nVent Electric at 18th Annual Global Transportation & Industrials Conference: Driving Growth Through Strategic Transformation

On Thursday, 22 May 2025, nVent Electric (NYSE:NVT) participated in the 18th Annual Global Transportation & Industrials Conference, highlighting its strategic transformation into a pure-play electrical company. The company, which reported $3 billion in sales in 2023, emphasized its focus on high-growth sectors, new product development, and global expansion. While optimistic about future growth, nVent acknowledged challenges such as tariff headwinds and margin pressures.

Key Takeaways

• nVent has successfully transitioned to a pure-play electrical company, focusing on protection and connection.
• The company anticipates 4% to 6% organic growth in the second quarter, driven by strong orders and backlog.
• Acquisitions of TracDE and Avail EPG have bolstered nVent’s presence in power utilities and data centers.
• nVent plans to expand its liquid cooling capacity to meet growing demand in data centers.
• Despite slight margin declines in Q1, nVent expects improvement through price increases and productivity gains.

Financial Results

The company reported $3 billion in sales for 2023, with a forecasted organic growth rate of 4% to 6% for Q2. Revenue growth is anticipated to be price-driven due to the changing environment. Margins were slightly down in Q1, but nVent expects sequential improvement throughout the year. The company aims for 30% incremental margins on growth and anticipates margin accretion in the second half of the year, excluding Avail. Tariff headwinds of $120 million are expected in FY2025, which nVent plans to offset through pricing strategies, productivity enhancements, and supply chain adjustments.

Operational Updates

nVent’s portfolio transformation has resulted in 40% of its business in electrical infrastructure, 20% in data solutions, and 20% in power utilities. The company is focused on high-growth verticals, new product development, strategic M&A, and global expansion. The integration of TracDE and Avail EPG is progressing well, with plans to eventually merge them into one business. Key leadership changes include the appointment of Gary Karona as CFO and Sarah leading the data solutions and power utilities segments.

Future Outlook

nVent sees continued strong growth opportunities in data solutions, particularly in liquid cooling, with plans to increase capacity by four times. The company aims to expand its liquid cooling offerings to meet the needs of hyperscalers, colos, and multi-tenant enterprises. The M&A pipeline remains healthy, with a focus on companies in the connect and protect space, targeting deals at around 11-12x EBITDA with synergies to reduce the multiple below 10x. nVent has raised its guidance due to strong orders and backlog in data solutions and power utilities, targeting organic growth of 4-6% for the year.

Q&A Highlights

The utilities segment now accounts for 20% of sales, driven by the acquisitions of TracDE and Avail. The company expects $120 million in tariff headwinds in FY2025 from Section 232 steel tariffs, which it plans to counter with price adjustments and productivity improvements. Liquid cooling penetration is expected to increase from 5-6% to approximately 30% in the next 3-5 years, amidst growing competition.

For more detailed insights, readers are encouraged to refer to the full transcript below.

Full transcript - 18th Annual Global Transportation & Industrials Conference:

Unidentified speaker, Interviewer: Great. So we’re to get restarted with nVent, hitting the homestretch here on the conference. This is the afternoon of day three. So we’ve got four more presentations. And as I mentioned, we’re going to kind of keep the best for the last presentations.

And nVent certainly is one I’ve been looking forward to just given all the transformation of the portfolio and what I think will be accelerated growth. So, with me on stage is Beth Wozniak, Chairman and CEO of nVent and Gary Karona, I think it’s fair to say, the new CFO of nVent. So, Beth, I know you’ve got some slides, so please kick off and we’ll get into Q and A.

Beth Wozniak, Chairman and CEO, nVent: All right. Thank you. So, just a couple of slides. I’m going start right here. So, last year, it was the start of our transformation, and we ended the year about $3,000,000,000 in sales, good return on sales in terms of our margins.

And as you know, we’re always a great generator of free cash flow. And I think what’s interesting, as I flip a couple charts forward, is just the trajectory of where we’re headed as a electrical company, pure play around protection and connection. One of the things about our strategy, and you may have seen this slide before because we’re very consistent, but, you know, for us, growth is focused on high growth verticals, new products, m and a is a big piece of it and growing globally. But we’re really focusing as a company about transforming our customer, our supplier, and our employee experience. That’s something new you haven’t seen.

But I think this is what is going to allow us to really scale what we do. So we continue to execute there. And the last slide, I think this is the most important one. When you think about the journey we’ve been on, we just closed on our eighth deal since we spun as a company. But what happened in the course of the last year is we sold our thermal management business.

We acquired Trocde and Avail EPG, and our portfolio is now 40% in what we call electrical infrastructure, which is where we see higher growth. 20% of our portfolio is in data solutions, and another 20% in power utilities. So from a transforming of our overall portfolio and the places that we play, it’s not only the high growth verticals, but we’ve also balanced more long cycle business with short cycle. So that really is what has happened over the last year in terms of the movements that we’ve made with capital allocation. And so, very excited for our future and very excited as the electrical industry continues to grow and expand with all the developments across infrastructure.

And as we always like to say, the trends of digitalization, sustainability electrification, our transformation is on track, and we think it’s going to be a strong year for us, and we always say our future is bright. All right.

Unidentified speaker, Interviewer: We won’t go into this one.

Beth Wozniak, Chairman and CEO, nVent: We won’t go into that.

Unidentified speaker, Interviewer: Okay. Thanks, Beth. So clearly, think the slide towards the end where you laid out the 2025, this one here, the new portfolio. I think that’s maybe I’m wrong, but that’s might be the first time I’ve seen that slide where you lay out the pro form a new portfolio. I was surprised that utility is now 20% of sales.

So that’s really important. So 20% data center, 20% utility. Maybe just given the rapid expansion of the utility segment subsegment, I should say, maybe just talk about where you play and how nVent the revenue model right now for nVent and utility?

Beth Wozniak, Chairman and CEO, nVent: So we’ve always played in Utilities, but it was to a much smaller scale. And I would say what’s got us to 20% are the two acquisitions of Tracte and Avail, which are focused on engineered building solutions. And as we looked at our portfolio, it’s really a larger enclosure with, you know, stronger integration capability. It tends to be longer cycle business. We see significant growth there because it’s expanding in utilities, renewables, and data centers or battery energy storage.

And with Tracty and Avail, those two combined really give us a leadership position in this category.

Unidentified speaker, Interviewer: Right. And the Trakty and Avel, do they play more in the substation areas? Is it more transmission distribution?

Beth Wozniak, Chairman and CEO, nVent: Yes, more transmission distribution in substation.

Unidentified speaker, Interviewer: Yes. Just to be clear, these are longer cycle backlog businesses?

Beth Wozniak, Chairman and CEO, nVent: They are.

Unidentified speaker, Interviewer: Okay. And then taking this a bit further. What kind of visibility do you have? Do you have visibility into 2026 at this point?

Beth Wozniak, Chairman and CEO, nVent: We do. Yes, with some of these backlog that we have goes into 2026. So we’ve got longer visibility.

Unidentified speaker, Interviewer: Okay. And then the 40% Data Solutions and Utility, how does the margin profile for these two portions of your portfolio compare to the free average?

Beth Wozniak, Chairman and CEO, nVent: So, when we think about our Data Solutions business, we’ve always said it’s a combination of products that fit in the system protection portfolio and electrical connections. And the product portfolios largely reflect those two segments, so in line with what we have expectations around those segments. I would say this, that for these newly acquired businesses, they’ve tended to come in at a lower margin, but we have so much opportunity from driving synergy savings, whether it’s our professional sourcing, whether it’s just on lean manufacturing, that we see a runway for margin improvement in these businesses over time. In the Tracd acquisition, there’s one of the sites there that we’ve been able to more than double the output with the same number of people just by applying lean. So all of that productivity, I think, is still in front of us, and we expect to see that driven through Avail as well.

Unidentified speaker, Interviewer: Yes. So if we assume that these again, sticking with Data Solutions and Utilities, if these grow at, say, 10%, twenty %, which feels like that’s the right level, would they increment at about 35% incremental margins? Is there any reason why they wouldn’t be higher than that?

Beth Wozniak, Chairman and CEO, nVent: Well, we’ve always said our model is to grow at 30% incremental, and it’s not to say that they can’t do better than that. And certainly, as we see synergy savings, we’ll get those margins up. So even with Avail, if they’re in the mid teens, we will get them up over time.

Gary Karona, CFO, nVent: Yep. Okay. And Nigel, what I would say is, in the first quarter, as you saw, we over delivered on Track D on the top line. It also exceeded our expectations on the bottom line as well, which was nice to see moving up that margin profile from where it came in.

Unidentified speaker, Interviewer: Okay. Thanks, Gary. Maybe take a step back. There’s been a lot of management changes announced in the last two months, Gary being one of them, Sarah leading up the segment leader now. Maybe just this is just a change in the go up, but essentially nothing’s changing internally?

Or are there things you want to achieve internally with this new leadership team?

Beth Wozniak, Chairman and CEO, nVent: Yeah. I think it’s fair to say Sarah was running two businesses for two roles for a while. And so we brought in Gary as our new CFO, so we’ve had a great handoff in transition between Sarah and Gary. Sarah certainly knows the business. And when you think about both these power utilities and data solutions, those initiatives largely fall under her segment, so she really understands the drivers and how to execute.

We brought in a new president to help us grow the electrical connections business. And Robert Vanderkook, who was leading that business, he is based over in Europe. And as our businesses with these acquisitions becomes more North American, it it just does, we felt that we needed to have one of our leaders focused on growing Europe and Asia. So Robert being based in Europe, we thought that that would allow us to put focus there because, again, just the weight of what we do in North America and these acquisitions was just taking the leadership’s focus and keeping it in here, whereas we know there’s growth potential outside of North America, and we wanted to have Robert as our senior leader focused on it. So if anything, these are really additions to our team, and strengthening our team is the way I think about it, and aligned to where we’re headed as a company.

Unidentified speaker, Interviewer: Yep. Lot of U. S. Companies, a lot of U. S.

Electricals find it hard to grow outside of North America because you’ve got such dominant players like Siemens, Schneider in Europe. So how do you manage to achieve that objective?

Beth Wozniak, Chairman and CEO, nVent: Well, I think it’s a couple of things. One, you need to make sure you’ve got the right product portfolio. And I look at the acquisitions that we have done in Europe, and it started with an Enclosure portfolio that we have more than doubled in Europe because we were able to have the right product portfolio and expand it through channels. And for us, it’s continuing that playbook of looking at high growth verticals. We see data centers as a big growth opportunity over in Europe, so ’ve been very focused with our portfolio and liquid cooling in North America, but we see that opportunity and investment to come in Europe.

So it’s really about choosing the right verticals to focus on, having great product portfolios and expanding through our channel relationships.

Unidentified speaker, Interviewer: Thank you very much. We’ll come back to Data Solutions. That’s going to surprise you, but we will come back to that. So I just want to maybe touch on what you see in intra quarter during the second quarter. You’re forecasting 4% to 6% organic growth, a nice acceleration from the low single digit you saw in 1Q.

Maybe just touch on what’s driving that acceleration, your confidence in seeing that acceleration?

Beth Wozniak, Chairman and CEO, nVent: Well, as we said, our guidance we raised our guidance really because of our backlog and our strong orders, particularly when it comes to Data Solutions and Power Utilities. And if you also think about our Track D acquisition, which we acquired in July, turns into organic growth. You saw that outperform in the first quarter. So those were really the key drivers for us and the confidence that we had to raise our guidance.

Gary Karona, CFO, nVent: And in addition to the strength that we’re seeing in the market, as you look at last year, recall first half, second half, our comps are much stronger in the first half. Last year, mid single digits, and we were flattish in the back half. As Beth talked about, the Trackt acquisition is also giving us confidence in that acceleration. We’ll see acceleration in Q2, and then the back half will accelerate from there.

Unidentified speaker, Interviewer: Yeah. Easier comps definitely a factor in that as well. And I’m asking this to all my companies just given the quite frankly, the volatility of news flow, etcetera. But is there anything strange going on in terms of tariff behavior with customers, channel partners, etcetera? Anything you’ve seen out there?

Beth Wozniak, Chairman and CEO, nVent: We have not seen anything strange. Of course, it’s an inflationary environment. But we haven’t seen any changes in terms of that demand because our sell through from our distribution partners has been positive as well.

Unidentified speaker, Interviewer: Yes. Maybe just touching quickly on tariffs. You mentioned the inflationary environment. Your tariff exposure is more Mexico, Section two thirty two. Maybe just talk about what you’re seeing from that.

Maybe just remind us on the pricing and offset strategies for that.

Gary Karona, CFO, nVent: Yes, I can take that. In our Q1 call, we talked about $120,000,000 worth of tariff headwinds in FY 2025. You mentioned that the number one headwind is two thirty two steel. We do have some headwinds from China as well and other markets. We’ll offset that with a combination of price productivity as well as some supply chain moves.

In Q2, we’ll see a bit of a mismatch on price cost. But as we get into the second half, we expect our base business to fully offset that and actually see some margin accretion to offset that. Obviously, it’s a very dynamic environment, and our business teams are building in flexibility. We’re not looking to generate profit off of the tariff environment. We want to keep that we want to offset it.

And we have plans in place to be agile and offset those tariffs.

Unidentified speaker, Interviewer: I’m guessing that the China import exposure is too small to have been affected too much by the pullback in the or rather the pause in the recent tariffs.

Gary Karona, CFO, nVent: Yeah, I mean, don’t have a crystal ball, right? We’ve got we know there’s a ninety day pause, but it will help us a bit. But again, we’ll thread the needle on pricing to ensure that we remain competitive.

Unidentified speaker, Interviewer: Yeah, okay. On margins, obviously margins were down a little bit in 1Q, tough comps obviously. I think we’re still going to be sort of underwater year over year in 2Q and 3Q, maybe 4Q starting to get back on.

Gary Karona, CFO, nVent: Yeah, I wouldn’t I don’t want to guide on Q3 and Q4, but what I would say is in the second half prior to Avail, we’ll see margin accretion as the price cost gets aligned. We’ve only owned Avail for a couple of weeks now, Avail EPG, but they’ll come in a bit below on margin until we can get our productivity model really humming on Avail like we have for Track D. So what’s important is that the business model be healthy in the second half as we exit the year.

Unidentified speaker, Interviewer: Yes. Okay. Do want to come back to Tracty and EPG in a moment just in terms of the integration and how they’re tracking to plan. It sounds like they’re humming, by the way. But in terms of that the margin sequentially just up from 1Q, is 1Q still the low watermark for margin?

Gary Karona, CFO, nVent: Yes, we’ll be up sequentially, yes.

Unidentified speaker, Interviewer: Sequentially, great. And then maybe one more just on the framework. The pricing, just remind us in terms of what contribution we’re seeing from pricing as we go through the year?

Gary Karona, CFO, nVent: Yes, I would say broadly as we our construct this year was going to be more volume driven from a growth perspective versus price. Obviously, the world’s changed a lot in ninety days as we shared in our Q1 call. And now we’ll see more price than volume, and that price will help us offset inflation as well as the tariff headwind.

Unidentified speaker, Interviewer: Okay, great. So Beth, we’ve covered the utility portion of your business, I think, in some depth now. So maybe we can just go back to Data Solutions. A lot of investors are very interested in where you play in data centers. Maybe just as the businesses evolve through acquisitions, maybe just remind us the big buckets of exposure you have in data center and how you see that evolving.

Beth Wozniak, Chairman and CEO, nVent: So last year, we said our Data Solutions business was about 600,000,000 and over 50% of that was tied to liquid cooling and power. And, those are certainly areas that are growing significantly. Although I would say there’s other parts of that portfolio, just like our cable management wire basket trade, that are growing just as fast. I will point out that with the new acquisitions, they also have some capability, and this is where it’s very synergistic to what we do and our customer relationships, where we’re expanding in data centers because of some of the gray space, and providing, more control houses and pods for data center opportunities as well. So, generally, we see the trends liquid cooling, but certainly the investment that is going into the overall infrastructure for AI driving demand for our products.

Unidentified speaker, Interviewer: And the control houses in the data center environment seems quite important because it frees up some the more switchgear you can put outside the building, the more you have for racks inside, which is obviously the revenue driver. So that seems to be a real

Beth Wozniak, Chairman and CEO, nVent: Absolutely. You’re trying to maximize that space for the IT side, and so anything you can put outside. But as well, we’re also seeing some interesting applications where you’re almost looking at, are there more things from just like a modular data center that you could put into a control building as well? So I you know, we’re seeing a lot of interesting opportunities. And, again, our relationships that we’ve had, I think, are additive to what was more of a utility based business in both Tracty and Avail.

Unidentified speaker, Interviewer: Thanks, Beth. So $3,000,000 rack cooling, rack power. Have you broken out the liquid cooling portion of that?

Beth Wozniak, Chairman and CEO, nVent: We have not. So both have been growing very well for us, and we see them also being very synergistic.

Unidentified speaker, Interviewer: Okay. A lot of companies that we track are talking about 20% -plus data center growth certainly for this year and medium term as well. Any reason why you wouldn’t be at that level or above?

Beth Wozniak, Chairman and CEO, nVent: I think it’s what we see is a trend as well. And we certainly have been accelerating in our growth. And so we can look at our backlog and our orders, and both are very strong. And so I think we’re going to see continued momentum here.

Unidentified speaker, Interviewer: I think it’d be reasonable to assume that just given that liquid cooling penetration is today still very low, think maybe 5%, six % of total installations, I think most industry experts would say that goes to 30% or so in the next three, five years. So you’re to be a genius to figure out that that probably grows faster than the industry in terms of I mean, a fair assumption.

Beth Wozniak, Chairman and CEO, nVent: Yes, it is. And we’ve always said that as you start to see these chips that are having higher heat densities and performance requirements, that they need to have liquid cooling. And that will just proliferate. There’s an energy efficiency play to this as well, because power is one of the constraints on building new data centers. Liquid cooling can provide energy efficiency up to 50%.

But the main driver right now has been the performance of the chip. But I just think that penetration is going to increase over time. And sometimes we’re seeing it’s not pure liquid to liquid. It could be liquid to air cooling. So there’s solutions that we have that can retrofit data centers as well as for greenfield.

Unidentified speaker, Interviewer: How is the competitive environment changing within liquid cooling? Because we’ve got Schneider has bought Motive Air Carrier launching their CDU, etcetera. So are you seeing a meaningful pickup in terms of competitive environment there?

Beth Wozniak, Chairman and CEO, nVent: Well, we’ve certainly seen a lot more entrants into having CDUs. And I think one of the important things is over the course of this year, there’s going to be some specification requirements and standards through ASHRAE and standards through ASHRAE and others, which we think is really important. Because as we’ve been in this a long time, we have tested a lot of our products and shown the performance characteristics. Others may claim they meet certain specs, but they’ve not fully tested. And we think for the industry as a whole, having specs, which we do across the rest of the electrical industry, is really important.

And we do think that not all will meet those specs. I think everyone’s rushing to say they’re in liquid cooling, and maybe they have a prototype. But it really comes down to ability to innovate, the ability to have that application and full system loop capability, and then managing your supply chain. And really, as we’re trying to scale quickly, you have to have a very resilient supply chain to be able to meet all the demands. And again, we’ve been at this for over a decade, and I think are continuing to prove that capability and expand upon it.

Unidentified speaker, Interviewer: And we had a great tour of your booth at FC24 last year. Seems like you’re comfortably number one in this market right now. Is that fair?

Beth Wozniak, Chairman and CEO, nVent: Well, we certainly think we’re one of the leaders. And I’m really excited for the Supercompute Show this year because this will be a record year for us in terms of our new product launches. And I think you’ve seen that we’ve got a good partnership with Nvidia, and we’re one of their partners. And we’re expanding that portfolio offering as liquid cooling and the different power requirements and CDUs that you’re going to see a lot of new products that are built this year.

Unidentified speaker, Interviewer: So those new product launches, would they be tied to the new generation of chips being launched by?

Beth Wozniak, Chairman and CEO, nVent: Yes, some of them are going to be tied to that because they have to meet higher power and heat requirements. And in other cases, we’re just trying to broaden our offering into more standard and modularized solutions that we can to meet other customer needs beyond hyperscalers and colos, multi tenant, enterprise, and through distribution. So our strategy is always to expand to meet the needs of large hyperscalers through to customers who really may not know a lot about liquid cooling and need to be served through distribution to have a standard solution. So we’re really thinking about that longevity and the future where liquid cooling is more prolific across various applications.

Unidentified speaker, Interviewer: Interesting. So when we think about distribution, we think of the West Coast of the world. I’m guessing these would be going through more kind of niche channels. Is

Beth Wozniak, Chairman and CEO, nVent: that Yeah. I mean, those distributors that are in that IT space. So, yes.

Unidentified speaker, Interviewer: Okay. Great. So you talked about increasing capacity in liquid cooling by 4x. You’re going back to late, I think, 2023 over the next couple of years. I think you raised your CapEx forecast for this year.

I think $10,000,000 of that’s going into additional liquid cooling. What is the message from that? So are we starting to run out of capacity at this point or I mean?

Gary Karona, CFO, nVent: Yes, we did take up our CapEx guidance last quarter. And really, it is driven by that big backlog and the orders that we have on the books. I will say, while Data Solutions drove the majority of that increase, we also took our CapEx up for Avail EPG, as well as some investment that we’re making in supply chain resiliency. Obviously, the supply chain is being pressed here as we move things around and look to deliver strong revenue. But the CapEx came up because of digital for sure.

Unidentified speaker, Interviewer: Yes, great. We’ve got a relatively full room here, so I want make sure any questions get addressed here. So any questions, please raise your hand. It doesn’t look like it, so let’s continue. So before we touch on Avail and Tracktie, I just want go back to the Investor Day that I think the last Investor Day was early twenty twenty three, Tony, if I’m not mistaken.

You put out a four to 6% kind of cross cycle growth rate for nVent. That feels horribly out of date because the portfolio has changed. So I’m just wondering if we were to mark to market today and just think about, okay, this is what we said then, this is what we might say now. What does that 46 do? It seems like it should be higher, but you tell me otherwise.

Beth Wozniak, Chairman and CEO, nVent: Yeah, well, after we announced the sale of our thermal business, we said this will position us as a higher growth pure play electrical company. By saying that, the implication is, yes, those targets will be higher than when we set them out a couple of years ago with thermal as part of our portfolio. And I think you see that as we show on this chart that’s still up here, that with that focus on infrastructure, which is now 40% of our portfolio, it is higher growth. And so I think this transformation will result in us updating those midterm targets.

Gary Karona, CFO, nVent: You see that in our guide for this year on the revenue line.

Unidentified speaker, Interviewer: And obviously, you had an Investor Day in the calendar for early March. I think in light of the acquisition and the margin changes, I think it’s obvious why that didn’t happen.

Beth Wozniak, Chairman and CEO, nVent: Yes, we had a lot going on.

Unidentified speaker, Interviewer: We had a lot going on, lot of bulls in the air. Any dates yet for the next Investor Day? Not quite, but sometime this year. Oh, next year, okay. I managed to nail down Terry there, that’s good news.

Okay, so we should look for that next year. That’s good news. And it sounds like 30% incremental margins are still sort of the framework that you’d be comfortable with. Great. That really helps us out there.

Obviously, early days on Avail, but maybe just talk about what you’ve seen so far. Any sort of comments you’d say in terms of expectations and what you’re seeing out there?

Beth Wozniak, Chairman and CEO, nVent: Well, I would say having owned Tracd in the portfolio and just seeing the growth potential, the productivity, new applications and data centers, we knew that Avail offered similar capability and expanded beyond that. And I think we’ve continued to see their backlog increase. And I think early days, we’re very excited about the opportunity of combining these two business in you know, because it creates a leadership position for us in the synergies that we saw on Tracty. We expect to see all of a avail EPG. And I do think by putting two portfolios together, it may accelerate some of our capabilities because we can align product technology road maps.

We can, We’ve got a lot of factories here, U. S.-based factories, too, which we can optimize the footprint for capacity reasons. So, I think these businesses have been growing double digits, and we expect, as we own them, that we’re going to continue to have nice momentum.

Unidentified speaker, Interviewer: Are you planning to run Avail and Tracty as separate businesses or integrate them?

Beth Wozniak, Chairman and CEO, nVent: We will eventually put them together as one business. So while we’re early days in the integration, it’s only been a couple of weeks. We have to integrate a business into, like, our HR systems and our digital systems and all of those things. But we start early on looking at how do we align customers, how do we look at product technology roadmaps, how do we look at the footprint. And so I think as we there’s a period of time that we’re integrating into nVent, but then we will start to bring these two businesses together.

Unidentified speaker, Interviewer: And then, Beth, you meant you obviously tracked returns organic in June.

Beth Wozniak, Chairman and CEO, nVent: July, yeah.

Unidentified speaker, Interviewer: July. Okay. Think it’s Okay. So, July, so it’s almost ten months now. Maybe just talk about how it’s tracking versus plan and how the backlog has been evolving.

Beth Wozniak, Chairman and CEO, nVent: Well, I would say cost synergies are tracking. Sales synergies are above plan and our expectation. And growth has been higher, and we’ve seen the backlog grow sequentially.

Unidentified speaker, Interviewer: Not bad. So, sales synergies is something that obviously attracts a lot of attention. So, where are you seeing the sales synergies between Endomet and

Beth Wozniak, Chairman and CEO, nVent: Yeah. So, as I mentioned, the Tracke business was predominantly focused in the utility space and some renewables and data centers. Because of the relationships that we have with some of these hyperscale customers, as we’re looking at gray space opportunities, we’ve been able to take some of our existing customers and show them the new capability that we have and win some new programs that are significant in size. Is

Unidentified speaker, Interviewer: there a possibility, an opportunity to maybe integrate more content within

Beth Wozniak, Chairman and CEO, nVent: Absolutely. Yeah. So, one of the things we always like to think about our business as any of our portfolio is that we really can be very horizontal across many applications and many different customers from through distribution. We serve customers direct, etcetera. And as you look at the level of integration, we can provide a control house or we can integrate things into it.

And, you know, I I’ve kind of made this very simplistic to say sometimes you see in these big control buildings, which are big enclosures, more enclosures inside. And there’s other products in there that are Invent type products, whether it’s wire basket tray. And so, where they’re not specified by a customer, we have that opportunity to replace them with nVent products or eventually get those nVent products specified in there.

Unidentified speaker, Interviewer: Okay. That sounds great. And then maybe just finishing off on the surplus capital. You obviously still have a fair amount of cash and liquidity to deploy. Just wondering sort of the visibility you have in your pipeline, how that’s been evolving?

And then we’ve seen, obviously, infrastructure as a vertical increasing. Do you think that will increase further as we do more M and A?

Beth Wozniak, Chairman and CEO, nVent: Yes. So I would say, we always like to say that we are where we play in connect and protect, we consider that about $100,000,000,000 space. And we’re one of the larger players, so it’s very fragmented, and our pipeline is healthy. So I think you never can control the timing in M and A, but we’ve seen that there’s lots of different opportunities. And I think we have a very disciplined approach in terms of our financial modeling that make these deals very generate a lot of value because we want to cross the weighted average cost of capital in two to three years.

Right? And sales synergies are not in our model, and they’re on top of that. So our flywheel that we’ve shown before is to have a great differentiated product portfolio that is in high growth verticals that we can then invest in scale. And so I think infrastructure is certainly a big focus for us.

Unidentified speaker, Interviewer: I want to say you do most of your deals at about 12x EBITDA.

Beth Wozniak, Chairman and CEO, nVent: Yeah, 11 to 12.

Unidentified speaker, Interviewer: Right. And then with synergies of maybe, I don’t know, five points of sales, you’re down below 10x. Yes. Not below 10x.

Gary Karona, CFO, nVent: Yep. The deals have been accretive to the top and bottom line fairly quickly, as you’ve seen. And from a capacity perspective, we target between two and two point five times, and we’ve been able to quickly generate more capacity to do more, and that’s our expectation as we move throughout this fiscal year.

Unidentified speaker, Interviewer: Right. Well, we’re actually right at the thirty minute mark, so why don’t we draw a line there, Beth? Beth, any closing remarks?

Beth Wozniak, Chairman and CEO, nVent: Yeah, I’m pretty excited for our future. If you think about, in the last year, we divested Thermal, we acquired two businesses, we increased our dividend, we paid off some debt, and we still have capacity to do M and A, and strengthened our leadership team. And raised our guidance, so I think it’s pretty exciting about how the portfolio has transformed and where we’re headed.

Unidentified speaker, Interviewer: I agree, you’ve been very busy, so keep it up. Thank you very much.

Beth Wozniak, Chairman and CEO, nVent: Thank you very much.

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