Is that good for you?
This is great.
Okay. You always got to sell, right?
This is great. All right, I think we're on. Great. I'm Will Dodson. I'm from Morgan Stanley. I'm delighted to be joined today by Mark Morelli, who's the President and CEO at Vontier, as well as Anshuman Aga, who's Senior Vice President and Chief Financial Officer, and Ron Edelman from IR here as well. We're gonna spend the next half hour or so talking about the Vontier business. Let me start with just a bit of a preamble at this stage, because I think it's a timely discussion. It's been four years since, almost to the day, candidly, since Vontier spun from Fortive. And I would say some elements of the transition have been more visible to those of us on the outside than others.
Lots going on. A major product cycle downturn with EMV. You spent the last several years re-accelerating growth and operating margins across the portfolio. Lots of investment in R&D, leadership changes, and at the initial stages, I would say of a multi-year portfolio shift. So when you step back and think about all of that, where are you in that journey? What inning? And how do you think you want to position the company for the longer term? What's sort of the end state?
Yeah, well, look, I think it's been, it's been a really interesting journey since then. I think there are a lot of transformational work. I think, one of the more salient things to bring out here, coming up on a four-year anniversary, is I think the portfolio's, significantly different. We've certainly repositioned it through, some acquisitions, through organic revenue growth, as well as through divestitures. But I think the thing that was one of the more harder things to do in the face of everything that you discussed, was how to bring this set of assets into focus by which there is some real ability for it to work together, and you can create a network effect and create a more growthier profile. So let me kind of describe that, maybe put that in a nutshell for folks.
I think we articulate the market that we serve is a leader in the mobility ecosystem, and if you haven't thought about this, it touches people's lives every day, and it's the critical infrastructure, both physical and digital, by which vehicles stop and get fueled, recharged, serviced, repaired, and consumers like you and I stop and get your essentials, and there's really three vertical segments that this applies to. The first one is the convenience store stop in your local neighborhood or your truck stop along the highway. I think you all recognize that that format has been changing. There's been a lot of investment going into that, and we are either the number one or number two of this critical infrastructure in each one of our businesses where we sell to that space as a technology provider.
The second vertical is on fleet management and fleet depots, where if you think about this is commercial trucking to even, like, a plumbing contractor in your local neighborhood, or UPS, or Waste Management. All of these vehicles are undergoing the same transformation in the mobility ecosystem, and the third vertical that is relevant here is around vehicle repair, truck and car repair. And so those three verticals are also benefiting from a set of secular drivers that make them really growthy and very attractive. The first of which is, it's no secret to anybody, it's all, we're all going through an energy transition, and that energy transition is about sustainability, it's about affordability of energy, and it's about energy security.
And then when you look around the world, the pace and rate of that is ebbing and flowing, whether it's electric vehicles or hydrogen, or folks are continuing to use petrol and diesel. So that's one secular driver that is very, I think, accretive to our business. The second one is the complexity of this infrastructure. It is receiving a lot of investment. Just read the news about Wawa or Kwik Trip or Sheetz, where they're building out their footprint, and folks are going to this more attractive space, which is requiring a lot of investment and infrastructure spend that is going into it, but that means that it's complex. There's also a lot of acquisitions that are going.
The industry is consolidating. The larger folks are buying the smaller mom and pops, and this adds also a lot of complexity to that. Then the third one is that there is labor challenges. If you think about labor challenges, you know, pretty much any of this infrastructure that I'm talking about is probably at the top of the list in terms of labor turnover. In a C-store space, labor turnover on average is 140%. So folks struggle with how to manage this infrastructure.
And when you're number one or number two in the most critical verticals here, you are meeting the high-value problems to be able to provide a more productive set of tools and capabilities, and they're trying to attract consumers to their site, which involves a network effect that we are, I think, finally now being able to put on the table and be able to demonstrate growth around.
One of the things, Mark, you've talked a bit about that I find super interesting is the strategy around connected mobility. Talk about the role that that plays with this go-forward vision for the company.
... So the way that we articulate how we're solving our customers' problems in this space is what we call the connected mobility strategy. And this strategy is about connecting smart hardware, providing application software, and scaling on the cloud software. And when we spun, it was about we've increased our recurring revenues about 10 points across our platform. We have more than 1,000 software engineers. At the same time, the problems that we're solving are problems that we are able to solve more in the sense of a digital transformation. If you talk to some of these heads of some of these businesses, they are all wrestling with how do their tools and capabilities, which by the way, underserve where they are in terms of their development and their infrastructure build-out.
And when you can start providing a leading system, whether it be the leading system on a car wash solution, leading system on a gasoline-based dispenser with a payment kit, the leading point-of-sale system, the leading site management software, the leading fleet management dispensers, both compressed natural gas, renewable natural gas, going to hydrogen. When you're providing all these, then the ability to connect this and manage it and cross-fertilize is really relevant. Let me give you a customer problem. You go into a convenience store and you pump gas. That's on one track. That's one-on-one transaction with a payment transaction. You go inside the store, that's on a separate transaction. You do a car wash, that's on a third transaction. Why isn't that the same payment kit? Why isn't that the same payment transaction? Why isn't all accrued to their loyalty program? It seems basic.
Why can't you order food ahead and have it delivered curbside? All these things are pretty basic to be able to provide, and since we're the leader in all this space, we're able to provide a microservices-based platform where you can share APIs across the infrastructure, and you can provide site management. That's a huge productivity benefit for folks in this space where there's nobody out there. It's highly differentiated based on what we're able to provide.
Well, why don't we use that as a jumping-off point to talk about the portfolio in a little bit more detail, and I think a great place to start, just given that discussion, is in Mobility Technologies. So you went to a new reporting structure about a year and a half ago. I think that's clarified the company's operations and business units tremendously. Mobility, though, in MT, there's still a fair bit of complexity to that business, several different segments. Why don't you talk a little bit about how you see the clarity in that particular portfolio? And then we'll get into the other two segments in a second, but how the segment for MT differs, or sorry, the strategy for MT differs from those other two segments.
Yeah, Mobility Technology segment really serves two end markets. It serves the convenience retail market and then the fleet customers of ours. And the common thread across the portfolio is the connected hardware, application software, and scaling in the cloud. We're a market leader and a technology leader in this space, and through our digitalization efforts, we're driving productivity and automation for our customers and also bringing in a better consumer experience. So taking the convenience retail space, we have our Invenco business in that space, which provides point-of-sale, payment, and enterprise productivity solutions for the convenience store.
We're a clear market leader, and one of the simple examples from just this morning, we had a press release around Costco in Canada, where they're taking a payment solution and our site management or enterprise productivity solution in effect, and launching that across all their sites in Canada. We do the same thing on the car wash site with our DRB solution, where we have a deeply embedded point-of-sale and control software, and we're the clear market leader. 17 of the 20 largest tunnel operators in the space, tunnel car wash operators in the space, use our solution. And then for EV charging, we provide the network management software, and we're a leading provider of the network management software and energy management for the site. We have over 85,000 plugs under management, making us the second-largest provider of the software in the space.
On the fleet sites, we're helping our customers through their decarbonization journey. Significant piece of the emissions are from fleet, and all our fleet customers are working on their decarbonization journey. We do believe in a multi-energy future, and as they're planning out their fleets and moving towards the mixed fleets of diesel, CNG, RNG, or even electric vehicles, how do they plan? How do they manage their fleet through a single pane of glass? And that's where our solutions come in. We have the leading CNG, RNG provider dispensing solution in the space with ANGI. We're also in the hydrogen space now. A perfect example is Waste Management, where we provide the station for RNG, CNG today for 22 of their locations. And then we have a telematics business, which is helping our fleet customers, also called Teletrac.
Let's talk for a second about Invenco. Mark gave the good example of the convenience store problem set. This is where a lot of the activity in your business is taking place around the convenience store. You mentioned, Anshuman, the recent win and press release this morning around Costco. Talk a little bit more about what's going on in that particular business, how you see the C-store evolving? Some of the other things that you guys are doing there, some of the other developments.
So, as Anshuman was saying, that, you know, an important part of this infrastructure and capability is around how we provide these tools and capabilities to the C-store owners. So just a little bit of history. This business, there was a kernel of this when it spawned, but it was embedded in part of GVR, but it's essentially, a connected smart hardware and software business, so essentially a software business. And it was not growing. It didn't have the investment for growth. It didn't have the structure for growth. It was very siloed out geographically because we sell these products around the world. Like, point-of-sale system in convenience store is actually different in Spain than it is in the United States or in the Middle East. And so a very siloed, very fragmented, not getting growth investment, not getting, didn't have the growth infrastructure.
So what we did was we formed this into a business. It's roughly a $500 million business, created leadership from the outside that has technical leadership, pulled it out, had as a direct report into myself, and be able to invest with the right leadership and management team for a software-enabled business. We did an acquisition called Invenco, which that will be a 20% return on invested capital in two years, and we rebranded this business, Invenco, by GVR. Now, last year, this business didn't grow, but what's happening is on the launch of the FlexPay 6 payment terminal, as an example, or the iNFX site management software, which, by the way, we've rolled out to more than 10,000 sites at Shell, and we've rolled out to and we're rolling out to 8,000 sites in Chevron.
What Anshuman just talked about with the combination for Costco and Canada of not only the FlexPay 6 payment terminal, but the iNFX site management software. So all this capability is coming to its fore. Last year, it didn't grow. This year, it will post really healthy growth on the backs of that, and I think, you know, demonstrates the fundamental change that's happening there. We're also consolidating the software platforms into a software factory. Most of that work is being done out at design centers that we're building, actually, in India, and a lot of the software activity and growth is happening there. But a couple other things to highlight. We've talked about the ability for security of payment. We have, in the Middle East, a leading offering called VIS, or Vehicle Identification System.
This is where the vehicle itself will identify with the user, and when you're dispensing fuel, that's a highly secure payment. We're rolling that out in another country in the Middle East. And so these type of payment security issues are big. These regulatory drivers are happening all the time in the industry. It drives our industry forward. There's a great societal benefit from that. And in developed markets, it's great, but also in developing markets, it's advancing a lot, too. And this automation capability is a real capability that we see long term with a strong secular driver, where we are building out with great investment and we think excellent traction, which we're articulating mostly right now through press release, but this year will pose really strong growth.
Another part of that, the Mobility Technologies portfolio that has grown significantly over the last couple of years has been the alternative energy business. I think twenty-plus in the last, you know, over the last couple of years. What do you see driving long-term growth there? Is that fundamentals in place? Are the fundamentals in place for that to continue?
Yes, they are. And when you think about this business, what it really is, is it's the ability to serve fleet managers and fleet depots with their technology to decarbonize. So the transportation industry today in the United States represents about 30% of the greenhouse gas emissions that are occurring, and less than 1% of commercial fleets are decarbonized. So you can imagine the pressure that these fleet operators are under to decarbonize, but it's very complicated for them to do that. They all have mixed fleets. They all have different routes. If you're a small fleet operator or if you're a major long-haul trucker, you're in a completely different profile. If you have a municipal government-owned fleet, it's very different. So the fabric of how do you make progress with a trusted partner is a really big deal.
And so the businesses that we have, Angie is one of these businesses, where we're the leader on compressed natural gas, which is now going to renewable natural gas. We've just launched a line of hydrogen. Of course, we offer electrification. I'll talk about the electrification here in a second 'cause we're actually the leader in providing that. And so for fleet operators to put this on a single pane of glass, where they're able to manage this productively, you have a trusted partner. Waste Management is a great customer of ours. UPS is a great customer. These folks all need this partnership and capability. But if you look back over a couple of years ago, this business has now doubled, and that same connect, manage, scale part of, for a fleet operator, it's a high-value problem for them, where we're playing a critical role.
You mentioned electrification. Obviously, a big sentiment shift around EVs just in the, you know, in the course of the last year. Talk about the impacts of that on your EVolve business and what your outlook is for that going forward.
So the way we think about the energy transition, like we said, it's a trilemma. What we're seeing happening with electric vehicles is a more sense of reality in terms of adoption rates. But we serve the electric charging market, and we've been working pretty earnestly on this since spin, and we've emerged as a network software provider that has, by the end of this quarter, between ninety thousand and a hundred thousand plugs under management. So it's probably number two worldwide from a high-speed plugs under management or even a level two chargers, and this is on a rate of doubling the monthly recurring revenue. It's a SaaS business every month.
The issue for us is that we see that there are certain markets, like the Nordics in Europe, where 95% of vehicles sold today are electric vehicles, and they're reaching very high percentages of the car park that's already electrified. We have about 80% of all public chargers under management with our network software from EVolve today. That's great, but in the U.S., there'll be places in the U.S., it'll take a lot longer to reach electrification rates, and I think the benefit with our portfolio is that we benefit with whatever rate and pace a certain geography might require to in order to decarbonize and be more sustainable. We have the solutions to be able to lead them towards a more sustainable future with the right kind of assets, so we're really happy with where we're positioned in terms of the portfolio.
I couldn't have said this certainly at spin, 'cause this wasn't part of our portfolio then. We now have a turnkey electric charging, high-speed charging offering with our partnership with SK, where we're combining our network software with that turnkey. We launched that this summer. We have about $100 million in the pipeline. There's a really strong uptake in that with NEVI funding in the United States. That's part of the infrastructure build-out. So I feel like we're at a point where we can have the right solution for the markets that require those solutions at whatever rate and pace that they're gonna decarbonize at or electrify, and I think the portfolio is in a really good position to be able to recognize growth based on that.
Great. Before we get into fueling and Matco, let me just... Now that we've wrapped on Mobility Technologies, let me see if there are any questions in the room before we go into the other segments. Why don't we then start on retail fueling? This is the business that's obviously been challenged by or you guys have had to rise to the challenge of the EMV down cycle. Talk about now that that's behind us, prospects for growth, how you're feeling that that business is positioned.
When we think about our fueling business, it's a global business. It's both above ground dispensers that all of you recognize when you dispense fuel, but also it's the underground and the associated software that goes with that, and also the payment technology that goes with that as well. That business is fundamentally driven by regulatory drivers, whether it be vapor recovery for sustainability, whether it be security of payment drivers. We live in a more regulated environment now than we ever have before on a global basis, whether it be a vapor recovery going through Mexico, whether it be security of payment adoption in Brazil, where the dispensers are being replaced.
You know, the Costco announcement that we made earlier today, that was fundamentally driven because in Canada, there was something called the Payment Card Industry version four, that is being sunset as a payment security standard in Canada, and that's not being extended. That payment security offering gives us an opportunity to advance with a more modern architecture, but the major, the underlying driver there is security of payment. This stuff, folks, is not going away. We're in a more regulated environment globally than we ever have been before, and these regulatory drivers are constantly driving our business forward. On the underground side, very growthy business is our Veeder-Root brand. It competes extremely well at high margins, growthy business. Last year, was experiencing some destocking that we had talked about. This year, we're out of that.
We've launched new offerings, like a new submersible pump, which is at four horsepower. The relevancy of that, it's bigger because there's going to be more larger underground tanks that are going in. This enables us to be more cost-effective. We have a new automatic tank gauge that has the world standard for vapor recovery. So all this innovation means that we've been gaining share in the marketplace, both domestically as well as internationally. Outstanding business for us. So, now we're post EMV. That was a major secular driver. But now you have all of these smaller drivers that are happening for regulatory drivers around the globe, and this means a pretty stable, growthy, very profitable business, where we're also being able to expand already healthy margins. So we really like that business.
It's an oligopoly, so there's really only a couple players in the market worldwide, so it's very disciplined... probably not a lot of new entrants coming into this market as well. And our investments, I think, are paying off as we-- you can see pretty good share gain trends that we've been able to stack up in this industry.
Okay, final segment, Repair Solutions, Matco business, another legacy part of the portfolio. Fundamentals there seem to be intact and supportive of certainly near medium-term positive performance. Talk a little bit about how you're thinking about that business and what you see as the near-term trends.
Yeah, well, the underlying fundamentals for car repair are extremely strong. When you look at the average age of the car park, it's up to 12.6 years. The sweet spot of repair is cars over five years, so that car park is increasing. When you look at miles driven, that's up. The complexity of the car park with electric vehicles, hybrids, along with the ICE vehicles, is increasing. And then when you look at the technicians, technician wages are at record levels, and technician employment are at record levels. So the fundamental backdrop is extremely strong. At the same time, the technician who buys our tools is a U.S. consumer, and they're feeling the impact of high inflation, high interest rates.
So what we've seen is, at this stage, there's a little bit of a slowdown where this, they're not buying discretionary items at the rate they were buying. We've seen quarters, a few quarters in a row, where we were selling discretionary items like toolboxes, high-priced items at double-digit growth, and that kind of turned in the second quarter, especially late in the second quarter. Having said that, we feel this is a great business, and we continue to drive product vitality, which allows us to continue to grow share in this space. But also from a longer-term perspective, we think it's a mid-single-digit kind of growth business. When you really look at it, there's three levers for growth in this business. First is same-store sales at constant prices.
We should be able, through our product vitality, to get about a couple of points of growth from that. Additionally, about 30% of the routes through our franchisees are unserved right now, and we're adding a couple of percent of growth by adding new storefronts or new franchisees every year, and then we should be getting 1-2% of price every year through just our power of our Matco brand, so at the end of the day, this business should be a mid-single-digit grower for us. Longer term, right now, we are seeing some of the impacts to our technicians, but we feel good about the business.
Okay, I want to ask one last question about capital allocation in a second, but before I do that, let me open it up to the room, as we wrap up the portfolio discussion. Okay, well, let's, then let's finish on capital allocation. I think after Q2, you guys, signaled the clear. There was a clear signal the preference was gonna be for share buyback. Does that mean deals are off the table, for the foreseeable future? Just talk about capital allocation priorities going forward.
Yeah, the deals aren't off the table, but our capital allocation, very intentionally, is how we describe dynamic. Meaning that we always go towards the highest return option for our shareholders. We're very return on invested capital focused. We believe we're trading significantly below the intrinsic value of our shares and below our peers, and as a result, share buybacks are a great return and use of capital for us. And what we've said for the back half of this year, Q3, Q4, the majority of our cash flow will be deployed towards share buyback. For Q3, we had $100 million ASR that we've executed on, and we'd expect more share buybacks in the fourth quarter. Having said that, we're very active in cultivating our M&A pipeline. It's very strategy-led, but think of it more bolt-on kind of transactions.
But, we're going to remain very disciplined and very returns-focused. We generate $400-$500 million of free cash flow a year. So over the next three years, about $1.5 billion of cash, and between buybacks and M&A, I think we will deploy with high returns. And looking back over the past three, four years since then, we've generated about $1.7-$1.8 billion of cash, and we've deployed 100% of that cash, both through acquisitions and buybacks, and on a cumulative basis, through end of the second quarter, that was already at double-digit returns. So we are building, as a young company, a strong track record of deploying capital with high returns, and that's what we plan to do with having our dynamic capital allocation policy.
All right, well, since we got 51 seconds, talk about balance sheet supporting all of that, leverage targets based on where you are today, where you'd like to get to, how you see that evolving.
Yeah, our balance sheet is pretty healthy. We're at two point seven times net leverage. We're split-rated today. We've got two of the agencies at investment grade, one a notch below with a positive outlook. So, you know, as our EBITDA is going to increase, that's a natural deleveraging event, and we generate a lot of cash. Our portfolio, while it's not recession-proof, it tends to do well through recessions in the past, and we feel pretty confident in the ability to generate a lot of cash every year. So we feel pretty comfortable where we are with our balance sheet.
Perfect. It's a great place to wrap, so Mark and Anshuman, thanks for joining us.
Oh, thanks for having us.