Financial Data and Key Metrics Changes - The company reported record sales of $963 million, up 30% year-over-year, with organic growth of 9% driven by both volume and price [12] - Adjusted EPS grew 28% to $0.86, exceeding guidance [14] - Adjusted operating income increased 18% year-over-year, with a return on sales of nearly 21% [8][14] Business Line Data and Key Metrics Changes - Systems Protection sales increased 43% to $632 million, with organic growth of 10% [14][16] - Electrical Connections sales rose 11% to $331 million, with organic sales up 7% [16] - Infrastructure vertical led with organic sales growth over 20%, while commercial residential sales were up mid-single digits and industrial sales were down slightly [8][16] Market Data and Key Metrics Changes - All key geographic regions experienced growth: Americas up 9%, Europe up 10%, and Asia Pacific up low single digits [9] - The backlog increased more than fourfold compared to the previous year, driven by strong demand in data centers and power utilities [6][10] Company Strategy and Development Direction - The company is focused on becoming a higher growth electrical connection and protection company, with a significant shift towards the infrastructure vertical, which is expected to account for over 40% of sales [25][26] - Investments are being made in data solutions to support the AI build-out, with a focus on innovative power and cooling solutions [27][29] - The company is prioritizing growth initiatives, including new products and acquisitions, while maintaining a strong balance sheet [10][20] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the strong performance and growth outlook, particularly in data centers and power utilities [10][11] - The company raised its full-year sales guidance to reflect strong Q2 results, expecting reported sales growth of 24% to 26% [21] - Management acknowledged the dynamic tariff environment but emphasized their ability to manage pricing and productivity to offset impacts [10][87] Other Important Information - The company launched 50 new products in the first half of the year, contributing over three points to sales growth [8] - Free cash flow for the quarter was robust at $74 million, with a healthy balance sheet supporting disciplined capital allocation [18][19] Q&A Session Summary Question: Timing of converting backlog and its duration - Management indicated that the backlog is expected to convert into sales through 2026 and beyond, driven by growth in the data center solutions business and recent acquisitions [36][37] Question: Concerns about disintermediation in liquid cooling - Management clarified that they partner with hyperscalers to provide complete system solutions or specific products, maintaining strong relationships despite market changes [38][41] Question: Performance of commercial residential segment - Management noted healthy performance in the commercial residential segment but remained cautious about the overall industry outlook, expecting it to be flattish for the year [47][49] Question: Backlog growth and expectations for the second half - Management confirmed that backlog has grown significantly, particularly in the systems protection business, which is expected to grow ahead of the electrical connections segment [54][55] Question: Price recovery from tariff impacts - Management stated that they expect to recover tariff impacts through pricing and productivity, with a focus on maintaining healthy margins [85][87] Question: Modular data centers and integration of other products - Management indicated that they are integrating other OEMs' equipment into their modular data center offerings, which will enhance their capabilities over time [90][91] Question: Growth opportunities in international markets - Management attributed outperformance in international markets to a focus on high-growth verticals and strong distribution partnerships [117] Question: Margin protection amid inflation and tariffs - Management confirmed that they have mechanisms in place to adjust pricing in response to tariffs and inflation, ensuring margin protection through long-term contracts [119]

Financial Performance - nVent delivered record Q2 sales of $963 million, up 30% year-over-year[10] - Adjusted EPS was $0.86, a 28% increase[12] - Adjusted operating income reached $200 million, up 18% year-over-year, with a ROS of 20.8%[12] - Free cash flow generation amounted to $74 million in Q2 2025[12] Growth and Orders - Organic sales increased by 9%[12] - Organic orders grew by over 20% year-over-year[10] - Total backlog increased more than four-fold year-over-year[10] - New products contributed over 3 percentage points to sales growth[12] Outlook and Guidance - nVent is raising full-year sales and adjusted EPS guidance[10] - The company expects sales to be up 24% to 26% reported, and 8% to 10% organically[33] - Adjusted EPS is projected to be between $3.22 and $3.30, a 29% to 33% increase[33]

[Q2 2025 Earnings Release Overview](index=1&type=section&id=Q2%202025%20Earnings%20Release%20Overview) nVent reports strong Q2 2025 results, driven by acquisitions and organic growth, leading to increased full-year guidance [Second Quarter 2025 Financial Highlights](index=1&type=section&id=Second%20Quarter%202025%20Financial%20Highlights) nVent achieved record Q2 2025 results with **30% reported sales growth** to **$963 million** and **28% adjusted EPS growth** to **$0.86**, leading to raised full-year guidance - Portfolio transformation and recent acquisitions, including Trachte and Electrical Products Group, significantly drove strong performance in high-growth infrastructure verticals like power utilities, data centers, and renewables[3](index=3&type=chunk)[4](index=4&type=chunk) Q2 2025 Key Financial Metrics | Metric | Q2 2025 | Q2 2024 | YoY Change | | :--- | :--- | :--- | :--- | | Reported Sales | $963 million | $740 million | +30% | | Organic Sales Growth | 9% | N/A | N/A | | Reported EPS (cont. ops) | $0.65 | $0.55 | +18% | | Adjusted EPS (cont. ops) | $0.86 | N/A | +28% | | Operating Income | $157 million | $145 million | +8% | | Adjusted Operating Income | $200 million | $169 million | +18% | | Free Cash Flow | $74 million | $101 million | -27% | [Second Quarter 2025 Performance Analysis](index=2&type=section&id=Second%20Quarter%202025%20Performance%20Analysis) nVent's Q2 2025 consolidated net sales grew **30% to $963 million**, with both segments contributing, despite a **210 basis point decline** in adjusted Return on Sales to **20.8%** [Consolidated Performance](index=2&type=section&id=Consolidated%20Performance) Consolidated net sales increased **30% to $963 million** with **9% organic growth**, while adjusted Return on Sales contracted **210 basis points** to **20.8%** nVent Consolidated Performance (Q2 2025 vs Q2 2024) | Metric | Q2 2025 | Q2 2024 | Change | | :--- | :--- | :--- | :--- | | Net Sales | $963M | $740M | +30% | | Organic Growth | 9% | N/A | N/A | | Operating Income | $157M | $145M | +8% | | Reported ROS | 16.3% | 19.6% | -330 bps | | Adjusted Operating Income | $200M | $169M | +18% | | Adjusted ROS | 20.8% | 22.9% | -210 bps | [Segment Performance](index=2&type=section&id=Segment%20Performance) Systems Protection sales rose **43% to $632 million** with **10% organic growth**, and Electrical Connections sales increased **11% to $331 million** with **7% organic growth**, though both segments saw adjusted ROS decline Q2 2025 Segment Performance | Segment | Net Sales | YoY Change | Organic Growth | Adjusted ROS | ROS Change (bps) | | :--- | :--- | :--- | :--- | :--- | :--- | | Systems Protection | $632M | +43% | +10% | 21.7% | -180 bps | | Electrical Connections | $331M | +11% | +7% | 28.7% | -220 bps | [Full-Year and Third Quarter 2025 Guidance](index=3&type=section&id=Full-Year%20and%20Third%20Quarter%202025%20Guidance) nVent raised full-year 2025 guidance, projecting **24-26% reported sales growth** and **adjusted EPS of $3.22-$3.30**, with strong Q3 2025 forecasts Updated Full-Year 2025 Guidance | Metric | New Guidance | Prior Guidance | | :--- | :--- | :--- | | Reported Sales Growth | 24% to 26% | 19% to 21% | | Organic Sales Growth | 8% to 10% | 5% to 7% | | GAAP EPS | $2.48 to $2.56 | $2.48 to $2.58 | | Adjusted EPS | $3.22 to $3.30 | $3.03 to $3.13 | Third Quarter 2025 Guidance | Metric | Q3 2025 Guidance | | :--- | :--- | | Reported Sales Growth | 27% to 29% | | Organic Sales Growth | 11% to 13% | | GAAP EPS | $0.67 to $0.69 | | Adjusted EPS | $0.86 to $0.88 | [Shareholder Returns](index=3&type=section&id=Shareholder%20Returns) A regular cash dividend of **$0.20 per share** was approved by the Board of Directors, payable on August 1, 2025 - A regular cash dividend of **$0.20 per share** was approved, payable in the third quarter on August 1, 2025[14](index=14&type=chunk) [Consolidated Financial Statements (Unaudited)](index=5&type=section&id=Consolidated%20Financial%20Statements%20(Unaudited)) Unaudited financial statements provide a comprehensive view of nVent's financial health and operational results for the three and six months ended June 30, 2025 [Condensed Consolidated Statements of Income](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Income) Q2 2025 net sales reached **$963.1 million**, with net income from continuing operations increasing to **$106.7 million** and diluted EPS rising to **$0.65** Income Statement Highlights (Three Months Ended June 30) | Metric (in millions, except EPS) | 2025 | 2024 | | :--- | :--- | :--- | | Net Sales | $963.1 | $739.8 | | Gross Profit | $371.8 | $307.6 | | Operating Income | $156.7 | $144.9 | | Net Income from Continuing Operations | $106.7 | $93.2 | | Diluted EPS from Continuing Operations | $0.65 | $0.55 | [Condensed Consolidated Balance Sheets](index=6&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of June 30, 2025, total assets were **$6,741.7 million**, with a significant increase in Goodwill and Intangibles, and long-term debt decreasing to **$1,752.1 million** Balance Sheet Summary (in millions) | Account | June 30, 2025 | Dec 31, 2024 | | :--- | :--- | :--- | | Total Current Assets | $1,484.6 | $1,389.3 | | Goodwill & Intangibles, net | $4,633.5 | $3,808.8 | | Total Assets | $6,741.7 | $6,734.9 | | Long-term Debt | $1,752.1 | $2,117.5 | | Total Liabilities | $3,223.0 | $3,497.3 | | Total Equity | $3,518.7 | $3,237.6 | [Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash from operating activities for the six months ended June 30, 2025, was **$154.9 million**, while investing activities used **$1,008.0 million** primarily for acquisitions, and financing activities used **$714.0 million** Cash Flow Summary (Six Months Ended June 30, in millions) | Activity | 2025 | 2024 | | :--- | :--- | :--- | | Net Cash from Operating (Continuing Ops) | $154.9 | $165.7 | | Net Cash from Investing (Continuing Ops) | $(1,008.0) | $(31.5) | | Net Cash from Financing | $(714.0) | $(83.2) | | Change in Cash and Cash Equivalents | $(64.1) | $88.9 | [Supplemental Financial Information by Reportable Segment](index=8&type=section&id=Supplemental%20Financial%20Information%20by%20Reportable%20Segment) For the six months ended June 30, 2025, Systems Protection generated **$1,140.2 million** in sales and Electrical Connections **$632.2 million**, both showing sales and income growth despite declining Return on Sales percentages Segment Performance (Six Months Ended June 30) | Segment (in millions) | Net Sales 2025 | Net Sales 2024 | Segment Income 2025 | Segment Income 2024 | | :--- | :--- | :--- | :--- | :--- | | Systems Protection | $1,140.2 | $880.7 | $241.3 | $198.6 | | Electrical Connections | $632.2 | $591.2 | $180.0 | $177.7 | [Non-GAAP Financial Measures and Reconciliations](index=9&type=section&id=Non-GAAP%20Financial%20Measures%20and%20Reconciliations) This section reconciles non-GAAP financial measures like organic sales, adjusted operating income, and free cash flow to GAAP equivalents, used to assess core operational performance - The company defines 'organic sales' as GAAP net sales excluding the impact of currency translation and revenue from acquisitions within their first year[30](index=30&type=chunk) - Adjusted measures are used to eliminate the distorting effects of certain items, such as restructuring costs, acquisition expenses, and amortization of intangible assets, to better assess the underlying strength of operations[31](index=31&type=chunk)[33](index=33&type=chunk) [Reconciliation of GAAP to Non-GAAP Measures (2025 Forecast)](index=10&type=section&id=Reconciliation%20of%20GAAP%20to%20Non-GAAP%20Measures%20(2025%20Forecast)) Q2 2025 operating income of **$156.7 million** was adjusted to **$200.0 million**, and diluted EPS of **$0.65** was adjusted to **$0.86**, after accounting for specific items Q2 2025 GAAP to Non-GAAP Reconciliation | Metric (in millions, except EPS) | GAAP | Adjustments | Non-GAAP | | :--- | :--- | :--- | :--- | | Operating Income | $156.7 | $43.3 | $200.0 | | Net Income (cont. ops) | $106.7 | $33.9 | $140.6 | | Diluted EPS (cont. ops) | $0.65 | $0.21 | $0.86 | [Reconciliation of Net Sales Growth to Organic Net Sales Growth](index=12&type=section&id=Reconciliation%20of%20Net%20Sales%20Growth%20to%20Organic%20Net%20Sales%20Growth) Q2 2025 total net sales growth of **30.2%** comprised **8.7% organic growth** and **20.7% from acquisitions**, with full-year forecasts anticipating **24-26% total sales growth** Q2 2025 Net Sales Growth Reconciliation | Segment | Organic | Currency | Acq./Div. | Total | | :--- | :--- | :--- | :--- | :--- | | nVent | 8.7% | 0.8% | 20.7% | 30.2% | | Systems Protection | 10.0% | 1.0% | 32.4% | 43.4% | | Electrical Connections | 6.8% | 0.3% | 3.6% | 10.7% | [Reconciliation of Cash from Operating Activities to Free Cash Flow](index=12&type=section&id=Reconciliation%20of%20Cash%20from%20Operating%20Activities%20to%20Free%20Cash%20Flow) For Q2 2025, net cash from continuing operating activities was **$91.0 million**, resulting in a free cash flow of **$74.1 million** after capital expenditures Free Cash Flow Reconciliation (Three Months Ended June 30) | Metric (in millions) | 2025 | 2024 | | :--- | :--- | :--- | | Net cash from operating activities (cont. ops) | $91.0 | $117.1 | | Capital expenditures | $(16.9) | $(16.5) | | **Free cash flow (non-GAAP)** | **$74.1** | **$100.6** |

Core Insights - Vertiv (VRT) and nVent Electric (NVT) are significant players in the data center infrastructure market, providing essential solutions for data centers and industrial environments [1] - The data center infrastructure management market is projected to grow from approximately $3.06 billion in 2024, with a CAGR of 17.3% from 2025 to 2030, presenting growth opportunities for both companies [2] Vertiv (VRT) Overview - Vertiv's product portfolio includes thermal systems, liquid cooling, UPS, switchgear, busbar, and modular solutions, with organic orders growing about 20% in the last 12 months and a book-to-bill ratio of 1.4 for Q1 2025, indicating strong prospects [3] - The backlog for Vertiv increased by 10% sequentially and 25% year-over-year, reaching $7.9 billion [3][10] - Recent product launches include a 142kW cooling and power reference architecture for NVIDIA's GB300 NVL72 platform, aimed at enhancing AI infrastructure deployment [4] - Vertiv introduced four new systems to meet AI application demands, focusing on power efficiency, thermal management, and scalability [5] - Strong capital expenditure plans from hyperscalers for data center expansion are favorable for Vertiv, supported by a rich partner base [6] nVent Electric (NVT) Overview - nVent Electric is experiencing strong momentum in the data center sector, with its Data Solutions business showing double-digit sales growth due to rising demand for electrical infrastructure products [7] - The recent $975 million acquisition of the Electrical Products Group from Avail Infrastructure Solutions enhances NVT's Systems Protection segment and expands its market presence [8] - nVent launched 35 new products during the quarter to address evolving data center demands [9] - Collaboration with NVIDIA to deliver advanced liquid cooling solutions for AI-driven data centers is a notable achievement [11] Stock Performance and Valuation - Year-to-date, Vertiv's shares have decreased by 2.7%, while nVent Electric's shares have increased by 0.7% [12] - Vertiv shares are currently overvalued with a Value Score of D, trading at a forward Price/Sales ratio of 4.17X, compared to nVent's lower valuation with a Value Score of B and a Price/Sales ratio of 3.01X [14] - Earnings estimates for 2025 indicate a projected $3.55 per share for Vertiv (24.56% year-over-year increase) and $3.08 per share for nVent (23.69% year-over-year increase) [17] Conclusion - Both Vertiv and nVent Electric are well-positioned to benefit from the growing data center market, but nVent is considered the stronger investment option due to consistent growth in its Data Solutions segment, strategic acquisitions, and favorable valuation [20] - nVent Electric holds a Zacks Rank 2 (Buy), while Vertiv has a Zacks Rank 3 (Hold), indicating a stronger investment outlook for nVent [21]

Company Overview - nVent is a high-performance electrical company focused on connection and protection[10] - The company reported net sales of $3 billion with a return on sales (ROS) of 21.7% and adjusted EPS of $2.49 in 2024[9] - Free cash flow for 2024 was $427 million[9] - The company expects to launch over 75 new products in 2025, driving 2+ points of sales growth and expects product vitality above 22% in 2025[14] Business Segments and Verticals - The company operates through two segments: Electrical Connections (39%) and Systems Protection (61%)[8] - Infrastructure accounts for >40% of the portfolio[15] - Data Solutions and Power Utilities each represent approximately 20% of the portfolio[15] Data Solutions - Data Solutions sales reached approximately $600 million in 2024 and are growing at a double-digit rate in 2025[21] Sustainability - The company reduced normalized CO2e emissions by 47% since 2019[23] - 85% of products in the New Product Introduction funnel have a positive sustainability impact[23] Financial Performance - Adjusted operating income for 2024 was $652 million, resulting in an adjusted return on sales of 21.7%[31]

nVent Electric (NVT) FY Conference Summary Company Overview - nVent Electric provides a wide range of electrical products, fastening solutions, and systems supporting electrical infrastructure across various industries, including industrial, commercial, and data centers [4][8] - The company has transformed its portfolio, focusing more on electrical infrastructure after selling its thermal management business [8][9] Key Points Portfolio Transformation - The sale of the thermal management business has led to a new focus on two segments: systems protection and electrical connections [9][10] - As of the end of last year, over 40% of nVent's revenue now comes from infrastructure, which is the fastest-growing segment [17][18] - New products contributed approximately two points to growth last year, indicating a strong emphasis on innovation [12][18] Growth Strategy - nVent has completed eight acquisitions since its spin-off, demonstrating strong integration and execution capabilities [12][17] - The company aims to grow globally, with a focus on high-growth verticals such as infrastructure [12][13] - The backlog of business is growing, with strong orders and visibility into 2026 and beyond [18] Financial Performance - nVent reported $600 million in sales from its cooling and power segment, with over half of that portfolio growing double digits [21] - The company expects to see strong sales, EPS growth, and robust cash flow in the coming years [24][55] Market Trends - The demand on the electrical grid is projected to double by 2050, necessitating significant infrastructure build-out [23] - nVent's products are essential for this electrical infrastructure development, positioning the company for future growth [24] Liquid Cooling Segment - nVent has a leading portfolio in liquid cooling, with applications in data centers, battery energy storage, and industrial applications [18][20] - The company has established relationships with major players like NVIDIA and AMD to inform its product roadmap [19][62] Margin Expansion Potential - Both segments of nVent have opportunities for margin expansion through new product launches and productivity improvements [41][42] - The company targets over 30% incremental margins and sees geographic expansion as a key area for growth [43][44] Tariff Impact - nVent has managed tariff impacts through pricing productivity and supply chain actions, with an estimated $120 million impact from tariffs [46][48] - The company has raised its guidance for the year despite potential challenges in the commercial residential market [47] Competitive Position - nVent has a competitive advantage in liquid cooling due to its extensive experience and manufacturing capabilities, ensuring high-quality, leak-proof systems [57][58] - The company continues to innovate and expand its customer base, anticipating a record year for new products [60][61] Additional Insights - The company emphasizes sustainability and employee engagement as part of its mission to connect and protect in an electrified world [22][24] - nVent's disciplined approach to capital allocation and M&A is expected to drive future growth [39][34]

Summary of nVent Conference Call Company Overview - **Company**: nVent - **Industry**: Electrical Infrastructure and Data Solutions Key Points and Arguments Transformation and Growth Strategy - nVent reported $3 billion in sales for the previous year, indicating a strong return on sales and free cash flow generation [3][4] - The company is focusing on high-growth verticals, new products, and mergers and acquisitions (M&A) as part of its transformation strategy [4][6] - The portfolio has shifted to 40% electrical infrastructure, 20% data solutions, and 20% power utilities, reflecting a balanced approach between high-growth and long-cycle businesses [6][10] Acquisitions and Market Position - nVent has completed eight acquisitions since its spin-off, including the recent acquisitions of Trocde and Avail EPG, which have significantly expanded its utility segment [5][12] - The utility segment has grown to 20% of sales due to these acquisitions, focusing on engineered building solutions and long-cycle businesses [12][13] - The company has a leadership position in the utility category, particularly in transmission and distribution [14] Financial Performance and Guidance - nVent raised its guidance for organic growth to 4-6% for the second quarter, driven by strong backlog and orders, particularly in Data Solutions and Power Utilities [25][26] - The company expects to see margin improvement over time through synergy savings and productivity enhancements, despite initial lower margins from newly acquired businesses [17][19] Market Trends and Competitive Landscape - The trends of digitalization, sustainability, and electrification are expected to drive growth in the electrical industry [7] - nVent is well-positioned in the liquid cooling market, which is anticipated to grow significantly as demand for energy-efficient solutions increases [44][46] - The competitive environment in liquid cooling is intensifying, but nVent believes its established testing and performance standards will maintain its leadership [46][47] Future Outlook and M&A Strategy - nVent is optimistic about future growth, with plans to update midterm targets due to the transformation of its portfolio [55] - The company has a healthy pipeline for M&A opportunities in the fragmented $100 billion connect and protect space, targeting deals that generate value above the weighted average cost of capital [70][71] - nVent aims to integrate its recent acquisitions into a cohesive business model, enhancing synergies and operational efficiencies [62][66] Additional Insights - The company is focused on expanding its presence in Europe and Asia, recognizing the growth potential outside North America [22][23] - nVent's CapEx guidance has increased due to strong backlog and orders, particularly in Data Solutions and supply chain resiliency [52] - The company is committed to offsetting tariff impacts through pricing strategies and operational flexibility [30][31] Conclusion - nVent is undergoing a significant transformation aimed at enhancing its growth potential in the electrical infrastructure and data solutions markets. The company is leveraging acquisitions, focusing on high-growth verticals, and maintaining a disciplined approach to M&A, positioning itself for a strong future in a rapidly evolving industry [76]

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]