Forward-looking Statements
This report 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," "are
confident," or words, phrases or terms of similar substance or the negative
thereof, are 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, including due to the impact of the
novel coronavirus 2019 ("COVID-19") pandemic and potential impairment of
goodwill and trade names; 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; 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; inability to mitigate material and other cost inflation; risks
related to the availability of, and cost inflation in, supply chain inputs,
including labor, raw materials, commodities, packaging and transportation;
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
Overview
The terms "us," "we," "our," "the Company" or "nVent" refer to
•Enclosures-The Enclosures segment provides innovative solutions to connect and protect critical controls systems, electronics, data and electrical equipment. From metallic and non-metallic enclosures to cabinets, subracks and backplanes, it offers the physical infrastructure to host, connect and protect server and network equipment, as well as indoor and outdoor protection for test and measurement and aerospace and defense applications in industrial, infrastructure, commercial and energy verticals.
•Electrical & Fastening Solutions-The Electrical & Fastening Solutions segment provides solutions that connect and protect electrical and mechanical systems and civil structures. Its engineered electrical and fastening products are innovative, cost efficient and time saving connections that are used across a wide range of verticals, including commercial, infrastructure, industrial and energy. •Thermal Management-The Thermal Management segment provides electric thermal solutions that connect and protect critical buildings, infrastructure, industrial processes and people. Its thermal management systems include heat tracing, floor heating, fire-rated and specialty wiring, sensing and snow melting and de-icing solutions for use in industrial, commercial & residential, energy and infrastructure verticals. Its highly reliable and easy to install solutions lower total cost of ownership to building owners, facility managers, operators and end users. OnFebruary 10, 2020 , we acquired substantially all of the assets ofWBT LLC ("WBT") for$29.9 million in cash. TheU.S. based WBT business manufactures high-quality cable tray systems and operates within our Electrical & Fastening Solutions segment. 23
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OnApril 1, 2021 , we acquired substantially all of the assets ofVynckier Enclosure Systems, Inc. ("Vynckier") for approximately$27.0 million in cash. TheU.S. based Vynckier business manufactures high-quality non-metallic enclosures that we will market as part of the nVent HOFFMAN product line within our Enclosures segment. OnJune 30, 2021 , we acquiredCIS Global LLC ("CIS Global") for approximately$202.4 million in cash. The CIS Global business is a leading provider of intelligent rack power distribution and server slides products, and will operate within our Enclosures segment. COVID-19 Update InMarch 2020 , theWorld Health Organization declared COVID-19 a pandemic. The COVID-19 pandemic has resulted, and is likely to continue to result, in significant economic disruption and has adversely affected, and may continue to adversely affect, our business. Governments around the world have implemented measures to help control the spread of the virus, including business curtailments and shutdowns, isolating residents to their places of residence and restricting travel. The effects of the COVID-19 pandemic have had and may continue to have an unfavorable impact on our business.
Beginning in
In response to the adverse effects of the pandemic, we executed a number of temporary cash and cost-savings measures, which were largely implemented in 2020. As our business has seen continuous, sequential improvement in our financial results and improved outlook for many end-markets since the third quarter of 2020, we have eliminated many of the temporary cash and cost savings measures put in place.
While our facilities have remained operational during the first three quarters of 2021, we continue to experience various degrees of manufacturing cost pressures and inefficiencies as a result of supply chain issues and increased demand. Although we regularly monitor the financial health and operations of companies in our supply chain, and use alternative suppliers when necessary and available, supply chain constraints could cause a disruption in our ability to obtain raw materials or components required to manufacture our products and adversely affect our operations. Further, as the COVID-19 conditions have improved and economic activity has increased, we have experienced supply chain challenges, including increased lead times, as well as inflation of raw materials, logistics and labor costs due to availability constraints and high demand. We expect the inflationary trends and supply chain pressures to continue throughout the remainder of 2021 and into 2022.
We continue to actively monitor the impacts of the pandemic and global efforts to respond to it, and may take further actions that alter our business operations as may be required by governments in the jurisdictions where we operate, or that we determine are in the best interests of our employees, customers, suppliers and shareholders.
Key Trends and Uncertainties Regarding our Existing Business
The following trends and uncertainties affected our financial performance in
2020 and the first nine months of 2021 and will likely impact our results in the
future:
•There are many uncertainties regarding the COVID-19 pandemic, including the
anticipated duration and severity of the pandemic and the extent of worldwide
social, political and economic disruption it may cause. The magnitude of the
impact of the pandemic on our financial condition, liquidity and results of
operations cannot be determined at this time, and ultimately will be affected by
a number of evolving factors including the length of time that the pandemic
continues, rates of vaccinations, the vaccines' ability to protect against
variant strains of COVID-19, the pandemic's effect on the demand for our
products and services and the supply chain, as well as the impact of
governmental regulations imposed in response to the pandemic including potential
business curtailments and shutdowns impacting our factories.
•We have identified specific product, vertical and geographic opportunities that
we find attractive and continue to pursue, both within and outside the
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Table of Contents •During the first nine months of 2021, we experienced supply chain challenges, including increased lead times, and inflationary increases of raw materials, logistics and labor costs due to availability constraints and high demand. While we have taken pricing actions and we strive for productivity improvements that could help offset these cost increases, we expect supply chain pressures and inflationary cost increases to continue for the remainder of 2021 and into 2022, and could negatively impact our results of operations. •During 2020 and the first nine months of 2021, we continued execution of certain business restructuring initiatives aimed at reducing our fixed cost structure and realigning our business. In 2021, our operating objectives include the following: •Executing our social responsibility strategy focused on People, Products and Planet; •Enhancing and supporting employee engagement and development; •Achieving differentiated revenue growth through new products and solutions and expansion in higher growth verticals and key developing regions; •Optimizing our technological capabilities to increasingly generate innovative new and connected products and advance digital transformation; •Driving operating excellence through lean enterprise initiatives, with specific focus on sourcing and supply management, cash flow management and lean operations; •Optimizing working capital through inventory reduction initiatives across business segments and focused actions to optimize customer and vendor payment terms; and •Deploying capital strategically to drive growth and value creation. 25
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