Good morning, and thanks for joining us again at the Wolfe Global Transportation and Industrials Conference. My name is Nigel Coe. I cover the multi-industry sector for Wolfe Research. Delighted to welcome nVent to the virtual stage on May 27th. With me is nVent CFO, Sara Zawoyski, and Enclosures President, Joe Ruzynski. That's a real test for me to pronounce these surnames, so I apologize if I've butchered your names. Of course, J.C. from Investor Relations. Folks, thanks for joining us this morning. I think we're going to start off with some opening comments from Sara, and then we'll get into Q&A. Thanks. All right. Thanks, Nigel. I'm just going to begin with just a few words here. Many of you know nVent. We're roughly a $2 billion electrical company. We just celebrated our three-year anniversary. We've got top quartile margins. I think that really reflects our strong brands as well as our value propositions. We've got robust cash flow profile. We believe we're one of the best companies positioned to grow with these electrification of everything megatrends. From a Q1 perspective, we're off to a good start for the year. We saw growth in the quarter, probably a quarter earlier than what we were expecting. Orders grew even faster than sales, and we saw that across each of our segments, along with strong incrementals and margin improvements. We believe we're executing well in what continues to be a challenging supply chain environment just with the ramp. We look forward to the discussion here this morning. With that, Nigel, I will pass it back over to you. Thanks. Thanks, Sara. Obviously Q1 was awesome. We had a really strong step up in the two-year stack from 4Q to 1Q. You mentioned within Enclosures there was some restocking activity. I'd like to dig into that. What changed during the quarter in terms of customer behavior? How impactful was that restocking activity, and what are you seeing so far in terms of momentum buying markets through the second quarter? We saw organic growth in Q1 of roughly 2%. Enclosures was the fastest, and we really feel like that reflected what we thought coming into this recovery, and that we'd see that recovery first in our industrial vertical. Like I said in my opening remarks, we probably saw it roughly a quarter earlier than what we were expecting, and we do think it's hard to parse out what that contributed to what. We do think that some of that was that restocking that we expect to see and have seen in past recoveries on the industrial side. We think that some of that likely too is ahead of some price increases in supply chain buffering, if you will, from our channel partners. With all that being said, if we looked at our April trends, and we talked about this on our Q1 earnings call, and you looked at those order trends, it was really on par with what we saw in January and February, and better than that, is what we said. With that better than that performance of January and February, we believe that that points to that underlying recovery continuing to improve. Even though we felt like March probably benefited from some of these underlying buy ahead of pricing and buffering of inventory levels because of that supply chain constraints, we do think that that pointed to that underlying recovery. From a restocking standpoint, inventory levels, we do believe that the inventory levels continue to be relatively low. We'd expect that restocking to continue into that Q2 timeframe. Great. Joe, is it normal to see Enclosures seeing very early restocking activity? I'm asking from the perspective of most other companies are not seeing restocking in their channels. Just curious why Enclosures stands out. Is this normal activity? I think from an industrial standpoint, a lot of the customers that we serve have a longer order cycle, so they can see demand a little bit further out there in the future. Restocking, we generally see that it hits Enclosures first in our business. Yes, it's fairly normal. The last few cycles, this is what we've seen, which is that restocking happens in general for Enclosures first. I would say just to add on to Sara's point, it gets harder to restock when orders and demand are just strong, and I think we see the economy specifically from an industrial standpoint. To her point where we saw that ramp up, that restock as we actually did Q1, we've not seen a fall off in those orders. The restocking coupled with demand are both good signs. Great. Perfect. Okay. The recovery continues. One area where we're seeing, well, a couple areas where we're seeing the lags naturally would be in commercial construction. Commercial was a bit more balanced in some businesses, but generally quite weak during the quarter. Obviously energy continues to lag. What are you seeing in terms of momentum in those two specific end markets? Yeah. On the commercial front, we were actually pleased with where commercial was in Q1. As you mentioned, Nigel, it was a relatively resilient, and in some of our businesses actually grew in Q1. Specifically, it relates to thermal management. Roughly a third of that business sits in commercial and residential, that grew kind of nicely in that mid-single digits range. I think that has a lot to do with some of their product around the fire-rated wiring, some of their pipe freeze protection. We saw a good Q1 start in the commercial side of the business. In EFS, I think we saw a relatively strong performance there. It grew nicely in the quarter. Remember that from a commercial standpoint, especially as it relates to electrical and fastening, it's a very diversified commercial setting. When you think of what we do, it's fastening and connection. Anything that needs cable run through it, they're going to need our products. It's not necessarily dependent upon office building, new builds. It really is more about the proliferation of data in that commercial setting. With that, there's demand for our product. We feel good about that commercial start to the year. I think, the year has to still play out. Nonetheless, we feel like we're outperforming that underlying overall commercial market. From an energy perspective, roughly 8% of our sales sit in energy. We do think that that's going to be a more gradual recovery that largely sits within our thermal management business. The projects, we felt good about where that backlog sat, and projects actually grew for us in the quarter. From an MRO standpoint, again, we expected a more gradual recovery. While we saw that business still down in the double-digit range a bit, of an improvement from where it was in Q4. We are seeing some encouraging signs in terms of just quoting and ordering activity, in Q1. That again, points to that more gradual recovery. Okay. I've got a question here in my inbox, and it's regarding one of your competitors, Thermon, in thermal. I haven't got time to read the entire email, but I think the gist of it is that they're seeing signs of real recovery in their businesses. I know you don't overlap perfectly with Thermon, but where you do, are you seeing similar trends? Yeah. Well, I would just say that one key difference is a third of our business in thermal management is commercial resi. We saw that strength even there in Q1. On the project side, that was strong really throughout last year for us and into Q1. I feel good about on the project side. Like I said, on the MRO side, in Q1, while sales were down for us, continued to be down in that double-digit range coming off of Q4. Better from a year-over-year rate, but still down. That quoting activity, the time that we're spending with our customers in the field, whether it be audits or otherwise, we feel good about those trends. Okay. What about MRO? That was down by a big number in 2020, I think down 40%+ with spectacular margins. What sort of ambitions do we have for MRO activity through second quarter, second half of the year into 2022? Do we think we get most of that back over the next couple of years? Yeah, I think that's how we're thinking about it, Nigel, in terms of most of that back over the next couple of years, right? This is not that snapback like we would expect to see in industrial. When we look back to past cycles, MRO is something that comes back. It just comes back over time. When you think about it, especially when it comes to critical maintenance on the heat tracing cables, they're going to need to get back to upgrading and maintaining the heat tracing cables within whether it be a petrochemical plant or otherwise. We also see as some of the transitions are happening, they go from traditional oil and gas to biofuels. That's also another opportunity for us to come in with our heat tracing management and capabilities. We're even finding that the temperature, the requirements in terms of keeping it to a specific temperature range, is requiring, again, our solutions when it comes to heat tracing management. So, I would say from an MRO specifically, again, our view is it will come back. In terms of this year, we expect it to be more back half, from that recovery standpoint. You're right, it comes with great margins. We would expect that to benefit the thermal management margins in the current year as well. One more question on thermal, then we'll switch to enclosures. On the Texas storm caused a lot of damage to infrastructure unexpectedly. The question we get is: Is that causing a rethink to the way that pipelines and other facilities think about their heat tracing capabilities, and do you think this leads to a nice tailwind for your thermal business? I think the short answer to that is yes. We see it as more of a long-term growth opportunity for us because some of this means incremental capital spend. What we're seeing with more traditional customers and nontraditional customers, whether it be through audits or early discussions, in the utility space or in the petrochem space, et cetera, that they're coming in and asking to say, "Okay, help me audit my current structure." How do I need to safeguard and build additional resiliency here? We do think, though, that it happens with CapEx cycles in terms of they've got to understand what those requirements are and put it in that CapEx funding process. We do think that it opens up long-term growth opportunities for us in the thermal management space. Great. Thank you. Thank you, Sara. Moving to Joe. Investors are picking up nVent for the first time and doing due diligence, look at enclosures and think how do you differentiate an enclosure? What technology is there? How does nVent differentiate? How do you basically maintain your share from new entrants? Kicking the ball to you there, what is the technology? How's it evolving, and how do you differentiate? One thing, when you think about an enclosure, I think the first thing is we try to talk about what's inside that enclosure, which are very sensitive, very important systems. What differentiates us is we make those systems resilient. When we think about what our enclosures do, it's provide the most robust protection in the industry. Also, as we add on features and add value and accessories, it's how do we make that system more resilient? We manage heat, we manage power, and we manage the environment in a very robust way. I think a few things that differentiate us, one is we can cover the most applications, we can solve the most problems in the industry. We've got a very wide portfolio in terms of solving those problems and protecting those systems. I would also say that the question you asked before about the channel and the restock. The channel is an important part of our business. We have 4,000 distribution points around the world, and it's very critical for us to have that product for our customers when they need it. If there is an issue, if they need to put a new system in place, we're there, and we can protect that. I think, finally, and part of this was greatly enhanced with our Eldon acquisition is, we can sell globally and we can serve locally. We have factories and regionalized supply chains in China and India and Europe and North America where we can sell to a global customer and we can manufacture that product and get it to them, which is critical. Our customers are global, and we need to be global. The final piece of this, I would say, and this has been a big thrust for us is we intend to make it very easy for our customers to do business with us. We've launched a lot of digital tools. One of the things we're excited about with Industry 4.0 or Factory 4.0 is it's about getting data to the factory floor to be able to serve more effectively and efficiently. Industrial automation is part of our DNA, part of our history, and it's going through really the biggest transformation that we've ever seen. Those digital tools, in addition to being able to serve that product breadth, we think is just a powerful combination. Right. You've been doing a number of not really small, these are fairly chunky acquisitions. You mentioned Eldon and most recently, Vynckier. What is the strategy? What is your strategy for broadening your footprint in enclosures? I think it's building on a few things that I think are starting from positions of strength. One is that ability to sell globally and to serve locally. If you talk about Eldon, that IEC portfolio has really become adopted now in our core brands as that base modular platform that you can get the same spec, the same product, the same quality, anywhere you need it around the world. That globalization is a key part, a key tenet of our acquisition strategy. A core part of our growth proposition, or our growth focus, I should say, is finding those verticals that are growing faster than some of the underlying markets within regions. If you think of data centers as an example, how do we expand our value proposition and specifically do it in those industries that are growing faster? I think Data Network Solutions is the term that we use, DNS, is a great example. Even within industrial, as we talk about industrial is great. That's a big bucket. You look beneath that in places like food and pharma, very good demand right there. If you look at material handling with Amazon and UPS and a lot of the different companies that are expanding, our ability to serve those and build systems that support that infrastructure is tremendous. Looking for acquisitions that can help us enhance that value proposition and more specifically focus on the industries that are growing faster. What would you say right now? Clearly, IEC footprint is one obvious area where you could see more acquisitions. To what extent can you broaden Eldon organically versus adding more capability in IEC markets? Yeah. I think one thing is just back to being able to serve our channel partners more effectively and from a broader sense. Historically, the enclosures business, we didn't always get the right coverage that we wanted in Europe, in China, and India because we didn't have that same full portfolio that was manufactured around the world. Part of growing Eldon organically, and we've seen this, they outperformed our legacy portfolio last year, and we saw this again in Q1, is being able to expand that coverage to work with those global channel partners, and we've got a lot of great partners out there. I think that's one. The second thing is we look at something called attachment rate, which are what are the accessories or the add-on solutions to our base enclosure that can help us grow faster? A simple example would be industrial cooling, which has been an important part of our business. Bringing those add-on accessories, whether it's cooling management, power management, et cetera, cable management, and then bundling that or bringing that with the base IEC platform, really has been a great growth opportunity for us organically. Great. Obviously, innovation is an important part. I want to come back to that in a second. Data centers, it's a pretty hot end market. It's a pretty hot topic for investors as well right now. You've got a nice position in data center, if I'm not mistaken, it's over $100 million. Again, I apologize if I got that wrong. Just for the benefit of the folks on the webcast, where do you play in data center, and what does this relationship with CoolIT bring to the party? It's obviously an area we're excited about, and if you listen to our investor presentations and our quarterly discussions, an area that we see some great growth. It's a good business for us today. We did over $130 million last year, and it's growing at a nice clip, as we mentioned in Q1. We really started in that business with the physical cabinet, with the protection of the enclosure or the cabinet, the actual networking, or the data cabinet itself. Over the last number of years, we've added on our capability, and really what we're excited about is we feel that managing heat in data centers is going to be one of the most important problems that has to be solved. That's been part of our DNA. We started in industrial cooling, over the last five or 10 years, we've gotten more innovation, more expertise in the liquid side. To CoolIT Systems, our strategy is about getting closer to the heat source. If you get closer to the heat source, you can get involved in the front end in the design of those data centers. Whether it's a hyperscale data center, an edge data center, understanding and solving those applications or those problems is really about understanding the heat in that data center. What CoolIT does for us is really brings that expertise of a cold plate, of solving the heat right at the source. Now, our expertise has been managing that heat outside of the source and outside of the cabinet, inside the cabinet. That combination is powerful, and I think from an innovation standpoint, what it affords us is to keep focusing on what we're good at, which are water cooling units, manifolds, managing that heat as we pull it away from the heat source, and CoolIT's expertise is really understanding it, getting close to that heat source, that cold plate right there. That strategic alliance has been a great step forward for us and has really given us a lot of good funnel exposure in the data center space. Right. Thanks, Joe. Is this scope to potentially broadening your footprints in the data center? We do. In some of the areas that I mentioned before. One is, first of all, looking at the industry trends. 5G will bring an explosion in edge computing, and edge computing is really about solving problems at the point of view. Whether it's on a street corner, whether it's in a factory, whether it's a semi-truck speaking to a warehouse once we get close. You have to send, you have to receive, and we're on both sides of that. I think, from a data center standpoint, we're looking a lot at edge applications. I think we've got a good start in traditional data centers. We've got a good understanding of hyperscale. 5G and edge, it's fragmented, it's growing fast, and it's something that I think we can continue to find solutions for. I would also say that understanding and getting better at power management is important for us. We've got some great solutions today. You talked about the freeze-out situation down in Texas. I think there were a few things that were critical. One is you have to manage that cold environment, which our thermal business can do. Also, if you look at the power disruption, those critical systems, whether it's a cell tower, whether it's a street corner that's managing an autonomous process, that's very critical. That's something that we've got a great start in, but we continue to look at opportunities there. Okay, thanks, Joe. I want to move to margins, and a few things I wanted to dive into here. One would be price cost, inflation pressures. You talked about that. Your pricing was, I think, 120 basis points in 1Q, but offset by inflation. I think you're fairly neutral. Sounds like you're fairly confident or very confident that you've got enough pricing power to offset the inflation pressures for the full year. Just wanted to dig into that, Sara, and just make sure that that's the case. It wouldn't be an investor discussion without a price cost conversation. I would say a couple things. One is, if you look back at our history, I mean, we've got a strong track record of being able to pass along inflation. I think that's due to a couple things. One, just the strong brands that we have within the places that we play. Two, as Joe pointed out, just our strong channel presence as well. In any normal, even given environment, we would expect to get roughly one point of price, just because you're going to see some underlying inflation. In more inflationary environments, we would expect to get more than that. I think Q1, if I just start there, Nigel, we did see some inflation, but we do expect that to step up here in Q2 and more acutely here in the back half. We look at that for a couple reasons. One is we didn't see that quite hit in Q1 because we do have some price locks that gives us some visibility and some time to plan and have these discussions with our channel partners and our customers. We're seeing a bit of delay from an inflationary perspective. More importantly, on the pricing side, we started out strong right out of the gate here in Q1. That pricing of close to a point and a half didn't even reflect full realization of those pricing actions that we either put into place or had announced there in Q1, which were multiple, across multiple of our segments. So it's something that we're going to have to continue to stay on top of. I mean, that inflation that we're seeing, whether it be in the metals or sort of more of the secondary inflation, we continue to see prevalent there, and we're going to have to continue to stay on top of that price-cost equation. As we said in Q1, we expect to manage to sort of more of a neutral to slightly positive from a price material cost perspective. Then more broadly, we're going to look to manage overall inflation, with a combination of price plus productivity. I think the last thing I would leave you with, Nigel, is even in what we're seeing is a significantly inflationary environment. Like we said in Q1, we'd expect our margins to be modestly expanded in the current year. Sure. That's helpful. With a lag, you'd expect there to be a slight lag on that recovery through 2Q as the inflationary pressures pick up, or is there enough pricing momentum to offset? We were expecting roughly a $10 million plus kind of step-up from Q1 to Q2. Again, given the pricing actions that we took in Q1 here, as well as kind of the full realization, we'd expect that price also to step up with higher inflation. On R&D, you're looking for R&D to step up by about 80 basis points over the medium term to get to that 3% range. As you're investing at the growth, what sort of incremental margin rate should we be modeling going forward 2022 and beyond? We still believe, putting this year aside with sort of the temporary costs coming back in and the price-cost dynamic, that underlying incrementals are in that 30%+ range. That's really indicative of the high margin that we see really across each one of our portfolios, thermal management, electrical fastening, and the enclosures business. We'd expect to get kind of back to that 30%+ incrementals as we move forward. Right. My final question is really around the balance sheet's in great shape. You've expressed a clear preference for M&A, to deploy surplus capital into M&A. Just curious, how the pipeline looks here and your confidence that you can do more deals, posting here, there's more deals in the pipeline. Yeah. As you suggest, because of the strong cash that we generated in 2020, even despite the pandemic as well as a Q1 start, our balance sheet sits in a great position. We're at roughly 2.1 x, and our target range is at 2.5 x. From an M&A perspective, I think that the fact that we've done roughly three deals in the last 18 months, I think speaks to really the pipeline that we're managing, importantly, the relationships that we have really fostered and worked with many folks right across many years, in the industries and side by side along with our brands. We continue to see the activity, and the pipeline good from an M&A perspective. As Joe said, where we're focused is on these high growth verticals, electrification of everything, where those mega trends are really going to benefit, as well as global growth. Okay. Well, I think we'll leave it there, guys. Sara, Joe, and J.C., thanks for your time. That was a great discussion, and we appreciate you being part of the conference. Thank you very much. Thank you. Thanks, guys. Appreciate it.