nVent Electric plc [NVT] Filings

10-Q 1 nvt-20230630.htm 10-Q nvt-20230630

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q


☑			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended June 30, 2023


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file number 001-38265

nVent Electric plc

(Exact name of Registrant as specified in its charter)

Ireland

98-1391970

(State or other jurisdiction of incorporation or organization)

(I.R.S. Employer Identification number)

The Mille, 1000 Great West Road, 8th Floor (East), London, TW8 9DW, United Kingdom

(Address of principal executive offices)

Registrant's telephone number, including area code: 44-20-3966-0279

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading symbol	Name of each exchange on which registered
Ordinary Shares, nominal value $0.01 per share	NVT	New York Stock Exchange

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes ☑ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☑ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☑

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting
company

☐

Emerging growth
company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☑

On June 30, 2023, 165,774,511 shares of Registrant's common stock were outstanding.

nVent Electric plc


		Page

PART I FINANCIAL INFORMATION

ITEM 1.	Financial Statements (unaudited)

	Condensed Consolidated Statements of Income and Comprehensive Income	3

	Condensed Consolidated Balance Sheets	4

	Condensed Consolidated Statements of Cash Flows	5

	Condensed Consolidated Statements of Changes in Equity	6

	Notes to Condensed Consolidated Financial Statements	7

ITEM 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	22

ITEM 3.	Quantitative and Qualitative Disclosures about Market Risk	34

ITEM 4.	Controls and Procedures	34

PART II OTHER INFORMATION

ITEM 1.	Legal Proceedings	35

ITEM 1A.	Risk Factors	35

ITEM 2.	Unregistered Sales of Equity Securities and Use of Proceeds	36

ITEM 5.	Other Information	37

ITEM 6.	Exhibits	37

	Signatures	38

PART I FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

nVent Electric plc

Condensed Consolidated Statements of Income and Comprehensive Income (Unaudited)


	Three months ended				Six months ended
In millions, except per-share data	June 30, 2023		June 30, 2022		June 30, 2023		June 30, 2022
Net sales	$	803.0	$	727.5	$	1,543.6	$	1,422.2
Cost of goods sold	471.1		459.7		908.5		907.1
Gross profit	331.9		267.8		635.1		515.1
Selling, general and administrative	167.7		148.5		330.1		290.5
Research and development	17.5		14.6		34.2		29.8

Operating income	146.7		104.7		270.8		194.8

Net interest expense	21.7		7.5		29.5		14.7
Gain on sale of investment	(10.2)		—		(10.2)		—
Other expense	1.1		1.2		2.3		1.8
Income before income taxes	134.1		96.0		249.2		178.3
Provision for income taxes	21.2		16.1		42.5		30.6
Net income	$	112.9	$	79.9	$	206.7	$	147.7

Comprehensive income, net of tax
Net income	$	112.9	$	79.9	$	206.7	$	147.7
Changes in cumulative translation adjustment	(0.4)		(9.0)		3.8		(6.0)
Changes in market value of derivative financial instruments, net of tax	(4.3)		3.5		(4.9)		(0.2)


Comprehensive income	$	108.2	$	74.4	$	205.6	$	141.5
Earnings per ordinary share
Basic	$	0.68	$	0.48	$	1.25	$	0.89
Diluted	$	0.67	$	0.48	$	1.23	$	0.88
Weighted average ordinary shares outstanding
Basic	165.7		166.4		165.5		166.3
Diluted	168.0		168.2		167.9		168.2
Cash dividends paid per ordinary share	$	0.175	$	0.175	$	0.35	$	0.35

See accompanying notes to condensed consolidated financial statements.

nVent Electric plc

Condensed Consolidated Balance Sheets (Unaudited)


	June 30, 2023		December 31, 2022
In millions, except per-share data
Assets
Current assets
Cash and cash equivalents	$	138.5	$	297.5
Accounts and notes receivable, net of allowances of $15.1 and $9.9, respectively	546.5		472.5
Inventories	475.3		346.7
Other current assets	135.8		112.5
Total current assets	1,296.1		1,229.2
Property, plant and equipment, net	378.1		289.2
Other assets
Goodwill	2,543.3		2,178.1
Intangibles, net	1,547.5		1,066.1
Other non-current assets	157.1		139.6

Total other assets	4,247.9		3,383.8
Total assets	$	5,922.1	$	4,902.2
Liabilities and Equity
Current liabilities
Current maturities of long-term debt and short-term borrowings	$	30.0	$	15.0
Accounts payable	241.3		252.1
Employee compensation and benefits	99.1		109.3
Other current liabilities	250.2		273.1

Total current liabilities	620.6		649.5
Other liabilities
Long-term debt	1,938.8		1,068.2
Pension and other post-retirement compensation and benefits	135.9		128.5
Deferred tax liabilities	205.2		199.6
Other non-current liabilities	145.9		124.7
Total liabilities	3,046.4		2,170.5
Equity

Ordinary shares $0.01 par value, 400.0 million authorized, 165.8 million and 165.3 million issued at June 30, 2023 and December 31, 2022, respectively	1.7		1.7
Additional paid-in capital	2,369.2		2,372.3
Retained earnings	605.5		457.3
Accumulated other comprehensive loss	(100.7)		(99.6)
Total equity	2,875.7		2,731.7
Total liabilities and equity	$	5,922.1	$	4,902.2

See accompanying notes to condensed consolidated financial statements.

nVent Electric plc

Condensed Consolidated Statements of Cash Flows (Unaudited)


	Six months ended
In millions	June 30, 2023		June 30, 2022
Operating activities
Net income	$	206.7	$	147.7


Adjustments to reconcile net income to net cash provided by (used for) operating activities

Depreciation	23.0		21.6
Amortization	38.9		35.5
Deferred income taxes	(3.8)		(0.4)

Share-based compensation	11.4		11.9





Gain on sale of investment	(10.2)		—
Amortization of bridge financing debt issuance costs	3.6		—
Changes in assets and liabilities, net of effects of business acquisitions
Accounts and notes receivable	7.7		(53.0)
Inventories	(18.5)		(61.1)
Other current assets	(16.6)		(34.3)
Accounts payable	(25.1)		28.6
Employee compensation and benefits	(19.5)		(21.4)
Other current liabilities	(45.2)		(12.2)
Other non-current assets and liabilities	(5.8)		1.0


Net cash provided by (used for) operating activities	146.6		63.9
Investing activities
Capital expenditures	(32.3)		(20.8)
Proceeds from sale of property and equipment	0.2		2.0

Settlement of net investment hedge	3.1		—
Acquisitions, net of cash acquired	(1,091.8)		(8.6)

Net cash provided by (used for) investing activities	(1,120.8)		(27.4)
Financing activities


Net receipts of revolving long-term debt	100.0		51.2
Proceeds from long-term debt	800.0		—
Repayments of long-term debt	(7.5)		(2.7)
Settlement of cash flow hedge	4.5		—
Debt issuance costs	(10.8)		—


Dividends paid	(58.5)		(58.4)

Shares issued to employees, net of shares withheld	(1.3)		(1.3)
Repurchases of ordinary shares	(15.2)		(8.5)


Net cash provided by (used for) financing activities	811.2		(19.7)
Effect of exchange rate changes on cash and cash equivalents	4.0		(10.5)
Change in cash and cash equivalents	(159.0)		6.3
Cash and cash equivalents, beginning of period	297.5		49.5
Cash and cash equivalents, end of period	$	138.5	$	55.8

See accompanying notes to condensed consolidated financial statements.

nVent Electric plc

Condensed Consolidated Statements of Changes in Equity (Unaudited)


In millions	Ordinary shares			Additional paid-in capital	Retained earnings		Accumulated other comprehensive loss		Total
	Number	Amount
December 31, 2022	165.3	$	1.7		$	2,372.3	$	457.3	$	(99.6)	$	2,731.7
Net income	—	—			—		93.8		—		93.8
Other comprehensive income (loss), net of tax	—	—			—		—		3.6		3.6
Dividends declared	—	—			—		(29.3)		—		(29.3)
Share repurchases	(0.3)	—			(13.2)		—		—		(13.2)
Exercise of options, net of shares tendered for payment	0.2	—			5.1		—		—		5.1
Issuance of restricted shares, net of cancellations	0.7	—			—		—		—		—
Shares surrendered by employees to pay taxes	(0.2)	—			(7.5)		—		—		(7.5)
Share-based compensation	—	—			5.7		—		—		5.7
March 31, 2023	165.7	$	1.7		$	2,362.4	$	521.8	$	(96.0)	$	2,789.9

Net income	—	—			—		112.9		—		112.9
Other comprehensive income (loss), net of tax	—	—			—		—		(4.7)		(4.7)
Dividends declared	—	—			—		(29.2)		—		(29.2)

Exercise of options, net of shares tendered for payment	0.1	—			1.8		—		—		1.8
Issuance of restricted shares, net of cancellations	—	—			—		—		—		—
Shares surrendered by employees to pay taxes	—	—			(0.7)		—		—		(0.7)
Share-based compensation	—	—			5.7		—		—		5.7
June 30, 2023	165.8	$	1.7		$	2,369.2	$	605.5	$	(100.7)	$	2,875.7


In millions	Ordinary shares			Additional paid-in capital	Retained earnings		Accumulated other comprehensive loss		Total
	Number	Amount
December 31, 2021	166.1	$	1.7		$	2,403.1	$	174.5	$	(83.2)	$	2,496.1
Net income	—	—			—		67.8		—		67.8
Other comprehensive income (loss), net of tax	—	—			—		—		(0.7)		(0.7)
Dividends declared	—	—			—		(29.0)		—		(29.0)
Share repurchases	(0.1)	—			(3.9)		—		—		(3.9)
Exercise of options, net of shares tendered for payment	—	—			1.4		—		—		1.4
Issuance of restricted shares, net of cancellations	0.4	—			—		—		—		—
Shares surrendered by employees to pay taxes	(0.1)	—			(4.4)		—		—		(4.4)
Share-based compensation	—	—			6.6		—		—		6.6
March 31, 2022	166.3	$	1.7		$	2,402.8	$	213.3	$	(83.9)	$	2,533.9
Net income	—	—			—		79.9		—		79.9
Other comprehensive income (loss), net of tax	—	—			—		—		(5.5)		(5.5)
Dividends declared	—	—			—		(29.3)		—		(29.3)

Exercise of options, net of shares tendered for payment	0.1	—			2.0		—		—		2.0
Issuance of restricted shares, net of cancellations	0.1	—			—		—		—		—
Shares surrendered by employees to pay taxes	—	—			(0.3)		—		—		(0.3)
Share-based compensation	—	—			5.3		—		—		5.3
June 30, 2022	166.5	$	1.7		$	2,409.8	$	263.9	$	(89.4)	$	2,586.0

See accompanying notes to condensed consolidated financial statements.

nVent Electric plc

Notes to condensed consolidated financial statements (unaudited)

1.Basis of Presentation and Responsibility for Interim Financial Statements

Business

nVent Electric plc ("nVent," "we," "us," "our" or the "Company") is a leading global provider of electrical connection and protection solutions. The Company is comprised of three reporting segments: Enclosures, Electrical & Fastening Solutions and Thermal Management.

The Company was incorporated in Ireland on May 30, 2017. Although our jurisdiction of organization is Ireland, we manage our affairs so that we are centrally managed and controlled in the United Kingdom (the "U.K.") and have tax residency in the U.K.

Basis of presentation

The accompanying unaudited condensed consolidated financial statements of nVent have been prepared following the requirements of the Securities and Exchange Commission ("SEC") for interim reporting. As permitted under those rules, certain footnotes or other financial information that are normally required by accounting principles generally accepted in the United States of America ("GAAP") can be condensed or omitted.

We are responsible for the unaudited condensed consolidated financial statements included in this document. The financial statements include all normal recurring adjustments that are considered necessary for the fair presentation of our financial position and operating results. As these are condensed financial statements, one should also read our consolidated and combined financial statements and notes thereto, which are included in our Annual Report on Form 10-K for the year ended December 31, 2022.

Revenues, expenses, cash flows, assets and liabilities can and do vary during each quarter of the year. Therefore, the results and trends in these interim financial statements may not be indicative of those for a full year. We may experience changes in customer demand or constrained supply that could materially adversely impact our business, financial condition, results of operations and overall financial performance in future periods.

2.Revenue

Disaggregation of revenue

We disaggregate our revenue from contracts with customers by geographic location and vertical for each of our segments, as we believe these best depict how the nature, amount, timing and uncertainty of our revenue and cash flows are affected by economic factors.

Geographic net sales information, based on geographic destination of the sale, was as follows:


	Three months ended June 30, 2023
In millions	Enclosures		Electrical & Fastening Solutions		Thermal Management		Total
U.S. and Canada	$	278.4	$	212.6	$	86.8	$	577.8
Developed Europe (1)	81.4		37.1		26.7		145.2
Developing (2)	35.9		12.0		18.6		66.5
Other Developed (3)	4.3		5.0		4.2		13.5
Total	$	400.0	$	266.7	$	136.3	$	803.0


	Six months ended June 30, 2023
In millions	Enclosures		Electrical & Fastening Solutions		Thermal Management		Total
U.S. and Canada	$	545.9	$	365.5	$	176.1	$	1,087.5
Developed Europe (1)	165.3		74.1		56.8		296.2
Developing (2)	71.2		23.1		38.2		132.5
Other Developed (3)	8.6		9.7		9.1		27.4
Total	$	791.0	$	472.4	$	280.2	$	1,543.6

nVent Electric plc

Notes to condensed consolidated financial statements (unaudited)


	Three months ended June 30, 2022
In millions	Enclosures		Electrical & Fastening Solutions		Thermal Management		Total
U.S. and Canada	$	257.0	$	152.0	$	87.7	$	496.7
Developed Europe (1)	81.1		33.7		30.7		145.5
Developing (2)	38.2		9.9		23.5		71.6
Other Developed (3)	4.5		5.3		3.9		13.7
Total	$	380.8	$	200.9	$	145.8	$	727.5


	Six months ended June 30, 2022
In millions	Enclosures		Electrical & Fastening Solutions		Thermal Management		Total
U.S. and Canada	$	497.3	$	289.9	$	174.9	$	962.1
Developed Europe (1)	162.4		68.4		63.7		294.5
Developing (2)	71.4		20.8		45.9		138.1
Other Developed (3)	9.1		9.4		9.0		27.5
Total	$	740.2	$	388.5	$	293.5	$	1,422.2

(1) Developed Europe includes Western Europe and Eastern Europe included in European Union.

(2) Developing includes China, Eastern Europe not included in European Union, Latin America, Middle East and Southeast Asia.

(3) Other Developed includes Australia and Japan.

Vertical net sales information was as follows:


	Three months ended June 30, 2023
In millions	Enclosures		Electrical & Fastening Solutions		Thermal Management		Total
Industrial	$	222.6	$	30.1	$	62.5	$	315.2
Commercial & Residential	58.7		140.2		43.6		242.5
Infrastructure	112.9		85.3		7.2		205.4
Energy	5.8		11.1		23.0		39.9
Total	$	400.0	$	266.7	$	136.3	$	803.0


	Six months ended June 30, 2023
In millions	Enclosures		Electrical & Fastening Solutions		Thermal Management		Total
Industrial	$	441.2	$	50.3	$	133.3	$	624.8
Commercial & Residential	117.3		239.6		85.4		442.3
Infrastructure	219.8		163.0		12.8		395.6
Energy	12.7		19.5		48.7		80.9
Total	$	791.0	$	472.4	$	280.2	$	1,543.6

nVent Electric plc

Notes to condensed consolidated financial statements (unaudited)


	Three months ended June 30, 2022
In millions	Enclosures		Electrical & Fastening Solutions		Thermal Management		Total
Industrial	$	209.8	$	19.7	$	68.8	$	298.3
Commercial & Residential	58.6		103.3		48.6		210.5
Infrastructure	105.4		69.8		5.8		181.0
Energy	7.0		8.1		22.6		37.7
Total	$	380.8	$	200.9	$	145.8	$	727.5


	Six months ended June 30, 2022
In millions	Enclosures		Electrical & Fastening Solutions		Thermal Management		Total
Industrial	$	413.2	$	38.9	$	141.4	$	593.5
Commercial & Residential	112.7		199.1		95.2		407.0
Infrastructure	201.6		134.9		10.8		347.3
Energy	12.7		15.6		46.1		74.4
Total	$	740.2	$	388.5	$	293.5	$	1,422.2

In the fourth quarter of 2022, for purposes of how we assess performance, we determined that certain revenue was better aligned with the infrastructure and commercial & residential verticals, rather than the industrial and energy verticals, where it was previously reported. For comparability, we have reclassified revenue for the three and six months ended June 30, 2022 to conform to the new presentation. This reclassification of revenue by vertical had no impact on our consolidated financial results.

Contract balances

Contract assets and liabilities consisted of the following:


In millions	June 30, 2023		December 31, 2022		$ Change		% Change
Contract assets	$	42.7	$	45.6	$	(2.9)	(6.4	%)
Contract liabilities	23.4		22.7		0.7		3.1	%

Net contract assets	$	19.3	$	22.9	$	(3.6)	(15.7	%)

The $3.6 million decrease in net contract assets from December 31, 2022 to June 30, 2023 was primarily the result of the timing of milestone payments. The majority of our contract liabilities at December 31, 2022 were recognized in revenue during the six months ended June 30, 2023. There were no material impairment losses recognized on our contract assets for the three and six months ended June 30, 2023 and 2022.

Remaining performance obligations

We have elected the practical expedient to disclose only the value of remaining performance obligations for contracts with an original expected length of one year or more. On June 30, 2023, we had $30.3 million of remaining performance obligations on contracts with an original expected duration of one year or more. We expect to recognize the majority of our remaining performance obligations on these contracts within the next 12 to 18 months.

3.Restructuring

During the six months ended June 30, 2023 and the year ended December 31, 2022, we initiated and continued execution of certain business restructuring initiatives aimed at reducing our fixed cost structure and realigning our business.

nVent Electric plc

Notes to condensed consolidated financial statements (unaudited)

Restructuring related costs included in Selling, general and administrative expense in the Condensed Consolidated Statements of Income and Comprehensive Income included costs for severance and other restructuring costs as follows:


	Three months ended				Six months ended
In millions	June 30, 2023		June 30, 2022		June 30, 2023		June 30, 2022
Severance and related costs	$	2.1	$	1.7	$	3.3	$	3.7
Other	0.4		0.6		3.2		0.6
Total restructuring costs	$	2.5	$	2.3	$	6.5	$	4.3

Other restructuring costs primarily consist of asset impairment and various contract termination costs.

Restructuring costs by reportable segment were as follows:


	Three months ended				Six months ended
In millions	June 30, 2023		June 30, 2022		June 30, 2023		June 30, 2022
Enclosures	$	—	$	2.1	$	0.6	$	2.3
Electrical & Fastening Solutions	0.6		—		0.8		—
Thermal Management	1.8		0.1		4.7		0.1
Other	0.1		0.1		0.4		1.9
Total	$	2.5	$	2.3	$	6.5	$	4.3

Activity related to accrued severance and related costs recorded in Other current liabilities in the Condensed Consolidated Balance Sheets is summarized as follows:


	Six months ended
In millions	June 30, 2023		June 30, 2022
Beginning balance	$	2.4	$	2.4

Costs incurred	3.3		3.7
Cash payments and other	(2.7)		(3.8)
Ending balance	$	3.0	$	2.3

nVent Electric plc

Notes to condensed consolidated financial statements (unaudited)

4.Earnings Per Share

Basic and diluted earnings per share were calculated as follows:


	Three months ended				Six months ended
In millions, except per-share data	June 30, 2023		June 30, 2022		June 30, 2023		June 30, 2022
Net income	$	112.9	$	79.9	$	206.7	$	147.7
Weighted average ordinary shares outstanding
Basic	165.7		166.4		165.5		166.3
Dilutive impact of stock options, restricted stock units and performance share units	2.3		1.8		2.4		1.9
Diluted	168.0		168.2		167.9		168.2
Earnings per ordinary share



Basic earnings per ordinary share	$	0.68	$	0.48	$	1.25	$	0.89



Diluted earnings per ordinary share	$	0.67	$	0.48	$	1.23	$	0.88
Anti-dilutive stock options excluded from the calculation of diluted earnings per share	0.4		0.7		0.3		0.5

5.Acquisitions

On May 18, 2023, as part of our Electrical & Fastening Solutions reporting segment, we completed the acquisition of ECM Investors, LLC, the parent of ECM Industries, LLC ("ECM Industries"), for approximately $1.1 billion in cash, subject to customary adjustments. ECM Industries is a leading provider of high-value electrical connectors, tools and test instruments and cable management. The purchase price was funded primarily through borrowings under the 2033 Notes and 2023 Term Loan Facility (as described in Note 9 below).

The purchase price has been preliminarily allocated based on the estimated fair value of assets acquired and liabilities assumed at the date of the ECM Industries acquisition. The preliminary purchase price allocation is subject to further refinement and may require significant adjustments to arrive at the final purchase price allocation. These changes will primarily relate to the fair value of trade names, tangible assets and impacts associated with income taxes. There can be no assurance that such finalization will not result in material changes from the preliminary purchase price allocation.

The following table summarizes our preliminary estimates of the fair values of the assets acquired and liabilities assumed in the ECM Industries acquisition:


In millions
Cash	$	45.7
Accounts receivable	78.1
Inventories	107.8
Other current assets	4.9
Property, plant and equipment	81.1
Identifiable intangible assets	519.8
Goodwill	361.5
Other assets	16.6
Current liabilities	(51.5)
Other liabilities	(26.5)
Purchase price	$	1,137.5

The excess purchase price over tangible net assets and identified intangible assets acquired has been allocated to

goodwill in the amount of $361.5 million, substantially all of which is expected to be deductible for income tax purposes.

nVent Electric plc

Notes to condensed consolidated financial statements (unaudited)

Identifiable intangible assets acquired included $113.3 million of trade name intangible assets, a majority of which are indefinite-lived, $377.9 million of definite-lived customer relationships with an estimated useful life of 20 years, and $22.0 million of definite-lived proprietary technology intangible assets with an estimated useful life of 7 years. The fair values of trade names and proprietary technology acquired in the acquisition were determined using a relief-from-royalty method, and customer relationships acquired were determined using a multi-period excess earnings method. These methods utilize unobservable inputs that are significant to these fair value measurements and thus classified as Level 3 of the fair value hierarchy.

ECM Industries net sales and operating income for the period from the acquisition date to June 30, 2023 were $49.7 million and $3.8 million, respectively. ECM Industries operating income includes identifiable intangible asset amortization expense and expense related to the fair market value inventory step-up.

The following table presents unaudited pro forma financial information as if the ECM Industries acquisition had occurred on January 1, 2022:


	Three months ended				Six months ended
In millions, except per-share date	June 30, 2023		June 30, 2022		June 30, 2023		June 30, 2022
Pro forma net sales	$	852.9	$	837.1	$	1,700.1	$	1,629.9
Pro forma net income	129.3		71.6		225.7		115.1
Pro forma earnings per ordinary share
Basic	$	0.78	$	0.43	$	1.36	$	0.69
Diluted	0.77		0.43		1.34		0.68

The unaudited pro forma results include adjustments for the amortization of acquired intangible assets, depreciation for the fair value adjustment to acquisition-date fixed assets and interest expense on debt issued to finance the acquisition, as well as the related income tax impact.

The unaudited pro forma results for the three and six months ended June 30, 2023 excludes the impact of $14.4 million and $16.9 million, respectively, of transaction-related charges, acquisition-related bridge financing costs and non-recurring expense related to the fair value inventory step-up. The three and six months ended June 30, 2022 was adjusted to include $5.9 million and $29.1 million, respectively, of transaction-related charges, acquisition-related bridge financing costs and non-recurring expense related to the fair market value inventory step-up.

The pro forma condensed consolidated financial information has been prepared for comparative purposes only and includes

certain adjustments, as noted above. The adjustments are estimates based on currently available information and actual amounts

may differ materially from these estimates. They do not reflect the effect of costs or synergies that would have been expected to

result from the integration of the ECM Industries acquisition. The pro forma information does not purport to be indicative of the

results of operations that actually would have resulted had the ECM Industries acquisition occurred on January 1, 2022.

On July 10, 2023, we acquired TEXA Industries for approximately $38.5 million in cash, subject to customary purchase price adjustments. TEXA Industries is an Italian manufacturer of industrial cooling applications that we will market as part of the nVent HOFFMAN product line within our Enclosures segment.

nVent Electric plc

Notes to condensed consolidated financial statements (unaudited)

6.Goodwill and Other Identifiable Intangible Assets

The changes in the carrying amount of goodwill by reportable segment were as follows:


In millions	December 31, 2022		Acquisitions/ divestitures		Foreign currency translation/other		June 30, 2023
Enclosures	$	414.4	$	—	$	2.7	$	417.1
Electrical & Fastening Solutions	1,052.0		361.5		—		1,413.5
Thermal Management	711.7		—		1.0		712.7
Total goodwill	$	2,178.1	$	361.5	$	3.7	$	2,543.3

Identifiable intangible assets consisted of the following:


	June 30, 2023						December 31, 2022
In millions	Cost		Accumulated amortization		Net		Cost		Accumulated amortization		Net
Definite-life intangibles
Customer relationships	$	1,667.0	$	(555.5)	$	1,111.5	$	1,287.6	$	(519.1)	$	768.5
Proprietary technology and patents	61.2		(17.4)		43.8		39.7		(15.2)		24.5
Other finite-lived intangible assets	17.7		(0.8)		16.9		—		—		—
Total definite-life intangibles	1,745.9		(573.7)		1,172.2		1,327.3		(534.3)		793.0
Indefinite-life intangibles
Trade names	375.3		—		375.3		273.1		—		273.1
Total intangibles	$	2,121.2	$	(573.7)	$	1,547.5	$	1,600.4	$	(534.3)	$	1,066.1

Identifiable intangible asset amortization expense was $21.3 million and $17.7 million for the three months ended June 30, 2023 and 2022, respectively, and $38.9 million and $35.5 million for the six months ended June 30, 2023 and 2022, respectively.

Estimated future amortization expense for identifiable intangible assets during the remainder of 2023 and the next five years is as follows:


	Q3-Q4
In millions	2023		2024		2025		2026		2027		2028
Estimated amortization expense	$	50.0	$	95.3	$	92.8	$	92.8	$	92.8	$	88.6

nVent Electric plc

Notes to condensed consolidated financial statements (unaudited)

7.Supplemental Balance Sheet Information


In millions	June 30, 2023		December 31, 2022
Inventories
Raw materials and supplies	$	157.3	$	112.9
Work-in-process	46.3		36.2
Finished goods	271.7		197.6
Total inventories	$	475.3	$	346.7
Other current assets
Contract assets	$	42.7	$	45.6
Prepaid expenses	59.3		44.9
Prepaid income taxes	16.1		4.1
Cross currency swap assets	—		14.5
Other current assets	17.7		3.4
Total other current assets	$	135.8	$	112.5
Property, plant and equipment, net
Land and land improvements	$	44.8	$	38.6
Buildings and leasehold improvements	220.8		180.5
Machinery and equipment	563.4		500.4
Construction in progress	38.1		34.7
Total property, plant and equipment	867.1		754.2
Accumulated depreciation and amortization	489.0		465.0
Total property, plant and equipment, net	$	378.1	$	289.2
Other non-current assets



Deferred compensation plan assets	$	17.9	$	16.7
Lease right-of-use assets	96.7		76.4
Deferred tax assets	17.1		16.3
Other non-current assets	25.4		30.2
Total other non-current assets	$	157.1	$	139.6
Other current liabilities

Dividends payable	$	29.9	$	30.4

Accrued rebates	68.6		98.4
Contract liabilities	23.4		22.7
Accrued taxes payable	27.8		34.5
Accrued interest	11.9		6.5
Current lease liabilities	22.7		17.7
Other current liabilities	65.9		62.9
Total other current liabilities	$	250.2	$	273.1
Other non-current liabilities

Income taxes payable	$	27.6	$	29.8

Deferred compensation plan liabilities	17.9		16.7
Non-current lease liabilities	79.1		63.7
Other non-current liabilities	21.3		14.5
Total other non-current liabilities	$	145.9	$	124.7

nVent Electric plc

Notes to condensed consolidated financial statements (unaudited)

8.Derivatives and Financial Instruments

Derivative financial instruments

We are exposed to market risk related to changes in foreign currency exchange rates. To manage the volatility related to this exposure, we periodically enter into a variety of derivative financial instruments. Our objective is to reduce, where it is deemed appropriate to do so, fluctuations in earnings and cash flows associated with changes in foreign currency exchange rates. The derivative contracts contain credit risk to the extent that our bank counterparties may be unable to meet the terms of the agreements. The amount of such credit risk is generally limited to the unrealized gains, if any, in such contracts. Such risk is minimized by limiting those counterparties to major financial institutions of high credit quality.

Foreign currency contracts

We conduct business in various locations throughout the world and are subject to market risk due to changes in the value of foreign currencies. We manage our economic and transaction exposure to certain market-based risks through the use of derivative instruments. These derivative instruments primarily consist of forward foreign currency contracts used to mitigate foreign currency exposure for certain foreign currency assets and liabilities. Our objective in holding these derivatives is to reduce the volatility in net earnings and cash flows associated with changes in foreign currency rates. The majority of our foreign currency contracts have an original maturity date of less than one year. These foreign currency contracts are not designated as hedging instruments; accordingly, changes in the fair value are recorded in current period earnings.

At June 30, 2023 and December 31, 2022, we had outstanding foreign currency derivative contracts with gross notional U.S. dollar equivalent amounts of $184.1 million and $145.7 million, respectively. The impact of these contracts on the Condensed Consolidated Statements of Income and Comprehensive Income was not material for any period presented.

Cross currency swaps

At June 30, 2023 and December 31, 2022, we had outstanding cross currency swap agreements with a combined notional amount of $259.6 million and $345.1 million, respectively. The agreements are accounted for as either cash flow hedges, to hedge foreign currency fluctuations on certain intercompany debt, or as net investment hedges, to manage our exposure to fluctuations in the Euro-U.S. Dollar exchange rate. In the second quarter of 2023, a cash flow hedge instrument and a net investment hedge instrument each reached maturity, resulting in settlement amounts reflected as a component of financing and investing cash inflows in the amount of $4.5 million and $3.1 million, respectively. Upon maturity of the previous agreement, we entered into a new net investment hedge of certain Euro-denominated subsidiaries to manage exposure to fluctuations in the Euro-U.S. dollar exchange rate with a gross notional U.S. dollar equivalent amount of $66.1 million. At June 30, 2023 and December 31, 2022, we had deferred foreign currency gains of $6.0 million and $18.9 million, respectively, in Accumulated other comprehensive loss associated with our cross currency swap activity.

Fair value of financial instruments

The following methods were used to estimate the fair values of each class of financial instrument:

•short-term financial instruments (cash and cash equivalents, accounts and notes receivable, accounts and notes payable and variable-rate debt) — recorded amount approximates fair value because of the short maturity period;

•long-term fixed-rate debt, including current maturities — fair value is based on market quotes available for issuance of debt with similar terms, which are inputs that are classified as Level 2 in the valuation hierarchy defined by the accounting guidance;

•cross currency swap and foreign currency contract agreements — fair values are determined through the use of models that consider various assumptions, including time value, yield curves, as well as other relevant economic measures, which are inputs that are classified as Level 2 in the valuation hierarchy defined by the accounting guidance; and

•deferred compensation plan assets (mutual funds, common/collective trusts and cash equivalents for payment of certain non-qualified benefits for retired, terminated and active employees) — fair value of mutual funds and cash equivalents are based on quoted market prices in active markets that are classified as Level 1 in the valuation hierarchy defined by the accounting guidance; fair value of common/collective trusts are valued at net asset value ("NAV"), which is based on the fair value of underlying securities owned by the fund divided by the number of shares outstanding.

nVent Electric plc

Notes to condensed consolidated financial statements (unaudited)

The recorded amounts and estimated fair values of total debt, excluding unamortized issuance costs and discounts, were as follows:


	June 30, 2023				December 31, 2022
In millions	Recorded Amount		Fair Value		Recorded Amount		Fair Value
Variable rate debt	$	681.2	$	681.2	$	288.8	$	288.8
Fixed rate debt	1,300.0		1,204.7		800.0		717.7
Total debt	$	1,981.2	$	1,885.9	$	1,088.8	$	1,006.5

Financial assets and liabilities measured at fair value on a recurring basis were as follows:


Recurring fair value measurements	June 30, 2023
In millions	Level 1		Level 2		Level 3		NAV		Total
Cross currency swap liabilities	$	—	$	(9.3)	$	—	$	—	$	(9.3)
Cross currency swap assets	—		6.2		—		—		6.2
Foreign currency contract liabilities	—		(1.6)		—		—		(1.6)
Foreign currency contract assets	—		0.9		—		—		0.9

Deferred compensation plan assets	12.4		—		—		5.5		17.9
Total recurring fair value measurements	$	12.4	$	(3.8)	$	—	$	5.5	$	14.1


Recurring fair value measurements	December 31, 2022
In millions	Level 1		Level 2		Level 3		NAV		Total
Cross currency swap liabilities	$	—	$	(4.8)	$	—	$	—	$	(4.8)
Cross currency swap assets	—		22.4		—		—		22.4
Foreign currency contract liabilities	—		(1.5)		—		—		(1.5)
Foreign currency contract assets	—		0.5		—		—		0.5
Deferred compensation plan assets	11.8		—		—		4.9		16.7

Total recurring fair value measurements	$	11.8	$	16.6	$	—	$	4.9	$	33.3

nVent Electric plc

Notes to condensed consolidated financial statements (unaudited)

9.Debt

Debt and the average interest rates on debt outstanding were as follows:


In millions	Average interest rate at June 30, 2023	Maturity Year	June 30, 2023		December 31, 2022
Revolving credit facility	6.341%	2026	$	100.0	$	—
2021 Term loan facility	6.431%	2026	281.2		288.8
2023 Term loan facility	6.816%	2028	300.0		—
Senior notes - fixed rate	4.550%	2028	500.0		500.0
Senior notes - fixed rate	2.750%	2031	300.0		300.0
Senior notes - fixed rate	5.650%	2033	500.0		—

Unamortized debt issuance costs and discounts	N/A	N/A	(12.4)		(5.6)
Total debt			1,968.8		1,083.2
Less: Current maturities and short-term borrowings			(30.0)		(15.0)
Long-term debt			$	1,938.8	$	1,068.2

Senior notes

In March 2018, nVent Finance S.à r.l. (“nVent Finance” or "Subsidiary Issuer"), a 100-percent owned subsidiary of nVent, issued $500.0 million aggregate principal amount of 4.550% senior notes due 2028 (the "2028 Notes").

In November 2021, nVent Finance issued $300.0 million aggregate principal amount of 2.750% senior notes due 2031 (the "2031 Notes").

On May 3, 2023, to finance the acquisition of ECM Industries, nVent Finance issued $500.0 million aggregate principal amount of 5.650% Senior Notes due 2033 (the "2033 Notes" and, collectively with the 2028 Notes and the 2031 Notes, the "Notes").

Interest on the 2028 Notes is payable semi-annually in arrears on April 15 and October 15 of each year, and interest on the 2031

Notes and 2033 Notes is payable semi-annually in arrears on May 15 and November 15 of each year.

The Notes are fully and unconditionally guaranteed as to payment by nVent (the "Parent Company Guarantor"). There are no subsidiaries that guarantee the Notes. The Parent Company Guarantor is a holding company that has no independent assets or operations unrelated to its investments in consolidated subsidiaries. The Subsidiary Issuer is a holding company that has no independent assets or operations unrelated to its investments in consolidated subsidiaries and the issuance of the Notes and other external debt. The Parent Company Guarantor’s principal source of cash flow, including cash flow to make payments on the Notes pursuant to the guarantees, is dividends from its subsidiaries. The Subsidiary Issuer’s principal source of cash flow is interest income from its subsidiaries. None of the subsidiaries of the Parent Company Guarantor or the Subsidiary Issuer is under any direct obligation to pay or otherwise fund amounts due on the Notes or the guarantees, whether in the form of dividends, distributions, loans or other payments. In addition, there may be statutory and regulatory limitations on the payment of dividends from certain subsidiaries of the Parent Company Guarantor or the Subsidiary Issuer. If such subsidiaries are unable to transfer funds to the Parent Company Guarantor or the Subsidiary Issuer and sufficient cash or liquidity is not otherwise available, the Parent Company Guarantor or the Subsidiary Issuer may not be able to make principal and interest payments on their outstanding debt, including the Notes or the guarantees.

The Notes constitute general unsecured senior obligations of the Subsidiary Issuer and rank equally in right of payment with all existing and future unsubordinated and unsecured indebtedness and liabilities of the Subsidiary Issuer. The guarantees of the Notes by the Parent Company Guarantor constitute general unsecured obligations of the Parent Company Guarantor and rank equally in right of payment with all existing and future unsubordinated and unsecured indebtedness and liabilities of the Subsidiary Issuer. Subject to certain qualifications and exceptions, the indenture pursuant to which the Notes were issued contains covenants that, among other things, restrict nVent’s, nVent Finance’s and certain subsidiaries’ ability to merge or consolidate with another person, create liens or engage in sale and lease-back transactions.

There are no significant restrictions on the ability of nVent to obtain funds from its subsidiaries by dividend or loan. None of the assets of nVent or its subsidiaries represents restricted net assets pursuant to the guidelines established by the SEC.

nVent Electric plc

Notes to condensed consolidated financial statements (unaudited)

Senior credit facilities

In September 2021, the Company and its subsidiaries nVent Finance and Hoffman Schroff Holdings, Inc. entered into an amended and restated credit agreement (the "Credit Agreement") with a syndicate of banks providing for a five-year $300.0 million senior unsecured term loan facility (the "2021 Term Loan Facility") and a five-year $600.0 million senior unsecured revolving credit facility (the "Revolving Credit Facility" and, together with the 2021 Term Loan Facility, the "Senior Credit Facilities"). Borrowings under the 2021 Term Loan Facility were permitted on a delayed draw basis during the first year of the five-year term of the 2021 Term Loan Facility, and borrowings under the Revolving Credit Facility are permitted from time to time during the full five-year term of the Revolving Credit Facility. In September 2022, nVent exercised the delayed draw provision of the 2021 Term Loan Facility, increasing the total borrowings under the 2021 Term Loan Facility by $200.0 million to $300.0 million. nVent Finance has the option to request to increase the Revolving Credit Facility in an aggregate amount of up to $300.0 million, subject to customary conditions, including the commitment of the participating lenders. As of June 30, 2023, the borrowing capacity under the Revolving Credit Facility was $500.0 million.

Borrowings under the Senior Credit Facilities bear interest at a rate equal to an adjusted base rate, the Secured Overnight Financing Rate ("SOFR"), Euro Interbank Offer Rate (“EURIBOR”) or Sterling Overnight Index Average (“SONIA”), plus, in each case, an applicable margin. The applicable margin will be based on, at nVent Finance’s election, the Company's leverage level or public credit rating.

On April 26, 2023, nVent and nVent Finance entered into a loan agreement providing for another unsecured term loan facility of $300.0 million for five years (the "2023 Term Loan Facility"), which was used to fund the acquisition of ECM Industries. The 2023 Term Loan Facility bears interest at a rate equal to an adjusted base rate or adjusted term SOFR plus an applicable margin. The applicable margin will be based on, at nVent Finance’s election, the Company's leverage level or public credit rating.

Our debt agreements contain certain financial covenants, the most restrictive of which are in the Senior Credit Facilities and the 2023 Term Loan Facility, including that we may not permit (i) the ratio of our consolidated debt (net of our consolidated unrestricted cash in excess of $5.0 million but not to exceed $250.0 million) to our consolidated net income (excluding, among other things, non-cash gains and losses) before interest, taxes, depreciation, amortization and non-cash share-based compensation expense ("EBITDA") on the last day of any period of four consecutive fiscal quarters (each a "testing period") to exceed 3.75 to 1.00 (or, at nVent Finance's election and subject to certain conditions, 4.25 to 1.00 for four testing periods in connection with certain material acquisitions, which we elected in connection with the acquisition of ECM Industries in May 2023 for each of the next four fiscal quarters beginning in the second quarter of 2023) and (ii) the ratio of our EBITDA to our consolidated interest expense for the same period to be less than 3.00 to 1.00. In addition, subject to certain qualifications and exceptions, the Senior Credit Facilities and the 2023 Term Loan Facility also contain covenants that, among other things, restrict our ability to create liens, merge or consolidate with another person, make acquisitions and incur subsidiary debt. As of June 30, 2023, we were in compliance with all financial covenants in our debt agreements.

Debt outstanding at June 30, 2023, excluding unamortized issuance costs and discounts, matures on a calendar year basis as follows:


	Q3-Q4
In millions	2023		2024		2025		2026		2027		2028		Thereafter		Total
Contractual debt obligation maturities	$	15.0	$	31.9	$	37.5	$	353.1	$	22.5	$	721.2	$	800.0	$	1,981.2

10.Income Taxes

The effective income tax rate for the six months ended June 30, 2023 was 17.1% compared to 17.2% for the six months ended June 30, 2022. The liability for uncertain tax positions was $13.1 million and $13.4 million at June 30, 2023 and December 31, 2022, respectively. We record penalties and interest related to unrecognized tax benefits in Provision for income taxes and Net interest expense, respectively, on the Condensed Consolidated Statements of Income and Comprehensive Income, which is consistent with our past practices.

In the three and six months ended June 30, 2023, we recorded a $4.3 million non-cash benefit related to the release of a valuation allowance on certain foreign deferred tax assets.

nVent Electric plc

Notes to condensed consolidated financial statements (unaudited)

11.Shareholders' Equity

Share repurchases

On May 14, 2021, the Board of Directors authorized the repurchase of our ordinary shares up to a maximum dollar limit of $300.0 million (the "2021 Authorization"). The 2021 Authorization began on July 23, 2021 and expires on July 22, 2024.

During the six months ended June 30, 2023, we repurchased 0.3 million of our ordinary shares for $13.2 million under the 2021 Authorization. During the six months ended June 30, 2022, we repurchased 0.1 million of our ordinary shares for $3.9 million under the 2021 Authorization. As of June 30, 2023 and December 31, 2022, outstanding share repurchases recorded in Other current liabilities were zero and $2.0 million, respectively.

As of June 30, 2023, we had $127.3 million available for share repurchases under the 2021 Authorization.

Dividends payable

On May 12, 2023, the Board of Directors declared a quarterly cash dividend of $0.175 per ordinary share payable on August 4, 2023, to shareholders of record at the close of business on July 21, 2023. The balance of dividends payable included in Other current liabilities on our Condensed Consolidated Balance Sheets was $29.9 million and $30.4 million at June 30, 2023 and December 31, 2022, respectively.

12.Segment Information

We evaluate performance based on net sales and segment income and use a variety of ratios to measure performance of our reporting segments. These results are not necessarily indicative of the results of operations that would have occurred had each segment been an independent, stand-alone entity during the periods presented. Segment income represents operating income exclusive of intangible amortization, acquisition-related expenses, costs of restructuring activities, impairments and other unusual non-operating items.

Financial information by reportable segment is as follows:


	Three months ended				Six months ended
In millions	June 30, 2023		June 30, 2022		June 30, 2023		June 30, 2022
Net sales
Enclosures	$	400.0	$	380.8	$	791.0	$	740.2
Electrical & Fastening Solutions	266.7		200.9		472.4		388.5
Thermal Management	136.3		145.8		280.2		293.5
Total	$	803.0	$	727.5	$	1,543.6	$	1,422.2
Segment income (loss)
Enclosures	$	90.0	$	61.5	$	172.5	$