nVent(US:NVT)2024-02-20 21:31PART I ITEM 1. Business nVent Electric plc provides global electrical connection and protection solutions across three segments, driven by strategic acquisitions - nVent Electric plc is a leading global provider of electrical connection and protection solutions, offering enclosures, electrical fastening, and thermal management solutions17158 - The company operates across three segments: Enclosures, Electrical & Fastening Solutions, and Thermal Management, which represented approximately 49%, 33%, and 18% of total revenues during 2023, respectively26159 - In 2023, nVent completed the acquisition of ECM Industries for approximately $1.1 billion in cash, enhancing its Electrical & Fastening Solutions segment. Additionally, it acquired TEXA Industries for $34.8 million, adding industrial cooling applications to its Enclosures segment23161162 Workforce Diversity as of December 31, 2023 (excluding 2023 acquisitions and direct field labor) | Category | Percent of Executive Leadership | Percent of Management | Percent of All Other Employees | | :--------- | :------------------------------ | :-------------------- | :----------------------------- | | Racially diverse (U.S. only) | 14% | 21% | 44% | | Women (Global) | 38% | 27% | 26% | Backlog of Orders by Segment (in millions USD) | Segment | December 31, 2023 (millions USD) | December 31, 2022 (millions USD) | $ Change (millions USD) | % Change | | :-------------------------- | :------------------ | :------------------ | :------- | :------- | | Enclosures | $373.1 | $361.9 | $11.2 | 3.1% | | Electrical & Fastening Solutions | $89.7 | $78.7 | $11.0 | 14.0% | | Thermal Management | $176.3 | $166.7 | $9.6 | 5.8% | | Total | $639.1 | $607.3 | $31.8 | 5.2% | ITEM 1A. Risk Factors The company faces diverse risks including global economic conditions, competition, acquisition integration, supply chain, and international operations - Global economic and business conditions, including inflation, slowing growth, and geopolitical instability, can negatively impact demand for products and financial performance6869 - The company operates in highly competitive markets, facing pressure on profit margins and requiring continuous product differentiation and strong distribution networks363770 - Acquisitions, including the recent ECM Industries acquisition, involve significant risks such as diversion of management attention, integration difficulties, potential loss of key personnel/customers, assumption of liabilities, and dilution of shareholder interests727385 - Supply chain disruptions, material cost inflation (raw materials, logistics, labor, energy), and the ability to pass on price increases remain significant challenges7576 - Operating a multinational business (34% of 2023 net sales from outside U.S.) exposes the company to political, regulatory, economic, and currency exchange rate risks8081106 - Increased debt from the ECM Industries acquisition ($900 million new indebtedness) raises cash requirements for interest payments, increases vulnerability to adverse economic changes, and may limit future financing flexibility104105 - Changes in tax laws (e.g., Pillar II global minimum tax regime) and potential changes in tax residency could negatively impact the effective tax rate and future profitability111116 - Cybersecurity threats are increasing in frequency and sophistication, posing risks to systems, networks, products, and services, potentially leading to regulatory, financial, and reputational damage100101 ITEM 1B. Unresolved Staff Comments The company reported no unresolved staff comments from the SEC - There are no unresolved staff comments127 ITEM 1C. Cybersecurity nVent implements a comprehensive cybersecurity program aligned with NIST and zero trust, overseen by the Board, covering risk management and safeguards - nVent's cybersecurity program is comprehensive, aligned with NIST Cybersecurity Framework and zero trust model, incorporating industry best practices128 - The Board of Directors, supported by the Audit Committee, oversees cybersecurity risk management, receiving periodic reports from the CTO and CISO129130 - Key program capabilities include enterprise-wide risk management, technical safeguards (firewalls, intrusion systems, anti-malware), incident response and recovery planning, third-party risk management, and employee education and awareness131132133134135 - Previous cybersecurity incidents have not materially affected the company's business strategy, results of operations, or financial condition, but future risks remain136 ITEM 2. Properties nVent's principal office is in London, U.K., with global manufacturing and distribution facilities deemed suitable - Principal office is in London, U.K. (leased), and U.S. management office is in Minneapolis, Minnesota (leased)137 Principal Manufacturing, Distribution, and Service Center Properties | Segment | Locations | Manufacturing Plants | Distribution Facilities | Service Centers | | :-------------------------- | :---------------------- | :------------------- | :---------------------- | :-------------- | | Enclosures | U.S. and 10 other countries | 19 | 16 | — | | Electrical & Fastening Solutions | U.S. and 4 other countries | 17 | 8 | — | | Thermal Management | U.S. and 3 other countries | 4 | 3 | 4 | ITEM 3. Legal Proceedings nVent is involved in various legal actions, including commercial, product liability, and environmental matters, with material impact deemed unlikely - nVent is party to various legal actions, including commercial disputes, product liability, asbestos, environmental, safety and health, patent infringement, and employment matters138 - Management believes a material impact on financial position, results of operations, or cash flows from current claims is unlikely, but acknowledges the remote possibility of future adverse rulings139 - Environmental liabilities are accrued on a site-by-site basis when probable and estimable, with current reserves not material as of December 31, 2023141 - Product liability claims incurred after the 2018 separation are insured and accrued for by Tonka Bay, nVent's captive insurance subsidiary142 ITEM 4. Mine Safety Disclosures This item is not applicable - This item is not applicable143 PART II ITEM 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities nVent's ordinary shares trade on the NYSE, showing strong shareholder returns and an active share repurchase program - nVent's ordinary shares trade on the New York Stock Exchange under the symbol "NVT"148 - As of December 31, 2023, there were 12,426 shareholders of record148 Indexed Returns (Years ended December 31) | Company / Index | 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | | :-------------------------- | :--- | :--- | :--- | :--- | :--- | :--- | | nVent Electric plc | $100 | $120.75 | $113.90 | $190.38 | $196.71 | $306.82 | | S&P Mid Cap 400 Index | $100 | $113.38 | $128.87 | $160.77 | $139.78 | $162.75 | | S&P Mid Cap 400 Industrials Index | $100 | $121.40 | $141.42 | $181.65 | $160.76 | $211.30 | - The Board authorized a $300.0 million share repurchase program (2021 Authorization) expiring July 22, 2024155205 Share Repurchases (Fourth Quarter 2023) | Period | Total Shares Purchased | Average Price Paid per Share | Total Shares Purchased (Publicly Announced Plans) | Dollar Value Remaining (Publicly Announced Plans) | | :------------------------ | :--------------------- | :--------------------------- | :---------------------------------------------- | :---------------------------------------------- | | October 1 – October 28, 2023 | 1,086 | $52.04 | — | $127,333,026 | | October 29 – November 25, 2023 | 605,964 | $51.49 | 605,726 | $96,133,146 | | November 26 – December 31, 2023 | 269,607 | $53.79 | 267,401 | $81,754,255 | | Total | 876,657 | | 873,127 | | - As of December 31, 2023, $81.8 million remained available for share repurchases under the 2021 Authorization155206 ITEM 6. Reserved This item is reserved and contains no information - This item is reserved154 ITEM 7. Management's Discussion and Analysis of Financial Condition and Results of Operations This section reviews nVent's 2023 financial performance, highlighting net sales and income growth, improved gross profit, strong liquidity, and critical accounting estimates - nVent is a global provider of electrical connection and protection solutions, operating in Enclosures, Electrical & Fastening Solutions, and Thermal Management segments158159 - Key trends include the converging megatrends of electrification, sustainability, and digitalization (including AI), driving sales growth, particularly in infrastructure and data solutions163 - Operating objectives for 2024 include executing ESG strategy, enhancing employee engagement, achieving differentiated revenue growth through innovation and vertical expansion, integrating acquisitions, optimizing technological capabilities, driving operational excellence, optimizing working capital, and strategically deploying capital163164 Forward-looking statements The report contains forward-looking statements subject to risks and uncertainties that could cause actual results to differ - The report contains forward-looking statements subject to risks, uncertainties, and assumptions that could cause actual results to differ materially156 - Factors include global economic conditions, restructuring benefits, acquisition integration, competition, currency volatility, supply chain risks, and regulatory changes156 Overview nVent is a leading global provider of electrical connection and protection solutions across three segments - nVent is a leading global provider of electrical connection and protection solutions, with operations classified into three segments: Enclosures, Electrical & Fastening Solutions, and Thermal Management158159 - In 2023, the company acquired ECM Industries for approximately $1.1 billion and TEXA Industries for $34.8 million, expanding its Electrical & Fastening Solutions and Enclosures segments, respectively161162 Key Trends and Uncertainties Regarding our Existing Business Key trends include ongoing inflation, Russia exit, Pillar II tax impact, and megatrends driving growth, with 2024 objectives focused on ESG, growth, and operational excellence - Ongoing inflationary increases, primarily in labor costs, are expected to continue into 2024, potentially impacting results despite pricing actions and productivity improvements163 - The company is exiting business operations in Russia due to the conflict with Ukraine, with potential for broader economic disruption163 - The Pillar II global minimum tax regime, effective from January 1, 2024, is expected to negatively impact the effective tax rate163 - Megatrends of electrification, sustainability, and digitalization (including AI) are driving sales growth, particularly in infrastructure and data solutions, expected to continue in 2024163 - Operating objectives for 2024 include executing ESG strategy, enhancing employee engagement, achieving differentiated revenue growth, integrating acquisitions, optimizing technology, driving operational excellence, optimizing working capital, and strategic capital deployment163164 Consolidated Results of Operations This section details nVent's consolidated financial performance, including net sales, gross profit, operating income, and net income, with key drivers Consolidated Results of Operations (in millions USD, except percentages) | Metric | 2023 (millions USD) | 2022 (millions USD) | % / point change (2023 vs 2022) | | :---------------------------------- | :------- | :------- | :------------------------------ | | Net sales | $3,263.6 | $2,909.0 | 12.2% | | Cost of goods sold | $1,921.5 | $1,812.3 | 6.0% | | Gross profit | $1,342.1 | $1,096.7 | 22.4% | | Gross profit % of net sales | 41.1% | 37.7% | 3.4 pts | | Selling, general and administrative | $683.2 | $595.9 | 14.7% | | SG&A % of net sales | 20.9% | 20.5% | 0.4 pts | | Research and development | $71.5 | $60.4 | 18.4% | | R&D % of net sales | 2.2% | 2.1% | 0.1 pts | | Operating income | $587.4 | $440.4 | 33.4% | | Operating income % of net sales | 18.0% | 15.1% | 2.9 pts | | Net interest expense | $79.4 | $31.2 | N.M. | | Gain on sale of investment | $(10.3) | — | N.M. | | Other expense (income) | $18.8 | $(63.4) | N.M. | | Income before income taxes | $499.5 | $472.6 | 5.7% | | Provision (benefit) for income taxes | $(67.6) | $72.8 | N.M. | | Effective tax rate | (13.5)% | 15.4% | (28.9) pts | | Net income | $567.1 | $399.8 | 41.8% | - Net sales increased by 12.2% in 2023, driven by 8.7% from acquisitions (ECM Industries and TEXA Industries) and 3.5% organic growth (primarily from infrastructure business and selective price increases)166 - Gross profit as a percentage of net sales increased by 3.4 percentage points, primarily due to increases in selling prices to mitigate inflationary costs and increased productivity167 - Net interest expense increased significantly due to increased debt from the ECM Industries acquisition and higher variable interest rates169 - The effective tax rate decreased by 28.9 percentage points, primarily due to non-cash benefits from deferred tax assets related to intangible assets in Switzerland ($72.0 million) and tax-deductible statutory losses in Luxembourg ($93.2 million)171174 Segment Results of Operations This section analyzes the financial performance of nVent's three segments: Enclosures, Electrical & Fastening Solutions, and Thermal Management - Segment income represents operating income exclusive of intangible amortization, acquisition-related expenses, restructuring costs, impairments, and other unusual non-operating items173 Enclosures Segment Performance (in millions USD, except percentages) | Metric | 2023 (millions USD) | 2022 (millions USD) | % / point change (2023 vs 2022) | | :------------- | :------- | :------- | :------------------------------ | | Net sales | $1,605.9 | $1,503.7 | 6.8% | | Segment income | $346.6 | $256.0 | 35.4% | | % of net sales | 21.6% | 17.0% | 4.6 pts | - Enclosures net sales increased by 6.8%, driven by 5.9% organic growth (infrastructure, industrial, commercial & residential businesses, and price increases) and 0.8% from the TEXA Industries acquisition176177 - Enclosures segment income as a percentage of net sales increased by 4.6 percentage points, primarily due to higher selling prices and increased productivity, partially offset by inflationary labor costs and growth investments176178 Electrical & Fastening Solutions Segment Performance (in millions USD, except percentages) | Metric | 2023 (millions USD) | 2022 (millions USD) | % / point change (2023 vs 2022) | | :------------- | :------- | :------- | :------------------------------ | | Net sales | $1,063.0 | $791.4 | 34.3% | | Segment income | $330.6 | $219.9 | 50.3% | | % of net sales | 31.1% | 27.8% | 3.3 pts | - Electrical & Fastening Solutions net sales increased by 34.3%, driven by 30.4% from the ECM Industries acquisition and 3.6% organic growth (infrastructure and commercial & residential businesses, and price increases)180181 - Electrical & Fastening Solutions segment income as a percentage of net sales increased by 3.3 percentage points, primarily due to higher selling prices, increased productivity, and favorable product mix, partially offset by inflationary labor costs and lower sales volume180182 Thermal Management Segment Performance (in millions USD, except percentages) | Metric | 2023 (millions USD) | 2022 (millions USD) | % / point change (2023 vs 2022) | | :------------- | :------- | :------- | :------------------------------ | | Net sales | $594.7 | $613.9 | (3.1)% | | Segment income | $138.5 | $140.8 | (1.6)% | | % of net sales | 23.3% | 22.9% | 0.4 pts | - Thermal Management net sales decreased by 3.1%, primarily due to organic sales declines in commercial & residential and industrial businesses, and unfavorable foreign currency effects, partially offset by organic growth in the energy business and price increases184185 - Thermal Management segment income as a percentage of net sales increased by 0.4 percentage points, driven by higher selling prices and lean initiatives, partially offset by lower sales volume and inflationary labor costs185186 Liquidity and Capital Resources This section discusses nVent's liquidity, primarily from operating cash flows, capital requirements, debt structure, share repurchases, and dividends - Primary liquidity source is cash flows from operations, with expected cash requirements for working capital, capital expenditures, debt service, and dividends187 - Seasonal cash flows are experienced, with increased demand for Electrical & Fastening Solutions in spring/summer and Thermal Management in fall/winter188 Cash Flow Summary (in millions USD) | Activity | 2023 (millions USD) | 2022 (millions USD) | | :-------------------------------------- | :------- | :------- | | Net cash provided by operating activities | $528.1 | $394.6 | | Net cash used for investing activities | $(1,164.7) | $(52.5) | | Net cash provided by (used for) financing activities | $516.7 | $(82.1) | | Change in cash and cash equivalents | $(112.4) | $248.0 | - Investing activities in 2023 primarily included $1,120.1 million for ECM Industries and TEXA Industries acquisitions and $71.0 million in capital expenditures191 - Financing activities in 2023 included $800.0 million from long-term debt proceeds (for ECM acquisition), offset by $116.8 million in dividends and $60.8 million in share repurchases192 - In May 2023, nVent Finance issued $500.0 million of 5.650% Senior Notes due 2033 to finance the ECM Industries acquisition196 - The company was in compliance with all financial covenants in its debt agreements as of December 31, 2023204 Material Contractual Cash Requirements (as of December 31, 2023, in millions USD) | Obligation | Within 1 year (millions USD) | Greater than 1 year (millions USD) | Total (millions USD) | | :-------------------------------------- | :------------ | :------------------ | :-------- | | Debt obligations | $31.9 | $1,760.6 | $1,792.5 | | Interest obligations on fixed-rate debt | $59.3 | $377.5 | $436.8 | | Operating lease obligations, net of sublease rentals | $31.1 | $114.9 | $146.0 | | Total | $122.3 | $2,253.0 | $2,375.3 | Free Cash Flow (in millions USD) | Metric | 2023 (millions USD) | 2022 (millions USD) | | :-------------------------------------- | :------- | :------- | | Net cash provided by operating activities | $528.1 | $394.6 | | Capital expenditures | $(71.0) | $(45.9) | | Proceeds from sale of property and equipment | $7.5 | $2.0 | | Free cash flow | $464.6 | $350.7 | Commitments and Contingencies The company is subject to various claims and disputes, with material impact deemed unlikely, and details outstanding bonds and guarantees - The company is subject to various claims and disputes, including commercial, product liability, environmental, and patent infringement matters215 - While a material impact from future claims is considered unlikely, the inherent uncertainty of litigation means a remote possibility of material adverse rulings exists216 - Outstanding bonds, letters of credit, and bank guarantees totaled $45.5 million as of December 31, 2023, up from $38.0 million in 2022218 Critical Accounting Estimates This section outlines nVent's critical accounting estimates for business combinations, goodwill impairment, pension plans, and income taxes - Critical accounting estimates involve significant judgment and assumptions about uncertain future events, where changes could materially impact financial condition or results219 - Business combinations require estimating fair values of acquired assets and liabilities, with goodwill recorded for excess purchase price. These estimates are subject to refinement for up to one year post-acquisition220221 - Goodwill and indefinite-lived intangible assets are tested for impairment annually or more frequently if circumstances warrant, using discounted cash flow and market approaches. As of December 31, 2023, goodwill and intangible assets were $4.1 billion, representing 66% of total assets84222223224 - Pension and other post-retirement plan valuations rely on actuarial assumptions (discount rates, expected return on assets, compensation increase rates). Mark-to-market adjustments for actuarial gains/losses can cause volatility234235236 - Income tax accounting involves estimates for tax liabilities and recoverability of deferred tax assets, considering future taxable income and potential changes in tax laws and rates240241242243 ITEM 7A. Quantitative and Qualitative Disclosures about Market Risk nVent manages market risks from interest rates and foreign currency through derivative financial instruments, with a debt portfolio primarily fixed-rate - nVent is exposed to market risks from changes in interest rates and foreign currency rates, managed through derivative financial instruments245 - Foreign currency risk is mitigated using forward foreign currency contracts for assets/liabilities and cross currency swaps for intercompany debt and net investment hedges246247248249 - As of December 31, 2023, outstanding foreign currency derivative contracts had gross notional U.S. dollar equivalent amounts of $344.3 million248 - The debt portfolio as of December 31, 2023, was approximately 73% fixed-rate debt and 27% variable-rate debt250 - A 100 basis point increase in interest rates would increase interest incurred on variable-rate debt by $4.9 million251 ITEM 8. Financial Statements and Supplementary Data This section presents nVent's audited consolidated financial statements, management's internal control report, and the independent auditor's unqualified opinion - Management assessed the effectiveness of internal control over financial reporting as effective as of December 31, 2023, excluding ECM Industries (acquired May 2023)254255 - Deloitte & Touche LLP issued an unqualified opinion on the consolidated financial statements and the effectiveness of internal control over financial reporting259265266 - Critical audit matters included the evaluation of goodwill for impairment in the Thermal Management reporting unit ($713.0 million as of December 31, 2023) and the valuation of the ECM Industries acquired customer relationship intangible asset ($381.7 million)270272 Consolidated Net Sales (in millions USD) | Year | Net Sales (millions USD) | | :--- | :-------- | | 2023 | $3,263.6 | | 2022 | $2,909.0 | | 2021 | $2,462.0 | Consolidated Net Income (in millions USD) | Year | Net Income (millions USD) | | :--- | :--------- | | 2023 | $567.1 | | 2022 | $399.8 | | 2021 | $272.9 | Consolidated Total Assets (in millions USD) | Year | Total Assets (millions USD) | | :--- | :----------- | | 2023 | $6,161.7 | | 2022 | $4,902.2 | Consolidated Total Liabilities (in millions USD) | Year | Total Liabilities (millions USD) | | :--- | :---------------- | | 2023 | $3,019.6 | | 2022 | $2,170.5 | Consolidated Net Cash Provided by Operating Activities (in millions USD) | Year | Net Cash Provided by Operating Activities (millions USD) | | :--- | :---------------------------------------- | | 2023 | $528.1 | | 2022 | $394.6 | | 2021 | $373.3 | Management's Report on Internal Control Over Financial Reporting Management assessed internal control over financial reporting as effective as of December 31, 2023, excluding the recently acquired ECM Industries - Management is responsible for establishing and maintaining adequate internal control over financial reporting252 - As of December 31, 2023, management assessed the company's internal control over financial reporting as effective, based on the COSO framework254 - The assessment excluded ECM Industries, acquired in May 2023, which accounted for approximately 4% of total assets and 7% of total net sales255 Report of Independent Registered Public Accounting Firm Deloitte & Touche LLP issued an unqualified opinion on the effectiveness of nVent's internal control over financial reporting, excluding ECM Industries - Deloitte & Touche LLP issued an unqualified opinion on the effectiveness of nVent's internal control over financial reporting as of December 31, 2023258 - The audit of internal control over financial reporting excluded ECM Industries, consistent with management's assessment260 Report of Independent Registered Public Accounting Firm (Financial Statements) Deloitte & Touche LLP issued an unqualified opinion on the consolidated financial statements, affirming fair presentation in conformity with GAAP - Deloitte & Touche LLP issued an unqualified opinion on the consolidated financial statements for the period ended December 31, 2023, stating they present fairly the financial position and results of operations in conformity with GAAP265 Critical Audit Matters Critical audit matters included goodwill impairment for Thermal Management and the valuation of ECM Industries' customer relationship intangible asset - The evaluation of goodwill for impairment in the Thermal Management reporting unit ($713.0 million as of December 31, 2023) was a critical audit matter due to significant management estimates and assumptions in fair value determination270271 - The valuation of the ECM Industries acquired customer relationship intangible asset ($381.7 million) was also a critical audit matter, requiring significant judgment on future cash flows, margin, revenue growth, discount, and customer attrition rates272273 Consolidated Statements of Operations and Comprehensive Income This section presents consolidated statements of operations and comprehensive income, detailing net sales, gross profit, operating income, and net income Consolidated Statements of Operations and Comprehensive Income (in millions USD, except per share data) | Metric | 2023 (millions USD) | 2022 (millions USD) | 2021 (millions USD) | | :-------------------------------------- | :------- | :------- | :------- | | Net sales | $3,263.6 | $2,909.0 | $2,462.0 | | Gross profit | $1,342.1 | $1,096.7 | $941.9 | | Operating income | $587.4 | $440.4 | $355.4 | | Net income | $567.1 | $399.8 | $272.9 | | Basic EPS | $3.42 | $2.40 | $1.63 | | Diluted EPS | $3.37 | $2.38 | $1.61 | | Comprehensive income | $562.7 | $383.4 | $284.9 | Consolidated Balance Sheets This section presents consolidated balance sheets, detailing assets, liabilities, and equity, including cash, goodwill, and long-term debt Consolidated Balance Sheets (in millions USD) | Asset/Liability/Equity | December 31, 2023 (millions USD) | December 31, 2022 (millions USD) | | :-------------------------------------- | :------------------ | :------------------ | | Cash and cash equivalents | $185.1 | $297.5 | | Total current assets | $1,336.1 | $1,229.2 | | Property, plant and equipment, net | $390.0 | $289.2 | | Goodwill | $2,571.1 | $2,178.1 | | Intangibles, net | $1,517.0 | $1,066.1 | | Total assets | $6,161.7 | $4,902.2 | | Total current liabilities | $733.6 | $649.5 | | Long-term debt | $1,748.8 | $1,068.2 | | Total liabilities | $3,019.6 | $2,170.5 | | Total equity | $3,142.1 | $2,731.7 | Consolidated Statements of Cash Flows This section presents consolidated statements of cash flows, detailing cash flows from operating, investing, and financing activities Consolidated Statements of Cash Flows (in millions USD) | Activity | 2023 (millions USD) | 2022 (millions USD) | 2021 (millions USD) | | :---------------------------------------- | :------- | :------- | :------- | | Net cash provided by operating activities | $528.1 | $394.6 | $373.3 | | Net cash used for investing activities | $(1,164.7) | $(52.5) | $(274.0) | | Net cash provided by (used for) financing activities | $516.7 | $(82.1) | $(166.8) | | Cash and cash equivalents, end of year | $185.1 | $297.5 | $49.5 | | Cash paid for interest, net | $103.2 | $49.2 | $43.0 | | Cash paid for income taxes, net | $112.4 | $87.3 | $61.3 | Consolidated Statements of Changes in Equity This section presents consolidated statements of changes in equity, detailing total equity, net income, dividends, and share repurchases Consolidated Statements of Changes in Equity (in millions USD) | Metric | December 31, 2023 (millions USD) | December 31, 2022 (millions USD) | December 31, 2021 (millions USD) | | :-------------------------------------- | :------------------ | :------------------ | :------------------ | | Total Equity | $3,142.1 | $2,731.7 | $2,496.1 | | Net income | $567.1 | $399.8 | $272.9 | | Dividends declared | $(119.1) | $(117.0) | $(119.1) | | Share repurchases | $(58.8) | $(63.3) | $(116.1) | | Share-based compensation | $23.5 | $25.0 | $16.6 | Notes to Consolidated Financial Statements 1. Basis of Presentation and Summary of Significant Accounting Policies nVent is an Irish-incorporated company providing electrical solutions, with financial statements prepared under GAAP, requiring estimates for goodwill, revenue, and pensions - nVent is an Irish-incorporated company with tax residency in the U.K., providing electrical connection and protection solutions across three segments287288 - Financial statements are prepared in USD under GAAP, requiring significant management estimates for items like goodwill valuation, inventory, acquisitions, and income taxes289291 - Revenue is recognized when control of goods/services transfers to customers. 76% of 2023 revenue was recognized at a point in time (upon shipment), and 24% over time (cost-to-cost or output method)292295296 - Goodwill and indefinite-lived intangibles are tested annually for impairment using discounted cash flow and market approaches. No impairment was recorded in 2023, 2022, or 2021316319322 - Pension and other post-retirement benefits are determined by actuarial valuations, with mark-to-market adjustments for actuarial gains/losses recognized annually in Q4324325 - Derivative financial instruments are recognized at fair value and used to hedge interest rate and currency exposures, not for trading327329 2. Revenue This section provides a breakdown of nVent's net sales by geographic region and vertical market, along with contract balances Geographic Net Sales (in millions USD) | Region | 2023 (millions USD) | 2022 (millions USD) | 2021 (millions USD) | | :------------- | :------- | :------- | :------- | | North America | $2,383.3 | $2,042.3 | $1,590.4 | | EMEA | $677.8 | $660.6 | $670.7 | | Asia-Pacific | $190.9 | $193.5 | $190.5 | | Rest of World | $11.6 | $12.6 | $10.4 | | Total | $3,263.6 | $2,909.0 | $2,462.0 | Vertical Net Sales (in millions USD) | Vertical | 2023 (millions USD) | 2022 (millions USD) | 2021 (millions USD) | | :-------------------- | :------- | :------- | :------- | | Industrial | $1,282.8 | $1,212.3 | $1,051.7 | | Commercial & Residential | $995.0 | $823.9 | $728.3 | | Infrastructure | $824.6 | $726.0 | $554.3 | | Energy | $161.2 | $146.8 | $127.7 | | Total | $3,263.6 | $2,909.0 | $2,462.0 | Contract Balances (in millions USD) | Metric | December 31, 2023 (millions USD) | December 31, 2022 (millions USD) | $ Change (millions USD) | % Change | | :---------------- | :------------------ | :------------------ | :---------------------- | :---------------------- | | Contract assets | $44.1 | $45.6 | $(1.5) | (3.3)% | | Contract liabilities | $27.1 | $22.7 | $4.4 | 19.4% | | Net contract assets | $17.0 | $22.9 | $(5.9) | (25.8)% | - The decrease in net contract assets in 2023 was primarily due to the timing of milestone payments335 - Remaining performance obligations for contracts with an original expected length of one year or more totaled $17.2 million as of December 31, 2023, with most expected to be recognized within 12-18 months336 3. Restructuring This section details nVent's restructuring initiatives, including costs for severance, aimed at reducing fixed costs and realigning the business - Restructuring initiatives in 2023, 2022, and 2021 aimed at reducing fixed cost structure and realigning the business, including headcount reductions337 Total Restructuring Costs (in millions USD) | Cost Type | 2023 (millions USD) | 2022 (millions USD) | 2021 (millions USD) | | :------------------------ | :------- | :------- | :------- | | Severance and related costs | $7.8 | $5.2 | $4.9 | | Other | $5.0 | $1.2 | $3.9 | | Total restructuring costs | $12.8 | $6.4 | $8.8 | Restructuring Costs by Segment (in millions USD) | Segment | 2023 (millions USD) | 2022 (millions USD) | 2021 (millions USD) | | :-------------------------- | :------- | :------- | :------- | | Enclosures | $1.4 | $3.5 | $6.0 | | Electrical & Fastening Solutions | $1.6 | — | $0.7 | | Thermal Management | $8.9 | $0.6 | $1.4 | | Other | $0.9 | $2.3 | $0.7 | | Consolidated | $12.8 | $6.4 | $8.8 | 4. Earnings Per Share This section presents the calculation of basic and diluted earnings per ordinary share based on net income and weighted average shares Earnings Per Ordinary Share (in millions, except per share data) | Metric | 2023 | 2022 | 2021 | | :------------------------------------------------------ | :------- | :------- | :------- | | Net income (millions USD) | $567.1 | $399.8 | $272.9 | | Basic weighted average ordinary shares outstanding (millions) | 165.6 | 166.3 | 167.9 | | Diluted weighted average ordinary shares outstanding (millions) | 168.2 | 168.3 | 169.7 | | Basic earnings per ordinary share | $3.42 | $2.40 | $1.63 | | Diluted earnings per ordinary share | $3.37 | $2.38 | $1.61 | | Anti-dilutive stock options excluded (millions) | 0.3 | 0.6 | 0.6 | 5. Acquisitions This section details nVent's acquisitions, including the $1.1 billion ECM Industries acquisition, its purchase price allocation, and pro forma financials - On May 18, 2023, nVent acquired ECM Industries for approximately $1.1 billion in cash, funded primarily by new debt341 Preliminary Purchase Price Allocation for ECM Industries Acquisition (in millions USD) | Asset/Liability | As Previously Reported (Sept 30, 2023) (millions USD) | As Revised (Dec 31, 2023) (millions USD) | | :-------------------------- | :------------------------------------- | :------------------------ | | Cash | $45.7 | $45.7 | | Accounts receivable | $78.1 | $77.0 | | Inventories | $104.0 | $104.2 | | Property, plant and equipment | $75.9 | $75.3 | | Identifiable intangible assets | $524.0 | $524.0 | | Goodwill | $371.7 | $375.7 | | Current liabilities | $(51.4) | $(53.9) | | Purchase price | $1,133.7 | $1,134.1 | - Identifiable intangible assets acquired from ECM Industries included $113.7 million in trade names (mostly indefinite-lived), $381.7 million in definite-lived customer relationships (20-year useful life), and $22.0 million in definite-lived proprietary technology (7-year useful life)344 - ECM Industries contributed $240.7 million in net sales and $31.4 million in operating income from acquisition date to December 31, 2023345 Unaudited Pro Forma Financial Information (ECM Industries Acquisition, in millions USD, except per share data) | Metric | 2023 (millions USD) | 2022 (millions USD) | | :-------------------------- | :------- | :------- | | Pro forma net sales | $3,420.1 | $3,316.5 | | Pro forma net income | $597.5 | $364.5 | | Pro forma basic EPS | $3.61 | $2.19 | | Pro forma diluted EPS | $3.55 | $2.17 | - Other acquisitions in 2021 included Vynckier ($27.0 million) and CIS Global LLC ($202.4 million), and in 2023, TEXA Industries ($34.8 million)350352354 6. Goodwill and Other Identifiable Intangible Assets This section details changes in goodwill by reporting unit, identifiable intangible assets, and estimated future amortization expense Changes in Goodwill by Reporting Unit (in millions USD) | Segment | December 31, 2022 (millions USD) | Acquisitions/Divestitures (millions USD) | Foreign Currency Translation/Other (millions USD) | December 31, 2023 (millions USD) | | :-------------------------- | :------------------ | :------------------------ | :------------------------------- | :------------------ | | Enclosures | $414.4 | $11.3 | $4.7 | $430.4 | | Electrical & Fastening Solutions | $1,052.0 | $375.7 | — | $1,427.7 | | Thermal Management | $711.7 | — | $1.3 | $713.0 | | Total goodwill | $2,178.1 | $387.0 | $6.0 | $2,571.1 | - No goodwill impairment expense was recorded in 2023, 2022, or 2021357 Identifiable Intangible Assets (in millions USD, as of December 31, 2023) | Type | Cost (millions USD) | Accumulated Amortization (millions USD) | Net (millions USD) | | :-------------------------------- | :------- | :----------------------- | :------- | | Customer relationships | $1,684.8 | $(599.3) | $1,085.5 | | Proprietary technologies and patents | $63.7 | $(20.8) | $42.9 | | Other definite-life intangible assets | $18.0 | $(4.8) | $13.2 | | Total definite-life intangibles | $1,766.5 | $(624.9) | $1,141.6 | | Trade names (indefinite-life) | $375.4 | — | $375.4 | | Total intangibles | $2,141.9 | $(624.9) | $1,517.0 | - Identifiable intangible asset amortization expense was $89.7 million in 2023, $70.7 million in 2022, and $67.5 million in 2021358 Estimated Future Amortization Expense for Identifiable Intangible Assets (in millions USD) | Year | Estimated Amortization Expense (millions USD) | | :--- | :----------------------------- | | 2024 | $97.0 | | 2025 | $94.5 | | 2026 | $94.5 | | 2027 | $94.4 | | 2028 | $90.2 | 7. Supplemental Balance Sheet Information This section provides supplemental balance sheet information, including detailed breakdowns of inventories, property, plant and equipment, and other assets/liabilities Inventories (in millions USD) | Category | December 31, 2023 (millions USD) | December 31, 2022 (millions USD) | | :---------------------- | :------------------ | :------------------ | | Raw materials and supplies | $165.1 | $112.9 | | Work-in-process | $34.9 | $36.2 | | Finished goods | $241.3 | $197.6 | | Total inventories | $441.3 | $346.7 | Property, Plant and Equipment, Net (in millions USD) | Category | December 31, 2023 (millions USD) | December 31, 2022 (millions USD) | | :-------------------------------- | :------------------ | :------------------ | | Land and land improvements | $39.6 | $38.6 | | Buildings and leasehold improvements | $217.4 | $180.5 | | Machinery and equipment | $599.6 | $500.4 | | Construction in progress | $37.2 | $34.7 | | Total property, plant and equipment | $893.8 | $754.2 | | Accumulated depreciation and amortization | $503.8 | $465.0 | | Total property, plant and equipment, net | $390.0 | $289.2 | Other Non-Current Assets (in millions USD) | Category | December 31, 2023 (millions USD) | December 31, 2022 (millions USD) | | :-------------------------- | :------------------ | :------------------ | | Deferred compensation plan assets | $19.4 | $16.7 | | Lease right-of-use assets | $118.7 | $76.4 | | Deferred tax assets | $179.2 | $16.3 | | Other non-current assets | $30.2 | $30.2 | | Total other non-current assets | $347.5 | $139.6 | Other Current Liabilities (in millions USD) | Category | December 31, 2023 (millions USD) | December 31, 2022 (millions USD) | | :-------------------------- | :------------------ | :------------------ | | Dividends payable | $32.6 | $30.4 | | Accrued rebates | $90.7 | $98.4 | | Contract liabilities | $27.1 | $22.7 | | Accrued taxes payable | $54.0 | $34.5 | | Current lease liabilities | $25.6 | $17.7 | | Accrued interest | $11.2 | $6.5 | | Other current liabilities | $62.6 | $62.9 | | Total other current liabilities | $303.8 | $273.1 | 8. Accumulated Other Comprehensive Loss This section details components of accumulated other comprehensive loss, including cumulative translation adjustments and derivative market value changes Components of Accumulated Other Comprehensive Loss (in millions USD) | Component | December 31, 2023 (millions USD) | December 31, 2022 (millions USD) | | :------------------------------------------------ | :------------------ | :------------------ | | Cumulative translation adjustments | $(108.0) | $(118.5) | | Change in market value of derivative financial instruments, net of tax | $4.0 | $18.9 | | Accumulated other comprehensive loss | $(104.0) | $(99.6) | 9. Debt This section details nVent's debt outstanding, including term loans and senior notes, interest rates, maturities, and compliance with financial covenants Debt Outstanding (in millions USD) | Debt Type | Average Interest Rate (Dec 31, 2023) | Maturity Year | December 31, 2023 (millions USD) | December 31, 2022 (millions USD) | | :-------------------------- | :----------------------------------- | :------------ | :------------------ | :------------------ | | 2021 Term loan facility | 6.708% | 2026 | $200.0 | $288.8 | | 2023 Term loan facility | 6.708% | 2028 | $292.5 | — | | Senior notes - fixed rate (2028) | 4.550% | 2028 | $500.0 | $500.0 | | Senior notes - fixed rate (2031) | 2.750% | 2031 | $300.0 | $300.0 | | Senior notes - fixed rate (2033) | 5.650% | 2033 | $500.0 | — | | Unamortized issuance costs and discounts | N/A | N/A | $(11.8) | $(5.6) | | Total debt | | | $1,780.7 | $1,083.2 | | Less: Current maturities and short-term borrowings | | | $(31.9) | $(15.0) | | Long-term debt | | | $1,748.8 | $1,068.2 | - In May 2023, nVent Finance issued $500.0 million of 5.650% Senior Notes due 2033 to finance the ECM Industries acquisition365 - The Notes are fully and unconditionally guaranteed by nVent Electric plc and constitute general unsecured senior obligations366367 - In April 2023, nVent and nVent Finance entered into a $300.0 million unsecured term loan facility (2023 Term Loan Facility) for the ECM Industries acquisition371 - As of December 31, 2023, the company was in compliance with all financial covenants in its debt agreements372 Contractual Debt Obligation Maturities (in millions USD) | Year | Amount (millions USD) | | :--------- | :------- | | 2024 | $31.9 | | 2025 | $37.5 | | 2026 | $179.4 | | 2027 | $22.5 | | 2028 | $721.2 | | Thereafter | $800.0 | | Total | $1,792.5 | 10. Derivatives and Financial Instruments nVent uses derivative financial instruments to manage foreign currency and interest rate exposures, detailing their fair values and notional amounts - nVent uses derivative financial instruments (forward foreign currency contracts, cross currency swaps, interest rate swaps) to manage foreign currency and interest rate exposures, not for speculative purposes374375380 - Outstanding foreign currency derivative contracts had gross notional U.S. dollar equivalent amounts of $146.8 million at December 31, 2023376 - Cross currency swaps are used as cash flow hedges, fair value hedges for intercompany debt, or net investment hedges for Euro-U.S. Dollar exchange rate fluctuations377 Fair Value of Financial Instruments (in millions USD, as of December 31, 2023) | Instrument | Recorded Amount (millions USD) | Fair Value (millions USD) | | :-------------------- | :-------------- | :--------- | | Variable rate debt | $492.5 | $492.5 | | Fixed rate debt | $1,300.0 | $1,261.6 | | Total debt | $1,792.5 | $1,754.1 | Recurring Fair Value Measurements (in millions USD, as of December 31, 2023) | Instrument | Level 1 (millions USD) | Level 2 (millions USD) | Level 3 (millions USD) | NAV (millions USD) | Total (millions USD) | | :-------------------------- | :------ | :------ | :------ | :---- | :------ | | Cross currency swap liabilities | — | $(21.7) | — | — | $(21.7) | | Cross currency swap assets | — | $3.9 | — | — | $3.9 | | Foreign currency contract liabilities | — | $(0.8) | — | — | $(0.8) | | Foreign currency contract assets | — | $2.1 | — | — | $2.1 | | Deferred compensation plan assets | $13.3 | — | — | $6.1 | $19.4 | | Total | $13.3 | $(16.5) | — | $6.1 | $2.9 | 11. Income Taxes This section details nVent's income before taxes, provision for taxes, and effective tax rate reconciliation, including significant non-cash tax benefits Income Before Income Taxes (in millions USD) | Category | 2023 (millions USD) | 2022 (millions USD) | 2021 (millions USD) | | :------------- | :------- | :------- | :------- | | Federal (U.K. loss) | $(15.1) | $(23.4) | $(23.7) | | International (non-U.K. income) | $514.6 | $496.0 | $344.4 | | Total | $499.5 | $472.6 | $320.7 | Provision (Benefit) for Income Taxes (in millions USD) | Category | 2023 (millions USD) | 2022 (millions USD) | 2021 (millions USD) | | :------------- | :------- | :------- | :------- | | Total current taxes | $110.1 | $86.9 | $66.2 | | Total deferred taxes | $(177.7) | $(14.1) | $(18.4) | | Total provision (benefit) | $(67.6) | $72.8 | $47.8 | Effective Tax Rate Reconciliation (Percentages) | Item | 2023 | 2022 | 2021 | | :-------------------------------------- | :------- | :------- | :------- | | Federal statutory income tax rate | 23.5% | 19.0% | 19.0% | | Tax effect of international operations | (4.1)% | — | (6.7)% | | Change in tax basis of foreign assets | (14.4)% | — | — | | Recognition of foreign income tax loss carryforwards | (18.7)% | — | — | | Effective tax rate | (13.5)% | 15.4% | 14.9% | - In 2023, a non-cash income tax benefit of $72.0 million was recorded for a step-up in tax basis of intangible assets in Switzerland, and $93.2 million for foreign income tax loss carryforwards in Luxembourg382 Gross Unrecognized Tax Benefits (in millions USD) | Metric | 2023 (millions USD) | 2022 (millions USD) | 2021 (millions USD) | | :-------------------------------------- | :------- | :------- | :------- | | Beginning balance | $13.4 | $15.6 | $17.1 | | Ending balance | $13.9 | $13.4 | $15.6 | - It is reasonably possible that gross unrecognized tax benefits may decrease by $0 to $3.7 million during 2024 due to resolution of non-U.K. examinations and statute expirations383 - As of December 31, 2023, $830.0 million in tax loss carryforwards were available, with a $98.4 million valuation allowance390 12. Benefit Plans This section details nVent's defined-benefit pension and post-retirement health plans, including funded status, benefit expense, assumptions, and asset allocation - nVent sponsors U.S. and non-U.S. defined-benefit pension plans and a post-retirement health plan391 Pension Plans Funded Status (in millions USD) | Metric | December 31, 2023 (millions USD) | December 31, 2022 (millions USD) | | :---------------------------------------- | :------------------ | :------------------ | | Benefit obligation end of year | $159.1 | $133.6 | | Fair value of plan assets end of year | $33.0 | $27.7 | | Benefit obligations in excess of plan assets | $(126.1) | $(105.9) | Net Periodic Benefit Expense (Income) for Pension Plans (in millions USD) | Metric | 2023 (millions USD) | 2022 (millions USD) | 2021 (millions USD) | | :-------------------------- | :------- | :------- | :------- | | Service cost | $2.2 | $2.6 | $3.2 | | Interest cost | $5.8 | $3.1 | $2.8 | | Expected return on plan assets | $(1.4) | $(1.2) | $(1.1) | | Net actuarial loss (gain) | $14.5 | $(62.7) | $(13.7) | | Net periodic benefit expense (income) | $21.1 | $(58.2) | $(8.8) | Weighted-Average Assumptions for Pension Plans (Percentages) | Assumption | 2023 | 2022 | 2021 | | :-------------------------------- | :------- | :------- | :------- | | Discount rate (benefit obligations) | 3.51% | 4.24% | 1.55% | | Discount rate (net periodic benefit expense) | 4.24% | 1.55% | 1.26% | | Expected long-term return on plan assets | 4.76% | 3.81% | 3.64% | | Rate of compensation increase | 3.40% | 3.42% | 2.96% | Pension Plan Asset Allocation (Percentages) | Asset Class | 2023 | 2022 | | :------------------ | :------- | :------- | | Equity securities | 45% | 52% | | Fixed income | 34% | 28% | | Alternative investments | 18% | 16% | | Cash equivalents | 3% | 4% | - Pension and other post-retirement plan contributions were $6.5 million in 2023 and $5.5 million in 2022. Expected 2024 contributions are $7.3 million402 Estimated Future Benefit Payments (in millions USD) | Year | Pension Plans (millions USD) | Post-retirement Health Plan (millions USD) | | :--------- | :------------ | :-------------------------- | | 2024 | $5.7 | $1.2 | | 2025 | $6.8 | $1.1 | | 2026 | $6.3 | $1.1 | | 2027 | $8.0 | $1.1 | | 2028 | $9.0 | $1.0 | | 2029-2033 | $45.8 | $4.6 | - 401(k) plan expense was $13.9 million in 2023, $12.5 million in 2022, and $8.6 million in 2021404 13. Shareholders' Equity This section details nVent's authorized share capital, share repurchase activities, dividends paid per ordinary share, and distributable reserves - Authorized share capital consists of 400.0 million ordinary shares with a par value of $0.01 per share405 - Under the 2021 Authorization, nVent repurchased 1.2 million ordinary shares for $58.8 million in 2023 and 1.6 million shares for $63.3 million in 2022407 - As of December 31, 2023, $81.8 million remained available for share repurchases under the 2021 Authorization408 - Dividends paid per ordinary share were $0.70 for both 2023 and 2022409 - A quarterly cash dividend of $0.19 per ordinary share was declared on December 12, 2023, and again on February 20, 2024410411 - Distributable reserves were $2.7 billion as of December 31, 2023209 14. Segment Information This section provides detailed financial information for nVent's three segments: Enclosures, Electrical & Fastening Solutions, and Thermal Management - nVent classifies operations into Enclosures, Electrical & Fastening Solutions, and Thermal Management segments412 - Segment income excludes intangible amortization, acquisition-related costs, restructuring activities, pension mark-to-market adjustments, impairments, and other unusual non-operating items413 Net Sales by Segment (in millions USD) | Segment | 2023 (millions USD) | 2022 (millions USD) | 2021 (millions USD) | | :-------------------------- | :------- | :------- | :------- | | Enclosures | $1,605.9 | $1,503.7 | $1,244.8 | | Electrical & Fastening Solutions | $1,063.0 | $791.4 | $657.5 | | Thermal Management | $594.7 | $613.9 | $559.7 | | Other | — | — | — | | Consolidated | $3,263.6 | $2,909.0 | $2,462.0 | Segment Income (Loss) (in millions USD) | Segment | 2023 (millions USD) | 2022 (millions USD) | 2021 (millions USD) | | :-------------------------- | :------- | :------- | :------- | | Enclosures | $346.6 | $256.0 | $202.1 | | Electrical & Fastening Solutions | $330.6 | $219.9 | $181.5 | | Thermal Management | $138.5 | $140.8 | $121.2 | | Other | $(95.1) | $(93.1) | $(69.0) | | Consolidated | $720.6 | $523.6 | $435.8 | Reconciliation of Segment Income to Income Before Income Taxes (in millions USD) | Item | 2023 (millions USD) | 2022 (millions USD) | 2021 (millions USD) | | :-------------------------------------- | :------- | :------- | :------- | | Segment income | $720.6 | $523.6 | $435.8 | | Intangible amortization | $(89.7) | $(70.7) | $(67.5) | | Pension and other post-retirement mark-to-market (loss) gain | $(13.9) | $66.3 | $15.1 | | Acquisition transaction and integration costs | $(13.0) | $(0.8) | $(4.1) | | Inventory step-up amortization | $(17.7) | — | — | | Interest expense, net | $(79.4) | $(31.2) | $(32.3) | | Income before income taxes | $499.5 | $472.6 | $320.7 | 15. Share-Based Compensation This section details nVent's long-term incentive program, including RSUs, PSUs, and stock options, along with total compensation expense - nVent's long-term incentive program includes restricted stock units (RSUs), performance share units (PSUs), and stock options under the 2018 Omnibus Incentive Plan417 Total Share-Based Compensation Expense (in millions USD) | Award Type | 2023 (millions USD) | 2022 (millions USD) | 2021 (millions USD) | | :-------------------------- | :------- | :------- | :------- | | Restricted stock units | $11.3 | $9.8 | $8.7 | | Performance share units | $7.7 | $11.1 | $4.1 | | Stock options | $4.5 | $4.1 | $3.8 | | Total | $23.5 | $25.0 | $16.6 | - As of December 31, 2023, unrecognized compensation expense for RSUs was $8.6 million (1.9 years weighted-average period), for PSUs was $8.7 million (1.7 years), and for stock options was $3.3 million (1.9 years)420423427 - PSUs granted in 2023, 2022, and 2021 vest based on a three-year service period and total shareholder return (TSR) relative to the S&P 400 Industrials422 - Stock options generally vest one-third each year over three years and expire ten years after the grant date, with fair value estimated using a Black-Scholes model424425 16. Leases This section details nVent's operating leases, including rent expense, weighted average lease term and discount rate, and future lease payments - nVent has operating leases for office space, production facilities, distribution centers, warehouses, sales offices, fleet vehicles, and equipment429 - Rent expense was $29.7 million in 2023, $25.9 million in 2022, and $19.9 million in 2021431 Weighted Average Lease Term and Discount Rate (as of December 31) | Metric | 2023 | 2022 | | :-------------------------- | :------- | :------- | | Weighted average remaining lease term (Operating leases) | 6 years | 6 years | | Weighted average discount rate (Operating leases) | 4.9% | 4.0% | Future Lease Payments Under Non-Cancelable Operating Leases (in millions USD, as of December 31, 2023) | Year | Amount (millions USD) | | :--------- | :------- | | 2024 | $31.1 | | 2025 | $28.1 | | 2026 | $25.4 | | 2027 | $21.4 | | 2028 | $14.6 | | Thereafter | $25.4 | | Total lease payments | $146.0 | | Less imputed interest | $(22.0) | | Total reported lease liability | $124.0 | Supplemental Balance Sheet Information Related to Operating Leases (in millions USD, as of December 31) | Item | Classification | 2023 (millions USD) | 2022 (millions USD) | | :-------------------------- | :-------------------- | :------- | :------- | | Lease right-of-use assets | Other non-current assets | $118.7 | $76.4 | | Current lease liabilities | Other current liabilities | $25.6 | $17.7 | | Non-current lease liabilities | Other non-current liabilities | $98.4 | $63.7 | | Total lease liabilities | | $124.0 | $81.4 | 17. Commitments and Contingencies nVent provides product warranties and indemnifications, with historically insignificant payments, and details outstanding bonds and guarantees - nVent provides warranties and guarantees on its products and may indemnify purchasers for various liabilities related to sold businesses435437 - The maximum obligation under indemnifications is generally not explicitly stated or reasonably estimable, but historically, payments have not been significant436 - Outstanding bonds, letters of credit, and bank guarantees totaled $45.5 million as of December 31, 2023, up from $38.0 million in 2022439 - Management does not believe existing disputes, administrative proceedings, and other claims will have a material impact on consolidated financial statements, but litigation outcomes are unpredictable440 ITEM 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure The company reported no changes in or disagreements with accountants on accounting and financial disclosure - There were no changes in or disagreements with accountants on accounting and financial disclosure441 ITEM 9A. Controls and Procedures Management evaluated disclosure controls and procedures as effective, with ongoing integration of ECM Industries into internal controls - Disclosure controls and procedures were evaluated as e