nVent Electric plc [NVT] Filings

10-Q 1 nvt-20240630.htm 10-Q nvt-20240630

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, 2024


☐			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, 2024, 166,215,120 shares of the 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	33

ITEM 4.	Controls and Procedures	33

PART II OTHER INFORMATION

ITEM 1.	Legal Proceedings	34

ITEM 1A.	Risk Factors	34

ITEM 2.	Unregistered Sales of Equity Securities and Use of Proceeds	35

ITEM 5.	Other Information	35

ITEM 6.	Exhibits	36

	Signatures	37

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, 2024		June 30, 2023		June 30, 2024		June 30, 2023
Net sales	$	880.3	$	803.0	$	1,754.9	$	1,543.6
Cost of goods sold	512.0		471.1		1,031.1		908.5
Gross profit	368.3		331.9		723.8		635.1
Selling, general and administrative	179.6		167.7		355.1		330.1
Research and development	20.9		17.5		41.7		34.2

Operating income	167.8		146.7		327.0		270.8



Net interest expense	24.0		21.7		46.2		29.5

Gain on sale of investment	—		(10.2)		—		(10.2)
Other expense	0.9		1.1		2.1		2.3
Income before income taxes	142.9		134.1		278.7		249.2
Provision for income taxes	31.9		21.2		62.6		42.5



Net income	$	111.0	$	112.9	$	216.1	$	206.7


Comprehensive income, net of tax
Net income	$	111.0	$	112.9	$	216.1	$	206.7
Changes in cumulative translation adjustment	(11.4)		(0.4)		(23.4)		3.8

Changes in market value of derivative financial instruments, net of tax	1.9		(4.3)		5.3		(4.9)
Comprehensive income	$	101.5	$	108.2	$	198.0	$	205.6


Earnings per ordinary share



Basic	$	0.67	$	0.68	$	1.30	$	1.25



Diluted	$	0.66	$	0.67	$	1.28	$	1.23
Weighted average ordinary shares outstanding
Basic	166.1		165.7		165.8		165.5
Diluted	168.9		168.0		168.7		167.9
Cash dividends paid per ordinary share	$	0.19	$	0.175	$	0.38	$	0.35

See accompanying notes to condensed consolidated financial statements.

nVent Electric plc

Condensed Consolidated Balance Sheets (Unaudited)


	June 30, 2024		December 31, 2023
In millions, except per share data
Assets
Current assets
Cash and cash equivalents	$	274.0	$	185.1
Accounts and notes receivable, net of allowances of $17.1 and $15.0, respectively	570.7		589.5
Inventories	445.8		441.3
Other current assets	132.2		120.2

Total current assets	1,422.7		1,336.1
Property, plant and equipment, net	384.9		390.0
Other assets
Goodwill	2,568.8		2,571.1
Intangibles, net	1,464.5		1,517.0
Other non-current assets	347.2		347.5

Total other assets	4,380.5		4,435.6
Total assets	$	6,188.1	$	6,161.7
Liabilities and Equity
Current liabilities
Current maturities of long-term debt and short-term borrowings	$	35.6	$	31.9
Accounts payable	266.1		275.7
Employee compensation and benefits	93.6		122.2
Other current liabilities	258.8		303.8

Total current liabilities	654.1		733.6
Other liabilities
Long-term debt	1,730.6		1,748.8
Pension and other post-retirement compensation and benefits	146.2		153.0
Deferred tax liabilities	202.1		204.4
Other non-current liabilities	167.3		179.8

Total liabilities	2,900.3		3,019.6
Equity

Ordinary shares $0.01 par value, 400.0 million authorized, 166.2 million and 165.1 million issued at June 30, 2024 and December 31, 2023, respectively	1.7		1.7
Additional paid-in capital	2,350.7		2,339.1
Retained earnings	1,057.5		905.3
Accumulated other comprehensive loss	(122.1)		(104.0)


Total equity	3,287.8		3,142.1
Total liabilities and equity	$	6,188.1	$	6,161.7

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, 2024		June 30, 2023
Operating activities
Net income	$	216.1	$	206.7


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

Depreciation	28.5		23.0
Amortization	49.6		38.9
Deferred income taxes	—		(3.8)
Share-based compensation	13.5		11.4



Gain on sale of investment	—		(10.2)


Amortization of bridge financing debt issuance costs	2.2		3.6


Changes in assets and liabilities, net of effects of business acquisitions
Accounts and notes receivable	12.2		7.7
Inventories	(13.8)		(18.5)
Other current assets	(16.7)		(16.6)
Accounts payable	(2.8)		(25.1)
Employee compensation and benefits	(26.2)		(19.5)
Other current liabilities	(40.0)		(45.2)
Other non-current assets and liabilities	(1.8)		(5.8)


Net cash provided by (used for) operating activities	220.8		146.6
Investing activities
Capital expenditures	(34.6)		(32.3)
Proceeds from sale of property and equipment	0.3		0.2


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



Net cash provided by (used for) investing activities	(34.3)		(1,120.8)
Financing activities
Net receipts of revolving credit facility	—		100.0


Proceeds from long-term debt	—		800.0
Repayments of long-term debt	(15.0)		(7.5)

Settlement of cash flow hedge	—		4.5

Debt issuance costs	(2.7)		(10.8)

Dividends paid	(63.6)		(58.5)
Shares issued to employees, net of shares withheld	(1.9)		(1.3)
Repurchases of ordinary shares	—		(15.2)

Net cash provided by (used for) financing activities	(83.2)		811.2
Effect of exchange rate changes on cash and cash equivalents	(14.4)		4.0
Change in cash and cash equivalents	88.9		(159.0)
Cash and cash equivalents, beginning of period	185.1		297.5
Cash and cash equivalents, end of period	$	274.0	$	138.5

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, 2023	165.1	$	1.7		$	2,339.1	$	905.3	$	(104.0)		$	3,142.1
Net income	—	—			—		105.1		—			105.1

Other comprehensive income (loss), net of tax	—	—			—		—		(8.6)			(8.6)

Dividends declared	—	—			—		(32.1)		—			(32.1)




Exercise of options, net of shares tendered for payment	0.5	—			10.0		—		—			10.0
Issuance of restricted shares, net of cancellations	0.6	—			—		—		—			—
Shares surrendered by employees to pay taxes	(0.2)	—			(10.8)		—		—			(10.8)
Share-based compensation	—	—			6.6		—		—			6.6

March 31, 2024	166.0	$	1.7		$	2,344.9	$	978.3	$	(112.6)		$	3,212.3
Net income	—	—			—		111.0		—			111.0

Other comprehensive income (loss), net of tax	—	—			—		—		(9.5)			(9.5)

Dividends declared	—	—			—		(31.8)		—			(31.8)




Exercise of options, net of shares tendered for payment	0.2	—			0.3		—		—			0.3
Issuance of restricted shares, net of cancellations	—	—			—		—		—			—
Shares surrendered by employees to pay taxes	—	—			(1.4)		—		—			(1.4)
Share-based compensation	—	—			6.9		—		—			6.9

June 30, 2024	166.2	$	1.7		$	2,350.7	$	1,057.5	$	(122.1)		$	3,287.8


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

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 financial statements and notes thereto, which are included in our Annual Report on Form 10-K for the year ended December 31, 2023.

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.

nVent Electric plc

Notes to condensed consolidated financial statements (unaudited)

2.Revenue

Disaggregation of revenue

We disaggregate our revenue from contracts with customers by geographic location and vertical, 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, 2024
In millions	Enclosures		Electrical & Fastening Solutions		Thermal Management		Total
North America (1)	$	320.1	$	252.2	$	81.1	$	653.4
EMEA (2)	93.6		35.8		41.5		170.9
Asia-Pacific	26.4		9.4		17.9		53.7
Rest of World (3)	0.7		1.6		—		2.3
Total	$	440.8	$	299.0	$	140.5	$	880.3

	Six months ended June 30, 2024
In millions	Enclosures		Electrical & Fastening Solutions		Thermal Management		Total
North America (1)	$	633.0	$	493.2	$	167.7	$	1,293.9
EMEA (2)	196.7		74.6		81.6		352.9
Asia-Pacific	49.5		19.5		33.7		102.7
Rest of World (3)	1.5		3.9		—		5.4
Total	$	880.7	$	591.2	$	283.0	$	1,754.9


	Three months ended June 30, 2023
In millions	Enclosures		Electrical & Fastening Solutions		Thermal Management		Total
North America (1)	$	285.1	$	216.5	$	86.8	$	588.4
EMEA (2)	89.2		39.0		33.9		162.1
Asia-Pacific	24.8		8.9		15.6		49.3
Rest of World (3)	0.9		2.3		—		3.2
Total	$	400.0	$	266.7	$	136.3	$	803.0

	Six months ended June 30, 2023
In millions	Enclosures		Electrical & Fastening Solutions		Thermal Management		Total
North America (1)	$	560.1	$	372.1	$	176.0	$	1,108.2
EMEA (2)	180.9		79.1		74.5		334.5
Asia-Pacific	48.8		17.0		29.5		95.3
Rest of World (3)	1.2		4.2		0.2		5.6
Total	$	791.0	$	472.4	$	280.2	$	1,543.6

(1) North America includes U.S., Canada and Mexico.
(2) EMEA includes Europe, Middle East, India and Africa.
(3) Rest of World includes Latin America and South America.

In the fourth quarter of 2023, based on benchmarking of industry peers and for purposes of how we assess performance, we updated the disaggregation categories on which we report revenue by geography. For comparability, we have recategorized revenue for the three and six months ended June 30, 2023 to conform to the new presentation. This recategorization of revenue by geography had no impact on our consolidated financial results.

nVent Electric plc

Notes to condensed consolidated financial statements (unaudited)

Vertical net sales information was as follows:


	Three months ended June 30, 2024
In millions	Enclosures		Electrical & Fastening Solutions		Thermal Management		Total
Industrial	$	236.3	$	37.6	$	71.3	$	345.2
Commercial & Residential	63.5		161.5		38.7		263.7
Infrastructure	133.8		86.9		7.8		228.5
Energy	7.2		13.0		22.7		42.9
Total	$	440.8	$	299.0	$	140.5	$	880.3

	Six months ended June 30, 2024
In millions	Enclosures		Electrical & Fastening Solutions		Thermal Management		Total
Industrial	$	466.9	$	75.0	$	143.3	$	685.2
Commercial & Residential	124.9		321.4		79.5		525.8
Infrastructure	275.0		169.4		15.2		459.6
Energy	13.9		25.4		45.0		84.3
Total	$	880.7	$	591.2	$	283.0	$	1,754.9


	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

Contract balances

Contract assets and liabilities consisted of the following:


In millions	June 30, 2024		December 31, 2023		$ Change		% Change
Contract assets	$	44.5	$	44.1	$	0.4	0.9	%
Contract liabilities	19.2		27.1		(7.9)		(29.2)	%

Net contract assets	$	25.3	$	17.0	$	8.3	48.8	%

The $8.3 million increase in net contract assets from December 31, 2023 to June 30, 2024 was primarily the result of the timing of milestone invoicing. The majority of our contract liabilities at December 31, 2023 were recognized in revenue during the six

nVent Electric plc

Notes to condensed consolidated financial statements (unaudited)

months ended June 30, 2024. There were no material impairment losses recognized on our contract assets for the three and six months ended June 30, 2024 and 2023.

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, 2024, we had $36.3 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 twelve to eighteen months.

3.Restructuring

During the six months ended June 30, 2024 and the year ended December 31, 2023, we initiated and continued execution of certain business restructuring initiatives aimed at reducing our fixed cost structure and realigning our business.

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, 2024		June 30, 2023		June 30, 2024		June 30, 2023
Severance and related costs	$	0.8	$	2.1	$	1.7	$	3.3
Other	1.3		0.4		1.7		3.2
Total restructuring costs	$	2.1	$	2.5	$	3.4	$	6.5

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

Restructuring costs by reportable segment as well as enterprise and other were as follows:


	Three months ended				Six months ended
In millions	June 30, 2024		June 30, 2023		June 30, 2024		June 30, 2023
Enclosures	$	0.1	$	—	$	0.4	$	0.6
Electrical & Fastening Solutions	1.3		0.6		1.9		0.8
Thermal Management	0.7		1.8		0.8		4.7
Enterprise and other	—		0.1		0.3		0.4
Total	$	2.1	$	2.5	$	3.4	$	6.5

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, 2024		June 30, 2023
Beginning balance	$	2.9	$	2.4

Costs incurred	1.7		3.3
Cash payments and other	(3.1)		(2.7)
Ending balance	$	1.5	$	3.0

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, 2024		June 30, 2023		June 30, 2024		June 30, 2023


Net income	$	111.0	$	112.9	$	216.1	$	206.7
Weighted average ordinary shares outstanding
Basic	166.1		165.7		165.8		165.5
Dilutive impact of stock options, restricted stock units and performance share units	2.8		2.3		2.9		2.4
Diluted	168.9		168.0		168.7		167.9
Earnings per ordinary share



Basic earnings per ordinary share	$	0.67	$	0.68	$	1.30	$	1.25



Diluted earnings per ordinary share	$	0.66	$	0.67	$	1.28	$	1.23
Anti-dilutive stock options excluded from the calculation of diluted earnings per share	0.4		0.4		0.2		0.3

5.Acquisitions

ECM Industries Acquisition

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 through borrowings under the 2033 Notes and 2023 Term Loan Facility (as described in Note 9 below).

The purchase price has been allocated based on the fair value of assets acquired and liabilities assumed at the date of the ECM Industries acquisition. The purchase price allocation was completed in the second quarter of 2024.

The following table summarizes the fair values of the assets acquired and liabilities assumed in the ECM Industries acquisition as previously reported as of December 31, 2023 and revised as of June 30, 2024:


In millions	As Previously Reported		As Revised
Cash	$	45.7	$	45.7
Accounts receivable	77.0		77.0
Inventories	104.2		99.1
Other current assets	4.9		4.9
Property, plant and equipment	75.3		75.0
Identifiable intangible assets	524.0		524.0
Goodwill	375.7		379.7
Other assets	17.0		17.4
Current liabilities	(53.9)		(53.9)
Other liabilities	(35.8)		(34.8)
Purchase price	$	1,134.1	$	1,134.1

The excess purchase price over tangible net assets and identified intangible assets acquired has been allocated to goodwill in the amount of $379.7 million, substantially all of which is expected to be deductible for income tax purposes. Goodwill recognized from the ECM Industries acquisition reflects the future economic benefit resulting from synergies of our combined operations.

Identifiable intangible assets acquired included $113.7 million of trade name intangible assets, a majority of which are indefinite-lived, $381.7 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

nVent Electric plc

Notes to condensed consolidated financial statements (unaudited)

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.

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, 2023
Pro forma net sales	$	852.9	$	1,700.1
Pro forma net income	129.3		225.7
Pro forma earnings per ordinary share
Basic	$	0.78	$	1.36
Diluted	0.77		1.34

The unaudited pro forma net income includes 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 net income 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 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.

Other acquisitions

On July 10, 2023, we acquired TEXA Industries for approximately $34.8 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 reporting segment. We acquired $5.2 million of debt with the TEXA Industries acquisition, which we repaid in full in the third quarter of 2023.

The excess purchase price over tangible net assets and identified intangible assets acquired has been allocated to goodwill in the amount of $10.9 million, none of which is expected to be deductible for income tax purposes. Identifiable intangible assets acquired included $12.4 million of definite-lived customer relationships with an estimated useful life of 13 years.

The pro forma impact of the TEXA Industries acquisition is not material.

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, 2023		Acquisitions/ divestitures		Foreign currency translation/other		June 30, 2024
Enclosures	$	430.4	$	(0.4)	$	(4.6)	$	425.4
Electrical & Fastening Solutions	1,427.7		4.0		—		1,431.7
Thermal Management	713.0		—		(1.3)		711.7
Total goodwill	$	2,571.1	$	3.6	$	(5.9)	$	2,568.8

nVent Electric plc

Notes to condensed consolidated financial statements (unaudited)

Identifiable intangible assets consisted of the following:


	June 30, 2024						December 31, 2023
In millions	Cost		Accumulated amortization		Net		Cost		Accumulated amortization		Net
Definite-life intangibles
Customer relationships	$	1,680.9	$	(641.4)	$	1,039.5	$	1,684.8	$	(599.3)	$	1,085.5

Proprietary technology and patents	63.4		(23.9)		39.5		63.7		(20.8)		42.9
Other finite-lived intangible assets	18.0		(7.9)		10.1		18.0		(4.8)		13.2
Total definite-life intangibles	1,762.3		(673.2)		1,089.1		1,766.5		(624.9)		1,141.6
Indefinite-life intangibles
Trade names	375.4		—		375.4		375.4		—		375.4
Total intangibles	$	2,137.7	$	(673.2)	$	1,464.5	$	2,141.9	$	(624.9)	$	1,517.0

Identifiable intangible asset amortization expense was $24.4 million and $21.3 million for the three months ended June 30, 2024 and 2023, respectively, and $49.6 million and $38.9 million for six months ended June 30, 2024 and 2023, respectively.

Estimated future amortization expense for identifiable intangible assets during the remainder of 2024 and the next five years is as follows:


	Q3-Q4
In millions	2024		2025		2026		2027		2028		2029
Estimated amortization expense	$	47.1	$	94.2	$	94.2	$	94.2	$	89.9	$	77.4

nVent Electric plc

Notes to condensed consolidated financial statements (unaudited)

7.Supplemental Balance Sheet Information


In millions	June 30, 2024		December 31, 2023
Inventories
Raw materials and supplies	$	169.1	$	165.1
Work-in-process	32.2		34.9
Finished goods	244.5		241.3
Total inventories	$	445.8	$	441.3
Other current assets
Contract assets	$	44.5	$	44.1
Prepaid expenses	43.8		44.7
Prepaid income taxes	22.4		10.5

Other current assets	21.5		20.9
Total other current assets	$	132.2	$	120.2
Property, plant and equipment, net
Land and land improvements	$	38.6	$	39.6
Buildings and leasehold improvements	216.0		217.4
Machinery and equipment	609.0		599.6
Construction in progress	39.1		37.2
Total property, plant and equipment	902.7		893.8
Accumulated depreciation and amortization	517.8		503.8
Total property, plant and equipment, net	$	384.9	$	390.0
Other non-current assets

Deferred compensation plan assets	$	21.4	$	19.4
Lease right-of-use assets	117.8		118.7
Deferred tax assets	178.0		179.2
Other non-current assets	30.0		30.2
Total other non-current assets	$	347.2	$	347.5
Other current liabilities
Dividends payable	$	32.3	$	32.6


Accrued rebates	62.0		90.7
Contract liabilities	19.2		27.1
Accrued taxes payable	44.7		54.0

Current lease liabilities	27.6		25.6
Accrued interest	11.0		11.2
Other current liabilities	62.0		62.6
Total other current liabilities	$	258.8	$	303.8
Other non-current liabilities
Income taxes payable	$	25.7	$	28.2

Deferred compensation plan liabilities	21.4		19.4

Non-current lease liabilities	96.0		98.4
Other non-current liabilities	24.2		33.8
Total other non-current liabilities	$	167.3	$	179.8

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, 2024 and December 31, 2023, we had outstanding foreign currency derivative contracts with gross notional U.S. dollar equivalent amounts of $131.2 million and $146.8 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, 2024 and December 31, 2023, we had outstanding cross currency swap agreements with a combined notional amount of $318.2 million and $330.8 million, respectively. The agreements are accounted for as either cash flow hedges or fair value 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. At June 30, 2024 and December 31, 2023, we had deferred foreign currency gain of $2.3 million and loss of $3.5 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 observable 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, 2024				December 31, 2023
In millions	Recorded Amount		Fair Value		Recorded Amount		Fair Value
Variable rate debt	$	477.5	$	477.5	$	492.5	$	492.5
Fixed rate debt	1,300.0		1,234.1		1,300.0		1,261.6
Total debt	$	1,777.5	$	1,711.6	$	1,792.5	$	1,754.1

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


Recurring fair value measurements	June 30, 2024
In millions	Level 1		Level 2		Level 3		NAV		Total
Cross currency swap liabilities	$	—	$	(10.6)	$	—	$	—	$	(10.6)
Cross currency swap assets	—		6.3		—		—		6.3
Foreign currency contract liabilities	—		(0.9)		—		—		(0.9)
Foreign currency contract assets	—		0.5		—		—		0.5

Deferred compensation plan assets	14.3		—		—		7.1		21.4
Total recurring fair value measurements	$	14.3	$	(4.7)	$	—	$	7.1	$	16.7


Recurring fair value measurements	December 31, 2023
In millions	Level 1		Level 2		Level 3		NAV		Total
Cross currency swap liabilities	$	—	$	(21.7)	$	—	$	—	$	(21.7)
Cross currency swap assets	—		3.9		—		—		3.9
Foreign currency contract liabilities	—		(0.8)		—		—		(0.8)
Foreign currency contract assets	—		2.1		—		—		2.1

Deferred compensation plan assets	13.3		—		—		6.1		19.4
Total recurring fair value measurements	$	13.3	$	(16.5)	$	—	$	6.1	$	2.9

9.Debt

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


In millions	Average interest rate at June 30, 2024	Maturity Year	June 30, 2024		December 31, 2023
Revolving credit facility	N/A	2026	$	—	$	—
2021 Term loan facility	6.689%	2026	192.5		200.0
2023 Term loan facility	6.689%	2028	285.0		292.5
2024 Term loan facility	N/A	2026	—		—
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		500.0
Unamortized debt issuance costs and discounts	N/A	N/A	(11.3)		(11.8)
Total debt			1,766.2		1,780.7
Less: Current maturities and short-term borrowings			(35.6)		(31.9)
Long-term debt			$	1,730.6	$	1,748.8

nVent Electric plc

Notes to condensed consolidated financial statements (unaudited)

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").

In May 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 Securities and Exchange Commission.

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, 2024, the borrowing capacity under the Revolving Credit Facility was $600.0 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.

nVent Electric plc

Notes to condensed consolidated financial statements (unaudited)

In April 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.

In June 2024, nVent and nVent Finance entered into a new loan agreement among nVent Finance, as borrower, nVent as guarantor, and the lenders and agents party thereto, providing for a two-year $500.0 million senior unsecured term loan facility (the "2024 Term Loan Facility"). As of June 30, 2024, the borrowing capacity under the 2024 Term Loan Facility was $500.0 million. On July 16, 2024, to finance the acquisition of the parent of Trachte, LLC ("Trachte"), we drew $500.0 million on our 2024 Term Loan Facility (as described in Note 15 below). The 2024 Term Loan Facility bears interest at a rate equal to an adjusted base rate or adjusted term SOFR plus, in each case, an applicable margin.

Our debt agreements contain certain financial covenants, the most restrictive of which are in the Senior Credit Facilities, the 2023 Term Loan Facility and the 2024 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) 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, the 2023 Term Loan Facility and the 2024 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, 2024, we were in compliance with all financial covenants in our debt agreements, and there is no material uncertainty about our ongoing ability to meet those covenants.

Debt outstanding at June 30, 2024, excluding unamortized issuance costs and discounts, matures on a calendar year basis as follows:


	Q3-Q4
In millions	2024		2025		2026		2027		2028		2029		Thereafter		Total
Contractual debt obligation maturities	$	16.9	$	37.5	$	179.4	$	22.5	$	721.2	$	—	$	800.0	$	1,777.5

10.Income Taxes

The effective income tax rate for the six months ended June 30, 2024 was 22.5% compared to 17.1% for the six months ended June 30, 2023. The liability for uncertain tax positions was $13.3 million and $13.9 million at June 30, 2024 and December 31, 2023, 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.

The Organization for Economic Co-operation and Development introduced an international tax framework under Pillar II (the "Pillar II framework") which includes a global minimum tax of 15%. The Pillar II framework has been implemented by several jurisdictions, including jurisdictions in which we operate, with effect from January 1, 2024, which resulted in an increase to our effective tax rate in the six months ended June 30, 2024 compared to the six months ended June 30, 2023.

Further, 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.

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 $