nVent(NVT) - 2025 Q2 - Quarterly Report

PART I FINANCIAL INFORMATION This section presents nVent Electric plc's unaudited condensed consolidated financial statements and management's analysis for H1 2025 Item 1. Financial Statements H1 2025 unaudited consolidated financial statements reflect the Thermal Management sale and recent acquisitions Condensed Consolidated Statements of Income and Comprehensive Income Q2 2025 net sales grew 30.2% to $963.1 million, with net income at $109.5 million impacted by discontinued operations Condensed Consolidated Statements of Income (Q2 & H1 2025 vs 2024) | In millions, except per share data | Three months ended June 30, 2025 | Three months ended June 30, 2024 | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Net sales | $963.1 | $739.8 | $1,772.4 | $1,471.9 | | Gross profit | $371.8 | $307.6 | $685.5 | $598.5 | | Operating income | $156.7 | $144.9 | $286.7 | $276.8 | | Net income from continuing operations | $106.7 | $93.2 | $193.7 | $178.4 | | Income from discontinued operations, net of tax | $2.8 | $17.8 | $276.5 | $37.7 | | Net income | $109.5 | $111.0 | $470.2 | $216.1 | | Diluted EPS (Continuing operations) | $0.65 | $0.55 | $1.17 | $1.06 | | Diluted EPS (Total) | $0.67 | $0.66 | $2.84 | $1.28 | Condensed Consolidated Balance Sheets Total assets were $6.74 billion as of June 30, 2025; long-term debt decreased to $1.75 billion, and equity increased to $3.52 billion Balance Sheet Summary (June 30, 2025 vs Dec 31, 2024) | In millions | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total current assets | $1,484.6 | $1,389.3 | | Goodwill | $2,678.7 | $2,221.8 | | Intangibles, net | $1,954.8 | $1,587.0 | | Total assets | $6,741.7 | $6,734.9 | | Long-term debt | $1,752.1 | $2,117.5 | | Total liabilities | $3,223.0 | $3,497.3 | | Total equity | $3,518.7 | $3,237.6 | - The balance sheet no longer shows assets and liabilities held for sale as of June 30, 2025, following the completion of the Thermal Management business sale[12] Condensed Consolidated Statements of Cash Flows H1 2025 operating cash flow decreased to $43.3 million; investing activities generated $576.6 million from the Thermal Management sale Cash Flow Summary (Six months ended June 30) | In millions | 2025 | 2024 | | :--- | :--- | :--- | | Net cash provided by (used for) operating activities | $43.3 | $220.8 | | Net cash provided by (used for) investing activities | $576.6 | $(34.3) | | Net cash provided by (used for) financing activities | $(714.0) | $(83.2) | | Change in cash and cash equivalents | $(64.1) | $88.9 | - Key investing activities included $971.6 million for acquisitions and $1,584.6 million in proceeds from discontinued operations (sale of Thermal Management)[15] - Key financing activities included $866.3 million in long-term debt repayments and $253.1 million in share repurchases, partially offset by $275.0 million in new long-term debt and $200.0 million from a revolving credit facility[15] Notes to Condensed Consolidated Financial Statements Notes detail accounting policies, revenue, acquisitions, the Thermal Management sale, segment performance, debt, and capital returns Note 2. Revenue H1 2025 total revenue was $1.77 billion, with Americas contributing $1.41 billion and Infrastructure leading verticals Net Sales by Geography (Six months ended June 30, 2025) | In millions | Systems Protection | Electrical Connections | Total | | :--- | :--- | :--- | :--- | | Americas | $874.4 | $537.4 | $1,411.8 | | EMEA | $209.6 | $75.2 | $284.8 | | Asia-Pacific | $56.2 | $19.6 | $75.8 | | Total | $1,140.2 | $632.2 | $1,772.4 | Net Sales by Vertical (Six months ended June 30, 2025) | In millions | Systems Protection | Electrical Connections | Total | | :--- | :--- | :--- | :--- | | Industrial | $479.1 | $84.7 | $563.8 | | Commercial & Residential | $132.4 | $318.4 | $450.8 | | Infrastructure | $510.4 | $203.9 | $714.3 | | Energy | $18.3 | $25.2 | $43.5 | | Total | $1,140.2 | $632.2 | $1,772.4 | Note 5. Acquisitions nVent acquired Electrical Products Group for $975.4 million and Trachte, LLC for $687.5 million, significantly increasing goodwill - On May 1, 2025, nVent acquired the Electrical Products Group for a purchase price of $975.4 million in cash, funded with cash on hand[33] - The preliminary purchase price allocation for the Electrical Products Group acquisition includes $440.9 million of goodwill and $429.8 million of identifiable intangible assets[35][36] - The acquisition of Trachte, LLC was completed on July 16, 2024, for approximately $687.5 million in cash, primarily funded through debt[38] Note 6. Discontinued Operations Thermal Management business sold for $1.7 billion on January 30, 2025, generating $1.585 billion net proceeds and a $435.4 million gain - The sale of the Thermal Management business was completed on January 30, 2025, for a purchase price of $1.7 billion, resulting in net cash proceeds of $1,585.2 million[45] - The sale resulted in a pre-tax gain of $435.4 million, net of $32.8 million in transaction costs, during the six months ended June 30, 2025[46] Note 10. Debt Total debt decreased to $1.77 billion by June 30, 2025, with new $275.0 million term and $600.0 million revolving credit facilities established Debt Outstanding (June 30, 2025 vs Dec 31, 2024) | In millions | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Revolving credit facility | $200.0 | $— | | Term loan facilities | $275.0 | $866.3 | | Senior notes - fixed rate | $1,300.0 | $1,300.0 | | Total debt (before issuance costs) | $1,775.0 | $2,166.3 | - In June 2025, nVent entered into an amended and restated credit agreement, establishing a new five-year $275.0 million term loan facility and a $600.0 million revolving credit facility[65] - The company repaid the remainder of borrowings on its 2021, 2023, and 2024 term loan facilities in 2025[64][68][69] Note 12. Shareholders' Equity H1 2025 saw 4.8 million shares repurchased for $253.1 million under the $500 million 2024 Authorization, with $146.9 million remaining - In the first six months of 2025, the company repurchased 4.8 million ordinary shares for $253.1 million[75] - A new $500.0 million share repurchase authorization (the "2024 Authorization") was approved by the Board on May 17, 2024, and is effective until July 22, 2027. As of June 30, 2025, $146.9 million was available under this plan[74][75] - On May 16, 2025, the Board declared a quarterly cash dividend of $0.20 per ordinary share[77] Note 13. Segment Information H1 2025 Systems Protection sales were $1.14 billion (21.2% margin); Electrical Connections sales were $632.2 million (28.5% margin) Segment Performance (Six months ended June 30, 2025 vs 2024) | In millions | Systems Protection 2025 | Systems Protection 2024 | Electrical Connections 2025 | Electrical Connections 2024 | | :--- | :--- | :--- | :--- | :--- | | Net sales | $1,140.2 | $880.7 | $632.2 | $591.2 | | Reportable segment income | $241.3 | $198.6 | $180.0 | $177.7 | | Segment income margin | 21.2% | 22.6% | 28.5% | 30.1% | - In Q1 2025, the company renamed its segments from Enclosures to Systems Protection and from Electrical & Fastening Solutions to Electrical Connections[78] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses H1 2025 financial results, highlighting 20.4% sales growth from acquisitions and organic expansion, and capital deployment Consolidated Results of Operations H1 2025 net sales grew 20.4% to $1.77 billion from acquisitions and organic growth, but margins contracted due to inflation Components of Net Sales Change (H1 2025 vs H1 2024) | Component | % Change | | :--- | :--- | | Organic growth | 5.2% | | Acquisition | 15.3% | | Currency | (0.1)% | | Total | 20.4% | - Gross profit margin declined due to inflationary increases in raw materials and labor, and investments in capacity. This was partially offset by higher sales volume and productivity gains[105][107] - SG&A as a percentage of sales increased due to higher intangible amortization from acquisitions, inflation, and investments in capacity and new products[105][107] - Net interest expense decreased primarily due to interest income earned on the cash proceeds from the sale of the Thermal Management business[106] Segment Results of Operations Systems Protection sales grew 29.5% (acquisitions 24.3%), margin 21.2%; Electrical Connections sales grew 6.9% (organic 5.4%), margin 28.5% Systems Protection Performance (H1 2025 vs H1 2024) | Metric | H1 2025 | H1 2024 | Change | | :--- | :--- | :--- | :--- | | Net Sales | $1,140.2M | $880.7M | +29.5% | | Segment Income | $241.3M | $198.6M | +21.5% | | Segment Income % | 21.2% | 22.6% | -1.4 pts | - Systems Protection sales growth was driven by a 24.3% contribution from acquisitions and 5.1% organic growth, primarily from the infrastructure business[113][114] Electrical Connections Performance (H1 2025 vs H1 2024) | Metric | H1 2025 | H1 2024 | Change | | :--- | :--- | :--- | :--- | | Net Sales | $632.2M | $591.2M | +6.9% | | Segment Income | $180.0M | $177.7M | +1.3% | | Segment Income % | 28.5% | 30.1% | -1.6 pts | - Electrical Connections sales growth was driven by 5.4% organic growth, led by the infrastructure and industrial businesses[117] Liquidity and Capital Resources As of June 30, 2025, liquidity included $125.8 million cash and $400.0 million credit facility; H1 2025 free cash flow was $118.5 million - As of June 30, 2025, the company had $125.8 million of cash on hand and $400.0 million of borrowing capacity under its Revolving Credit Facility[120][136] Free Cash Flow Reconciliation (Six months ended June 30) | In millions | 2025 | 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities of continuing operations | $154.9 | $165.7 | | Capital expenditures | $(38.0) | $(31.8) | | Proceeds from sale of property and equipment | $1.6 | $0.3 | | Free cash flow of continuing operations | $118.5 | $134.2 | - During H1 2025, the company used cash for $866.3 million in debt repayments, $253.1 million in share repurchases, and $65.7 million in dividends[127] Item 3. Quantitative and Qualitative Disclosures about Market Risk No material changes in market risk were reported for the quarter ended June 30, 2025, with further details in the 2024 Form 10-K - There have been no material changes in market risk during the quarter ended June 30, 2025[150] Item 4. Controls and Procedures Disclosure controls were effective as of June 30, 2025, with ongoing integration into the newly acquired Electrical Products Group - The CEO and CFO concluded that disclosure controls and procedures were effective as of June 30, 2025[151] - The company is in the process of incorporating its controls and procedures into the newly acquired Electrical Products Group business[152] PART II OTHER INFORMATION This section covers legal proceedings, risk factors, equity sales, and other disclosures for the period Item 1. Legal Proceedings No material developments in legal proceedings were reported since the 2024 Annual Report on Form 10-K disclosures - No material developments in legal proceedings were reported for the period[154] Item 1A. Risk Factors No material changes to previously disclosed risk factors were reported for the period - No material changes to risk factors were reported for the period[155] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds Q2 2025 saw 3,864,207 shares repurchased under the $500 million 2024 Authorization, with $146.9 million remaining Share Repurchases (Q2 2025) | Period | Total number of shares purchased | Average price paid per share | | :--- | :--- | :--- | | April 1 - April 26, 2025 | 3,154,657 | $51.22 | | April 27 - May 24, 2025 | 708,516 | $54.85 | | May 25 - June 30, 2025 | 1,034 | $68.80 | | Total | 3,864,207 | | - As of June 30, 2025, $146.9 million remained available for share repurchases under the 2024 Authorization, which expires on July 22, 2027[158] Item 5. Other Information No directors or Section 16 officers adopted or terminated Rule 10b5-1 trading arrangements during Q2 2025 - No directors or Section 16 officers adopted or terminated any Rule 10b5-1 trading arrangements during Q2 2025[157] Item 6. Exhibits This section lists the exhibits filed as part of the Quarterly Report on Form 10-Q, including credit agreements and officer certifications