nVent Electric (NVT) 5 Feb 202019 Q4 Earnings call transcript

Ladies and gentlemen, thank you for standing by, and welcome to the nVent Q4 and Full Year 2019 Earnings Conference Call. [Operator Instructions].

I would now like to hand the conference over to your speaker today, J.C. Weigelt, Vice President of Investor Relations. Please go ahead.

welcome, Earnings nVent's Call. and Full Quarter Ted, XXXX Year you, everyone, Fourth to and Thank We're you glad could join us. I'm J.C. of Weigelt, President Investor Vice Relations. Officer; today our Chief And Beth Officer. and Executive Financial me our Sara with Zawoyski, are Chief Wozniak, on On and fourth as first full provide year full well quarter quarter as our and today's performance XXXX will call, our we details year outlook.

uncertainties remind results such made about future anticipated financial are Before in statements release statements risks the today's we and the and with as any Commission. and begin, risks outlined nVent's you that let the to forward-looking me Exchange subject press company's Securities filings

could Forward-looking statements results. materially no statements undertakes publicly from are company such as results made to reflect and or differ the to events update today, anticipated obligation subsequent of Actual circumstances.

presentation, of accompanied financials have to presentation. References which be is nVent's section appendix found non-GAAP time Investors questions webcast our by the in the of in can prepared the Today's remarks. after website. for We'll are reconciled a

now And the Beth. to over call will I turn

XXX% strong events, macro Every cash we over generation our free And performance. with Thank well. very grew and flow margins, made Across well a our like Slide we the segment thank We and expanded would X%. our the joining recent difficult I ahead call us. today's full begin pleased we are had quarter to of morning, environment. J.C. and is of conversion. performing year quarter the are presentation, X Good fourth the $X.XX adjusted you summarizing progress EPS for Eldon of in plan. you, in Overall, acquisition during executing on quarter,

organic EFS, XXX another & in Electrical growth return expansion points reflecting Fastening had of Solutions with or we improvements. sales on quarter and operational solid basis Notably, X%

response completed. to our integration see We've vertical, Eldon the to goal the continue plans in industrial sales customers X/X detailed and key on globally. channel with Eldon are a product our on of partners The easiest synergies and is of performed extended be business our a meetings very of and with sales. to well velocity with track. do many grew expanded with integration organically and weak offering positive our return quarter, the held and have While executive progressing team received enclosures to

during Thermal declined Finally, Management basis with on organic XX sales sales quarter, X% expanding return the points.

encouraged our the down quarter million of are $XXX the slowdown order In quarter backlog into vertical nVent during or The channels. particularly quarter by another a guidance and X% heading growth. more distribution December, was or and total, sales reported the flat to variance pronounced organically. We biggest industrial of in in

XXXX X. want you to how I against performed priorities. Turning share we Slide with to our

on key new fast growth. and channel organic regions, growth partnerships. We in strategic including growth initiatives, First, verticals, nVent our saw One positive products

was in this of softer to half demand factors. due offset However, a number the broader by second year of the macroeconomic

price with We margin on Second, availability our and service customer higher return through operational expansion. improved our product across sales performance XX productivity. points and We basis segments levels. on improved expanded

approximately completed a to cash We over year the our bought under work $XXX put just acquisition, our allocation. strong capital X% first generation and million dividend balance X% over on Lastly, back paid flow with shares. and sheet. We a outstanding of healthy

connect Slide mission and X. protect. to is nVent, our to Turning At

one for increase macro electronics design, globally, trends can and We increase customers India. as both role to labor with broadest everything skilled enclosures. We that the now We facility food new the the and us electrification and our XG everywhere. continue can providing demand believe and With Enclosures We for a growth. regulated the trends our excited our have safety the build-out shortage products We've products. as and global our in Romania segment, in be to footprint globally. the for long-term we that of world of We from environments well see protection we data see about manufacturing the to distribute position of security global in to facility the with manufacturing portfolios in standards and state-of-the-art manufacture NEMA and more. certified provide solutions extended with data centers beverage enclosures and and explosion-proof IEC highly of

expect Our to networking more cost of across and Thermal deliver land security solutions, to people connects Management vertical commercial rail focus ownership and growth, vertical driving in and data is broadly and this build optimize protects centers and and portfolio. focus transit for safety total this and to we infrastructure.

controls Our new and control advanced commercial tracing applications. monitoring provides RAYCHEM industrial platform heat smart and ELEXANT in

largest base has with solutions installed in provides the connected and opportunities, to Our thermal protect the MRO trusted in us infrastructure of are that world the business most environments. some demanding our

trusted innovative solutions and protects cost and and with provide connects EFS that labor savings. are efficient

and this new efforts EFS about to in our innovative XX that expect already We an accelerating build year are portfolio. launch products product development upon new

solutions attractive grow Some seismic these initiatives customers expected more this around all nVent our management Spark to and include additions trusted all the allow to to are of names our rates efforts, year. prefab us at the One world. system double-digit that delivering solutions Putting with scale recent while and this brand our together,

long-term trends believe favor. are our macro we summarize, in To

investments in am in executed position environment. Eldon strengthened R&D, more a the the in our have people. with our pleased XXXX and segments of challenging and with digital way acquisition I We

Sara go will the I to the Sara, for and on full over that, quarter more With fourth detail and call please results outlook. year turn ahead. XXXX

Beth. you, Thank

return quarter as a were XXXX points and to return million despite declined titled income organically. X last We sales. $XXX expanded on sales $XXX Slide million as cost in nVent and reported sales X% performance. expanded productivity than investment in, had to was the approximately spending. all over XX on Notably, turn plus and realized the up All segments year and relative second offset basis basis productivity for half modestly up lower flat $XX pricing we point. on planned the actions Sales of in million, inflation was quarter price X fourth Let's segment we more

$X.XX was prior flow versus reflecting, previously share going well generated exceeded XXXX. in free $X.XX, guided $XXX approximately part, rate. to quarter, cash per earnings quarter, range strong up our a the in We X% year. us in positioning lower-than-expected of This $X.XX of Adjusted tax million the into

basis XXX% points price and on on and flow end believe the we pleased at flow full Slide for plenty XXXX Return Sales our conversion were and offset of at working and billion free lower cash basis expanded flat record our and to more on guidance year Looking as of a the of $X.X X. both inflation organic XX We reported range. relative productivity than our to investments were to efficiencies of have improve cash generation. the upon runway strong track build year. with capital sales

for fourth declined with turn quarter Starting year segment a $XXX to Sales X quarter strong X% ago. the to discussion performance. please a organically with Slide of million of Eldon Enclosures. X% of compared and a grew our Now addition

of expected, we December, quarter our vertical in the As marked more industrial channels. the distribution particularly was a during but in drop slow with

we in key continue the environment growing to and on focused verticals globally. expanding While was be macro challenging,

be quarter of the to in Eldon an growth in continues important strategy. Eurozone Notably, our broader despite the part and grew headwinds

HOFFMAN and build data We and centers Express led Demand upon we also One nVent of to program. our success our networking saw and continue solutions, the on growth in vertical by HOFFMAN and initiatives

grew Enclosures sales on with lower segment organic points. modestly basis income XX on expansion sales return of

current Our team the costs business condition. that outpaced continue to to align manage productivity to delivered actively price solid and gains we inflation, and

Industrial Moving to Thermal million low organically, Management. growth, sales were project modest commercial Sales declined sales. $XXX approximately X% while of single MRO digits. lower reflecting sales showed mainly down

on digits, this XXXX. strong can importantly, basis to business Importantly, to backlog continued of believe growth And backlog year. contribution order With price. X on we versus point return and points expanded as cost actions prior in realized team from grow the and sales return XX up executed double

points. in is in second XXX expansion of row Now the the on year. sales and X% expansion, $XXX Sales with quarter growth grew which on sales segment positive on return with finish the contributions This, second EFS, return the million resulting a combined both productivity strong had half. of gains, from strong a volume. in organically, basis a price X% income with translated to to strong This to

Turning make expanded on Slide to X% comments were sales basis Enclosures, a our with X. points. Beginning ago, performance. I sales and year some would up versus reported like return segment a full to XX basis on organically year on XXXX flat and

focus the half, and global centers second We saw continue verticals to product Eldon diversification growth demand we and acquisition. data While like and softer reach the extended our commercial solutions. and higher on networking with in offerings we industrial

global growth. improvement expanded marked a return sales and on while in operational Enclosures Importantly, performance investing made in

XXXX, versus Switching the time, were which of we for down well the with align X% return on positions to almost sales last we team Thermal. to made executed the At same only We growth. business in contracting year, backlog us Sales basis and million the actions and encouraged the the drive investments conditions, cost to for order future by $XXX XX year. believe growth R&D points. year were during organically

year return on with the strong second expansion X% the for sales growth the points finished and than EFS XXX full organic half. year of basis in more

launch return availability in new R&D XXXX. with have while calendar an product investing on product We sales and exciting improved in

sheet and cash Slide to Turning balance titled flow. XX,

free cash $XXX our on sheet. ratio we strong a finished of flow, year, to returned to the the a For completed adjusted over in first our and share of of dividends. form delivering conversion million income in million back XXX% balance shareholders We net year We and the with cash. and repurchases acquisition X.Xx $XXX generated debt-to-EBITDA target net over

Our for shareholders. our to businesses, investment-grade strategy cash to maintain core look metrics, acquisitions capital bolt-on invest continues in be: attractive and return allocation

rigor expect drive on continue cash same protecting capital the margins, and in to deployment. and We focus generation growth, to XXXX

full to nVent outlook. Slide So moving XX, year titled XXXX

up includes forecasting We full year flat X%. to flat introducing of X%. sales currency of acquisition impact up and guidance This of approximately approximately down a to be organic to down to reported X% contribution in sales X% the an range X%, and are

be segment including sales reported into approximate acquisition. are expected an from to down Eldon the on X% up to this X% basis, a level. Breaking X% Enclosures contribution

offset key weak expect industrial some softness. help vertical the While of continue half expect and QX, first geographies of we trend the specifically a in the in to and to our initiatives verticals we

order we up towards be expect In year as the the Management, of to expected is sales half X% the be to back down growth to organically. Thermal Sales begins fuel made We to localization book expect weighted great internationally, this of this and expanding coverage have invested out. products growth read strides And to with partners. we our global year. channel year global in last the X%

EFS. to Turning

be sales organic up X%. to expect flat to We

expanding are macroeconomic coverage have a drive sales we indicators East While product the growth Middle are and calendar, we moderating, launch to to growth. pointing in Europe strong and the

For be expected points. return on XX basis is up nVent overall, sales to flat to

costs growth targeting to are than XXXX price continue and protect cost our to help expect Corporate and return align be help And help plus million. on cost actions We $XX execute conditions inflation to business demand, $XX inflation softer more offset productivity are approximately actions to from expected to we to as offset And carryover will million we've to of fund discussed, we million the $XX out investments. investments. sales.

in Eldon EPS our X% expected this EPS to guidance note $X.XX in to $X.XX year-over-year adjusted approximately approximate and add result A here. year to is expected for couple repurchase XXXX is XX%. growth items year. to activity adjusted $X.XX to $X.XX, tailwind Our the to representing an of is

So quarter guidance. and our to Slide turning first XX

the down sales X% softness decrease anticipate from a and the to expect organically. actions. We vertical, to X% we fourth We within are to industrial or the linger quarter taking X% cost additional to up be X% of

still in to grow Management continue Overall, quarter. is at While Thermal recent line expected to we in year, grow expect the EFS flat prior are full quarters. sales with to expected the down EPS be is expected to first year projects be to to midpoint.

XXXX. back the provide and This detail some to in Beth additional concludes on and guidance, my our to more on initiatives I call over will growth turn comments priorities

Sara. you, Thank

Turning walk growth. organic you beginning top XXXX, XX. would like to with priorities for I through to Slide our

initiatives We focus, One win, we and these continue our XXXX. to expand where demonstrate nVent initiatives we with want that to we and in accelerate

As to more example, commercial America. we've expanded territories North our an initiative in cover

of centers we solutions hyperscale, growth edge expect our data expand and to networking continue portfolio globally for on-site and strengthen We as and innovative products solutions. in

America. and North up opportunities We see great outside also manufacturing a a We for of new example. growth demand facility have year strong for India last in is seen products. our opened Bangalore

IEC to strong be products. portfolio grow our globally continues of of Eldon opportunities One with biggest its to

expect to to our a this X improved plan year. products In all we score start new product XXXX. and in point, Lastly, we segments introduce a the record year this vitality XXXX, across with continue new XX momentum to strong

improving financial on focuses priority performance. next our Our

with looking efforts. We focus our digital are at streamlining end-to-end enterprise processes lean and

expect expand help working We to drive improvements. margins capital this and

products continue experience We look and market build, and along this more to journey. customer for efficiently sell improve ways the to

productivity margin expect price We these can plus to gains expansion. lead

to see harmonize levels customer terms healthy balance improve to capital service Specifically reduce were with sheet. inventory continuing continue well on that allocation, expect velocity with working XXXX we and and year as to we opportunity and approach. our One our nVent this On capital, as active in programs while

shareholders seeking return. on strategy the allocation best remains capital Our consistent, focusing and cash returning growth to

expand and to Looking many the ahead, have strategy drive we we of spend growth before initiatives accelerate to remains nVent. sound, our at started and plans

nVent to top-tier performance committed a company. are making We

turn to start the over With I will that, operator now to the Q&A. call

Deane Capital Instructions]. RBC with Dray Markets. [Operator

Maybe actually the we comment comments the weakness in and macro start is us be December. you helpful, destocking has was we if fall can the So well? sell-through So on start persisted there. maybe this a that XXXX? too. that is off as saw with the distributors, any throughout would weak the can Enclosures short-cycle fourth And in industrial same give quarter, January in the about Can sense, or they

Okay.

that make I so one start think our I as just when December very restocking to and overall combined we distributors saw with to ago, Enclosures cycles, And That we drop, too. the industrial that comps. mean, saw And manage think really December. in things So look the were with I in that through always yes, always January. saw those I When inventory some that have weakness, has we before that we then positions just we go particularly point soft. -- shared pronounced at did And destocking a us would a their and X is business more effort. orders you year tough wanted you these are a that global

Enclosures remember, grew XXXX of about in So the X%. end

with what seen is the So that past. in we've I we're think seeing patterns consistent

I then initial think X% any about on also but And helpful. really That's chain China? it's supply of comments risk. exposure to sales,

dual suppliers. have You

Just how are prepared you there? for choppiness any

procurement is when previously, we tariffs, million. as commented total China $XX out So of on we've shared our spend only

impact on on sales from So that supply chain China. for based standpoint, based lower it's us in and a

there Deane, taking shutdown We first that course, a to Our priority, is that of about sure know period government make do we're employees. the extended over care of by the has week. our

think a basis. it's we're but us to it too early evaluating tell, daily still I on for

I sales a bit you're little one specific of be percent bit working I'd focus, improvements. say you as a of of Okay. XXXX. That's capital, where follow-up, you're terms helpful. targeting for could capital my That but to And for percent targeting be more a then some love and would a the as around the helpful. from if Sara improvements more in places that hear is inventory heard working that Beth of

Yes.

So Deane. thanks,

That's and just look focus as us. north So X percentage sales of of in percentage we a XX cash But kind XX% focus for a point and today working range. our generation I we're of targeting a improvement at that we high-teens being us. of inventory sales. we capital of at as of biggest And over that inventory. free nVent. hand, in capital is capital specifically, north as real strong of targeting days benchmark XXXX, over working as has entitlement, we're a time, sitting of for at sales on key we a working the at mean, think see been our look sit We of opportunity flow hallmark today, days. Overall,

on base. of we're looking the our at also we're you time Specifically strength the factory channel HOFFMAN and looking programs more on Demand it, lead importantly, just and supply distribution the inventory more But might commercial well. expect, the leveraging even inventory side, side, from side things, of overall [indiscernible], the of at as looking at the as looking and vendor-managed operational within at at our looking with HOFFMAN Express it our broadly

but is the our against working capital One elements the other our X harmonize at looking time, to programs segments. as well focus, we're at inventory biggest same just So we and also nVent terms as the across look

the second will just weighted? initiatives And will be that readout clarify, linear can on you do you XXXX? think more Or be half those improvement for

I would probably At half. time, out of right to working we've say, it's excellence. to here, teams the the drive our a overall, hard. is that and journey this to be more working capital got And on it second the really we're plans driving gate same going in

helpful. question really right free cash That's with on the target flow your nose. that prefaced should I have

So we'd always that's you but see more, target. like to good hitting the

Goldman with Sachs. Ritchie Joe

kind just Thermal. starting maybe So on of off

see order So really improvement. nice and to backlog the

that this think growth going of about down a into translated for in could us quarter. you Thermal of growth into flavor bit helpful. see talk most yet. it now quarters, would XXXX? that's you're be maybe or if give works the hasn't backlog going this a has for I translating And in doing They're guess, That backlog? how couple but a just on into been types projects little that still I you

Okay.

translating with from win as in backlog, you we working growth order petrochem we second some we're on. to that shared LNG look large year, to activity And into had pipelines a last the Europe the that's So half. the everything in over see at we projects that we and that

So I mean, broad. I fairly think it's

orders look those we to when projects translate the with backlog see but it very into we encouraged up half executed. being what more year-over-year, it going see So second when at we and we're is by significantly

that, appreciate look, see the a to And I quarters now also the in improvement. couple margin improvement I then, Beth. enough. Fair it's guess, of EFS Okay. nice of

just Is produced update different expansion how into looking there? I expand heard be going, outside So facility do have improvements plans? the to help is productivity in regions. that manufacturing that an U.S.? with I you're to you the think to on the going your prepared that And localized of comments Or

Yes.

as were all me had of question part first you EFS requirement in commented as know, was that that availability let we we So take ensure we to -- XXXX. with year, because, our first the challenged in product

quarter-over-quarter, to of team, with EFS adding place, still better. lot our we good investments of the with that our do. capital capacity see shared at do stronger opportunity we to some all this to acquired that we've starting lean building supply there the and we're bringing can enterprise, being process that we put believe a So we work and looking position looking base, improvements, applying a and in just progress occurring in And have times a end-to-end it that to many part things most at sustain that of respect some online, newly is continue operational business, even

North doing The Middle sense based your question manufacturing American-centric And it efficiencies, segments. America. in having we for the other it North and makes and our as scale come is expand have in Europe do us Europe. will East, manufacturing EFS, well products as over as on it's to in globalizing around products us some just a of that, and continue from business late second if of combination part capability to and look products Europe assembly most of was some more We the X some distributed

little of a it's So both. bit

is our localizing to but chain, time, supply over that's be journey think generally strategy in our I a well. as region,

Research Partners. Vertical with Sprague Jeff

little volume was First, wondering a more give just EFS, us you follow-up if I detail a bit on if there. on could I just could.

availability This did And of a product the refill little QX like you it channel the maybe of in that slightly last You in slip do positive of you outgrown some given driving there's similar. year? couple kind does quarters, lack feel maybe you've kind the kind but had QX. market think of earlier bit the of

of some I views volume And Well, better question. But some we to as We about me this. do fourth have would okay, think on this And is say had let -- I started product quarter. momentum share availability. we that. X started in great get to point

Our EFS cost really around driving solutions. business efficient labor-saving and has been

forward to channel with products year, believe December, and launch I So go our as forward. to in new this, distribution we would these weakness expect growth continue the start that's say as much go also Enclosures we well. saw a as to EFS in all strong like we drive we that going to that

saying, with see we're part little we're think execute very the I now bit much and slower positive to way. especially efficient at for going in of a is the so ability that the QX looking that EFS new year, a start. and and the to But and And deliver trends on more products having all

looking part energy then or kind Thermal, maybe on a quarter in cycle the up on is And just understandably Can on here with the that but commercial? on stuff going part popping in some positive at kind you every other little comment of any what so everyone's have you of of business? as the keeps And do visibility commercial the later year anticipation here, of early squishy.

Yes.

to that business we've discussed. of commercial our it a different couple So has elements

in improving. business, and area. floor a the our just heating that under We we're us more takes have which into electrical And the area, has just channels announced partnership steadily been tile fact, our expanding

you just tends aligned heat like, trace because wiring of is continued some has where commercial fire-rated that business to Our more in And if some to we've our seen to projects. lumpiness, some grow. business be

in we driving. for momentum that initiatives we we with had see expand channel to business with lot just But lumpiness. that partnerships a continue the commercial going that year But our we in example. as So to EFS, some see what we're that line the we're expect over of

What's see I do have of deflation in And that would dealing if that? you your view out? XXXX. how should mention you one but did squeak in materials could kind some playing just you with on, inflation And going more, on think, productivity, I cost and

Yes.

look our So QX, just good into for million. a you XXXX. if $XX And inflation productivity that's walk, was roughly believe going rate overall net we at run

marked in a reflect inflation improvement does that year-over-year. So

overall, tariff inflation. has some that the do perspective, it's we expect we small. and and Beth roughly expect some see imports. of but about local-for-local $X side, easing million, to with earlier, to from just more do relatively material impact strategy Just continue do We what wage small a on and talked a It's amount China a

going material So we are -- we overall, inflation into XXXX. to expecting ease

Hammond Capital Jeff Markets. KeyBanc with

Just, Beth, I the think as you that upside And business? what you think mentioned surprise? be about of you growth it do where Eldon just exceeding kind Can can talk integrate expectation. core, in finding the you're into the you

great about excited a Eldon. we very complement do. acquisition, perfect was mean, and so with We're what I a synergistic Great. this

integration. I with the the Eldon within our India, great the We've sales grow. terms to organizations very right And product Eurozone business is as think map. within pleased road the were and weak a aligning within of already yet East. is in integrated been very mentioned, Middle continues what to start our we're we now Europe, I off We've

going keep are. broadly looked sales as is, portfolio, couple distributed it the here of momentum specifically. We're driving areas, wasn't as A as at Eldon we we to

at looking that we're further. how So distribute we

serve broader how customers position NEMA, we're specification IEC out globally. talking can the we With and between more and portfolio about them with

sales think very some is feel So takes I synergy that us. strong opportunity And time. we the for it

Enclosures our around that the world. manufactures Recall point. everywhere other one share business would I

North Eldon So product into we're take to into Asia. plans America, working the

and that time distribute bit a to us takes production get it of allow efficiently up, to our going to line effectively. is very little that product So but set

So just this. of that's really about. we're would I say one things the And pleased

looking you synergy expect this things it's business. just all operations this cost those understand align We again, -- in how the that back-office we operates. typically certainly, at are how all sourcing, the And On business and that side, looking we're there. things at

So high execute here to our have confidence. successful, be and we ability very

And on just back then the Great. Enclosures Okay. destocking.

kind mentioned restock. it's you then and sharper destock Just sharper of

softness the and you you that do to distributors incremental think your saw So just do as -- where in talk destock you where December, process? are you you in

at and QX, did to see right? macro QX looked some then destocking think with uncertainty, to is, think some this I be us. of soft still they as we're weak that I of going a end part And January to the of

QX in I context, So just industrial weakness global is think with to uncertainty. the softer going and that be Enclosures macro

data one, centers. last maybe just about what in then talk just seeing And you're

have about And business for kind how think talked slowing shapes just you in of that growth hyperscale. in Some XXXX? up

Yes.

So to for data to we our be ago, digits. just year, been this. just centers as a going products. initiative we X We new and got our us, at that got growing second In really it's in think year started pace. year, has double-digit high-single first This years we've more mid- started

globally So we're as well. expanding

the full a that we timing to of softer But there little really think there. year, sometimes different We is there I think to to here. well confidence have projects. for is some -- us continue look we're -- perform I maybe going bit for QX

Julian with Mitchell Barclays.

X. Maybe just starting with Slide

So last the segment year. XX bps grew for bridge margin about XXXX. you have Margins

for a guiding XXXX. You're similar increase in

very those being than rather bridge in probably of terms margin of figures similar is to see different the 'XX contribution you do for which small FX, the that three year, from or aside how dollar again other pieces the So amount? this

Yes.

perspective, So roughly I is exit think earlier, continuing to from a we're material price offset to I mentioned price-cost expect X%. QX more Like inflation. price our than

and XXXX, we've into now price continue several to that years performance. had expect good We of

of more specifically easing earlier. material side some ease, do sort as I reflecting bit a to of On environment, a about the inflation that that that's and the side, Mostly, talked expecting expect wage cost still we on inflation.

On of productivity. the productivity side, we another strong year expect

of the based XXXX. the out focusing productivity here. $XX logistics $XX a efficiencies, half we're to here just carryover our based the cross industrial as those million of our up our good for in funnels well. cost some actions. XXXX start coming productivity, some actions and weakness, and on $XX into delivering of from mentioned looking roughly with back on So additional we're earlier, at on year million cross-sell cost XXXX with sets pleased I half million as top to That even On -- us And processes end-to-end of productivity operational we've strong back rigor, broader got that, of

to cost productivity So look XXXX drive to and favorably strong we a in manage price improvement.

I see.

So to was in out just net you sort of on bps XX Slide drawing the X, XXXX. minus productivity them as it called items,

that, in slightly a is XXXX, that headwind, fair? headwind number You're is still saying but smaller a that

Correct.

just question second and my then And buyback capital deployment. around

year? Just the And term? XXXX, does understand X.Xx. maintain was count the you that have leverage wanted embed spend first 'XX? expect we Should of share provided your guidance half function in of the this year-end to level if then to of level Or about buyback to that spending that share for for you a it's related medium that, some simply

So guided on the and of roughly million, exiting we're million XXX a share XXX to QX XXX to at count we shares. buybacks, million had

buyback would exiting we we're So that -- in just XXXX. And offset mean, part X.X ratio. see some that does assume dilution at rate, I from in X.X debt-to-EBITDA net an to exit natural or a

to targeted squarely that range X think within X.Xx. I of our

on to best shareholders. believe by capital us to good some gives balanced optionality way deployment. delivering take continue very And of to deployment and are the us expect capital returns further we to focusing that can what approach So you a

Buckingham Research. with Barry Robert

dynamic the quarter? there. I just a just bit. on also get continue the a held was color was to there, little Actually, you that what margin to I you margin. Enclosures in quite though first the and the down little sales the in lot, if curious grew more wanted actually expect it was Even a

pleased some very impact So the QX quarter. from headwind acquisition we margin the a we of even because the expanded with perspective, it performance Enclosures the in with are in

on things. we that performance that quarter. that's what One, saw price conditions of a I the some have of material couple easing, cost of their managing Enclosures' expected. And continues had We cost. function business good a price the are. in to to They the current structure think align would which team

expect cost part, weakness half. taking those and the on But I QX. in QX that are In we're read pressure And a accordingly QX, we actions into think in back conditions. we to expect additional in QX moving bit just we current to market of going actions, on into think, cost sales. to to that in the so bleed we industrial the return more space of out that do saw industrial some align

run when the imply earlier, that Sara, in as it. just million XQ what does And good that then kind you're And rate the forward, Got that mentioned $XX annualizing million of... inflation expecting? inflation about is for $XX you going in year

that's... Yes, Sure.

much... how Quarter

Yes, Yes, over overall, half. that in probably ratably a $XX with annualizing versus lighter correct. half pretty second say, first would taking little bit year. But that. I million in the the the that's

market and that's of segments, all volume really guess, EFS. guess, end on the What's I to to X% price Just -- to or curious then, lastly the the implies for flat Got assuming it. so, just you there. down a guide piece midpoint. be I and would expectation dynamics? And Are the for getting the slightly, just is the but point it flat outgrowing X.X% moving there you're quite you're the that the modest?

Yes.

overall seen think EFS, -- we vertical have -- I is with the and moderated. we has commercial commercial what

expect it still We grow. to

how mean, I that's ranged So we really it.

point operational get than rate availability. our for try there's at ever lots market thing, hallmark that's we efficiencies. of all what with we'll and new better product what been, had us -- that does. looked of that always least and business. the given of feel how that think products, growth range. the we've But has which the guidance least been to I at of We see has key those price opportunity in been that volume point it's grow, vertical mentioned, We how expect here always better we That get EFS as X to overall we than before, and is. get be And we're or a As at shape

Research. G. with Bergner Justin

there? Just a actually obviously very from couple cleanup your it of have larger for advantage With my questions. small respect you seeing Most nVent. for answered. questions competitors any such to any may Is that of strategic it's disruptions over be a sourcing, the China of been

No.

shared for very we different us very space. times. I that's we're in so mean, to fragmented -- think this many gauge. I hard We've many have a

different a of So there's lot players.

some I that are in be think China. certainly would local. that from there's more some There's importing

we've building channel about, to strategic our initiatives, regardless, that's just -- one us, I think, for build we're those of relationships. talked trying as

Second, we're availability. velocity a focused and product lot on

doing we're growth. us with I products. things channels position sure that are with velocity, think to we're new the going those the us that So well And for with is that all digital, make supporting to elements are our for

Okay, understood.

business You mentioned new around products new number for products. that another And of in XX EFS, for maybe products, was I think you it XX? was the I think new overall mentioned

Yes. Correct.

XXXX of just of cadence general those compare and XXXX, understand to there? sort to sort How the numbers do

shared and really what we And us wanted more. do area R&D, as we to this we take where from a more nVent, invest launched scale is opportunities that the were and differentiate. continue as said what could in we significantly for to we wanted we at to look an Yes, we

this we're for are that focus. also launching in new velocity will differentiated, at Not our So products scale we that at an looking looking that been area are process. highly has but only more

we're that worked of seeing one in things the new launched product well. reduce that's as get so cycle development, faster more you're to And we've other able is products to time as

That step this point ways X from last is last measure revenue that a X year. our of improving products that years. over again is and So the developed the one our We're point vitality, improved this product new And we year. another new which it's mid-teens, up. is

our And measure so that's effectiveness of here. the

macro sort going the maybe Great. all are M&A you you given coming front? and seeing uncertainty Okay. the in anything then of quarters? Or lastly, political on take And the are pause, a to interesting

there's EFS, look an M&A space been opportunity for bolt-on that think From our I And to at we've M&A. very it's a very where we fragmented with do Enclosures lots and standpoint, us pipeline. active of

ability to of on some just our be it, have our we successful around execute. the we segments being and the things discipline Eldon to That's to deal. at first our like We one or ability look want that execute because very

And and year, certainly, for this our opportunity capital right M&A to us generate is And so it's there execute allocation certainly if value then we the we some strategy, if as about growth. we're prioritizing opportunity. would think a the good on fit, strategic

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

morning second we in our while a connect investing and closed the nVent. the experienced that interest half, in I'm are Well, softer digital this key team portfolio. Combine Growth other well like out people in demand and of the investment in our your for capability, future. M&A And us margins thank play, with executed believe for you expand and acquisitions manufacturing highly that cash we to XXXX. future our proud opportunities most sales. protect to we though many and grow R&D, and way Eldon for in fragmented Even we can joining is flow, the priority initiatives strong importantly, expand us. deliver bolt-on we space

strategy spin, we us Prior today, examples a to we growth company. that many focus, we we top-tier our where show launched win. can help make to And One nVent have

a forward And you even delivering Our you across may us We look lot channel again better. have partners we a we operator, to know call. the changes, customer tell get your successful I they and support. to of the conclude positive globe see now thank but for XXXX. opportunity

today's concludes for you conference We participation. call. your thank This

disconnect. now may You