nVent(US:NVT)2025-02-18 22:19Financial Performance - In 2024, net sales increased by 12.6% to $3,006.1 million, compared to $2,668.9 million in 2023, driven by acquisitions and organic growth[160] - The gross profit margin slightly decreased to 40.2% in 2024 from 40.3% in 2023, primarily due to inflationary increases in labor costs[160] - Enclosures segment net sales increased by 13.5% to $1,823.3 million in 2024, with segment income rising by 16.3% to $403.1 million[173] - Electrical & Fastening Solutions segment net sales grew by 11.3% to $1,182.8 million in 2024, with segment income increasing by 7.2% to $354.5 million[179] - The total net cash provided by operating activities from continuing operations was $501.0 million in 2024, reflecting a net income of $472.0 million[186] - Free cash flow for the year ended December 31, 2024 was $562.0 million, an increase from $464.6 million in 2023[216] Acquisitions and Divestitures - The company completed the acquisition of ECM Industries for approximately $1.1 billion in cash on May 18, 2023, enhancing its Electrical & Fastening Solutions segment[155] - The acquisition of Trachte, LLC was finalized on July 16, 2024, for approximately $687.5 million, aimed at strengthening the Enclosures segment[157] - The company entered into an agreement to sell its Thermal Management business for $1.7 billion in cash, with the sale completed on January 30, 2025[158] Research and Development - Research and development expenses increased by 19.7% to $66.1 million in 2024, reflecting the company's commitment to innovation[160] Taxation - The effective tax rate rose significantly to 43.9% in 2024 from a negative 22.5% in 2023, influenced by changes in international tax laws[160] - The effective tax rate increased by 66.4 percentage points in 2024, influenced by higher earnings in jurisdictions with elevated tax rates[170] - As of December 31, 2024, the total gross liability for uncertain tax positions was estimated to be $11.7 million[214] Cash Flow and Financing - Net cash used for investing activities was $750.8 million in 2024, primarily due to the Trachte acquisition costing $677.7 million[189] - The company issued $500.0 million in long-term debt in 2024, contributing to net cash provided by financing activities of $146.2 million[191] - Cash on hand as of December 31, 2024, was $131.2 million, with $53.2 million held in jurisdictions with limited repatriation capabilities[184] - The company had $400.0 million available for share repurchases under the 2024 Authorization as of December 31, 2024[207] - The company repurchased 1.5 million ordinary shares for $100.0 million under the 2024 Authorization during the year ended December 31, 2024[206] Future Outlook - The company plans to focus on higher growth verticals and new products to achieve differentiated revenue growth in 2025[159] - Inflationary cost increases, particularly in labor and raw materials, are expected to continue impacting operations into 2025[159] - Revenues and operating profit beyond 2030 are projected to grow at a perpetual growth rate of 3.0%[227] Financial Ratios and Covenants - The company’s debt agreements contain financial covenants, including a maximum consolidated debt to EBITDA ratio of 3.75 to 1.00[204] - The borrowing capacity under the Revolving Credit Facility was $600.0 million as of December 31, 2024[200] Market and Currency Risks - At December 31, 2024, the company had outstanding foreign currency derivative contracts with gross notional U.S. dollar equivalent amounts of $259.3 million[250] - A 10% appreciation or depreciation of the U.S. dollar relative to the Euro would result in a change in Accumulated other comprehensive loss of $13.6 million[251] - A 100 basis point increase in interest rates would result in a $63.1 million decrease in the fair value of fixed-rate debt[253] - A 100 basis point increase in interest rates on variable-rate debt would result in an $8.7 million increase in interest incurred[253] Pension and Other Post-Retirement Benefits - The company recorded a pre-tax, non-cash pension and other post-retirement mark-to-market gain of $0.1 million in 2024, compared to a loss of $13.4 million in 2023[169] - The discount rates on the pension plans ranged from 1.00% to 5.39%, 1.00% to 4.88%, and 1.00% to 5.22% in 2024, 2023, and 2022, respectively[238] - A 0.25 percentage point change in the discount rates is estimated to impact the total projected benefit obligation by approximately $4.6 million[240] Shareholder Returns - Dividends paid per ordinary share were $0.76 for the year ended December 31, 2024, compared to $0.70 for the years ended December 31, 2023 and 2022[208] - The company’s distributable reserve balance was $2.4 billion as of December 31, 2024, down from $2.7 billion in 2023[211]