Nvent Electric Plc · NYSE:NVT
Nvent Electric — Non-Deal Roadshow (April 2018)
42 slides from Nvent Electric's roadshow presentation, Apr 19, 2018
Slide 1: nVent Investor Presentation
nVent Investor Presentation April 2018
Slide 2: Forward Looking Statement
Forward Looking Statement 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 historical fact are fo
Slide 3: Key Definitions
Key Definitions Except as Otherwise Noted, All References to nVent and All Amounts Included Herein Represent the Pentair Electrical Business Excluding the Pentair Water Business, Presented on an Adjusted Basis “Organic Sales" Refers to GAAP Revenue Excluding (1) the Impact of Currency Translatio
Slide 4: nVent Presenters
nVent Presenters • Current President of Pentair’s Electrical Segment with over 27 years of experience • Over 12 years of experience as President of various businesses including, President of Pentair’s Flow & Filtration Solutions Beth Wozniak business from 2015 – 2016 Future Chief Executive Officer •
Slide 5: Spinoff Overview
Spinoff Overview Ticker NVT Exchange NYSE Exchange Ratio 1 share of nVent for every share of Pentair Expected Number of Shares 181 Million* Record Date Declared April 3 When Issued Trading Date April 16 Record Date April 17 Distribution of nVent Shares April 30 First Day of Regular-way Trading May 1
Slide 6: Rationale of Separation
Rationale of Separation RATIONALE STRATEGIC FOCUS Improved Clarity into Performance and Growth Opportunities FINANCIAL STRENGTH CAPITAL ALLOCATION FLEXIBILITY Supports Plan to be Successful, Unique Strategies to Deliver Profitable, and Sustainable Growth for Each FOUNDATION CAPITAL STRUCTURE MANAGEM
Slide 7: Agenda
Agenda 1. Introduction to nVent 2. Strategic Priorities 3. Financial Overview Appendix: Supplementary Information 7
Slide 8: 1. Introduction to nVent
1. Introduction to nVent
Slide 9: Introduction to nVent
Introduction to nVent $2.1B $334M 2017 Revenues 2017 Free Cash Flow Generation 20% ~8,600 2017 Return on Sales Employees 3 47 Highly Profitable Mfg., Distribution & Business Segments Service Facilities 9
Slide 10: Leading Electrical Company Focused on Connection & Protection
Leading Electrical Company Focused on Connection & Protection Company Characteristics 2017 Financials Industry-leading positions and strong brands $2.1B Focused on improving utilization, lowering Revenue costs and maximizing customer uptime Attractive margin profile 20% Return on Sales Stron
Slide 11: Three Businesses of Scale with Leading Product Portfolios
Three Businesses of Scale with Leading Product Portfolios Electrical & Fastening Enclosures Thermal Management Solutions ($935M) ($622M) ($541M) Equipment Electronics Building Industrial Fastening Electrical Protection Protection Infrastructure Heating Solutions Solutions Solutions Solutions 11
Slide 12: Mission-Critical Solutions That Create Value
Mission-Critical Solutions That Create Value Customer Productivity & Mission-Critical Solutions High Cost of Failure Total Cost of Ownership Our products… Our products… Our products… • Connect and protect • Protect equipment • Reduce labor cost in across broad range of and electronics in installatio
Slide 13: Industry Leading Positions
Industry Leading Positions We are a Leader in Connection and Protection • A global leader in electric heat tracing solutions • A global leader in complete heat management systems • A global leader in electrical and fastening solutions • A leader in North American industrial enclosures • A leader in
Slide 14: Evolution of Our Management System
Evolution of Our Management System Introducing spark Growth Mindset, Growth Commercial Excellence Energize Employees & People Create Value Lean Lean Information Enterprise Flow Drive Velocity in Velocity Everything We Do Digitize the Customer Digital Experience, Products and Processes Building on a
Slide 15: 2. Strategic Priorities
2. Strategic Priorities
Slide 16: The nVent Strategy
The nVent Strategy One nVent Focus on Attractive Accelerate Innovation Grow Globally & in Verticals & Connected Solutions Developing Regions Drive Productivity & Velocity Pursue Targeted Bolt-on Acquisitions 16
Slide 17: One nVent
One nVent Customers Aligned Go to Market Teams for Key Verticals Channels Key Partnerships and Account Management Capability Commercial Excellence Digital Digitizing the Customer Experience Scale Common Processes & Systems 17
Slide 18: Focus on Attractive Verticals
Focus on Attractive Verticals 2018 Macro Addressable Expected Growth Focus Outlook Size ($B) Growth • New products, global focus Industrial ~$18 ~4% (45% of Sales) • Connected solutions & digital tools • Lower cost of ownership Commercial & and installation Residential ~$22 ~3% (27% of Sales) • Spec
Slide 19: Accelerate Innovation and Connected Solutions
Accelerate Innovation and Connected Solutions Advanced Flexible Busbar Thermal Industrial Controller • Unique low-smoke, halogen-free, • Safe and reliable and flame-retardant insulation temperature control • Reduces Total Installed Cost • Connected controls and monitoring solutions • Improves safety
Slide 20: Grow Globally and in Developing Regions
Grow Globally and in Developing Regions Strategy: Europe: Expand products categories and brands that are underpenetrated in Europe Developing Regions: Enhance local capabilities and create localized products and solutions Key Actions: Expand sales and channel coverage globally (especially Euro
Slide 21: Drive Productivity and Velocity
Drive Productivity and Velocity Our Solid Foundation Accelerating Performance Lean Enterprise Lean Enterprise • Standard Work • Lean Information Flow • Creating Flow • Integrated Supply Chain • Strategy Deployment Digital Transformation Digitization • Enterprise-wide platforms • Digital customer exp
Slide 22: Pursue Targeted Bolt-on Acquisitions
Pursue Targeted Bolt-on Acquisitions Appetite for M&A: • Flexible capital structure • Leverage target of 2x – 2.5x over the long-term • Ability to flex to 3x over a short period of time if the appropriate opportunity presents itself M&A Strategy - Key Considerations: • How does the target fit nVent’
Slide 23: 3. Financial Overview
3. Financial Overview
Slide 24: nVent Financial Overview
nVent Financial Overview Financial Profile Key Metrics at Spin • Focus on establishing reliable growth Net Leverage 2.2x • Favorable and competitive margin profile with ample opportunity for expansion • Consistent and robust cash flow generation Cash on Balance Sheet ~$50 million targeting 100% of a
Slide 25: nVent Financial Overview
nVent Financial Overview* Revenue ($B) Segment Income ($M) +3-5% $407 $410 ~$430 $2.12 $2.10 $1.81 $344 2015 2016 2017 2018 Outlook 2015 2016 2017 2018 Outlook Pro Forma Adjusted EPS Summary $1.70-$1.80 • Sales expected to be up 3-5%, 2-4% • Interest/Other: ~$43M in 2018 organic sales growth • Tax r
Slide 26: Favorable Margin Profile with Opportunities for Expansion
Favorable Margin Profile with Opportunities for Expansion Sales ($ in millions) & ROS Competitive Margin vs Peers1 2018E Adj. EBITA Margin¹ (ROS) of Selected Electrical Peers $2,116 $2,098 $1,809 19% 20% 20% 2015 2016 2017 Sales ROS Current Margin Profile Opportunity to Drive Margin Expansion Establ
Slide 27: Strong Cash Flow Generation
Strong Cash Flow Generation Free Cash Flow1 ($ in millions) Capital Expenditures ($ in millions) $334 $75 $252 $232 $47 3.5% $32 86% 115% 2.6% 109% 1.5% 2015 2016 2017 2015 2016 2017 Free Cash Flow % Adj. Net Income Capex % of Sales (%) • Target free cash flow at 100% of • Low capital intensity adju
Slide 28: Conservative Capital Structure and Allocation Philosophy
Conservative Capital Structure and Allocation Philosophy • Target investment grade metrics • Balanced capital deployment strategy • Competitive dividend policy • Share repurchases to offset dilution at a minimum • Bolt-on acquisitions targeting focused growth areas Committed and Disciplined 28
Slide 29: Q1'18 nVent Performance
Q1’18 nVent Performance Sales ($ in millions) Financial Highlights (yoy) $21 $539 $3 $0 Organic sales up 3% $13 $502 • Enclosures: Up 9% ~7% • Thermal Management: Down 4% YoY • EFS: Up 1% 2 pts 1 pts 0 pts 4 pts Pro Forma Segment Income up 5%** Q1'17 Volume Price Acq. FX Q1’18 Pro Forma ROS at
Slide 30: Q2'18 nVent Pro Forma Outlook
Q2’18 nVent Pro Forma Outlook* Q2’18 Guidance Q2’17 Organic Sales +2% - 4% $513M Segment Income* +1% - 3% $106M ROS* 18% - 20% 20.6% EPS (reported) $0.33 - $0.36 EPS (adjusted) $0.41 - $0.44 Summary Other Considerations Continued Sales Strength Tax Rate: ~18% Sequential ROS Improvement Pro F
Slide 31: Full Year 2018 nVent Pro Forma Outlook
Full Year 2018 nVent Pro Forma Outlook* Enclosures Thermal Mgmt. EFS Total Organic Sales Up 3-5% Up 0-2% Up 2-4% Up 2-4% ROS ~Flat +50-70bps +30-50bps ~Flat Corporate Expenses ~$45M Int. Exp./Other ~$43M Tax Rate ~18% Reported EPS $1.38 - $1.48 Adjusted EPS $1.70 - $1.80 Shares ~181M Key Considerati
Slide 32: Long-Term Financial Framework
Long-Term Financial Framework Long-Term Goals Revenue Differentiated growth 1-2% above GDP Segment Income Margin Expansion EPS Top Tier Performance Free Cash Flow = Cash Flow 100% Adjusted Net Income Long-Term Value Creation Goals 32
Slide 33: Investment Thesis
Investment Thesis Mission-Critical Solutions Maximize Customer Efficiency Conservative Leading Industry Capital Structure & Positions, Brands Capital Allocation and Footprint Philosophy Value Creation Diversified Across Strong Cash Flow Products, Verticals Generation and Customers Strong Financial P
Slide 34: Appendix
Appendix
Slide 35: nVent Leadership Team
nVent Leadership Team STACY McMAHAN LYNNETTE HEATH JON LAMMERS BEN SOMMERNESS EVP & Chief EVP & Chief Human EVP, General Counsel EVP, Chief Growth & Financial Officer Resources Officer & Secretary Strategy Officer BETH WOZNIAK Chief Executive Officer TOM PETTIT JOE RUZYNSKI BRAD FAULCONER ROBERT Van
Slide 36: Enclosures Business Overview
Enclosures Business Overview Segment Description 2017A Sales Breakdown Geographies Verticals Provides Innovative Solutions That Protect, 2% 11% Connect, and Manage Heat in Critical 11% Other Developed Energy Electronics, Communication, Control, and Developing 10% Commercial Power Equipment 19% Weste
Slide 37: Thermal Management Business Overview
Thermal Management Business Overview Segment Description 2017A Sales Breakdown Geographies Verticals Provides Electric Thermal Solutions that 2% Connect and Protect Critical Buildings, 14% Other Developed 43% Infrastructure, Industrial Processes Developing Industrial 26% and People Commercial 55% &
Slide 38: Electrical & Fastening Business Overview
Electrical & Fastening Business Overview Segment Description 2017A Sales Breakdown Geographies Verticals Provides Electrical and Fastening Solutions that Connect and Protect Electrical and 10% 2% Other 10% Developed Mechanical Systems Developing Energy 18% 14% Western Infrastructure Europe 70% 2017A
Slide 39: Reported to Adjusted 2018 Reconciliation
Reported to Adjusted 2018 Reconciliation nVent Electric plc Reconciliation of the GAAP Year Ended December 31, 2018 to the non-GAAP Excluding the Effect of 2018 Adjustments (Unaudited) Actual Forecast First In millions, except per-share data Quarter Second Quarter Full Year Net sales $ 539 approx $
Slide 40: Reported to Adjusted 2015-2017 Reconciliation
Reported to Adjusted 2015-2017 Reconciliation nVent Electric plc Reconciliation of the GAAP Year Ended December 31, 2017, 2016 and 2015 to the non-GAAP Excluding the Effect of 2017, 2016 and 2015 Adjustments (Unaudited) 2015 2016 2017 Net sales $ 1,809 $ 2,116 $ 2,098 Operating income 260 333 316 %
Slide 41: Q1 and FY 2018 Organic Sales Growth Reconciliation
Q1 and FY 2018 Organic Sales Growth Reconciliation nVent Electric plc Reconciliation of Net Sales Growth to Organic Net Sales Growth by Reportable Segment For the Quarter Ended March 31, 2018 (Unaudited) Q1 Net Sales Growth Organic Currency Acq./Div. Total nVent 3.1% 4.2% —% 7.3% Enclosures 8.9% 3.3
Slide 42: Cash Flow Reconciliation
Cash Flow Reconciliation nVent Electric plc Reconciliation of the GAAP Operating Activities Cash Flow to the non-GAAP Free Cash Flow (Unaudited) Three months ended In millions March 31, 2018 March 31, 2017 Free cash flow Net cash provided by (used for) operating activities - as reported $ 36 $ 87 In