nVent Electric PLC Q3 2024 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Jeffrey Sprague - Vertical Research - Analyst : Hey, thanks. Good morning, everyone. Good morning.

Question: Jeffrey Sprague - Vertical Research - Analyst : Hey, Just on the NVIDIA collaboration that you mentioned here. Maybe I missed it, but did they press release this name by name partner ecosystem or something. Just wondering maybe we're going to hear that super compute. But any color there?

Question: Jeffrey Sprague - Vertical Research - Analyst : In their booth or just in your booth. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. NOVEMBER 01, 2024 / 1:00PM, NVT.N - Q3 2024 nVent Electric PLC Earnings Call

Question: Jeffrey Sprague - Vertical Research - Analyst : Okay. And what was the negative mix effect in EFS that you mentioned?

Question: Jeffrey Sprague - Vertical Research - Analyst : And how are you thinking about price going forward? Obviously ticked a little negative and it's frail kind of inflation, productivity investments collectively, how do you think you could kind of manage that algorithm as we move into Q4 and 2025.

Question: Nigel Coe - Wolfe Research - Analyst : Thanks. Good morning, everyone. So yes, so I think, Sara, this is for you, I think. The so the 4 key 1% to 3% core sales, maybe just break that out between the two segments. I'm guessing it's not going to be that different between the two. But I do want to try and understand a little bit better the lumpiness in Solutions and perhaps Liquid Cooling as well. and how that's influenced in sort of the kind of 3Q to 4Q because it does feel like the sales are a bit flatter 3Q to 4Q than perhaps normal seasonality?

Question: Nigel Coe - Wolfe Research - Analyst : Anything on the phasing of shipments in Data Solutions?

Question: Nigel Coe - Wolfe Research - Analyst : That's great. And then just a quick one on the M&A sort of pipeline development. You've got a lot of cash to deploy, which is obviously good news. But do you expect this to be a series of acquisitions? Or do you think there could be one or two sort of larger opportunities? And are we sort of set on deploying the bulk of the surplus capital in 2025 on M&A? Or could there be some buybacks as well?

Question: Nigel Coe - Wolfe Research - Analyst : Okay. Thanks, sir.

Question: Deane Dray Dray - RBC Capital Markets - Analyst : Thank you. Good morning, everyone. Good morning. I appreciate the slide 11 with the portfolio snapshots as well as sizing Data Solutions. And I know you said up double digits, but can you be more specific on what data center did in the quarter in terms of growth?

Question: Deane Dray Dray - RBC Capital Markets - Analyst : Understood. So and that kind of brings up the question about market share and growth rates and how you stack up versus peers in this space. And so one of the challenges, and we've talked about this with you before, but the idea here is you are in many platforms and partners where you don't see the net name. And so it's a bit like in the early 1990s when Intel went to the Intel Inside, that's when people started to see and appreciate how pervasive and what kind of share Intel had. So how are you addressing this in the way of being able to profile your share? I know you're a leader, you've been in it the first in terms of liquid cooling, but what kind of challenges you have here in being able to talk about where and how you're in different platforms, but not necessarily able to put your name on it.

Question: Deane Dray Dray - RBC Capital Markets - Analyst : Great. That's just my follow-up question is exactly on that, the 4 times capacity expansion. Can you give us a sense I mean, if the market is growing in excess of 40%, how much is this capacity expansion? How far does that take you in the next couple of years? And just remind us how much is REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. NOVEMBER 01, 2024 / 1:00PM, NVT.N - Q3 2024 nVent Electric PLC Earnings Call actually manufacturing capacity versus the amount of test labs because that's really how you have proof to your partners that the liquid cooling delivers on the specs that they require.

Question: Deane Dray Dray - RBC Capital Markets - Analyst : That's great. I look forward to seeing the team in Atlanta. Thank you. Thank you.

Question: Joe Ritchie - Goldman Sachs - Analyst : Hey, guys. Good morning.

Question: Joe Ritchie - Goldman Sachs - Analyst : Hey, so maybe, maybe following on that thread and I'm sure again, we'll, we'll hear more in a few weeks, but I'm, I'm trying to understand like the, the productivity right now that you have in your data center business and liquid cooling specifically, maybe just kind of comment. You know, last time we saw the offering, it just seemed like you guys were trying to run as fast as you could and there's probably is probably not fully efficient at that point. And so I'm just curious to understand the margins and just any any comments you can make around the productivity you have around that business today.

Question: Joe Ritchie - Goldman Sachs - Analyst : Okay. Good to hear. And then, I guess, just circling back to the organic growth question and heading into next year. If I kind of pull out your acquisition contribution from this year and the comments that you've made around Data Solutions, it seems like the rest of the business isn't growing this year from an organic growth standpoint. And so I'm curious, Beth, as you kind of think about 2025, are there areas that are kind of really depressed within your business where you could see an inflection that just spur organic growth? And then just a follow-on to that, are there any capacity constraints that you have to be able to meet demand if it were to inflect outside of Data Solutions, of course.

Question: Joe Ritchie - Goldman Sachs - Analyst : Okay, great. Thank you.

Question: Nicole DeBlase - Deutsche Bank - Analyst : Yeah, thanks. Good morning. Maybe just starting on orders and kind of dovetailing with the expectations for 2025 with respect to industrial and commercial and resi, have you guys seen any sign of improvement in order activity? Or is it more about rates coming down and some of the macro dynamics that gives you conviction that those parts of the businesses can turn positive?

Question: Nicole DeBlase - Deutsche Bank - Analyst : Okay. That's helpful. And then, I guess, maybe could you talk a little bit about what you're seeing holistically from a channel inventory perspective. It seems like things are kind of going according to plan with less of those headwinds in the back half of the year. But I guess, how would you characterize inventory now?? Thank you.

Question: Nicole DeBlase - Deutsche Bank - Analyst : Thank you. I'll pass it on.

Question: Jeff Hammond - KeyBanc Capital Markets - Analyst : Hey, good morning. Good morning, Jeff. Hey, Just back to capital allocation. I'm just wondering, you get you did $100 million buyback in the quarter, and I'm just wondering, I know the focus is organic and organic, but just how to think about any earmark for buyback around the thermal sale? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. NOVEMBER 01, 2024 / 1:00PM, NVT.N - Q3 2024 nVent Electric PLC Earnings Call

Question: Jeff Hammond - KeyBanc Capital Markets - Analyst : Okay. And then utility I think that had been kind of a drag, and I think you called out high single-digit growth. Is that just a function of comps? Or are you actually seeing that business start to reaccelerate?

Question: Jeff Hammond - KeyBanc Capital Markets - Analyst : Okay. Great. And then just last one, orders up mid-single digits. I think you haven't really been calling out orders, so I'm assuming that's a reacceleration. And I'm just wondering, is that largely data solutions? Or is it more broad-based than that?

Question: Jeff Hammond - KeyBanc Capital Markets - Analyst : Okay, thanks so much.

Question: Brian Drab - William Blair - Analyst : Good morning.I was wondering if you could just I don't know if you're willing to do this or not give us a little more granularity on that $575 million because in the past, we've talked about the data solutions category and then within that power and cooling and then within that liquid cooling. And can you just comment on whether power and cooling is now maybe more than half of that $575 million? And then what I'm curious what power and cooling is growing at as well. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. NOVEMBER 01, 2024 / 1:00PM, NVT.N - Q3 2024 nVent Electric PLC Earnings Call

Question: Brian Drab - William Blair - Analyst : Okay. And then is there any way you could give us an update on the expected timing of the thermal deal and it's like going to be a massive amount of cash that you'll have at that point and the interest rate that you expect at least I know you can't predict interest rates, but like the interest rate that you're getting on your cash.

Question: Brian Drab - William Blair - Analyst : Right? Okay. Thank you very much.

Question: David Silver - CL King - Analyst : Yeah. Hi, good morning. Good morning. I just wanted to follow up maybe on your comments on the Trachte business serving as a new platform. I think you mentioned that a couple of times in your prepared remarks. But you mentioned the business is off to a good start. My sense is that it touches on some different end markets, different customer base. when you did make the deal, I'm sure you had some longer-term plans. I mean, do those plans I mean, maybe if you could just add a little color on where the business might be heading in the next few years. But is this a business you want to scale up? Is this a business where the breadth adding breadth is more important? And then maybe since it is a new platform, is this something that's best managed within the enclosures, the larger enclosures group? Or are there some differences that maybe make you think down the road, it could form the basis for a new third segment? Anyway, just your thinking about? I know it's very early days, but strategically, what are some of your thoughts about the opportunities there? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. NOVEMBER 01, 2024 / 1:00PM, NVT.N - Q3 2024 nVent Electric PLC Earnings Call

Question: David Silver - CL King - Analyst : Okay, great. Thank you very much that that's it for me. Appreciate it. Thank you.