Nvent Electric Plc · NYSE:NVT
Nvent Electric — Investor Day (February 2019)
75 slides from Nvent Electric's investor day presentation, Feb 27, 2019
Slide 1: 2019 nVent Institutional Investor and Analyst Day
2019 nVent Institutional Investor and Analyst Day Redwood City, California February 27, 2019
Slide 2: Welcome
Welcome J.C. Weigelt Vice President, Investor Relations
Slide 3: Agenda for Today
Agenda for Today Time Agenda Presenter 7:30 Welcome J.C. Weigelt 7:35 – 8:05 Review 2018 and 2019 Priorities Beth Wozniak 8:05 – 8:30 Thermal Management: Setting the Stage for Growth Brad Faulconer 8:30 – 9:30 Question and Answer Session Management 9:30 – 9:35 Safety Overview John Grantz 9:35 – 9:45
Slide 4: Forward-Looking Statement and Key Definitions
Forward-Looking Statement and Key Definitions CAUTION CONCERNING FORWARD-LOOKING STATEMENTS This presentation contains statements that we believe to be "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. All statements, other than statements of hi
Slide 5: nVent Overview
nVent Overview Beth Wozniak Chief Executive Officer
Slide 6: Leading Electrical Company Focused on Connection and Protection
Leading Electrical Company Focused on Connection and Protection Company Characteristics 2018 Financials Industry-leading positions and strong brands ~$2.2B Focused on improving utilization, lowering costs and Revenue maximizing customer uptime Attractive margin profile ~19% Strong free cash
Slide 7: Our nVent Strategy
Our nVent Strategy One nVent Accelerate Innovation and Grow Globally and in Focus on Attractive Verticals Connected Solutions Developing Regions Drive Productivity and Velocity Pursue Targeted Bolt-on Acquisitions Driving a strategy for growth and performance 2019 nVent Institutional Investor and An
Slide 8: Macro Trends are Favorable
Macro Trends are Favorable Technology and Electrification and Connectivity Urbanization Demographic Safety and Shifts Security Trends drive use of more electrical products 2019 nVent Institutional Investor and Analyst Day 8
Slide 9: Focus on Attractive Verticals
Focus on Attractive Verticals Growth Focus Expected Growth Infrastructure Energy Commercial Industrial Total Industry Growth • New products, global focus Verticals* 2018 ($B) 2019 (%) • Connected solutions and digital (%) tools Industrial 16 5 3 • Lower cost of ownership and installation Commercial
Slide 10: 2018 Priority Scorecard
JZ —_ nvent 2018 Priority Scorecard
Slide 11: 2018 nVent Priorities and Results
2018 nVent Priorities and Results 1 Stand up nVent as a Separate Company 2 Drive Organic Sales growth 3 Stabilize Enclosures Margin Overall a successful year 2019 nVent Institutional Investor and Analyst Day 11
Slide 12: Stand up nVent as a Separate Company
1. Stand up nVent as a Separate Company Significant effort across the enterprise to set up a new public company 2019 nVent Institutional Investor and Analyst Day 12
Slide 13: Drive Organic Sales Growth
2. Drive Organic Sales Growth: 5% Organic Growth FY 2018 Innovation and Globally and in One nVent Attractive Verticals Connected Solutions Developing Regions Data Centers and Networking Solutions Digital Product Commercial Information 98% Rail and Transit China, India, Middle East Strategic partners
Slide 14: Stabilize Enclosures Margin
3. Stabilize Enclosures Margin Recent Margin History Strong Position to Support Growth Major capacity expansion + automation 2016 - 2017 Align Value Chain to Serve • New factory plus expansions in Reynosa, Mexico • Cycle time reduction • Local supply chains and channels • New distribution center in
Slide 15: 2019 Priorities
2019 Priorities
Slide 16: 2019 nVent Priorities
2019 nVent Priorities 1 Drive Organic Sales growth 2 Expand Margins 3 Execute our Capital Allocation Strategy Deliver shareholder value 2019 nVent Institutional Investor and Analyst Day 16
Slide 17: Attractive Vertical: Industrial
Attractive Vertical: Industrial Leading Solutions Focus for Growth Key Applications Holistic end-to-end digital customer Modular and wall- experience mount solutions to enable design flexibility Innovation that improves safety, Material Handling reliability and connectivity Connected cooling sol
Slide 18: Attractive Vertical: Data Centers and Networking Solutions
Attractive Vertical: Data Centers and Networking Solutions Racks Cable Support and Fastening and Fixing Pathways Cable Driving Growth in DNS Management Focusing on high density heat Aisle Containment applications for hyper scale datacenters Enclosures Adding new products for power and cooling so
Slide 19: Attractive Vertical: Commercial
Attractive Vertical: Commercial Leading Solutions Aligned for Growth Protecting Entire Buildings Fastening and Support Seismic Protection Expanding selling focus in Lightning Protection targeted cities Grounding & Bonding Improving project Enclosures specifications with architects Cable Mana
Slide 20: Attractive Vertical: Rail and Transit
Attractive Vertical: Rail and Transit Key Global Accounts Focus Applications One nVent Approach 1. nVent HOFFMAN outdoor pole mount Signaling systems integrators enclosure Rolling stock and equipment OEMs Signaling 2. nVent SCHROFF customized cooling Enclosures solution Majority of projects outs
Slide 21: One nVent: Build Scale and Capability
One nVent Build Scale and Capability to Accelerate Growth and Performance Spark Management System Distribution Strategy Commercial Excellence Digital Common Processes, Transformation and Data Analytics nVent Brand Driving transformation with a goal to grow our business 2019 nVent Institutional Inves
Slide 22: One nVent: Spark Management System
One nVent: Spark Management System People are at the core of Spark, positively impacting our business and growing People their careers Growth Growth is the foundation of Spark, driving shareholder, customer and employee value Lean Lean is the relentless pursuit of eliminating waste and increasing ve
Slide 23: One nVent Distribution Partnerships
One nVent Distribution Partnerships Strategic global partnerships across the nVent portfolio to better serve customers and position nVent for the future Partnering to help grow new customers, markets, and address evolving customer experience Work collaboratively with distributor partners to meet mut
Slide 24: Digital: Accelerating our Digital Transformation
Digital: Accelerating our Digital Transformation Business Strategy 2018 Achievements One nVent website Digitize Go-To-Market Offer Connected Solutions One CRM platform 98% digital product data available Enclosures configurators launched 2019 Accelerate Digital Transformation Align business
Slide 25: nVent SCHROFF: Digital Initiative
nVent SCHROFF: Digital Initiative CREATION VELOCITY INNOVATION Turn your ideas into immediate results! Try out Get ready for a rapid design experience with out Learn and collaborate with our industry experts! new front panel configurator and receive a 3D redesigned product configurator, which includ
Slide 26: Accelerate Innovation
Accelerate Innovation High Density In-Row/Liquid Cooling Seismic Bracing New solutions for Rigid bracing solutions managing increasing heat for mechanical, electrical loads and plumbing Direct liquid cooling Builds on fire protection portfolio Expand Configurators Grounding and Bonding Enh
Slide 27: Drive Organic Growth
Drive Organic Growth Attractive Strategic New Products Verticals Partnerships • Commercial, Data • Distributor partnerships • Continue to improve Centers and Networking • Represents over $400M in vitality score Solutions, Industrial and sales today • Customer back Rail and Transit innovation • Growi
Slide 28: Productivity and Velocity
Productivity and Velocity Materials Operations Logistics SG&A Lean materials and Lean enterprise; end-to- Track/trace visibility Lean process and information flow end business process information flow optimization and velocity Customer collaboration Category management in ordering/shippi
Slide 29: Margin Expansion
Margin Expansion Margin Expansion of Price Productivity Inflation 40 - 60bps Pricing excellence End-to-end supply Material inflation Funding investments chain optimization in digital and R&D New pricing software Direct tariff impact is implementation Logistics and distribution improvem
Slide 30: Capital Allocation: Our Foundation
3. Capital Allocation: Our Foundation Return Excess Reinvest in the Manage Leverage M&A Cash to business Shareholders • Net debt to EBITDA • Expect capex of • Focus on bolt-on • Generated Free Cash ratio at 1.7X ~2 - 3% of sales in 2019 acquisitions Flow of $301M in 2018 • Target of 1.5X - 2.0X • In
Slide 31: Expect to Generate Free Cash Flow in 2019
Expect to Generate ~$320M of Free Cash Flow in 2019 Generated $301M of pro forma Free Cash Flow Diluted Weighted Average 2018 Shares Outstanding Repurchased ~$60M of shares ~181M Paid a quarterly dividend Expect to generate ~$320M of Free Cash Flow ~177M Expect to use excess cash to reduce
Slide 32: Capital Deployment to M&A
Capital Deployment to M&A Full Pipeline Benefits Criteria • Opportunities for bolt-on • Add scale and operating • nVent value proposition acquisitions effectiveness • Ability to differentiate • Potential targets have sales • Add value through revenue between $50 - $100M and cost synergies • Accretiv
Slide 33: 2019 nVent Plan
2019 nVent Plan Long Term Outlook 2019 Guidance 2 - 4% Organic Growth Sales Growth 1 - 2 Points above GDP Expected Real GDP at 2 - 3% 40 - 60bp ROS Expansion Attractive Margins EPS grows multiple points faster than sales EPS of $1.80 - $1.90 Represents 5 - 10% constant currency growth ~$320M Free Ca
Slide 34: Segment Review
Segment Review Enclosures and EFS
Slide 35: Enclosures Overview
Enclosures Overview Description 2018 Financials We provide innovative solutions that protect, ~$1.0B connect and manage heat in critical Revenue electronics, communication, control and power equipment. ~17% ROS Verticals Geographies 9% 1% Commercial & 10% Other Developed Residential 61% Developing 1
Slide 36: Enclosures Strategy
Enclosures Strategy Align Digital Focus on Grow to Serve Customer Attractive Globally and Experience Key Verticals in Developing Regions • End-to-end business • Improve digital • Focus effort on high • Localized process focus capabilities potential verticals differentiated • Align value streams • Se
Slide 37: Enclosures Win
Enclosures Win Global Hotel and Casino Chain Global reach • 2 projects in 2018 • 3 planned projects for 2019 Focused on our Data Center and Networking Solutions capabilities Sole spec in all future projects Products • nVent HOFFMAN 2- and 4-post Open Frame Racks • nVent HOFFMAN Cable Manager
Slide 38: Enclosures Summary
Enclosures Summary Enclosures expects to deliver revenue and income growth: Key investments that deliver quality, velocity and productivity Setting value streams to exceed industry service requirements We expect to grow by: Focusing on high-growth segments Launching VOC-based new products th
Slide 39: EFS Overview
EFS Overview Description 2018 Financials ~$570M We provide electrical and fastening solutions Revenue that connect and protect electrical and mechanical systems and civil structures. ~25% ROS Verticals Geographies 3% 9% 8% Other Developed Energy 58% Developing 13% Commercial & 70% Residential Infras
Slide 40: EFS Strategy
EFS Strategy One nVent Grow Globally Accelerate and in Developing Innovation Regions • Rail and Transit • Europe and Middle East • Seismic • Commercial • Localized, differentiated • Prefab • Distributor growth products • Grounding and Bonding • Price realization • Continued expansion in Commercial P
Slide 41: EFS Win
EFS Win New York Commercial Building Customer Desire: • Prefabricated solution for ground terminal boxes (“GTB”) for fire alarm Prefabricated Solutions system • Savings in total installed cost • Specified products per (newly adopted) building codes for fire alarm connections in New York One nVen
Slide 42: EFS Summary
EFS Summary EFS expects to deliver revenue and income growth Continued growth in Commercial and Industrial We expect to grow by: Focused growth initiatives Expansion into Middle East and Europe New product introductions We expect to expand margins by: Driving pricing to offset inflation
Slide 43: Thermal Management
Thermal Management Brad Faulconer President, Thermal Management
Slide 44: Welcome to Thermal Management's Redwood City Campus
Welcome to Thermal Management’s Redwood City Campus Center of Excellence for R&D and Heating Cable Manufacturing 1963 1969 1981 First parallel, RAYCHEM Expanded cut-to-length CHEMELEX development to R&D heating cable develops Auto-Trace, the first polymeric Commercial and Residential • 30 techno
Slide 45: Thermal Management Leadership You Will Meet Today
Thermal Management Leadership You Will Meet Today PAUL THOMAS MARTY LEE DR. LINDA KISS JOHN GRANTZ Vice President, IHS Vice President, BIS Vice President, Vice President, Product Line Product Line Technology Integrated Supply Chain Deep industry experience 2019 nVent Institutional Investor and Analy
Slide 46: What You Will Hear Today
What You Will Hear Today Thermal Management is well positioned to deliver revenue and income growth Highly differentiated products and solutions Continued strength in Commercial and Industrial MRO Longer cycle project activity increasing We expect to grow by: Launch of new products and softw
Slide 47: Thermal Management Overview
Thermal Management Overview Description 2018 Financials We provide electrical thermal solutions that ~$620M connect and protect people, critical Revenue infrastructure, industrial processes and buildings. ~25% ROS Verticals Geographies 3% 1% Infrastructure 13% Other Developed 42% Developing 27% Indu
Slide 48: Thermal Management's Heat Tracing Innovation
Thermal Management’s Heat Tracing Innovation Control Panel Remote Configuration and Monitoring with Supervisor software Heat tracing is… providing heat to maintain temperature Transformer of fluids, by replacing the heat lost through thermal insulation on pipes. RTD Temperature Sensor Lighted End Se
Slide 49: Thermal Management Solutions
Thermal Management Solutions Industrial Heating Heat Tracing for Heating System Solutions Plant Piping and Components Vessels Control, Monitoring Turnkey and Sensing Services Pipe freeze protection Process temperature maintain Pipeline heating Tank and vessel heating Heat Tracing for Fire Rated Buil
Slide 50: Thermal Management Has Strong Competitive Advantages
Thermal Management Has Strong Competitive Advantages Specialized engineering Strong Brand History of innovative and Technical high-quality products and expertise for optimized Recognition services Expertise solutions Ease of Offer one-stop shop from Installation Highly reliable solutions that Comple
Slide 51: Thermal Management Strategy
Thermal Management Strategy Connected Attractive Global Growth Solutions Verticals and Localization • Advanced industrial control • Industrial • Silk Road major and monitoring opportunities • Commercial / Residential • Thermostats and detection • Fit for purpose products and • Rail and Transit local
Slide 52: Industrial Heating Solutions – MRO and Projects
Industrial Heating Solutions (“IHS”) – MRO and Projects Ramp Heating Pipe, Vessel & Tank Maintenance, Repair, Overhaul Tank Heating Systems Thermal Insulation Systems (“MRO”) Cryogenic Tank Base Leak Heating Systems Detection Significant installed base in facilities Systems across the globe Exte
Slide 53: Example: Pipeline Heating – Gulf Coast Swamplands
Example: Pipeline Heating – Gulf Coast Swamplands Application: 12” 36 mile Vacuum Gas Oil (“VGO”) buried and submerged pipeline Crossing historic wetlands throughout the Gulf Coast region Scope: nVent RAYCHEM Skin-Effect Trace-Heating System (“STS”) with fiber optic distributed temperature sen
Slide 54: Building and Infrastructure Solutions – Specified Applications
Building and Infrastructure Solutions (“BIS”) – Specified Applications Rail Heating Full range of safety, performance and comfort solutions 2019 nVent Institutional Investor and Analyst Day 54
Slide 55: BIS Application Growth
BIS Application Growth Fire Rated Wiring Floor Heating nVent PYROTENAX life nVent NUHEAT electric safety circuit protection floor heating Exceeds industry Made to measure for standards ease of installation Home automation Rail Heating Hot Water Maintenance nVent RAYCHEM high nVent RAYC
Slide 56: Thermal Management Commercial Project Win
Thermal Management Commercial Project Win Historic New York City Hotel Application: Building retrofit with multiple runs from under 100ft to over 1,000ft Various circuit sizes up to 3,000 Amps Interior and exterior segments, vertical and horizontal Pressurization Fans Smoke Extraction Fans pla
Slide 57: Connected Solutions New Product Family
Connected Solutions New Product Family Strategic Actions 2019 Focus Digitization: connectivity and analytics RAYCHEM ELEXANT family launches User experience Cloud connectivity and analytics Global platforms Expanded services Launching a New ELEXANT Family of Connected Controls ELEXANT Wi
Slide 58: Advanced Engineering Automation with TracerLynx Design Software
Advanced Engineering Automation with TracerLynx Design Software Lowering customer’s total installed costs using state of the art 3D design software to optimize power distribution Start projects earlier, rapid change management, and schedule compression Early and accurate placement of panels at th
Slide 59: Global Growth – China and Silk Road Focus
Global Growth – China and Silk Road Focus Industrial Silk Road: global project sales and execution engagement Manufacturing localization to provide fit-for-purpose products with features valued by local customers Commercial Spec focus for differentiation and demand creation Focus on safety a
Slide 60: Business Performance Improvement Through Spark
Business Performance Improvement Through Spark >900 bps improvement in Operating Margin since 2012 Lean Manufacturing Lean Engineering New Product Development Redwood City Plant Global Engineering Centers NPD Process • ~50% cycle time reduction • Standard work and visual mgmt. • Standard work and vi
Slide 61: Thermal Management Summary
Thermal Management Summary Thermal Management is well positioned to deliver revenue and income growth Highly differentiated products and solutions Continued strength in Commercial and Industrial MRO Longer cycle project activity increasing We expect to grow by: Launch of new products and sof
Slide 62: At nVent, we believe that safer systems ensure a more secure world
At nVent, we believe that safer systems ensure a more secure world. We connect and protect our customers with inventive electrical solutions. 62
Slide 63: Agenda for Today
Agenda for Today Time Agenda Presenter 7:30 Welcome J.C. Weigelt 7:35 – 8:05 Review 2018 and 2019 Priorities Beth Wozniak 8:05 – 8:30 Thermal Management: Setting the Stage for Growth Brad Faulconer 8:30 – 9:30 Question and Answer Session Management 9:30 – 9:35 Safety Overview John Grantz 9:35 – 9:45
Slide 64: nVent Leadership Bios
nVent Leadership Bios
Slide 65: nVent Leadership Bios
nVent Leadership Bios Beth Wozniak CHIEF EXECUTIVE OFFICER Beth Wozniak was announced as the future CEO of nVent in 2017 before the separation from Pentair, and assumed that role at separation. She previously served as Pentair's senior vice president and president of its Electrical segment, and as p
Slide 66: nVent Leadership Bios
nVent Leadership Bios Stacy McMahan EXECUTIVE VICE PRESIDENT, CHIEF FINANCIAL OFFICER Stacy McMahan was announced as the future CFO of nVent in 2017 before the separation from Pentair, and assumed that role at separation. Prior to joining nVent, she was the CFO of Spectranetics Corporation, a medica
Slide 67: nVent Leadership Bios
nVent Leadership Bios Brad Faulconer PRESIDENT, THERMAL MANAGEMENT Brad Faulconer was announced as the future President of Thermal Management in 2017 before the separation from Pentair, and assumed that role at separation. Faulconer has 27 years of experience with Tyco, Pentair and nVent. Prior to t
Slide 68: nVent Leadership Bios
nVent Leadership Bios Paul Thomas VICE PRESIDENT, INDUSTRIAL HEATING SOLUTIONS, THERMAL MANAGEMENT Paul Thomas has over 20 years of experience at Pentair and nVent in various positions including Gulf Coast East General Manager, Director of Strategic Business Units, VP/GM USA and Latin America for Th
Slide 69: nVent Leadership Bios
nVent Leadership Bios Marty Lee VICE PRESIDENT, BUILDING & INFRASTRUCTURE, THERMAL MANAGMENT Marty Lee has over 20 years of combined experience at Raychem, Pentair and nVent in various positions including Engineering, Sales, Business Development, Marketing, Operations and Supply. Most recently he wa
Slide 70: nVent Leadership Bios
nVent Leadership Bios J.C. Weigelt VICE PRESIDENT, INVESTOR RELATIONS J.C. Weigelt currently serves as vice president, Investor Relations for nVent and has served in that role since May 2018 following nVent’s separation from Pentair. He previously served as Pentair’s vice president, Investor Relatio
Slide 71: Appendix: GAAP to Non-GAAP Measurements & Reconciliations
Appendix GAAP to Non-GAAP Measurements & Reconciliations
Slide 72: Reported to Adjusted 2018 Reconciliation
Reported to Adjusted 2018 Reconciliation 2019 nVent Institutional Investor and Analyst Day 72
Slide 73: Reported to Adjusted 2017 Reconciliation
Reported to Adjusted 2017 Reconciliation 2019 nVent Institutional Investor and Analyst Day 73
Slide 74: Reported to Adjusted 2019 Reconciliation
Reported to Adjusted 2019 Reconciliation 2019 nVent Institutional Investor and Analyst Day 74
Slide 75: Organic Sales Growth and Free Cash Flow Reconciliation
Organic Sales Growth and Free Cash Flow Reconciliation 2019 nVent Institutional Investor and Analyst Day 75