nVent Fourth Quarter and Full-Year 2019 · Q4 ’19 Earnings Presentation 3 Executive Summary ROS...

nVent Fourth Quarter and Full-Year 2019

Earnings Presentation

February 5, 2020

Forward-Looking Statement and Key Definitions

2Q4 ’19 Earnings Presentation

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 forward-looking statements. Without limitation, any statements preceded or followed by or that include the words "targets," "plans," "believes,"

"expects," "intends," "will," "likely," "may," "anticipates," "estimates," "projects,“ “forecasts,” "should," "would," "positioned," "strategy," "future," or words, phrases or terms of similar

substance or the negative thereof, are forward-looking statements. All projections in this presentation are also forward-looking statements. These forward-looking statements are not

guarantees of future performance and are subject to risks, uncertainties, assumptions and other factors, some of which are beyond our control, which could cause actual results to differ

materially from those expressed or implied by such forward-looking statements. These factors include the ability to realize the anticipated benefits from our separation from Pentair (the

“Separation”); adverse effects on our business operations or financial results; the ability of our business to operate independently following the Separation; overall global economic and

business conditions impacting our business; the ability to achieve the benefits of our restructuring plans; the ability to successfully identify, finance, complete and integrate acquisitions,

including the acquisition of Eldon Holding AB; competition and pricing pressures in the markets we serve, including the impacts of tariffs; the strength of housing and related markets;

volatility in currency exchange rates and commodity prices; inability to generate savings from excellence in operations initiatives consisting of lean enterprise, supply management and

cash flow practices; increased risks associated with operating foreign businesses; the ability to deliver backlog and win future project work; failure of markets to accept new product

introductions and enhancements; the impact of changes in laws and regulations, including those that limit U.S. tax benefits; the outcome of litigation and governmental proceedings; and

the ability to achieve our long-term strategic operating goals. Additional information concerning these and other factors is contained in our filings with the Securities and Exchange

Commission, including nVent’s Annual Report on Form 10-K, as amended. All forward-looking statements speak only as of the date of this presentation. nVent Electric plc assumes no

obligation, and disclaims any obligation, to update the information contained in this presentation.

KEY DEFINITIONS AND NOTES

Except as otherwise noted all references to 2019 and 2018 represent our results for the period indicated, presented on an adjusted basis. “Organic Sales" refers to GAAP revenue

excluding (1) the impact of currency translation and (2) the impact of revenue from acquired businesses recorded prior to the first anniversary of the acquisition less the amount of sales

attributable to divested product lines not considered discontinued operations. “Segment Income” represents Operating Income exclusive of non-cash intangible amortization, separation

costs, certain acquisition related costs, costs of restructuring activities, impairments and other unusual non-operating items. Return on Sales ("ROS") equals Segment Income divided by

Sales. See appendix for GAAP to non-GAAP reconciliations.


Executive Summary

ROS expansion and strong cash generation

Q4 ‛19

Full-Year 2019

Q4 Segment Call-outs

Sales of $567 million, flat year-over-year, down 3% organically

ROS was 19.2%, expanded 10 bps

Adjusted EPS of $0.47, up 4%

Delivered strong Free Cash Flow of $169 million

EFS grew sales 3% organically and expanded ROS by 130 bps

Thermal Management expanded ROS by 80 bps

December saw broad-based softening

Eldon performance on track in Enclosures

Sales of $2.2 billion, flat year-over-year

ROS was 19.3%, expanded 20 bps; Adjusted EPS of $1.78

Delivered ~100% Free Cash Flow Conversion

Completed Eldon acquisition

2020 Outlook

Reported Sales outlook of flat to 5%, organically down 2 to up 2%

ROS expansion of flat to +30 bps

Adjusted EPS guidance range of $1.85 - $1.95


2019 Priorities

Strong execution in a tougher environment

• Accelerated One nVent initiatives

• Drove key vertical growth

• Launched new products

Organic Growth

• Delivered price + productivity to offset inflation

• Drove supply chain efficienciesMargin Expansion

• Returned cash in form of dividends and repurchases

• Completed Eldon acquisitionCapital Allocation


At nVent: Connect and Protect is our Mission

Accelerate and scale with One nVent

• Protection of Electronics and Data Everywhere

Enclosures

• Connection and Protection for Safety and Security

Thermal Management

• Innovation in Cost-Efficient, Labor-Saving Connections

Electrical & Fastening Solutions

Our Solution:

Favorable trends position

us well:

Electrification of everything

Increased safety and

security

Need for labor-savings

Q4 ’19 nVent Performance


*Non-Cash Amortization

Sales ($ in millions) Financial Highlights (YoY)

Segment Income ($ in millions)

Sales flat, Organic down 3%

• Sales contribution from acquisitions

Price + productivity more than offset inflation

Protected profit

• Return on sales up 10 bps

• All segments expanded return on sales

Adjusted EPS of $0.47

• Up ~4% year-over-year

• Lower tax rate versus expectations

Free Cash Flow of $169 million

Other Items

• Adjusted tax rate of ~18%

• Net interest expense of ~$11M

• Shares of ~171M

($5)

Q4 ’18

($27)

Volume

$8$567

Price FX

$23

Acq. Q4 ’19

$568

$0

Growth/

Acq.

$15*

Q4 ’18

($6)

$8

Price FX

($1)

Net Prod.

$16*

Q4 ’19

$108 $109

ROS

19.1%

ROS

19.2%(0.9%) 1.1% 0.1% (0.2%)

FlatYoY

-5 pts 2 pt 4 pts -1 pt

+ Productivity

- Investments

- Inflation

FlatYoY

Full-Year ’19 nVent Performance


*Non-Cash Amortization

Sales ($ in millions) Financial Highlights (YoY)

Segment Income ($ in millions)

Organic Sales flat

Price + productivity more than offset inflation

Segment Income flat

• Return on sales expanded 20 bps

‒ Enclosures up 40 bps

‒ EFS up 50 bps

Adjusted EPS of $1.78

• Up ~2% year-over-year

Free Cash Flow of $304 million

• ~100% conversion of adjusted net income

Other Items

• Adjusted tax rate of ~18%

• Net interest expense of ~$45M

• Shares of ~173M

FY ’18 Price

($40)

Volume

$38$31

($37)

Acq. FX FY ’19

$2,214 $2,204

$61*

Growth/

Acq.

($4)

FY ’18

($17)

$38

Price FX

($17)

Net Prod.

$61*

FY ’19

$424 $424

ROS

19.1%

ROS

19.3%(0.6%) 1.4% 0.1% (0.7%)

FlatYoY

-2 pts 2 pts 1 pt -1 pts

+ Productivity

- Investments

- Inflation

FlatYoY


Q4 ’19 Segment Performance

Maintained profits in a softer demand environment

En

clo

su

res

Th

erm

al M

gm

tE

FS

─ Slowdown in the Industrial vertical

Strong sales in One nVent initiatives

Eldon contributed ~$23M in Sales

Strong operational performance, positive net productivity

Segment IncomeSales

Expanded ROS by 80 bps, cost-out actions executed

± Backlog up strong double digits while orders were up modestly

─ Commercial sales down low-single digits

Expanded ROS by 130 bps

Positive contributions from Price and Volume

Strong operational performance

Commentary($M)

$256Up 2%

Down 6% organic

$40Up 3%

ROS 15.6% (+10bps)

$169Down 5%

Down 4% organic

$47Down 3%

ROS 27.9% (+80bps)

$142Up 2%

Up 3% organic

$36Up 8%

ROS 25.1% (+130bps)


Full-Year ’19 Segment Performance

Solid execution

En

clo

su

res

Th

erm

al M

gm

tE

FS

Expanded ROS by 40 bps, strong operational performance

Positive contributions from One nVent initiatives

Eldon contributed ~$31M in Sales

─ Slowdown in Industrial vertical during second half

Segment IncomeSales

Orders and backlog grew in 2H

± ROS contracted 10 bps, executed cost-out actions

─ Slowdown in Commercial

Strong organic sales growth

Addressed operational inefficiencies

Expanded ROS by 50 bps

Commentary($M)

$1,034Up 1%

Flat organic

$181Up 4%

ROS 17.5%(+40bps)

$591Down 5%

Down 3% organic

$145Down 6%

ROS 24.6%(-10bps)

$580Up 2%

Up 3% organic

$150Up 4%

ROS 25.8%(+50bps)

Debt Repayments

Acquisitions/Other 56 84

Ending Debt 1,065$ 1,065$

Share Repurchases - 236

(14) (3)

Dividends 30 121

Beginning Debt 1,151$ 942$

Used (Generated) Cash (169) (304)

Q4

Use of Cash: 20192019

Other Accruals/Other

Working Capital 107 6

Free Cash Flow - Total 169$ 304$

(14) 1

Depreciation 9 35

Capital Expenditures (10) (39)

Net Income

Amortization 15 61

Subtotal 77$ 301$

62$ 239$

Q4

2019

CASH FLOW ($M)

2019


Balance Sheet and Cash Flow

Strong balance sheet and free cash flow performance

Debt Roll-Forward ($M)

Debt Summary

2019 Capital Expenditures of ~$39M

2019 D&A of ~$97M + ~$16M of Non-Cash Stock

Compensation

Net debt to EBITDA ratio of 2.1X

$465M revolver available

$800M

$270M

Q4 ‘19

$1,070M

Weighted Average Rate ~4.0%

25% Variable

75% Fixed$300M @ 2023

$500M @ 2028

Maturity

2023

Note: Does not include $106M of cash on hand at quarter-end and $5M of unamortized debt issuance costs


Full-Year 2020 nVent Outlook

Outlook reflects soft macro environment

Key Considerations

Target FCF at 100% of Adjusted Net Income

Expect ~$55 million corporate costs

Capex $40 – 50 million

See softer demand in Industrial vertical during 1H

Depreciation & Amortization ~$100 million

Sales

ROS

Adjusted EPS

Flat – Up 5%

Down 2 – Up 2% Organic

Flat – Up 30 bps

$1.85 – $1.95

Organic Sales by SegmentTotal nVent

Thermal Management

EFS

Down 1 – Up 3%

Flat – Up 3%

Up 3 – 7% including Eldon

Down 3 – Up 1%

Other ItemsNet Int. Exp: $40 – 43M

Tax Rate: 18 – 19%

Shares: 169 – 170M

Enclosures


First Quarter 2020 nVent Outlook

Prepared to execute in tougher macro environment

Summary

Enclosures Industrial sales expected to remain soft

Thermal Management sales expected to remain down while orders and backlog continue to grow

Eldon expected to add ~$20M+ of sales in the quarter

Cost out actions expected to read out; continuing to invest in our strategic growth initiatives

Q1 ‘20 Q1 ’19 Other Items

Reported Sales -1 to 1% $538M Tax Rate 18 to 19%

Organic Sales -4 to -2% Net Interest Expense ~$11M

EPS (adjusted) $0.37 to $0.41 $0.39 Shares ~170M


2020 Priorities

Continue to build a high performance growth company

• Accelerate and expand One nVent initiatives

• Grow sales globally

• Launch record number of new products

Organic Growth

• Expand margins

• Optimize inventory levelsMargin and

Working Capital

• Return cash in form of dividends and repurchases

• Focus on accretive and bolt-on M&ACapital Allocation


Summary

Focused on growth and execution

Strong organic sales growth and ROS expansion in EFS

Eldon is a great strategic fit with a strong IEC product portfolio

Thermal Management gaining traction and building backlog

Continued momentum with our strategic growth initiatives

Expanded margins in a more challenging macro environment

Delivered approximately 100% free cash flow conversion

We are a Leader in Connection and Protection

Appendix and

GAAP to Non-GAAP Measurements & Reconciliations

Reported to Adjusted 2019 Reconciliation


In millions, except per-share data First Quarter Second Quarter Third Quarter Fourth Quarter Full Year

Net sales 538.0$ 539.5$ 559.8$ 566.7$ 2,204.0$

Net income 56.4 60.9 59.9 45.5 222.7

Provision for income taxes 9.7 13.2 13.7 (1.9) 34.7

Income before income taxes 66.1 74.1 73.6 43.6 257.4

Other expense 0.9 1.0 0.9 28.2 31.0

Net interest expense 10.5 11.9 11.6 10.7 44.7

Operating income 77.5 87.0 86.1 82.5 333.1

% of net sales 14.4% 16.1% 15.4% 14.6% 15.1%

Adjustments:

Restructuring and other 3.6 2.7 11.2 6.7 24.2

Acquisition transaction and integration costs - - 1.9 0.5 2.4

Intangible amortization 15.1 15.1 15.4 15.8 61.4

Inventory step-up amortization - - - 3.2 3.2

Segment income 96.2$ 104.8$ 114.6$ 108.7$ 424.3$

Return on sales 17.9% 19.4% 20.5% 19.2% 19.3%

Segment income 96.2$ 104.8$ 114.6$ 108.7$ 424.3$

Depreciation 8.4 8.8 8.9 9.3 35.4

EBITDA - as adjusted 104.6$ 113.6$ 123.5$ 118.0$ 459.7$

Net income - as reported 56.4$ 60.9$ 59.9$ 45.5$ 222.7$

Adjustments to operating income 18.7 17.8 28.5 26.2 91.2

Pension and other post-retirement mark-to-market loss - - - 27.3 27.3

Income tax adjustments (5.6) (3.3) (4.6) (19.3) (32.8)

Net income - as adjusted 69.5$ 75.4$ 83.8$ 79.7$ 308.4$

Diluted earnings per ordinary share

Diluted earnings per ordinary share - as reported 0.32$ 0.35$ 0.35$ 0.27$ 1.29

Adjustments 0.07 0.09 0.14 0.20 0.49

Diluted earnings per ordinary share - as adjusted 0.39$ 0.44$ 0.49$ 0.47$ 1.78

nVent Electric plc

Reconciliation of GAAP to non-GAAP financial measures for the year ended December 31, 2019

excluding the effect of 2019 adjustments (Unaudited)



In millions, except per-share data First Quarter Second Quarter Third Quarter Fourth Quarter Full Year

Net sales 538.9$ 542.7$ 563.9$ 568.1$ 2,213.6$

Net income 52.3 43.3 68.2 67.0 230.8

Provision for income taxes 11.5 7.6 12.9 5.9 37.9

Income before income taxes 63.8 50.9 81.1 72.9 268.7

Other Expense 1.2 5.1 0.9 3.7 10.9

Net interest expense 0.6 9.3 11.7 9.6 31.2

Operating income 65.6 65.3 93.7 86.2 310.8

% of net sales 12.2% 12.0% 16.6% 15.2% 14.0%

Adjustments:

Restructuring and other 2.8 2.3 1.3 1.3 7.7

Intangible amortization 15.4 15.2 15.2 15.1 60.9

Separation costs 9.7 24.8 4.8 5.7 45.0

Corporate allocations - (0.8) - - (0.8)

Segment income 93.5$ 106.8$ 115.0$ 108.3$ 423.6$

Return on sales 17.4% 19.7% 20.4% 19.1% 19.1%

Segment income 93.5$ 106.8$ 115.0$ 108.3$ 423.6$

Depreciation 9.2 9.1 9.3 8.6 36.2

EBITDA - as adjusted 102.7$ 115.9$ 124.3$ 116.9$ 459.8$

Net income - as reported 52.3$ 43.3$ 68.2$ 67.0$ 230.8$

Interest expense adjustment - pro forma (5.6) - - - (5.6)

Adjustments to operating income 27.9 41.5 21.3 22.1 112.8

Pension and other post-retirement mark-to-market loss - 4.1 - 2.9 7.0

Income tax adjustments (4.0) (9.8) (5.5) (11.7) (31.0)

Net income - pro forma adjusted 70.6$ 79.1$ 84.0$ 80.3$ 314.0$

Diluted earnings per ordinary share - pro forma adjusted

Diluted earnings per ordinary share - pro forma 0.29$ 0.24$ 0.38$ 0.37$ 1.28$

Adjustments 0.10 0.20 0.08 0.08 0.46

Diluted earnings per ordinary share - pro forma adjusted 0.39$ 0.44$ 0.46$ 0.45$ 1.74$

nVent Electric plc





In millions, except per-share data First Quarter Full Year

Net sales 2,270$

Operating income 375

% of net sales 17%

Adjustments:

Intangible amortization 63

Segment income 438$

Return on sales 19%

Net income - as reported 53$ 271$

Adjustments to operating income 16 63

Income tax adjustments (3) (11)

Net income - as adjusted 66$ 323$

Diluted earnings per ordinary share

Diluted earnings per ordinary share - as reported $0.29 - $0.33 $1.55 - $1.65

Adjustments 0.08 0.30

Diluted earnings per ordinary share - as adjusted $0.37 - $0.41 $1.85 - $1.95

(1) Forecast information represents an approximation

nVent Electric plc



Forecast (1)

Organic Sales Growth & Free Cash Flow Reconciliation


Organic Currency Acq./Div. Total Organic Currency Acq./Div. Total

nVent (3.4%) (0.9%) 4.0% (0.3%) (0.2%) (1.6%) 1.4% (0.4%)

Enclosures (6.4%) (0.8%) 9.2% 2.0% (0.3%) (1.3%) 3.0% 1.4%

Thermal Management (4.4%) (1.0%) 0.0% (5.4%) (2.8%) (2.4%) —% (5.2%)

Electrical & Fastening Solutions 3.1% (0.8%) 0.0% 2.3% 3.0% (1.4%) —% 1.6%

Organic Currency Acq./Div. Total Organic Currency Acq./Div. Total

nVent (4) - (2)% (1%) 4% (1) - 1% (2) - 2% (1) - 0% 3% 0 - 5%

Enclosures (3) - 1% —% 6% 3 - 7%

Thermal Management (1) - 3% —% —% (1) - 3%

Electrical & Fastening Solutions 0 - 3% —% —% 0 - 3%

In millions

Net cash provided by (used for) operating activities

Capital expenditures

Proceeds from sale of property and equipment

Free cash flow 169.2$

178.8$

(1) Forecast information represents an approximation

Full Year Net Sales GrowthQ1 Net Sales Growth

303.8$

Reconciliation of cash from operating activities to free cash flow (Unaudited)

Twelve months ended

December 31, 2019

(9.8)

0.2

(38.8)

6.3

December 31, 2019

336.3$

Three months ended

Reconciliation of Net Sales Growth to Organic Net Sales Growth by Segment

for the quarter ended March 31, 2020 and the year ended December 31, 2020 (Unaudited)

Forecast (1)

nVent Electric plc

Reconciliation of Net Sales Growth to Organic Net Sales Growth by Segment

for the quarter and year ended December 31, 2019 (Unaudited)

Q4 Net Sales Growth Full Year Net Sales Growth

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