nVent Electric plc Ordinary Shares

Good morning, everyone, and welcome to the Invent Electric first quarter 2023 earnings conference call. All participants will be in a listen-only mode. Should you need assistance, please say no to 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 and then one using a touchtone telephone. To withdraw your questions, you may press star and two. Please also note today's event is being recorded. And at this time, I'd like to turn the floor over to Tony Reiter, Vice President of Investor Relations. Sir, please go ahead.

Thank you. And welcome to Invent's first quarter 2023 earnings call. On the call with me are Beth Wozniak, our Chief Executive Officer, and Sarah Zawoisky, our Chief Financial Officer. Today, we'll provide details on our first quarter performance, provide an outlook for the second quarter, and an update to our full year 2023 outlook. Before we begin, let me remind you that any statements made looking statements subject to future risks and uncertainties, such as the risks outlined in today's press release and end-vents filings with the Securities and Exchange Commission. More 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 Investors section of NVENC's website. References to non-GAAP financials are reconciled to the appendix of the presentation. We'll have time for questions after our prepared remarks. 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 first quarter results. We had a strong start to the year. We continue to advance our strategy with our focus on high growth verticals, new products, and geographic expansion. We delivered record first quarter sales growing 7% with adjusted EPS up 34%. We had impressive year-over-year margin expansion and robust free cash flow. Our enclosures and electrical and fastening segment sales grew double digits with the trends in the electrification of everything. In addition, we're excited to expand our Connect and Protect portfolio with the announcement to acquire ECM Industries. Overall, we are pleased with the strong start to the year and are raising our full year sales and adjusted EPS guidance. Now onto slide four for a summary of our first quarter performance. First quarter sales were up 8% organically with all verticals growing. New products contributed approximately three points to our sales growth and we launched 17 new products in the quarter. Segment income grew 34% year over year with return on sales up an impressive 410 basis points. Adjusted EPS grew 34% and we generated $52 million of free cash flow compared to a $3 million usage a year ago. We're on track for another strong year. With our focus on the electrification of everything, we continue to have significant wins in our portfolio. In data solutions, we recently won a large contract with a semiconductor company for a new liquid cooling system for their data center. We also won a multi-million dollar contract for a cable management solution with a hyperscale modular data center provider. On e-mobility, our Aeroflex connections have been specified by your European OEM leader in power solutions for EV chargers. And with the energy transition, we continue to have wins in LNG, clean fuels, and carbon capture. We recently won several multi-million dollar contracts for our heat tracing systems, providing reliability and optimization. Looking at our key verticals, all grew organically in the quarter. Infrastructure led the way up mid-teens, including data solutions growing 20% and power utilities up over 30%. Industrial grew high single digits with broad-based growth. Energy performed well up mid-teens. And finally, commercial and residential grew low single digits. Turning to organic sales by geography, We continue to see broad-based growth in North America up low double digits, Europe grew high single digits, and Asia Pacific declined primarily due to a slow recovery in China. Lastly, orders in Q1 were flat year over year. Recall a year ago we had 28% order growth in the first quarter. As we said in our investor day, orders were positive through February. However, March orders declined with our toughest monthly comparison from a year ago. In addition, our distribution partners were adjusting their inventories and destocking with improved supply chains. We expect this to continue into Q2. Importantly, customer demand and distributor sell-through remain strong. Looking ahead, We are raising our full-year guidance, reflecting our strong start to the year. We expect electrification, sustainability, and digitalization to drive demand. Specifically, we expect continued strength in infrastructure, including data solutions, power utilities, and renewables. In industrial, with the trends of automation and onshoring, and in energy, with the energy transition. We expect commercial resi too slow. While our outlook is positive, we remain cautious due to the macroeconomic environment. Overall, I'm proud of our InvenTeam and how we continue to perform and deliver impressive results. We are on track for another strong year. I will now turn the call over to Sarah for some detail on our first quarter results and our updated outlook for 2023. Sarah, please go ahead. Thank you, Beth.