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nVent Electric plc (NVT)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 revenue of $752.2M rose 9% y/y (organic -1%); adjusted EPS was $0.59 (+7% y/y) while GAAP EPS from continuing operations was $(0.10), driven by a $92.8M tax valuation allowance; adjusted ROS expanded 50 bps to 21.0% .
  • Sequentially, revenue fell to $752.2M from $782.0M and adjusted EPS to $0.59 from $0.63 as mix and higher investments weighed; adjusted ROS was 21.0% vs 21.5% in Q3 .
  • FY25 guide: reported sales +8–10% (organic +4–6%) and adjusted EPS $2.98–$3.08; Q1’25 adjusted EPS $0.65–$0.67 on reported sales +7–9% (organic 0–2%) .
  • Portfolio transformation is a key catalyst: Thermal Management sale closed Jan 30, 2025 (net proceeds ~$1.4B); management plans nearly $2B deployable capital in 2025, including ~200M of buybacks assumed in the outlook and leverage <1x post proceeds .

What Went Well and What Went Wrong

What Went Well

  • Data Solutions momentum: ~$600M revenue in 2024 (+~30% y/y), backlog growing; management expects another year of double-digit growth in 2025. “We are investing in new products and expanding our offerings in liquid cooling... Our future is bright at nVent.” .
  • Enclosures (Systems Protection) margin execution: Q4 segment ROS 21.5% (+40 bps y/y) on acquisitions (Trachte) and productivity; segment income +18% y/y .
  • Cash generation: Q4 free cash flow $150.4M; FY free cash flow $427.5M; Q4 adjusted operating income +12% y/y to $158.3M; adjusted ROS up 50 bps to 21.0% .

What Went Wrong

  • Channel destocking weighed on organic sales (–1% qtr), especially sell-in late in Q4; North America declined low single digits organically while Europe was slightly up .
  • Price modestly negative in Enclosures in 2024; mix pressure and higher investments reduced EFS ROS by 20 bps y/y in Q4; consolidated adjusted ROS down sequentially vs Q3 .
  • GAAP EPS (cont. ops) swung to loss (–$0.10) on a 116.6% effective tax rate, including a $92.8M valuation allowance at a foreign holding company .

Financial Results

Consolidated results vs prior periods

MetricQ4 2023Q3 2024Q4 2024
Revenue ($USD Millions)$690.5 $782.0 $752.2
Gross Margin %40.0% 39.8% 39.8%
Operating Income ($M)$117.5 $133.2 $117.1
Reported ROS %17.0% 17.0% 15.6%
Adjusted Operating Income ($M)$141.7 $168.4 $158.3
Adjusted ROS %20.5% 21.5% 21.0%
Diluted EPS – Continuing Ops ($)$1.26 $0.47 $(0.10)
Adjusted EPS – Continuing Ops ($)$0.55 $0.63 $0.59
Cash from Operations ($M, quarter)$189.7 $158.4 $176.9
Free Cash Flow ($M, quarter)$169.0 $142.9 $150.4

Note on estimates: S&P Global consensus was unavailable due to data access limits; company’s prior Q4 adjusted EPS guidance was $0.58–$0.60, and actual was $0.59 (within range) .

Segment performance

SegmentQ4 2023 Net Sales ($M)Q3 2024 Net Sales ($M)Q4 2024 Net Sales ($M)Q4 2023 ROS %Q3 2024 ROS %Q4 2024 ROS %
Enclosures (Systems Protection from Q1’25)$402.2 $477.1 $465.5 21.1% 21.9% 21.5%
Electrical & Fastening (Electrical Connections from Q1’25)$288.3 $304.9 $286.7 29.6% 30.4% 29.4%

KPIs and operating drivers

KPIQ4 2024 / FY 2024
Organic orders growthLow-teens YoY in Q4; continued into January
Year-end backlog (Data Solutions + Trachte platform)~$750M exiting 2024
Data Solutions revenue (FY24)~$600M; grew ~30% y/y
New products launched (FY24)~90; >2 pts to sales
Free cash flow conversion (FY24)~102% of adjusted net income

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Reported Sales GrowthFY 2025N/A+8% to +10% New
Organic Sales GrowthFY 2025N/A+4% to +6% New
GAAP EPSFY 2025N/A$2.45–$2.55 New
Adjusted EPSFY 2025N/A$2.98–$3.08 New
Reported Sales GrowthQ1 2025N/A+7% to +9% New
Organic Sales GrowthQ1 2025N/A0% to +2% New
GAAP EPSQ1 2025N/A$0.52–$0.54 New
Adjusted EPSQ1 2025N/A$0.65–$0.67 New
Adjusted Tax RateFY 2025N/A~22% New
Net Interest ExpenseFY 2025N/A~$(60)M New
Diluted SharesFY 2025N/A~166M (assumes buybacks) New
CapExFY 2025N/A$75–$80M New
Corporate CostsFY 2025N/A~$100M; working lower New
Tariffs in OutlookFY 2025N/ANot yet reflected New
DividendQ1 2025$0.20 declared, payable Feb 7, 2025 $0.20 declared, payable May 9, 2025 Maintained

Earnings Call Themes & Trends

TopicQ2 2024 (Q-2)Q3 2024 (Q-1)Q4 2024 (Current)Trend
AI/Data centers & Liquid coolingCapacity expansion to 4x; 2024 Data Solutions tracking >$500M; backlog building Expect $575M 2024; NVIDIA collaboration; lab/testing expansion Orders double-digit; pipeline broadening beyond hyperscale; continued capacity/lab buildout and new product launches Strengthening
Channel inventoryUtility/telecom destock pressured EFS; expected improvement in 2H Distributors cautious into year-end Q4 sell-in below sell-out; orders rebounded in Jan Improving
Tariffs/macro—Macro uncertainty flagged China tariff minimal; Mexico low-teens COGS; guidance excludes tariff impacts Monitor
Regional demandNA mid-single growth; EU modest; APAC strong NA low-single up; APAC strong; EU down NA low-single down; EU slight up; APAC mid-teens up APAC improving; EU stabilizing
Capital deploymentNearly $2B available in 2025 post Thermal $100M buyback in Q3; sale expected early 2025 ~200M buybacks assumed; net leverage <1x post proceeds Capacity rising
Segment branding——Renaming: Enclosures→Systems Protection; E&FS→Electrical Connections (from Q1 2025) Update

Management Commentary

  • “Data Solutions now represents approximately $600 million in sales and grew approximately 30 percent in 2024. We expect another year of double-digit growth in 2025.” — Beth Wozniak, CEO .
  • “We expect to have nearly $2 billion in capital available to deploy in 2025.” — Beth Wozniak .
  • “Q4 adjusted EPS was $0.59…we generated robust free cash flow of $150 million.” — Sara Zawoyski, CFO .
  • “Beginning in Q1 2025, the Enclosure segment will be known as Systems Protection… Electrical & Fastening will be known as Electrical Connections.” — Beth Wozniak .
  • “Backlog will exit 2024 at $750 million… Trachte and Data Solutions backlogs building.” — Sara Zawoyski .

Q&A Highlights

  • Organic growth cadence: Slow start in Q1 (tough comp), acceleration through the year on growing data solutions and utilities backlogs; positive order funnels in small-capex industrial projects .
  • Margins: Q1 ROS down modestly on higher corporate costs (stranded costs from Thermal) and upfront investments; price/cost improves into back half; full-year ROS flat to modestly up .
  • Tariffs: Minimal China exposure; Mexico ~low-teens of COGS; Canada minimal; mitigation via supply chain and pricing .
  • Liquid cooling: Demand intact despite tech shifts (e.g., DeepSeek); capacity expanded ~4x with ongoing lab/test buildout; broadening customer base; NVIDIA collaboration cited as positive .
  • Capital allocation: Baseline 2025 plan includes ~$200M buybacks and interest income on proceeds; pro forma net leverage <1x after Thermal sale .
  • Trachte: Roughly $250M revenue baseline (when acquired), growing strong double digits; meaningful contribution to second-half organic growth .

Estimates Context

  • Wall Street consensus (S&P Global) could not be retrieved due to data access limits; therefore, we cannot quantify Street beat/miss for Q4 2024. The company’s own Q4 adjusted EPS guidance was $0.58–$0.60; actual adjusted EPS was $0.59, within guidance .
  • Investors should monitor estimate revisions as management guided FY25 adjusted EPS to $2.98–$3.08 with organic growth of 4–6% and acquisitions contributing ~5 points, implying 20–24% adjusted EPS growth y/y .

Key Takeaways for Investors

  • Mix shift to infrastructure (Data Centers and Utilities) is accelerating growth durability: Data Solutions ~$600M FY24 (+~30% y/y) with double-digit growth expected in 2025; Trachte platform adds visibility and scale in utilities .
  • Temporary Q4 headwinds (channel destock, slightly negative price in Enclosures) should ease as orders/backlog support sequential acceleration through 2025; watch Q1 ROS (seasonally softer) and second-half ramp .
  • FY25 setup is constructive: +8–10% reported sales (organic +4–6%), adjusted EPS $2.98–$3.08; assumptions include ~166M diluted shares, ~22% adjusted tax, ~$(60)M net interest, $75–$80M capex .
  • Cash optionality is significant post Thermal sale: ~$1.4B net proceeds and <1x leverage create capacity for M&A (focused on infrastructure tech platforms) and incremental buybacks beyond the ~$200M embedded in the outlook .
  • Margin quality remains solid despite investment: Q4 adjusted ROS 21.0% (+50 bps y/y); Enclosures ROS +40 bps; continuous productivity and simplification offsetting inflation; pricing expected to be positive in 2025 .
  • Risk watch: Macro/tariff uncertainty (guidance excludes tariff impacts), E&FS mix/seasonality, and high-growth program timing can add lumpiness; management cites minimal China tariff exposure and mitigation levers .
  • Near-term catalysts: Continued AI data center wins (including NVIDIA-linked solutions), evidence of channel normalization, M&A announcements deploying Thermal proceeds, and confirmation of double-digit growth in utilities/control buildings .