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Thank you, and welcome to nVent's first quarter twenty five earnings call. On the call with me are Beth Wozniak, our Chair and Chief Executive Officer Gary Corona, our Chief Financial Officer and Sarah Zawoyski, our President of System Protection. Dave will provide details on our first quarter performance, and outlook for the second quarter and an update to our full year outlook. As a reminder, all results referenced throughout this presentation are a continuing operation basis unless otherwise stated. Before we begin, let me remind you that any statements made about company's anticipated financial results are forward looking statements subject to future risks and uncertainties. Such as the risks outlined in today's press release and nVent's filings with the Securities and Exchange Commission. Forward looking statements are made as of today, and the company undertakes no obligation to update publicly such statements to reflect subsequent events or circumstances. Actual results could differ materially from anticipated results. Today's webcast is accompanied by a presentation which you can find in the Investors section of nVent's website. References to non GAAP financials are reconciled in the appendix of the presentation. We will have time for your questions after our prepared remarks. With that, please turn to Slide three, and I will now turn the call over to Beth.
11m 56s
Good morning, everyone. I'm pleased to share with you our strong first quarter results and cover some key business highlights. First, the way we have set up the call today is to have Sarah cover our first quarter performance and then have Gary provide our guidance and outlook. Sarah and Gary have been working closely together to ensure a smooth transition. This will be Sarah's last earnings call. And I'm grateful for her leadership and partnership. Sarah, in her new role as president of systems protection, will be leading our largest growth opportunities. From our data solutions business, to our newest acquisitions which includes Trachty and the AVAIL Electrical Products Group. I know she will be successful and drive our business to new levels. I'm excited to have Gary as part of our team. Gary has a strong growth and operational finance background and will continue to drive our track record of performance. With his most recent experience as acting CFO for Medtronic, over twenty five years at General Mills, he brings broad expertise to nVent. Gary is getting up to speed very quickly. He will build upon the transformation strategy in place and his experience will help us scale and grow to create shareholder value and strong returns.
13m 21s
Turning to the business performance. We're off to a strong start with double digit growth across the board in order, sales adjusted EPS and free cash flow in Q1. In addition, we continue to see our backlog grow up double digits sequentially, giving us visibility through the year. We continue to make great progress on our portfolio transformation to become a more focused, higher growth electrical company. We closed the Thermal Management divestiture early in the quarter and the AVAIL Electrical Products Group acquisition yesterday. Our balance sheet is strong. And our disciplined capital allocation is focused on growth and returning cash to shareholders for continued value creation. We are raising our full year sales and adjusted EPS guidance to reflect the Electrical Products Group acquisition, Data Solutions and Power Utilities strength in the second half and it also includes the expected impact of tariffs. Now on to Slide four. For a summary of our first quarter performance. Sales were up 112% organically. Led by the infrastructure vertical. New products contributed over two points to our sales growth, and we launched 35 new products in the quarter. The Tracte acquisition performed well, growing strong double digits double digits year over year.
14m 51s
Adjusted operating income grew 4% year over year, with return on sales of 20%. Adjusted EPS grew 10% and free cash flow free cash flow grew 32%. Looking at our key verticals, infrastructure led the way. With sales up mid teens, with strength in both data solutions and Power Utilities. Commercial resi declined low single digits Industrial and energy were each down mid single digits. [indiscernible] Turning to organic sales by geography, The Americas grew low single digits while Europe was down slightly. Asia Pacific grew in the high teens. Organic orders were up mid teens including strong double digit growth in Data Solutions and mid single digit growth in the rest of the business. Looking ahead at our verticals, we expect infrastructure to have strong sales growth across both datacenters and power utilities, which is now a more meaningful part of our portfolio. We expect industrial to grow low to mid single digits We now expect commercial resi to be flattish for the year. [indiscernible] While there remains uncertainty given the dynamic environment we continue to prioritize our key growth initiatives. Which includes new products, acquisitions, and capacity expansion, for high growth verticals. With regard to tariffs, we are taking mitigating steps that include pricing, productivity, and supply chain actions.
16m 28s
We continue to closely monitor the situation scenario plan, and execute our playbook. Overall, I am proud of our nVent team and how we continue to perform and deliver impressive results. We are on track for a strong year. I will now turn the call over to Sarah for further details on our first quarter results Sarah, please go ahead. Thank you, Beth. To begin, I am honored for the opportunity to lead the Systems Protection segment. And I'm thrilled to have Gary part of the team. We have been working closely together to ensure a smooth transition. Now turning to the business performance. We are off to a great start to the year with double digit growth in both sales and adjusted earnings along with robust free cash flow. Let's begin on slide five with our first quarter results. Sales of $8.00 $9,000,000 were up 11% relative to last year. Organically, sales grew 2% driven by volume, on top of six points of volume growth last year. Acquisitions added $71,000,000 to [indiscernible] or 10 points to growth. Foreign exchange was roughly a one point headwind. First quarter segment income was $162,000,000 up 4%. As expected, return on sales was down in the quarter at [indiscernible] Inflation was approximately $25,000,000 Productivity partially offset inflation we also continued to make investments for growth particularly in data solutions.
18m 11s
Q1 adjusted EPS was $0.67 up 10% at the high end of our guidance range. We generated robust free cash flow of $44,000,000 up 32% compared to a year ago. Now please turn to slide six for a discussion of our first quarter segment performance. Starting with Systems Protection, sales of $5.00 $8,000,000 increased 16% driven by the Track D acquisition. Track D has performed extremely well with sales up double digits versus a year ago and a strong backlog. Organically, sales were flat on top of 11% growth a year ago. Infrastructure grew mid teens with continued strength in data solutions. This was offset by declines in both Industrial and commercial resi. Geographically, Americans declined low single digits while Europe was flat and Asia Pacific grew double digits. First quarter segment income was $104,000,000 up 10% return on sales of 20.5% decreased 110 basis points year over year impacted by inflation, and growth investments. Moving to Electrical Connections, sales of $3.00 $1,000,000 increased 3%. Organic sales were up 4% reflecting strong volume. Infrastructure and industrial each grew double digits in the quarter while commercial resi was down low single digits. Geographically, organic sales were up mid single digits The Americas.
19m 59s
While Europe and Asia Pacific declined. Segment income was $85,000,000 flat year over year Return on sales was 28.3% down 90 basis points mainly due to higher inflation. And that wraps up the quarter. And I will now hand it over to Gary. Thanks, Sarah.
20m 22s
I really appreciate the warm welcome from you and Beth. I'm excited to be part of nVent. I've been impressed with the strength of the broader team, the disciplined capital allocation, and focus on execution. The culture of the company focused on innovation, growth and performance is a powerful combination.
20m 46s
I look forward to getting to meet many of you in the investment community in the coming months. Turning to the balance sheet and cash flow on Slide seven. We ended the quarter with over $1,300,000,000 of cash on hand including the proceeds from the Thermal Management divestiture. We also had $600,000,000 available on our revolver. In addition, we repaid $390,000,000 of term loans in the first quarter. Reducing our overall debt. Free cash flow was robust in the quarter, growing 32% year over year. We believe our healthy balance sheet and strong liquidity position support our disciplined capital allocation strategy. Turning to Slide eight. We outline our capital allocation priorities. We continue to prioritize growth. And execute a balanced and disciplined approach to capital allocation to deliver great returns. We are investing in the business via R and D and CapEx for growth and supply chain resiliency. In addition, we returned significant capital to shareholders already this year. We repurchased approximately $250,000,000 in shares year to date Exceeding our plan, resulting in a lower share count and we believe at a great value. As previously announced, our quarterly dividend increased 5%. We have additional capacity for capital deployment with our first priority being to invest in growth.
22m 38s
Moving to Slide nine. As Jeff as Beth shared earlier, we are raising our full year reported sales and adjusted EPS guidance. We now forecast reported sales growth of 19% to 21% for organic sales growth we now expect to grow 5% to 7% versus our prior guidance of 4% to 6%. Mainly reflecting visibility and strength in Data Solutions and Power Utilities. We expect acquisitions to now contribute 14 points to sales, up from five points previously. Reflecting the AVAIL EPG acquisition. We now expect foreign exchange to be approximately flat. We are raising our full year adjusted EPS range to $3.03 to $3.13 up 22% to 26% versus our original guidance of 2.98 to $3.00 8. This new guidance assumes tariff impacts of approximately $120,000,000 based on what we know today. We expect to offset the impact with price productivity and supply chain mitigating actions. It also includes approximately $05 for the AVAIL EPG acquisition. A few modeling assumptions to note. First, full year net interest expense is now expected to be approximately $75,000,000 reflecting the cash deployed to M and A share repurchases and debt paydown year to date Second, we anticipate share count to be approximately 165,000,000.
24m 35s
Lastly, we are raising our CapEx forecast to approximately $100,000,000 The increase is for additional Data Solutions capacity supply chain resiliency, and the expected CapEx for the AVAIL EPG acquisition. Looking at our second quarter outlook on Slide 10. We forecast reported sales to grow 22% to 24% with acquisitions contributing approximately 18 points to sales. Organic sales growth is expected to be up 4% to 6%. The additional price increases coupled with productivity are not expected to fully offset the tariff impacts Q2. We anticipate price plus productivity to more than offset the impacts as we get to the back half of the year. We expect adjusted EPS to be $0.07 7 to $0.79 in the second quarter point which at the midpoint reflects 16% growth relative to last year. Wrapping up, we are pleased with our first quarter performance. We delivered strong sales and earnings growth and are well positioned for another great year. I will now turn the call back over to Ben.
26m 1s
Thank you, Gary. On Slide 11, you can see the actions we have taken in our portfolio transformation. The divestiture of the Thermal Management business and the two most recent acquisitions of Tracte and Avail's electrical product [indiscernible] have reshaped our portfolio to increase our presence in the electrical infrastructure vertical. We believe these actions have positioned us as a more focused, higher growth connection and protection company. In addition, we have grown our data solutions business to over $600,000,000 in sales. The infrastructure vertical, which was our smallest vertical at spin, is now the largest. We believe it is the highest growth vertical with the trends of electrification, sustainability and digitalization. This year, the infrastructure vertical is expected to be over 40% of our sales with Data Solutions and Power Utilities each approximately 20% of sales. Our portfolio is now a balance between short cycle and long cycle with a growing backlog. As a result, we believe we are better positioned for growth and value creation. Turning to Slide 12, Yesterday, we closed on our acquisition of the AVAIL Electric Coal Products Group. A leading provider of control buildings, switchgear and bus systems. This acquisition builds on our control buildings platform acquired with the [indiscernible] and expands our offerings and capabilities in new applications.
27m 40s
The addition of the electrical products group further strengthens our solutions in high growth verticals with approximately 85% of its sales in power utilities, data centers and renewables. This business has been growing sales strong double digits with a robust backlog, giving us visibility into 2026. [indiscernible] Overall, the demand for electrical infrastructure products is increasing with the need to expand the overall grid, the move to more renewable energy, and the increase in data centers. Recently, NEMA, the National Electrical Manufacturers Association, released an independent grid study showing electricity demand is forecasted to grow by 50% by 2050. This study shows the electrification trend is upon us, electrical solutions and innovation will be required to meet the increasing demand. Demand. It is an exciting time for the electrical industry and nVent is well positioned to be a part of this energy transition. Please turn to Slide 13 titled 2024 Sustainability Report. At nVent, we are building a more sustainable and electrified world. Last month, we published our latest sustainability report, that outlines our commitment to sustainability and the meaningful progress we are making. Our focus is on people, products, planet, and governance. A few highlights from the reports. In 2024, we achieved above the global benchmark for employee satisfaction.
29m 21s
On products, 85% of our new product introduction funnel has a positive sustainability impact. On planet, we've reduced our normalized c o two emissions by 47% since 02/2019. Lastly, we were recognized as one of the world's most ethical companies by Ethisphere for the second consecutive year. Our sustainability efforts are key to our strategy and how we operate. I'm very proud of everything we've accomplished and the journey we are on. Wrapping up on Slide 14, we are off to a strong start to the year with double digit growth in orders sales, adjusted EPS and free cash flow.
30m 8s
Our portfolio transformation is on track and we expect another year of strong growth and value creation. And we believe we are well positioned with the electrification sustainability, and digitalization trends. Our future is bright. With that, I will now turn the call over to the operator to start Q and A. We will now begin the question and answer session. Please press star then 2. The first question comes from Deane Dray with RBC Capital Markets. Please go ahead.
31m 8s
Happy Friday, Jane. Thanks.
31m 11s
So first, welcome to Gary. It was great to meet you in New York a couple weeks ago, and then best of luck to Sarah. I'm not gonna say it's a new role because it's not. Been wearing the two hats. So but now it's a dedicated role, and so best of luck there. So look, know there'll be lots of questions about tariffs. Looked very much in line with what we were expecting, but I'd rather put the spotlight first on the data solutions business and if you could give us further color, Sarah, before you write off, The pace of orders any any push outs, just kinda like the tone of demand there? And then you said double digit growth, but how does that square with Americas being flat? In for the segment?
32m 2s
Thanks. Yeah. I would just start, Jean, by by thank you.
32m 6s
And excited to take on this new role and work with a fantastic team in system protection. So I would just frame it up this way. You know, we exited 2024 with roughly 600,000,000 sales and and and we expect this to grow strong double digits this year. With a strengthening back half, that was alluded to in the prepared remarks. And we continue to see overall orders, strong year over year in the quarter. You know, backlog grew double digits sequentially, and and that's providing some very good visibility as we head into the back half. I would also point out that this is broad based growth know, not just in liquid cooling solutions, you know, but also in power distribution units, cable management as well. And I would say, characterize it as seeing, an acceleration and increased demand for our solutions, you know, from our customers. Maybe a couple more quick highlights. We expect another strong year in new product launches. I think the team is making some very good progress there building on our strengths of performance, reliability, serviceability, and that's both across liquid cooling and power distribution units. So stay tuned there. Think the other thing we're seeing is that we're beginning to see the growth really from hyperscalers. [indiscernible] And also, growth outside of The US.
33m 33s
So you saw a little bit of that in that geographical commentary as well. I would say largely excited about what we're seeing, but but but also suggest that that growth is still largely in front of us. Because it's early in that investment cycle. And, of course, we continue to make, investments this year really focusing on R and D and building out our lab capabilities.
33m 54s
That's a a great recap there. And just as a follow-up, can you talk about the the latest deals, Avail and Track E, just the contribution, are there any synergies between those businesses? And did I hear Gary correctly avails contribution a nickel and 25?
34m 17s
Yes. You did. I'll so I'll start Recall when we when we acquired TrackDay, we said this is a new platform for us. It's a different type of enclosure if you like with more enclosures in it. But we saw that there were opportunities both on the cost synergy side, we buy a lot of steel, but our ability to transform through lean manufacturing and to drive integration. And we saw the opportunity for these type of buildings are growing not just for utilities and the grid build out, but even for data centers. So with Avail, it is now building on that platform and giving us further integration capabilities from switchgear and from bus systems, etcetera, So we believe that it's going to be very synergistic building a more scaled platform here. And maybe I'll just have Sarah talk about some of the early things that we're seeing with tracking in terms of our wins. I think it's a very exciting space for us. Yeah. Thanks, Beth. I mean, it may be just another commentary on the end markets. The other thing we're seeing is a trend of data centers really freeing up that computing space, moving that IT equipment, IT gear back up power into control building.
35m 29s
So we're seeing a nice kind of white space application as well in addition to the power utilities. So maybe a couple things on track because I think it helps frame up you know, how we're thinking about AVAIL EPG. A quick reminder, while we don't put sales synergies in our deal models, it is a top area of focus for us by way of value creation. And for Tracfi, we're already seeing opportunity here specifically in data centers where we're able to provide control building solutions to our customers. In addition, some exciting things happening in the battery energy storage system space as well. And then as it relates to cost synergies, we had talked about a five year or or a $5,000,000 run rate cost synergy and sort of that two, three year time frame. And I would suggest here that we're well on track Sourcing team has done an excellent job here on the procurement savings, really ahead of plan with the focus on the metals. For, for example. And another, quick area of focus here us has been lean.
36m 33s
And I'm really proud of the team. I was just, this one of our plants here last week from Tracti. And a quick data point there, since July when we acquired Trakti, and as of today, that team has more than doubled the output of buildings per month in a particular value stream And this is driving capacity, productivity, ultimately better, customer experience. So it's just giving you a flavor for the sales synergies and cost synergies that we would look to apply as we welcome, the AVAIL EPG team members here with our day one celebrations yesterday.
37m 7s
And, Dean, just to jump in on financial impact, as Beth said, love the growth. It's been growing double digits and it'll contribute nine of the 14 points of incremental acquisition growth. EPG will be accretive in the first year. It drops an additional $05 to our EPS and that's net of the interest of benefit coming out. As Sarah mentioned, strong cost synergies and we also expect a nice cash tax benefit. Of approximately $15,000,000 a year. You know? And and, you know, from a from a margin perspective, it it's a bit lower. But like Trakti, we expect it to improve over time.
37m 53s
Great. Thank you.
37m 58s
Our next question comes from Julian with Barclays. Please go ahead. Hi, good morning and I'll echo the congratulations to Sarah and welcome Gary.
38m 10s
To this call. Maybe just my first question would be around the organic sales outlook. So I think you're guiding the first half organic sales up sort of low single digits year on year. The second half implied is up high single digits year on year. So just sort of in the context of this macro backdrop, kind of help us understand confidence in that second half acceleration? I see the orders the last six months very good. I'm not sure how much lead time there is from those into your 2H revenue though. And maybe any clarification around what drives the acceleration in terms of price step up or a specific end market or segment?
39m 3s
Well, let me start on this. So as we look forward so, yes, we had strong orders growth, and we also talked about our back building. As we look at data solutions, and power utilities in particular, where we see that growth accelerating. And I would make a comment Trupti, which is performing very well we closed on that deal last July. So that turns into organic growth you know, the back half, you know, into August. So the growth that we're seeing in those particular that infrastructure is strong. Our backlog is strong. Our orders are strong. And then, of course, from a reported standpoint, it's the addition of of ECG.
39m 46s
And I would just add, in addition to the confidence that we have in the, in the orders backlog and underlying growth, the comps as you look at it, were much stronger last year in the first half versus the second half. We were up mid single digits last year in the first half and flattish in the second half.
40m 6s
That's helpful. Thank you. And then my second question just around the operating margins. So I think those were about 20% in the first quarter. It looks like the guide is embedding maybe 20% in Q2 and in the second half. So I just wanted to double check if that math is roughly right and how we should think about the tariffs affecting the margins in those quarters in the balance of the year?
40m 41s
Sure. I'll take that. And I'll paint the picture for the year first, and then I'll talk about about Q2. On the base business, we are expecting first half margins to be down a bit on price cost timings from tariffs. And as well as the investments that we're putting into the business to support the second half strong growth. On the base business, we expect margins to flip positive in the second half as pricing and the other mitigating productivity and supply chain actions fully take hold and we have, really, really strong growth. Contribution. When we layer in Avail EPG, we are expecting margin dilution, for both the Q2 and the year. Again, as we talked about, with a path on on improving over time, You know, we we love the the the growth and it's delivering accretive top and bottom line to overall nVent, but it will impact, will impact our our reported, reported margins. On the Q2 front, we expect Q2 to be up modestly on a sequential sequential basis, but it will be down versus year ago, as I mentioned, primarily driven by the timing of price cost with tariffs. But the most important thing we want you to take away is the actions that we're taking will put us in in place to grow our our base margins in the second half.
42m 15s
That's great. Thank you.
42m 20s
Our next question comes from Brian Drab with William Blair. Please go ahead.
42m 25s
Hey, good morning. Thanks for taking my questions. First one, just on the tariff [indiscernible] If you see if we see a reversal or the trade war died down with China, what sort of impact did that have to the upside for your '25 and your estimate of that $120,000,000 in tariff headwind.
42m 52s
You know, it's really so uncertain to be able to make a comment on that. You know, I think part of our offsets with the tariff it's pricing productivity and supply chain actions. I would say this, you know, we're managing our price as we see these additional cost impacts I think it takes longer for us in terms of any supply chain you know, reconfiguration that we do. So I wouldn't I'd like to say you know, we're just neutral. And that that has been our goal as we go forward is just to manage offset the impact of tariffs through numerous actions.
43m 29s
Okay. Okay.
43m 31s
And then can you just put a finer point on the order growth? Good double digit order growth, but is that organic? And which segment is contributing the most to that order growth? If you could just kind of peel that back a little bit, that would be Yeah. So as I said in my prepared remarks, organic orders were up. Mid teens and strong double digits in data solutions with you know, the rest of the business growing mid single digits. And I would characterize it this way. Where we see infrastructure, which have of course, is data centers and power utilities and renewables, that's where we're seeing the strongest growth, and that's also where we have that backlog.
44m 19s
Okay. Thanks very much. Thank you.
44m 24s
The next question comes from Joe Ritchie with Goldman Sachs. Please go ahead.
44m 31s
Hey guys, good morning. Good morning. Good morning. So, Sarah, thanks so much for all the help throughout the years. Wish you the best. In your year in your kind of new role. But, and then and, Gary, welcome on board. So I guess just, my first question is if if you think about just just let's just start with Avail. It's kind of surprising to me that the contribution is only 5¢. It just seems like the margins are a little bit lower. I'm calculating to, let's just call it, like, roughly a 10% EBITDA margin. For the rest of the year. So help me just kind of understand what the what's going on there, what the expectation is for that business? Yeah. Joe, I'll I'll take that. I'll take that one. And and you know, please keep in mind that the nickel that we talked about to EPS is net of the interest that we assumed in our guide coming out. We're expecting on a gross basis the EPS impact to be much much higher than that nickel and the margins that we're seeing are are higher than what you what you suggested as as well. So while the AVAIL EPG margins are a bit lower, than the overall margins, We love the top and bottom line growth.
45m 57s
And as Sarah talked about, with Track D, we've got a nice plan to, to improve them over time. Okay. Great. I can walk through kind of the math, I guess, offline. But then then the following question is look. The the guidance range that you've now reset and increased It's interesting because it seems like a lot of that is being driven by, you know, the the extra point in volumes But clearly, the tariffs there's going to be some incremental pricing as well. And so I know you're not breaking out the pricing anymore, but, I'm just curious, like, if if the hundred 20,000,000, that that kind of equates to, roughly four points of four points on top line. So are you expecting to offset most of it with price? And if that's the case, then ultimately, if the tariffs are in place throughout the year, would we expect the organic growth number to go up? Commensurately?
46m 56s
Well, here's the thing. There's as we said in our in our remarks, there's a lot of uncertainty. And so as we looked at, you know, going forward, yes, we have backlog and infrastructure is growing, We you know, and as we looked at our quarter and how we performed in industrial and commercial resi, we think there's just an uncertain background there. And so we believe there's a balance of, yes, we'll likely get more price, but maybe there is some volume impact as a result. And so that's how we thought of it going forward, and I'll I'll let Gary add some more color to that.
47m 28s
Yeah. You know, coming into the year, you know, our guidance assumed really primarily a volume driven year. And based on the environment changing and the uncertainty, as Beth said, we'll have more price. And that think that syncs up with with your comments. As I think about the pluses and minuses on the EPS, we mentioned AVAIL EPG nickel and we mentioned the strength in in data solutions and and power utilities in back half. You know, in addition, we've got we have fewer shares, outstanding than our initial initial guide. You know, it is worth mentioning, we talked about the softness in the prepared remarks in commercial resi. And as Beth said, we're managing the tariffs with our playbook. Which is pricing supply chain productivity and some mitigating mitigating actions. So that's the construct, of the guide for the balance of the year. Okay. Helpful guys. Thank you.
48m 34s
Thank you.
48m 36s
We have our next question from Jeff Sproj with Vertical Research. Please go ahead.
48m 42s
Hey, thank you. Good morning, everyone. Good morning. Hey. Just coming back to sort of you know, the commercial resi, like, all all the stuff that implicitly, you know, didn't grow or [indiscernible] I think the comment was that you did have mid single digit growth in those recently sluggish markets. Can you just speak a little bit to that side of the portfolio, what you're seeing from a demand standpoint, Do you think inventories are now in the right place? Kind of a set of questions around sort of the shorter cycle elements of the portfolio.
49m 25s
Yeah. You know, as we came into this year, you know, we said for, we expected industrial to grow, and we still do. And we said, commercial resi would be low would be low single digits growth, and I and I just you know, updated that and said, now we think that's flattish because we think this may have more of an impact coming from the tariffs in in terms of just the demand side. But I would say this, as we look, a lot of our short cycle business goes through distribution. Our sell out is positive there. Sell in has been positive as well. So we think that inventories are, you know, in alignment there. But we just, you know, with the uncertainty, we just think commercial resi is going is going to be softer and some short cycle maybe a little bit softer.
50m 11s
Understood. And then just back on on tariffs, is this number you're sharing all China? Or we've got some other countries. We got steel and aluminum. Can you put a little bit finer point on this kind of, the origination of the tariff number?
50m 27s
Yep. As we, looked at this, this is everything that we know as of today. So, of course, things may change. But the biggest impact one of the biggest impacts for us is the two thirty two on steel and aluminum. And as you know, we make a lot of enclosures and other products. Then China and not, you know, China just the magnitude of that tariff, an impact. Then we look at all other countries and the impact there. Of course, we have a lot of things where we have coverage through USMCA. Could change. But what we know today then we also thought about some of the, secondary or third level tariffs our supply base. So that that was how we constructed that number. As best as we could determine it, at this point in time.
51m 13s
Yeah. Okay. But steel and aluminum is number one, not not China.
51m 17s
Okay.
51m 18s
And then yeah, just maybe a little bit more color on what you are seeing on power utility side. I think we you've probably given us about all you wanna say on data solutions. Appreciate that. But maybe just how the portfolio is coming together there? Kind of trajectory of orders in that business and how you see the year playing out a little bit more specifically?
51m 42s
Yeah. I think the exciting thing for us is where we are today now with the most recent acquisition. We believe Power Utilities is about 20% of our overall sales. So that's significant for us from where we started. And it's not just the Trocde and Avail acquisition. I mean, certainly, gives us scale. And and what we like about those businesses is that on avail, it's grown at double digits. It has a nice backlog in the 2026. Similarly, we've shared with you the results on track d, which was very strong growth and backlog building. But within our electrical connections segment, we also have some of the products, aimed at utility space as well. And they have also been growing in that double digit range. So we think overall, just with that infrastructure build out, that is going to be a strong growth driver just like data solutions has been for us. So the two of them together really 40% of our portfolio now.
52m 42s
Right. Thank you. Good luck, Sarah. Hope we'll still see you around. I'm sure we will.
52m 46s
Thanks, Jeff.
52m 50s
The next question comes from Nicole DeBlase with Deutsche Bank. Please go ahead.
52m 56s
Yeah. Good morning, thanks, and congrats to both Sarah and Gary. I guess maybe just starting with a question on the comments you made Gary around margins for the business for the rest of the year. That commentary hold for both businesses? And maybe that kind of dovetails with the question of is the tariff and price cost impact kind of spread relatively similarly across the businesses? Or is there one versus the other that's more impacted?
53m 24s
Yeah, Nicole. It's, there's nothing unique to to call out. You know, both of the business are juggling a pretty dynamic environment and, you know, both of the businesses are deploying the the playbook that I, you know, that I mentioned. Know, we, from a growth perspective, we will see differential growth from system protection in the second half. And a lot of that, you know, lot of that, Beth, in in Sarah talked about In the first half, I also mentioned impacting our margins in with the investments that we're making in Data Solutions. And that'll will be an entire year, but that first half investment really was to support the growth that we'll see in that business in the second half.
54m 13s
Okay. Perfect. Thank you. And then just a clarification question on what you guys are doing from a pricing perspective. Is this via list price increases or surcharges or some combination of the two? And have those price increases already been fully implemented? And was that like an April 1 sort of date?
54m 29s
Thanks.
54m 30s
Yeah. Well, as you know, you know, over 60% of our portfolio goes through distribution. And so we typically will increase our prices there as long as we give them notification And, you know, our playbook and as we've seen through other inflationary times is that often you're doing multiple price increases just as you're adjusting over the course of the year. [indiscernible] we've done some price increases, and we'll monitor the situation if if, there's more impact, you know, we can certainly manage price effectively there. And then, we also ensure with some of our more direct business that we, you know, manage price with those customers on a project by project basis. So we're actively managing pricing right now. Beth. I'll pass it on. Thank you.
55m 19s
Our next question comes from Nigel Coe with Wolfe Research. Please go ahead.
55m 25s
Thanks. Good morning, everyone. And Sarah, congrats And Gary, look forward to seeing you soon.
55m 32s
So the yeah. Look, maybe a couple of follow ons here.
55m 36s
So as I understand that the organic uplift is basically the price associated with the tariff kind of measures.
55m 43s
Volume unchanged. If I put an extra point price, I'm getting about $30,000,000 of extra price. Versus $120,000,000 of the tariff impact. So I'd like to understand a little bit better the kind of the offsets against that 120 Well, I I I just wanna start by saying, it's it's not you know, we assumed that it shifts between price and volume, but really what we what we drove the uplift with was just stronger orders and backlog. That was the number one reason for updating our organic guidance. [indiscernible] just to clarify again, we came into the year with a very strong volume plan. And as Beth mentioned, we have now more price into the market and our assumption is a bit less volume as we as we've taken our organic guidance up a point.
56m 34s
Okay. So there's more than a point of price but it doesn't seem like there's four points of price. To offset the 120. So I'm just curious if you could maybe provide a bit more color there. But maybe moving on to the AVAIL acquisition. I have to agree with Joe. I'm getting more than $05 as well. So I'm curious on the assumption that we've got like a high teens EBITDA margin, which maybe you can clarify that. Are there any integration expenses or spending against that point $5 Yes. So just to reiterate, the nickel was a a net impact to nVent which is the the profitability of of the coming in. But now our assumption that will no longer be gaining, the interest benefit, on the you know, on the investment. So it's a it's a net number mid teens margins. And keep mind, we closed the business yesterday, and, we're just getting under the hood. And we've got a good playbook from Tracktie to improve margins. And we'll plan to do that and update this group as we as we have more share.
57m 48s
Yes. Yes. We're still getting high numbers, but we will follow-up offline. And then just maybe just a quick one on Data Solutions. I mean, if you just back into the mid teens kind of all in core and then five you know, mid single digits x data solutions. We're getting to like 50% type numbers for Data Solutions. That in the right zone? Of order growth there?
58m 10s
Yeah. Nigel, they were very strong. In q one, you know, on on top of strong growth q one of a year ago.
58m 18s
Right. Okay. Thanks, guys.
58m 22s
The next question comes from Vlad by Bastriqi with Citigroup. Please go ahead.
58m 29s
Hey, good morning team and congrats to both Gary and Sarah.
58m 34s
Thanks for taking my questions here.
58m 39s
I guess just a quick clarification on the increased CapEx outlook. Can you kind of dissect how much of that is related to avail coming into the portfolio versus sort of core investments in legacy nVent?
59m
If you will?
59m 2s
Yes, Vlad. As you noticed, we did take our CapEx assumptions up and the majority of the increase is really related to the core business and so supporting growth not just in the second half but beyond. But we did layer in you know, CapEx associated with the EPG acquisition, in the guide as well.
59m 28s
Got it. That's helpful, Gary. Appreciate it.
59m 30s
And then, maybe just one follow-up. So when I when I look at the segments, I guess, can you just talk a little about the divergence between declining America sales and systems protection versus the robust Americas deals worth you saw in Electrical Connections and sort of what you think is some of the driving factors behind the that that divergence and how we should think about either as potentially a leading indicator going forward.
1h 5s
Yeah. I think some of that is really just the comp of a year ago because we had really strong growth a year ago out of systems protection, and we were a little weaker on the electrical connection side. So that's really one of the primary reasons.
1h 18s
So I wouldn't I I wouldn't extrapolate that plan going forward.
1h 23s
Alright. That's helpful. Appreciate it.
1h 29s
The next question comes from Scott Graham with Seaport Research. Please go ahead.
1h 35s
Hey, thanks for taking my question and welcome aboard Gary. Great to meet you couple weeks back. And Sarah, best of luck to you. You've been truly excellent.
1h 46s
I wanted to ask a couple of questions, and I'll just ask them both. And let you go at it. So the incremental margin in the quarter was sort of below what we've been seeing. Is that all inflation and investments [indiscernible] or was there maybe something else there? And does that improve in the second half the year?
1h 1m 6s
And then on acquisitions, how is the pipeline? And is pricing better? So I'll take I'll take the margin question in the quarter. And as you mentioned, Q1 margins were down. You know, that net productivity bar was was down 17,000,000. And as you mentioned, it reflects you know, both, both the inflation offset somewhat by positive productivity but also net of investments that ramping for, you know, for the back half. Going forward, as we mentioned, gross productivity will ramp tariffs will ramp, and then the pricing in our playbook will flow throughout the year. As I mentioned, excluding the EPG deal, we did expect margins, to grow in the second half modestly as we get our playbook in place. As we layer in the deal. As we said, it comes comes in with a bit of a nice top and bottom line contribution, but it but it it will impact margins a bit. But we feel good about our margin game plan in the back half, that will that will be put into place.
1h 2m 28s
And on the acquisition, M and A pipeline question, I would like to say that you know, where we play in this connect and protect space, you know, it's about a hundred billion dollar opportunity. And remember, a three plus billion, we're one of the larger players. So it's very fragmented. I think there's a lot of opportunities. And you've seen the last couple of deals that we've had. And I think we've been very disciplined. You know, this is our eighth deal. And we always, you know, want our deals to cross the weighted average cost of capital in two to three years, and a deal will do that. And I think for us as we go forward, it's just looking to see that there is the right deal and the right timing and our account capacity to be able to execute on it as well. But do have more capital to allocate and feel, you know, we're in a good position if there's the right opportunity for us to continue to to do deals in the in the near term, I would say.
1h 3m 26s
Thank you. Thanks, Scott.
1h 3m 32s
This concludes sorry. Go ahead.
1h 3m 34s
No. Go ahead.
1h 3m 36s
This concludes our question and answer session.
1h 3m 40s
I would like to turn the conference back over to Beth Wozniak for any closing remarks.
1h 3m 46s
Well, thank you for joining us today. I am proud of our performance in the first quarter, will continue to focus on delivering for our customers, employees and shareholders by executing on our growth strategy, We believe nVent is a top tier high performance electrical company well positioned for the electrification, sustainability and digitalization trends. Thanks again for joining us. This concludes the call.
1h 4m 12s
The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.
Key Insights
nVent reported strong Q1 results with double-digit growth in orders, sales, adjusted EPS, and free cash flow; organic sales grew 2% and total sales were up 11% year-over-year, with acquisitions contributing significantly.
The company raised its full-year 2025 guidance: reported sales growth now expected at 19%-21% (organic 5%-7%), adjusted EPS raised to $3.03-$3.13 (up 22%-26% vs. prior guidance), and CapEx forecast increased to $100M.
Recent portfolio actions include the divestiture of the Thermal Management business and acquisitions of Tracte and AVAIL Electrical Products Group, strengthening nVent’s position in high-growth infrastructure verticals (now ~40% of sales).
Data Solutions and Power Utilities are key growth drivers, each expected to be ~20% of 2025 sales; both segments are experiencing strong double-digit growth and robust backlogs, providing visibility into the second half and beyond.
The company anticipates a $120M tariff headwind in 2025 but expects to offset this through pricing, productivity, and supply chain actions; Q2 reported sales are forecast to grow 22%-24% (organic 4%-6%), with adjusted EPS of $0.77-$0.79.
