NVent Electric : Reports First Quarter 2019 Financial Results

Steady Progress on Growth Strategy Reported sales of $538 million were flat; Organic sales up 3% Reported EPS of $0.32; Adjusted EPS of $0.39 Reported return on sales of 14.4% or 17.9% on an adjusted basis Repurchased approximately $110 million in nVent shares year-to-date Reconciliations of GAAP (reported) to Non-GAAP measures are in the attached financial tables.

nVent Electric plc (NYSE:NVT) (“nVent”), a global leader in electrical connection and protection solutions, today announced financial results for the first quarter of 2019 and provided guidance for the second quarter and full-year 2019.

First quarter sales of $538 million were flat relative to the first quarter 2018 and grew 3 percent organically, which excludes the impact from currency fluctuations. First quarter 2019 earnings per diluted share (“EPS”) were $0.32, while on an adjusted basis, the company had EPS of $0.39. Segment income, adjusted net income, free cash flow and adjusted EPS are described in the attached schedules.

First quarter 2019 operating income was $78 million, up from $66 million and up 18 percent from the same quarter in 2018. On an adjusted basis, segment income was $96 million, up 3 percent compared to the first quarter of 2018. Segment income excluding corporate and other costs was up 5 percent compared to the first quarter of 2018.

First quarter net cash used for operating activities was $13 million and total free cash flow usage was $16 million. The company continues to target full-year free cash flow of approximately 100 percent of adjusted net income.

"We are off to a good start in 2019, growing in all three segments. We're making steady progress on our goals including solid margin expansion in our Enclosures segment," said Beth Wozniak, nVent's chief executive officer. "Our first quarter performance puts us on track to deliver on our 2019 commitments."

FIRST QUARTER PERFORMANCE ($ in millions)

nVent Electric plc
			Three months ended
			March 31, 2019				March 31, 2018				% / point change
Net Sales			$538				$539				0	%
Organic											3	%
Operating Income			$78				$66				18	%
Reported ROS			14.4	%			12.2	%
Segment Income			$96				$94				3	%
Adjusted ROS			17.9	%			17.4	%			50 bps

Enclosures
			Three months ended
			March 31, 2019				March 31, 2018				% / point change
Net Sales			$256				$254				1	%
Organic											3	%
ROS			17.8	%			16.0	%			180 bps

Enclosures organic sales growth was broad-based across Infrastructure, Commercial and Industrial. First quarter ROS improved 180 basis points as price plus productivity more than offset inflation.

Thermal Management
			Three months ended
			March 31, 2019				March 31, 2018				% / point change
Net Sales			$145				$148				-2	%
Organic											2	%
ROS			23.6	%			22.7	%			90 bps

Thermal Management organic sales growth was driven by double digit growth in Industrial Maintenance, Repair and Overhaul ("MRO"), while longer cycle Energy was down versus prior year. The 90 basis points of margin expansion was driven in part by Industrial MRO.

Electrical & Fastening Solutions ("EFS")
			Three months ended
			March 31, 2019				March 31, 2018				% / point change
Net Sales			$137				$137				0	%
Organic											3	%
ROS			22.7	%			23.2	%			-50 bps

EFS organic sales growth was driven by Industrial and Commercial including strong price realization across the portfolio. EFS margin declined by 50 basis points due to operational inefficiencies, which have been identified and are being addressed to drive margin expansion in the back half of 2019.

GUIDANCE FOR FULL-YEAR AND SECOND QUARTER 2019

The company continues to estimate reported sales growth for the full-year 2019 of flat to up 3 percent, which represents 2 to 4 percent organic growth versus the prior year. The company expects full-year 2019 EPS of $1.50 to $1.60 on a GAAP basis and adjusted EPS remains unchanged at $1.80 to $1.90.

The company estimates reported sales for the second quarter of 2019 to be flat to up 2 percent, which represents 2 to 4 percent on an organic basis. The company estimates second quarter 2019 EPS on a GAAP basis of $0.35 to $0.39 and adjusted EPS of $0.42 to $0.46.

The second quarter and full-year EPS guidance includes the estimated impact of the proposed U.S. tax regulations announced in December 2018.

DIVIDENDS

nVent previously announced on February 19, 2019 that its Board of Directors approved a regular cash dividend of $0.175 per share, payable during the second quarter on May 3, 2019.

EARNINGS CONFERENCE CALL

nVent’s management team will discuss the company’s first quarter performance on a conference call with analysts and investors at 8:00 a.m. Eastern Daylight Time today. A live audio webcast of the conference call and materials will be available through the “Investor Relations” section of the company’s website (http://investors.nvent.com). To participate, please dial 855-493-3495 or 720-405-2160 along with conference number 1298999 approximately ten minutes before the 8:00 a.m. EDT start. A replay of the conference call will be made accessible once it becomes available and will remain accessible through midnight on May 30, 2019 by dialing 855-859-2056 or 404-537-3406, along with the above conference number.

About nVent

nVent is a leading global provider of electrical connection and protection solutions. We believe our inventive electrical solutions enable safer systems and ensure a more secure world. We design, manufacture, market, install and service high performance products and solutions that connect and protect some of the world's most sensitive equipment, buildings and critical processes. We offer a comprehensive range of enclosures, electrical connections and fastening and thermal management solutions across industry-leading brands that are recognized globally for quality, reliability and innovation. Our principal office is in London, United Kingdom and our management office in the United States is in Minneapolis, Minnesota. Our robust portfolio of leading electrical product brands dates back more than 100 years and includes nVent CADDY, ERICO, HOFFMAN, RAYCHEM, SCHROFF and TRACER.

nVent, CADDY, ERICO, HOFFMAN, RAYCHEM, SCHROFF and TRACER are trademarks owned or licensed by nVent Services GmbH or its affiliates.

CAUTION CONCERNING FORWARD-LOOKING STATEMENTS

This press release 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 press release 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 adverse effects on our business operations or financial results as a result of the consummation of our separation from Pentair (the "Separation"); 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; 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 our Annual Report on Form 10-K, as amended. All forward-looking statements speak only as of the date of this press release. nVent assumes no obligation, and disclaims any obligation, to update the information contained in this press release.

nVent Electric plc
Condensed Consolidated and Combined Statements of Income (Unaudited)
			Three months ended
In millions, except per-share data			March 31, 2019					March 31, 2018
Net sales			$	538.0				$	538.9
Cost of goods sold				328.1					330.0
Gross profit				209.9					208.9
% of net sales				39.0	%				38.8	%
Selling, general and administrative				120.1					131.9
% of net sales				22.3	%				24.5	%
Research and development				12.3					11.4
% of net sales				2.3	%				2.1	%
Operating income				77.5					65.6
% of net sales				14.4	%				12.2	%
Net interest expense				10.5					0.6
Other expense				0.9					1.2
Income before income taxes				66.1					63.8
Provision for income taxes				9.7					11.5
Effective tax rate				14.7	%				18.0	%
Net income			$	56.4				$	52.3
Earnings per ordinary share
Basic			$	0.32				$	0.29
Diluted			$	0.32				$	0.29
Weighted average ordinary shares outstanding
Basic				176.5					179.0
Diluted				178.2					181.2
Cash dividends paid per ordinary share			$	0.175				$	—

nVent Electric plc
Condensed Consolidated Balance Sheets (Unaudited)
			March 31, 2019				December 31, 2018
In millions
Assets
Current assets
Cash and cash equivalents			$	32.6			$	159.0
Accounts and notes receivable, net				342.7				340.9
Inventories				244.4				228.2
Other current assets				126.5				118.4
Total current assets				746.2				846.5
Property, plant and equipment, net				264.6				264.8
Other assets
Goodwill				2,233.9				2,234.3
Intangibles, net				1,158.7				1,173.3
Other non-current assets				71.3				33.8
Total other assets				3,463.9				3,441.4
Total assets			$	4,474.7			$	4,552.7
Liabilities and Equity
Current liabilities
Current maturities of long-term debt and short-term borrowings			$	13.8			$	12.5
Accounts payable				149.1				186.4
Employee compensation and benefits				64.3				75.8
Other current liabilities				183.0				187.0
Total current liabilities				410.2				461.7
Other liabilities
Long-term debt				925.6				929.2
Pension and other post-retirement compensation and benefits				175.4				177.9
Deferred tax liabilities				222.7				224.8
Other non-current liabilities				105.7				72.0
Total liabilities				1,839.6				1,865.6
Equity				2,635.1				2,687.1
Total liabilities and equity			$	4,474.7			$	4,552.7

nVent Electric plc
Condensed Consolidated and Combined Statements of Cash Flows (Unaudited)
			Three months ended
In millions			March 31, 2019					March 31, 2018
Operating activities
Net income			$	56.4				$	52.3
Adjustments to reconcile net income to net cash provided by (used for) operating activities
Depreciation				8.4					9.2
Amortization				15.1					15.4
Deferred income taxes				(2.1	)				(0.6	)
Share-based compensation				4.3					2.4
Changes in assets and liabilities, net of effects of business acquisitions
Accounts and notes receivable				(1.5	)				(1.3	)
Inventories				(16.8	)				2.0
Other current assets				(8.8	)				(8.0	)
Accounts payable				(40.8	)				(34.6	)
Employee compensation and benefits				(11.2	)				(16.5	)
Other current liabilities				(2.5	)				19.4
Other non-current assets and liabilities				(13.6	)				(3.6	)
Net cash provided by (used for) operating activities				(13.1	)				36.1
Investing activities
Capital expenditures				(9.2	)				(5.4	)
Proceeds from sale of property and equipment				6.0					2.3
Acquisitions, net of cash acquired				—					(2.0	)
Net cash provided by (used for) investing activities				(3.2	)				(5.1	)
Financing activities
Proceeds from long-term debt				—					800.0
Repayments of long-term debt				(2.5	)				—
Debt issuance costs				—					(7.5	)
Dividends paid				(31.0	)				—
Net transfers to former Parent prior to separation				—					(10.0	)
Shares issued to employees, net of shares withheld				1.0					—
Repurchases of ordinary shares				(76.1	)				—
Net cash provided by (used for) financing activities				(108.6	)				782.5
Effect of exchange rate changes on cash and cash equivalents				(1.5	)				(3.7	)
Change in cash and cash equivalents				(126.4	)				809.8
Cash and cash equivalents, beginning of year				159.0					26.9
Cash and cash equivalents, end of year			$	32.6				$	836.7

nVent Electric plc
Supplemental Financial Information by Reportable Segment (Unaudited)
			2019					2018
In millions			First Quarter					First Quarter
Net sales
Enclosures			$	255.5				$	254.1
Thermal Management				145.1					147.9
Electrical & Fastening Solutions				137.4					136.9
Total			$	538.0				$	538.9
Segment income (loss)
Enclosures			$	45.6				$	40.6
Thermal Management				34.3					33.5
Electrical & Fastening Solutions				31.2					31.7
Other				(14.9	)				(12.3	)
Total			$	96.2				$	93.5
Return on sales
Enclosures				17.8	%				16.0	%
Thermal Management				23.6	%				22.7	%
Electrical & Fastening Solutions				22.7	%				23.2	%
Total				17.9	%				17.4	%

nVent Electric plc
Reconciliation of the GAAP year ended December 31, 2019 to the non-GAAP financial measures
excluding the effect of 2019 adjustments (Unaudited)
			Actual					Forecast (1)
In millions, except per-share data			First Quarter					Second Quarter					Full Year
Net sales			$	538.0
Operating income				77.5
% of net sales				14.4	%
Adjustments:
Restructuring and other				3.6
Intangible amortization				15.1
Segment income				96.2
Return on sales				17.9	%
Corporate and other costs				14.9
Segment income excluding corporate and other costs			$	111.1
Net income - as reported			$	56.4				$	65				$	269
Adjustments to operating income				18.7					15					64
Income tax adjustments				(5.6	)				(3	)				(12	)
Net income - as adjusted			$	69.5				$	77				$	321
Diluted earnings per ordinary share
Diluted earnings per ordinary share - as reported			$	0.32				$	0.35 - $0.39				$	1.50 - $1.60
Adjustments				0.07					0.07					0.30
Diluted earnings per ordinary share - adjusted			$	0.39				$	0.42 - $0.46				$	1.80 - $1.90
(1) Forecast information represents an approximation

nVent Electric plc
Reconciliation of the GAAP year ended December 31, 2018 to the non-GAAP financial measures
excluding the effect of 2018 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
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	%
Corporate and other costs				12.3					12.4					13.2					12.0					49.9
Segment income excluding corporate and other costs			$	105.8				$	119.2				$	128.2				$	120.3				$	473.5
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 - as adjusted			$	0.39				$	0.44				$	0.46				$	0.45				$	1.74

nVent Electric plc
Reconciliation of Net Sales Growth to Organic Net Sales Growth by Segment
for the quarter ended March 31, 2019 (Unaudited)
							Actual
							Q1 Net Sales Growth
							Organic				Currency				Acq./Div.				Total
nVent							2.6	%			(2.8	)%			—	%			(0.2	)%
Enclosures							2.7	%			(2.1	)%			—	%			0.6	%
Thermal Management							2.3	%			(4.2	)%			—	%			(1.9	)%
Electrical & Fastening Solutions							2.7	%			(2.3	)%			—	%			0.4	%

nVent Electric plc
Reconciliation of Net Sales Growth to Organic Net Sales Growth by Segment
for the quarter ending June 30, 2019 and year ending December 31, 2019 (Unaudited)
			Forecast (1)
			Q2 Net Sales Growth												Full Year Net Sales Growth
			Organic			Currency			Acq./Div.			Total			Organic				Currency			Acq./Div.				Total
nVent			2 - 4%			(2)%			—%			0 - 2%			2 - 4	%			(1) - (2)%			—	%			0 - 3%
Enclosures															2 - 4	%			(1)%			—	%			1 - 3%
Thermal Management															2 - 6	%			(2) - (3)%			—	%			(1) - 4%
Electrical & Fastening Solutions															2 - 4	%			(1)%			—	%			1 - 3%
(1) Forecast information represents an approximation

nVent Electric plc
Reconciliation of cash from operating activities to free cash flow (Unaudited)
			Three months ended
In millions			March 31, 2019
Net cash provided by (used for) operating activities			$	(13.1	)
Capital expenditures				(9.2	)
Proceeds from sale of property and equipment				6.0
Free cash flow			$	(16.3	)

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