UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Quarterly Period Ended March 31, 2022 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission file number 001-38265 (Address of principal executive offices) Registrant's telephone number, including area code: 44-20-3966-0279 Securities registered pursuant to Section 12(b) of the Act ...

Financial Data and Key Metrics Changes - The company reported record sales of $695 million in Q1 2022, representing a 27% increase year-over-year and a 24% organic growth [19] - Adjusted earnings per share (EPS) was $0.50, up 16% year-over-year, exceeding the high end of guidance [21] - Segment income for Q1 was $110 million, up 13%, with a return on sales of 15.9%, down 180 basis points [20] Business Line Data and Key Metrics Changes - Enclosures segment sales increased by 30% to $359 million, with organic growth of 23% [22] - Electrical & Fastening segment sales grew by 29% to $188 million, with strong contributions from both pricing and volume [25] - Thermal Management segment sales were $148 million, up 22% organically, driven by industrial and infrastructure strength [26] Market Data and Key Metrics Changes - North America saw over 30% growth, while Europe experienced low double-digit growth, and developing regions grew low single digits [16] - Industrial vertical led growth, particularly in automotive, food and beverage, and material handling [15] Company Strategy and Development Direction - The company is focused on high growth verticals, new products, and global expansion, particularly in the electrification of everything [7][11] - The strategy includes expanding in data solutions, power utilities, and renewable energy, with significant investments in infrastructure [38][39] Management's Comments on Operating Environment and Future Outlook - Management raised full-year guidance due to strong Q1 performance, but remains cautious about geopolitical tensions, COVID-19 lockdowns in China, and supply chain challenges [17] - The company expects organic sales growth of 11% to 13% for the year, up from previous guidance of 6% to 9% [31] Other Important Information - The company ended Q1 with a cash balance of $51 million and an additional $446 million available on its revolver, indicating a healthy balance sheet [28][29] - The company returned approximately $38 million to shareholders in Q1 through dividends and share repurchases [29] Q&A Session Summary Question: What are the expectations for price and inflation in Q2? - Management expects price increases to exceed 6% for the full year, with improvements in the price/cost equation anticipated for Q2 and the second half of the year [48][51] Question: How is the company managing uncertainties, particularly in China? - The company has limited exposure in China and is managing operations despite lockdowns, with overall sales in APAC showing some slowness [64][65] Question: What is the outlook for the Thermal Management segment? - Management expects continued growth in the Thermal Management segment, but not at the same magnitude as Q1 due to the recovery phase of industrial MRO [54] Question: Can you quantify the supply chain impact on missed sales? - Management indicated that while strong growth was achieved, backlog continues to build, suggesting that demand remains robust despite supply chain challenges [88][89] Question: What is the company's position regarding oil and gas investments? - The company has seen increased orders and quotations in the oil and gas sector, indicating a positive outlook for MRO activity [101]

nVent First Quarter 2022 1 Earnings Presentation April 29, 2022 Forward-Looking Statement and Key Definitions 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 ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Fiscal Year Ended December 31, 2021 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission file number 001-38265 nVent Electric plc (Exact name of Registrant as specified in its charter) (State or other jurisdiction of incorporation or organization) Ireland 98-1391970 (I.R.S. Employer ...

Financial Data and Key Metrics Changes - In Q4 2021, sales increased by 28% year-over-year, reaching $669 million, with organic growth of 24% [9][16] - Adjusted EPS grew by 16% to $0.50, exceeding guidance [17] - Free cash flow for Q4 was $101 million, with a conversion rate of 120% [17] - For the full year, sales reached a record $2.5 billion, up 23% or 18% organically, with adjusted EPS up 31% [10][22] Business Line Data and Key Metrics Changes - Enclosures segment sales increased by 44% to $332 million, with a 35% organic growth rate [18] - Electrical and Fastening sales grew by 17% to $171 million, with segment income up 9% [20] - Thermal Management sales grew by 16% to $166 million, with segment income up 30% [21] Market Data and Key Metrics Changes - North America showed exceptional strength, particularly in enclosures, while Europe also experienced double-digit growth [10] - Developing regions, especially China, grew over 40%, driven by thermal management [10] Company Strategy and Development Direction - The company executed a strategy focused on new product development, digital transformation, and acquisitions to strengthen its portfolio [8][12] - A new strategy and business development role was announced to enhance growth platforms and technologies [13] - The company anticipates ongoing supply chain and inflationary challenges but remains confident in managing these headwinds [14] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in strong demand for products due to the electrification trend [14] - The outlook for 2022 includes organic sales growth of 6% to 9% and adjusted EPS between $2.10 and $2.20, reflecting expected inflation and supply chain challenges [28][29] Other Important Information - The company launched 58 new products in 2021, contributing to sales growth [11] - The balance sheet showed $50 million in cash and $493 million available on the revolver, with a net debt to adjusted EBITDA ratio of 2 times [24][25] - The company returned approximately $230 million to shareholders in 2021, including dividends and share repurchases [27] Q&A Session Summary Question: Organic revenue growth in Q4 was significantly above expectations; can you discuss the cadence? - Management noted consistent growth across all three months of the quarter, supported by strong orders [51] Question: What are the expectations for price increases in 2022? - Management indicated that price increases were already announced for 2022, with expectations for strong carryover pricing [54][55] Question: How does the company view volume growth versus price in 2022? - Management expects volume growth to be stronger in the first half of the year due to favorable comparisons [60] Question: What is the outlook for margin progression across segments in 2022? - Management anticipates margin expansion across all segments, with a focus on Enclosures [62] Question: Can you elaborate on the impact of inflation on pricing and margins? - Management expects inflation to persist, but price increases and productivity improvements are anticipated to offset these costs [56][68] Question: What is the rationale behind recent debt refinancing? - The refinancing was aimed at taking advantage of favorable market conditions and improving the maturity profile of the debt [97][98]

nVent Fourth Quarter and 1 Full-Year 2021 Earnings Presentation February 8, 2022 Forward-Looking Statement and Key Definitions 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 ...

[PART I FINANCIAL INFORMATION](index=3&type=section&id=PART%20I%20FINANCIAL%20INFORMATION) This section presents unaudited condensed consolidated financial statements and management's analysis of financial performance [ITEM 1. Financial Statements (unaudited)](index=3&type=section&id=ITEM%201.%20Financial%20Statements%20(unaudited)) This section presents the unaudited condensed consolidated financial statements, including statements of income, balance sheets, cash flows, and changes in equity, along with detailed notes explaining the basis of presentation, revenue disaggregation, restructuring activities, earnings per share, acquisitions, goodwill, derivatives, debt, income taxes, shareholders' equity, segment information, and commitments and contingencies [Condensed Consolidated Statements of Income (Loss) and Comprehensive Income (Loss)](index=3&type=section&id=Condensed%20Consolidated%20Statements%20of%20Income%20(Loss)%20and%20Comprehensive%20Income%20(Loss)) The company reported significant improvements in net sales and net income for both the three and nine months ended September 30, 2021, compared to the prior year, primarily driven by increased sales volume and the absence of goodwill impairment charges seen in 2020 Consolidated Statements of Income (Loss) and Comprehensive Income (Loss) (in millions, except per-share data) | Metric (in millions, except per-share data) | Three months ended Sep 30, 2021 | Three months ended Sep 30, 2020 | Nine months ended Sep 30, 2021 | Nine months ended Sep 30, 2020 | | :---------------------------------------- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Net sales | $642.8 | $509.3 | $1,793.0 | $1,477.4 | | Gross profit | $250.5 | $196.8 | $694.7 | $552.4 | | Operating income (loss) | $97.7 | $(141.6) | $266.4 | $(36.0) | | Net income (loss) | $74.3 | $(138.7) | $205.9 | $(94.3) | | Basic EPS | $0.44 | $(0.82) | $1.23 | $(0.56) | | Diluted EPS | $0.44 | $(0.82) | $1.21 | $(0.56) | | Cash dividends paid per ordinary share | $0.175 | $0.175 | $0.525 | $0.525 | - Operating income significantly improved from a loss of **$(141.6) million** in Q3 2020 to a profit of **$97.7 million** in Q3 2021, and from a loss of **$(36.0) million** in the first nine months of 2020 to a profit of **$266.4 million** in the same period of 2021, largely due to the absence of a **$220.5 million** goodwill and trade names impairment in 2021[10](index=10&type=chunk) [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) The balance sheet shows an increase in total assets, primarily driven by higher accounts receivable, inventories, goodwill, and intangibles, while cash and cash equivalents decreased. Total liabilities also increased, mainly due to higher accounts payable and long-term debt Consolidated Balance Sheets (in millions) | Metric (in millions) | September 30, 2021 | December 31, 2020 | | :------------------- | :----------------- | :---------------- | | Cash and cash equivalents | $46.0 | $122.5 | | Total current assets | $889.7 | $764.4 | | Goodwill | $2,187.2 | $2,098.2 | | Intangibles, net | $1,162.6 | $1,105.5 | | Total assets | $4,678.9 | $4,366.1 | | Total current liabilities | $571.2 | $450.0 | | Long-term debt | $971.5 | $928.0 | | Total liabilities | $2,137.3 | $1,956.3 | | Total equity | $2,541.6 | $2,409.8 | - Cash and cash equivalents decreased by **$76.5 million** from **$122.5 million** at December 31, 2020, to **$46.0 million** at September 30, 2021[15](index=15&type=chunk) - Goodwill increased by **$89.0 million**, from **$2,098.2 million** to **$2,187.2 million**, primarily due to acquisitions[15](index=15&type=chunk)[47](index=47&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash provided by operating activities increased, while net cash used for investing activities significantly rose due to acquisitions. Net cash used for financing activities decreased, reflecting changes in debt and share repurchases Consolidated Statements of Cash Flows (in millions) | Metric (in millions) | Nine months ended Sep 30, 2021 | Nine months ended Sep 30, 2020 | | :------------------- | :----------------------------- | :----------------------------- | | Net income (loss) | $205.9 | $(94.3) | | Net cash provided by (used for) operating activities | $258.1 | $203.7 | | Net cash provided by (used for) investing activities | $(260.2) | $(50.9) | | Net cash provided by (used for) financing activities | $(70.7) | $(100.2) | | Cash and cash equivalents, end of period | $46.0 | $159.8 | - Net cash used for investing activities increased substantially from **$(50.9) million** in 2020 to **$(260.2) million** in 2021, primarily driven by **$235.1 million** in acquisitions (net of cash acquired) in 2021[18](index=18&type=chunk) - Net cash provided by operating activities increased by **$54.4 million**, from **$203.7 million** in 2020 to **$258.1 million** in 2021[18](index=18&type=chunk) [Condensed Consolidated Statements of Changes in Equity](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Changes%20in%20Equity) Total equity increased from December 31, 2020, to September 30, 2021, primarily due to net income, partially offset by dividends declared and share repurchases. The company also saw changes in accumulated other comprehensive loss Consolidated Statements of Changes in Equity (in millions) | Metric (in millions) | December 31, 2020 | September 30, 2021 | | :------------------- | :---------------- | :----------------- | | Total equity | $2,409.8 | $2,541.6 | | Net income | $20.7 (Retained Earnings) | $136.9 (Retained Earnings) | | Dividends declared | N/A | $(29.7) | | Share repurchases | N/A | $(20.0) | - Total equity increased by **$131.8 million** from **$2,409.8 million** at December 31, 2020, to **$2,541.6 million** at September 30, 2021[21](index=21&type=chunk) - Retained earnings increased significantly from **$20.7 million** at December 31, 2020, to **$136.9 million** at September 30, 2021, reflecting net income generation[21](index=21&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) These notes provide essential details supporting the condensed financial statements, covering the company's business, accounting policies, revenue disaggregation by geography and vertical, restructuring costs, EPS calculations, recent acquisitions, changes in goodwill and intangibles, supplemental balance sheet details, derivative financial instruments, debt structure, income tax impacts, and shareholder equity activities including share repurchases and dividends [1. Basis of Presentation and Responsibility for Interim Financial Statements](index=8&type=section&id=1.%20Basis%20of%20Presentation%20and%20Responsibility%20for%20Interim%20Financial%20Statements) nVent Electric plc is a global provider of electrical connection and protection solutions, operating in three segments: Enclosures, Electrical & Fastening Solutions, and Thermal Management. The unaudited interim financial statements are prepared in accordance with SEC requirements, with certain GAAP footnotes condensed or omitted. The company acknowledges the ongoing uncertainty and potential unfavorable impact of the COVID-19 pandemic on its business - nVent Electric plc is a leading global provider of electrical connection and protection solutions, with three reporting segments: Enclosures, Electrical & Fastening Solutions, and Thermal Management[24](index=24&type=chunk) - The company is incorporated in Ireland but centrally managed and tax resident in the United Kingdom[25](index=25&type=chunk) - The COVID-19 pandemic has had and may continue to have an unfavorable impact on the business, with potential for reduced customer demand or constrained supply[28](index=28&type=chunk) [2. Revenue](index=9&type=section&id=2.%20Revenue) Revenue is disaggregated by geographic location and vertical, showing strong growth across all segments and regions for the three and nine months ended September 30, 2021, compared to 2020. Contract liabilities increased significantly, indicating more upfront payments or deferred revenue Geographic Net Sales (in millions) | Region | Q3 2021 Total | Q3 2020 Total | 9M 2021 Total | 9M 2020 Total | | :--------------- | :------------ | :------------ | :------------ | :------------ | | U.S. and Canada | $412.2 | $338.5 | $1,134.3 | $978.3 | | Developed Europe | $143.5 | $118.7 | $419.9 | $338.3 | | Developing | $74.1 | $41.3 | $202.4 | $128.6 | | Other Developed | $13.0 | $10.8 | $36.4 | $32.2 | | **Total** | **$642.8** | **$509.3** | **$1,793.0** | **$1,477.4** | Vertical Net Sales (in millions) | Vertical | Q3 2021 Total | Q3 2020 Total | 9M 2021 Total | 9M 2020 Total | | :------------------- | :------------ | :------------ | :------------ | :------------ | | Industrial | $275.0 | $215.5 | $776.1 | $629.8 | | Commercial & Residential | $173.2 | $148.2 | $491.0 | $415.7 | | Infrastructure | $142.9 | $104.5 | $370.4 | $303.1 | | Energy | $51.7 | $41.1 | $155.5 | $128.8 | | **Total** | **$642.8** | **$509.3** | **$1,793.0** | **$1,477.4** | Contract Balances (in millions) | Metric | September 30, 2021 | December 31, 2020 | $ Change | % Change | | :------------------ | :----------------- | :---------------- | :------- | :------- | | Contract assets | $45.2 | $45.6 | $(0.4) | (0.9%) | | Contract liabilities | $18.4 | $11.3 | $7.1 | 62.8% | | Net contract assets | $26.8 | $34.3 | $(7.5) | (21.9%) | - The **$7.5 million** decrease in net contract assets was primarily due to the timing of milestone payments, with most December 31, 2020 contract liabilities recognized as revenue in the first nine months of 2021[33](index=33&type=chunk) [3. Restructuring](index=12&type=section&id=3.%20Restructuring) The company continued its restructuring initiatives to reduce fixed costs and realign its business. Total restructuring costs decreased for both the three and nine months ended September 30, 2021, compared to the prior year, with a notable reduction in severance and related costs Total Restructuring Costs (in millions) | Cost Type | Q3 2021 | Q3 2020 | 9M 2021 | 9M 2020 | | :------------------------ | :------ | :------ | :------ | :------ | | Severance and related costs | $1.3 | $3.5 | $4.0 | $9.7 | | Other | $0.6 | $0.8 | $3.0 | $1.9 | | **Total** | **$1.9**| **$4.3**| **$7.0**| **$11.6**| Restructuring Costs by Segment (in millions) | Segment | Q3 2021 | Q3 2020 | 9M 2021 | 9M 2020 | | :-------------------------- | :------ | :------ | :------ | :------ | | Enclosures | $1.3 | $0.9 | $4.5 | $5.1 | | Electrical & Fastening Solutions | — | $0.3 | $0.6 | $0.4 | | Thermal Management | — | $1.7 | $1.3 | $4.3 | | Other | $0.6 | $1.4 | $0.6 | $1.8 | | **Total** | **$1.9**| **$4.3**| **$7.0**| **$11.6**| Accrued Severance and Related Costs (in millions) | Metric | 9M 2021 | 9M 2020 | | :---------------- | :------ | :------ | | Beginning balance | $6.6 | $9.5 | | Costs incurred | $4.0 | $9.7 | | Cash payments | $(7.4) | $(11.6) | | Ending balance | $3.2 | $7.6 | [4. Earnings (Loss) Per Share](index=13&type=section&id=4.%20Earnings%20(Loss)%20Per%20Share) Basic and diluted earnings per share significantly improved for both the three and nine months ended September 30, 2021, compared to the prior year, which had reported losses. The dilutive impact of stock options and restricted stock units was positive in 2021, unlike 2020 when they were anti-dilutive due to net losses Earnings (Loss) Per Ordinary Share (in millions, except per-share data) | Metric | Q3 2021 | Q3 2020 | 9M 2021 | 9M 2020 | | :---------------------------------------- | :------ | :------ | :------ | :------ | | Net income (loss) | $74.3 | $(138.7)| $205.9 | $(94.3) | | Basic EPS | $0.44 | $(0.82) | $1.23 | $(0.56) | | Diluted EPS | $0.44 | $(0.82) | $1.21 | $(0.56) | | Weighted average ordinary shares outstanding (Basic) | 168.2 | 170.0 | 168.0 | 169.9 | | Dilutive impact of stock options, etc. | 1.9 | — | 1.5 | — | | Weighted average ordinary shares outstanding (Diluted) | 170.1 | 170.0 | 169.5 | 169.9 | - In 2020, **0.5 million** (Q3) and **0.7 million** (9M) outstanding stock options, restricted stock units, and performance share units were excluded from diluted EPS calculation due to their anti-dilutive effect resulting from net losses[39](index=39&type=chunk) [5. Acquisitions](index=13&type=section&id=5.%20Acquisitions) nVent completed two acquisitions in 2021: Vynckier Enclosure Systems, Inc. for $27.0 million and CIS Global LLC for $202.4 million, both strengthening the Enclosures segment. These acquisitions resulted in significant goodwill and identifiable intangible assets, with preliminary allocations subject to refinement - On April 1, 2021, nVent acquired Vynckier Enclosure Systems, Inc. for approximately **$27.0 million** in cash, adding non-metallic enclosures to its Enclosures segment[42](index=42&type=chunk) - The Vynckier acquisition resulted in a preliminary goodwill allocation of **$13.5 million** and **$6.1 million** in definite-lived customer relationships[43](index=43&type=chunk) - On June 30, 2021, nVent acquired CIS Global LLC for approximately **$202.4 million** in cash, enhancing its Enclosures segment with intelligent rack power distribution and server slides products[44](index=44&type=chunk) - The CIS Global acquisition resulted in a preliminary goodwill allocation of **$80.5 million**, **$78.0 million** in customer relationships, and **$24.5 million** in developed technology[45](index=45&type=chunk) [6. Goodwill and Other Identifiable Intangible Assets](index=14&type=section&id=6.%20Goodwill%20and%20Other%20Identifiable%20Intangible%20Assets) Goodwill increased due to acquisitions in 2021, primarily within the Enclosures segment. Identifiable intangible assets also grew, mainly in customer relationships and proprietary technology. No goodwill impairment was recorded in 2021, contrasting with a significant impairment in 2020 related to Thermal Management Goodwill Carrying Amount by Segment (in millions) | Segment | December 31, 2020 | Acquisitions/Divestitures | Foreign Currency Translation/Other | September 30, 2021 | | :-------------------------- | :---------------- | :------------------------ | :--------------------------------- | :----------------- | | Enclosures | $332.1 | $93.9 | $(5.4) | $420.6 | | Electrical & Fastening Solutions | $1,051.9 | $0.1 | — | $1,052.0 | | Thermal Management | $714.2 | — | $0.4 | $714.6 | | **Total goodwill** | **$2,098.2** | **$94.0** | **$(5.0)** | **$2,187.2** | Identifiable Intangible Assets (in millions) | Asset Type | September 30, 2021 Net | December 31, 2020 Net | | :------------------------------ | :--------------------- | :-------------------- | | Customer relationships | $859.3 | $824.9 | | Proprietary technology and patents | $30.2 | $7.5 | | Trade names (indefinite-life) | $273.1 | $273.1 | | **Total intangibles** | **$1,162.6** | **$1,105.5** | - Goodwill increased by **$89.0 million** from December 31, 2020, to September 30, 2021, primarily due to **$94.0 million** in acquisitions[47](index=47&type=chunk) - No goodwill impairment expense was recorded in the three and nine months ended September 30, 2021, a significant improvement from the **$212.3 million** impairment in the Thermal Management unit in 2020[47](index=47&type=chunk) [7. Supplemental Balance Sheet Information](index=15&type=section&id=7.%20Supplemental%20Balance%20Sheet%20Information) This note provides a detailed breakdown of inventories, other current assets, property, plant and equipment, other non-current assets, other current liabilities, and other non-current liabilities, highlighting changes between September 30, 2021, and December 31, 2020 Inventories (in millions) | Category | Sep 30, 2021 | Dec 31, 2020 | | :------------------ | :----------- | :----------- | | Raw materials and supplies | $98.3 | $67.3 | | Work-in-process | $32.9 | $24.4 | | Finished goods | $170.2 | $143.5 | | **Total inventories** | **$301.4** | **$235.2** | Other Current Assets (in millions) | Category | Sep 30, 2021 | Dec 31, 2020 | | :------------------ | :----------- | :----------- | | Prepaid expenses | $49.0 | $29.8 | | Prepaid income taxes | $17.2 | $13.4 | | **Total other current assets** | **$113.8** | **$92.9** | Other Current Liabilities (in millions) | Category | Sep 30, 2021 | Dec 31, 2020 | | :------------------ | :----------- | :----------- | | Dividends payable | $30.6 | $29.4 | | Accrued rebates | $69.5 | $40.5 | | Contract liabilities | $18.4 | $11.3 | | Accrued taxes payable | $22.4 | $32.8 | | **Total other current liabilities** | **$228.4** | **$188.5** | - Total inventories increased by **$66.2 million**, from **$235.2 million** at December 31, 2020, to **$301.4 million** at September 30, 2021[49](index=49&type=chunk) - Accrued rebates increased by **$29.0 million**, from **$40.5 million** at December 31, 2020, to **$69.5 million** at September 30, 2021[49](index=49&type=chunk) [8. Derivatives and Financial Instruments](index=16&type=section&id=8.%20Derivatives%20and%20Financial%20Instruments) The company uses derivative financial instruments, primarily foreign currency contracts, cross currency swaps, and interest rate swaps, to manage exposure to foreign currency exchange rates and interest rate fluctuations. These instruments are not designated as hedging instruments, except for certain cross currency and interest rate swaps accounted for as cash flow or net investment hedges - Outstanding foreign currency derivative contracts increased significantly from **$41.8 million** (gross notional) at December 31, 2020, to **$154.4 million** at September 30, 2021[53](index=53&type=chunk) - Cross currency swap agreements increased from **$329.0 million** to **$380.0 million** (combined notional amount) and are used as cash flow or net investment hedges[54](index=54&type=chunk) - Deferred gains from interest rate swap activity increased from **$2.1 million** at December 31, 2020, to **$12.3 million** at September 30, 2021, recorded in Accumulated other comprehensive loss[55](index=55&type=chunk) Fair Value of Financial Instruments (in millions) | Metric | Sep 30, 2021 Total | Dec 31, 2020 Total | | :-------------------------------- | :----------------- | :----------------- | | Foreign currency contract liabilities | $(6.8) | $(14.3) | | Foreign currency contract assets | $3.8 | $0.9 | | Interest rate swap assets | $12.3 | $2.1 | | Deferred compensation plan assets | $20.4 | $20.0 | | **Total recurring fair value measurements** | **$29.7** | **$8.7** | [9. Debt](index=18&type=section&id=9.%20Debt) The company's total debt increased slightly, with an amended and restated credit agreement in September 2021 providing for a $300.0 million term loan facility and a $600.0 million revolving credit facility. The company remains in compliance with all financial covenants Debt Outstanding (in millions) | Debt Type | Sep 30, 2021 | Dec 31, 2020 | | :---------------------------- | :----------- | :----------- | | Revolving credit facility | $79.9 | $34.6 | | Senior notes - fixed rate (2023) | $300.0 | $300.0 | | Senior notes - fixed rate (2028) | $500.0 | $500.0 | | Term loan facility | $100.0 | $117.5 | | **Total debt** | **$976.5** | **$948.0** | | Less: Current maturities | $(5.0) | $(20.0) | | **Long-term debt** | **$971.5** | **$928.0** | - In September 2021, the company entered into an amended and restated credit agreement, establishing a five-year **$300.0 million** senior unsecured term loan facility and a five-year **$600.0 million** senior unsecured revolving credit facility[65](index=65&type=chunk)[66](index=66&type=chunk) - As of September 30, 2021, **$200.0 million** borrowing capacity under the Term Loan Facility and **$520.1 million** under the Revolving Credit Facility remained available[68](index=68&type=chunk) - The company was in compliance with all financial covenants in its debt agreements as of September 30, 2021[69](index=69&type=chunk) [10. Income Taxes](index=19&type=section&id=10.%20Income%20Taxes) The effective income tax rate for the nine months ended September 30, 2021, was 14.3%, a significant change from the negative 42.9% in the prior year, primarily due to a one-time tax benefit and the absence of a valuation allowance on deferred tax assets recorded in 2020 Effective Income Tax Rate | Period | 9M 2021 | 9M 2020 | | :---------------- | :------ | :------ | | Effective tax rate | 14.3% | (42.9%) | - The **14.3%** effective income tax rate in 2021 reflects a one-time tax benefit of **$5.2 million** related to a worthless stock deduction[72](index=72&type=chunk) - In 2020, the negative effective tax rate was influenced by a **$21.6 million** income tax benefit from tax-deductible goodwill impairment and a **$19.4 million** valuation allowance on certain foreign deferred tax assets[72](index=72&type=chunk)[73](index=73&type=chunk) [11. Shareholders' Equity](index=19&type=section&id=11.%20Shareholders'%20Equity) The Board of Directors authorized a new $300.0 million share repurchase program in May 2021, replacing prior authorizations. The company repurchased $20.0 million of ordinary shares in the first nine months of 2021 and continued to pay quarterly cash dividends - On May 14, 2021, the Board of Directors authorized a new **$300.0 million** share repurchase program (the "2021 Authorization"), which commenced on July 23, 2021, and expires on July 22, 2024[75](index=75&type=chunk) - During the nine months ended September 30, 2021, the company repurchased **0.9 million** ordinary shares for **$20.0 million** under the expired 2018 Authorization[76](index=76&type=chunk) - As of September 30, 2021, **$300.0 million** remained available for share repurchases under the 2021 Authorization[76](index=76&type=chunk) - A quarterly cash dividend of **$0.175** per ordinary share was declared on September 27, 2021, payable on November 5, 2021[77](index=77&type=chunk) [12. Segment Information](index=21&type=section&id=12.%20Segment%20Information) All three reportable segments—Enclosures, Electrical & Fastening Solutions, and Thermal Management—showed significant increases in net sales and segment income for both the three and nine months ended September 30, 2021, compared to the prior year. This growth was driven by higher sales volume and improved operational performance, with the absence of goodwill impairment charges Net Sales by Segment (in millions) | Segment | Q3 2021 | Q3 2020 | 9M 2021 | 9M 2020 | | :-------------------------- | :------ | :------ | :------ | :------ | | Enclosures | $335.2 | $244.7 | $912.6 | $722.5 | | Electrical & Fastening Solutions | $169.3 | $147.7 | $486.4 | $421.7 | | Thermal Management | $138.3 | $116.9 | $394.0 | $333.2 | | **Total** | **$642.8**| **$509.3**| **$1,793.0**| **$1,477.4**| Segment Income (Loss) by Segment (in millions) | Segment | Q3 2021 | Q3 2020 | 9M 2021 | 9M 2020 | | :-------------------------- | :------ | :------ | :------ | :------ | | Enclosures | $56.4 | $44.0 | $158.9 | $113.1 | | Electrical & Fastening Solutions | $48.4 | $40.7 | $136.5 | $108.9 | | Thermal Management | $31.6 | $25.5 | $77.5 | $60.2 | | Other | $(18.2) | $(9.3) | $(47.4) | $(31.5) | | **Total** | **$118.2**| **$100.9**| **$325.5**| **$250.7**| Reconciliation of Segment Income to Income (Loss) before Income Taxes (in millions) | Item | Q3 2021 | Q3 2020 | 9M 2021 | 9M 2020 | | :-------------------------- | :------ | :------ | :------ | :------ | | Segment income | $118.2 | $100.9 | $325.5 | $250.7 | | Impairment of goodwill | — | $(212.3)| — | $(212.3)| | Impairment of trade names | — | $(8.2) | — | $(8.2) | | Intangible amortization | $(17.8) | $(16.1) | $(49.7) | $(48.1) | | Restructuring and other | $(1.9) | $(5.4) | $(7.0) | $(15.9) | | Acquisition transaction and integration costs | $(0.8) | $(0.5) | $(2.4) | $(2.2) | | Net interest expense | $(8.2) | $(8.5) | $(24.4) | $(27.8) | | Other expense | $(0.6) | $(0.7) | $(1.8) | $(2.2) | | **Income (loss) before income taxes** | **$88.9** | **$(150.8)**| **$240.2**| **$(66.0)**| - Segment income for Enclosures increased by **28.2%** in Q3 2021 and **40.5%** in 9M 2021[80](index=80&type=chunk) - The absence of goodwill and trade name impairment charges in 2021 significantly contributed to the improved income before income taxes compared to 2020[80](index=80&type=chunk) [13. Commitments and Contingencies](index=21&type=section&id=13.%20Commitments%20and%20Contingencies) The company provides indemnifications for disposed businesses and product warranties, with maximum obligations generally not explicitly stated but historically not resulting in material payments. Outstanding bonds, letters of credit, and bank guarantees totaled $37.0 million as of September 30, 2021 - The company indemnifies purchasers for various potential liabilities related to sold businesses, with the overall amount of these obligations not reasonably estimable, but historically not resulting in significant payments[81](index=81&type=chunk)[82](index=82&type=chunk) - Liability for service and product warranties was not material as of September 30, 2021, and December 31, 2020[84](index=84&type=chunk) - Outstanding bonds, letters of credit, and bank guarantees totaled **$37.0 million** at September 30, 2021, down from **$43.8 million** at December 31, 2020[85](index=85&type=chunk) [ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=23&type=section&id=ITEM%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on the company's financial performance, condition, and future outlook. It details the impact of COVID-19, key trends, operating objectives, and a comprehensive analysis of consolidated and segment-specific results, as well as liquidity and capital resources [Overview](index=23&type=section&id=Overview) nVent Electric plc is a global provider of electrical connection and protection solutions across three segments: Enclosures, Electrical & Fastening Solutions, and Thermal Management. The company experienced significant economic recovery in 2021 following the COVID-19 pandemic, with organic sales increasing by 16% in the first nine months. Key operating objectives include differentiated revenue growth, technological innovation, operational excellence, and strategic capital deployment, while managing ongoing supply chain challenges and inflationary pressures - nVent is a leading global provider of electrical connection and protection solutions, with segments including Enclosures (**51%** of 9M 2021 revenue), Electrical & Fastening Solutions (**27%**), and Thermal Management (**22%**)[88](index=88&type=chunk)[89](index=89&type=chunk) - Organic sales increased by **16%** in the first nine months of 2021 compared to the same period in 2020, reflecting economic recovery from the COVID-19 pandemic[94](index=94&type=chunk) - The company's 2021 operating objectives include achieving differentiated revenue growth through new products and expansion, optimizing technological capabilities, driving operating excellence, optimizing working capital, and deploying capital strategically[100](index=100&type=chunk) - Ongoing challenges include supply chain issues, increased lead times, and inflationary increases in raw materials, logistics, and labor costs, which are expected to continue into 2022[96](index=96&type=chunk)[100](index=100&type=chunk) [CONSOLIDATED RESULTS OF OPERATIONS](index=26&type=section&id=CONSOLIDATED%20RESULTS%20OF%20OPERATIONS) Consolidated net sales increased significantly for both the three and nine months ended September 30, 2021, driven by strong organic growth (volume and price) and acquisitions. Gross profit margins improved, and operating income saw a substantial turnaround from a loss in 2020, primarily due to higher sales volume, pricing actions, and the absence of goodwill impairment Consolidated Financial Performance (in millions) | Metric (in millions) | Q3 2021 | Q3 2020 | $ Change (Q3) | % Change (Q3) | 9M 2021 | 9M 2020 | $ Change (9M) | % Change (9M) | | :------------------- | :------ | :------ | :------------ | :------------ | :------ | :------ | :------------ | :------------ | | Net sales | $642.8 | $509.3 | $133.5 | 26.2% | $1,793.0| $1,477.4| $315.6 | 21.4% | | Gross profit | $250.5 | $196.8 | $53.7 | 27.3% | $694.7 | $552.4 | $142.3 | 25.8% | | Gross profit % of net sales | 39.0% | 38.6% | N/A | 0.4 pts | 38.7% | 37.4% | N/A | 1.3 pts | | Operating income (loss) | $97.7 | $(141.6)| $239.3 | 169.0% | $266.4 | $(36.0) | $302.4 | 840.0% | | Net income (loss) | $74.3 | $(138.7)| $213.0 | 153.6% | $205.9 | $(94.3) | $300.2 | 318.3% | Components of Net Sales Change | Component | Q3 2021 vs Prior Year | 9M 2021 vs Prior Year | | :------------- | :-------------------- | :-------------------- | | Volume | 10.7% | 10.9% | | Price | 9.3% | 5.4% | | Organic growth | 20.0% | 16.3% | | Acquisition | 5.1% | 2.1% | | Currency | 1.1% | 3.0% | | **Total** | **26.2%** | **21.4%** | - The **26.2%** and **21.4%** increases in net sales for Q3 and 9M 2021, respectively, were primarily driven by organic sales growth (volume and price increases across industrial, commercial & residential, and infrastructure businesses) and contributions from the Vynckier and CIS Global acquisitions[103](index=103&type=chunk)[104](index=104&type=chunk) - Gross profit as a percentage of net sales increased by **0.4 percentage points** in Q3 2021 and **1.3 percentage points** in 9M 2021, due to increased sales volume leverage, selective selling price increases, and savings from lean and supply management practices, partially offset by inflationary cost increases[106](index=106&type=chunk)[108](index=108&type=chunk) - Operating income saw a significant turnaround, increasing by **$239.3 million** in Q3 2021 and **$302.4 million** in 9M 2021, largely due to the absence of the **$220.5 million** goodwill and trade names impairment expense recognized in Q3 2020[101](index=101&type=chunk)[102](index=102&type=chunk)[107](index=107&type=chunk) [SEGMENT RESULTS OF OPERATIONS](index=29&type=section&id=SEGMENT%20RESULTS%20OF%20OPERATIONS) All three segments—Enclosures, Electrical & Fastening Solutions, and Thermal Management—demonstrated strong net sales and segment income growth in 2021, driven by organic growth (volume and price) and acquisitions. While all segments faced inflationary cost pressures, strategic pricing and operational efficiencies helped improve segment income margins [Enclosures](index=29&type=section&id=Enclosures) The Enclosures segment experienced substantial growth in net sales and segment income, driven by strong organic growth across industrial, commercial & residential, energy, and infrastructure verticals, complemented by the Vynckier and CIS Global acquisitions. Despite inflationary pressures and increased incentive compensation, strategic pricing and sales volume leverage contributed to improved profitability over the nine-month period Enclosures Segment Performance (in millions) | Metric | Q3 2021 | Q3 2020 | % Change (Q3) | 9M 2021 | 9M 2020 | % Change (9M) | | :------------------ | :------ | :------ | :------------ | :------ | :------ | :------------ | | Net sales | $335.2 | $244.7 | 37.0% | $912.6 | $722.5 | 26.3% | | Segment income | $56.4 | $44.0 | 28.2% | $158.9 | $113.1 | 40.5% | | Segment income % of net sales | 16.8% | 18.0% | (1.2 pts) | 17.4% | 15.7% | 1.7 pts | Components of Enclosures Net Sales Change | Component | Q3 2021 vs Prior Year | 9M 2021 vs Prior Year | | :------------- | :-------------------- | :-------------------- | | Volume | 16.1% | 14.0% | | Price | 9.3% | 5.7% | | Organic growth | 25.4% | 19.7% | | Acquisition | 10.7% | 4.1% | | Currency | 0.9% | 2.5% | | **Total** | **37.0%** | **26.3%** | - Enclosures net sales increased by **37.0%** in Q3 2021 and **26.3%** in 9M 2021, driven by strong organic growth (**25.4%** in Q3, **19.7%** in 9M) and acquisitions (**10.7%** in Q3, **4.1%** in 9M)[114](index=114&type=chunk) - Segment income as a percentage of net sales decreased by **1.2 percentage points** in Q3 2021 due to supply chain challenges, inflationary costs, and higher incentive compensation, but increased by **1.7 percentage points** in 9M 2021 due to selective pricing and sales volume leverage[117](index=117&type=chunk)[118](index=118&type=chunk)[119](index=119&type=chunk) [Electrical & Fastening Solutions](index=30&type=section&id=Electrical%20%26%20Fastening%20Solutions) The Electrical & Fastening Solutions segment reported solid increases in net sales and segment income, primarily from organic growth driven by volume and price increases across commercial & residential, infrastructure, and industrial businesses. Improved segment income margins were achieved through strategic pricing, sales volume leverage, and lean initiatives, despite ongoing supply chain and inflationary cost pressures Electrical & Fastening Solutions Segment Performance (in millions) | Metric | Q3 2021 | Q3 2020 | % Change (Q3) | 9M 2021 | 9M 2020 | % Change (9M) | | :------------------ | :------ | :------ | :------------ | :------ | :------ | :------------ | | Net sales | $169.3 | $147.7 | 14.6% | $486.4 | $421.7 | 15.3% | | Segment income | $48.4 | $40.7 | 19.0% | $136.5 | $108.9 | 25.3% | | Segment income % of net sales | 28.6% | 27.6% | 1.0 pts | 28.1% | 25.8% | 2.3 pts | Components of Electrical & Fastening Solutions Net Sales Change | Component | Q3 2021 vs Prior Year | 9M 2021 vs Prior Year | | :------------- | :-------------------- | :-------------------- | | Volume | 0.4% | 5.1% | | Price | 13.4% | 7.6% | | Organic growth | 13.8% | 12.7% | | Acquisition | — | 0.4% | | Currency | 0.8% | 2.2% | | **Total** | **14.6%** | **15.3%** | - Net sales increased by **14.6%** in Q3 2021 and **15.3%** in 9M 2021, primarily due to organic sales growth (**13.8%** in Q3, **12.7%** in 9M) driven by volume and price increases[120](index=120&type=chunk) - Segment income as a percentage of net sales increased by **1.0 percentage point** in Q3 2021 and **2.3 percentage points** in 9M 2021, attributed to selective pricing, higher sales volume leverage, and savings from restructuring and lean initiatives, despite supply chain and labor cost inflation[121](index=121&type=chunk)[122](index=122&type=chunk)[124](index=124&type=chunk) [Thermal Management](index=32&type=section&id=Thermal%20Management) The Thermal Management segment achieved strong net sales and segment income growth, driven by organic growth from increased volume and strategic pricing across industrial, commercial & residential, and energy verticals. Segment income margins improved due to sales volume leverage and lean initiatives, despite facing supply chain challenges and inflationary cost increases Thermal Management Segment Performance (in millions) | Metric | Q3 2021 | Q3 2020 | % Change (Q3) | 9M 2021 | 9M 2020 | % Change (9M) | | :------------------ | :------ | :------ | :------------ | :------ | :------ | :------------ | | Net sales | $138.3 | $116.9 | 18.3% | $394.0 | $333.2 | 18.2% | | Segment income | $31.6 | $25.5 | 23.9% | $77.5 | $60.2 | 28.7% | | Segment income % of net sales | 22.8% | 21.8% | 1.0 pts | 19.7% | 18.1% | 1.6 pts | Components of Thermal Management Net Sales Change | Component | Q3 2021 vs Prior Year | 9M 2021 vs Prior Year | | :------------- | :-------------------- | :-------------------- | | Volume | 12.3% | 11.6% | | Price | 4.1% | 2.3% | | Organic growth | 16.4% | 13.9% | | Currency | 1.9% | 4.3% | | **Total** | **18.3%** | **18.2%** | - Net sales increased by **18.3%** in Q3 2021 and **18.2%** in 9M 2021, driven by organic growth (**16.4%** in Q3, **13.9%** in 9M) from increased volume and selective pricing[126](index=126&type=chunk) - Segment income as a percentage of net sales increased by **1.0 percentage point** in Q3 2021 and **1.6 percentage points** in 9M 2021, primarily due to higher sales volume leverage, selective pricing, and savings from restructuring and lean initiatives, despite supply chain and labor cost inflation[127](index=127&type=chunk)[128](index=128&type=chunk)[129](index=129&type=chunk) [LIQUIDITY AND CAPITAL RESOURCES](index=34&type=section&id=LIQUIDITY%20AND%20CAPITAL%20RESOURCES) The company's liquidity is primarily supported by cash flows from operations, which increased in the first nine months of 2021. Investing activities saw a significant increase in cash usage due to acquisitions, while financing activities used less cash compared to the prior year, reflecting changes in debt and share repurchases. The company maintains investment-grade metrics and a solid liquidity position, with a new share repurchase authorization and consistent dividend payments - Net cash provided by operating activities increased to **$258.1 million** in the first nine months of 2021, up from **$203.7 million** in the prior year[132](index=132&type=chunk) - Net cash used for investing activities significantly increased to **$260.2 million** in the first nine months of 2021, primarily due to **$228.0 million** in cash paid for the Vynckier and CIS Global acquisitions[133](index=133&type=chunk) - Net cash used by financing activities decreased to **$70.7 million** in the first nine months of 2021, compared to **$100.2 million** in 2020, reflecting debt repayments, dividends, and share repurchases, partially offset by new debt proceeds[134](index=134&type=chunk)[135](index=135&type=chunk) - The company paid **$88.3 million** in dividends (**$0.525** per share) and repurchased **$20.0 million** of ordinary shares in the first nine months of 2021[134](index=134&type=chunk)[149](index=149&type=chunk) Free Cash Flow (in millions) | Metric | 9M 2021 | 9M 2020 | | :-------------------------------------- | :------ | :------ | | Net cash provided by (used for) operating activities | $258.1 | $203.7 | | Capital expenditures | $(25.2) | $(25.4) | | Proceeds from sale of property and equipment | $0.1 | $1.5 | | **Free cash flow** | **$233.0**| **$179.8**| [CRITICAL ACCOUNTING POLICIES](index=36&type=section&id=CRITICAL%20ACCOUNTING%20POLICIES) There have been no material changes to the company's critical accounting policies and estimates from those disclosed in its 2020 Annual Report on Form 10-K - No material changes to critical accounting policies and estimates were reported for the quarter ended September 30, 2021, compared to the 2020 Annual Report on Form 10-K[153](index=153&type=chunk) [ITEM 3. Quantitative and Qualitative Disclosures about Market Risk](index=36&type=section&id=ITEM%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) There have been no material changes in the company's market risk during the quarter ended September 30, 2021 - No material changes in market risk occurred during the quarter ended September 30, 2021[154](index=154&type=chunk) [ITEM 4. Controls and Procedures](index=37&type=section&id=ITEM%204.%20Controls%20and%20Procedures) Management, including the CEO and CFO, evaluated the effectiveness of disclosure controls and procedures as of September 30, 2021, concluding they were effective at a reasonable assurance level. No material changes in internal control over financial reporting occurred during the quarter [Evaluation of Disclosure Controls and Procedures](index=37&type=section&id=Evaluation%20of%20Disclosure%20Controls%20and%20Procedures) The company's management, including the CEO and CFO, concluded that disclosure controls and procedures were effective as of September 30, 2021, providing reasonable assurance for the reliability and timely reporting of financial information - The Chief Executive Officer and Chief Financial Officer concluded that the company's disclosure controls and procedures were effective at the reasonable assurance level as of September 30, 2021[156](index=156&type=chunk) [Changes in Internal Control over Financial Reporting](index=37&type=section&id=Changes%20in%20Internal%20Control%20over%20Financial%20Reporting) There were no material changes in the company's internal control over financial reporting during the quarter ended September 30, 2021 - No material changes in internal control over financial reporting occurred during the quarter ended September 30, 2021[157](index=157&type=chunk) [PART II OTHER INFORMATION](index=38&type=section&id=PART%20II%20OTHER%20INFORMATION) This section covers legal proceedings, risk factors, equity security sales, and required exhibits [ITEM 1. Legal Proceedings](index=38&type=section&id=ITEM%201.%20Legal%20Proceedings) There have been no material developments regarding legal proceedings previously disclosed in the 2020 Annual Report on Form 10-K - No material developments in legal proceedings were reported for the quarter ended September 30, 2021[160](index=160&type=chunk) [ITEM 1A. Risk Factors](index=38&type=section&id=ITEM%201A.%20Risk%20Factors) No additional material changes to the risk factors previously disclosed in the 2020 Annual Report on Form 10-K were identified - No additional material changes to risk factors were reported for the quarter ended September 30, 2021[161](index=161&type=chunk) [ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=38&type=section&id=ITEM%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company repurchased 1,930 ordinary shares during the third quarter of 2021, with $300.0 million remaining available under the 2021 Authorization for share repurchases Ordinary Share Purchases (Q3 2021) | Period | Total number of shares purchased | Average price paid per share | Dollar value of shares that may yet be purchased under the plans or programs | | :---------------------- | :------------------------------- | :--------------------------- | :------------------------------------------------------------------------- | | July 1 - July 31, 2021 | 80 | $30.29 | $300,000,000 | | August 1 - August 28, 2021 | 245 | $33.04 | $300,000,000 | | August 29 - September 30, 2021 | 1,605 | $33.08 | $300,000,000 | | **Total** | **1,930** | **—** | **—** | - As of September 30, 2021, **$300.0 million** was available for share repurchases under the 2021 Authorization[163](index=163&type=chunk) [ITEM 6. Exhibits](index=39&type=section&id=ITEM%206.%20Exhibits) This section lists the exhibits filed as part of the Quarterly Report on Form 10-Q, including the Amended and Restated Credit Agreement, certifications from the CEO and CFO, and iXBRL financial data - Exhibits include the Amended and Restated Credit Agreement (Exhibit 4.1), Guarantors and Subsidiary Issuers (Exhibit 22), Certifications of Chief Executive Officer and Chief Financial Officer (Exhibits 31.1, 31.2, 32.1, 32.2), and iXBRL formatted financial statements (Exhibit 101, 104)[166](index=166&type=chunk) [Signatures](index=40&type=section&id=Signatures) The report is duly signed on behalf of nVent Electric plc by its Executive Vice President and Chief Financial Officer, Sara E. Zawoyski, and Senior Vice President, Chief Accounting Officer and Treasurer, Randolph A. Wacker, on October 28, 2021 - The report was signed by Sara E. Zawoyski, Executive Vice President and Chief Financial Officer, and Randolph A. Wacker, Senior Vice President, Chief Accounting Officer and Treasurer, on October 28, 2021[168](index=168&type=chunk)[169](index=169&type=chunk)

nVent Electric Plc (NYSE:NVT) Q3 2021 Earnings Conference Call October 28, 2021 9:30 AM ET Company Participants J.C. Weigelt - Vice President, Investor Relations Beth Wozniak - Chief Executive Officer Sara Zawoyski - Chief Financial Officer Conference Call Participants Jeff Hammond - KeyBanc Capital Markets Joe Ritchie - Goldman Sachs Deane Dray - RBC Capital Markets Julian Mitchell - Barclays Nigel Coe - Wolfe Research Operator Ladies and gentlemen, thank you for standing by and welcome to the nVent Third ...

nVent Third Quarter 2021 1 Earnings Presentation October 28, 2021 Forward-Looking Statement and Key Definitions 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," "pla ...

PART I FINANCIAL INFORMATION [Condensed Consolidated Statements of Income and Comprehensive Income](index=3&type=section&id=Condensed%20Consolidated%20Statements%20of%20Income%20and%20Comprehensive%20Income) The company reported significant financial performance improvements for the three and six months ended June 30, 2021 Financial Performance Summary | Metric (in millions) | 3 Months Ended Jun 30, 2021 | 3 Months Ended Jun 30, 2020 | YoY Change (%) | 6 Months Ended Jun 30, 2021 | 6 Months Ended Jun 30, 2020 | YoY Change (%) | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Net sales | $601.3 | $447.2 | 34.5% | $1,150.2 | $968.1 | 18.8% | | Cost of goods sold | $366.1 | $286.9 | 27.6% | $706.0 | $612.5 | 15.3% | | Gross profit | $235.2 | $160.3 | 46.7% | $444.2 | $355.6 | 24.9% | | Operating income | $88.3 | $45.3 | 94.9% | $168.7 | $105.6 | 59.8% | | Net income | $66.2 | $25.8 | 156.6% | $131.6 | $44.4 | 196.4% | | Basic EPS | $0.39 | $0.15 | 160.0% | $0.78 | $0.26 | 200.0% | | Diluted EPS | $0.39 | $0.15 | 160.0% | $0.78 | $0.26 | 200.0% | [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) The company's balance sheet shows increased total assets driven by growth in goodwill and intangible assets as of June 30, 2021 Balance Sheet Summary | Metric (in millions) | June 30, 2021 | December 31, 2020 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Total current assets | $902.5 | $764.4 | $138.1 | 18.1% | | Property, plant and equipment, net | $291.6 | $289.4 | $2.2 | 0.8% | | Goodwill | $2,193.3 | $2,098.2 | $95.1 | 4.5% | | Intangibles, net | $1,179.0 | $1,105.5 | $73.5 | 6.6% | | Total assets | $4,709.8 | $4,366.1 | $343.7 | 7.9% | | Total current liabilities | $535.8 | $450.0 | $85.8 | 19.1% | | Long-term debt | $1,083.9 | $928.0 | $155.9 | 16.8% | | Total liabilities | $2,217.0 | $1,956.3 | $260.7 | 13.3% | | Total equity | $2,492.8 | $2,409.8 | $83.0 | 3.4% | [Condensed Consolidated Statements of Cash Flows](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Cash from operations increased significantly while investing activities used cash for acquisitions for the six months ended June 30, 2021 Cash Flow Summary | Metric (in millions) | 6 Months Ended Jun 30, 2021 | 6 Months Ended Jun 30, 2020 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Net cash provided by (used for) operating activities | $143.3 | $90.5 | $52.8 | 58.3% | | Net cash provided by (used for) investing activities | $(250.4) | $(42.8) | $(207.6) | 485.0% | | Net cash provided by (used for) financing activities | $86.1 | $82.5 | $3.6 | 4.4% | | Effect of exchange rate changes on cash and cash equivalents | $0.3 | $(1.6) | $1.9 | -118.8% | | Change in cash and cash equivalents | $(20.7) | $128.6 | $(149.3) | -116.1% | | Cash and cash equivalents, end of period | $101.8 | $235.0 | $(133.2) | -56.7% | [Condensed Consolidated Statements of Changes in Equity](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Changes%20in%20Equity) Total equity increased by $83.0 million, driven by net income and partially offset by dividends and share repurchases Changes in Equity | Metric (in millions) | December 31, 2020 | June 30, 2021 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Total equity | $2,409.8 | $2,492.8 | $83.0 | 3.4% | - For the six months ended June 30, 2021, net income contributed **$131.6 million**, dividends declared totaled **$60.0 million**, and share repurchases amounted to **$20.0 million**[10](index=10&type=chunk)[19](index=19&type=chunk)[128](index=128&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=7&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) This section provides detailed notes covering basis of presentation, revenue, acquisitions, and segment performance [Note 1. Basis of Presentation and Responsibility for Interim Financial Statements](index=7&type=section&id=Note%201.%20Basis%20of%20Presentation%20and%20Responsibility%20for%20Interim%20Financial%20Statements) - nVent is a leading global provider of electrical connection and protection solutions, operating through three reporting segments: **Enclosures, Electrical & Fastening Solutions, and Thermal Management**[20](index=20&type=chunk) - The company is incorporated in Ireland but is centrally managed and has **tax residency in the United Kingdom**[21](index=21&type=chunk) - The effects of the COVID-19 pandemic have had and may continue to have an unfavorable impact on the business, with the broader implications on results of operations and overall financial performance remaining uncertain[24](index=24&type=chunk) [Note 2. Revenue](index=8&type=section&id=Note%202.%20Revenue) Net Sales by Geographic Location (Three months ended June 30, 2021 vs 2020) | Geographic Location (in millions) | 2021 Net Sales | 2020 Net Sales | YoY Change ($) | YoY Change (%) | | :--- | :--- | :--- | :--- | :--- | | U.S. and Canada | $378.7 | $292.6 | $86.1 | 29.4% | | Developed Europe | $141.7 | $100.9 | $40.8 | 40.4% | | Developing | $67.9 | $42.3 | $25.6 | 60.5% | | Other Developed | $13.0 | $11.4 | $1.6 | 14.0% | | **Total** | **$601.3** | **$447.2** | **$154.1** | **34.5%** | Net Sales by Vertical (Three months ended June 30, 2021 vs 2020) | Vertical (in millions) | 2021 Net Sales | 2020 Net Sales | YoY Change ($) | YoY Change (%) | | :--- | :--- | :--- | :--- | :--- | | Industrial | $270.1 | $190.8 | $79.3 | 41.5% | | Commercial & Residential | $164.0 | $120.1 | $43.9 | 36.6% | | Infrastructure | $111.7 | $94.2 | $17.5 | 18.6% | | Energy | $55.5 | $42.1 | $13.4 | 31.8% | | **Total** | **$601.3** | **$447.2** | **$154.1** | **34.5%** | - In the first quarter of 2021, revenue in power utilities, datacom, and renewables sub-verticals was reclassified to the infrastructure vertical for better alignment with industry peers and performance assessment[27](index=27&type=chunk) Contract Balances (in millions) | Metric | June 30, 2021 | December 31, 2020 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Contract assets | $47.6 | $45.6 | $2.0 | 4.4% | | Contract liabilities | $14.4 | $11.3 | $3.1 | 27.4% | | Net contract assets | $33.2 | $34.3 | $(1.1) | (3.2%) | - As of June 30, 2021, the company had **$47.9 million** of remaining performance obligations on contracts with an original expected duration of one year or more, with the majority expected to be recognized within the next 12 to 18 months[29](index=29&type=chunk) [Note 3. Restructuring](index=11&type=section&id=Note%203.%20Restructuring) Total Restructuring Costs (in millions) | Metric | 3 Months Ended Jun 30, 2021 | 3 Months Ended Jun 30, 2020 | 6 Months Ended Jun 30, 2021 | 6 Months Ended Jun 30, 2020 | | :--- | :--- | :--- | :--- | :--- | | Severance & related costs | $2.5 | $2.7 | $2.7 | $6.2 | | Other | $1.8 | $0.3 | $2.4 | $1.1 | | **Total** | **$4.3** | **$3.0** | **$5.1** | **$7.3** | - Accrued severance and related costs decreased from **$6.6 million** at the beginning of the six months ended June 30, 2021, to **$3.9 million** at the end of the period[33](index=33&type=chunk) [Note 4. Earnings Per Share](index=12&type=section&id=Note%204.%20Earnings%20Per%20Share) Earnings Per Ordinary Share | Metric | 3 Months Ended Jun 30, 2021 | 3 Months Ended Jun 30, 2020 | 6 Months Ended Jun 30, 2021 | 6 Months Ended Jun 30, 2020 | | :--- | :--- | :--- | :--- | :--- | | Basic | $0.39 | $0.15 | $0.78 | $0.26 | | Diluted | $0.39 | $0.15 | $0.78 | $0.26 | [Note 5. Acquisitions](index=12&type=section&id=Note%205.%20Acquisitions) - On April 1, 2021, nVent acquired Vynckier Enclosure Systems, Inc for approximately **$27.0 million** in cash, adding non-metallic enclosures to its Enclosures segment[37](index=37&type=chunk) - On June 30, 2021, nVent acquired CIS Global LLC for approximately **$203.0 million** in cash, enhancing its Enclosures segment with intelligent rack power distribution and server slides products[39](index=39&type=chunk) - The Vynckier acquisition resulted in a preliminary allocation of **$12.4 million to goodwill** and **$6.1 million to customer relationships**, while the CIS Global acquisition resulted in **$84.1 million to goodwill**, **$74.5 million to customer relationships**, and **$24.5 million to developed technology**[38](index=38&type=chunk)[40](index=40&type=chunk) [Note 6. Goodwill and Other Identifiable Intangible Assets](index=13&type=section&id=Note%206.%20Goodwill%20and%20Other%20Identifiable%20Intangible%20Assets) Goodwill by Segment (in millions) | Segment | December 31, 2020 | Acquisitions/Divestitures | Foreign Currency Translation/Other | June 30, 2021 | | :--- | :--- | :--- | :--- | :--- | | Enclosures | $332.1 | $96.5 | $(3.2) | $425.4 | | Electrical & Fastening Solutions | $1,051.9 | $0.1 | — | $1,052.0 | | Thermal Management | $714.2 | — | $1.7 | $715.9 | | **Total goodwill** | **$2,098.2** | **$96.6** | **$(1.5)** | **$2,193.3** | Identifiable Intangible Assets, Net (in millions) | Asset Type | December 31, 2020 | June 30, 2021 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Customer relationships | $824.9 | $874.6 | $49.7 | 6.0% | | Proprietary technology and patents | $7.5 | $31.3 | $23.8 | 317.3% | | Trade names (indefinite-life) | $273.1 | $273.1 | $0.0 | 0.0% | | **Total intangibles, net** | **$1,105.5** | **$1,179.0** | **$73.5** | **6.6%** | - Estimated future amortization expense for identifiable intangible assets is **$35.6 million** for the remainder of 2021 and approximately **$70 million** annually from 2022 to 2026[43](index=43&type=chunk) [Note 7. Supplemental Balance Sheet Information](index=14&type=section&id=Note%207.%20Supplemental%20Balance%20Sheet%20Information) Inventories (in millions) | Inventory Type | June 30, 2021 | December 31, 2020 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Raw materials and supplies | $84.2 | $67.3 | $16.9 | 25.1% | | Work-in-process | $30.2 | $24.4 | $5.8 | 23.8% | | Finished goods | $161.0 | $143.5 | $17.5 | 12.2% | | **Total inventories** | **$275.4** | **$235.2** | **$40.2** | **17.1%** | Other Non-Current Assets (in millions) | Asset Type | June 30, 2021 | December 31, 2020 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Deferred compensation plan assets | $20.4 | $20.0 | $0.4 | 2.0% | | Lease right-of-use assets | $78.4 | $45.6 | $32.8 | 71.9% | | Deferred tax assets | $19.8 | $29.8 | $(10.0) | -33.6% | | Other non-current assets | $24.8 | $13.2 | $11.6 | 87.9% | | **Total other non-current assets** | **$143.4** | **$108.6** | **$34.8** | **32.0%** | [Note 8. Derivatives and Financial Instruments](index=15&type=section&id=Note%208.%20Derivatives%20and%20Financial%20Instruments) - Outstanding foreign currency derivative contracts had gross notional U.S. dollar equivalent amounts of **$103.6 million** at June 30, 2021, up from **$41.8 million** at December 31, 2020[48](index=48&type=chunk) - Cross currency swap agreements had a combined notional amount of **$387.9 million** at June 30, 2021, used as cash flow hedges for intercompany debt and net investment hedges for Euro-U.S. Dollar exchange rate exposure[49](index=49&type=chunk) - Deferred gains of **$10.8 million** from interest rate swaps were recorded in Accumulated other comprehensive loss at June 30, 2021, up from **$2.1 million** at December 31, 2020[50](index=50&type=chunk) [Note 9. Debt](index=17&type=section&id=Note%209.%20Debt) Debt Outstanding (in millions) | Debt Type | June 30, 2021 | December 31, 2020 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Revolving credit facility | $200.0 | $34.6 | $165.4 | 477.9% | | Senior notes - fixed rate (2023) | $300.0 | $300.0 | $0.0 | 0.0% | | Senior notes - fixed rate (2028) | $500.0 | $500.0 | $0.0 | 0.0% | | Term loan facility | $107.5 | $117.5 | $(10.0) | -8.5% | | **Total debt** | **$1,103.9** | **$948.0** | **$155.9** | **16.4%** | - The company was in compliance with all financial covenants in its debt agreements as of June 30, 2021, including the consolidated debt to EBITDA ratio (not to exceed 3.75 to 1.00) and the EBITDA to consolidated interest expense ratio (not less than 3.00 to 1.00)[59](index=59&type=chunk) - Contractual debt obligation maturities include **$10.0 million** in the remainder of 2021, **$20.0 million** in 2022, **$577.5 million** in 2023, and **$500.0 million** thereafter[60](index=60&type=chunk) [Note 10. Income Taxes](index=18&type=section&id=Note%2010.%20Income%20Taxes) Effective Income Tax Rate | Period | Effective Tax Rate | | :--- | :--- | | 6 Months Ended Jun 30, 2021 | 13.0% | | 6 Months Ended Jun 30, 2020 | 47.6% | | **Change (pts)** | **(34.6) pts** | - The **13.0% effective income tax rate** for the six months ended June 30, 2021, reflects a one-time tax benefit of **$5.2 million** related to a worthless stock deduction[62](index=62&type=chunk) - In the six months ended June 30, 2020, a valuation allowance of **$19.4 million** was established on certain foreign deferred tax assets, contributing to the higher effective tax rate in that period[63](index=63&type=chunk) [Note 11. Shareholders' Equity](index=18&type=section&id=Note%2011.%20Shareholders'%20Equity) - The Board of Directors authorized a new **$300.0 million** share repurchase program (2021 Authorization) on May 14, 2021, which began on July 23, 2021, and expires on July 22, 2024[66](index=66&type=chunk) - During the six months ended June 30, 2021, the company repurchased **0.9 million** ordinary shares for **$20.0 million** under previous authorizations[65](index=65&type=chunk) - A quarterly cash dividend of **$0.175 per ordinary share** was declared on May 13, 2021, payable on August 6, 2021[67](index=67&type=chunk) [Note 12. Segment Information](index=19&type=section&id=Note%2012.%20Segment%20Information) Net Sales by Reportable Segment (in millions) | Segment | 3 Months Ended Jun 30, 2021 | 3 Months Ended Jun 30, 2020 | YoY Change (%) | 6 Months Ended Jun 30, 2021 | 6 Months Ended Jun 30, 2020 | YoY Change (%) | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Enclosures | $300.4 | $219.3 | 37.0% | $577.4 | $477.8 | 20.8% | | Electrical & Fastening Solutions | $169.2 | $132.1 | 28.1% | $317.1 | $274.0 | 15.7% | | Thermal Management | $131.7 | $95.8 | 37.5% | $255.7 | $216.3 | 18.2% | | **Total** | **$601.3** | **$447.2** | **34.5%** | **$1,150.2** | **$968.1** | **18.8%** | Segment Income (in millions) | Segment | 3 Months Ended Jun 30, 2021 | 3 Months Ended Jun 30, 2020 | YoY Change (%) | 6 Months Ended Jun 30, 2021 | 6 Months Ended Jun 30, 2020 | YoY Change (%) | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Enclosures | $53.7 | $28.2 | 90.4% | $102.5 | $69.1 | 48.3% | | Electrical & Fastening Solutions | $48.9 | $34.7 | 41.0% | $88.1 | $68.2 | 29.2% | | Thermal Management | $24.9 | $14.4 | 72.9% | $45.9 | $34.7 | 32.3% | | **Total** | **$110.2** | **$68.3** | **61.3%** | **$207.3** | **$149.8** | **38.4%** | [Note 13. Commitments and Contingencies](index=19&type=section&id=Note%2013.%20Commitments%20and%20Contingencies) - The company may indemnify purchasers for various potential liabilities related to sold businesses, with the maximum obligation generally not explicitly stated or reasonably estimable, but historically, payments have not been significant[71](index=71&type=chunk) - Liability for service and product warranties was not material as of June 30, 2021, and December 31, 2020[72](index=72&type=chunk) - Outstanding bonds, letters of credit, and bank guarantees totaled **$46.9 million** at June 30, 2021, an increase from **$43.8 million** at December 31, 2020[73](index=73&type=chunk) [ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=21&type=section&id=ITEM%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses financial condition, operational results, business overview, key trends, and liquidity [Forward-looking Statements](index=21&type=section&id=Forward-looking%20Statements) - The report contains forward-looking statements, identified by words such as 'targets,' 'plans,' 'believes,' and 'expects,' which are not guarantees of future performance and are subject to various risks and uncertainties[75](index=75&type=chunk) - Key risk factors include the adverse effects of the COVID-19 pandemic, overall global economic and business conditions, the ability to achieve restructuring benefits, successful acquisition integration, and competition and pricing pressures[75](index=75&type=chunk) [Overview](index=21&type=section&id=Overview) - nVent is a leading global provider of electrical connection and protection solutions, operating across three segments: **Enclosures, Electrical & Fastening Solutions, and Thermal Management**[76](index=76&type=chunk) - For the first six months of 2021, Enclosures represented approximately **50%** of total revenues, Electrical & Fastening Solutions **28%**, and Thermal Management **22%**[77](index=77&type=chunk) - The company completed two acquisitions in Q2 2021: Vynckier Enclosure Systems, Inc for **$27.0 million** and CIS Global LLC for **$203.8 million**, both integrated into the Enclosures segment[79](index=79&type=chunk)[80](index=80&type=chunk) [COVID-19 Update](index=22&type=section&id=COVID-19%20Update) - Economic activity in many end-markets stabilized and recovered in the second half of 2020 and continued to increase in the first and second quarters of 2021, with **organic sales growing sequentially for four consecutive quarters**[82](index=82&type=chunk) - The company continues to experience supply chain challenges, including increased lead times, and inflationary increases of raw materials, logistics, and labor costs, which are expected to continue throughout the remainder of 2021[84](index=84&type=chunk) - Temporary cash and cost-savings measures implemented in 2020 in response to the pandemic have largely been eliminated due to continuous sequential improvement in financial results and an improved outlook[83](index=83&type=chunk) [Key Trends and Uncertainties Regarding our Existing Business](index=22&type=section&id=Key%20Trends%20and%20Uncertainties%20Regarding%20our%20Existing%20Business) - Significant uncertainties persist regarding the COVID-19 pandemic, including its duration, severity, vaccination rates, and its impact on product demand and the supply chain[86](index=86&type=chunk) - The company is pursuing specific product, vertical, and geographic opportunities through research and development and increased sales and marketing resources to drive organic sales growth[86](index=86&type=chunk) - Supply chain challenges, increased lead times, and inflationary cost increases for raw materials, logistics, and labor are expected to continue and could negatively impact results[88](index=88&type=chunk) [Operating Objectives](index=23&type=section&id=Operating%20Objectives) - Operating objectives for 2021 include executing a social responsibility strategy focused on **People, Products, and Planet**, and enhancing employee engagement and development[88](index=88&type=chunk) - The company aims to achieve differentiated revenue growth through new products and solutions and expansion in higher-growth verticals and key developing regions[88](index=88&type=chunk) - Other objectives include optimizing technological capabilities for innovative products, advancing digital transformation, driving operating excellence through lean initiatives, optimizing working capital, and strategically deploying capital[88](index=88&type=chunk) [Consolidated Results of Operations](index=24&type=section&id=Consolidated%20Results%20of%20Operations) [Net sales](index=25&type=section&id=Net%20sales) Components of Change in Consolidated Net Sales | Component | 3 Months Ended Jun 30, 2021 (YoY Change %) | 6 Months Ended Jun 30, 2021 (YoY Change %) | | :--- | :--- | :--- | | Volume | 23.2% | 11.0% | | Price | 5.7% | 3.4% | | Organic growth | 28.9% | 14.4% | | Acquisition | 0.9% | 0.6% | | Currency | 4.7% | 3.8% | | **Total** | **34.5%** | **18.8%** | - Organic sales growth was significantly contributed by the industrial business (approximately **15.0% in Q2** and **8.5% in H1**), commercial & residential business (approximately **8.5% in Q2** and **4.0% in H1**), and infrastructure business (approximately **3.5% in Q2** and **2.0% in H1**)[93](index=93&type=chunk) [Gross profit](index=26&type=section&id=Gross%20profit) - Gross profit as a percentage of net sales increased by **3.3 percentage points in Q2 2021 (to 39.1%)** and **1.9 percentage points in H1 2021 (to 38.6%)** compared to the prior year[89](index=89&type=chunk)[91](index=91&type=chunk) - These increases were primarily due to increased sales volume leading to leverage on fixed expenses, selective increases in selling prices to mitigate inflationary costs, and savings from lean and supply management practices[94](index=94&type=chunk) - The gains were partially offset by inflationary increases related to certain raw materials, labor, and freight costs[94](index=94&type=chunk) [Selling, general and administrative ("SG&A")](index=26&type=section&id=Selling,%20general%20and%20administrative%20(%22SG&A%22)) - SG&A expense as a percentage of net sales decreased by **0.8 percentage points in Q2 2021 (to 22.5%)** and **1.6 percentage points in H1 2021 (to 21.9%)** compared to the prior year[89](index=89&type=chunk)[91](index=91&type=chunk) - These decreases were primarily a result of increased sales volume leading to leverage on fixed operating expenses and savings generated from restructuring and other lean initiatives[95](index=95&type=chunk) - The decreases were partially offset by inflationary increases impacting labor costs, the cessation of temporary cost-saving actions taken in Q2 2020 due to COVID-19, and higher employee incentive compensation expense[95](index=95&type=chunk) [Provision for income taxes](index=26&type=section&id=Provision%20for%20income%20taxes) - The effective tax rate decreased by **9.9 percentage points in Q2 2021 (to 16.8%)** and **34.6 percentage points in H1 2021 (to 13.0%)** compared to the prior year[89](index=89&type=chunk)[91](index=91&type=chunk) - The differences were primarily due to a **$19.4 million** non-cash charge related to a valuation allowance on certain foreign deferred tax assets recorded in H1 2020, and a **$5.2 million** one-time tax benefit from a worthless stock deduction recorded in H1 2021[95](index=95&type=chunk) [Segment Results of Operations](index=26&type=section&id=Segment%20Results%20of%20Operations) [Enclosures](index=26&type=section&id=Enclosures) Enclosures Segment Performance (YoY Change) | Metric | 3 Months Ended Jun 30, 2021 | 6 Months Ended Jun 30, 2021 | | :--- | :--- | :--- | | Net sales growth | 37.0% | 20.8% | | Segment income growth | 90.4% | 48.3% | | Segment income % of net sales change | +5.0 pts | +3.3 pts | - Organic sales growth was driven by strong contributions from the industrial business (approximately **20.5% in Q2** and **12.0% in H1**), commercial & residential business (approximately **6.0% in Q2** and **2.0% in H1**), and infrastructure business (approximately **2.0% in Q2** and **2.5% in H1**)[100](index=100&type=chunk) - The increase in segment income as a percentage of net sales was primarily due to higher sales volume, selective price increases, and savings from restructuring and lean initiatives, partially offset by inflationary costs and higher employee incentive compensation[101](index=101&type=chunk) [Electrical & Fastening Solutions](index=28&type=section&id=Electrical%20&%20Fastening%20Solutions) Electrical & Fastening Solutions Segment Performance (YoY Change) | Metric | 3 Months Ended Jun 30, 2021 | 6 Months Ended Jun 30, 2021 | | :--- | :--- | :--- | | Net sales growth | 28.1% | 15.7% | | Segment income growth | 41.0% | 29.2% | | Segment income % of net sales change | +2.6 pts | +2.9 pts | - Organic sales growth was driven by commercial & residential (approximately **12.5% in Q2** and **6.5% in H1**), infrastructure (approximately **7.0% in Q2** and **3.0% in H1**), and industrial (approximately **4.0% in Q2** and **3.0% in H1**) businesses, including selective price increases[105](index=105&type=chunk) - The increase in segment income as a percentage of net sales was mainly due to selective price increases, higher sales volume, and savings from restructuring and lean initiatives, partially offset by inflationary increases in raw materials, labor, and freight costs[105](index=105&type=chunk)[106](index=106&type=chunk) [Thermal Management](index=29&type=section&id=Thermal%20Management) Thermal Management Segment Performance (YoY Change) | Metric | 3 Months Ended Jun 30, 2021 | 6 Months Ended Jun 30, 2021 | | :--- | :--- | :--- | | Net sales growth | 37.5% | 18.2% | | Segment income growth | 72.9% | 32.3% | | Segment income % of net sales change | +3.9 pts | +2.0 pts | - Organic sales growth was strong in industrial (approximately **16.5% in Q2** and **8.5% in H1**), commercial & residential (approximately **9.0% in Q2** and **5.0% in H1**), and energy (approximately **4.0% in Q2**) businesses, supported by selective price increases[110](index=110&type=chunk) - The increase in segment income as a percentage of net sales was primarily due to higher sales volume, selective price increases, and savings from restructuring and lean initiatives, partially offset by inflationary costs and higher employee incentive compensation[109](index=109&type=chunk)[111](index=111&type=chunk) [Liquidity and Capital Resources](index=31&type=section&id=Liquidity%20and%20Capital%20Resources) [Operating activities](index=31&type=section&id=Operating%20activities) Net Cash Provided by Operating Activities (in millions) | Period | Net Cash Provided by Operating Activities | | :--- | :--- | | 6 Months Ended Jun 30, 2021 | $143.3 | | 6 Months Ended Jun 30, 2020 | $90.5 | | **Change ($)** | **$52.8** | | **Change (%)** | **58.3%** | - The increase in operating cash flow primarily reflects net income of **$182.6 million**, net of non-cash depreciation, amortization, and changes in deferred taxes, partially offset by a **$47.6 million** increase in working capital[116](index=116&type=chunk) [Investing activities](index=31&type=section&id=Investing%20activities) Net Cash Used for Investing Activities (in millions) | Period | Net Cash Used for Investing Activities | | :--- | :--- | | 6 Months Ended Jun 30, 2021 | $(250.4) | | 6 Months Ended Jun 30, 2020 | $(42.8) | | **Change ($)** | **$(207.6)** | | **Change (%)** | **485.0%** | - Net cash used for investing activities in H1 2021 primarily relates to capital expenditures of **$17.9 million** and cash paid for the Vynckier and CIS Global acquisitions totaling **$228.7 million**[117](index=117&type=chunk) [Financing activities](index=31&type=section&id=Financing%20activities) Net Cash Provided by Financing Activities (in millions) | Period | Net Cash Provided by Financing Activities | | :--- | :--- | | 6 Months Ended Jun 30, 2021 | $86.1 | | 6 Months Ended Jun 30, 2020 | $82.5 | | **Change ($)** | **$3.6** | | **Change (%)** | **4.4%** | - Net cash provided by financing activities in H1 2021 primarily relates to net receipts of **$165.4 million** from the revolving credit facility, offset by **$58.8 million** in dividends paid and **$20.0 million** in share repurchases[118](index=118&type=chunk) [Senior notes](index=31&type=section&id=Senior%20notes) - nVent Finance S.à r.l. issued **$300.0 million** aggregate principal amount of 3.950% senior notes due 2023 and **$500.0 million** aggregate principal amount of 4.550% senior notes due 2028 in March 2018[119](index=119&type=chunk) - The notes are fully and unconditionally guaranteed by nVent, the Parent Company Guarantor, whose principal source of cash flow for payments is dividends from its subsidiaries[120](index=120&type=chunk) [Senior credit facilities](index=32&type=section&id=Senior%20credit%20facilities) - In March 2018, nVent Finance entered into a **$200.0 million** senior unsecured term loan facility and a **$600.0 million** senior unsecured revolving credit facility, with total availability under the revolving facility at **$400.0 million** as of June 30, 2021[123](index=123&type=chunk) - The company was in compliance with all financial covenants in its debt agreements as of June 30, 2021, including the consolidated debt to EBITDA ratio and EBITDA to consolidated interest expense ratio[124](index=124&type=chunk) [Share repurchases](index=32&type=section&id=Share%20repurchases) - The Board of Directors authorized a new **$300.0 million** share repurchase program (2021 Authorization) on May 14, 2021, which became effective on July 23, 2021, and expires on July 22, 2024[127](index=127&type=chunk) - During the six months ended June 30, 2021, the company repurchased **0.9 million** ordinary shares for **$20.0 million** under previous authorizations[126](index=126&type=chunk) [Dividends](index=32&type=section&id=Dividends) Dividends Paid (in millions, except per share data) | Period | Dividends Paid ($) | Dividends Paid Per Share ($) | | :--- | :--- | :--- | | 6 Months Ended Jun 30, 2021 | $58.8 | $0.35 | | 6 Months Ended Jun 30, 2020 | $59.5 | $0.35 | - A quarterly cash dividend of **$0.175 per ordinary share** was declared on May 13, 2021, payable on August 6, 2021[129](index=129&type=chunk) [Other financial measures (Free cash flow)](index=33&type=section&id=Other%20financial%20measures%20(Free%20cash%20flow)) Free Cash Flow (in millions) | Metric | 6 Months Ended Jun 30, 2021 | 6 Months Ended Jun 30, 2020 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Net cash provided by (used for) operating activities | $143.3 | $90.5 | $52.8 | 58.3% | | Capital expenditures | $(17.9) | $(17.2) | $(0.7) | 4.1% | | Proceeds from sale of property and equipment | $0.1 | $1.4 | $(1.3) | -92.9% | | **Free cash flow** | **$125.5** | **$74.7** | **$50.8** | **68.0%** | - Free cash flow, a non-GAAP financial measure, is used to assess cash flow performance and represents cash generated from operations available for dividends, acquisitions, debt repayment, and share repurchases[131](index=131&type=chunk) [Critical Accounting Policies](index=33&type=section&id=Critical%20Accounting%20Policies) - There have been no material changes to the company's critical accounting policies and estimates from those previously disclosed in its 2020 Annual Report on Form 10-K[133](index=133&type=chunk) [ITEM 3. Quantitative and Qualitative Disclosures about Market Risk](index=33&type=section&id=ITEM%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) The company reported no material changes in its market risk during the quarter ended June 30, 2021 - No material changes in market risk were reported for the quarter ended June 30, 2021[134](index=134&type=chunk) [ITEM 4. Controls and Procedures](index=33&type=section&id=ITEM%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective and reported no material changes in internal control - The company's disclosure controls and procedures were evaluated and deemed effective at a reasonable assurance level as of June 30, 2021[135](index=135&type=chunk) - There was no change in internal control over financial reporting that materially affected, or is reasonably likely to materially affect, the company's internal control over financial reporting during the quarter ended June 30, 2021[136](index=136&type=chunk) PART II OTHER INFORMATION [ITEM 1. Legal Proceedings](index=34&type=section&id=ITEM%201.%20Legal%20Proceedings) There have been no material developments with respect to previously disclosed legal proceedings - No material developments regarding legal proceedings were reported[138](index=138&type=chunk) [ITEM 1A. Risk Factors](index=34&type=section&id=ITEM%201A.%20Risk%20Factors) No additional material changes to previously disclosed risk factors were reported - No additional material changes to the risk factors were reported[139](index=139&type=chunk) [ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=34&type=section&id=ITEM%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company repurchased shares in Q2 2021 and initiated a new $300.0 million repurchase authorization Share Repurchases (Q2 2021) | Period | Total Number of Shares Purchased | Average Price Paid Per Share | | :--- | :--- | :--- | | April 1 - May 1, 2021 | 1,953 | $28.24 | | May 2 - May 29, 2021 | 3,520 | $31.26 | | May 30 - June 30, 2021 | 634 | $31.86 | | **Total (Q2 2021)** | **6,107** | **~$29.98** | - A new **$300.0 million** share repurchase authorization (2021 Authorization) began on July 23, 2021, upon the expiration of the 2018 and 2019 Authorizations, and expires on July 22, 2024[141](index=141&type=chunk) [ITEM 6. Exhibits](index=35&type=section&id=ITEM%206.%20Exhibits) This section lists the exhibits filed as part of the Quarterly Report on Form 10-Q - Exhibits include certifications from the Chief Executive Officer (31.1, 32.1) and Chief Financial Officer (31.2, 32.2), as well as iXBRL formatted financial statements (101, 104)[144](index=144&type=chunk) [Signatures](index=36&type=section&id=Signatures) The report was duly signed on August 3, 2021, by the company's Chief Financial Officer and Chief Accounting Officer - The report was signed on August 3, 2021, by Sara E. Zawoyski (Executive Vice President and Chief Financial Officer) and Randolph A. Wacker (Senior Vice President, Chief Accounting Officer and Treasurer)[147](index=147&type=chunk)