nVent Electric plc Ordinary Shares

Specialist are 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. To withdraw your question, please press star, then two. Please note, today's event is being recorded. I would now like to turn the conversation over to Tony Ryder, Vice President of Investor Relations. Please go ahead, sir.

Thank you. And welcome to Advent's third quarter 2023 earnings call. On the call with me are Beth Wozniak, our Chair and Chief Executive our Chief Financial Officer. Today we will provide details on our third quarter performance, provide an outlook for the fourth quarter, and an update to our full year 2023 outlook. 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 advance 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 Investors section of MN'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. With that, please turn to slide three, 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 record third quarter results. I'm very pleased with our execution in the quarter. We had exceptionally strong income growth, Ross expansion, and robust free cash flow. We continue to execute on our strategy, focused on high growth verticals, new products, acquisitions, and geographic expansion. We believe we are well positioned with the electrification of everything. In the third quarter, we had record sales up 15% with the addition of ECM and TEXA Industries. Adjusted EPS was up an impressive 27%. The acquisitions performed well and are great additions to Invenz. Overall, we are very pleased with our Q3 performance. We had strong execution despite a mixed environment, which I will comment on shortly. Now onto slide four for a summary of our third quarter performance. Organic sales in the quarter were up slightly on top of 20% a year ago. We continue to see channel inventory adjustments resulting in lower than expected organic sales. Organic orders were positive in the quarter, growing low single digits. Segment income was up 40% year-over-year and return on sales up an impressive 420 basis points. Adjusted EPS grew 27% on top of 25% a year ago, and we generated $136 million of free cash flow, up 8%. Let me touch on a few highlights for the quarter. New products contributed approximately two points to sales growth, and we are well ahead of our goal of launching over 50 new products for the year. Turning to acquisitions, We're excited to have the ECM and TEXA team as part of Invent. These acquisitions have strong product portfolios, which we believe further position us with the electrification of everything and high growth verticals globally. In Q3, they added 14 points to sales and delivered better than expected income. With ECM, we are executing on our plan to globalize its portfolio. In particular, we are working on the certifications to expand the ILSCO Power Connection offering for Europe and Asia Pacific. We are making progress with our distribution partners to expand coverage. In addition, we are working on pulling our Inven products through some of the ECM channels. With TEXA, we are executing on our plan to position its industrial cooling portfolio alongside our enclosures through our European distribution channels. Similarly, we are executing on the product roadmap to expand the portfolio to North America. We believe there is significant potential for global growth and expansion with both acquisitions starting next year. I would also like to share a couple of awards that we recently received. Invent was named as one of Fortune's best workplaces in manufacturing and production. We were also named as one of Newsweek's America's Greenest Companies. Finally, we were awarded the I-Mark Supplier of the Year for ILSCO, part of ECM, which highlights the strength of that product portfolio. Looking at our vertical performance in the quarter, overall, we saw a mixed environment. Organic sales were led by industrial and commercial resi, each growing low single digits in the quarter. While industrial is growing, the rate of growth is slowing. In commercial, we saw pockets of growth. Infrastructure declined low single digits, largely in electrical and fastening solutions due to customers and channel partners adjusting their inventories as our supply chain improved. Data solutions continued to grow double digits. We're making good progress on expanding our footprint and capacity to meet growing demand for liquid cooling, driven by the acceleration of AI. We remain confident in the growth of the infrastructure vertical, with the electrification of everything and legislative funding expected to ramp in 2024. Finally, energy was flat in the quarter, but with the energy transition, we are seeing positive order trends. Turning to organic sales by geography, we continue to see growth led by North America up low single digits. Europe declined low single digits primarily due to our wind down in Russia, and Asia Pacific declined primarily due to China. Looking ahead, we are updating our sales expectations and raising our full year adjusted EPS guidance. This reflects our view on a continued mixed environment, Importantly, it also reflects our confidence in our ability to execute. Be it our acquisitions, new products, pricing, productivity, and cash, we believe are all strengths for us. We expect electrification, sustainability, and digitalization to continue to drive demand. Specifically, we expect strength in infrastructure, in data solutions, in industrial with the trends of automation and onshoring, and in energy with the energy transition. We continue to expect the commercial revenue vertical to have pockets of strength. Overall, I'm very proud of our event team and our execution. I will now turn the call over to Sarah for some detail on our third quarter results and our updated outlook for 2023. Sarah, please go ahead. Thank you, Beth.