nVent Electric plc Ordinary Shares

Good day and welcome to the Invent Electric fourth quarter 2023 earnings conference call. Please note this event is being recorded. I would now like to hand the conference over to Mr. Tony Ryder, Vice President of Investor Relations. Please go ahead, sir.

Thank you, Chuck. And welcome to Invent's fourth quarter 2023 earnings call. On the call with me are Beth Wozniak, Chair and Chief Executive Officer, and Sarah Zawoisky, Chief Financial Officer. Today we'll provide details on our fourth quarter and full year performance and our outlook for 2024. 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 M-BEN's 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. The 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. 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. 2023 was another outstanding year. Q4 was a record quarter with double-digit sales growth and adjusted EPS exceeding our guidance. This included margin expansion across every segment and robust free cash flow. For the full year, we had strong growth and execution resulting in record sales, margins, earnings, and cash flow. I am proud of our InvenTeam and everything we've accomplished. I'm very excited for 2024 with the trends of electrification, sustainability, and digitalization. We are well positioned for strong sales and profit growth driven by our focus on high growth verticals, new products, and acquisitions. Slide four summarizes our Q4 and full year performance. Fourth quarter sales were up 16%. On an organic basis, sales grew 2% on top of 15% a year ago. Segment income grew an impressive 31% year over year, with return on sales of 260 basis points. Adjusted EPS grew 18% on top of 32% a year ago, And we generated $215 million of free cash flow up 19%. Looking at our vertical performance in the quarter, infrastructure led up low double digits with strength in data solutions. Commercial resi grew low single digits. Industrial declined mid-single digits impacted by channel inventory adjustments. Finally, energy was down low single digits impacted by our exit from Russia. Turning to organic sales by geography, we saw growth across our key regions. North America grew low single digits and Europe was up slightly. Asia Pacific grew low double digits with solid growth in China. Lastly, organic orders were slightly down in the quarter reflecting the ongoing channel inventory adjustment Importantly, sellout was positive. For the full year, we had record sales of $3.3 billion, an increase of 12% and 3% organically. Segment income grew 38% with margins expanding more than 400 basis points. Adjusted EPS was up 28% on top of 22% in 2022. For the full year, we had record free cash flow of $465 million, growing 32%. Let me share a few more highlights. First, we launched 95 new products in 2023, and our new product vitality is now at 22%. New products contributed more than two points to our sales growth. We have great momentum in our innovation pipeline. Second, all of our key verticals grew organically in 2023, led by infrastructure, which includes data solutions, power utilities, and renewables, to name a few. Within infrastructure, data solutions now represents greater than $450 million in sales and grew over 20% in 2023. Finally, we completed two acquisitions last year, adding over $400 million in annualized sales that we are investing in to scale and drive growth. Looking at the macro trends, we expect electrification, sustainability, and digitalization to continue to drive demand. We anticipate government funding to flow this year, more so in the back half. On our key verticals, we expect all to grow. Infrastructure is forecasted to have the strongest growth benefiting from investments with the electrification and digitalization trends. We expect continued strong growth for data solutions, particularly for our liquid cooling solutions given the acceleration of AI. Industrial is forecasted to grow with investments in automation and reshoring. Overall, commercial is expected to grow modestly. The need for more labor-saving solutions as well as the increase in power and data infrastructure are expected to drive demand for our products. Residential is expected to remain soft. In energy, we expect to see growth, particularly in the energy transition supported by decarbonization trends. Overall, I am proud of our INVENT team and the record results we delivered in 2023. We continue to change the growth profile of INVENT. We believe 2024 will be another year of strong growth and value creation. I will now turn the call over to Sarah for details on our results as well as our 2024 Outlook. Sarah, please go ahead.