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☑			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

OR

☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file number 001-38265

Securities registered pursuant to Section 12(b) of the Act:

Title of each class			Trading symbol			Name of each exchange on which registered
Ordinary Shares, nominal value $0.01 per share			NVT			New York Stock Exchange

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days.  Yes ☑ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☑ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☑

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting  company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☑

On September 30, 2023, 165,911,804 shares of Registrant's common stock were outstanding.

 

						Page
PART I FINANCIAL INFORMATION
ITEM 1.			Financial Statements (unaudited)
			Condensed Consolidated Statements of Income and Comprehensive Income			3
			Condensed Consolidated Balance Sheets			4
			Condensed Consolidated Statements of Cash Flows			5
			Condensed Consolidated Statements of Changes in Equity			6
			Notes to Condensed Consolidated Financial Statements			8
ITEM 2.			Management’s Discussion and Analysis of Financial Condition and Results of Operations			23
ITEM 3.			Quantitative and Qualitative Disclosures about Market Risk			35
ITEM 4.			Controls and Procedures			35
PART II OTHER INFORMATION
ITEM 1.			Legal Proceedings			36
ITEM 1A.			Risk Factors			36
ITEM 2.			Unregistered Sales of Equity Securities, Use of Proceeds, and Issuer Purchases of Equity Securities			37
ITEM 5.			Other Information			38
ITEM 6.			Exhibits			38
			Signatures			39

1.Basis of Presentation and Responsibility for Interim Financial Statements

nVent Electric plc ("nVent," "we," "us," "our" or the "Company") is a leading global provider of electrical connection and protection solutions. The Company is comprised of three reporting segments: Enclosures, Electrical & Fastening Solutions and Thermal Management.

The Company was incorporated in Ireland on May 30, 2017. Although our jurisdiction of organization is Ireland, we manage our affairs so that we are centrally managed and controlled in the United Kingdom (the "U.K.") and have tax residency in the U.K.

The accompanying unaudited condensed consolidated financial statements of nVent have been prepared following the requirements of the Securities and Exchange Commission ("SEC") for interim reporting. As permitted under those rules, certain footnotes or other financial information that are normally required by accounting principles generally accepted in the United States of America ("GAAP") can be condensed or omitted.

We are responsible for the unaudited condensed consolidated financial statements included in this document. The financial statements include all normal recurring adjustments that are considered necessary for the fair presentation of our financial position and operating results. As these are condensed financial statements, one should also read our consolidated and combined financial statements and notes thereto, which are included in our Annual Report on Form 10-K for the year ended December 31, 2022.

Revenues, expenses, cash flows, assets and liabilities can and do vary during each quarter of the year. Therefore, the results and trends in these interim financial statements may not be indicative of those for a full year. We may experience changes in customer demand or constrained supply that could materially adversely impact our business, financial condition, results of operations and overall financial performance in future periods.

2.Revenue

We disaggregate our revenue by geographic location and vertical for each of our segments, as we believe these best depict how the nature, amount, timing and uncertainty of our revenue and cash flows are affected by economic factors.

Geographic net sales information, based on geographic destination of the sale, was as follows:

			Three months ended September 30, 2023
In millions			Enclosures			Electrical & Fastening Solutions			Thermal Management			Total
U.S. and Canada			$	284.1		$	250.2		$	95.5		$	629.8
Developed Europe (1)			87.3			34.1			28.2			149.6
Developing (2)			37.6			13.1			16.7			67.4
Other Developed (3)			3.7			4.9			3.4			12.0
Total			$	412.7		$	302.3		$	143.8		$	858.8

Vertical net sales information was as follows:

			Three months ended September 30, 2023
In millions			Enclosures			Electrical & Fastening Solutions			Thermal Management			Total
Industrial			$	224.6		$	37.6		$	70.1		$	332.3
Commercial & Residential			65.0			169.2			45.7			279.9
Infrastructure			116.6			83.0			6.1			205.7
Energy			6.5			12.5			21.9			40.9
Total			$	412.7		$	302.3		$	143.8		$	858.8

In the fourth quarter of 2022, for purposes of how we assess performance, we determined that certain revenue was better aligned with the infrastructure and commercial & residential verticals, rather than the industrial and energy verticals, where it was previously reported. For comparability, we have reclassified revenue for the three and nine months ended September 30, 2022 to conform to the new presentation. This reclassification of revenue by vertical had no impact on our consolidated financial results.

Contract assets and liabilities consisted of the following:

In millions			September 30, 2023			December 31, 2022			$ Change			% Change
Contract assets			$	44.2		$	45.6		$	(1.4)		(3.1		%)
Contract liabilities			18.7			22.7			(4.0)			(17.6		%)
Net contract assets			$	25.5		$	22.9		$	2.6		11.4		%

The $2.6 million increase in net contract assets from December 31, 2022 to September 30, 2023 was primarily the result of the timing of milestone payments. The majority of our contract liabilities at December 31, 2022 were recognized in revenue during the nine months ended September 30, 2023. There were no material impairment losses recognized on our contract assets for the three and nine months ended September 30, 2023 and 2022.

We have elected the practical expedient to disclose only the value of remaining performance obligations for contracts with an original expected length of one year or more. On September 30, 2023, we had $18.0 million of remaining performance obligations on contracts with an original expected duration of one year or more. We expect to recognize the majority of our remaining performance obligations on these contracts within the next 12 to 18 months.

3.Restructuring

During the nine months ended September 30, 2023 and the year ended December 31, 2022, we initiated and continued execution of certain business restructuring initiatives aimed at reducing our fixed cost structure and realigning our business.

Restructuring related costs included in Selling, general and administrative expense in the Condensed Consolidated Statements of Income and Comprehensive Income included costs for severance and other restructuring costs as follows:  

			Three months ended									Nine months ended
In millions			September 30, 2023			September 30, 2022						September 30, 2023			September 30, 2022
Severance and related costs			$	3.2		$	0.4					$	6.5		$	4.1
Other			2.2			0.1						5.4			0.7
Total restructuring costs			$	5.4		$	0.5					$	11.9		$	4.8

Other restructuring costs primarily consist of asset impairment and various contract termination costs.

Restructuring costs by reportable segment were as follows:

			Three months ended									Nine months ended
In millions			September 30, 2023			September 30, 2022						September 30, 2023			September 30, 2022
Enclosures			$	0.4		$	0.3					$	1.0		$	2.6
Electrical & Fastening Solutions			0.1			—						0.9			—
Thermal Management			4.7			0.1						9.4			0.2
Other			0.2			0.1						0.6			2.0
Total			$	5.4		$	0.5					$	11.9		$	4.8

Activity related to accrued severance and related costs recorded in Other current liabilities in the Condensed Consolidated -Balance Sheets is summarized as follows:

			Nine months ended
In millions			September 30, 2023			September 30, 2022
Beginning balance			$	2.4		$	2.4
Costs incurred			6.5			4.1
Cash payments and other			(4.4)			(4.9)
Ending balance			$	4.5		$	1.6

4.Earnings Per Share

Basic and diluted earnings per share were calculated as follows:

			Three months ended									Nine months ended
In millions, except per-share data			September 30, 2023			September 30, 2022						September 30, 2023			September 30, 2022
Net income			$	105.5		$	93.4					$	312.2		$	241.1
Weighted average ordinary shares outstanding
Basic			165.8			166.5						165.6			166.4
Dilutive impact of stock options, restricted stock units and performance share units			2.8			1.8						2.6			1.8
Diluted			168.6			168.3						168.2			168.2
Earnings per ordinary share
Basic earnings per ordinary share			$	0.64		$	0.56					$	1.89		$	1.45
Diluted earnings per ordinary share			$	0.63		$	0.55					$	1.86		$	1.43
Anti-dilutive stock options excluded from the calculation of diluted earnings per share			0.4			0.7						0.3			0.5

5.Acquisitions

On May 18, 2023, as part of our Electrical & Fastening Solutions reporting segment, we completed the acquisition of ECM Investors, LLC, the parent of ECM Industries, LLC ("ECM Industries"), for approximately $1.1 billion in cash, subject to customary adjustments. ECM Industries is a leading provider of high-value electrical connectors, tools and test instruments and cable management. The purchase price was funded primarily through borrowings under the 2033 Notes and 2023 Term Loan Facility (as described in Note 9 below).

The purchase price has been preliminarily allocated based on the estimated fair value of assets acquired and liabilities assumed at the date of the ECM Industries acquisition. The preliminary purchase price allocation is subject to further refinement and may require significant adjustments to arrive at the final purchase price allocation. These changes will primarily relate to the impacts associated with income taxes and other accruals. There can be no assurance that such finalization will not result in material changes from the preliminary purchase price allocation.

The following table summarizes our preliminary estimates of the fair values of the assets acquired and liabilities assumed in the ECM Industries acquisition as previously reported and revised as of September 30, 2023:

The excess purchase price over tangible net assets and identified intangible assets acquired has been allocated to goodwill in the amount of $371.7 million, substantially all of which is expected to be deductible for income tax purposes.

Identifiable intangible assets acquired included $113.7 million of trade name intangible assets, a majority of which are indefinite-lived, $381.7 million of definite-lived customer relationships with an estimated useful life of 20 years, and $22.0 million of definite-lived proprietary technology intangible assets with an estimated useful life of 7 years. The fair values of trade names and proprietary technology acquired in the acquisition were determined using a relief-from-royalty method, and customer relationships acquired were determined using a multi-period excess earnings method. These methods utilize unobservable inputs that are significant to these fair value measurements and thus classified as Level 3 of the fair value hierarchy.

ECM Industries net sales and operating income for the three months ended September 30, 2023 were $98.4 million and $10.5 million, respectively. ECM Industries net sales and operating income for the period from the acquisition date to September 30, 2023 were $148.1 million and $14.3 million, respectively. ECM Industries operating income for the three and nine months ended September 30, 2023 includes $7.6 million and $11.2 million of identifiable intangible asset amortization expense, respectively, and $11.8 million and $17.7 million of expense related to the fair market value inventory step-up, respectively.

The following table presents unaudited pro forma financial information as if the ECM Industries acquisition had occurred on January 1, 2022:

The unaudited pro forma results include adjustments for the amortization of acquired intangible assets, depreciation for the fair value adjustment to acquisition-date fixed assets and interest expense on debt issued to finance the acquisition, as well as the related income tax impact.

The unaudited pro forma results for the three and nine months ended September 30, 2023 exclude the impact of $13.8 million and $30.8 million, respectively, of transaction-related charges, acquisition-related bridge financing costs and non-recurring expense related to the fair value inventory step-up. The three and nine months ended September 30, 2022 were adjusted to include zero and $31.1 million, respectively, of transaction-related charges, acquisition-related bridge financing costs and non-recurring expense related to the fair market value inventory step-up.

The pro forma condensed consolidated financial information has been prepared for comparative purposes only and includes certain adjustments, as noted above. The adjustments are estimates based on currently available information and actual amounts may differ materially from these estimates. They do not reflect the effect of costs or synergies that would have been expected to result from the integration of the ECM Industries acquisition. The pro forma information does not purport to be indicative of the results of operations that actually would have resulted had the ECM Industries acquisition occurred on January 1, 2022.

On July 10, 2023, we acquired TEXA Industries for approximately $34.8 million in cash, subject to customary purchase price adjustments. TEXA Industries is an Italian manufacturer of industrial cooling applications that we will market as part of the nVent HOFFMAN product line within our Enclosures segment. We acquired $5.2 million of debt with the TEXA Industries acquisition, which we repaid in full in the third quarter of 2023.

The excess purchase price over tangible net assets and identified intangible assets acquired has been preliminarily allocated to goodwill in the amount of $11.5 million, none of which is expected to be deductible for income tax purposes. Identifiable intangible assets acquired included $12.4 million of definite-lived customer relationships with an estimated useful life of 13 years. The preliminary purchase price allocation is subject to further refinement and may require significant adjustments to arrive at the final purchase price allocation.

The pro forma impact of the TEXA Industries acquisition is not material.

6.Goodwill and Other Identifiable Intangible Assets

The changes in the carrying amount of goodwill by reportable segment were as follows:

In millions			December 31, 2022			Acquisitions/ divestitures						Foreign currency translation/other			September 30, 2023
Enclosures			$	414.4		$	11.5					$	(1.7)		$	424.2
Electrical & Fastening Solutions			1,052.0			371.7						—			1,423.7
Thermal Management			711.7			—						0.2			711.9
Total goodwill			$	2,178.1		$	383.2					$	(1.5)		$	2,559.8

Identifiable intangible assets consisted of the following:

Identifiable intangible asset amortization expense was $25.6 million and $17.6 million for the three months ended September 30, 2023 and 2022, respectively, and $64.5 million and $53.1 million for the nine months ended September 30, 2023 and 2022, respectively.

Estimated future amortization expense for identifiable intangible assets during the remainder of 2023 and the next five years is as follows:

			Q4
In millions			2023			2024			2025			2026			2027			2028
Estimated amortization expense			$	25.2		$	96.6		$	94.1		$	94.1		$	94.1		$	89.8

7.Supplemental Balance Sheet Information

In millions			September 30, 2023			December 31, 2022
Inventories
Raw materials and supplies			$	182.2		$	112.9
Work-in-process			36.9			36.2
Finished goods			245.8			197.6
Total inventories			$	464.9		$	346.7
Other current assets
Contract assets			$	44.2		$	45.6
Prepaid expenses			62.5			44.9
Prepaid income taxes			19.8			4.1
Cross currency swap assets			—			14.5
Other current assets			4.3			3.4
Total other current assets			$	130.8		$	112.5
Property, plant and equipment, net
Land and land improvements			$	42.5		$	38.6
Buildings and leasehold improvements			205.5			180.5
Machinery and equipment			572.0			500.4
Construction in progress			35.4			34.7
Total property, plant and equipment			855.4			754.2
Accumulated depreciation and amortization			483.5			465.0
Total property, plant and equipment, net			$	371.9		$	289.2
Other non-current assets
Deferred compensation plan assets			$	17.4		$	16.7
Lease right-of-use assets			92.8			76.4
Deferred tax assets			17.1			16.3
Other non-current assets			28.4			30.2
Total other non-current assets			$	155.7		$	139.6
Other current liabilities
Dividends payable			$	30.1		$	30.4
Accrued rebates			77.0			98.4
Contract liabilities			18.7			22.7
Accrued taxes payable			28.1			34.5
Accrued interest			26.5			6.5
Current lease liabilities			22.8			17.7
Other current liabilities			68.1			62.9
Total other current liabilities			$	271.3		$	273.1
Other non-current liabilities
Income taxes payable			$	28.2		$	29.8
Deferred compensation plan liabilities			17.4			16.7
Non-current lease liabilities			75.2			63.7
Other non-current liabilities			18.8			14.5
Total other non-current liabilities			$	139.6		$	124.7

8.Derivatives and Financial Instruments

We are exposed to market risk related to changes in foreign currency exchange rates. To manage the volatility related to this exposure, we periodically enter into a variety of derivative financial instruments. Our objective is to reduce, where it is deemed appropriate to do so, fluctuations in earnings and cash flows associated with changes in foreign currency exchange rates. The derivative contracts contain credit risk to the extent that our bank counterparties may be unable to meet the terms of the agreements. The amount of such credit risk is generally limited to the unrealized gains, if any, in such contracts. Such risk is minimized by limiting those counterparties to major financial institutions of high credit quality.

We conduct business in various locations throughout the world and are subject to market risk due to changes in the value of foreign currencies. We manage our economic and transaction exposure to certain market-based risks through the use of derivative instruments. These derivative instruments primarily consist of forward foreign currency contracts used to mitigate foreign currency exposure for certain foreign currency assets and liabilities. Our objective in holding these derivatives is to reduce the volatility in net earnings and cash flows associated with changes in foreign currency rates. The majority of our foreign currency contracts have an original maturity date of less than one year. These foreign currency contracts are not designated as hedging instruments; accordingly, changes in the fair value are recorded in current period earnings.

At September 30, 2023 and December 31, 2022, we had outstanding foreign currency derivative contracts with gross notional U.S. dollar equivalent amounts of $153.8 million and $145.7 million, respectively. The impact of these contracts on the Condensed Consolidated Statements of Income and Comprehensive Income was not material for any period presented.

At September 30, 2023 and December 31, 2022, we had outstanding cross currency swap agreements with a combined notional amount of $249.9 million and $345.1 million, respectively. The agreements are accounted for as either cash flow hedges, to hedge foreign currency fluctuations on certain intercompany debt, or as net investment hedges, to manage our exposure to fluctuations in the Euro-U.S. Dollar exchange rate. In 2023, a cash flow hedge instrument and a net investment hedge instrument each reached maturity, resulting in settlement amounts reflected as a component of financing and investing cash inflows in the amount of $4.5 million and $3.1 million, respectively. Upon maturity of the previous agreement, we entered into a new net investment hedge of certain Euro-denominated subsidiaries to manage exposure to fluctuations in the Euro-U.S. dollar exchange rate with a gross notional U.S. dollar equivalent amount of $66.1 million. In the third quarter of 2022, as a result of an early settlement of a cash flow hedge instrument, $10.0 million of cash flows has been reflected as a component of financing cash flows and $0.3 million of expense was recorded to Selling, general and administrative expense from Accumulated other comprehensive loss. We entered a cross currency swap with a gross notional U.S. dollar equivalent amount of $121.0 million to replace the terminated agreement, which we designated as a fair value hedge to offset foreign currency risk associated with intercompany debt. At September 30, 2023 and December 31, 2022, we had deferred foreign currency gains of $5.1 million and $18.9 million, respectively, in Accumulated other comprehensive loss associated with our cross currency swap activity.

The following methods were used to estimate the fair values of each class of financial instrument: 

•short-term financial instruments (cash and cash equivalents, accounts and notes receivable, accounts and notes payable and variable-rate debt) — recorded amount approximates fair value because of the short maturity period;

•long-term fixed-rate debt, including current maturities — fair value is based on market quotes available for issuance of debt with similar terms, which are inputs that are classified as Level 2 in the valuation hierarchy defined by the accounting guidance;

•cross currency swap and foreign currency contract agreements — fair values are determined through the use of models that consider various assumptions, including time value, yield curves, as well as other relevant economic measures, which are inputs that are classified as Level 2 in the valuation hierarchy defined by the accounting guidance; and

•deferred compensation plan assets (mutual funds, common/collective trusts and cash equivalents for payment of certain non-qualified benefits for retired, terminated and active employees) — fair value of mutual funds and cash equivalents are based on quoted market prices in active markets that are classified as Level 1 in the valuation hierarchy defined by the

accounting guidance; fair value of common/collective trusts are valued at net asset value ("NAV"), which is based on the fair value of underlying securities owned by the fund divided by the number of shares outstanding.

The recorded amounts and estimated fair values of total debt, excluding unamortized issuance costs and discounts, were as follows:

			September 30, 2023									December 31, 2022
In millions			Recorded Amount			Fair Value						Recorded Amount			Fair Value
Variable rate debt			$	573.8		$	573.8					$	288.8		$	288.8
Fixed rate debt			1,300.0			1,182.2						800.0			717.7
Total debt			$	1,873.8		$	1,756.0					$	1,088.8		$	1,006.5

Financial assets and liabilities measured at fair value on a recurring basis were as follows: