Nvent Electric Plc · NYSE:NVT
Nvent Electric — Investor Day (March 2023)
77 slides from Nvent Electric's investor day presentation, Mar 7, 2023
Slide 1: Welcome
Welcome Tony Riter, Vice President, Investor Relations March 7, 2023 nVent 2023 Investor Day 1 March 7, 2023
Slide 2: Agenda
Agenda Time (EST) Topic Speaker, Title Tony Riter 9:00 a.m. Welcome VP, Investor Relations Beth Wozniak 9:05 a.m. Building a More Sustainable & Electrified World Chief Executive Officer Aravind Padmanabhan 9:35 a.m. Innovation & Digital Transformation Chief Technology Officer Joe Ruzynski 9:45 a.m.
Slide 3: 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 4: Logistics
Logistics Hybrid Meeting • Slides posted on investor relations section of nVent.com • Q&A session will feature questions live and the opportunity to submit questions via webcast • Meeting will be archived on investor relations section of nVent.com nVent 2023 Investor Day 4 March 7, 2023
Slide 5: Building a More Sustainable and Electrified World
Building a More Sustainable and Electrified World Beth Wozniak, Chief Executive Officer March 7, 2023 nVent 2023 Investor Day 5 March 7, 2023
Slide 6: nVent 2023 Investor Day March 7, 2023
nVent 2023 Investor Day 6 March 7, 2023
Slide 7: Key Messages
Key Messages 1 Demonstrated strong performance and value creation Changing the growth profile of nVent; significant portion of 2 portfolio is tied to secular trends Well positioned to grow with the Electrification of Everything 3 and Sustainability Confident in our strategy with multiple growth and
Slide 8: nVent Overview
nVent Overview Company Characteristics 2022 Financials ▪ Leader in connection and protection ▪ Industry leading positions and strong brands $2.9B $2.40 ▪ Attractive margin profile Sales Adjusted EPS ▪ Well positioned with the Electrification of Everything ▪ Strong free cash flow generation 20% 22% O
Slide 9: nVent Value Proposition
nVent Value Proposition Mission Critical Solutions for Resiliency and Safety Customer Productivity and Electrification Protect electronics and systems from Total Cost of Ownership Meet stringent global regulatory standards disruptions and harsh environments Reduce labor cost in design and and certif
Slide 10: Our nVent Story Since Spin in 2018
Our nVent Story Since Spin in 2018 Sales Our Growth Journey: ▪ Growing and scaling as one nVent ▪ Focusing on high-growth verticals $2.9B ▪ Driving new products and innovation $2.2B ▪ Establishing an acquisition track record 2018 2022 ▪ Transforming digitally with velocity Market Cap wit $7.7B 20% 2
Slide 11: nVent Total Shareholder Returns
nVent Total Shareholder Returns Up 138% since spin! 2018 2019 2020 2021 2022 2023 Delivering strong total shareholder returns As of March 3, 2023 nVent 2023 Investor Day 11 March 7, 2023
Slide 12: Macro Trends
Macro Trends Sustainability Electrification Digitalization Infrastructure of Everything Investments ▪ More generation from renewable ▪ Growth in demand for electricity ▪ Need for digitalized and smart ▪ Government Infrastructure sources in new verticals electrical solutions investments in the United
Slide 13: Recent Legislative Funding Should Further Increase Our Growth
Recent Legislative Funding Should Further Increase Our Growth U.S. legislative funding EU legislative funding ▪ Infrastructure Investment and Jobs Act ▪ EU Recovery Plan Legislation ▪ Inflation Reduction Act ▪ EU Green Deal ▪ Clean energy from wind, solar, hydrogen to clean fuels ▪ Energy efficiency
Slide 14: Connecting and Protecting The Electrification of Everything
Connecting and Protecting The Electrification of Everything Data E-mobility Commercial Energy Power Energy Industrial Renewable Solutions Transition Utilities Storage Solutions Energy nVent 2023 Investor Day 14 March 7, 2023
Slide 15: Strategic Drivers
We Developed Our Strategy to Win One nVent Strategic Drivers High-growth New products and Global growth verticals innovation Grow Acquisitions and partnerships Productivity and Transform Digital acceleration Working capital velocity Executing on our strategy to drive growth and performance nVent 202
Slide 16: High-Growth Vertical Opportunities
High-Growth Vertical Opportunities nVent Reported Industrial: 42% Comm/Res: 28% Infrastructure: 25% Energy: 5% Verticals Industrial Solutions Commercial Data Solutions Energy Transition* Power Utilities ▪ Industrial automation ▪ Smart buildings ▪ Clean fuels ▪ Digitalization ▪ Density of Power & Dat
Slide 17: Industrial and Commercial Growth Opportunities
Industrial and Commercial Growth Opportunities Industrial Solutions* Commercial* ~$830M nVent sales 23% Sales ’20-’22 CAGR $12B Total opportunity ~$390M nVent sales 15% Sales ’20-’22 CAGR $16B Total opportunity Our solutions enable industrial automation and digitalization Our solutions are needed fo
Slide 18: Infrastructure: Data Solutions Growth Opportunity
Infrastructure: Data Solutions Growth Opportunity Data Solutions* Attractive and growing opportunity ~30% nVent sales CAGR (’20-’22) ~$375M nVent sales $10B Total opportunity Our solutions are critical for increasing digitalization Driving growth in data solutions by: ▪ One nVent commercial team foc
Slide 19: Infrastructure: Power Utilities and Renewables Growth Opportunities
Infrastructure: Power Utilities and Renewables Growth Opportunities Power Utilities* Renewables* Total ~$90M nVent sales 19% Sales ’20-’22 CAGR $4B opportunity ~$50M nVent sales 26% Sales ’20-’22 CAGR <$2B Total opportunity Our solutions offer protection for power utilities Our solutions provide res
Slide 20: Global Growth
Global Growth EMEA* APAC* ~$620M nVent sales 16% Sales ’20-’22 CAGR ~$210M nVent sales 21% Sales ’20-’22 CAGR Invested in commercial teams, localized products, new plants Strategy Next 3 Years Focus on high-growth verticals Expand local product portfolio Strengthen distribution partnerships Build re
Slide 21: One nVent Strategic Distribution
One nVent Strategic Distribution Strategic Distribution Partnerships Testimonials ~25% 23% of nVent’s Organic sales Preferred “We know we can count on nVent for innovative products, outstanding total sales CAGR (’20-’22) Strategic Partner service and a shared focus on achieving growth together.” -CE
Slide 22: Acquisitions
Acquisitions $75B Connect and Protect Total Opportunity Proven Acquisition Track Record Acquisition Framework ▪ IEC enclosures ▪ Industrial Automation ▪ Cable management ▪ Data Solutions Invest to Great ▪ Non-metallic enclosures Grow Products ▪ Renewables ▪ Power distribution units Ability to High-
Slide 23: Spark Management System
Spark Management System PEOPLE GROWTH Build an inclusive and diverse Drive market back, voice of the culture customer and commercial excellence 8pt Increase in employee engagement score since 2018 3pts ofproducts sales growth from new in 2022 LEAN ENTERPRISE DIGITAL VELOCITY Increase customer value
Slide 24: Environmental, Social and Governance
Environmental, Social and Governance People Products Planet 2025 Goals: 2025 Goals: 2030 Goals: (updated in 2021 ESG report) ▪ Increase representation of women in ▪ Reach >90% of products in our active New ▪ Achieve 50% reduction in Scope 1 and management globally by 20% Product Introduction funnel
Slide 25: Building a More Sustainable and Electrified World
Building a More Sustainable and Electrified World Investing in Sustainability and Strong Customer Electrification Value Propositions ▪ New Products: by 2025 90% of our new ▪ Energy efficiency product funnel will have positive ESG impact ▪ Resiliency and protection ▪ Time savings and labor savings ▪
Slide 26: Summary
Summary ▪ We are well positioned for growth with the Electrification of Everything and Sustainability ▪ We have demonstrated strong performance and have opportunities ahead of us for further value creation ▪ We have top tier margins and strong cash flow with runway nVent is well positioned to grow a
Slide 27: Innovation and Digital Transformation
Innovation and Digital Transformation Aravind Padmanabhan, Chief Technology Officer March 7, 2023 nVent 2023 Investor Day 27 March 7, 2023
Slide 28: New Product Introduction (NPI)
New Product Introduction (NPI) Long-Term 2023 2020 2022 2018 25% vitality 32 products 53 products 59 products >50 products 14% vitality 15% vitality 20% vitality >20% vitality Contribute ~2 pts of growth each year R&D 32% Accretive to nVent margins spend Innovating and Increasing Velocity Differenti
Slide 29: Digital Transformation Creating Value
Digital Transformation Creating Value Executing our Strategy Digitize Go-to-Market Digitize Operations Data and Analytics Software ▪ Digital data exchange ▪ Supply chain end-to-end visibility ▪ Unified data lake for analytics Foundation ▪ Real-time order and ▪ Shipment track and trace ▪ Advanced dat
Slide 30: Progressing on Our Connected Products Roadmap
Progressing on our Connected Products Roadmap nVent Software Continuum Design & Configure Embedded Connect Analyze Specify & Build Run & Control Access & Manage Optimize & Predict ▪ >$500M of sales enabled by software 50% increase since 2021 ▪ >10% of nVent sales is enabled by proprietary design and
Slide 31: Summary
Summary ▪ New products and innovation are key contributors to our growth. ▪ Digital transformation is helping drive velocity, growth and margin enhancement. ▪ Software-enabled products are an increasing part of our portfolio. nVent 2023 Investor Day 31 March 7, 2023
Slide 32: Enclosures
Enclosures Joe Ruzynski, President March 7, 2023 nVent 2023 Investor Day 32 March 7, 2023
Slide 33: Enclosures Overview
Enclosures Overview Business Strengths 2022 Financials Verticals Geographies ▪ Enclosures leader in the U.S. and #2 globally* $1.5B 55% 68% Sales NAM Industrial ▪ Leader in data protection and advanced cooling 28% 22% 21% Infrastructure EMEA ▪ More than 100 million Organic systems protected 8% globa
Slide 34: Enclosures Value Proposition
Enclosures Value Proposition We Make Systems Resilient We Innovate New Solutions We Make it Easy to help customers avoid downtime through in the fastest growing verticals, with a global presence and advanced digital optimum protection, application expertise, to solve the most challenging problems. t
Slide 35: Growing in Data Solutions
Growing in Data Solutions Leading with an innovative systems approach, Our Fastest Growing Opportunity Focused on outsized growth in cooling focused on cooling and power. and power Only 5% of data centers are We focus on the heart (CDU) and brain liquid cooled today (PDU) of the data center, providi
Slide 36: Growing in Industrial Solutions
Growing in Industrial Solutions Diversifying within Industrial. Leading in the migration to smart factories with our broad portfolio of products. From machine learning to automated warehouses, more systems require more protection. Global platforms and brand to serve DESIGN TO globally for both NEMA
Slide 37: Electrifying Our Future Through Innovation
Electrifying Our Future Through Innovation Solutions Innovation Focus Data and Industrial Smart Power Distribution Broad Enclosure Panel Shop Software engineering Data Cooling Platforms Automation focused on smart controls and efficiency management Thought leadership and innovation in smart power an
Slide 38: Margin Expansion Strategy
Margin Expansion Strategy Simplification of Flexing our Lean DNA in Digitizing Processes ▪ Enclosures has the most upside Portfolio and Pricing Supply and Operations to Drive Productivity for margin expansion in 2023 as We Grow and Speed ▪ We have enhanced our ability to grow rapidly and expand marg
Slide 39: Enclosures Summary
Enclosures Summary ▪ We are solving the most critical system protection problems ▪ We are serving the fastest growing verticals with innovation and the ability to scale ▪ We have multiple levers to drive stronger margins Positioned well in the fastest growing verticals nVent 2023 Investor Day 39 Mar
Slide 40: Electrical and Fastening Solutions
Electrical and Fastening Solutions Robert van der Kolk, President March 7, 2023 nVent 2023 Investor Day 40 March 7, 2023
Slide 41: Electrical and Fastening Solutions Overview
Electrical and Fastening Solutions Overview Our Business 2022 Financials Verticals Geographies ▪ Strong brands with leadership positions $791M 50% Commercial & 75% NAM Sales ▪ #1 U.S. electrical and Residential 18% fastening solutions provider* 24% 36% EMEA Organic Infrastructure 5% ▪ Known for inno
Slide 42: Electrical and Fastening Solutions Value Proposition
Electrical and Fastening Solutions Value Proposition Driving Efficiency Delivering Resiliency Application Expertise through design, installation and operation. during electrical transients and other through global experts driving impactful disruptions. innovation. Reducing project costs Helping to e
Slide 43: Growing in Infrastructure
Growing in Infrastructure Delivering Efficiency and Resiliency in Power and Data Infrastructure. Energy Storage Our flexible power connections DATA CENTERS AND RENEWABLES replace traditional solutions and COMMERCIAL AND INDUSTRIAL COMMUNICATIONS deliver up to 50% faster installation.* ELECTRIC VEHIC
Slide 44: Growing in Commercial
Growing in Commercial Fast-growing applications in Commercial. LIGHTNING Fast-Growing Opportunity PROTECTION SEISMIC BRACING Structured cabling growing 2X faster than the overall Comm/Resi vertical We are a leader in pathway management for POWER PRE-FAB structured cabling in the U.S. CONNECTION ASSE
Slide 45: Electrifying Our Future Through Innovation
Electrifying Our Future Through Innovation Solutions Innovation Focus Cable Pathway Standard Prefab FleXbus System Efficient and Resilient Power Systems Assemblies and Data infrastructure Easy-to-install cable pathway management systems Labor-saving standard kitted and prewired in-wall solutions Eas
Slide 46: Electrical and Fastening Solutions Summary
Electrical and Fastening Solutions Summary ▪ Electrification of Everything: we drive efficiency and resilience of power and data infrastructure ▪ Skilled-labor shortage: we save 30% installation time* Ben – can you make suggestions on ▪ Innovation is key: we out-innovate the proof points needed and
Slide 47: Thermal Management
Thermal Management Brad Faulconer, President March 7, 2023 nVent 2023 Investor Day 47 March 7, 2023
Slide 48: Thermal Management Overview
Thermal Management Overview Our Business 2022 Financials Verticals Geographies ▪ nVent RAYCHEM #1 brand in electric heat tracing* $614M 49% 62% Sales Industrial NAM ▪ ~30% sales driven by our large MRO installed base of 33% 14% Commercial 28% ~$5B Organic and residential EMEA ▪ Leading application e
Slide 49: Thermal Management Value Proposition
Thermal Management Value Proposition Save on Total Installed Cost Prevent Downtime Save on Operating Cost with advanced engineering and with reliable solutions and services. with smart controls. ease-of-use products and tools. New HPR technology provides industry-leading performance nVent RAYCHEM nV
Slide 50: Growing with the Energy Transition
Growing with the Energy Transition Delivering mission critical electric thermal LNG / Transition Fuel solutions, enabling sustainability. Significant wave of investments in liquefaction and storage. Our nVent TRACERLYNX software optimizes designs and saves on total installed cost. Clean Fuels: Bio-f
Slide 51: Growing in Commercial and Infrastructure
Growing in Commercial and Infrastructure Differentiated solutions for safety and Infrastructure sustainability in buildings and infrastructure. Critical safety and protection systems for rail, tunnels and airports. ROOFTOP WINTER BUILDING HOT Our nVent RAYCHEM systems are most LIFE SAFETY FIRE PROTE
Slide 52: Electrifying Our Future through Innovation
Electrifying Our Future through Innovation Solutions Innovation Focus nVent RAYCHEM Heater nVent RAYCHEM Elexant nVent RAYCHEM Supervisor IoT Innovations (HPR Technology) (IoT Controls Ecosystem) (Software as a Service) New-to-world high power Remote Interface retention technology New IoT software a
Slide 53: Thermal Management Summary
Thermal Management Summary ▪ Electrification of Everything: we provide mission critical electric thermal solutions that connect and protect ▪ Our solutions are essential for the energy transition, enabling decarbonization ▪ Winning through innovation, with new heaters, controls and software Differen
Slide 54: Our Financial Performance
Our Financial Performance Sara Zawoyski, Chief Financial Officer March 7, 2023 nVent 2023 Investor Day 54 March 7, 2023
Slide 55: Key Messages
Key Messages 1 We are changing the growth profile of nVent 2 2022 was another year of strong financial performance for nVent 3 We are confident in our ability to continue expanding margins 4 We generate robust cash flows to enable strategic capital deployment 5 We’re raising mid-term targets support
Slide 56: Financial Performance Since Spin
Financial Performance Since Spin 7% 8% $400 4% $4.0 CAGR* $4.00 CAGR* CAGR* THOUSANDS $2.0 $2.00 $200 100% Avg Conversion $0.0 $- $- 2018 2019 2020 2021 2022 2018 2019 2020 2021 2022 2018 2019 2020 2021 2022 Sales ($B) Adjusted EPS Free Cash Flow ($M) Approaching Grew Adjusted EPS Delivered $1.6 bil
Slide 57: Strong Performance in 2022
Strong Performance in 2022 Sales Growth Acquisitions Margins Adjusted EPS Free Cash Flow +20% 2 points $351 +30 bps +22% organic to sales growth million 7 consecutive Acquisition sales Strong value Record On top of quarters of growing faster than proposition and Free Cash Flow, 31% growth in 2021 do
Slide 58: Investments Driving Growth
Investments Driving Growth New Products Capital Expenditures $60M $46M $49M $40M 2.1% 2.0% 1.6% 1.6% ~3% ~2% of sales avg of 2021 2022 over time 2021 2022 sales R&D % of Sales Capex % of Sales ▪ >$150M sales since spin from new products ▪ Expect $55M - $60M in capex in 2023 ▪ Expect ~2 pts sales con
Slide 59: Top Tier Margins with Margin Expansion Opportunity
Top Tier Margins with Margin Expansion Opportunity Growth Operational Excellence Functional Excellence ▪ Electrification of Everything ▪ Lean Enterprise ▪ End-to-end process improvements ▪ High-growth verticals ▪ Digitalization and automation ▪ Advanced analytics ▪ Higher margin new products ▪ Simpl
Slide 60: Working Capital Efficiencies Delivering Robust Free Cash Flow
Working Capital Efficiencies Delivering Robust Free Cash Flow Working Capital as % of Sales Free Cash Flow Robust Improved from Free Cash Flow 23% of sales ~$600M $351M enables strategic in 2019 $334M deployment ~$500M 14% 20% 21% <20% 12% >15% 2021 2022 Goal 2021 2022 Goal WC % of Sales FCF FCF Mar
Slide 61: Disciplined Capital Allocation Driving Top Tier Returns
Disciplined Capital Allocation Driving Top Tier Returns Reinvest in the Acquisitions and Return Cash to Manage Leverage Business Partnerships Shareholders Capital Deployment Manage Leverage Reinvest in the Business ~$0.8B of Operating Cash Flow Generated 2021 - 2022 ▪ Strong liquidity position ▪ New
Slide 62: Increasing Return on Invested Capital
Increasing Return on Invested Capital Return on Invested Capital >30% ROIC Excluding Goodwill* 12.3% 10.9% 9.5% 9.8% Investments in R&D, 8.5% digital, capacity and acquisitions delivering strong returns 0 2018 2019 2020 2021 2022 Increased return on invested Increased capital return byon 270 investe
Slide 63: Mid-Term Value Creation Targets (2023 – 2025E)
Mid-Term Value Creation Targets (2023 – 2025E) Sales Growth Acquisitions Segment Margins Adjusted EPS Free Cash Flow ▪ Electrification and ▪ High-growth ▪ Enclosures: ▪ Growth and ▪ Working capital Sustainability verticals, with 19 - 20% margin expansion efficiencies ▪ Higher growth high margin ▪ E
Slide 64: Confirming Q1 and Full-Year Outlook
Confirming Q1 and Full-Year Outlook Q1 2023 Full-Year 2023 Organic Sales Adjusted EPS Organic Sales Adjusted EPS +5% to +7% $0.56 to $0.58 +4% to +6% $2.51 to $2.61 (+14% at midpoint) (+7% YoY at midpoint) ▪ Orders are up year-over-year through February ▪ Electrification of Everything secular trends
Slide 65: nVent: A Compelling Investment
nVent: A Compelling Investment Building Strong Industry Leading Strong Secular Tremendous Growth Attractive Capital Track Record Products and Solutions Tailwinds Opportunities Allocation ▪ Strong growth, with more ▪ Leaders in the spaces we ▪ Positioned well with ▪ Growing mix of high ▪ Priority is
Slide 66: Question and Answer Session
Question and Answer Session Tony Riter, Vice President, Investor Relations March 7, 2023 nVent 2023 Investor Day 66 March 7, 2023
Slide 67: Q&A logistics
Q&A logistics Hybrid Meeting: • Both live in-room and virtual questions may be submitted • Webcast participants can submit questions in the text box in the upper right-hand corner of your screen nVent 2023 Investor Day 67 March 7, 2023
Slide 68: Appendix and GAAP to Non-GAAP Measurements and Reconciliation
Appendix and GAAP to Non-GAAP Measurements and Reconciliation nVent 2023 Investor Day 68 68 March 7, 2023
Slide 69: Reported to Adjusted 2022 Reconciliation
Reported to Adjusted 2022 Reconciliation nVent 2023 Investor Day 69 March 7, 2023
Slide 70: Reported to Adjusted 2021 Reconciliation
Reported to Adjusted 2021 Reconciliation nVent 2023 Investor Day 70 March 7, 2023
Slide 71: Reported to Adjusted 2020 Reconciliation
Reported to Adjusted 2020 Reconciliation nVent 2023 Investor Day 71 March 7, 2023
Slide 72: Reported to Adjusted 2019 Reconciliation
Reported to Adjusted 2019 Reconciliation nVent 2023 Investor Day 72 March 7, 2023
Slide 73: Reported to Adjusted 2018 Reconciliation
Reported to Adjusted 2018 Reconciliation nVent 2023 Investor Day 73 March 7, 2023
Slide 74: Reported to Adjusted 2023 Reconciliation
Reported to Adjusted 2023 Reconciliation nVent 2023 Investor Day 74 March 7, 2023
Slide 75: Organic Sales Growth Reconciliation
Organic Sales Growth Reconciliation nVent 2023 Investor Day 75 March 7, 2023
Slide 76: Free Cash Flow Reconciliation
Free Cash Flow Reconciliation nVent 2023 Investor Day 76 March 7, 2023
Slide 77: Return on Invested Capital Reconciliation
Return on Invested Capital Reconciliation nVent 2023 Investor Day 77 March 7, 2023