nVent Electric (NVT) 6 Feb 242023 Q4 Earnings call transcript

Good day, and welcome to the nVent Electric Fourth Quarter 2023 Earnings Conference Call. Please note, this event is being recorded. I would now like to hand the conference over to Mr. Tony Riter, Vice President of Investor Relations. Please go ahead, sir.

Chuck. you, Thank nVent's to XXXX Call. Earnings And Fourth welcome Quarter

fourth are Chair Zawoyski, and and On on Financial the Executive our Wozniak, me with our details provide Sara call outlook Chief for year Beth Officer; They will and XXXX. quarter full Officer. performance Chief and

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

of Forward-looking statements subsequent are And undertakes made publicly to as no update obligation reflect such statements today. to company circumstances. or events the

you website. anticipated appendix section differ results from time can Today's References materially prepared in which Actual after results. of presentation. financials the the for the to Investors in is questions are reconciled our accompanied non-GAAP nVent's webcast have could We'll find of by presentation, a remarks.

turn and please Slide that, X, Beth. now I turn call to to With the over will

record growth Tony, morning, exceeding margin another today and with guidance. everyone. you to flow. with fourth be our across was share expansion sales EPS segment This to year good you, QX a year. free every results. double-digit cash XXXX full and outstanding and It's was robust adjusted great Thank included quarter our quarter and

sustainability earnings had and year, and electrification, very full everything of we with for I'm growth the sales, and strong I cash nVent flow. trends excited and in am margins, accomplished. the we've For team resulting digitalization. our execution, record of XXXX proud

our sales products verticals, strong and well by acquisitions. positioned We and high-growth profit for new growth, on are focus driven

we top our performance. On generated an XX% sales on up of with cash free and grew impressive a of $XXX QX basis up And flow, on a sales points. sales top million basis, Fourth Slide XX%. on XX%. quarter grew of XX% ago. year income year X%, summarizes Segment EPS X year grew an year-over-year XX%, organic ago. of XXX return XX% Adjusted were full

vertical Industrial led digits our channel adjustments. performance digits, digits. Data with grew single declined at Looking the low quarter. by Solutions. mid-single up Commercial strength low inventory impacted double in resi in Infrastructure

Energy single impacted Russia. our Finally, exit by was low down digits, from

organic to our digits growth Turning single America regions. and low slightly. by geography. Europe up was sales We across saw grew key North

Asia grew digits with growth Pacific solid double in low China.

in the organic inventory Lastly, the adjustments. quarter, ongoing down orders slightly channel were reflecting

positive. was sellout Importantly,

of Segment record EPS For the XX% we income of increase and X% $X.X basis margins more top points. an expanding year, full grew organically. on up had XX% XX% billion, XX% XXXX. XXX was with Adjusted sales in of than

cash the full year, of $XXX million, record flow we For had XX%. growing free

Let more me highlights. few share a

new and in is XX%. at XX our product now we XXXX, new First, products launched vitality

than more our contributed to products X points sales New growth.

pipeline. have great We momentum in our innovation

XX% Second, includes than to verticals key greater our in Infrastructure, over now Solutions in and sales XXXX a power organically grew name in by few. Infrastructure, XXXX. all represents million and renewables Data Data $XXX of Within Solutions, grew utilities led which

sales Finally, adding acquisitions investing $XXX that scale X in to we million are drive completed annualized in growth. over and last year, we

trends. verticals, Infrastructure back government to electrification, and we is with more digitalization have funding continue the and drive grow. expect to sustainability trends, We On demand. flow benefiting forecasted growth investments half. Looking our the in the to macro digitalization the so all strongest to at we expect year electrification anticipate from this to key

and with for liquid Industrial investments growth continued for Solutions, given solutions expect particularly in to We cooling strong reshoring. automation forecasted is the AI. acceleration Data grow our of

products. Residential expected need to power are and to as well remain soft. supported for to as and expected increase the record proud growth, we expected is our trends. decarbonization I expect Overall, results am the commercial the data nVent is transition In modestly. of our see more solutions particularly in infrastructure for XXXX. by The Energy, Overall, team in we grow energy to drive labor-saving in delivered demand

of change to of and another We believe continue creation. year the nVent. We growth XXXX be profile value growth will strong

go will Sara the turn our now call outlook. I details on results Sara, as to XXXX as over our for well please ahead.

am strong Thank another share robust margin and cash growth, you, Beth. sales to earnings pleased free expansion double-digit quarter and of I flow.

quarter fourth our with X Slide on results. begin Let's

X XX% a or Organic down Sales were in compared of year, million growth to with points line Acquisitions and XX points up up to sales to last $XX with added meaningful contributing X $XXX million guidance. sales growth. points. X%, volumes were price to

Foreign exchange million, up Fourth XX%. XX% was up on quarter tailwind. XXX was points $XXX year-over-year. a sales of incrementals was segment income basis with XX%, X Return point

Our performance by more over productivity Price inflation ECM acquisition. the and than from accretive from driven the on million. was of just positive price/cost, return sales impact $XX offset

range. EPS above $XXX year-over-year. included contributed $X.XX the guidance was robust growth CapEx of XX% adjusted generated flow higher up for Acquisitions investments capacity. We cash and XX% and up free $X.XX, our QX quarter. This million, in

X to Now sales X% segment over and and price for fourth to a X of discussion performance. our Starting with million sales. of X%. with Organically, TEXA volume. acquisition sales quarter The solid Slide please increased points $XXX increased positive contributed Enclosures, turn

grew points XXX with North mid-single also up XX.X% XX% China Commercial Solutions. $XX Return fourth the Europe digits. and than million, geographically, by income driven was up in quarter America productivity price continued strength And strength cost. sales America. more resi led Enclosures grew. basis in year-over-year, of and with Data increased XX%. quarter North segment grew in on Infrastructure

an ROS basis impressive expanded the year, points. full XXX For

while due acquisition sales of positive North Infrastructure, to in from This basis XXX was Fastening contributed Fastening. a in adjustments up million, modestly. growth million to increased sales XX%. on down grew to up growth. favorable $XX Moving XX with & organic ECM year volumes Commercial Electrical income Sales mix productivity. that on The Europe to Geographically, last was $XXX digits. grew sales and Electrical low points price single by Industrial inventory channel each flat continued & resi segment the compared Organic and points was slightly sales -- up Return and QX. offset XX.X%, was declined decline were quarter. XX%. America, in

Turning and MRO was Management. note, impact resi points. price to double in was Thermal X Overall, were Sales Russia and approximately with to points wind-down million digits. was Industrial. by up growth. down of organically. Important X% decline contributing Industrial improved sequentially, Commercial Commercial The The sales driven $XXX resi X to volumes were down

due energy of price Thermal Management and year-over-year. basis XX.X% of segment X/X sales project was the cost In to of addition, was $XX backlog productivity. nearly represents grew backlog. points income year-over-year million flat and XX on transition up year-over-year Return

XX% summary, an And basis year, conversion was points $XXX $X.XX Slide with full the of Let's with up to for was to XX% up year. acquisitions $X.X initial on year sales. XX.X%. billion, impressive segments recap Segment record XX% Adjusted return XX% the an our X% sales to up turn All EPS the $X.XX, income outstanding of million, a our expanded XX% XXX net expanded X ended In million. return grew to sales Overall, cash year XXXX organically. We full results. expectations. flow free and year of adjusted or income. exceeding for on XXXX contributed $XXX was

flow, and see cash Balance revolver. hand titled $XXX year X, Sheet Slide on million our we On $XXX with will Cash on million the and you exited available of

with acquisitions. million $X.X have post strong and on debt paid Our We believe capacity ample nearly in down and execute stands billion, provides $XXX strategy. invest at us sheet the and our generation balance growth to just we our healthy under business cash

allocation outline Turning our to we Slide where X, will capital priorities.

growth approach allocation to and returns. great disciplined balanced, execute prioritize a capital to to continue deliver We

will We increased have in help million new we new constraints. repurchases invested million, where distribution and XXXX, quarterly in to of recently have including This we our center, CapEx We in dividend, shareholders unlock returned up and million opportunities factories a $XX share $XX $XXX XX%. XXXX, X%. includes which

targeted X.Xx, well This to a within net cash our EBITDA We the debt adjusted to year our with is ratio generation. exited a range. flow of strong testament

deployment shareholder are attractive as positioned and strategy well on growth capital our in for deliver XXXX execute returns. We we

our Slide Moving XX XXXX outlook. and to

sales to X% This reported growth. in to Acquisitions expected are organic contribute the X%. range points positive growth. with of expect to of growth XX%, to strong X volume We approximately growth and X% assumes price

We expect normal seasonality through year. the

year or X tax for Our includes of negative standards is full X. impact point adjusted changes related represents January effect to percentage outlook that global to X% $X.XX which EPS went to X%. $X.XX, into to growth in an EPS This $X.XX

items to note for important the few year. A

inflation. offsetting the for positive to more X% reflects First, we than productivity XX% expect income price grow segment year. plus This to

and addition, invest capacity, digital accelerate In to productivity. we to products plan new in and growth

from million. flow cash be income X.X global tax This year reflects and higher in to approximately tax change relates Second, XX.X% mix to impact increase And free XX% the rate versus full XXXX. XX% The third, rate we over to the includes adjusted reflects capital. point investments of XXX%, rate $XXX in ECM. our conversion in This range standards. working a of remaining a and our in expect expect improvements we CapEx or

$XXX approximately include million, expect a expense to standards. offset higher tax $XX we cash $XX million global million. assumptions A the and of few XXXX of corporate costs in shares interest Importantly, of of $XX change $XX CapEx impact million; to tax million amount of of approximately the meaningful additional approximately net

outlook. XX our and to Moving Slide first quarter

margin We expect in sales X% of X% range the organic and year-over-year to growth expansion.

global the earnings year-over-year. from to For including in a in to range standards. from $X.XX, This change $X.XX includes tax expect adjusted Wrapping higher $X.XX impact X% negative $X.XX tax approximately rate, the share, EPS of a per we up. up XX%

Our I year. believe are outstanding another and XXXX, for an well positioned we great team delivered

turn With and over Beth. turn back that, the XX, Slide will call now please I to to

strategy drive you, been performance. have executing differentiated growth Thank we spin, and Since on our to Sara.

our Our of and growth is strong strategy track demonstrates key record working. and are innovation new High-growth strategy. products pillars global growth financial acquisitions our plus verticals,

to billion growth $X As billion had a we've well last result, outstanding in from over going year. $X sales

At made year, In also segment medium-term year, XXXX. doubling with $X.X our we we have cash laid last have we And tremendous Day approximately out flow. first income returns We achieved adjusted already in the EPS target. Investor our margin and expansion have billion since progress. than significant have and targets delivered free more generated

have exceeded believe also And of ahead earnings of and share contribution plenty we runway us. our have meaningfully per growth. we We acquisition

turn Please Slide to XX.

We strong are track record. building a

tailwinds. have We strong we industry-leading solutions, secular with products are well and positioned and

expect We everything. of electrification see In year and the liquid growth over and for infrastructure funding of X-plus our government next the with significant particular, the the need flow AI for the to opportunities cooling. contribute We to years. this growth acceleration

XXXX in pipeline in digits beyond double growth. grow to are we continue $XXX and to building business million to for a Solutions Data our future expect We sales,

we In as from our addition, energy scaling power energy acquisitions are renewables, and into ECM we well of well And Industries, verticals expanding and globally. storage through high-growth decarbonization the to to for these Industries have grow opportunities TEXA with growing transition, portfolios, as channels, positioned the like utilities. to

When products, never engine innovation it our to has stronger. comes new been

than overall points to accretive expect add We more margin growth products to X new sales nVent. to and be

Finally, through we space. billion We allocation. opportunity acquisitions. capital to creating a grow see highly We in fragmented play value ample $XX via are connect-and-protect

as serves accelerate growth. acquisition a framework flywheel Our to

a good healthy of returns. We strong record and pipeline a have track

dividend are raised the In recently and quarterly cash addition, returning to by shareholders X%. we

for our build deliver strong We customers are track and our record shareholders. can confident on and we to continue

and Slide and nVent Work. XX. to to to A Place our people success culture our Moving has been Great making Key

customers, We communities. are focused our on impact our on a having and delivering for positive

has strategy. a been As core sustainable to we world, our build ESG and more electrified

team production Workplaces Best have greenest time rating On on were slide, awards have and Gold we as Newsweek, we the and companies recognition will XXrd manufacturing see and first America's us recognized accomplished X% and everything this received. named a of nVent a can that industry few from also list. companies percentile many of to a the few of the more placing these. you We in I'm assessed the I These awarded Recently, have top do. one were to in were of proud companies and in just are extremely our in assessed. sustainability that recognitions EcoVadis, Fortune by there's comment and all we of the awards for and our numerous received. we of we

nVent. on another of up Wrapping delivered year for earnings Slide XXXX was growth. We double-digit performance XX. sales and outstanding

with year with of We everything, robust are XXXX sustainability profit cash digitalization And electrification well be positioned strong another and the we flow. to growth sales expect trends. and of

Our future is bright.

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

Ritchie And with will come question Joe the from Sachs. Goldman [Operator first Instructions]

year. to Congrats on a end the nice

Thank you.

you. Thank

the interesting EPS expected to below if that Let's off growth cadence. forecasting X% XX% is modestly the to quarter from an is start be with the just It's first rate for what yet, you're up the standpoint year.

So just any conservatism the it some that and into the to thoughts stronger start of around expectations guide. baked year? the the through think there's help us can't But of the kind year remainder

a of Maybe, things just note. have of couple big Yes. to would QX the acquisition. One carryover, benefit does ECM Joe, the the be

So you're perspective, acquisition XX an obviously, contribution dropping And seeing earnings the line share standpoint. that's from that from top in points. per down a

going inventory X% of X% channel are X%, standpoint, laps thing, X% and maybe in, at be organic think in to other QX of QX. some growth if too, look that QX here other I segment the QX is piece, in factor beginning that the to guide we double-digit has to we And year that in some that versus level lapping beyond. to to full a you adjustments and think that from strong I EFS is

growth but was X year, will, lap, in point that to the feel QX is about X% Thermal the one think other QX. you X% to And to roughly thing, Joe, last I our good in we would that of of It here points start early I So is impact Russia exit. Management QX. if out our

here X points that thermal in expect to We be QX. roughly to

segue what destocking to we've seeing think volumes exited the this good months you're I guess been it's perspective. inventory I Got into a it. and maybe To helpful. your an from also point, and clear That's XX year still negative. phase

for for price turning if on helpful, expectations provide 'XX. guide embedded volumes would be And And too. 'XX, that what in organic into is that then ultimately could any just positive so you color

we was in remember ended the expect When saw on we And those start. adjustments. when strong inventory QX, was build tailwinds, some of with secular have all slow start the believe Sara Yes. year me let we Sara Joe, enter we sell-through And our I'll that's view to pricing. forward continued positive. as is pointed growth, let out, adjustments. QX, volume as and we inventory really this comment importantly, inventory there go some year, we on the lap in But we and we'll be to XXXX,

Yes.

do contribute in because to from So a XXXX. It of of piece overall contributor smaller that. expect price bigger price just we volume positive volume a that will perspective, growth will be a

communicated. inflation. pricing carryover be I already And We into wage labor in some to guidance as just of think price, the we've maybe year one it as inflationary I positive to that in that's other and take is, that particularly point still account realization expect another backdrop would relates say as does here well it from of rates. XXXX, actions

next Your come will Wolfe Coe question Nigel Research. from with

just Data Solutions. But digits, granular get during fourth quarter? is hoping digits double on very XX%, color double tailwind in to we there? you're a any material And liquid go if closer more wide maybe that But cooling? a quotably, XX% Is I out double 'XX, more the the mean maybe the Maybe know of more forward? I strong the becoming how that a tracked obviously was as curious it's digits. what range. kind it's you bit I importantly, and could of seeing

Yes.

really, have. with we the our commented. say of not higher strong would So just you've those I traction double digits double and digits Solutions on the as lower that cooling. those think end double say, I liquid of only Data end at that business, the is we when And digits

the as AI. and the of our thing key is of as talked about, acceleration WBT we've Some acquisition well,

cooling several effort distribution some cooling all channels, and so to those through And exchangers. our door hyperscale standard with of customers rear well on ramping. product and our accelerating continuing we're work that liquid our through as distribution served with of our Having some of solutions as heat products is unit offerings

a activity we of XXXX. see that us so funnel takes And into

centers. to So to in type our as need be of these at powerful see chips, you're proliferation you view liquid-cooled. edge computing, it's that we to see only data as is, and of start this GPU Eventually, not going more components those look

so is on Solutions. beyond we're positive And even applications future. the that has and Data for But this feel several we outlook going our what cooling very liquid -- year the into years

Okay.

strong flattish margins. And So to implies, double the plan obviously, just digits closer obviously, okay. has XX% -- then

need that if anything set And up And how consider so maybe I'm we from first Sara, segments? across a there's does of just half wondering, second the sort look versus to half?

just me products, say our start investment. a continue is invest half. in the perspective. it to would first an see -- top more here From behind couple expansion a last the great second Yes. talked half, that growth that of second bit and include and let in and you muted context about new We're quarter in in particularly half, One Cooling earnings. we've here. Liquid also Data margin of even does a in I great the providing And there's things Solutions that a see phase line from we in going returns to the

the phase in the So year. that course will of over

I of talked of about additional would in online, some liquid commissioned, is and cooling gets specific specifically, I midpoint if out think call will, the one sort bringing you capacity kind we've thing year. that of

associated see that, the costs ramp-up in here we'll half. some that there's So with back

last quarters talked to mix ECM. last and point are lap some of just the we've I benefits the couple beginning of EFS would think those in about we I say, that

are growth, a good muted organic in bit of so it's it's first early included, to year the profit saying versus the expansion look growth. if all half. half would year. those back margin you Maybe by the with it, of I a the just end we But see in still good going still And more at

So that perspective it reflects as well.

Julian question Barclays. come Mitchell Next from with will

a of on just perhaps bit price the wanted explore little volume So sort to I more top line. element a

So guide, to XX-XX flattish sort price versus are outside is fair Data XXXX? is total overall it volume? is of kind then split the growth that that embedding in say volumes of guide is sort company, organic sort of Solutions your say of to fair And of it

So than price this year. we would expect, more Julian, volume

positive transition anticipate as and that going to and again, manage we as to volume on price expect Commercial a for well of resi Enclosures, energy than well. would we volume the with EFS from half offsetting little in do in us industrial energy our bit is. strong growing investments So more reshoring be than this commercial inflation also perspective more where muted Solutions, more I then plus about industrial think to bit plus automation be the with sure. of And been the commercial But But trends a versus growth and side. I those we're we Data continue productivity, to And outside talked remarks. some as resi. has and some of a prepared see overall, price resi,

be So stronger contributor expect that of volume a X%. we to do X% to top to overall organic line

follow-up Russia year you because That's XXXX? kind last organic through as for the of positive did of sort Enclosures of the Thermal lead sort for segment great. the for a Are as it that expectations turn headwind? sort of the the thinking for after are exiting of rest just get year assuming And the QX whole year. growth can we that of Management, And a we around that growth kind

Yes, right. that's exactly

EFS growth but to the in growth stronger to positive Thermal XXXX. expect volume growth expect have we Enclosures, So and and we both be in

come from will Capital question Deane with next Dray RBC The Markets.

fair the where most of the on us immediate be will place? rear door door back fastest industry liquid heat that midyear that Solutions it's need the expansion rear Data the you capacity for You but exchangers. sounds of that you and That's it is cooling? like us. commissioned most capacity But has in And Can heat would that exchangers? particularly we size is the said in have put how size much business to is and most Can retrofit. circle really it for

-- I distribution we well -- Deane, opened of And on our we Well, the as will as as We're with us would And opened effectively, capacity to allowed we Minnesota. have around capacity your a to capacity, in factory Mexico cooling center other new question world content we some did know, liquid it and that what here double overall. you our new is up expand in of also that start in increase the to using Anoka the have. plants facility. globally a our

seeing say that as as growth strong And with we've So got distribution the in grow we're I cooling exchanger. hyperscalers some door say I of unit of would our some those also would rear our solutions. heat well

where multiple got growth. we're of driving fronts an So expanded and we've portfolio

then product take That's a where this question. victory typical almost Is that's goal just you lap And take XX opportunity. second Vitality because just a introductions can does new And that each year. guess Right. a products on new Index? your I your great new standard? the what double

to liquid also really and accretion drive really Well, configure things We're you're XX%, about It's verticals high-growth platforms. and one more through faster Investor and process, in it's like products and want focus of out margin it's cooling, launch -- not the on we seeing on it and platforms that us And we to the more products. on one new impact, -- our growth. But that really I us of And set really that those focus products got focus things that at well. helping right, our probably we We're the as velocity that is thank important, are well are new our we the a would with couple as as more focus on whole off that's we've is much of allows us revenue target the reasons of on and to our these and as what in as say which so get Day. track just is you. terms vitality. And midterm I measure number our important. excited

Jeff Research. The next with question will come from Vertical Sprague

could back companies going to I significant global But a of what, little around. wonder and just about color movement tax friction kind the think the talking the We've the and uptick if more is a of on now? than this some to we're come sticky lot minimum seen of we things the more from these lot the tax. and a why how this where seeing at others. at you just we've on kind moved do we're of rate Maybe here

impacts point of and change, standard really upper rolling that's and So impact no are ECM. The in Jeff, really where roll relates higher rate things. And that in as to tax do. One, increase really $X.XX. really tax effective I to that X Jan at would planning was that But XX% X, X point America things, say we continue the doubt, X.X that our captures X of we income does we rate roughly it that work global and encompass has at and tax today. XX% really North always

We of carry of expected XXXX to here. kind some over into that as well

the And were but I said cash remarks tax to that to related the my this XXXX, tax meaningfully the our in things think a all rate. noting a all, -- think lower we it's we But our expect we just I tax expect tax things we cash rate. flow lower rate meaningful planning, be bit as of higher tax of taxes, of is the meaningfully prepared in adding of that couple again of kind really which standard. there's overall final element those overall prioritized to cash in here, impact working so is of cash worthy I global to offset than taxes element

on and And in million finished inside can Data you comment Solutions of given roughly other that any of versus XXXX. then power just where confirm cooling kind for number? kind your came But at kind $XXX sounds Understood. that color the just It $XXX of it vertical. like Great. million, we

see on we're certainly, just terms And see million, devices million that finished going in of and industrial as $XXX year storage energy, over cooling $XXX we is I areas revenue year. we're or overall continue liquid cooling Jeff, well time be And accelerate. the as growth, our said over the proliferate increasing we we to way into solutions percentage So this edge to as like we of think to other over well. see that and our liquid

we and a growth there. see nice future So trajectory

you thought said I XXXX. for My $XXX million great. Okay, bad.

from Hammond Your KeyBanc will come question Jeff Capital next with Markets.

on the Just order rates.

I think down slightly. trends that kind said outlier an or of know the if grew you quarter maybe don't segments were or what within any the of more I that? are there through

as through just always, quarter. actually looking I and QX at I the position. trend their I in get The there. that EFS of any mean, would we end the the year comment distributors, that know inventory are don't see there's we positive did orders

once reaccelerate think through you Okay. like done. destock? orders you get to It those this of sounds And it's expect you then kind would

say and I that think build. would going they're the I is adjust slowly word to

an time, wouldn't slowly But expect see we the I'd we're build. I say so inventory improve. and do comment saw So that acceleration, that they'll sell-through, that levels call is what over made positive we I going that to

had some came Okay. I versus model. light didn't ECM, a -- my timing in slowness And if bit other issues? I of then that know or little the or any business was seasonality

it Yes, continues of expected to QX distribution just grow, seeing this of where business basically that the residential seasonality. part talked to about last we as and some bit It headwinds, had did while little was is be. it the Jeff, so that quarter in it I We think right that's a well.

a standpoint lot So to like look the you a from can business. about business EFS think ECM seasonality that

with Blair. Next question William Brian will come from Drab

Thermal the first in of from impact some especially business. wondering warmer was any the on in Canada? industrial weather, applications you I Did see

actually improve our the would in and sales I we say product increase. saw quarter

when levels down were just there And pockets product we saw of channels. is And in some inventory of were that increase. weather, cold the sales

to nothing So really. call out note there, or

Okay.

a not trend And colder in MRO, business? a of near seeing in business term the -- Thermal the so regions really outlook that isn't concern so that's for your really those warmer the in that affecting terms seeing in you're weather

talk Not because I of in the elements actually we and more controlling term. And more one near trying things think the energy transition, as the it content, you're takes a maintain temperature. about to

And protection. so -- maintaining process about It's heating about also remember, just business Thermal our isn't temperature. freeze

opportunity And transition that with fuels the decarbonization that clean great of so and biofuels and front there's see actually us. LNG energy we and a in

Yes. Okay.

was lot point a a main if one that about talked your bit, Sorry, I recently. on of just little that. competitors dwelling

impacting the then me to And that wanted just is, trajectory all of And margin you ups have get year? the you're into sense margin 'XX? I -- comment the putting so forecast downs could that And last for place was might put at you. any a any gross whether you, question capacity for for if in additions on the the gross for any and

Yes.

just in you new those of R&D, those our half, ramp-up that alluded bit new if a a the it's half. accretive believe is here as be second into So we going to phased-in that bit meaning be stronger some as we including, a the incrementally expect overall earlier, have some in we and well more going products, of back that we talked to lines margins. verticals, about put perspective, in In half versus in high-growth with as to costs our But you you're investments, rolling as ECM muted commission, the from capacity first margin will. to the part, to,

top consistent did the But out I [ quarter what that called again, other businesses getting or as mind, in last in, to EFS growth. good good the thing lap. expect to ECM in the line in with have all as be we just think We is profit this well growth and benefits and ] some mix X. we'll keep

will question from Vlad Bystricky Citigroup. with next The come

just think wanted I So I mentioned your with saw low to you in double comments ask, you that up growth in digits China. solid APAC

So seen around returns obviously, of macro we've outlook. China and growing -- sort the

about was for you're behind saw? So how can thinking about strength that And what you you really China going outlook talk that the just forward?

first sales. remember, our China all, than of represents less X% Well, of

China. high-growth last in over And significant. not several focused on it's the we've our So really the -- verticals years,

can and we win be think And so competitive. therefore, that's where we

some on And of growth like focus both where projects, we saw in Solutions. some chemical. Transportation our or our so Enclosures we in business focus particular, areas key Management And we in saw growth Thermal on Data some segment with our

is not So I growth ensuring on that of key been very verticals. those we it's are where think high-growth But overall, portion it's the knowing portfolio. us, really focused our for significant and a

the Understood. of down front, leverage allocation range, target end And can on lower helpful just your color. now your capital about toward sort back that's you do net then incremental of a just management the And M&A? And capacity perspective the ECM integrating for from TEXA about you're how of you're to thinking and talk sizable potential as larger sort still with M&A?

the done over opportunity and So sure and as that X -- But to to to have But M&A ability about both think as execute of those driving about execute good want to a portfolios. that I the expect view returns. about deals, pursue and a it, returns, never framework at how of and our got the the deals we've think shared the make we we've of track record we're think ability standpoint a that we Investor you we we're think our happens. generate well. we strategic going when some growth company, our right the and now a have think always timing have we from the to would Day as I we've course scale that And we the about and great is to they're quite -- ability of year, control we opportunities M&A

from come will Graham question with next Scott Loop. The

year, on all, you with of the capacity billion can would your year. is to this year, bit Is what $X which pipeline possible? little the us kind And does So pass. you -- stronger? just share maybe target another next end leverage, the we high step. your another you and just will terrific right? of where the include this like -- seems If it's look take billion you maybe the just at I'm like? can mean that's it last EBITDA, it execution. that question, Maybe in get to one areas did a wondering, do back last of to Which does the in company? that of able $X I'm what have great of the I you end. not go And wanted high that quarter, to First congratulations again, be deploy,

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it's auction process. an Sometimes,

we've year. high-growth in we said a product So one two and great the opportunity feel like is to it that be And to we of has a deal things portfolio very good vertical. did or in the of pipeline terms last a pursue our

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of So again, a have part strategy. our been acquisitions growth key

that any Understood. I for that within segment restrictions Sara, wondering was just does also pose on ECM M&A?

So I'll answer that.

deal, from think a ability about by about we geography. that by think whenever about that to think we our segment, execute. I standpoint the think we So we of And do

will when time opportunities consideration. of So be will the -- our -- part at arise, those that

thinking what you there. to lead by question this your will other last Center sort the and And you I of for assuming X by organic My were know of organic I it. that on able with Data the again is year. just just Got verticals? be earlier. wondering might asked this vertical. sort is Infrastructure in segment a was rank if I'm is question

Yes.

lead. So within that by organic Infrastructure X% far X% growth, will to

to secular double Commercial, in reshoring in growth to see Industrial, being stronger soft. these more Commercial digits. see Industrial, growing And growth to the of expect expect we we trends. continue really strong see and resi fueled modest also by that some We

You can kind of look then at that growing. Energy flat. as roughly And

see the and and see a that strong backlog with we of Importantly in Thermal some backlog, energy strong transition, Management. we

will question with The come Silver David CL next King. from

but the hope talked provide incremental comments in to was for about sales, the about several did I impact. But questions, quarter? mean, your you above be terms earlier, you would this the make I part of I didn't for we I maybe did XXXX? capture. may wondering beyond recall it maybe in fourth portfolio of reasonable of what to the sure that an then you revenue 'XX saw accretion or expect really was but have that. I'm of this, synergy it and growth missed And have total first hoping half in accretion A not kind time the couple I and of XXXX I miss about the acquisition. ECM

Yes.

David, EPS So and so ECM that to XXXX, that estimations of acquisition completed initial we mid-May, $X.XX. being well $X.XX contributed in to our above $X.XX

mostly range we in expect there. benefit obviously, think that $X.XX XXXX. carryover So of about And kind benefiting but as $X.XX well. QX into some that in some strong And here, contribution to QX,

CapEx I Okay. Great. have question a budget. about your

line beyond, that double So some trend years $XX year. But the company interested guess, of, a to a I'm have million had I portion liquid million number, I $XX for that budget. of know, cooling. you're your in mostly to And several before XXXX. CapEx guiding don't And next basically discretionary

your for of -- we spend spend discretionary think portion where priorities going done lot to XXXX that the be I your been Although But the CapEx think is the a already. directed? of has should highest

start saying of context CapEx that would XXXX. maybe the by I higher started Well, really in

really in the products also our CapEx capacity visibility as year-on-year, capacity. of And over some over in productivity. underlying reflecting that really as folding that of growth great or just but we and see investments well grew So XX% and XX% Data mostly new demand ECM, but Solutions, ahead

that go the prioritizing we right and process through look got a capital kind at productivity. So rigorous of growth, and ensuring we've prioritization

more if growth. and been being very towards we order prioritize focused that have is year capital, capital of in at in on it's so allocated capital of kind invested look return And versus strict more that help returns, allocation that more where And that you of to this us the on past, overall.

think So digital that CapEx second growth there, rack in Really platforms and capacity returns. the being And stack you productivity. then based products. from being probably elevated new on about context in really and can we to third, really helping enable first, new of

this question I Okay. Very to sneak tax that for has maybe probably should more, policies But impossible company. modeling precisely. mentioned, out this going stipulate will the do what we been we're helpful. to about think to is and in your when years with and answer I'm one it's

fudging nominal in a getting regime is forward. kind tax kind cash versus tighter are is up indicating permanent step the But there So of rate of going tax the your you a to I'm here. tax again, rate. be going little And

there's for say, would which we you that various As on should deal incremental In and think of you out look words, beyond higher somewhat further in going on let's a other issues, XXXX? beyond? to here, the some be tax touched pencil issues to XXXX with, you rate taxation

Yes.

a And work, lot of to time. evolving in we're effective seen a tax to that in tax tax wouldn't things. That I So to tax with the change one come prioritizing some of begin cash was work and continue accordingly. future aspect may of to bigger not flow back fruition. come tax did tax to that speculate global quite what We that just standards our may we've of on going on rigorous planning changes or there, planning. kind regulations regulations would really planning I

ahead. This concludes to Beth for conference our turn question-and-answer over to back like session. I closing the Wozniak any remarks. go would Ms. Please

this Thank joining you us morning. for

We strong believe are demand and our and electrification digitalization products solutions. of our driving are everything, the sustainability and proud for XXXX of

I We again This execute call. work concludes the us. are to for the our grateful joining am for excited Thanks customers growth outstanding for and of support our on XXXX. team our strategy.

for now you has concluded. Thank attending today's conference presentation. The

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