nVent Electric plc Ordinary Shares

Good morning, and welcome to the Invent Electric fourth quarter 2022 earnings conference call. All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then one on your touch-tone phone. To withdraw your question, please press star, then two. Please note, this event is being recorded. I would now like to turn the conference over to Tony Ryder, Vice President of Investor Relations. Please go ahead.

Thank you, and welcome to NVEN's fourth quarter 2022 earnings call. On the call with me are Beth Wozniak, our Chief Executive Officer, and Sarah Zawieski, our Chief Financial Officer. They will provide details on our fourth quarter and full year performance and the outlook for the first quarter and full year 2023. Before we begin, let me remind you that any statements made about the company's anticipated financial results are forward-looking statements subject to future risks and uncertainties, such as the risks outlined in today's press release and in events filings with the Security and Exchange Commission. Forward-looking statements are made as of today, and the company undertakes no obligation to update publicly such statements to reflect subsequent events or circumstances. Actual results could differ materially from anticipated results. Today's webcast is accompanied by a presentation, which you can find in the investor section of NBEN's website. References to non-GAAP financials are reconciled in the appendix of the presentation. We will have time for questions after our prepared remarks. I also want to add that we look forward to hosting our next Investor Day the morning of Tuesday, March 7th in New York City. With that, please turn to slide three, and I will now turn the call over to Beth.

Thank you, Tony, and good morning, everyone. It's great to be with you today to share our fourth quarter and full-year results. 2022 was a record year for InvenT, with the fourth quarter marking our seventh consecutive quarter of double-digit organic growth. Our InvenT team delivered exceptional results by serving our customers, responding to strong demand, and overcoming supply chain challenges. We successfully executed on our strategy, focusing on high growth verticals, new products, global expansion, and acquisitions. As a result, full year sales grew an impressive 18% with adjusted EPS of 22%. This was another year of outstanding performance and value creation, and we're well positioned to do it again in 2023. Slide four summarizes our Q4 and full year performance. Fourth quarter sales were up 15% organically, with broad-based growth across all segments and verticals. Segment income grew an impressive 31% year-over-year, with return on sales up 290 basis points. Adjusted EPS grew 32%, and we generated $180 million of free cash flow, up 77%. Our fourth quarter results were terrific. Looking at our key verticals, all grew in the quarter. Industrial led the way, up low double digits with broad-based growth. Infrastructure had strong double-digit growth led by data solutions and power utilities. Energy performed well, up strong double digits. And finally, commercial and residential grew mid-single digits driven by North America. Turning to organic sales by geography, we continue to see broad-based growth in North America, up strong double digits. Europe grew in all segments, up high single digits. Developing regions declined, primarily due to COVID-related impacts in China. Lastly, orders in Q4 were flat year over year. Recall a year ago, we had 37% orders growth, a tough comparison. Also, as we discussed in our Q3 earnings call, we expected orders to moderate as distributors return to seasonal destocking. Overall, our customer demand and distributor sell-through remained strong. Orders in January have since increased, and we continue to have a robust backlog. For the full year, we had record sales of $2.9 billion, an increase of 20% organically, and segment income also grew 20%. Adjusted EPS was up 22% on top of 31% in 2021. For the full year, we generated over $350 million of free cash flow. Let me share a few more highlights. First, we launched 59 new products, and our new product vitality is now 20%. New products contributed approximately three points to our sales growth. Second, with our focus on high growth verticals, infrastructure is now approaching 25% of our sales, up from low teens at spin. Infrastructure includes data solutions, power utilities, renewables, and e-mobility, to name a few. All of these sub-verticals are growing rapidly, and we continue to expand our portfolio and solutions in these areas. For example, Data Solutions now represents $375 million in sales and grew over 35% in 2022. Lastly, we have added more than $300 million in annual sales from acquisitions since then. And in 2022, sales growth from acquisitions exceeded overall invent growth. While we did not complete any new acquisitions in 2022, we remained disciplined in our approach and built a very healthy pipeline of opportunities. We've had success when we acquire companies that have differentiated products and solutions that extend our position in high-growth verticals. We've been able to rapidly scale them through our distribution channels, global reach, and footprint. This approach has led to higher growth and we believe fantastic returns for our shareholders. We're well positioned with ample capacity to execute on M&A in 2023. Looking at the macro trends, we expect electrification, sustainability, and digitalization to continue to accelerate. We anticipate the investments from the Infrastructure Bill and Inflation Reduction Act will drive demand for our products and solutions. On verticals, we expect industrials to see continued growth with investments in automation and supply chain resiliency. Infrastructure will benefit from investments with the electrification trend in power utilities, renewables, and e-mobility. We expect continued strong growth with our portfolio in liquid cooling for data centers, given the energy efficiency benefits. Overall, commercial is expected to slow, However, the need for more labor-saving solutions will drive demand for our products as well as growth in power and data infrastructure. Residential is expected to be soft, but represents less than 5% of our portfolio. In energy, we expect to see continued growth with MRO and projects supported by decarbonization with LNG, clean fuels, and carbon capture. While supply chains remain challenging, we do expect them to gradually improve. We also expect an inflationary environment. We have shown we are able to manage price cost positive. We are confident we can continue to perform. Overall, I am proud of our InvenTeam and the record results we delivered in 2022. We continue to change the growth profile of the company, focusing on higher growth verticals tied to longer-term secular trends. We believe 2023 will be another year of strong growth and value creation. I will now turn the call over to Sarah for some details on our results as well as our 2023 outlook. Sarah, please go ahead.