Neal Burk

Neal Burk questioned the apparent deceleration in nVent's organic growth guide for the second half of 2026, despite accelerating data center CapEx, asking if this was due to tougher comparisons or timing differences between hyperscaler CapEx and nVent's sales. He also asked if nVent now has better visibility into the multi-year data center project pipeline and future demand as the business scales.

Answer

Gary Corona, Chief Financial Officer, reiterated that it's early in the year and nVent is managing unprecedented growth, promising updates quarterly and more details on the multi-year data center opportunity at Investor Day. Beth Wozniak, Chair and Chief Executive Officer, explained that the portfolio transformation has provided a better balance between short and long-cycle businesses, including data centers and power utilities, which offers more visibility into multi-year projects, technology roadmaps, and aids in capacity and new product planning.

Neal Burk from UBS questioned the implied deceleration in organic growth for the back half of 2026, despite accelerating data center CapEx, asking if this was due to harder comparisons or timing differences between hyperscaler CapEx and nVent's sales. He also asked if nVent now has better multi-year visibility into the data center project pipeline and future demand as the business scales and backlog increases.

Answer

CFO Gary Corona acknowledged the strong backlog and momentum but reiterated that it's early in the year for the 2026 guide. He noted that nVent is managing unprecedented growth and overlapping strong H2 2025 performance, and that the multi-year opportunity would be discussed at the upcoming Investor Day. CEO Beth Wozniak stated that the portfolio transformation provides a better balance between short and long-cycle businesses, increasing visibility into multi-year projects and technology roadmaps, which aids in capacity and new product planning.

Neal Burk asked for confirmation on the annualized data center revenue run rate exiting the year at $1.6 billion, based on Q4 guidance, and the assumed capacity utilization. He also inquired about the trending of the data center pipeline and whether visibility on future orders and revenues has improved compared to six to twelve months ago.

Answer

Mick Lucareli, EVP and CFO, confirmed that a Q4 sales quarter of $400 million+ implies an annualized run rate of $1.6 billion. Neil Brinker, CEO, added that capacity is in line with expectations, and efficiency is improving, supporting a return to the 20% margin range. Neil also stated that data center pipeline visibility continues to expand, now looking out as far as five years, with the order funnel swelling, indicating greater visibility than in previous periods.

Neal Burk inquired about the performance of ESAB's consumables business, given the solid growth reported in equipment and automation.

Answer

Shyam Kambeyanda, President and CEO, stated that the consumables business is 'steady' and performing better than the market, albeit with slightly lower growth compared to the strong performance in equipment and automation. He highlighted the success of new equipment product introductions and the strategy of offering full workflow solutions.

Neal Burk questioned the implied step-down in incremental margins for the second half of the year, given the strong 37% incremental in Q2. He also asked for an update on new product introductions and their contribution to sales.

Answer

CFO Kevin Johnson explained that the change in incrementals is primarily due to the impact of FX, which drops through at a lower rate of around 10%. President & CEO Shyam Kambeyanda added that the company is on track for nearly 100 new product introductions this year, maintaining a vitality rate near 23-24%, and noted new acquisitions will significantly expand the portfolio.

Asked about the implied step-down in incremental margins for the second half of the year and requested an update on the contribution from new product introductions.

Answer

The lower implied incremental margin in the H2 guidance is primarily due to the impact of foreign exchange, which has a lower flow-through rate. The company continues to focus on innovation, with nearly 100 new products planned for the year, maintaining a vitality rate of around 23-24%.

Neal Burk of UBS Group AG questioned why the second-half guidance implies a step-down in incremental margins despite strong Q2 performance. He also asked for an update on new product introductions and their contribution to sales.

Answer

CFO Kevin Johnson and CEO Shyam Kambeyanda explained the implied step-down in incrementals is primarily due to the impact of FX, which has a lower incremental margin of around 10%. On new products, Shyam Kambeyanda stated the company is on track to introduce nearly 100 new products, maintaining a vitality rate near 23-24%, with recent acquisitions set to expand the portfolio further.

Neal Burk asked for a breakdown of the updated guidance, specifically how much revenue and EBITDA the Bavaria acquisition contributes, and whether the outlook embeds macro uncertainty.

Answer

CFO Kevin Johnson stated the Bavaria acquisition adds approximately $20 million to the revenue forecast and accounts for most of the profit guidance increase, contributing $2.5-$3.0 million. CEO Shyam Kambeyanda added that while Bavaria is expected to be EPS neutral in year one, he is confident in significant synergy opportunities that will make it accretive in year two, similar to the past Sandvik acquisition.