Core Viewpoint - The AI and data center sector presents significant investment opportunities, with companies like Vertiv and nVent providing essential solutions and services that capitalize on the growing demand for data centers driven by AI applications [1]. Vertiv - Vertiv specializes in digital infrastructure for data centers and communication networks, offering products such as power management and thermal management solutions [2]. - The company has experienced a 10% increase in backlog from the end of 2024, indicating strong demand for data center investments [3]. - Following robust order and backlog growth, management raised the full-year organic revenue growth forecast to 18% from 16% [5]. - Despite maintaining profit margin guidance due to tariff uncertainties, free cash flow (FCF) is projected at $1.3 billion in 2025, with expectations of $1.65 billion and $1.79 billion in 2026 and 2027, respectively [6]. - With a market cap of $36.1 billion, Vertiv is expected to trade at 28 times and 22.5 times FCF in 2025 and 2026, respectively, which could be seen as a good value if AI/data center demand continues to rise [7]. nVent - nVent provides electrical connection and protection solutions, with a strategic focus on increasing exposure to data centers and power utilities [9]. - The acquisition of Avail Infrastructure Solutions for $975 million has resulted in infrastructure-related solutions now comprising 40% of nVent's portfolio, which is the fastest-growing segment [10]. - The company reported mid-teens growth in organic orders in Q1, driven by strong demand in data solutions [10]. - nVent raised its full-year sales guidance to organic growth of 5% to 7% and earnings growth guidance to 22% to 26%, reflecting positive performance despite anticipated tariff impacts [11]. - Analysts project earnings per share of $3.09 and $3.46 for 2025 and 2026, with FCF estimates of $406 million and $561 million, respectively, indicating attractive valuation multiples below 20 times earnings for 2025 and 17.4 times for 2026 [13].

Financial Performance - Net sales for Q1 2025 reached $809.3 million, a 10.5% increase from $732.1 million in Q1 2024[95] - The Systems Protection segment generated net sales of $508.2 million, reflecting a 15.5% increase compared to $439.9 million in the prior year[103] - Electrical Connections net sales increased by 3.0% to $301.1 million in Q1 2025 from $292.2 million in Q1 2024, driven by organic growth of 3.9%[109] - Organic growth in net sales was 1.6%, while acquisition-related growth accounted for 9.8% of the total sales increase[96] Income and Expenses - Income from discontinued operations, primarily from the sale of the Thermal Management business, was $273.7 million, resulting in a gain of $433.9 million after tax expenses[100] - The effective tax rate increased to 22.0% in Q1 2025, up from 21.5% in Q1 2024, due to higher earnings in jurisdictions with elevated tax rates[99] - Selling, general and administrative expenses rose to 20.5% of net sales, an increase of 1.0 percentage point from the previous year[95] - Gross profit margin decreased by 0.9 percentage points to 38.8% in Q1 2025 compared to 39.7% in Q1 2024[95] Acquisitions - The company completed the acquisition of Trachte for approximately $687.5 million and the Electrical Products Group for $975.0 million, enhancing its Systems Protection segment[90][93] - The acquisition of Trachte contributed $71.4 million in sales during Q1 2025, with organic sales growth from the infrastructure business at approximately 5.0%[96] - Organic sales growth contributed approximately 5.0% from the infrastructure business, with a total of $71.4 million in sales attributed to the Trachte acquisition[110] Cash Flow and Liquidity - The company reported net cash provided by operating activities of $63.9 million in Q1 2025, compared to $48.6 million in Q1 2024, reflecting an increase in net income[116][117] - Free cash flow for continuing operations increased to $44.4 million in Q1 2025, up from $33.6 million in Q1 2024, representing a 32.8% growth[139] - As of March 31, 2025, the company had $1,343.0 million in cash on hand, with $58.6 million held in jurisdictions with limited repatriation capabilities[114] - Net cash used for investing activities from continuing operations was $15.7 million in Q1 2025, primarily for capital expenditures of $21.1 million[118] - The company repaid $483.6 million in financing activities during Q1 2025, including $392.5 million in long-term debt repayments[121] Operational Challenges - The company anticipates continued inflationary cost increases and supply chain challenges throughout 2025, impacting operational results[94] - The company experienced a 1.5% organic sales decline in its commercial & residential business, partially offsetting gains in other segments[112] Segment Performance - Segment income for Electrical Connections decreased slightly by 0.1% to $85.1 million in Q1 2025, with segment income as a percentage of net sales dropping from 29.2% to 28.3%[108] Capital Expenditures - Capital expenditures increased to $21.1 million in Q1 2025 from $15.3 million in Q1 2024, reflecting a 37.9% rise[139] Compliance and Risk - As of March 31, 2025, the company was in compliance with all financial covenants in its debt agreements, indicating a solid liquidity position[132] - Market risk has remained stable with no material changes during the quarter ended March 31, 2025[142] - There have been no material changes to critical accounting policies and estimates from the previous disclosures in the 2024 Annual Report[141]

Financial Data and Key Metrics Changes - Sales increased by 112% organically, driven by the infrastructure vertical, with new products contributing over two points to sales growth [9] - Adjusted operating income grew by 4% year over year, with a return on sales of 20% [9] - Adjusted EPS increased by 10%, and free cash flow grew by 32% [9][15] Business Line Data and Key Metrics Changes - Systems Protection segment sales increased by 16%, driven by the Track D acquisition, while organic sales were flat [16] - Electrical Connections segment sales rose by 3%, with organic sales up by 4% [18] - Infrastructure sales grew in the mid-teens, with strength in Data Solutions and Power Utilities [10][16] Market Data and Key Metrics Changes - The Americas experienced low single-digit sales decline, while Europe was flat and Asia Pacific grew in the high teens [10][16] - Organic orders were up in the mid-teens, with strong double-digit growth in Data Solutions [11][68] Company Strategy and Development Direction - The company is focused on portfolio transformation, having divested the Thermal Management business and acquired the AVAIL Electrical Products Group [8][28] - The infrastructure vertical is expected to account for over 40% of sales, with Data Solutions and Power Utilities each contributing approximately 20% [29][30] - The company is prioritizing growth through new products, acquisitions, and capacity expansion [11][30] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in strong sales growth in the second half of the year, particularly in infrastructure and data solutions [11][24] - The company is taking steps to mitigate tariff impacts through pricing, productivity, and supply chain actions [11][25] - Overall, management is optimistic about the company's positioning in the electrification, sustainability, and digitalization trends [35] Other Important Information - The company ended the quarter with over $1.3 billion in cash and repaid $390 million of term loans [21] - A quarterly dividend increase of 5% was announced, with significant capital returned to shareholders through share repurchases [23] Q&A Session Summary Question: Comments on the data solutions business and order pace - Management noted strong double-digit growth in data solutions, with a growing backlog providing visibility into the second half [41][42] Question: Contribution and synergies from recent acquisitions - Management confirmed that the AVAIL acquisition will contribute a nickel to EPS and highlighted potential cost synergies from both AVAIL and Track D [52][46] Question: Organic sales outlook and confidence in second half acceleration - Management indicated strong orders and backlog in data solutions and power utilities, expecting growth to accelerate in the second half [57][58] Question: Impact of tariffs on margins - Management expects first half margins to be impacted by tariffs, with a positive flip in the second half as pricing and productivity measures take effect [61][62] Question: Clarification on tariff impacts and pricing strategies - Management stated that the tariff impact is primarily from steel and aluminum, and they are actively managing pricing through various strategies [92][105] Question: Insights on the power utility segment - Management highlighted that power utilities now represent about 20% of sales, with strong growth expected from recent acquisitions [95][96]

Financial Data and Key Metrics Changes - The company reported a strong first quarter with sales up 112% organically, driven by the infrastructure vertical [11] - Adjusted EPS grew 10% to $0.67, and free cash flow increased by 32% to $44 million [17] - The company raised its full-year sales guidance to 19% to 21% growth and adjusted EPS guidance to $3.30 to $3.13, reflecting strong performance in Data Solutions and Power Utilities [25][26] Business Line Data and Key Metrics Changes - Systems Protection segment sales increased by 16%, driven by the Track D acquisition, while organic sales were flat [18] - Electrical Connections segment sales grew by 3%, with organic sales up 4% [20] - Infrastructure vertical sales grew in the mid-teens, while Commercial Resi declined low single digits [12] Market Data and Key Metrics Changes - Organic orders were up mid-teens, with strong double-digit growth in Data Solutions [13] - The Americas saw low single-digit growth, while Europe was flat and Asia Pacific grew in the high teens [12] - The infrastructure vertical is expected to account for over 40% of sales, with Data Solutions and Power Utilities each contributing approximately 20% [30] Company Strategy and Development Direction - The company is focused on portfolio transformation, having divested the Thermal Management business and acquired the AVAIL Electrical Products Group [10][29] - The strategy emphasizes growth in electrical infrastructure, data solutions, and power utilities, aligning with trends in electrification and sustainability [30][31] - The company plans to invest in R&D and capital expenditures to support growth and supply chain resiliency [23] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in strong demand for electrical infrastructure products, anticipating a 50% increase in electricity demand by 2050 [32] - The company is taking steps to mitigate tariff impacts through pricing, productivity, and supply chain actions [13][26] - Management remains optimistic about the second half of the year, expecting strong growth driven by backlog and order strength [60] Other Important Information - The company has a strong balance sheet with over $1.3 billion in cash and $600 million available on its revolver [22] - The company repurchased approximately $250 million in shares year-to-date, exceeding its plan [24] - The recent sustainability report highlighted the company's commitment to reducing CO2 emissions and improving employee satisfaction [34] Q&A Session Summary Question: Can you provide more details on the data solutions business and order demand? - Management indicated strong double-digit growth in data solutions, with a growing backlog providing visibility into the second half of the year [40] Question: What are the contributions and synergies from the recent acquisitions? - The AVAIL acquisition is expected to contribute a nickel to EPS, with strong growth and cost synergies anticipated [51][52] Question: How confident is the company in the second half organic sales growth? - Management expressed confidence in strong orders and backlog, particularly in data solutions and power utilities, which are expected to drive growth [58][60] Question: What is the impact of tariffs on margins and pricing? - Management noted that tariffs are expected to impact margins in the first half, but pricing and productivity measures are anticipated to offset these impacts in the second half [61][62] Question: Can you clarify the order growth and its organic nature? - Management confirmed that organic orders were up mid-teens, with strong contributions from data solutions and infrastructure [68] Question: What is the outlook for the commercial residential segment? - Management revised expectations for commercial residential to flattish growth due to tariff impacts and market uncertainty [90]

nVent First Quarter 2025 Earnings Presentation May 2, 2025 Caution Concerning Forward-Looking Statements This presentation contains statements that we believe to be "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. All statements, other than statements of historical fact, are forward looking statements. Without limitation, any statements preceded or followed by or that include the words "targets," "plans," "believes," "expects," "intends," "will," "like ...

Financial Performance - Reported sales in Q1 2025 totaled $809 million, representing an 11% increase year-over-year, with organic sales growth of 2%[4] - Earnings per diluted share (EPS) from continuing operations were $0.52, up 2%, while adjusted EPS was $0.67, reflecting a 10% increase[5] - Operating income for Q1 2025 was $130 million, down 1% from $132 million in Q1 2024, but adjusted operating income increased by 4% to $162 million[6] - The company reported a net income from continuing operations of $87 million for Q1 2025, compared to $85 million in Q1 2024[21] - Net income from continuing operations for Q1 2025 was $87.0 million, slightly up from $85.2 million in Q1 2024, reflecting a growth of 2.1%[25] - Total net sales for Q1 2025 reached $809.3 million, an increase of 10.5% compared to $732.1 million in Q1 2024[28] - Adjusted operating income for Q1 2025 was $162.2 million, up from $155.9 million in Q1 2024, indicating a growth of 4.0%[28] - The company’s total reportable segment income for Q1 2025 was $189.3 million, compared to $180.0 million in Q1 2024, indicating a growth of 5.0%[28] Cash Flow and Investments - Net cash provided by operating activities was $64 million, a 31% increase compared to $49 million in Q1 2024, with free cash flow of $44 million, up 32%[7] - Cash and cash equivalents at the end of Q1 2025 were $1,343.0 million, significantly higher than $201.4 million at the end of Q1 2024[25] - The company reported net cash provided by operating activities of continuing operations at $63.9 million for Q1 2025, compared to $48.6 million in Q1 2024, a growth of 31.7%[25] - The net cash provided by investing activities for Q1 2025 was $1,567.4 million, a significant increase from $(15.8) million in Q1 2024[25] - Free cash flow for Q1 2025 was reported at $44.4 million, up from $33.6 million in Q1 2024[40] Guidance and Projections - The company raised its full-year 2025 sales guidance to a growth range of 19% to 21%, up from the previous guidance of 8% to 10%[12] - Full-year 2025 adjusted EPS is now expected to be between $3.03 and $3.13, an increase from the prior guidance of $2.98 to $3.08[12] - The second quarter 2025 is projected to see reported sales growth of 22% to 24% and organic sales growth of 4% to 6%[13] - For Q2 2025, nVent forecasts organic net sales growth between 4% to 6%, with total net sales growth projected at 22% to 24%[38] - The full year 2025 organic net sales growth is expected to be between 5% to 7%, with total net sales growth estimated at 19% to 21%[38] Segment Performance - The return on sales for the Systems Protection segment was 20.5% in Q1 2025, down from 21.6% in Q1 2024[28] - The Systems Protection segment experienced a total net sales growth of 15.5% in Q1 2025, driven by a 16.2% contribution from acquisitions[37] - The Electrical Connections segment achieved an organic net sales growth of 3.9% in Q1 2025[37] - nVent reported a Q1 2025 organic net sales growth of 1.6%, with total net sales growth at 10.5% due to acquisitions[37] Acquisitions and Strategic Moves - The acquisition of Avail Electrical Products Group is expected to strengthen the company's position in high-growth infrastructure sectors, including power utilities and data centers[4] - nVent's total net sales growth for the year is influenced by a projected 14% contribution from acquisitions[38] Capital Expenditures - Capital expenditures for Q1 2025 were $21.1 million, up from $15.3 million in Q1 2024, reflecting an increase of 37.9%[25] - Capital expenditures for Q1 2025 amounted to $21.1 million, compared to $15.3 million in Q1 2024[40] Currency Impact - Currency effects negatively impacted organic net sales growth by 0.9% in Q1 2025[37] Dividends - Cash dividends of $0.20 per share were approved, payable on May 9, 2025[14]

Core Viewpoint - Avail Infrastructure Solutions has entered into a definitive agreement to sell its Electrical Products Group business unit to nVent Electric plc for an enterprise value of $975 million, which is expected to close in the first half of 2025 [1][3]. Group 1: Transaction Details - The transaction is valued at $975 million, subject to customary adjustments [1]. - The deal is anticipated to close in the first half of 2025, with HSR approval already obtained [3]. - Avail and Fernweh will collaborate with nVent to ensure a smooth transition for approximately 1,100 employees of the Electrical Products Group [3]. Group 2: Strategic Implications - The acquisition is seen as a crucial step in enhancing EPG's position as a leading provider of electrical products, with expected benefits in the datacenter and utilities markets [2]. - The transformation of EPG since its acquisition in 2022 is highlighted as a testament to the partnership between Fernweh and AZZ, focusing on growth, innovation, and operational efficiency [2]. Group 3: Company Background - EPG is recognized as a leading provider of specialized products and solutions for industrial and electrical applications, focusing on safe and reliable power transmission [4]. - EPG operates a diverse portfolio that includes custom switchgear, electrical enclosures, and medium and high-voltage bus ducts [4]. - Fernweh Group is an investment firm with expertise in strategy, M&A, and operational transformation in the industrial and industrial technology sectors [5].

Core Insights - Avail Infrastructure Solutions has entered into a definitive agreement to sell its Electrical Products Group (EPG) to nVent Electric plc for an Enterprise Value of $975 million, subject to customary adjustments [1][2][3] Group 1: Transaction Details - The transaction is expected to close in the first half of 2025, with HSR approval already obtained and subject to customary closing conditions [3] - Avail and Fernweh will collaborate with nVent to ensure a smooth transition for approximately 1,100 employees of EPG [3] Group 2: Strategic Importance - The acquisition is seen as a crucial step in solidifying EPG's position as a leading provider of electrical products, enhancing its brand and creating significant value for customers, employees, and stakeholders [2] - The transaction positions EPG to deliver best-in-class electrical products and solutions, benefiting from growth in the datacenter and utilities markets [2] Group 3: Company Background - EPG is a leading provider of specialized products and solutions for industrial and electrical applications, focusing on safe and reliable power transmission [4] - EPG operates a portfolio that includes custom switchgear, electrical enclosures, and medium and high-voltage bus ducts through various entities [4] Group 4: Fernweh Group Overview - Fernweh Group is an investment firm with leaders from global institutions, focusing on strategy, M&A, and operational transformation in the industrial and industrial technology sectors [5] - The firm aims to create value for stakeholders by providing tailored management capabilities and capital for mid- and small-cap companies [5]

Core Insights - Avail Infrastructure Solutions has entered into a definitive agreement to sell its Electrical Products Group (EPG) to nVent Electric plc for an Enterprise Value of $975 million, subject to customary adjustments [1][2][3] Group 1: Transaction Details - The transaction is expected to close in the first half of 2025, with HSR approval already obtained and subject to customary closing conditions [3] - Avail and Fernweh will collaborate with nVent to ensure a smooth transition for approximately 1,100 EPG employees [3] Group 2: Company Background - EPG is a leading provider of specialized products and solutions for industrial and electrical applications, focusing on safe and reliable power transmission [4] - EPG's portfolio includes custom switchgear, electrical enclosures, and medium and high-voltage bus ducts through various entities [4] Group 3: Strategic Importance - The strategic combination with nVent is expected to enhance EPG's brand and create significant value for customers, employees, and stakeholders [2] - The transaction marks the completion of EPG's transformation since its acquisition in 2022, highlighting the partnership between Fernweh and AZZ [2]

Financial Data and Key Metrics Changes - Q4 2024 reported sales growth was 9%, with adjusted EPS growth of 7% [7][10] - Full year 2024 reported sales growth was 13%, with adjusted EPS also up 7% [7][12] - Segment income for Q4 grew 12% year over year, with return on sales up 50 basis points [10][12] - Free cash flow for the full year was $427 million, growing 20% [31][34] Business Line Data and Key Metrics Changes - Enclosures (now systems protection) sales increased 16%, with organic sales down 1% [28] - Electrical and fastening (now electrical connections) sales were flat organically [29] - Data solutions within infrastructure grew approximately 30% in 2024, contributing significantly to sales [13][141] Market Data and Key Metrics Changes - North America organic sales declined low single digits, while Asia Pacific grew in the mid-teens [12][29] - Organic orders were up low teens in Q4, with double-digit order growth in data solutions [12][104] Company Strategy and Development Direction - The company is focused on electrification, sustainability, and digitalization trends, with a 2025 guidance reflecting approximately 9% sales growth and 22% adjusted EPS growth [9][36] - The divestiture of the thermal management business positions the company for higher growth in electrical connection and protection [15][36] - The company plans to launch over 75 new products in 2025, contributing to sales growth [24][36] Management's Comments on Operating Environment and Future Outlook - Management noted that while Q1 2025 may start slow, they expect organic growth to accelerate as the year progresses due to growing backlogs and positive order trends [50][54] - The company anticipates continued demand for liquid cooling solutions driven by energy efficiency needs in data centers [82][129] Other Important Information - The company expects nearly $2 billion in capital available for deployment in 2025, including proceeds from the thermal management sale [8][36] - The company has a strong liquidity position with $190 million in cash and $600 million available on its revolver [32][34] Q&A Session Summary Question: Organic growth expectations for 2025 - Management expects organic growth to be heavily weighted towards volume, with price also playing a role [56] Question: Operating margin guidance - Q1 is expected to see modestly lower return on sales due to higher corporate costs and ongoing investments [66] Question: Channel inventory status - Management noted that channel inventory adjustments impacted Q4, but orders have picked up in January [92][93] Question: Impact of tariffs on COGS - Minimal impact from tariffs on imports from China, with low exposure from Mexico and Canada [96] Question: Liquid cooling business dynamics - Demand for liquid cooling remains strong, with ongoing investments in capacity and innovation [82][129]