nVent Electric plc Ordinary Shares

Good day, and welcome to the Invent Electric second quarter 2023 earnings conference call. All participants will be in a listen-only mode. Should you need assistance, please signal conference specialists 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 touchtone phone. And 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 Mr. Tony Ryder, Vice President of Investor Relations, Please go ahead, sir.

Thank you and welcome to NVEN's second quarter 2023 earnings call. On the call with me are Beth Wozniak, our Chair and Chief Executive Officer, and Sarah Zawoisky, our Chief Financial Officer. Today we will provide details on our second quarter performance, provide an outlook for the third quarter, and an update to our full year 2023 outlook. Before we begin, let me remind you that any and Exchange Commission. Overlooking 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 NVEN'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. and I'll 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 strong second quarter results. We continue to execute on our strategy for growth with a focus on high growth verticals, new products, acquisitions, and geographic expansion. In the second quarter, we delivered record sales, up 10%, and adjusted EPS up an impressive 35%. Our strong execution resulted in another quarter of robust margin expansion and free cash flow. Highlights for the quarter include the acquisition of ECM Industries, expanding our electrical power connection and grounding solutions portfolio, We also published our 2022 ESG report, which highlighted significant progress on our goals around our people, products, and planet pillars. Overall, we are very pleased with our strong first half performance and are raising our full year sales and adjusted EPS guidance. Now on to slide four for a summary of our second quarter performance. Sales in the quarter were up 4% organically, on top of 21% a year ago, with all verticals growing, led by infrastructure. New products contributed approximately three points to sales growth. We've launched 33 new products in the first half and are on track to launch 50 plus for the full year. We closed on the ECM acquisition and are excited to welcome the team to Invent. In Q2, ECM added seven points to sales and was accretive to overall invent margins. Segment income grew 45% year over year, with return on sales up an impressive 540 basis points. Adjusted APS grew 35% on top of 14% a year ago. We generated $62 million of free cash flow, up 29%. We are on track for another strong year. I am very proud of our results and the great work being done by our Invent team. I want to share some recent awards and recognition to highlight this. Invent was named a top 10 data solutions provider by CIO applications for the second year in a row. This recognition is for companies at the forefront of providing data center solutions and transforming businesses. We also were named by the Minneapolis St. Paul Business Journal as the 2023 Large Manufacturer of the Year. Based on our contributions to the regional economy and community, this award recognized our performance, innovation, and manufacturing excellence. And Invent is one of four finalists in the mid-cap category for the 2023 Diversity, Equity, and Inclusion Award by the National Association of Corporate Directors. This award recognizes forward-thinking boards that leverage the power of DE&I to enhance their governance, create long-term value, and build innovative and inclusive workplaces and boardrooms. Looking at performance across our key verticals, all grew organic sales in the quarter. Infrastructure led the way up 10%, including data solutions growing double digits, and power utilities up over 40%. Industrial and energy each grew low single digits, and commercial and resi was also positive. Turning to organic sales by geography, we continued to see broad-based growth in North America, up high single digits. Europe declined low single digits, primarily due to our wind down in Russia, and Asia Pacific declined due to a slow recovery in China. Lastly, organic orders in Q2 grew low single digits year over year, on top of high teens orders growth a year ago. As expected, we saw distributors adjusting their inventories in Q2, with improving supply chains and lead times. Importantly, we continue to see positive growth distributors sell through. Looking ahead, I am excited for both the ECM acquisition and TEXA acquisition, which we just announced, and how they further position Invent with the electrification of everything. We are raising our full year guidance, reflecting our strong first half and the addition of our two acquisitions. 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 continue to expect the commercial resi vertical to be soft. Lastly, artificial intelligence is driving demand for our liquid cooling solutions, leading us to increase investments in the back half of the year to drive future growth in our data solutions business. Overall, I am very proud of our InvenTeam and how we continue to execute and deliver for our customers and shareholders. We're on track for another strong year. I will now turn the call over to Sarah for some detail on our second quarter results and our updated outlook for 2023. Sarah, please go ahead.