nVent(NVT) - 2024 Q3 - Quarterly Results

Executive Summary nVent achieved record sales and strong cash flow in Q3 2024, with significant growth in continuing operations, while divesting its Thermal Management business to focus on core electrical solutions Key Highlights The company reported record sales and strong cash flow from continuing operations in Q3 2024, reclassifying the Thermal Management business as discontinued operations - The Thermal Management business is reported as discontinued operations for the current and all prior periods[1][2] - The company is updating its full-year 2024 guidance to reflect continuing operations[1] Q3 2024 Key Financial Metrics (Continuing Operations) | Metric | Amount/Growth Rate | | :-------------------------------- | :---------- | | Reported Sales | $782 Million USD, 9% growth | | Organic Sales | 1% growth | | Reported EPS | $0.47 | | Adjusted EPS | $0.63 | | Cash Flow from Continuing Operations | $158 Million USD, 29% growth | | Free Cash Flow from Continuing Operations | $143 Million USD, 33% growth | Q3 2024 Key Financial Metrics (Total) | Metric | Amount/Growth Rate | | :-------------------------------- | :---------- | | Total Sales | $939 Million USD, 9% growth | | Total EPS | $0.62 | | Total Adjusted EPS | $0.84 | | Sales from Continuing Operations | $782 Million USD | | Sales from Discontinued Operations | $157 Million USD | Q3 2024 Financial Performance nVent delivered strong Q3 2024 financial results, exceeding expectations in continuing operations, driven by new products, high-growth verticals, and strategic acquisitions Overall Performance nVent achieved strong Q3 2024 financial results, with continuing operations exceeding expectations, driven by new products, high-growth verticals, and strategic acquisitions - CEO Beth Wozniak stated that Q3 earnings and cash flow exceeded expectations, with new products, high-growth vertical markets, and acquisitions like Trachte being key contributors[3] - The sale of the Thermal Management business is expected to close in early 2025, positioning nVent as a more focused, higher-growth leader in electrical connection and protection, aligned with electrification, sustainability, and digitalization megatrends[4] Q3 2024 Financial Performance (Continuing Operations) | Metric | Q3 2024 | Q3 2023 | Change Rate | | :--------------------- | :------------- | :------------- | :----- | | Reported Sales | $782 Million USD | $715 Million USD | 9% growth | | Organic Sales Growth | 1% | - | - | | Reported EPS | $0.47 | $0.49 | 4% decrease | | Adjusted EPS | $0.63 | $0.65 | 3% decrease | | Operating Income | $133 Million USD | $126 Million USD | 6% growth | | Adjusted Operating Income | $168 Million USD | $162 Million USD | 4% growth | | Cash Flow from Continuing Operations | $158 Million USD | $123 Million USD | 29% growth | | Free Cash Flow | $143 Million USD | $107 Million USD | 33% growth | Segment Performance In continuing operations, the Enclosures segment achieved significant sales growth in Q3 2024, while Electrical & Fastening Solutions maintained stable growth, with both segments showing strong Adjusted ROS Q3 2024 Segment Net Sales and Adjusted Return on Sales | Segment | Q3 2024 Net Sales (Million USD) | Q3 2023 Net Sales (Million USD) | Sales Change Rate | Organic Sales Change Rate | Q3 2024 Adjusted ROS | Q3 2023 Adjusted ROS | ROS Change | | :------------------------- | :--------------------- | :--------------------- | :----------- | :--------------- | :------------------------ | :------------------------ | :------ | | Enclosures | $477 Million | $413 Million | 16% | 1% | 21.9% | 21.7% | 20 bps | | Electrical & Fastening Solutions | $305 Million | $302 Million | 1% | 1% | 30.4% | 32.3% | -190 bps | Financial Outlook & Guidance nVent updated its full-year 2024 guidance for continuing operations, projecting growth in reported and organic sales, along with expected GAAP and Adjusted EPS ranges Full-Year 2024 Guidance nVent updated its full-year 2024 guidance for continuing operations, projecting growth in reported and organic sales, along with expected GAAP and Adjusted EPS ranges - nVent is updating its guidance based on continuing operations, excluding the Thermal Management business held for sale[12] Full-Year 2024 Guidance (Continuing Operations) | Metric | Expected Range | | :--------------------- | :---------------- | | Reported Sales Growth | Approximately 13% | | Organic Sales Growth | Approximately 3% | | GAAP EPS | $1.99 to $2.01 | | Adjusted EPS | $2.49 to $2.51 | Fourth Quarter 2024 Guidance The company anticipates continued sales growth for continuing operations in Q4 2024, providing GAAP and Adjusted EPS expectations Q4 2024 Guidance (Continuing Operations) | Metric | Expected Range | | :--------------------- | :---------------- | | Reported Sales Growth | 11% to 13% | | Organic Sales Growth | 1% to 3% | | GAAP EPS | $0.45 to $0.47 | | Adjusted EPS | $0.58 to $0.60 | Corporate Actions & Information nVent announced a regular cash dividend, provided details for its Q3 earnings conference call, and reiterated its position as a global leader in electrical connection and protection solutions Dividends nVent's Board of Directors approved a regular cash dividend - nVent's Board of Directors approved a regular cash dividend of $0.19 per share on September 24, 2024, payable in Q4 2024 (November 1)[14] Earnings Conference Call Details Company management will host a conference call to discuss Q3 results, with webcast and replay information provided - nVent's management team will discuss the company's Q3 results with analysts and investors at 9:00 AM ET[14] - A live audio webcast and materials for the conference call are available on the company's "Investor Relations" section at http://investors.nvent.com[14](index=14&type=chunk) - A replay of the conference call will be available until November 15, 2024[14] About nVent nVent is a global leader in electrical connection and protection solutions, dedicated to ensuring safer systems and a more reliable world through innovative products and industry-leading brands - nVent is a global leader in electrical connection and protection solutions, designing, manufacturing, marketing, installing, and servicing high-performance products and solutions[15] - The company offers comprehensive enclosure, electrical connection, fastening, and thermal management solutions under brands including nVent CADDY, ERICO, HOFFMAN, ILSCO, and SCHROFF[15] - nVent's principal executive offices are in London, with management offices in Minneapolis, USA[15] Caution Concerning Forward-Looking Statements This press release contains forward-looking statements subject to risks, uncertainties, and assumptions that could cause actual results to differ materially from expectations - This press release contains forward-looking statements, subject to risks, uncertainties, assumptions, and other factors that could cause actual results to differ materially from expectations[18] - Risk factors include, but are not limited to: the completion of the Thermal Management business sale, global economic and business conditions, acquisition integration capabilities, market competition, currency fluctuations, supply chain risks, and changes in laws and regulations[18] - The company undertakes no obligation to update the information in this press release[18] Consolidated Financial Statements This section presents nVent's condensed consolidated financial statements, including income statements, balance sheets, and cash flow statements, for both continuing and discontinued operations Condensed Consolidated Statements of Income nVent's condensed consolidated statements of income show increased net sales and operating income for continuing operations in Q3 2024, despite a slight decrease in net income, with discontinued operations also contributing to total net income Condensed Consolidated Statements of Income (Continuing Operations) | Metric (Million USD) | Q3 2024 | Q3 2023 | First Nine Months 2024 | First Nine Months 2023 | | :--------------------- | :------------- | :------------- | :------------- | :------------- | | Net Sales | 782.0 | 715.0 | 2,253.9 | 1,978.4 | | Cost of Sales | 470.9 | 425.9 | 1,344.3 | 1,179.7 | | Gross Profit | 311.1 | 289.1 | 909.6 | 798.7 | | Gross Margin | 39.8% | 40.4% | 40.4% | 40.4% | | Operating Income | 133.2 | 126.2 | 410.0 | 345.2 | | Operating Income % | 17.0% | 17.7% | 18.2% | 17.4% | | Net Income from Continuing Operations | 78.9 | 81.9 | 257.3 | 247.3 | | Net Income from Discontinued Operations | 26.1 | 23.6 | 63.8 | 64.9 | | Total Net Income | 105.0 | 105.5 | 321.1 | 312.2 | | Diluted EPS from Continuing Operations | 0.47 | 0.49 | 1.53 | 1.47 | | Diluted EPS from Discontinued Operations | 0.15 | 0.14 | 0.38 | 0.39 | | Total Diluted EPS | 0.62 | 0.63 | 1.91 | 1.86 | | Cash Dividends Per Share | 0.19 | 0.175 | 0.57 | 0.525 | Condensed Consolidated Balance Sheets As of September 30, 2024, nVent's balance sheet shows increases in total assets and liabilities, with significant growth in long-term debt, substantial goodwill and intangible assets, and certain assets and liabilities classified as held for sale Condensed Consolidated Balance Sheets (Million USD) | Metric | September 30, 2024 | December 31, 2023 | | :------------------------- | :------------- | :------------- | | Assets | | | | Cash and Cash Equivalents | 137.1 | 179.6 | | Inventories | 366.2 | 360.2 | | Current Assets Held for Sale | 256.5 | 253.6 | | Total Current Assets | 1,418.7 | 1,336.1 | | Goodwill | 2,232.0 | 1,858.1 | | Intangible Assets, Net | 1,618.3 | 1,350.5 | | Non-Current Assets Held for Sale | 983.3 | 994.5 | | Total Assets | 6,918.0 | 6,161.7 | | Liabilities and Equity | | | | Current Liabilities Held for Sale | 126.5 | 114.7 | | Total Current Liabilities | 776.2 | 733.6 | | Long-Term Debt | 2,220.7 | 1,748.8 | | Non-Current Liabilities Held for Sale | 48.0 | 47.7 | | Total Liabilities | 3,634.3 | 3,019.6 | | Equity | 3,283.7 | 3,142.1 | | Total Liabilities and Equity | 6,918.0 | 6,161.7 | Condensed Consolidated Statements of Cash Flows nVent's cash flow from continuing operations significantly increased in the first nine months of 2024, despite substantial cash outflows from investing activities primarily due to acquisitions, with positive financing cash flow driven by long-term debt issuance Condensed Consolidated Statements of Cash Flows (Million USD) | Metric | First Nine Months 2024 | First Nine Months 2023 | | :------------------------------------- | :------------- | :------------- | | Net Cash Provided by Operating Activities - Continuing Operations | 324.1 | 232.5 | | Net Cash Provided by Operating Activities - Discontinued Operations | 94.4 | 59.1 | | Total Net Cash Provided by Operating Activities | 418.5 | 291.6 | | Net Cash Used in Investing Activities - Continuing Operations | (724.7) | (1,147.3) | | Net Cash Used in Investing Activities - Discontinued Operations | (5.6) | 3.2 | | Total Net Cash Used in Investing Activities | (730.3) | (1,144.1) | | Net Cash Provided by Financing Activities | 278.1 | 672.1 | | Cash and Cash Equivalents, End of Period | 137.1 | 107.9 | Segment Financial Information This section provides supplemental financial information by reportable segment, detailing net sales and adjusted return on sales for nVent's continuing operations Supplemental Financial Information by Reportable Segment nVent's Enclosures and Electrical & Fastening Solutions segments, both continuing operations, achieved sales growth and maintained healthy Adjusted Return on Sales in the first three quarters of 2024, with the latter showing higher profitability 2024 Net Sales and Adjusted Return on Sales by Reportable Segment (Million USD) | Metric | Q1 | Q2 | Q3 | First Nine Months | | :------------------------- | :------- | :------- | :------- | :------- | | Net Sales | | | | | | Enclosures | 439.9 | 440.8 | 477.1 | 1,357.8 | | Electrical & Fastening Solutions | 292.2 | 299.0 | 304.9 | 896.1 | | Total | 732.1 | 739.8 | 782.0 | 2,253.9 | | Adjusted Operating Income | | | | | | Enclosures | 94.8 | 103.8 | 104.4 | 303.0 | | Electrical & Fastening Solutions | 85.2 | 92.5 | 92.6 | 270.3 | | Adjusted Return on Sales | | | | | | Enclosures | 21.6% | 23.5% | 21.9% | 22.3% | | Electrical & Fastening Solutions | 29.2% | 30.9% | 30.4% | 30.2% | 2023 Net Sales and Adjusted Return on Sales by Reportable Segment (Million USD) | Metric | Q1 | Q2 | Q3 | First Nine Months | | :------------------------- | :------- | :------- | :------- | :------- | | Net Sales | | | | | | Enclosures | 391.0 | 400.0 | 412.7 | 1,203.7 | | Electrical & Fastening Solutions | 205.7 | 266.7 | 302.3 | 774.7 | | Total | 596.7 | 666.7 | 715.0 | 1,978.4 | | Adjusted Operating Income | | | | | | Enclosures | 82.5 | 90.0 | 89.4 | 261.9 | | Electrical & Fastening Solutions | 61.3 | 86.5 | 97.6 | 245.4 | | Adjusted Return on Sales | | | | | | Enclosures | 21.1% | 22.5% | 21.7% | 21.8% | | Electrical & Fastening Solutions | 29.8% | 32.4% | 32.3% | 31.7% | Non-GAAP Financial Measures This section explains nVent's use of non-GAAP financial measures and provides detailed reconciliations to their most directly comparable GAAP counterparts for both continuing and discontinued operations Explanation of Non-GAAP Measures nVent utilizes various non-GAAP financial measures, such as organic sales, adjusted operating income, adjusted EPS, and free cash flow, to assess core business performance and reconcile them with GAAP metrics - This press release refers to non-GAAP financial measures including organic sales, adjusted operating income, adjusted return on sales, adjusted net income, adjusted diluted EPS, and free cash flow[30] - Due to the sale of the Thermal Management business, the company reported its results as discontinued operations and reclassified all prior periods[31] - Adjustments include restructuring charges, acquisition and integration costs, amortization of all acquisition-related intangible assets, gains on investment sales, mark-to-market pension and other post-retirement benefit gains/losses, bridge financing debt issuance cost amortization, and the income tax impact of these adjustments[32] - Management uses these adjusted financial measures to evaluate the operating health of continuing operations and as criteria for measuring and paying long-term and annual incentive compensation[33][34] Reconciliation of GAAP to Non-GAAP Measures (Continuing Operations) This section provides reconciliation tables for GAAP to non-GAAP financial measures for continuing operations in 2024 and 2023, detailing the impact of adjustments on operating income, net income, and EPS 2024 Reconciliation of GAAP to Non-GAAP Financial Measures (Continuing Operations) (Million USD, except per share data) | Metric | Q1 | Q2 | Q3 | Q4 Forecast | Full-Year | | :------------------------------------- | :------- | :------- | :------- | :----------- | :----- | | Net Sales | 732.1 | 739.8 | 782.0 | - | - | | Operating Income | 131.9 | 144.9 | 133.2 | - | - | | Total Adjustments (Operating Income) | 24.0 | 24.5 | 35.2 | 28 | 112 | | Adjusted Operating Income | 155.9 | 169.4 | 168.4 | - | - | | Net Income from Continuing Operations | 85.2 | 93.2 | 78.9 | 77 | 334 | | Adjusted Net Income from Continuing Operations | 102.0 | 113.0 | 105.3 | 99 | 419 | | Diluted EPS from Continuing Operations | 0.51 | 0.55 | 0.47 | 0.45 - 0.47 | 1.99 - 2.01 | | Adjusted Diluted EPS from Continuing Operations | 0.61 | 0.67 | 0.63 | 0.58 - 0.60 | 2.49 - 2.51 | 2023 Reconciliation of GAAP to Non-GAAP Financial Measures (Continuing Operations) (Million USD, except per share data) | Metric | Q1 | Q2 | Q3 | Q4 | Full-Year | | :------------------------------------- | :------- | :------- | :------- | :------- | :----- | | Net Sales | 596.7 | 666.7 | 715.0 | 690.5 | 2,668.9 | | Operating Income | 97.7 | 121.3 | 126.2 | 117.5 | 462.7 | | Total Adjustments (Operating Income) | 16.0 | 27.6 | 36.1 | 24.2 | 103.9 | | Adjusted Operating Income | 113.7 | 148.9 | 162.3 | 141.7 | 566.6 | | Net Income from Continuing Operations | 73.2 | 92.2 | 81.9 | 212.4 | 459.7 | | Adjusted Net Income from Continuing Operations | 85.3 | 103.1 | 109.1 | 93.4 | 390.9 | | Diluted EPS from Continuing Operations | 0.44 | 0.55 | 0.49 | 1.26 | 2.73 | | Adjusted Diluted EPS from Continuing Operations | 0.51 | 0.61 | 0.65 | 0.55 | 2.32 | Reconciliation of GAAP to Non-GAAP Measures (Discontinued Operations) This section presents reconciliation tables for GAAP to non-GAAP financial measures for discontinued operations in 2024 and 2023, illustrating the impact of adjustments on operating income, net income, and EPS for this business 2024 Reconciliation of GAAP to Non-GAAP Financial Measures (Discontinued Operations) (Million USD, except per share data) | Metric | Q1 | Q2 | Q3 | | :------------------------------------- | :------- | :------- | :------- | | Net Sales | 142.5 | 140.5 | 157.1 | | Operating Income | 27.3 | 22.9 | 31.2 | | Total Adjustments (Operating Income) | 9.1 | 10.1 | 14.4 | | Adjusted Operating Income | 36.4 | 33.0 | 45.6 | | Net Income from Discontinued Operations | 19.9 | 17.8 | 26.1 | | Adjusted Net Income from Discontinued Operations | 28.1 | 25.8 | 35.2 | | Diluted EPS from Discontinued Operations | 0.11 | 0.11 | 0.15 | | Adjusted Diluted EPS from Discontinued Operations | 0.16 | 0.15 | 0.21 | 2023 Reconciliation of GAAP to Non-GAAP Financial Measures (Discontinued Operations) (Million USD, except per share data) | Metric | Q1 | Q2 | Q3 | Q4 | Full-Year | | :------------------------------------- | :------- | :------- | :------- | :------- | :----- | | Net Sales | 143.9 | 136.3 | 143.8 | 170.7 | 594.7 | | Operating Income | 26.4 | 25.4 | 30.0 | 42.9 | 124.7 | | Total Adjustments (Operating Income) | 7.9 | 7.0 | 9.7 | 4.7 | 29.3 | | Adjusted Operating Income | 34.3 | 32.4 | 39.7 | 47.6 | 154.0 | | Net Income from Discontinued Operations | 20.6 | 20.7 | 23.6 | 42.5 | 107.4 | | Adjusted Net Income from Discontinued Operations | 28.0 | 25.8 | 31.9 | 38.4 | 124.0 | | Diluted EPS from Discontinued Operations | 0.12 | 0.12 | 0.14 | 0.25 | 0.64 | | Adjusted Diluted EPS from Discontinued Operations | 0.16 | 0.16 | 0.19 | 0.23 | 0.74 | Reconciliation of Total Net Sales and Adjusted EPS This section provides reconciliations for total net sales and total adjusted diluted EPS for 2024 and 2023, combining data from both continuing and discontinued operations 2024 Reconciliation of Total Net Sales (Million USD) | Metric | Q1 | Q2 | Q3 | | :--------------------- | :------- | :------- | :------- | | Net Sales from Continuing Operations | 732.1 | 739.8 | 782.0 | | Net Sales from Discontinued Operations | 142.5 | 140.5 | 157.1 | | Total Net Sales (Non-GAAP) | 874.6 | 880.3 | 939.1 | 2024 Reconciliation of Total Adjusted Diluted EPS | Metric | Q1 | Q2 | Q3 | | :------------------------------------- | :------- | :------- | :------- | | Adjusted Diluted EPS from Continuing Operations | 0.61 | 0.67 | 0.63 | | Adjusted Diluted EPS from Discontinued Operations | 0.16 | 0.15 | 0.21 | | Total Adjusted Diluted EPS (Non-GAAP) | 0.77 | 0.82 | 0.84 | 2023 Reconciliation of Total Net Sales (Million USD) | Metric | Q1 | Q2 | Q3 | Q4 | Full-Year | | :--------------------- | :------- | :------- | :------- | :------- | :----- | | Net Sales from Continuing Operations | 596.7 | 666.7 | 715.0 | 690.5 | 2,668.9 | | Net Sales from Discontinued Operations | 143.9 | 136.3 | 143.8 | 170.7 | 594.7 | | Total Net Sales (Non-GAAP) | 740.6 | 803.0 | 858.8 | 861.2 | 3,263.6 | 2023 Reconciliation of Total Adjusted Diluted EPS | Metric | Q1 | Q2 | Q3 | Q4 | Full-Year | | :------------------------------------- | :------- | :------- | :------- | :------- | :----- | | Adjusted Diluted EPS from Continuing Operations | 0.51 | 0.61 | 0.65 | 0.55 | 2.32 | | Adjusted Diluted EPS from Discontinued Operations | 0.16 | 0.16 | 0.19 | 0.23 | 0.74 | | Total Adjusted Diluted EPS (Non-GAAP) | 0.67 | 0.77 | 0.84 | 0.78 | 3.06 | Reconciliation of Net Sales Growth to Organic Net Sales Growth by Segment This section provides a reconciliation of net sales growth to organic net sales growth by segment for Q3 2024, including Q4 and full-year 2024 forecasts, highlighting the impact of currency and acquisitions/divestitures on sales growth Q3 2024 Reconciliation of Net Sales Growth to Organic Net Sales Growth by Segment | Segment | Organic Growth | Currency Impact | Acquisition/Divestiture Impact | Total Growth | | :------------------------------------- | :------- | :------- | :------------ | :----- | | Enclosures | 1.2% | 0.2% | 14.2% | 15.6% | | Electrical & Fastening Solutions | 0.9% | —% | —% | 0.9% | | nVent Continuing Operations | 1.0% | 0.2% | 8.2% | 9.4% | | Thermal Management (Discontinued Operations) | 8.9% | 0.3% | —% | 9.2% | | nVent Total (Non-GAAP) | 2.4% | 0.2% | 6.8% | 9.4% | Q4 and Full-Year 2024 Net Sales Growth to Organic Net Sales Growth Forecast (Continuing Operations) | Metric | Q4 Organic Growth | Q4 Currency Impact | Q4 Acquisition/Divestiture Impact | Q4 Total Growth | Full-Year Organic Growth | Full-Year Currency Impact | Full-Year Acquisition/Divestiture Impact | Full-Year Total Growth | | :---- | :--------------- | :--------------- | :-------------------- | :------------- | :----------- | :----------- | :------------------ | :--------- | | nVent | 1% - 3% | 1% | 9% | 11% - 13% | 3% | —% | 10% | 13% | Reconciliation of Cash from Operating Activities to Free Cash Flow This section provides a reconciliation of cash from operating activities to free cash flow for Q3 and the first nine months of 2024 and 2023, including data for both continuing and discontinued operations Reconciliation of Cash from Operating Activities to Free Cash Flow (Million USD) | Metric | Q3 2024 | Q3 2023 | First Nine Months 2024 | First Nine Months 2023 | | :------------------------------------- | :------------- | :------------- | :------------- | :------------- | | Net Cash Provided by Operating Activities - Continuing Operations | 158.4 | 123.0 | 324.1 | 232.5 | | Capital Expenditures | (15.7) | (15.6) | (47.5) | (44.8) | | Free Cash Flow (Non-GAAP) | 142.9 | 107.4 | 277.1 | 187.7 | | Net Cash Provided by Operating Activities - Discontinued Operations | 39.3 | 22.0 | 94.4 | 59.1 | | Capital Expenditures - Discontinued Operations | (2.8) | (1.0) | (5.6) | (4.1) | | Total Free Cash Flow (Non-GAAP) | 179.4 | 135.5 | 365.9 | 250.0 |