Good day everyone. It's Deane Dray, Senior Analyst with RB C, covering the multi-industry and electrical equipment group. We're delighted to have the senior management team from nVent today with us. Beth Wozniak, CEO, Sara Zawoyski, CFO, and again, thank you for bein g here today. Beth, I always like to start things off with the opportunity for you to give us a bit of the state of the company, maybe reflection on the second quarter and how you see the story today. Let's start there. Thank you. Deane, thank you. Well, as we said in our earnings call af ter the Q2, we're seeing some very strong orders and strong demand, and I think we've been executing very well. You see that just in our cash performance and in our margins. We see that continuing. If I step back and we always shared that, and in our Investor Day, that we're at a technology shift now. Not only are we starting to see the recovery from COVID-19, but we're at this point where the world is becoming more electric, and we think that just bodes well for everything that we do, whether it's data and networking solutions, whether it's more automation, whether it's the infrastructure. You've seen us do some acquisitions this year that have helped to strengthen our portfolios to grow where there's high growth, extending what we do in data centers with PDUs through CIS Global. I also would want to share that our view is, the things that we put in place over the last couple of years to position our supply chains to respond flexibly, I think are really paying off well for us. While we're all managing supply chain challenges, our ability to respond and deliver, what we hear through our customers and our channels is we're doing better than most, and we're going to just keep continuing down that track. I think everything that we're doing around growth, digital investments, new products focused on high growth verticals and acquisitions, and our ability to execute, is the performance that you're seeing come through in our numbers. With that, Deane, I'll turn it back over to you for Q&A. Appreciate it. I want to seize on one of the words that you used is flexibility, because nobody had the COVID script ready to go, but it happened. No. If you would just reflect for us on how the company pivoted, what lessons were learned, what changes are permanent within the organization because of COVID-19? Let's start there. Yeah, I think, from our standpoint, one of the things that we had done pre-COVID was we'd start to put scenario playbooks in place to say, "What if we're in a downturn?" We didn't know there was going to be COVID, but the fact that we did that planning allowed us to execute very well. We shared with everyone that here was our playbook, how we thought our performance would be, and we actually did better than that. Similarly, as we started to see things in a year ago, in Q4, we put playbooks in place to say: How are we going to respond when demand comes back? I think that's in part why you're seeing some of the strength of our performance. There's many other things. Scenario planning, it has to be a part of it. There's many other things that I would say that we've learned is, take our investments and where we thought that were important on new products, on digital, we continued and stuck with those things that were priorities, and that has allowed us to emerge stronger. I think that's really key. Of course, there's all the other things that say things have changed coming out of this pandemic, right? In terms of we're all more digital, we're all more comfortable with that. We don't go back to the old way of working, right? There's many more things that we can do remote, putting more emphasis on digital content, digital sales. We've learned that you have to have flexibility, you need to be resilient, you need to communicate a lot, so that all your stakeholders know where you're going and your employees feel safe. To me, there's changes that you make that you just don't go back to that old way of working. It's also that ability to respond. Respond with speed, and I think we did that well, and I think we're learning to do that on when we have tremendous growth. I think one of the surprises in how the company responded, because you still have to report quarterly earnings, so there's still a report card. For us, one of the positive surprises was the decrementals were not nearly as bad as what might have been feared. On the rebound, the incrementals have actually been pleasantly above expectations. I think that a lot has to do with how you pivoted with expenses. Maybe that's a good question for Sara, just to start off in terms of pivoting the company, on the P&L, SG&A, and what that means for incrementals on a go-forward basis. Yeah, so a couple of point there was, o ne, we felt good about how we managed the decrementals in a very challenging environment last year, particularly in the back half. I think it's a couple things. One, it is pivotal on these scenario plannings that we did, because that allowed us to be really thoughtful in terms of where are we going to put permanent actions in place versus temporary. I think the other thing is we moved into the ramp in demand. It was a couple things. One, we've been very intentional, too, around how these temporary costs feather back in. That's one thing that we're kind of really monitoring and managing, and importantly, like Beth alluded to, some of these aren't coming back in. For example, a shift to maybe digital marketing versus something that was a bit more paper-based before. I think the other piece for us, too, is continuing to look at the structural cost aspect of things and making sure that we continue to make the business better, and ability to support the growth, while also supporting the margin side. Beth touched upon it a little bit, but it's all about automation in the factory, the digital production platform investments that we're making to enable growth as well as drive productivity. I think the last part of the equation, even this year for us in particular, has been managing the price-cost equation. Incrementals and the ability to manage the margin front wouldn't be the case if we didn't stay very front-footed from a price-cost perspective. Those are just a couple of the things that I think has allowed us to manage on the decremental front, but importantly, put us very front-footed from an incremental perspective. I think the last thing I would share, Deane, is just in a more normalized environment, we would expect those incrementals to be in that 30% + range, and I think that's just indicative of the strong margin profile of every one of our segments. I want to seize on the point about price cost. You mentioned it, Beth mentioned it, everyone's talking about it. Just what do we need to know about nVent today in terms of what you're seeing on the supply chain disruptions, labor shortages, just kind of like triage it for us if you could. Yeah. I think it's been a highly inflationary environment, and there have been supply chain challenges. In Q4 of last year, we started to look at these scenarios and how do we position inventory? How do we strengthen our position with our suppliers, give them a view to what we think that long-term demand is? We had been working over the last several years to focus on more regional supply chains as well, and I think that's allowed us to respond. As we worked through Q2, while we had the challenges that we had to work through, it's a lot of effort, we still were able to manage lead times within reason. We weren't on allocation. We would get feedback from our channel partners that we were doing better than most when it came to our responsiveness, our delivery, and I think it's multiple factors in how we've managed our supply chain. When it comes to labor, it's been a challenge for most every company, and we recognized that, so it was important for us to look at our wage rates to ensure that we were giving a view to our hourly folks as well as temporary employees in terms of the career that they could have and talk to our culture that we've developed. Those things have helped in terms of our ability to acquire and retain labor. Still very challenging, which is why digital investments are important. When you think about the price side of things, one of the things that we've talked about in nVent is we have a price lock strategy when it comes to how we manage our materials and our metals. It gives us visibility knowing a quarter or two in advance what our cost structure is to then work with our channel partners to go out with price increases. We're able to manage that price-cost equation with as best of information as we can and communicating that well. You've seen that we've been able to manage and realize price because we know what our costs are going to be as we look forward in the future. It's very challenging, but I think we've done a pretty good job, and it's allowed us to outperform in some cases, just because we've been able to really focus on execution of those different elements. Just to put some numbers around price is, and we always look at pricing power, and take us through the portfolio. Where do you have significant pricing power? We usually equate that to bigger market shares, and you have to think about Enclosures. The number that you've given last quarter was 5 percentage points of price. Do you get to keep that? When things normalize, do you keep that price? We typically do. Let m e start with actually our EFS business, because that whole segment has been built around a value proposition of labor saving solutions. As we create new products there, we're always finding ways to take labor off the job site, and time is money, labor shortages, that value is there. Again, we're a small price on the bill of materials. When someone is building a commercial job, it's not our product or parts that are really the determinant as to whether someone wins that solution, and we create that value. It's a great value equation there. When we look at Enclosures, I think one of our abilities this year in terms our brand and the fact that we protect, we're a small item, again, on the bill of materials relative to, say, the electronics and the protection that we provide. The fact that we can deliver and be responsive, and our digital tools have helped us drive to more standard modified products that we can deliver versus something very custom. It's helped our customers and us. That has allowed us to create value. When you're delivering in a really tough environment, price is not the issue. Lead time often is, right? Again, our value there has allowed us to manage that price. I even say that on the thermal side, with our products, in terms of the protection value. In many cases, we're also driving a total lowest cost of operation or installation. That value always allows us to have a premium price and maintain that even when we go through a deflationary period. I'm glad you finished off on thermal, because if you did a rollback on the second quarter earnings call, I had asked, "Do you think thermal has turned a corner?" It's been multiple quarters that we've been waiting for, be able to, A, ask the question, and B, get a positive response. Just frame for us what thermal has gone through. What are the indicators that you're looking at today that would suggest that a turning point is reached? I did respond to you, Deane, very confidently and say, "Yes, we have turned the corner." I would state that again. What we first saw, and recall, we've been working to diversify our thermal portfolio so that it's not just energy-focused. I'd say about 40% today is in that resi and commercial. That returned very strongly beginning of this year and continues as we see commercial strong across our entire nVent portfolio. The second thing that we looked at is the MRO spend. If you go back a year ago, job sites were shut down. It was hard to get labor on job sites. Everyone did not know how the pandemic was going to unfold, and so therefore, cash preservation was critical for everyone and CapEx spend. Maintenance has to happen, right, for you to safely operate a process or a plant. We started to see that improve. I think as we got into this year in the Q2, we felt very good about the MRO spend, the quotes, and what we were doing, and even new products we're launching to support that MRO value that we create for an installed base, that we felt very good that we were on a good trajectory. As well as just even project quoting and orders for longer cycle things was starting to pick up again. We feel we're on a good growth trajectory for our thermal business as we go forward. That's really good to hear. Beth, in your opening remarks, you stepped through what really I think is one of the key longer-term drivers, is how well-positioned nVent is in these mega trends, and you rattled off several of them. We say core around the electrification of everything, but automation, 5G, data centers, edge computing. Give us an update on data centers. Yeah. There was a little bit of nervousness about how is demand in the market with another supplier. How do you see data centers today, and let's start there? Thanks. Yeah. We've added to this portfolio of data centers. As you know, pre-pandemic, that was growing very strong double digits for us. We said once we get out of where we're not able to get on site or installations aren't occurring, we think that's going to continue. We've added to that portfolio. Couple of things there. One, I think we're uniquely positioned with our liquid cooling. We've done some partnerships there because that, again, a technology shift also drives some more demand. High-density electronics, energy efficiency requires cooling solutions that's not air, but liquid cooling. So we're very uniquely positioned. We added to our portfolio with the acquisition of CIS Global with Power Distribution Units, also very critical in that operation. As we sit here today, we've been seeing a very strong order book. I think we've got some unique positioning in the offering that we have, and we feel very confident that we see that double-digit growth continue. Our supply chain is in good shape. Our order book is strong. We have a good backlog, and I foresee we're going to see some very strong demand here in the next several years. We feel very good about where we're positioned. That's great. I know at some point this will be ancient history, but what was really unique about nVent when it was spun from Pentair is this wasn't a fixer-upper. Oftentimes, we see that it needs to be a turnaround story, that there's way too much leverage, and the portfolio needs all kinds of tweaking. That wasn't the case with nVent. You could immediately start playing offense. You waited a year before M&A, but talk about the track for margin targets and how do you get there. All right. I'll let Sara answer that one. Yeah. I think we exited last year at roughly, I think 17.4%, and we talked about it in our Investor Day, getting to that greater than 20%. I would say that even as we sit here today, with that strong value proposition that Beth talked about and what I would say strong margin position, I think indicative of those leading positions across our portfolio, we still believe that there's plenty of room for margin expansion going forward. If I look particularly at the Enclosures side, a couple areas we're really focused is obviously continuing that lean journey, but really looking at an inflection point on productivity and really enabling capacity with some of our automation and digital production investments that we're making, along with where we're taking that portfolio, which is in these higher growth, higher margin areas. That would be Enclosures. From an EFS perspective, even with them being kind of the best return on sales across all of nVent from a segment perspective, we feel like they probably have the biggest runway in terms of just implementing and continuing on their lean enterprise journey. We know that that's a proven way to enable growth along with driving productivity. They're really also focused on the automation side. I would tell you that that is an added focus. It's always been sort of part of o ur capital planning and enabling growth mindset and focus, but we're putting an even incremental focus on it this year and as we go into our strategic planning horizon. I also think that the new products and just the volume leverage in that business is going to also provide some margin expansion. In Thermal Management, we still believe there's margin expansion there. We had a bit of a reset here in the last year, but again, those are plus 20% margins, and we think they can expand from here. A lot of there is the new products, the controls, and just that strong value proposition that they give, along with the productivity underlying. We've got multiple levers to the margin expansion beyond volume leverage that really get at the productivity, the supply chain side, along with the growth in the new products to help drive that overall margin expansion. That's really helpful. Just to put an exclamation point on an earlier answer, it certainly helps retaining all of your pricing, and then assuming you get a normalization on your cost inputs and freight and so forth, is that also margin-enhancing? Yeah, absolutely. I think, even in what is trending to be an unprecedented inflationary year in the current year, right. Our guidance implies margin expansion for nVent. I think that shows that staying ahead of that price-cost equation and driving that underlying productivity, you got to have a combination of both, right. Along with the volume leverage to get on that margin expansion path. Great. Let's pivot over to ESG, which you all have many attributes within the business that fit nicely with an appeal to a growing ESG investor base. Just give us an update, Beth, if you could, in terms of where ESG stands, what new initiatives, and how that is changing at the margin. We just, in the month of July, released our second social responsibility report, and our focus is around people, products, and planet. If I take each one of those elements, people, I would say our people and our culture are so important to us, and I think a differentiator. When we launched as a new company, we made inclusion and diversity a priority, and from that standpoint, we have a diverse board. I have a diverse leadership team. I always say this, diversity attracts diversity, and I think it helps us in terms of our employee resource groups retain talent, which is critical in a time like now. The second element is around product, and as we think about our products, first, we're positioned around this technology shift around the electrification of everything, which is good. What we're doing internally is to ensure we're using safe materials, to ensure we're being responsible in the development of those products, and that's key for us, and we build that into our new product development process. The third area for us is around planet and environment. I think from our history, we've always done a good job around waste recycling. We're taking that to how do we do more waste reduction. We've always done a great job around energy efficiency, water usage, but we've set some goals to really drive us to accelerate some of our performance there because we think it's the right thing to do, and it's important. Our employees and our stakeholders, I think, are really excited about the steps that we're taking here. Again, this is our second report, so we're taking some big, bold steps. I think we're going to make a lot of traction. I'm pleased with the goals that we've set and the progress that we're making. In some cases, I think, our safety record, for example, or where we're at on inclusion and diversity, I really think that we're at levels that may surpass many others. That's all good to hear. Just from a sell-side analyst standpoint, it really matters for the stock. We see this, it's an input. We update our perspective on every company on ESG after every quarter, and it's in our reports, and so we appreciate the level of disclosure that you have. Again, we think it matters for the stock. We do, too. We believe in it. Thank you, Deane. All right, good. Let's pivot over to M&A, you're building a pretty good track record here, having first waited for 12 months as a new public company to say, "Let's grow what we own," started doing what we thought made the most sense in terms of attractive bolt-on acquisitions. Take us through what you've accomplished so far and what you're looking for in terms of gap fillers. Any color on pricing in the funnel would be a big help. Thanks. Okay. We've done four acquisitions as a new company, I think we've always said we're in a very fragmented space, there's plenty of opportunity. We really focus on where do we build out our portfolio. I'm really pleased to say that the acquisitions that we've done actually as we've come out of COVID-19, or are coming out of COVID-19, are actually outperforming the core of our portfolio. We've executed very well. We're getting to the returns that we set in our models sooner than we expected, and just building upon that. We said with the Eldon portfolio, it was going to help us grow globally and grow in Europe, and we're seeing great performance there. The other two deals that we did with both WBT and now CIS Global, strengthening what we do around data centers. Again, as we've said, double-digit growth is our expectation there as we go forward, and it's expanding the TAM for us, right, in terms of what we can go after. Even the Vynckier acquisition, which gave us a non-composite set of enclosures, takes us into infrastructure, so into solar, for example, or energy storage, where we weren't as strongly positioned. As we go forward, I think you're going to continue to see that we're looking at portfolios that provide that connect and protect because it speaks to margins and differentiation that build out our capability, whether it's globally or with a product set that align to what we do in these high-growth verticals or can go through our distribution channels because we can immediately scale smaller portfolios that just didn't have that reach. That was true of Eldon. That was true perhaps of Vynckier or even our CIS Global acquisition. As we go forward, I think our execution track record has shown that we could do larger deals if that made sense for us to do. From the standpoint of our funnel is really rich, and I think we've said clearly that our capital allocation priority is to do M&A to drive growth. We believe that's a big part of the value creation we have as we go forward. I think we're seeing sort of that low teens in terms of the type of expectation, in terms of the deals that we're doing. We're not going to overpay. We want to create value, do that as quickly as we can. Got to be strategic, and we're going to execute well. That's great to hear. When you say low teens, that's on a enterprise value multiple to EBITDA. Now, on the EBITDA side, this is more like a banker question, but people are asking, how are the adjustments being made for COVID? Are you looking at some sort of normalized, you go back to 2019? Just from your perspective, in some cases because of lower earnings, you're going to get inflated multiple, but it's mostly because of COVID. How are you thinking about making COVID adjustments to the asking prices and so forth? I'm going to give that one to Sara to respond. Yeah. No doubt, Deane, I think there's an element of that, right? Look at the multiple versus are you looking at a trailing or forward? I think from our perspective, we look at it both, right? We're going to look at the trailing, we're going to look at the forward. Importantly, we look at the return mechanism of getting to that exceeding WACC in that two to three -year timeframe. I think the other piece I would just add is just strengthening the long-term growth profile of nVent. Year two, they're rolling into that organic number. It's really exciting to me is that over the last eight quarters, we've done four deals, and it's added on an annualized basis roughly $200 million of sales, all we believe positioned in those higher growth verticals. Really getting at strengthening that long-term growth profile of nVent. At the same time, we're going to be laser focused on the returns side of the equation. We see that as a combination of growth as well as the margin expansion. Great. We only have a couple more minutes. Is there any update on your distribution channel? Either just because they're facing constraints as well, they're looking at how much inventory they're carrying. Any perspective on your distribution partners? Yeah. A couple of things I would say, because we've been asked this question in terms of do you think you're seeing this restocking occur and are they double ordering and all of those things. We have the opportunity to look at, in some cases, what the sellout is, and I would say the end demand is strong. We really have good visibility when it comes to our Enclosures business in North America. We're not seeing a huge restocking because demand is so strong. That's good news. That means we've still got continued runway there. The other thing I would say is our channel partners tell us just our ability to respond has allowed us to expand our position with them because others have not been able to respond. Even non-competing lines were on allocation early in the year. We've not been in that situation. We work with them. We're expanding, right? Part of our strategy as a company was to ensure that we could build upon a strong North American presence with all of our brands into Europe. We're seeing our European distribution growth even stronger with the Eldon portfolio, with the partnerships that we're building. I think we still have opportunities for strengthening our position there. I think as long as we keep executing and adding to the portfolio where some of these portfolios didn't have distribution presence, we're going to continue to se e that as a strong growth driver for us going forward. Terrific. Well, it looks like we're out of time here. We covered a lot of ground. Appreciate you all being with us today, nVent senior management team, Beth and Sara, appreciate it. Have a great day. Thank you, Deane. Thank you. This concludes the presentation by nVent. Thank you.