nVent Electric PLC Q4 2018 Earnings Call Transcript

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

Question: Deane Michael Dray - RBC Capital Markets, LLC, Research Division - Analyst : Hey, on the free cash flow guidance for the year, the 95% to 100%, you called out some incremental investments, I think, you said, digital and for equipment, expansion. Can you just size those just put it in context of what you'll actually be spending on? What kind of returns? Any metrics there would be helpful.

Question: Deane Michael Dray - RBC Capital Markets, LLC, Research Division - Analyst : Got it. And then, it was encouraging to see the capital allocation, there it was, M&A. I know you had deferred any discussion about M&A at the outset, wanting to focus to grow on what you own. Now M&A is one of the levers that you can pull. And we're not to talk about the actual names and sizes and end markets in the funnel, but on your update slide, it was interesting that target ROIC you want to hit greater than the whack in 2 years. And we find for the multi-industry names, they are more -- companies are more apt to be a little wider in that timeframe, like, 3 years for bolt-on acquisitions. So why would you have a higher hurdle here? And does that also reflect the potential higher returns in the funnel of what you're looking at today?

Question: Deane Michael Dray - RBC Capital Markets, LLC, Research Division - Analyst : So where would you go with that?

Question: Deane Michael Dray - RBC Capital Markets, LLC, Research Division - Analyst : Got it. And then, just lastly, was there anything on government shutdown of any significance for you guys?

Question: Deane Michael Dray - RBC Capital Markets, LLC, Research Division - Analyst : How about the cold weather?

Question: Deane Michael Dray - RBC Capital Markets, LLC, Research Division - Analyst : I did see that and that's what I was making a reference to, and so stay warm.

Question: Robert Scott Graham - BMO Capital Markets Equity Research - Analyst : I wanted to maybe if you'd mind, I kind of have a price cost question but -- in a couple of subparts here. Slide 6 and 7, I was hoping you would disaggregate for us within inflation, materials versus essentially everything else for both the quarter and the year, is that doable?

Question: Robert Scott Graham - BMO Capital Markets Equity Research - Analyst : Right. That actually -- and that progression makes a ton of sense as well. So you said that you increased prices in the fourth quarter, I think you said in EFS and then in the first quarter recently in Enclosures. Is one in thermal coming or do you need to see a little bit more visibility in the oil and gas side?

Question: Robert Scott Graham - BMO Capital Markets Equity Research - Analyst : Oh, okay, I missed that. Very good. And on -- and maybe this is a little bit of a digression from what I said. The oil and gas side of thermal is kind of remaining stubbornly flattish, I guess, I'd say. Could you kind of tell us what your exposures there, maybe, whether it's a little bit more upstream? Is it a little bit more U.S. upstream, in particular? And just, I guess, I would have thought that we would have seen some response to sales in that business on higher capital spending that we saw in '18 from DOEs? without the prior written consent of Thomson Reuters. 'Thomson Reuters' and the Thomson Reuters logo are registered trademarks of Thomson Reuters and its affiliated companies. JANUARY 31, 2019 / 4:00PM, NVT.N - Q4 2018 nVent Electric PLC Earnings Call

Question: Robert Scott Graham - BMO Capital Markets Equity Research - Analyst : Got you. So...

Question: Robert Scott Graham - BMO Capital Markets Equity Research - Analyst : Right, right. I do get that. I just thought that we would have seen something a little bit more vigorous by now. And actually, I just thought of a final question, if you don't mind. Stacy, I know that you would be very hard at work if the regs start to move against you on the tax thing. I know Jeff asked a question of if you did nothing, but I guess my question would then be, what if you did something? I'm sure we wouldn't see 300 basis points. Do you have any idea what you can hammer that down to?

Question: Robert Scott Graham - BMO Capital Markets Equity Research - Analyst : Is there any reason why you think that the guys across The Street are a little bit more definitive in thinking that it's going to happen? Is that maybe just they're being too conservative and without visibility, just any thoughts?