nVent Electric (NVT) 29 Apr 222022 Q1 Earnings call transcript

Good day and thank you for standing by. Welcome to the nVent First Quarter Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today's call is being recorded. to Investor call Relations. like Riter, to now President, Vice would hand over the Tony I Please ahead, go sir.

of Thank you, I'm President call. quarter XXXX Relations. Charlie. Welcome to Tony nVent's Riter, first earnings Investor Vice

me On Zawoyski, to second on quarter for Sara Financial our are the quarter Chief outlook. full call Beth our year provide Officer; our provide Chief we'll Today, update the performance, and our Wozniak, XXXX Officer. first an and Executive details outlook with an

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

undertakes of reflect update such by you materially is nVent's Forward-looking on prepared statements remarks. are a events non-GAAP presentation. made to subsequent for Beth. from the our webcast which after as results company investors call appendix now financials questions I'll obligation statements We'll that, anticipated publicly no have over the please the of and could to accompanied circumstances. the in website. presentation, slide With the turn of section today Actual turn reconciled time or Today's differ find results. to are to three, can to and References

share today you, first Thank to great quarter Tony and good our outstanding to It's with you morning, be everyone. results.

and performance earnings. Our guidance sales first quarter exceeded on our

strong per our all year-over-year. with the in we sales We on Orders and higher with sales high results growth are Overall, up $X.XX start execution delivered adjusted raising quarter, was of to than focus new with year to share in XX% to and segments. growing expansion, Our verticals, full guidance. EPS success. sales. are pleased XX% these across Adjusted and QX, our grew year strong earnings strategy the XX% products global are key growth combined record

performance. well This for driven volume organically, XX Sales first a price. QX segment XX%. broad-based, primarily our summary of in the of of each slide were quarter points, was up XX% ahead our of strong quarter points XX than coupled with with onto four by guidance, Now greater up

and Our executing are winning we results well. show

approximately deliver X on new this rate year. products products growth and added we're to track points our XX New to again

We customers delivering are value on focused growth, serving and our long-term creation.

continue to of electrification wins significant the with We have everything.

in social their We unit our data example, with distribution are solutions several new we for from power leading large preferred the Enclosures in data media vertical, won provider had center a hyperscale offering. wins CIS our intelligent a for and a For program acquisition partner. now

hammerlock companies. telecommunication of been large With American Electrical rod & We've specked fiber-to-the-home, are has easy-to-install the increase a in in and Management, we in at a and lengths, orders resulting utilities, recently rollout with We our benefits end sevenfold converted adoption in in year-over-year. And XG large both North to advanced seen ground Fastening including by good that and connection Thermal circuit with over $X million project with labor use. our lowering heat an providing the account systems, valued producer. longer hours, costs controls the tracing enable won multiple chemical

to and top business awards our distribution addition numerous wins, partners. from received In recognitions these we

our strong Our support team recognition, recently Electrical received & platinum partnership. Fastening highlighting and level of

Operational serve. teams verticals in of testament award support. that want customers our partners and quality each Beyond earned And to the excellence our the every serving nVent to and the Management excellence comment These Technological practices business recognition service work recognitions state-of-the-art services. and Enclosures great now are Thermal day. we our & and a team I award their awarded was their innovative, of for the Above Our team unprecedented on

continue detail particularly growth North best continued in few and strong in by America year-over-year. led we and minutes. growth our finally, XX% trend. one with verticals energy, data recovery, I see strong continued handling. and to MRO. solutions way growth, and strength growth on see its in we this utilities. in by residential on and automotive, beverage, all Industrial to growth, food where around verticals electrification our double-digit touch a growing companies trend grow of in A to nice will than these Europe. mega factor the in continue more driven everything of we power And of led Commercial a higher in We Infrastructure focus with is driving with more broad-based are results material the the continued believe its positioned

Looking sales at geographical our performance.

grew We North in continue XX%. low over and up was to see low double-digits, regions single developing growth America, the digits. Europe up strongest

full Looking the our guidance, raising to reflecting our are strong ahead, we year. year start

we results. While ability to deliver outstanding ongoing is these customers and team our manage China chain turn confident the positive, for and cautious given our I outlook conflict, remain COVID supply of XXXX. ahead. for updated to call on the continue I'm now please and over for quarter and our perform outlook how I to in some Russia/Ukraine our go results challenges we Sara, lockdowns in deliver the Sara through detail very will and shareholders. our proud our impacts of remain and challenges. first

you, Thank Beth.

first quarter on results. slide five our begin Let's with

price growth points. relative to another Sales to Volumes are adding off strong than were were strong We growth, the and year. expected, XX across line. to broad-based organically. or better continued XX% segments verticals. points the saw up XX% of a acquisitions last year million Sales points was realization, impressive to adding XX X $XXX top added We start to an while

guidance was above flow was adjusted margin QX up previous was reflecting nearly range. up on and headwind. Recall, due investments and costs. in prior $XX quarter, basis cost expected. the while of similar First energy down XXX better $X $X.XX, our segment than cash both demand. year-over-year year higher to a be usage XX%, material, than quarter, return offset the million, EPS million XX% points, sales expected total $XXX of corporate Free to the including forecasted of was Price to of a capital we QX million robust in income high-end quarter quarter despite inflation working logistics XX.X% the performance

more by Now segment Starting to for in the focus. strong of discussion nine and six CIS XX% turn contribution testament regions increased quarter with quarter, sales growth. well, vertical adding XX% to all each slide outstanding to growth Global delivering perform exceptionally to points Geographically, grew from first high a Acquisitions growth and our and Vynckier XXX performance. both across on than $XX another Enclosures Growth were America. digits million, up points to sequentially $XXX first continued while impacting down in strength North year-over-year of quarter volume X%. million Enclosures, factors grew with Return quarter several return please was segment our a broad-based with There sales. industrial. year-over-year. XX%, and of basis and improved price. organically, verticals led on XX% all income was also particular double sales

costs than we inflationary in expected. higher First, came

Second, operations due significantly inefficiencies higher we in supply experienced output to our challenging amidst chain. a

us increased in winning XX for to In future. key growth addition, we percentage strong these continue output realization the was offsetting to believe points. Partially of and well our capacity new business. to We inventory price impacts in invest are position

improved expect price/cost performance improve productivity. forward, Moving return sales on to to continue sequentially we and with better

XX% double-digit & Moving respectively. Sales all increased an of the pricing and across in and Both strength verticals organically, Europe. contributed North impressive points, $XXX million growth line, adding America and nicely with Fastening. XX to volume to Electrical and top XX

this trajectory accelerates, electrification does of everything of growth As so business. the the

was For $XX example, price better relative to datacenters expected over on due and in strong Electrical power growth sales up utilities inflation. segment million, Return result XX%. than to quarter. the last volume This down was basis XX.X%, Fastening were up income year. XXX and offsetting XX% & was points

expanded margin in double-digits. cycle cash longer the Lastly, Thermal XX.X%, a million, seven up infrastructure. XX% of strong America up the basis grew was were industrial balance Orders million. grew up and driven Management from Geographically, cash mix flow. and on projects. for driven segment with was positive and volume to balance including points by ended sales quarter, XXX strength strong slide and contribution by On of backlog MRO. $XX fourth double-digits sales MRO industrial China XX%. consecutive sheet a organically and growth tremendous year-over-year, quarter titled $XXX XX%. income North both We industrial Management Thermal High with Return

We have our additional $XXX an revolver. on available million

We have a healthy balance sheet with ample capacity.

a allocation at the our on including approximately to shareholders in $XX sheet debt to us growth a in of and slide robust our in generation cash of competitive priorities a We eight. repurchases. M&A and X.X. dividend two position Turning strategy. range great our to believe balance times to to with two million returned first invest the capital of EBITDA target exited and share execute adjusted net quarter, We on low-end our QX ratio We puts

deploy drive to to growth continue for attractive to capital expect and shareholders. We returns

Moving nine, to nVent outlook. titled slide XXXX

We reflecting along with are performance raising strong the in first full record year quarter, our orders our backlog. and guidance,

to up. We will steps price/cost as inflation continue manage

price to X% sales contributing includes now outlook over year Our full growth.

we still plus pricing productivity For offset inflation. expect the year, to

top now expect the sales reflects of free earnings to XX% supply This adjusted with growth guidance XX% the with to EPS another range uncertainty. and original of guidance in to XXXX. expect We strong our lastly, the growth to versus expect also grow approximately of EPS of challenges $X.XX. on cash chain performance greater of XXX%. be versus X% And XX% $X.XX of flow we X% to organic prior along overall guidance XX% X% our of year macro to We $X.XX persist, expect conversion in $X.XX to to new

our last XX% quarter and customer inflationary At to outlook We, be sales executed XX, manage up strong again, with meet to to X% $X.XX I price/cost earnings to mid-point, this we slide up, reflects this Looking $X.XX. our between second to in demand. and our Wrapping organic adjusted relative at growth XX%, quarter the well EPS expect first am on performance. ability environment. pleased to demonstrated year. We be

nVent. growing in and are growth. Our capacity acquisitions overall we And are importantly, investing than faster

the turn remarks, great quarter, the call setup concludes back With will we for first This my Beth. I are successful now and over another we believe to year.

Thank you, Sara.

became high slide to element put on Turning XX. everything. on Since the in of of a and growth strategy. been we mega of particular, In we place keep the executing capitalize that electrification working, to expand one that's company, we strategy been has verticals the a new this trend elements in

portfolio new with new acquiring have products, technology companies. partnering businesses added We and our to launching by

a solutions, year growth datacenters, and to networking, almost been significant we has continue. It touch IT a Data few double-digits these every area grown us. me verticals. and on high for strong communication Let the of emphasis infrastructure has growth of expect which includes

our products. cooling We have new liquid advanced innovative differentiated launching many capabilities,

accounts, hyperscale through a integrators channels. have wins system We commercial expanding team focused on and dedicated distribution our

We also well-positioned wins customers have space, units and completed two this achieved believe we marquee WBT, are to cable Global adding for extend our and distribution offerings. further power and CIS significant acquisitions in trays future. the We've with

power With infrastructure, the team where portfolio, always globally. being including solar. charging greater power to Fastening, buildings or to and continue number is stations. in demand as a we utilities electrical electric, there's us opportunity smarter our EV renewable products grow. unique believe building, data we we products. expect provided Enclosures stronger focus it whether in a move a Vynckier more more even We've had We And solar for further our growing see become we've emphasis expanded commercial, position. continues our with The our to in acquisition more non-metallic made data, connections of commercial which products. and see Electrical infrastructure, launch to investments energy on on new drive power infrastructure, solutions for we and the In more & and and In strong a offering

developing that this of to solutions our We've faster, safer and are in products. a of easier All leader more install. been requires saving labor

continue well-positioned save As our contractors outsized and this we labor to shortages, and time increase We provides believe the allowing see to vertical value, in site. we're innovate offerings. on our continue portfolio to job

strong a portfolio, is another with where Enclosures. industrial example particularly automation have Finally, we

and global setting lines our us up presence able be offering. with to our and around This to been configure capabilities new investing our OEMs globally, specify to want able been products to be this factories allows expanded IEC to manufacture We've acquisition support served even with portfolio locally. velocity. products also solution Eldon Our an yet further who We've in the in build globally. global world digital to be

the year our of growth Our a result investments. is of in Enclosures many portfolio last these over

more sales, safety we protected see environment capability for be nVent and challenging strong for and to high grow. need more We almost are of and well-positioned This more continued more required. start. up with our believe environment. to to a to portion from the significant team As slide of on execute. specification, trajectory. IoT everything more any accelerating we with secular have security electrification year automation, well meet the trends. reasons. solutions well-positioned we and I'm become verticals enclosures all believe The are These of last off our And our a and XX. means breadth and to electronics a has from respond we our proud momentum the be in ability growth and we're Wrapping our very plan, growth executing scenario will We're

are EPS well and the for sales positioned and this double-digit expect We for believe we and we year beyond. growth year,

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

of first Mitchell. Sure, ma'am. Your Instructions] the comes go Please from ahead. [Operator line Julian question

Good much. very Thanks morning.

Good morning.

strong but with and perhaps growth, price off Maybe starting inflation. Good the morning. notable volume

So, in them do you million you of see dialed then, sort for back on the cost of and those in I in how $XX about your QX $XX of QX talked side. half? in And price guidance? million inflation numbers the think What's

Yeah.

So, things. a couple of

from be pace we in year we from to going was prices X%. That we're be into to in perspective, thinking year what what need did keep range. to full came we'll that's to incorporates perspective. that now importantly, the price/cost and that, So, saying that X% a than QX, greater with And a X% going

perspective that -- for price would in increases in. to expect a QX from fold those price year-over-year we just So,

in I think, keep considerable out, see a I just last we did in price would from year-over-year in year mind call perspective, step-up QX.

we of to price So, point six we QX saw in were and roughly a here at points in five QX.

sort of stick, year-over-year From an because year kind here perspective, to outsized metal So we an of higher of inflation expect very the year-over-year impact while perspective, see a in perspective. locks of QX to that's going we inflation that a impact favorable the did ago. from

the is And So, maybe into that well of the the the that Julian, that expect margin improve we way going to to back the half I one into QX factors half. a think of that's nice up, performance be QX this ROS going and back we as expect equation to through wrap improvement in driving of overall price/cost as year.

around segment your much. a QX maybe sort looking is at for very it Thanks XX%. then, from And think of standpoint, at ROS implied I

particularly by So, thermal to sequentially. strong it's very QX maybe of sort up And margin. sequentially bps sustainability I the or or the so, people business XXX flattish revenue Anything in that call are segment? and out suppose interested of there

Yeah.

from better well sort expect margin at Enclosures really of So, less we as then, price/cost from making. would things on a headwind as standpoint, a nVent corporate better would just be, of year-over-year position, QX. these investments we're perspective, that an in out outsized performance of point ROS growth ROS was capacity a one, that on there we have on leverage of and largely to look you improve sequentially cost couple a if And to that some

a a perspective, seeing ROS ROS begin great off So, that's price/cost earnest year that income we that just performance. the prices of MRO growth. improve. to we in the began still From perspective, elevated even just way expect not of the there team really would industrial at we we in we're that quarter, levels, being when from still recovery that overall by Thermal an that But Management year-over-year in a of ROS QX. inflation that that's still expansion expect expect EFS nice as and to year-over-year in to perspective, because largely the QX, lap magnitude From ago

Great. Thank you.

Thank you.

comes line from next of go Your Please question Joe the Ritchie. ahead.

Thanks. morning, Good everyone.

Good morning.

Good morning.

growth Hey, year nice as in rate above really to the to the kind was on organic good quarter start XQ so It's for you're and year. the guidance the congrats expected range this well. interesting. The be of

fluid I'm And just I just about is. dialing full backdrop Any think number year the that that and in guess, you're on trying today, of some would how helpful. thoughts just to so, be based whether conservatism kind around maybe

very I the and the we year, of been a I think, -- think the last tremendous And remember, we as got orders we we've and full look with we've into see had. we're things. started QX One, year through of how growth pleased to couple that growth at QX. momentum as QX

second, able but start that we've been still I to think within just the pointing we respond, then So, fact doing to speak. environment. the And being so is lap that, there to not our control. uncertainties a are lot well there And in to out of in everything we're

part thinking into So the just of our that's guide.

And the quarter. uncertainties, specifically maybe clearly comment can the evolving the China, maybe on you Beth, since of end that's some been of

operating there your and there helpful. exposures Any would your business Just color there? how is be

Okay.

seen to the would say, in for on us, where again, revenue. had country. lockdowns manufacturing are I manufacturing were we've across our And in have certainly don't So, And slowness, how lockdown, Like the Shanghai a we occur overall are going -- managing orders I'd there this others, I have across say portion any but from lockdowns, those point, some to of overall do of in we significant have we've we're and China is APAC at the We hard country. not predict where it's nVent QX. that employees salespeople. many some well. the

where -- I chain just think And the able overall, because today. But greater companies. have we for QX guide are many create chain to to supply position disruptions supply for just I it so, our -- think we'll we think does we be that respond, a reflects just --

more put is of Enclosures like the some pressure, question most the price/cost. probably you're Julian's back If feeling sneak the one area Is the I on be the in, business Great. you going where on price could positive guess, It the there. Okay. seems of XX to just I just well of of maybe but as Enclosures talk year still price/cost through some quarter. points progresses? this dynamics through as

that answer is quick The to yes.

We expect price/cost be positive. that to

of a just from it's standpoint. matter timing Enclosures So, an

I way sales. percentage little as percentage think other have thing a as of P&L is, a maybe too, bit do other much we by Enclosures than different the mind, that looks in two freight to higher of labor the sales, a how higher of just a keep

to quicker, got of So that QX, it in going to We from that largely continue we here well. lot ROS look, but driving if P&L. improve the expect a will, on also improve. XX% is we've see to confidence to did XX%. half, we're And to equation, to to QX that continue and price/cost that But come the the cost tends overall underlying productivity you QX into as to team back that

Perfect. you. Thank

Thank you.

next comes Your go Coe. question line of ahead. from the Nigel Please

Hey, Nigel. Are you Good morning. there?

Hello?

you. Hey, Nigel. got We

Hi.

-- That’s Good that. I about morning, what know, don’t Sorry there. everyone. happen

Sorry about that.

Good morning.

Thermal. I circle to to back So, wanted

not think, XX%. You all down. mentioned, up And those you XX% year quarter. I in and were I is MRO prior know industrial puts the in whole down -- If XX%, XXXX mistaken, I'm

given the shouldn't it any suggests we there? math, below reason to running Is correct? percentage XXXX peak-ish just levels And So, get that still back that double-digit we're levels. why

of perspective ROS as years of what that have in that just year recovery that I say did level profile, from ago improve, sales to began that's way industrial would And would double-digit or well expansion say MRO sales. takes as sales and standpoint. industrial still MRO by seen to strong -- industrial to see growth QX from of a I it we a that's that, MRO then, in from to to we And begin reflected see what get in by the MRO but both we XXXX here's that's got is an MRO from further recover. as runway well as an past that cycles typically couple last recover of to that yet orders, the growth year. right, not continue Well, right, a in way And trajectory of for really fully that standpoint. QX some

and the we're that we've four midst So, it sequential if of you quarters. improvement, improvement seen for now in like,

That your got in in that's think Right. I Right. just the swinging chunky the Thermal Russia, And makes I exposure was wondering guide sense. year. how of then to you've back half a Russia.

in Well, we towards weighted are for that is Thermal our more Russia than suspended our And our position you there in are Russia. sales overall -- and business activities we're business. less that is X%, in correct any nVent, new it

existing there completing so, And position the we reflected guide. fully and is we our are in business. just supporting And have

And Great. quick then Okay. just one. a

auto… out called You

Yes.

Mr. disconnected. with question. Maybe we the Coe proceed has next

Okay.

from question of next Dray. the comes line Your Deane

now Your line open. is

Good you. morning, Thank everyone.

morning. Good

Good morning.

Hey, everything slide. I really map like good road that you. electrification for a of That's

together. put nicely So,

you. Thank

but in A can question the you the chain can is, and that? sales? any quantify able any products, to supply you've quantify not you impact were you ship Clearly, terms missed of demand, got

to in, that for lost right? -- Well, I building it's kind I Deane, think we're right, keep out, say, would orders coming -- hard didn't will, we think but continue we about point quarter. the of have good say with to our right, so, in less deliver that the it's you backlog, it's still I about think do sales, right? strong that And if as we customers, to important So, growth, sales output,

continues it into QX order give and trends here. visibility I great to think, is does great backlog, us we it step what as

this, sure commented Got And started? it. you April but how not has if I'm on

Yeah.

this So, April, commented here. but color bit, give more think I'll a we I upon bit a

see to is sales continue to from we the saw bit growth. And double-digits. that with from continues up mean, at easing, if earlier. Europe, lockdowns to perspective, a when what you in QX, look see EFS we see on From we segment where those and and I growth China referred fronts. standpoint, to and reflecting of that APAC will, a perspective. continue orders largely the lead both we North Beth America consistent Enclosures it April some geographical really a we lead So, a

with Any distributors? the channel That's comment real just And one. about inventory in last helpful.

matching products partners. sell-in. what to or is distribution we've our more We've the for seen And less the sellout talked that Yeah. key is our

So, the imbalanced. get that that perspective we we're is

that through So, having from we're that sales. of they're strong up demand pull-in keeping with their flow

you. That’s really Thank helpful.

you. Thanks, Deane. Thank

you. [Operator next question from Hammond. Jeff Please Thank the comes ahead. of go Your line Instructions]

good morning. Hey,

Good morning.

XX. how lot markets detail. good size like wondering also or would individually within slide your those a just collectively you I business. That's of like you frame if the can I'm either

We that haven't example, be we're on less share full but given shown you at data growing the portfolio, used perspective that, that, just you with now we would for of I to to our and all that have, that you with double-digits. of solutions than $XXX million mid-XXXs

that the trajectory. of you but we commercial So, a just at of around what overall sense smarter are less the nVent has look you of right, subsets, portfolio, buildings, look gives in that others industrial. And been When commercial to portfolio. we more our overall at spoke XX%-some or and

vertical at So, all our perspective an of we are really areas -- yet, look you our just we overall just faster that haven't business. given growing but say want these when view I to

pricing and moving any renewed kind you're oil on up. Okay. an oil quarter and seeing I'm MRO activity, incremental order Great. certainly, and And and of gas? focus then, what project gas is from wondering inflection around just

and out. we've activity very We quotations has our MRO and pick pointed a strong, that's orders increase. Certainly, been as steady have our up, the seen been

-- for we energy or things is we of energy So, looking everyone security one like. the see independence, if that is you that

there made. And going investments that are well-positioned any to are expect global to we're respond be that And investments. to so, continued do we

an in here in upturn we're that of think we So, terms energy.

if I And could Great. sneak Okay. more just in. one then,

back or less in what Just productivity you starting like any what for size you moving -- need better, terms negative of to to do to get see need do happen either -- or positive? things

way, it efficiency counting in in didn't is, guide. on that meaningful full really -- reflect we're a Jeff, year our Well, say not I supply our we would perspective, guide, because so, overall this from improvement chain

over see today. and are if some baked return, that that miraculously -- the current to here a a service So, just we so, I have adds lot as think labor with somehow bring time. an customer, to sign-up challenges output, of choppy of initially. just still in people, we And the issue, we will. better whether more we're that's quick of we process, that And tremendous efficient in in availability, gets the think continued working issue as a should job [ph] we're teams But train but not and a pockets, takes but time help. if increase it and of them, tight Material that becoming market you an to less it doing it be new

So, I not get to in the chain point that that overall on here supply counting is better our we're think, key guide. meaningfully

Thanks good perfect. Okay. for all the color.

Thank you. Please of Coe. go from Nigel question And your comes the next sir. line ahead

the [indiscernible]. Thanks for

Just auto. a quick one on

and lot. maybe and talk nVent. by auto how strength peak, out this EV within I'm called it just is industrial And a You area big of about that not vertical. is projects an your as about it's remind because it's something us assuming talk you

we're is where the What automobile. are we play yes. remember, seeing we're not Well, on investments --

in the We and factories are the in actually operations.

that's see growth of going vehicles, to in is line in, that see our that of as Enclosures automation And so, as you to start the you seeing some to portfolio. all start we're changeovers electric

very Thank Great. you much.

would we no And presenters closing have to that time, further to back our [Operator at questions Instructions] now call the this for I turn remarks. over like

we very performance for of you first delivered the today. outstanding in joining Thank the us proud We're quarter.

for continue customers strategy. We growth our on on delivering to shareholders and our will executing by focus

joining for employees. again And the believe is performance to for continue us. concludes for call. will place high well nVent a nVent This top tier we company, great electrical everything. work a to make the We Thanks positioned our electrification of

And call. concludes this today's conference

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