Core Insights - nVent Electric plc has introduced new modular liquid cooling solutions aimed at meeting the cooling requirements of next-generation AI chips, showcasing these innovations at SC25 [1][3][12] - The company is collaborating with Siemens to develop a liquid cooling and power reference architecture tailored for hyperscale AI workloads [8] Product Offerings - The new product portfolio includes modular and scalable row-based coolant distribution units (CDUs), next-generation power distribution units (PDUs), and advanced technology cooling system manifolds [3][4] - nVent's CDUs and PDUs feature a common control platform designed to enhance reliability and improve user experience for data center operators [3] Industry Collaboration - nVent is participating in Project Deschutes, exhibiting a new CDU design based on Google's specifications, which aims to accelerate the adoption of liquid cooling in data centers [9] - The company is leveraging its extensive experience and technical expertise to address unique challenges faced by customers in the data center industry [2][7] Educational Initiatives - nVent will host "Tech Talks" at SC25 to provide insights into new products and address critical industry questions, supporting data center managers in deploying the latest AI technology [11] - Industry experts from nVent, NVIDIA, Lenovo, HPE, and AMD will participate in a panel discussion on the evolution of liquid cooling technology [10] Marketing Campaign - nVent is launching a new marketing campaign titled "We Do Cool Stuff" to highlight its leadership and innovation in the data center industry [12][13]

Core Insights - The company reported a 6% growth in sales, a 100 basis point expansion in segment margins, and a 17% increase in adjusted EPS, achieving a free cash flow conversion of 102% [1][22][23] - The backlog reached a record $15 billion, reflecting sustained demand for the company's solutions [1][24][27] - The proprietary business system is evolving as a growth engine, combining 80/20 and Lean principles with digital and AI approaches to enhance customer focus and operational efficiency [2][5][6] Financial Performance - Fiscal 2025 was marked by strong execution, with organic revenue growth of 4% and adjusted EPS of $1.26, a 14% year-over-year increase [22][23] - The company ended the quarter with $400 million in available cash and a net debt ratio of 2.4 times, within the long-term target range [23] - Adjusted free cash flow improved by approximately $700 million to $2.5 billion for the year [23] Segment Performance - Orders grew 6% in the quarter, with notable growth in The Americas (9%) and EMEA (3%), while APAC saw a slight decline of 1% [24][25] - The Americas experienced a 3% organic sales increase, while EMEA delivered 9% organic growth [25][27] - The backlog grew 13%, with system backlog increasing by 14% and service backlog by 9% [27] Strategic Initiatives - The company is updating its long-term growth algorithm to reflect improved mid-single-digit top-line growth and double-digit adjusted EPS growth [2][28] - The focus remains on investing in organic growth, returning capital to shareholders, and pursuing selective acquisitions [29] - The proprietary business system aims to identify and remove barriers to growth, with over 700 colleagues engaged in priority areas [6][9] Market Position and Innovations - The company is strengthening its leadership in advanced thermal management, particularly for data centers, with new product launches like the coolant distribution unit [13][14][15] - The transition to liquid cooling technologies is expected to enhance the company's competitive advantage in the data center vertical [14][15][56] - A significant project in Zurich will provide green heat to the city, showcasing the company's commitment to sustainable solutions [16][17][18] Future Outlook - The company anticipates organic sales growth of approximately 3% for the first quarter and mid-single-digit growth for the full year [30][31] - Adjusted EPS is expected to be approximately $4.55 per share, reflecting over 20% growth [30] - The guidance for fiscal 2026 includes a target of 50% operating leverage and approximately 100% free cash flow conversion [30][31]

Financial Data and Key Metrics Changes - Fiscal 2025 saw a 6% increase in sales, with segment margins expanding by 100 basis points and adjusted EPS rising by 17% [8][24] - Free cash flow conversion reached 102%, reflecting disciplined execution and financial strength [8][24] - The company ended the quarter with approximately $400 million in available cash and net debt declined to 2.4 times compared to the prior year [24] Business Line Data and Key Metrics Changes - Organic revenue grew 4% in Q4, with segment margin expanding by 20 basis points to 18.8% [23] - Orders grew 6% in the quarter, with a notable 9% growth in the Americas, driven by data center strength [24] - EMEA orders increased by 3%, while APAC saw a small decline of 1% due to lower systems volumes [24] Market Data and Key Metrics Changes - The backlog expanded by 13% to a record $15 billion, with system backlog growing by 14% and service backlog by 9% [24] - In the Americas, sales were up 3% organically, while EMEA delivered 9% organic growth [25] - APAC sales declined 3% organically, primarily due to lower volumes in China [25] Company Strategy and Development Direction - The company is updating its long-term growth algorithm to reflect improved mid-single-digit top-line growth and double-digit adjusted EPS growth [8][27] - A proprietary business system is being implemented to enhance operational efficiency and customer-centricity [9][10] - The focus on technology innovation and sustainability is expected to drive future growth, particularly in advanced thermal management for data centers [15][17] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to navigate evolving market conditions and achieve long-term growth commitments [30] - The guidance for fiscal 2026 includes expectations for mid-single-digit organic revenue growth and approximately 100% free cash flow conversion [29][30] - The company is focused on leveraging strengths in HVAC controls and digital solutions to capture significant opportunities [21][27] Other Important Information - The company is pursuing selective acquisitions to strengthen its portfolio while maintaining a strong balance sheet [28] - Recent leadership changes aim to enhance operational capabilities and align talent with strategic priorities [11] Q&A Session Summary Question: Can you walk through the 50% operating leverage target for 2026? - Management indicated that EMEA and APAC will be the main drivers of margin improvement, with overall operating leverage expected to be in the 50s or above [33] Question: What are the opportunities for cost and portfolio improvements? - Management highlighted ongoing efforts to reduce G&A costs and improve productivity through the proprietary business system, with a vibrant acquisition pipeline [34][38] Question: Can you provide details on the $250 million benefits related to operating leverage? - Management confirmed that the operating leverage is expected to improve over time, driven by productivity and responsible cost reductions [40][41] Question: What is the outlook for orders in the first quarter? - Management noted that the health of the pipeline continues to improve, with opportunities for growth in orders despite tough comparisons [51] Question: How does the company view the content opportunity in data centers? - Management emphasized that the demand for cooling solutions is increasing due to higher power requirements from newer chips, positioning the company well in the market [66] Question: Can you elaborate on the investments in technology for the aftermarket? - Management stated that technology investments are aimed at both gaining market share and improving margin profiles by lowering service costs [69]

Financial Data and Key Metrics Changes - Fiscal 2025 saw a sales growth of 6%, with segment margins expanding by 100 basis points and adjusted EPS increasing by 17% [6][20] - Free cash flow conversion reached 102%, reflecting disciplined execution and financial strength [6][21] - The company ended the quarter with approximately $400 million in available cash, and net debt declined to 2.4 times compared to the prior year [21] Business Line Data and Key Metrics Changes - Organic revenue grew 4% in the fourth quarter, with segment margin expanding by 20 basis points to 18.8% [20] - Orders grew 6% in the quarter, with a notable 9% growth in the Americas, supported by strength in data centers [21] - In EMEA, orders increased by 3%, while APAC saw a small decline of 1% due to decreasing systems [22] Market Data and Key Metrics Changes - The backlog expanded by 13% to a record $15 billion, with system backlog growing by 14% and service backlog by 9% [21][24] - In the Americas, sales were up 3% organically, while EMEA delivered 9% organic growth [22] - APAC experienced a 3% organic sales decline, primarily due to lower volumes in China [22] Company Strategy and Development Direction - The company is updating its long-term growth algorithm to reflect improved mid-single-digit top-line growth and double-digit adjusted EPS growth [6][24] - The proprietary business system is being developed as a growth engine, focusing on customer-centric and continuous improvement [5][8] - The company aims to leverage strengths in HVAC controls and digital solutions to capture significant opportunities in decarbonization and mission-critical systems [19][24] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to navigate evolving market conditions and achieve long-term growth commitments [26] - The guidance for fiscal 2026 includes expectations for mid-single-digit organic revenue growth and approximately 100% free cash flow conversion [25][26] - Management highlighted the importance of operational efficiencies and a record backlog in supporting future growth [25][26] Other Important Information - The company is focusing on investments in organic growth, returning capital to shareholders, and pursuing selective acquisitions [24] - Recent leadership changes include the appointment of a new leader for the Americas segment to sharpen customer focus [10] Q&A Session Summary Question: Can you walk through the 50% operating leverage target for 2026? - Management indicated that EMEA and APAC will be the main drivers of margin improvement, with a comfortable outlook for operating leverage in the 50s or above [28][29] Question: What are the opportunities for cost and portfolio improvements? - Management emphasized ongoing efforts to reduce G&A costs and improve productivity through the proprietary business system, with a vibrant acquisition pipeline [31][32] Question: Can you provide more detail on the $250 million benefits from operating leverage? - Management confirmed that the operating leverage will continue to improve over time, driven by productivity and responsible cost reductions [32][34] Question: What is the outlook for orders in the first quarter? - Management noted that the health of the pipeline continues to improve, with expectations for order growth despite tough comparisons [36] Question: How will the company achieve 100% cash flow conversion? - Management highlighted strong improvements in receivable management and inventory management as key drivers for free cash flow conversion [38][39] Question: What are the targeted actions for margin improvement in EMEA and APAC? - Management stated that margin improvement will come from a combination of pricing discipline, operational efficiency, and ongoing deployment of the business system [40] Question: How does the company view the content opportunity in data centers? - Management expressed confidence in the continued demand for both air and liquid cooling solutions, emphasizing the strength of their chiller offerings [41] Question: What is the impact of technology investments on aftermarket services? - Management indicated that technology investments are driving both share gain and margin improvement by lowering costs to serve [43] Question: Can you discuss the order growth from specific verticals? - Management noted strong growth in data centers, pharmaceuticals, and advanced manufacturing as key verticals driving backlog growth [45]

Financial Performance - The company achieved organic sales growth of 6% for the full year 2025[9], and 4% for Q4 2025[22], demonstrating broad-based strength across its operations[9] - Adjusted Segment EBITA margin expanded by 100 basis points to 171% for the full year 2025[9], and 20 basis points to 188% for Q4 2025[22] - Adjusted EPS increased by 17% year-over-year[9] from $321 in FY24 to $376 in FY25[39], successfully offsetting dilution from the R&LC divestiture[9] - Adjusted free cash flow conversion was strong at 102% for the full year 2025[9], validating disciplined capital allocation[9] - Q4 2025 adjusted EPS increased 14% year-over-year, from $111 to $126[24] Orders and Backlog - Orders grew by 7% for the full year 2025, with strong performance in the Americas offsetting softness in China[9] - Backlog grew by 13% to approximately $15 billion, providing visibility into future growth[9] Future Outlook - The company initiated FY26 adjusted EPS guidance of approximately $455, representing over 20% growth[9] - The company expects adjusted free cash flow conversion of approximately 100% for FY26[9] - For Q1 2026, the company anticipates organic revenue to be up approximately 3% and adjusted EPS to be approximately $083[43]