nVent Electric plc Ordinary Shares

Good day and welcome to the Invent Electrics first quarter 2026 earnings conference call. All participants will be in 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 a touch tone phone. To withdraw your question, please press star and 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 Invent's first quarter 2026 earnings call. On the call with me are Beth Wise, Chair and Chief Executive Officer, and Gary Corona, our Chief Financial Officer. Today we'll provide details on our first quarter performance, an outlook for the second quarter, and an update to our full year outlook. All results referenced throughout this presentation are on a continuing operations basis, unless otherwise stated. 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 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 MVENT'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.

Good morning, everyone. I am pleased to share with you our outstanding first quarter results and cover some key business highlights. We had a tremendous start to the year with record sales, orders, and backlog exceeding our expectations. This was our third consecutive quarter with sales of more than $1 billion. Both sales and EPS significantly exceeded our guidance driven by strong sales growth in the infrastructure vertical led by data centers. Our data center business grew across the portfolio in both the gray and white spaces. In the gray space, we had strong growth in engineered buildings, enclosures, and power connections. In the white space, we had outstanding growth in liquid cooling, along with strong growth in power distribution units and cable management. We are winning with a wide range of customers, from hyperscalers to neoclouds and multi-tenants, and also through our distribution partners. Our investments in new products and capacity have been key to our ability to scale and respond to customer demand. The tremendous growth in data centers was accomplished by our team working tirelessly to increase and expand capacity in our facilities and across our supply base. Earlier this week, we celebrated the opening of our new Blaine, Minnesota facility that started production in Q1. We expect production to ramp throughout the year. In Q1, for total invent, we had record orders and backlog. Organic orders were up approximately 40%, primarily driven by orders for the AI data center build-out. Excluding data centers, organic orders grew mid-teens. In addition, we continue to see our backlog grow, up low double digits sequentially to $2.6 billion, giving us visibility through the year. Our free cash flow and balance sheet are strong. And our discipline capital allocation is focused on growth and returning cash to shareholders for continued value creation. We are raising our full year sales and EPS guidance to reflect our outstanding first quarter performance and significant momentum in data centers. Now onto slide four for a summary of our first quarter performance. Sales were up 53% and 34% organically, led by the infrastructure vertical. New products contributed over 20 points to our sales growth, and we launched 11 new products in the quarter. The EPG acquisition exceeded expectations, growing sales strong double digits year over year. Adjusted operating income grew 53% year over year, with return on sales of 20%. Adjusted EPS grew 63%. And free cash flow grew 21% year-over-year. Looking at our key verticals, sales grew across all verticals. Infrastructure led the way with organic sales up nearly 80%, driven by outstanding growth in data centers and double-digit growth in power utilities. Both industrial and commercial resi grew mid-single digits. Turning to organic sales by geography, the Americas led, growing over 40%. Europe was up low single digits while Asia Pacific was down. Looking ahead, we believe the infrastructure vertical has the highest growth opportunity with the trends of electrification, sustainability, and digitalization. Infrastructure is expected to grow strong double digits this year, driven by AI data center CapEx accelerations. Our greatest growth opportunity within the infrastructure vertical is data centers. Power utilities is next, with strong secular tailwinds as the demand for electrical grid capacity is increasing, with electrification and the need for power for AI data centers. Our expectations for industrial and commercial resi remain the same. For industrial, we expect mid-single-digit growth with increasing CapEx investment, automation and reshoring, the commercial resi vertical is expected to grow low single digits. Moving to slide five. Our portfolio transformation to become a more focused, higher growth electrical connection and protection company is showing up in our results. We have intentionally increased our exposure to the high growth infrastructure vertical through both organic investments and M&A. Infrastructure made up 12% of sales at spin, expanding to 45% last year, and now is over 55% in Q1. We have been significantly investing in our data center and power utilities businesses, which are rapidly growing and more capacity is needed to meet customer demand. Overall, I am proud of our InvenTeam and how we continue to perform and deliver for our customers. We're on track for another strong year. This wraps up my opening remarks. I will now turn the call over to Gary for further details on our first quarter results, as well as our updated outlook. Gary, please go ahead.

Thank you, Beth. We had another excellent quarter, exceeding our guidance with record sales, orders, backlog, and adjusted EPS. Let's turn to slide six to review our results. Sales of $1,242,000,000 were up 53% relative to last year. Organically, sales grew 34% well ahead of our guidance, driven by very strong data center sales. Acquisitions added $138,000,000 to sales or 17 points to growth ahead of our guidance. Foreign exchange was a two-point tailwind. Adjusted operating income was $249 million, up 53%. Return on sales came in ahead of expectations, 20%, flat to last year. Price plus productivity offset inflation of nearly $60 million, including approximately $40 million in tariff impact. We also continued to make investments for growth in data centers and power utilities. We had record earnings, and it was the first time we reported quarterly adjusted EPS north of a dollar. Adjusted EPS grew 63% year over year to $1.09, well above the high end of our guidance range. We generated free cash flow of $54 million, up 21% year over year. Now, please turn to slide seven for a discussion on the first quarter segment performance. Starting with systems protection, sales of $895 million increased 76%. Acquisitions contributed 24 points of sales and have performed ahead of expectations. Organically, sales grew 50%, with all verticals growing. Infrastructure grew more than 100%, largely due to continued strength in data centers. Industrial was up mid-single digits. Commercial resi grew in the high teens. Geographically, Americas grew by over 65%, while Europe was up low single digits. Asia Pacific was down in the quarter. First quarter segment income was $203 million, up 95%. Return on sales of 22.7% increased 220 basis points year over year on strong volume and productivity. Moving to electrical connections, sales of $347 million increased 15%. Organic sales were up 8%, and the EPG acquisition contributed six points to sales. From a vertical perspective, infrastructure led, growing in the high teens. Industrial grew mid-single digits, and commercial resi was up low single digits. Geographically, all three regions grew. Sales were up high single digits in the Americas. Europe was up low single digits, and Asia Pacific grew mid-single digits. Segment income was $85 million flat versus last year. Return on sales of 24.4% was down 390 basis points year over year. The margin performance was impacted by higher than expected raw material inflation. We have taken pricing and productivity actions and saw margins improve as the first quarter progressed. We expect margins to improve in Q2 and for the balance of the year. Turning to the balance sheet and cash flow on slide eight, we ended the quarter with $109 million of cash on hand and $600 million available on our revolver, putting us in a strong liquidity position. Our debt stands at $1.6 billion. Our healthy balance sheet and strong liquidity position gives us financial flexibility to support our disciplined capital allocation strategy. Turning to slide nine on capital allocation, where we outline how we deploy capital to drive growth and sustain financial outperformance. Our framework has been consistent and is centered on disciplined growth investment, rigorous execution of our M&A strategy, while maintaining the balance sheet flexibility to consistently return capital to shareholders. Our capital allocation priority is growth. And that starts with reinvesting in the business by funding capacity expansion, innovation, and the capabilities required to win in high-growth verticals. This year, we expect to invest approximately $130 million in CapEx, up 40%. We spent $36 million in Q1, up over 70% versus last year. Most of this increased investment is for new capacity to support growth and data centers, power utilities, and supply chain resiliency. In Q1, we returned $84 million to shareholders, including share repurchases of $50 million. And we recently increased our quarterly dividend by 5%. We exited the quarter with net leverage of one and a half times, well below our target range of two to two and a half times, providing ample flexibility to invest in growth and acquisitions. Overall, our disciplined capital allocation approach positions us to prioritize growth and create long-term shareholder value. As Beth shared earlier, we are significantly raising our full-year reported sales and adjusted EPS guidance, primarily due to our continued momentum in infrastructure. We now forecast reported sales growth of 26% to 28%. This includes expected higher organic growth, approximately five points from acquisitions, and flattish on foreign exchange. For organic sales growth, we now expect to grow 21 to 23% versus our prior guidance of 10 to 13% due to our strong first quarter performance and momentum in infrastructure. We are raising our full year adjusted EPS range to $4.45 to $4.55 versus our original guidance of $4 to $4.15. This new guidance continues to reflect tariff impacts of approximately $80 million. We continue to expect to offset the impact of inflation, including tariffs, through pricing, supply chain productivity, and operational mitigating actions. For free cash flow, we still expect conversion of 90% to 95%. Looking at our second quarter outlook on slide 11, we forecast reported sales of 28% to 30%, with acquisitions contributing approximately five points to sales. Organic sales growth is expected to be up 23% to 25%. Pricing coupled with productivity are expected to fully offset the impact of inflation, including tariffs, in Q2. We also expect to continue to invest for growth, particularly in data centers and power utilities. We expect adjusted EPS to be between $1.12 and $1.15, which at the midpoint reflects over 30% growth relative to last year. Wrapping up, I am very pleased with our first quarter performance. We delivered strong sales and earnings growth and are well positioned for another outstanding year. Through disciplined portfolio transformation and strong execution, our growth profile has meaningfully accelerated. We significantly raised our midterm financial targets at our investor day in March, and we are off to a great start. Inven is well positioned for the secular trends in electrification, digitalization, and sustainability. We are confident in the growth and value creation opportunities ahead. I will now turn the call back over to Beth.

Thank you, Gary. Please turn to slide 12, titled Our 2025 Sustainability Report. Last month, we published our latest sustainability report that outlines our commitment to sustainability and the meaningful progress we are making in our three pillars, people, products, and planet. A few highlights from the report. We achieved an employee satisfaction plus recommend score in our 2025 employee engagement survey that was three points above the global benchmark. 100% of our new products launched last year did not use single-use plastic packaging. We reduced our normalized CO2 emissions by 24%. We continue to receive accolades for our progress. We were recognized as one of the world's most ethical companies by Ethisphere for the third consecutive year and received a gold sustainability rating from EcoVadis. placing us in the top 2% of our industry. Our sustainability efforts are key to our strategy and how we operate. I am proud of everything we've accomplished and the journey we are on. Wrapping up on slide 13, we are off to a tremendous start to the year with record sales, orders, backlog, and adjusted EPS. Our portfolio transformation and the AI data center build-out are accelerating our growth. We expect another record year with strong sales and earnings growth. And we believe we are well-positioned with the electrification, sustainability, and digitalization trends. Our future is bright. With that, I will now turn the call over to the operator to start Q&A.

We will now begin the question and answer session. To ask a question, you may press star then one on your touchtone phone. If you're using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star and then two. Our first question comes from Dean Dre with RBC Capital Markets. Please go ahead.

Thank you. Good morning, everyone.

Good morning. Morning.

Hey Beth, I think you get the understatement of the year award for your analyst meeting just saying that Porter was tracking above initial expectations, but that's a pleasant surprise. But I would love to hear a bit more color in terms of what drove the outperformance. I mean, in your prepared remarks, you gave us some real highlights regarding what was the white space, what was the gray space, It really did sound broad-based, but if we just kind of zero in on what drove the outperformance this quarter, that'd be a good place to start. Thanks.

Okay. Well, as we said, first of all, our growth was broad-based. We saw growth in all of our verticals. And when it came to infrastructure, certainly that was leading with the most growth. We saw nice growth in power utilities, but I would say a significant increase portion of our growth was coming from data centers. As you know, we've continued to expand capacity for liquid cooling, but we also saw nice growth across the entire portfolio. I would say white space was leading, stronger growth there, but continued growth as we focus on the gray space as well. So I think we're very pleased just to see that where we've been investing in new products and capacity that we've seen strong orders and have been able to execute to deliver on that growth.

All right. Really good to hear. And I want to follow up on the point on the new capacity ads and you reaffirmed CapEx at 130 million. That's up 40% year over year. You just had orders up 40% organically. Just kind of take us through the timeline for the new capacity that's coming online and And then when do you expect this new capacity to start to contribute to operating leverage for the firm? Love to hear that. Thank you.

Okay. So as I commented, we had our grand opening of our Blaine facility just this week. However, it took us 100 working days to sign a lease to get that facility up and running. And we've been building our capability, training new operators. And we expect that production to ramp as we go through the course of the year. So a lot of the strength that you saw was our execution in our other plants, but this Blaine facility will be coming online and really ramping through the year.

And the next question comes from Joe Ritchie with Goldman Sachs. Please go ahead.

Hey guys, good morning. And yeah, Echo, what a start to the year. Maybe just on that last point, Beth, let's talk a little bit about like how you're thinking about capacity going forward. Clearly, the data center market, the whole infrastructure market is white hot. But how are you thinking about maybe even incremental investment from here? And then secondly, I don't know that I heard a specific number, but I think last quarter you told us that Infra was going to be up around 20% this year. Obviously, it seems like that number has been revised upward. Any updated thoughts on what infrastructure is expected to grow in 2026?

Okay. So, you know, the way that we have been looking at our capacity, and by the way, it's not just our new Blaine facility, we've expanded our capabilities globally to be able to support some of the data center product growth that we're seeing, liquid cooling and other. So we've been investing across multiple factories. We also have been investing and expanding some of our engineered building solutions sites because we've seen growth there from both data centers and utilities. So we've expanded within existing sites as well. And what we continue to do is to look at that, look at it as we're seeing we're winning more customers, as we're launching new products. What do we view as that order acceleration or order growth, and what do we need to do to support that? So I think this is an area where we're going to continue to see that we make those investments for growth. And as far as infrastructure, we, you know, gave that back in our – investor day that our outlook on infrastructure was really strong. And I think that's really what's playing out. And I look at it as our ability to expand capacity and execute and manage our supply base has really been a differentiator for us in terms of realizing that growth. And the teams are working really hard. It's a lot of work to be able to grow at these double-digit rates.

Yeah, it's incredible to see. I guess maybe my second question, Gary, bringing you into the discussion, just on margins, just talking through EFS for a second. I think you made a comment that, you know, sequentially as the year progresses, things should get better. Just help us understand, like, unpack, you know, the margin progression a little bit for that segment going forward. Thank you.

Yeah, thanks, Joe. Appreciate it. And I'll start with our – our margins for Invent across the company were higher than we guided. That was driven by the strength of systems protection and leverage that more than offset the headwind that we saw in EC, where we saw higher than expected inflation, primarily due to copper. We took pricing and productivity actions, as I mentioned, leading to improved margins month over month throughout the quarter. And as I mentioned, we expect our margins to improve in Q2 and the balance of the year more towards historical levels that that segment has delivered. And like I said, we're seeing proof of that in market and expect that to improve in the balance of the year.

Okay. Thank you. And the next question comes from Nigel Coe with Wolf Research. Please go ahead.

Thanks. Good morning, everyone. Not a bad start to the year. I'll put it that way.

Thanks, Nigel.

So just on that last point, Gary, do you expect to be at sort of flat margins by the end of the year and sort of getting there pretty progressively? Or how do you think about that?

Yeah, we should see meaningful improvement in Q2, Nigel. And as I mentioned, we'll get towards more historical levels of margin in EC as we move throughout the year. Overall, as we mentioned in our initial guidance, you know, we have those headwinds coming into the first half of the year on margin, and we'll be essentially flattish for the first half versus a year ago. We'll see nice sequential improvement overall in Q2, but we'll have nice margin growth and healthy incrementals overall in the second half.

Oh, that's great to hear. Thanks. And then just thinking about the framework, you know, your 2Q guide, I think, embeds pretty flat sales. with one queue. And I think the sales are pretty flat, actually, also the year. Normally, we have a nice pickup in Q2, Q3, and then coming down in Q4. So just wondering, is the data solutions business sort of flattening out the seasonality? Because I would expect with the Blame facility ramping up, there would be some lift there. Just curious on what you're seeing there.

Yeah, thanks. Thanks, Nigel. We have, you know, organic sales growth in Q2 23 to 25%. So all in, you know, almost 30%, you know, 30% growth for the quarter. You know, we feel really good about the progression we're making, you know, on growth. And, you know, we start to ramp, you know, with higher sales. higher comparisons as we get into Q2 and then in the back half of the year. Obviously, our historical seasonality has become a bit reshaped as our portfolio has changed, but we're excited about the growth that we'll post in Q2 and in the back half of the year, and you see that very meaningful guidance raise.

Okay. Thanks, Gary. I appreciate that.

Next question comes from Julian Mitchell with Barclays. Please go ahead.

Maybe I just wanted to circle back to sort of the organic sales growth assumptions and help us understand perhaps first off with that backlog of $2.6 billion at the end of March. how much visibility are you now having into second half revenues? And has there been any change in kind of lead time or ordering patterns from customers? And on that revenue point, it looks like on a sort of a two-year stack basis, you're just assuming maybe mid-30s organic sales growth year-on-year each quarter. Is that the right kind of framework?

Well, let me start with our backlog. So our backlog continues to grow sequentially. And as we look at our backlog, most of it is over a 12-month period, the majority of it. So that takes us into 2027. And, you know, our view there is just I'd say we're trying to ensure that we're being competitive on our lead times. Of course, we have to work with our supply base. So as we're ramping, that's really a significant part of our effort is to make sure that our supply base can ramp with us. But I think we're making good investments that are allowing us to. And I'll let Gary talk to some of the guidance in the organic growth numbers.

Yeah, Julian, you've got it exactly right. We're looking at mid-30s, two-year stack growth pretty much throughout the year.

Okay, great. And then just to follow up on the margins, Is it fair to say that the operating margin expansion guide for the year is largely similar with what you said three months ago? So it's up maybe some tens of basis points total company. Just wanted to make sure I had that right. And within that, how much extra kind of cost inflation dollar headwind are you now assuming with that extra price offset in turn?

Yeah, I'll start with the I'll start with the margin. Yeah, we're essentially in line with what we had had guided previously, sort of, you know, mid 20s incrementals in the second half and, and, you know, call it 3040 basis points overall for the for the year and margin expansion, you know, as we think about inflation, we have updated our expectations on inflation, we shared mid single digits at the initial guide. It's up a little bit under a point of inflation, still mid single digits. And we've taken action with additional pricing in the first quarter to offset that inflation.

Great. Thank you.

Thank you. And the next question comes from Jeff Sprague with Vertical Research. Please go ahead.

Yeah, thanks. Good morning, everyone. A couple from me. Just on Blaine, do these orders represent sort of, you know, filling the book for the year? I think you were holding off taking orders on a lot of those new products that, you know, you introduced and the factory wasn't ready. So I know the sales need to ramp, but do the orders sort of reflect, you know, kind of booking the year out?

Well, I would say this. Some of our new products are launching in Q2 and Q3. And so we expect that as those products get launched, the orders will follow. So with respect to Plain, you know, we're currently building out for the orders that we have, but expanding our capabilities within that site for both new products and existing business that we have.

And then just thinking about systems protections, maybe structural margins, I think somebody tap danced around this a little bit, right? But you clearly would have had factory inefficiencies in the quarter. You also would have had more inflation than you expected in the quarter, right? It's not visible to the naked eye here, given the volumes, but, you know, and there's just naturally factory inefficiencies in any startup. So should we be Thinking about just structurally higher margins as we look forward for systems protection, I understand the margins should probably ramp somewhat over the course of the year, but just thinking beyond that.

Yeah, Jeff, a couple of things. The first is we were very pleased with the margin expansion that we saw in the quarter from systems protection. We will continue to see nice leverage, and we will also continue to see investments. And we'll continue to invest both in the capacity expansion, as Beth talked about, it was Blaine ramps throughout the year, and also in our capabilities, as I mentioned in my remarks. So I think we'll see margin expansion throughout the year for systems protection, but we will continue to invest to set us up for the future.

Great. And just a quick follow-up. Incremental tariff, 80. What is the all-in tariff expectation for the year now?

So, yeah, incremental is 80 this year, followed from 90 last year. So, 170 all-in. You know, there were, you know, worth mentioning, the U.S. tariff environment remains highly fluid, and we did have a lot of puts and takes since we were last talking to you last 90 days ago, but we landed essentially in the same spot with an $80 million headwind primarily in the first half of this year.

We had an unrelated CEO say the administration's open to talking about this and there's some discussions. Are you guys aware of that? You see any possibility of tariff relief relative to your current position?

We've kept to our current outlook and I guess we'll wait and see.

Great. Thank you. Good luck. Awesome results.

Thank you.

Thank you. And the next question comes from Vlad Bystrycki with City. Please go ahead.

Good morning, Beth and Gary. Thanks for taking my questions here. And congrats on a nice quarter and nice start to the year.

Thank you, Vlad.

So, I just wanted to ask you about the orders we're seeing here, because I know you've talked in the past about how orders can be lumpy quarter to quarter, but my math is right. You know, orders have grown almost 40% a quarter on average over the past year, and you're seeing accelerating contributions from NPIs with more products to come. So, can you talk about how you're thinking about the durability this accelerated orders pace over the coming quarters?

Well, you are correct in that orders can be lumpy, and so they can vary, you know, certainly month to month. I think when you, you know, as we broke it out, we said, you know, our orders were still very strong when you exclude data centers. And so I think that's really great when we look at the orders were broad-based across all of our verticals. outside of data centers. So that's good. And then I would say with data centers, they tend to be lumpy. But, you know, we believe, and this is part of, you know, why we took up our guidance, is that the backlog and the current order book gives us visibility to a stronger growth year.

Got it. I appreciate that, Beth. And then maybe just... Stepping back to capital allocation, you highlighted net leverage back down at the one and a half times well below your longer term target. So can you talk about what you're seeing M&A pipeline and how we should think about your operational capacity to potentially digest a meaningful acquisition, even as you're still ramping production and still integrating prior acquisitions?

Well, as you know, at our investor day, which was just six weeks ago, it seems like a long time ago, but it was six weeks ago, we raised our outlook in terms of what we thought acquisitions or inorganic growth could contribute. And so that speaks to our confidence and our ability to do larger deals. And so we have a really robust pipeline and consistent with how we've talked about infrastructure being the highest growth vertical, our focus is there. And we believe there's opportunity for M&A. We remain very disciplined. And then we certainly continue to develop our execution capability. And we're very thoughtful about the different targets that we go after and how they would integrate into Invent and ensuring that we have the right teams and capability to do that.

Thanks, Beth.

And the next question comes from Nicole DeBlaise with Deutsche Bank. Please go ahead.

Yeah, thanks. Good morning, and I'll add my congratulations on a great start to the year.

Thanks, Nicole.

So maybe just starting with a question on the order pipeline, the book-to-bill that we calculated is also really strong, 1.2 times this quarter. when you look at the pipeline of orders and the magnitude of customer conversations that you're having, um, what would you say about the strength of the pipeline and maybe the sustainability of that 1.2 times book to bill ratio?

Well, here's what I would say. You know, there's a couple of comments that I made is that, uh, some of the new products that we're working on launch in Q2 and Q3, and we know we have a lot of customer interest. And I think, uh, as you look at the landscape, at least in data centers, we're seeing a wide range of customer interest from hyperscalers, neoclouds, multi-tenant. And I would comment that we're seeing strength through distribution as well. So really that diversification and the breadth of customers there, we view as a real positive. And then the second comment that I would make is we said, If you excluded data centers, organic orders grew in the mid-teens, and it was very, again, across all of our verticals and through distribution, which is a good indicator for us, just that, you know, in different verticals that we're seeing momentum.

Got it. Thanks, Beth. And then one thing on that point that really stood out to me in the prepared remarks was You said that within systems protection, ComResi was up high teens in the quarter, which is a lot stronger than I would have expected. Can you just give us some color on what you guys are seeing in the ComResi vertical and where that improvement is coming from? Thank you.

Yes. So in both systems protection and electrical connections, we are seeing commercial Resi growth. And I will say some of our products being sold through distribution is being sold to our contractor base, and it's sometimes hard to distinguish where exactly that's going. So it may be sold to a commercial contractor, and then it ends up in a data center. We may not necessarily know that. So I do think what you're seeing is some of our products, whether it's core enclosures or our power connections, just with construction build-out, that we're seeing more uplift there and stronger orders.

Got it. Thank you. I'll pass it on.

And the next question comes from Brian Drab with William Blair. Please go ahead.

Hi, good morning. Thanks for taking my questions. It was six weeks ago when you said you're expecting about three points of growth from new products. And then first quarter, I know it's one quarter, but 20 points of growth from new products is pretty incredible. And I'm just wondering if you can elaborate on which categories are you seeing the most success in Do you feel like you're taking share in some of these categories? And, you know, how do you expect that contribution from new products to be playing out throughout the year?

Yes. So we've continued to see, you know, strength in – and it's a big focus for us, right, on driving new products, on driving velocity through our new product pipeline, and – our new products that contributed to our growth so strongly in Q1 were really related to data centers. So whether it was liquid cooling or some of our other offerings, that was the strong contributor.

Okay. And you can't comment more specifically on new versions of the CDU or anything more specifically, Beth?

Well, I will say this. We've got new, some new product, let's see, back at supercomputing in the fall, we showcased a lot of our new products. And many of those new products are still to launch through this year. So we think we're going to have continued momentum there with some of these new offerings.

Okay. Thank you. And then Um, just in terms of your visibility, I know a moment ago, you mentioned, you know, backlog is going to take you, you know, into 2027, but can you talk about some of the, um, projects that you're working with or talking to customers about whether it's hyperscale or co-locators, um, you know, how, how far out are some of these projects going? We're hearing a lot of people in the industry saying, you know, you've got now five plus years of visibility or talking about projects for, 2030? Any comments along those lines?

Well, I would say this. With some of our key customers, we have a view to what their demands are for several years out. And so as we think about making investments in our capacity, and this could be for liquid cooling, it could be for our engineered building solutions, and whether that's part of data centers or power utilities, we're getting a view several years out And we're staying very close to those customers to make sure that we're making the right investments for expansion as we go forward.

Okay. Thanks very much.

Congrats.

Thank you.

Thanks. And the next question comes from Jeff Hemant with KeyBank Capital Markets. Please go ahead.

Hey, morning, everyone. This is David Tarantino. I'm for Jeff. Could you give us an update on TRAC-D and EPG? It seems the modular theme is playing out quite well here. So could you talk about what you're expecting here from a growth perspective and maybe give us some color on how you're driving some margin improvement in the deals as well?

Okay. Well, I'll start and I'll turn it over to Gary. You know, with TRAC-D and EPG, as you know, we decided that that was a great platform for us because it extended capabilities from enclosures and integration. And we really thought it was going to be a good way for us to strengthen what we do in utilities. And that continues to grow nicely. But in addition to that, we have found that there are significant opportunities in data centers. And so whether it is for modular data centers, whether it is for the gray space, And so there we're seeing a really nice pipeline of opportunity and have been looking at how do we expand across our current sites to be able to drive our throughput and see some of those opportunities. And I'll let Gary talk to margins.

Yeah, I'll just start by reminding folks it's actually one year today that we closed on EPG. So they'll flip to organic here as we move through the second quarter. And look, we're running the playbook on both Trachte and EPG, leveraging our scale to drive synergy. And as we've talked about, EPG has exceeded our expectations, not just on the top line, but on the bottom line as well. We're focused on growth, but the margin expansion is impacting our results as well.

Okay, great. And you highlighted orders outside of data center were quite strong as well. I guess, how much was driven by our utilities, and are you starting to see some broadening out of the order growth outside of infrastructure?

Well, yes, I would say we had double-digit growth in infrastructure. you know, power utilities from a sales standpoint. And so we've had nice orders there. And when we looked at our orders overall, they were up mid-teens. And I think we see strength through our distribution channel, which is really where we see that across all verticals.

Okay. Great. Thanks, guys.

All righty. The next questioner comes from Alexander Virgo with Evercore ISI. Please go ahead.

Yeah, thanks very much. Good morning, both of you. I appreciate the opportunity to ask you a question. I wondered if I could dig into the order development for a little bit more color. I want to double check what you just said on power utilities up mid-teens. And then just on DC, can you give us a sense of sort of splits or even if it's qualitative rather than quantitative in terms of liquid cooling versus others and sort of a sense of how much, it looks like it's about $1.5 billion in the quarter. How much of that's actually DC? That would be really helpful. Thank you.

Well, as we mentioned on orders, outside of data centers, our orders grew mid-teens, and that was across commercial resi, that was across infrastructure, that was across industrial. So organic orders were up 40% with, you know, most of that, you know, so you could do the math there with most of that being from data centers. And I will say this, as I mentioned, we've seen really good strength on liquid cooling, but we have with some of our other product lines as well. So I mentioned that we've seen strength in the gray space with engineered buildings, with enclosures and power connections. And we've also seen the white space very strong on liquid cooling, but also power distribution units and our cable management. So when I mentioned data centers, you know, everything, well, I'll leave it at that. I think that's probably good color for, you know, we're just seeing good order growth across the board.

Very helpful. Thank you.

And the next question comes from Neil Burke with UBS. Please go ahead.

Hey, good morning, everyone. Good morning. I just had a question on the competitive landscape. I know there are a lot of relatively new players in liquid cooling, and I know you've talked about having the largest install base in liquid cooling, but can you just talk about how you see this competitive environment evolving And do quarters like the one, like the strong quarter you just reported, does that give you confidence that you're maintaining or even taking share in liquid cooling? Thank you.

Well, you know, as we've always stated, our liquid cooling capability, we've developed organically and we started at pre-data centers and industrial and medical applications. And so because we have been working in liquid cooling for a while, we think We have good application expertise, good modeling capability, that we've got good field experience. And so we're continuing to invest in new products and strengthen our portfolio, as well as work with our supply base. And I think the space is growing so significantly that it's not a surprise that there would be a lot more entrance into this space. But we have confidence in our strategy and our ability to continue to work with various partners from the chip manufacturers to the hyperscalers. And I mentioned all the other customers that we're working with that we have a good view and have worked roadmaps in some cases in some of our next CDUs to launch out to 2030 with some of the chip manufacturers. So we're going to continue to invest and we're going to continue to build on our portfolio. And what's really important is the ability to scale and deliver for customers. And so we're really focused on that as well.

That's great. That's it for me. Thank you.

Thank you. And the next question comes from Scott Graham with Seaport Research. Please go ahead.

Hey, good morning, Beth, Gary, and Tony. Great quarter, just flat out. I wanted to ask about inflation a little bit more. I know you said ex-tariff inflation was $20 million. Obviously, we've seen commodities prices rise across the board. I'm just wondering, what was the run rate of that number at the end of the quarter? And if it was, in fact, a higher run rate, which I suspect it might have been, are you still increasing prices to catch up to that?

Yes, Scott. So, you know, we did see elevated inflation in the quarter. And as I mentioned, again, in an earlier question, we have raised our expectations for inflation a little under a point, you know, for the year. And it's really driven by fuel and copper. And, you know, we've taken actions, you know, in the quarter on pricing. And we feel like we can offset this emerging inflation with pricing and productivity for the year. So that's, you know, that's what we're seeing. And, you know, we have a playbook to do this and we've taken action.

Thank you for that. I wanted to maybe just ask you about a seldom discussed subject because you're so U.S. centric and you're doing so well stateside. You know, electrification is you know, a secular trend in Europe as well. I was just wondering if I know you're kind of capacity max, maybe even people max, but do you have plans to start to, you know, move into Europe more aggressively over the next couple of years to try to tap some of that opportunity?

Well, the answer to that is yes. And one of the changes that we made a year ago was to put in place a president for both Europe and Asia Pacific to ensure that we had the focus on our customers, to ensure we had focus on growth opportunities, working with our channel partners. And as I mentioned, we had growth in Europe. And one of the areas certainly that we see is electrification is both the growth and the need for power as well as data centers are expected to grow more globally. And so we've been making some of those investments for manufacturing capacity in our plants as well as our commercial teams.

Appreciate it. Thank you.

Thank you. And the next question comes from Austin Wang with GLJ Research. Please go ahead.

Hi, guys. Congratulations on a great quarter. I think if you back out the lion's share of the inorganic sales for the quarter, I think you can get to around like an incredible organic growth rate for the total infrastructure vertical that's kind of in the 80s just for 1Q. I know it's chunky. I know we're early in the year here, but like is it fair to think that both overall data centers and liquid cooling and power within data centers are growing around

the overall growth rate for that as well and maybe how do you want us thinking about those businesses growing this year as we head into more difficult comparison the balance of the year well i would say you know as you you know try and look at those different pieces it is you you are right it is very strong growth and certainly liquid cooling is uh significantly growing but i will share with you that we're seeing some of our other portfolios beyond liquid cooling growing at significant growth rates, both in the gray space and in the white space. And so as we look to our backlog and we look to the orders, you know, that's what gave us confidence to raise our guidance is that runway that we have. And as we're adding capacity and new products, you know, we have confidence in what we're going to be able to execute through the back half of the year and set up for 27.

That's great. And do you think we should maybe get a handle on the size of that gray space business last year? I know some of the acquisitions make it a little messy, but maybe just a percentage of overall sales.

Yeah, what we said at Investor Day was 80% white space and 20% gray space.

Got it. And that's within the total data center business. Okay. Thank you guys so much. I'll get back to you.

This concludes our question and answer session. I would like to turn the conference back over to Beth Wozniak for any closing remarks.

All right. Well, I want to end by saying today is May 1st, which actually is our birthday today. So it's a great day for our employees to celebrate. But I want to thank everyone for joining us today. We're confident in our strategy, which has remained consistent, our ability to execute. We have many growth opportunities and multiple levers to expand margins. And we significantly raised our midterm targets at our investor day to reflect these opportunities. I'm proud of our performance in the first quarter. We will continue to focus on delivering for our customers, employees, and shareholders. Invent is a top-tier, high-performance electrical company well positioned for the electrification, sustainability, and digitalization trends. Thanks again for joining us. This concludes the call.

The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.