Nvent Electric Plc · NYSE:NVT
Nvent Electric — Investor Day (February 2018)
118 slides from Nvent Electric's investor day presentation, Feb 13, 2018
Slide 1: 2018 nVent Investor and Analyst Day
2018 nVent Investor and Analyst Day New York City February 13, 2018 5/3/2018
Slide 2: Welcome
Welcome J.C. Weigelt Vice President Investor Relations
Slide 3: Agenda for Today
Agenda for Today Estimated Time Topic Speaker 1:00pm Welcome J.C. Weigelt 1:05pm Opening Remarks Randall Hogan 1:10pm Overview of nVent Beth Wozniak 1:35pm Growth Strategy Ben Sommerness 1:50pm Overview of Enclosures Joe Ruzynski 2:05pm Overview of Thermal Management Brad Faulconer 2:20pm Overview o
Slide 4: Forward-Looking Statements
Forward-Looking Statements 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 f
Slide 5: 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 • "Core Sales" Refers to GAAP Revenue from Continuing Operations Excluding (1) the Impact of Currency Translation and (2
Slide 6: Opening Remarks
Opening Remarks Randall Hogan Chairman, nVent
Slide 7: Separation into Two Publicly-Traded Companies
Separation into Two Publicly-Traded Companies WATER ELECTRICAL CONNECTION SUSTAINABILITY Maximizing the Use of & PROTECTION the Resources People Connecting & Protecting Rely on Most Critical Processes, People, and the Environment A Leading Global Water Treatment A High-Performance Electrical Company
Slide 8: 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 PIMS CAPITAL STRUCTURE MA
Slide 9: nVent Overview
nVent Overview Beth Wozniak Chief Executive Officer
Slide 10: 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.
Slide 11: The Road to nVent
The Road to nVent Erico Raychem Tracer Schroff Raychem & Tracer Founded Founded Founded Acquisition Acquisition (Tyco) 1900s 1940s 1950s 1960s 1970s 1980s 1990s 2000s 2010s Hoffman Caddy Schroff Hoffman Erico/Caddy Engineering Launched Founded Acquisition Acquisition Launched A Name that Reflects Ou
Slide 12: Performance History
Performance History ~19% ~15% ~10% ~$2.1B ~$550M ~$1.1B ~$550M 1996 2007 2017 Sales ($M) ROS 4x Sales and nearly Doubled ROS…Profitable, Scaled Electrical Business February 13, 2018 nVent Investor Day 12
Slide 13: Diversified Portfolio with Strong Financials
Diversified Portfolio with Strong Financials 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 ~19% ▪ Strong free cash flow generation ROS
Slide 14: 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 15: nVent Has Mission-Critical Solutions That Create Value
nVent has Mission-Critical Solutions That Create Value Mission-Critical Customer Productivity & High Cost of Failure Solutions 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 i
Slide 16: 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 17: The nVent Strategy
The nVent Strategy One nVent Accelerate Focus on Attractive Grow Globally & in Innovation & Verticals Developing Regions Connected Solutions Drive Productivity & Velocity Pursue Targeted Bolt-on Acquisitions February 13, 2018 nVent Investor Day 17
Slide 18: Macro Trends Are Favorable
Macro Trends are Favorable Technology & Electrification & Connectivity Urbanization Demographic Safety & Security Shifts Trends Drive use of More Electrical Products February 13, 2018 nVent Investor Day 18
Slide 19: 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 February 13, 2018 nVent Investor Day 19
Slide 20: Focus on Attractive Verticals
Focus on Attractive Verticals 2018 Macro Growth Focus Outlook • New products, global Industrial focus (45% of Sales) • Connected solutions & digital tools Commercial & • Lower cost of ownership Residential and installation (27% of Sales) • Specification selling • Global new products Energy • MRO foc
Slide 21: Accelerate Innovation and Connected Solutions
Accelerate Innovation and Connected Solutions Advanced Flexible Busbar Thermal Industrial Controller • Unique low-smoke, halogen- • Safe and reliable free, and flame-retardant temperature control insulation • Connected controls and • Reduces Total Installed Cost monitoring solutions • Improves safet
Slide 22: Grow Globally and in Developing Regions
Grow Globally and in Developing Regions • Developed Regions: Accelerate product coverage and penetration • Developing Regions: Enhance local capabilities and localized solutions • Localizing products • Increasing global Manufacturing Facilities design capability Global Footprint Supports Global Grow
Slide 23: 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 24: nVent Values
nVent Values Retain our Win Right Values and Culture Living our Values is Fundamental to Achieving Our Goals February 13, 2018 nVent Investor Day 24
Slide 25: Evolution of Our Management System
Evolution of Our Management System PIMS Foundation Introducing spark Growth spark Rapid Growth Process 3D Innovation ▪ Growth Commercial Excellence ▪ People PENTAIR ▪ Lean Enterprise INTEGRATED MANAGEMENT SYSTEM ▪ Velocity Standard Work Creating Flow Strategy Deployment Talent Mgmt. Org. Development
Slide 26: The Elements of Spark
The 5 elements of Spark Growth Growth Mindset, Commercial Excellence People Energize Employees & Create Value Lean Enterprise Lean Information Flow Velocity Drive Velocity in Everything We Do Digitize the Customer Experience, Digital Products and Processes February 13, 2018 nVent Investor Day 26
Slide 27: Key Priorities by Segment
Key Priorities by Segment • Grow Industrial and Infrastructure Enclosures • Expand margins via productivity and price • Digitize customer experience • Grow Industrial, Commercial and Infrastructure Thermal • Focus on Industrial MRO Management • Launch new products and connected solutions Electrical
Slide 28: CEO Priorities
CEO Priorities Set up nVent as a Separate Public Company Drive Organic Growth Expand Margins via Productivity and Velocity Continue Strong Cash Flow Drive Disciplined Capital Allocation February 13, 2018 nVent Investor Day 28
Slide 29: 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 February 13, 2018 nVent Investor Day 29
Slide 30: Key Takeaways
Key Takeaways We are a Leader in Connection and Protection • We have industry leading positions in growing verticals • We have attractive segments with differentiated growth opportunities • We have a clear strategy and are focused on driving organic growth • Our One nVent approach can accelerate per
Slide 31: Countdown to Target Spin Date
Countdown to Target Spin Date ~ 76 Days, 19 hours, 55 min. February 13, 2018 nVent Investor Day 31
Slide 32: Growth Strategy
Growth Strategy Ben Sommerness Chief Growth & Strategy Officer
Slide 33: nVent's Verticals Are Attractive and Growing
nVent’s Verticals are Attractive and Growing Characteristics • Large, attractive verticals Total • Strong fundamentals Addressabl Expected accelerating growth Verticals e – Technology/Connectivity Growth Size – Electrification/Urbanization ($B) – Demographic Shifts Commercial & ~22 ~3% – Safety and
Slide 34: We Have a Leading Portfolio of Electrical Products
We Have a Leading Portfolio of Electrical Products Electrical & Fastening Enclosures Thermal Management Solutions ($935M) ($622M) ($541M) Equipment Electronics Building Industrial Fastening Electrical Protection Protection Infrastructure Heating Solutions Solutions Solutions Solutions 2017 Revenue b
Slide 35: Unifying Our Strong Brands Under nVent
Unifying Our Strong Brands Under nVent 2015 2012 2018 1994 1988 1966 A “Branded House” That Better Enables Portfolio Selling February 13, 2018 nVent Investor Day 35
Slide 36: The nVent Strategy
The nVent Strategy One nVent Accelerate Focus on Attractive Grow Globally & in Innovation & Verticals Developing Regions Connected Solutions Drive Productivity & Velocity Pursue Targeted Bolt-on Acquisitions February 13, 2018 nVent Investor Day 36
Slide 37: Drive One nVent via Commercial Excellence Framework
Drive “One nVent” via Commercial Excellence Framework Developing Addressing Executing Growing 1 2 3 4 5 6 7 8 9 10 11 Communication Development Management Effectiveness Commercial Generation Branding & Creation & Innovation Customer Market & Service & Demand Strategy Analysis Support Product Insight
Slide 38: Pursuing a Digital Strategy to Enable Growth
“One nVent” - Pursuing a Digital Strategy to Enable Growth Business strategy • Focus in 2018 Digitize Go-To-Market Connected Solutions – New web site – CRM launch – Product data – Configurators • Transformation over time Digitize Operations Digitize Support – 2018 – 2019 Functions Digitize the Core
Slide 39: Configurators Allow Better Customer Experience
Configurators Allow Better Customer Experience Digital Example: Schroff Configurator • Enhancing the customer experience • Driving velocity by simplifying processes • Expanding configurator capability to more product lines Design Your Electronics Cabinet or Front Panel in Minutes! Connecting Our Cus
Slide 40: Attractive Verticals - Infrastructure
Attractive Verticals - Infrastructure • Infrastructure is a large, DataCom & Networking Solutions global vertical with attractive growth – ~$11B, ~4% growth • DataCom & Networking Solutions (DNS) is one key growth opportunity • Increase DNS sales via: – Dedicated enterprise team – Selling solutions
Slide 41: Attractive Verticals - Commercial
Attractive Verticals - Commercial • Commercial vertical is Commercial Building large and growing – ~$22B, ~3% growth • Increase Commercial sales via: – Dedicated enterprise leader – Project pipeline expansion – Specification selling – Clear value propositions – Collaboration across nVent – Aligned c
Slide 42: Accelerate Innovation - 3D Process for Organic Growth
Accelerate Innovation - 3D Process for Organic Growth 3D Product Development Process • Established, robust Discover process driving velocity Identify, Evaluate & Prioritize – Vitality up 25% since 2015 • Increasing investment with focus on ‘bigger’ ideas Develop – Technology differentiation Optimize
Slide 43: Growth Globally and in Developing Regions
Growth Globally and in Developing Regions Developed Regions Developing Regions • Approach: • Approach: – Vertical growth initiatives – Align nVent, go-to-market approach – Segment coordination – Product & manufacturing localization – Sell existing portfolio – Expanded in-region marketing – Innovativ
Slide 44: Key Takeaways
Key Takeaways • nVent is in attractive, growing verticals • We have strong, well-positioned brands and products • We are unifying under One nVent to drive portfolio growth • nVent has an exciting future with a clear, focused strategy • Underpin growth with commercial excellence velocity nVent is Poi
Slide 45: Enclosures
Enclosures Joe Ruzynski President, Enclosures
Slide 46: What You Will Hear Today
What You Will Hear Today • Enclosures is growing and is well positioned to grow − Strong brands positioned well in favorable verticals − Sustainable competitive advantages • We expect to grow by: − Driving growth in Industrial and Infrastructure verticals − Supporting the transformation in our chann
Slide 47: Who We Are: Enclosures
Who We Are: Enclosures Description 2017 Financials We provide innovative solutions that protect, connect, and manage $935M heat in critical electronics, Revenue communication, control, and power equipment. ~17% ROS Geographies Verticals 1% 11% Other Developed 11% 69% Energy 60% Developing US & 10% I
Slide 48: We Connect and Protect Critical Controls and Components
We Connect and Protect Critical Controls and Components Modular Equipment Enclosure Solutions Protection Industrial controls and automation Industrial Cooling Oil & gas controls Food and beverage Commercial construction Hazardous Location Data centers & networking Enclosures Electronic Protection Su
Slide 49: Did You Know?
Did you know? • More than 30 million nVent enclosures are in use around the globe today • Our 4X stainless steel enclosure with POWERGLIDE handle withstood hurricane flooding for four days • Data centers with high heat densities are deploying nVent closed loop cooling systems globally • nVent backpl
Slide 50: Key 2018+ Priorities to Support nVent Strategy
Key 2018+ Priorities to Support nVent Strategy 1 • Strategic channel partnerships One nVent • Digitize customer experience 2 Focus on Attractive • Accelerate in higher growth DNS Verticals • Global industrial expansion • Flow capital to best opportunity 3 Stabilize Performance & • Partnered distribu
Slide 51: Well Positioned to Continue Capturing Macro Trends
Well Positioned to Continue Capturing Macro Trends Macro-Trends Example Sub-Trends Segment Implications Demographi Industrial & Infrastructure c Shifts Investments in Developing Broad Footprint and Portfolio Regions Technology & Increased Data Needs … Leading Data, Networking, and Connectivity Every
Slide 52: Enclosures Has Strong Competitive Advantages
Enclosures Has Strong Competitive Advantages • Specialized • Deep history in our engineering and Hoffman and testing expertise Strong Brand Schroff brands and Technical enables ability to Recognition reputation for Expertise deliver high quality and performance, lower reliability cost designs • Broa
Slide 53: Differentiated Solutions Driving Customer Value
Differentiated Solutions Driving Customer Value • Differentiated corrosion protection solution Customer needs: Harsh environments • Implemented at Leading Tire cause “general Manufacturer for a 24 month pilot purpose” products SPECTRACOOL air to fail • Strong results at customer: conditioners with A
Slide 54: Using Digital to Improve the Customer Experience
Using Digital to Improve the Customer Experience EASY SEARCH CONFIGURE & PRICE FULFILL & TRACK VELOCITY • Improve customer’s digital journey with flexible search and collaborative design tools • Provide better customer service through quick quoting, fast fulfillment, order tracking and online suppor
Slide 55: Driving Growth With New Products
Driving Growth With New Products PROTECTING PEOPLE CONTRACTOR INNOVATION Product: Product: Internal Disconnect Shield Angled Trough Customer Need: Customer Need: Reduce risk of electric shock and arc flash Cut total installation time by the elimination of costly 90-degree conduit bends Differentiati
Slide 56: Improving Performance and Margin Expansion
Improving Performance and Margin Expansion Investment Execution Acceleration Past: 2015-2017 Today: 2018 Future: 2019-2022 Capacity Expansion Integrated Supply Chain Supply Chain Velocity Factory Consolidation Logistics Optimization Digital End to End New Distribution Center Digital Front End Improv
Slide 57: Enclosures Financial Overview
Enclosures Financial Overview Revenue ($M) ROS $959 $935 +4-6% $911 21% 20% 17% ~Flat 2015 2016 2017 2018 Outlook 2015 2016 2017 2018 Outlook • Improve the customer experience • Optimize pricing • Drive growth in key verticals • Drive productivity and lean • Introduce innovative products • Remove co
Slide 58: Key Takeaways
Key Takeaways • Enclosures is growing and is well positioned to grow − Strong brands positioned well in favorable verticals − Sustainable competitive advantages • We expect to grow by: − Driving growth in Industrial and Infrastructure verticals − Supporting the transformation in our channel and digi
Slide 59: Thermal Management
Thermal Management Brad Faulconer President, Thermal Management
Slide 60: What You Will Hear Today
What You Will Hear Today • Our Thermal Management segment has improved profitability and we believe is positioned for sustained growth − Highly differentiated products and solutions − Diversified to capitalize on key global trends • We expect to grow by: − Launch of new products & software − Deliver
Slide 61: Who We Are: Thermal Management
Who We Are: Thermal Management Description 2017 Financials We provide electric thermal solutions that connect and protect $622M people, critical infrastructure, Revenue industrial processes and buildings. ~24% ROS Geographies Verticals 2% Other Developed 14% 55% 43% Developing US & 26% Industrial Ca
Slide 62: A Global Leader in Thermal Management Solutions
A Global Leader in Thermal Management Solutions Industrial Heating Heat Tracing for Heating System Solutions Plant Piping & Components Vessels Control, Monitoring Turnkey & Sensing Services Pipe freeze protection Process temperature maintain Pipeline heating Tank & vessel heating Heat Tracing for Fi
Slide 63: Did You Know?
Did you know? Inventor of New York High Rise The world’s longest Self-Regulating buildings use heated pipeline in Heating Cables with Raychem heating India uses Raychem more than a Billion technology for efficient heating technology, Feet installed hot water design for engineered by Tracer worldwide
Slide 64: Key 2018+ Priorities to Support nVent Strategy
Key 2018+ Priorities to Support nVent Strategy 1 • Strategic channel partnerships One nVent • Digitize the customer experience 2 Focus on Attractive • Industrial MRO Verticals • Commercial & Infrastructure Product Innovation to • Smarter, IoT enabled products 3 Capitalize on Attractive • Fire, Safet
Slide 65: Well Positioned to Continue Capturing Macro Trends
Well Positioned to Continue Capturing Macro Trends Segment Macro-Trends Differentiated Solutions Implications Connected: Heat Trace Control & Monitoring Technology & Connected Solutions Connectivity Sustainability: Systems for Fire: Life Sustainability Energy & Water savings in Safety Buildings Circ
Slide 66: Thermal Has Strong Competitive Advantages
Thermal Has Strong Competitive Advantages • History of • Specialized innovative and Strong Brand Technical engineering high-quality Recognition Expertise expertise for products & optimized solutions services Ease of • Highly Reliable • Offer one-stop Installation solutions that lower Complete shop f
Slide 67: Differentiated Solutions Driving Customer Value
Differentiated Solutions Driving Customer Value Thermal Management 3D Design & Optimization Software TracerLynx Platform: Customer Results: • Single database heat management • Heating & Insulation optimization resulting design software in significant power load reduction • Imports electronic piping
Slide 68: Driving Growth With New Products
Driving Growth With New Products Innovation in Heating Innovation in Connected Technology Controls • Product: Raychem • Product: Raychem XL-Trace Control & Monitoring • Customer Need: • Customer Need: Ease Enhanced Fire Safety of use, connectivity • Differentiating Industrial Process • Differentiati
Slide 69: Business Performance Improvement Through PIMS
Business Performance Improvement Through PIMS • ~800 bps improvement in Operating Margins since 2012 New Product Lean Manufacturing Lean Engineering Development Redwood City Plant: Global Engineering Centers: NPD Process: • ~50% cycle time reduction • Standard work and visual mgmt. • Standard work,
Slide 70: Thermal Financial Overview
Thermal Financial Overview Revenue ($M) ROS $703 $692 $622 +1-3% 22% 24% 50-70 bps 18% 2015 2016 2017 2018 Outlook 2015 2016 2017 2018 Outlook • Drive productivity and lean • Deliver new products & software • Remove complexity • Grow in focused verticals • Leverage digital • Regional expansion, Chin
Slide 71: Key Takeaways
Key Takeaways • Our Thermal Management segment has improved profitability and we believe is positioned for sustained growth − Highly differentiated products and solutions − Diversified to capitalize on key global trends • We expect to grow by: − Launch of new products & software − Delivering Vertica
Slide 72: Electrical & Fastening Solutions (EFS)
Electrical & Fastening Solutions (EFS) Robert van der Kolk President, EFS
Slide 73: What You Will Hear Today
What You Will Hear Today • Our Electrical & Fastening Solutions (EFS) segment is well positioned for sustained growth with • Innovative solutions • End-user focused applications • Strong brands with well-defined value propositions • We expect to grow by: • Innovative new products and solutions • Tar
Slide 74: Who We Are: Electrical & Fastening Solutions
Who We Are: Electrical & Fastening Solutions Description 2017 Financials We provide electrical and fastening solutions that $541M Revenue connect and protect electrical and mechanical systems ~26% and civil structures. ROS Geographies Verticals 2% Other Developed 10% 70% 14% 57% Developing US & Infr
Slide 75: A Global Leader in Electrical & Fastening Solutions
A Global Leader in Electrical & Fastening Solutions Electrical Solutions Electrical Installation & Protection • .77 Rail & Transit Telecom Utility & Industrial Facilities Electrical Rail & Transit Protection Fastening Solutions Electrical Installation Seismic & Fire Protection Data Communications El
Slide 76: Did You Know?
Did you know? With over 100,000,000 connections nVent sells nVent manufactures installed globally, ERICO products to and sells over 5,000 ERICO CADWELD sets all major miles of CADDY the standard in the North American and Telescoping Screw exothermic welding most Gun Brackets annually method in the i
Slide 77: Key 2018+ Priorities to Support nVent Strategy
Key 2018+ Priorities to Support nVent Strategy 1 • Strategic channel partnerships One nVent • Digitize customer experience 2 Innovative New Products • Innovation with strong value propositions & Solutions • Supported by macro trends Focus on • Solution selling across nVent portfolio 3 Attractive Ver
Slide 78: Well Positioned to Continue Capturing Macro Trends
Well Positioned to Continue Capturing Macro Trends Macro-Trends Implications Differentiated Solutions CADDY Prefab Solutions Electrification & • Modular Urbanization Products • Ease of Installation ERIFLEX CADDY Seismic ERICO Rail FLEXIBAR • Reliable Safety & Products Security • Code Compliant Solut
Slide 79: EFS Has Strong Competitive Advantages to Leverage
EFS Has Strong Competitive Advantages to Leverage WITHOUT WITH AID AID Total Cost of Ownership 53% | 83% Well-defined Brand Value Recognition Propositions 29% | 81% Design Flexibilit y 115 YEARS Regions Innovation Diversification & Ve r t i c a l s February 13, 2018 nVent Investor Day 79
Slide 80: Differentiated Solutions Drive Customer Value
Differentiated Solutions Drive Customer Value Before After Panel Manufacturer Need: ▪ Save time ▪ Save space Differentiations: ▪ Flexible ▪ Customizable solution ▪ Reduce total installed cost ▪ Safety & Reliability Customer Results: ▪ Reduced installation time ▪ Less congestion in panel ▪ Improved p
Slide 81: Driving Growth With New Products
Driving Growth With New Products Rail Switch Heating Stamped Bracing Systems Differentiated Conductors Systems CADDY ERICO ERIFLEX Stamped Seismic Bracing Rail Switch Heating System FLEXIBAR ADVANCED • Differentiating features: • Differentiating features: • Differentiating features: − Reduce total i
Slide 82: EFS Financial Overview
EFS Financial Overview Revenue ($M) ROS $513 $541 +3-5% 28% 26% 26% 30-50 bps $147 2015 2016 2017 2018 Outlook 2015 2016 2017 2018 Outlook • Innovative new products & solutions • Price / Cost • Targeted vertical & regional focus • Productivity and lean enterprise • Strong brands with well defined va
Slide 83: Key Takeaways
Key Takeaways ▪ Our EFS segment is well positioned for sustained growth with ▪ Innovative solutions ▪ End-user focused applications ▪ Strong brands with well-defined value propositions ▪ We expect to grow by: ▪ Innovative new products and solutions ▪ Targeted vertical and regional focus ▪ Further en
Slide 84: Investment Thesis & Financial Outlook
Investment Thesis & Financial Outlook Stacy McMahan Chief Financial Officer
Slide 85: What You Will Hear Today
What You Will Hear Today • Expect Industry Growth • Positive Macro Environment • Highly Profitable Business with Sustained Margin Performance • Consistent, Strong Cash Flow • Disciplined Capital Allocation An Attractive Long-Term Investment February 13, 2018 nVent Investor Day 85
Slide 86: Differentiated Growth
Differentiated Growth Organic: • Favorable macro trends • Differentiated opportunities in verticals • New products and connected solutions • Underpenetrated in certain global verticals Inorganic: • Attractive bolt-on targets in highly fragmented markets Focus on Establishing Reliable Growth Profile
Slide 87: Favorable Margin Profile
Favorable Margin Profile 2017 Adj. EBITDA Margin1 of Select Electrical Peers 23.9% 23.7% 22.5% Starting from a position of 21.0% 18.2% competitive margin… 17.3% 17.3% 16.5% Sales & Adjusted EBITDA Margin1 …with established margin $2,116 $2,098 performance via: $1,809 • Diversification 20% 21% 21% •
Slide 88: A Clear Opportunity to Drive Margin Expansion
A Clear Opportunity to Drive Margin Expansion • Drive profitable growth ‒ Commercial excellence ‒ Pricing optimization ‒ Product vitality acceleration • Expand lean enterprise ‒ Lean information flow ‒ Integrated supply chain • Driving common processes and systems Runway for Sustained Profitability
Slide 89: Strong Cash Flow Generation
Strong Cash Flow Generation Free Cash Flow1 Capital Expenditures $334 $75 $251 $232 $47 3.5% $32 86% 115% 2.6% 109% 1.5% 2015 2016 2017 2015 2016 2017 Free Cash Flow % Adj. Net Income Capex % of Sales (%) • Target free cash flow at 100% of • Low capital intensity adjusted net income • Expect capital
Slide 90: Conservative Capital Structure and Allocation Philosophy
Conservative Capital Structure and Allocation Philosophy • Target investment grade metrics • Balanced capital deployment strategy • Competitive dividend policy • Share repurchases to offset dilution at a minimum • Bolt-on acquisitions targeting focused growth areas Committed and Disciplined February
Slide 91: M&A Strategy
M&A Strategy Key Considerations: • How does the target fit nVent’s strategy? • How compelling are the financials of the deal? • Why are we the right buyer? • What’s our integration plan? • Who’s the integration team? Example of Financial Targets: • ROIC crosses cost of capital at 24 months • Accreti
Slide 92: nVent Financial Overview
nVent Financial Overview Revenue ($B) Segment Income ($M) $2.12 +3-5% $401 $404 ~$420 $2.10 $1.81* $339* 2015 2016 2017 2018 Outlook 2015 2016 2017 2018 Outlook Pro Forma Adjusted EPS Summary $1.70-$1.80 $1.58 • Interest: $40M in • Sales expected to be up 3-5% on 2-4% 2017, ~30M in 2018 core sales g
Slide 93: 2017 and 2018 Revenue Performance
2017 and 2018 Revenue Performance 2017 2018E ~$2.2B $2.1B $12M $2.1B $2.1B $1M ~$25M $58M ~$15M ($89M) ~$40M -0.9% +3-5% YoY YoY 3 pts 0 pts (4 pts) 1 pts (1 pt) ~2 pts ~1 pts ~1 pts (1 pt) Acq./ 2016 Volume Price FX 2017 2017 Volume Price FX 2018E Large Jobs Summary Summary Adjusted Core Sales Up ~
Slide 94: 2017 and 2018 Segment Income Performance
2017 and 2018 Segment Income Performance 2017 2018E $401M $15M $2M $28M $404M ~$15M ~$5M $50M ~$420M $404M ($42M) 1% ($55M) ~4% YoY YoY ROS ROS ROS Net of Growth Investment ROS 19% 19% 19% ~19% (1 pt) (1 pt) 2016 Growth/ FX Inflation Prod. 2017 2017 Growth/ FX Inflation Prod. 2018E Price/Acq. Price
Slide 95: 2017 and 2018 Adjusted EPS and Free Cash Flow
2017 and 2018 Adjusted EPS and Free Cash Flow Adjusted EPS Free Cash Flow ~$35M ~$.04 ~$.03 $1.70-$1.80 ~$.08 ~$320M ~$0M ~$320M $1.58 - Restructuring (~$35M) - Taxes + Working __Capital +~10% YoY ~5% ~2% ~3% (1 pt) (1 pt) 2017 Pro Segment 2018 Adj. 2018 Adj. Net Work Cap/ Interest Tax Rate Deprecia
Slide 96: Full Year 2018 nVent Outlook
Full Year 2018 nVent Outlook Enclosures Thermal EFS Total Core Sales Up 3-5% Up 0-2% Up 2-4% Up 2-4% ROS ~Flat +50-70bps +30-50bps ~Flat Corporate Expenses ~$45M Interest Expense ~$30M Tax Rate ~18% Adjusted EPS $1.70 - $1.80 Shares ~183M Key Considerations • FX sales benefit of ~1% • Capital expend
Slide 97: Long-Term Financial Outlook
Long-Term Financial Outlook Strong - GDP growth plus one or two points Growth - EPS grows multiple points faster than sales Disciplined - Competitive dividend policy Capital - Repurchase shares to offset dilution Allocation - Active and disciplined M&A program Robust Cash - Free Cash Flow conversion
Slide 98: Investment Thesis
Investment Thesis Mission-Critical Solutions Maximize Customer Efficiency Conservative Capital Structure Leading Industry & Capital Positions, Brands Allocation and Footprint Philosophy Value Creation Diversified Across Strong Cash Flow Products, Verticals Generation and Customers Strong Financial P
Slide 99: 10 Minute Break
TE EE 10 Minute nm
Slide 100: Question & Answer Session
Question & Answer Sessio nvent
Slide 101: Thank You
Thank You nvent
Slide 102: nVent Leadership Bio's
FTE SE a nVent Leadership Bio's | nvent
Slide 103: nVent Leadership Bio's: Randall J. Hogan
nVent Leadership Bio’s RANDALL J. HOGAN CHAIRMAN | NVENT Randall J. Hogan currently serves as Pentair’s Chairman and Chief Executive Officer and upon the separation, he will serve as Chairman of nVent. Hogan was named Pentair’s Chief Executive Officer in 2001 and was appointed Chairman in 2002. He f
Slide 104: nVent Leadership Bio's: Beth A. Wozniak
nVent Leadership Bio’s BETH A. WOZNIAK CHIEF EXECUTIVE OFFICER | NVENT Ms. Wozniak will be the Chief Executive Officer of nVent. She was named Pentair's Senior Vice President and President of its Electrical segment in 2017. She previously served as President of Pentair's Flow & Filtration Solutions
Slide 105: nVent Leadership Bio's: Stacy P. McMahan
nVent Leadership Bio’s STACY P. MCMAHAN EXECUTIVE VICE PRESIDENT AND CHIEF FINANCIAL OFFICER | NVENT Ms. McMahan will be the Executive Vice President and Chief Financial Officer of nVent. Previously, Ms. McMahan was the Chief Financial Officer of The Spectranetics Corporation (a developer and manufa
Slide 106: nVent Leadership Bio's: Lynnette R. Heath
nVent Leadership Bio’s LYNNETTE R. HEATH EXECUTIVE VICE PRESIDENT, CHIEF HUMAN RESOURCES OFFICER | NVENT Ms. Heath will be the Executive Vice President and Chief Human Resource Officer of nVent. She joined from Twin Cities based Entrust Datacard, where she served as Senior Vice President of Global H
Slide 107: nVent Leadership Bio's: Jon D. Lammers
nVent Leadership Bio’s JON D. LAMMERS EXECUTIVE VICE PRESIDENT, GENERAL COUNSEL AND SECRETARY | NVENT Mr. Lammers will be the Executive Vice President, General Counsel and Secretary of nVent. He joined from Wichita based Foulston Siefkin LLP. Previously he served as Senior Vice President, General Co
Slide 108: nVent Leadership Bio's: Benjamin R. Sommerness
nVent Leadership Bio’s BENJAMIN R. SOMMERNESS EXECUTIVE VICE PRESIDENT, CHIEF GROWTH & STRATEGY OFFICER | NVENT Mr. Sommerness will be the Executive Vice President, Chief Growth and Strategy Officer of nVent. He joined from Twin Cities-based Smiths Medical, where he served as Vice President of Globa
Slide 109: nVent Leadership Bio's: Tom F. Pettit
nVent Leadership Bio’s TOM F. PETTIT EXECUTIVE VICE PRESIDENT, CHIEF INTEGRATED SUPPLY CHAIN OFFICER | NVENT Mr. Pettit will be the Executive Vice President and Chief Integrated Supply Chain Officer of nVent. He is currently the Operations and Supply Chain Vice President of Pentair and has served in
Slide 110: nVent Leadership Bio's: Joseph A. Ruzynski
nVent Leadership Bio’s JOSEPH A. RUZYNSKI PRESIDENT, ENCLOSURES | NVENT Mr. Ruzynski will be the President of Enclosures at nVent. Mr. Ruzynski is currently the Vice President of Pentair’s Enclosures Strategic Business Unit and has served in that role since January 2017. Mr. Ruzynski previously serv
Slide 111: nVent Leadership Bio's: M. Bradley Faulconer
nVent Leadership Bio’s M. BRADLEY FAULCONER PRESIDENT, THERMAL MANAGEMENT| NVENT Mr. Faulconer will be the President of Thermal Management at nVent. Mr. Faulconer is currently the Vice President of Pentair’s Thermal Management Strategic Business Unit of the Electrical segment and has served in that
Slide 112: nVent Leadership Bio's: Robert J. van der Kolk
nVent Leadership Bio’s ROBERT J. VAN DER KOLK PRESIDENT, EFS | NVENT Mr. van der Kolk will be President, EFS at nVent. He currently serves as Vice President / General Manager of the Electrical Fastening Solutions Business (EFS), of Pentair, since September 2015. Between September 2015 and May 2016 R
Slide 113: nVent Leadership Bio's: Randolph A. Wacker
nVent Leadership Bio’s RANDOLPH A. WACKER SENIOR VICE PRESIDENT & CHIEF ACCOUNTING OFFICER| NVENT Mr. Wacker will be the Senior Vice President and Chief Accounting Officer of nVent. Currently, Mr. Wacker is the Assistant Corporate Controller of Pentair plc beginning in October 2005. Previously, Mr.
Slide 114: nVent Leadership Bio's: J.C. Weigelt
nVent Leadership Bio’s J.C. WEIGELT VICE PRESIDENT, INVESTOR RELATIONS | NVENT J.C. Weigelt currently serves as Vice President, Investor Relations of Electrical and upon the separation, he will serve as Vice President, Investor Relations for nVent. Mr. Weigelt joined Pentair in 2017. Prior to Pentai
Slide 115: Appendix: GAAP to Non-GAAP Measurements & Reconciliations
Appendix GAAP to Non-GAAP Measurements & Reconciliations
Slide 116: Reported to Adjusted 2015-2018 Reconciliation
Reported to Adjusted 2015-2018 Reconciliation nVent Electric plc Reconciliation of the GAAP year ended December 31, 2018, 2017, 2016 and 2015 to the non-GAAP excluding the effect of 2018, 2017, 2016 and 2015 adjustments (Unaudited) Actual Forecast In millions 2015 2016 2017 2018 Total nVent Net sale
Slide 117: Reported to Adjusted 2015-2018 Reconciliation
Reported to Adjusted 2015-2018 Reconciliation nVent Electric plc Reconciliation of the GAAP year ended December 31, 2018, 2017, 2016 and 2015 to the non-GAAP excluding the effect of 2018, 2017, 2016 and 2015 adjustments (Unaudited) Actual Forecast In millions 2015 2016 2017 2018 Free Cash Flow Net c
Slide 118: Full Year 2017 and 2018 Core Sales Growth Reconciliation
Full Year 2017 and 2018 Core Sales Growth Reconciliation nVent Electric plc Reconciliation of Net Sales Growth to Core Net Sales Growth by Segment for the years ended December 31, 2018 and 2017 (Unaudited) 2017 Net Sales Growth Adjusted Core Large Jobs Core Currency Acq./Div. Total nVent 2.8% (4.9%)