, longer term here as we continue to work through this. No slowdown in conversations. If there’s anything, there’s more conversation, more pilots that are ongoing. So we feel really good about the momentum we have there in that business.

David Ridley-Lane: Thank you very much.

Operator: Thank you. Our next question comes from Andy Kaplowitz of Citigroup. Let’s go ahead.

Unidentified Analyst: Hey, good morning everyone. This is actually Jose on for Andy. Maybe to start, could you talk about the progress you’re seeing from your focus on prioritization process and your other simplification initiatives given your gross margin of 45% plus in 2024 and also in the quarter. How are you viewing the path of the 150 bps margin improvement by 2026 target that you outlined at your Investor Day before?

Mark Morelli: So look, our FPP process is with most folks would know is an 80/20 process with product line simplification customer led and rating fan. I would say we have a tremendous amount of runway ahead. We’re continuing to have very engaging business reviews with each of our businesses on the opportunities that we have for further simplification. We’re a high mix, low volume business with engineered products, and that complexity has really been conspired against us for quite a bit of time. So we have a lot of opportunity clean-up, we’ve also been taking some of those investments in — some of those cost savings in recent years and plowing that back into R&D, so we can get growth. We’re talking about Invenco, it’s a prime example of spending more on development on a customer high-value problem.

You can see the uptake that we’re having on that. So we’re also not forgetting the growth element of that. But I think from a self-help opportunity as we lean into this, particularly with folks who might be cautious about demand, we’re certainly cautious about demand. I think there is a really solid set of opportunities that we have and very engaging each of our operating companies. We have our VBS office where this is sort of run out essentially as well as finance. It’s very involved with this. We’ve also engaged our data analytics team more effectively to pull out insightful elements here to help us clean up our portfolio. Do you want to comment on the margins, Anshooman?

Anshooman Aga: Yes. I think we still feel comfortable that we have a path to the 150 basis point margin expansion over the three years that we had laid out. And so we feel there’s a significant runway for opportunity to continue to expand margin.

Unidentified Analyst: Thanks. And then maybe a follow-on on mobility tech. You called out in your presentation, growth in grid. Could you update us on that business and your current EV strategy? How are you thinking about the potential growth on that side of the business?

Mark Morelli: Yes, so our drives business is a relatively small part of our portfolio, but has been experiencing very high growth. What drives does is it provides the software for anybody who wants to manage a fleet of electric chargers. Typically, it’s high-speed chargers. It is very difficult to do the tech stack to be able to manage that with very high uptime, with great energy management capabilities, how it backs into the grid as well as how you attract consumers to be able to charge and make that effective. We are #2 worldwide with the number of plugs under management with the Drives platform with roughly about 110,000 plugs under management at a clip of a very high growth rate on a multiyear basis, and we’re continuing to get very strong demand from some of the largest charge point operators in the world.

I think if you’re going to be a charge point operator and more and more, you start seeing the convenience store operators looking to be able to do this themselves like Circle K is a great example of that as well as others, they want the tools to be able to do that. You have a choice to make. You either are going to write that software yourself and strong charge point operators choose to do it, but they find that to be very difficult for them to do. And so those are some of our best customers that have worked on and tried that for some period of time, and then they’ll convert and we’ve been converting a large number of these charge point operators as well as new charge point operators at scale. That’s something we think bodes really well because it’s a SaaS business at very high margins.

And it’s something we’ve invested in historically, but now we’re beginning to get growth. It’ll actually begin to show up at the Vontier level.

Unidentified Analyst: Appreciate the time guys. Thanks.

Mark Morelli: Thank you.

Operator: Thank you. 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.

Mark Morelli: Yes. Thank you, operator. I appreciate everybody joining us on the call today. I’m encouraged by the start that we’ve had at the beginning of this year. As we navigate through this near-term uncertainty, our teams will continue to execute and advance our strategic initiatives. We are confident in our ability to deliver differentiated solutions that create value for our customers and returns for our shareholders. We appreciate your continued interest in Vontier and look forward to engaging with many of you on the road in the next couple of weeks. Have a great day.

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