Morning, thanks for tuning in to Deutsche Bank's Industrials Conference. For those of you who don't know me, I am Nicole DeBlase, the lead analyst for both the multi-industry and machinery sectors here at DB. I'm very pleased to introduce nVent. From the company, we have Beth Wozniak, CEO, and Sara Zawoyski, CFO. Thank you both for supporting our conference this year. The format of today's presentation will be fireside chat, but before we get to that, Beth is going to provide a few opening remarks. Now, for the audience, please feel free to enter any questions that you have in the chat box below or low in the window. I'll be monitoring that, and we'll ask the questions to management anonymously on your behalf. With that, we'll kick it off. Over to you, Beth. Thank you. Well, I guess what I wanted to just share is, you know, this has been a year where we said last year we wanted to emerge stronger, and we think we have. We're very excited about the electrification of everything and just the trends that we're seeing with infrastructure, with the move to EV, automation, all of those things, which play well for us. Our portfolio at nVent is so well positioned. I think if you look at our financial performance, our Q3 earnings, and you look at how we've had very strong organic growth on top of great inorganic growth from the four acquisitions that we've done since we've started as a new company and our order trends, our pricing, our supply chain execution, we're really pleased with our performance and think, you know, we're gonna continue to thrive and excel as we go forward. That's all I wanted to say, that the future is bright for nVent, and we're happy to answer your questions. Excellent. Thanks, Beth. Maybe I just wanna start with a few on the current environment, and then we'll move on to some of the longer term story here. It's been a few weeks since you guys reported third quarter earnings. The environment's clearly just very dynamic. Can you give us a sense of the supply chain environment today, what you're seeing out there? You know, from your earnings release, it was very clear that you guys are doing a great job of navigating this environment. What do you think you're doing to, you know, allow you to kind of outperform your peers when it comes to supply chain? A couple things there. You know, one, since we started as a new company three years ago, we talked a lot about how we were working to regionalize our supply chains and add in more capacity. I think even as we exited a year ago, out of 2020, we looked at where do we need to ensure that we've got capacity, position inventory, et cetera. Our ability to manage that supply chain, that regionalization, I think, is one of the reasons that we've been able to outperform. I guess I would say this, there's so many constraints. You know, we think that Q4 is gonna be much like Q3, but I think, you know, our ability to ensure that we're working with customers and some of our digital efforts have even helped us respond, right? Because our digital efforts have helped us configure products where we have more availability or faster response time. I think that's really key right now, is those suppliers that can deliver, you know, and we're seeing it, are acquiring new customers. Got it. Okay. I mean, as you've progressed through this unprecedented supply chain environment, have there been any key learnings where, you know, you would maybe rethink, "Hmm, should we do our manufacturing footprint a little bit different? Should we make adjustments to the global supply chain?" Or has this taught you that your strategy is on point? Well, we always know and think that we can do better, and I think the one area for us is we were working towards regional supply chains, and so we're continuing that effort because that's proven to be very effective in responding. The other thing that a couple of our segments had done is had some flex capacity. Whether that was internally or externally, having suppliers that could help us with peaks in demand, and that's an area that we're going to continue to build out so we've got more supply chain resiliency. Ensuring that if we have outsourced partners, that we've tested them in advance, right? And that this whole idea of having flexible capacity is something that we're gonna more broadly implement across the company. Okay. That makes a lot of sense. Maybe shifting to order activity, obviously very, very strong, I think up 43% in the third quarter. How do you think about whether there could be any double ordering going on out there with your customers since lead times have become a bit extended? Yeah. You know, we look at this, and we talk to our customers and our channel partners, and I would say there's a couple of things. What we are seeing is where we do have larger OEM type of customers or direct relationships, we're not seeing double ordering, but what we're seeing is that they're placing orders into 2022 to give us visibility so we can ensure that we secure components or whatever is required through our supply base. So we're getting a longer time horizon. I wouldn't call that double ordering. It's just they're placing those orders in, you know, out into the future, so we see it. When we look at our channel partners, and remember, two-thirds of what we do goes through those channel partners, we're not necessarily seeing this huge stock-up. You know, we can look at the point of sales data, and we can see that, you know, it's really matching. What's going in is really going out. The third thing I would say is when we look at the strength of our orders, we're seeing new customers, and I think that speaks to our ability to execute and having good supply chain. You know, our view is we're not seeing double ordering. We're just seeing the strength overall of the demand, and we're seeing some longer term visibility. Okay. That makes sense. I guess on the topic of channel inventories, which you brought up, I mean, would you say that there is an appetite out there for restocking, where maybe when some of the supply chain, the component issues free up, we could get maybe a little bit of a boost from restocking activity into 2022? I think it's possible because I think everyone is just so challenged, right, in terms of being able to, you know, have inventory or have components that they need. I think we may see some of that as we get into 2022. Remind us which of your businesses do you think that there is the most potential for, like an inventory restock? Well, the two businesses that are most predominantly through distribution is our Enclosures business and our Electrical & Fastening Solutions business. Okay. Got it. One thing that took me by surprise as I was digging through the third quarter results is you actually called out strength in auto, and that's been kind of the polar opposite of what we've heard from a lot of companies so far. Can you talk a little bit about how you're outperforming and whether that's sustainable? Yeah. In our case, remember, we're not automotive on board. We're actually in the factories, right? As we hear all the automotive companies talking about their new lines or they're moving to EV, there is a changeover that they have to do in the automation equipment to run those new lines. As they're putting the investments in there, that's where we play. I think that's very different than if you're a component provider that's actually, you know, automotive on board. Have you seen that kind of play out with respect to predominantly like the EV shift? If that's what's- Yeah. Okay. Yeah. Got it. That's exactly right. Okay. On the project pipeline, so can you comment a little bit on what you're seeing with respect to like larger projects based on your customer conversations? Where I'm most interested would be non-resi construction, both commercial and institutional, as well as maybe some of the data center investment trends. Yeah. Maybe let me start first with data centers. Very strong. You know, we've done a couple of acquisitions there to actually strengthen our position further. We see really robust activity as we look into 2022, and I expect, you know, that's gonna continue even as we see more infrastructure. On the commercial and non-resi side, that has held up for us. I point to two areas. When you look at our thermal business, we've seen really good strength, you know, on the commercial side, and I would also say with our CADDY portfolio as part of EFS. It's a little hard for us to say because sometimes our product is sold through distribution, so it's a little hard to say exactly where it ends up. I would generally say that the commercial side and the commercial activity has been good. One other point I would make is particularly what we do around power and data infrastructure, that as buildings are refurbished, there's just more power and data everywhere, and that just is driving more content and an increase in the demand for us of more of our fastening type solutions. We're seeing that occur. Okay. Got it. The only area where I've started to hear a little bit of concern is resi because it's been so strong for a few years. Have you guys seen any cooling down of the business that you have that's associated with resi, or has it remained strong? For us, resi is small. I mean, the only place we really have a resi presence is mostly in our Thermal Management business and some of our underfloor heating products. But there we haven't really seen any change there in terms of demand. It's continued to be, you know, very resilient for us, and again, it's a small piece of what we do at nVent. Okay. Very clear. You brought up the data center market position and how you've grown into that through acquisitions, or at least you've grown your presence via acquisitions. Would you say that you're happy with how you're positioned in the data center market today, or is there more that you could do to be a bigger player? There's always more we can do. I mean, I think we're very happy because it's an area that, you know, as we started as a new company, we put a focus on it across the portfolio. We've done a couple of acquisitions there. We've seen double-digit growth. You know, I think. There's just such a trajectory there with, again, the need for more data everywhere. So our view is, you know, we have a strong position. It can get stronger both organically as we extend, you know, strengthen what we do in, say, Europe or even in Asia. I think just like the couple of acquisitions we've done, there's more opportunity for us to extend our portfolio from. You know, we do everything from the enclosure to fastening to heat management and power management. Okay. Understood. One more current topic to dig into before we talk about some longer term stuff. Price cost, another very hot topic on investors' minds. Was price cost actually positive for you guys during the third quarter, and what's the expectation for Q4 and the carryover into 2022 at this point? Yeah. I was gonna take that. Yeah. Good. Yeah. The quick answer to that is yes, it was price-cost positive. When we talk about cost, it's all-in cost. It's raw material, it's logistics, it's labor, so we're really pleased, you know, with that performance in Q3. As we look out to Q4, right, our goal is to really be neutral to positive. I think a couple things. One, what you know allows us to be, you know, successful in this price-cost equation management is a couple things. One is the visibility that we have on the cost side, specifically as it relates to raw material and metals. We've got a hedging strategy that gives us good visibility on what those metal costs are, you know, a quarter or two out. That I think allows us to be very front-footed. Then on the pricing side, it really is a couple things. One, I would say it starts with, you know, leading brands, strong positions. That is core. I think the second piece is we've always said we're a lower cost on the overall bill of materials. So when you think about, you know, what we're doing to protect those electrical or electronic, you know, pieces of equipment, and then ultimately the millions of dollars of output, that allows us to price through. No doubt, being able to deliver and being good on the supply chain side has enabled that pricing to read out. As we think about that going into 2022, you know, we're gonna continue to, you know, stay front-footed on that, you know, have that visibility and make sure that we're disciplined, you know, from a pricing standpoint. Okay. Understood. One thing that stood out to me from a pricing perspective is, I think you commented that you had about 9% pricing in Enclosures, which was super impressive. Is that the business that's been able to get the greatest pricing increases through so far? Well, I would say we had strong pricing performance across Electrical and Fastening, which was actually a bit above that 9% as well as Enclosures. I think it just speaks to the execution of those two businesses to make sure that we get those pricing actions in place, realize the pricing, right, to help us combat that inflation. Thermal was on a lower front, but that's more a reflection of them not having some of these inflationary pressures to the magnitude that Electrical and Fastening Enclosures did, as they were price cost positive in the quarter for Q3. Wow. Very impressive that all of your businesses achieved that. That was not common this quarter. Okay, maybe let's shift and talk about revenue. The news of the week is we finally got a U.S. infrastructure bill passed. Right. After waiting for a year, that's good news. Which of your businesses are likely to see the greatest impact? From your perspective, how soon might we start to see this show up in revenue? Well, I think all of our businesses benefit, but especially our Enclosures in our Electrical & Fastening Solutions business, 'cause they're clearly aligned there. If you think about what we do in Enclosures, it protects anything that's electrical or electronic, for example. You know, I think the infrastructure bill itself is going to take some time. We're really excited about it. I think there's, you know, there's just investments you know, across so many different types of infrastructure. I think, you know, we're not gonna see that investment, you know, until the end of 2022, 2023, but, you know, then there'll be a tailwind there. Having said that, I think there's already things that are being done on the private sector side that are, in a way, aligned to this, you know, infrastructure investment, because whether it's any of the automotive companies going forward with EV, you hear a lot about the 5G rollout, which is, you know, in rural areas and broadband. You just think about the grid hardening from things that we've seen going on, all of those things, or even just the labor constraints that we've had. As companies talk about supply chain resiliency and onshoring, there isn't enough labor or it's too costly to do that without automating. Those investments we're seeing happen now, right, in terms of just requiring enclosures and our fastening solutions and all of those things. We're really excited, you know, that bill is going forward. I think just in general, the world has changed and this technology shift to the electrification of everything just presents great opportunity, and we're really well positioned. Yeah, absolutely. I have it on my list. We might as well dig into that topic now. I guess when we think about the long-term secular driver of electrification, is it possible to quantify, like, what% of your sales could benefit from that or, you know, kind of frame it in our minds how big of a driver this could be? You know, I think it's really aimed at our full portfolio, right? Everything we do is electrical, right? You know, I just think we're gonna see several years of strong growth because if you think about all the changeover, right, that we're going to see, whether it's renewable energy, whether it's the grid, whether, as I talked about earlier, e-mobility. All of these trends are going to drive, and it's hard to quantify, you know, what is that impact gonna be? I just think we're gonna see some steady growth over the next several years as a result. Probably not what we're seeing right now with 43% orders growth, but I think it's going to make for, you know, just really, you know, consistent, strong growth over the next several years because it's not just the infrastructure bill, but it's just everywhere in the private sector that those investments are getting made. Are you starting to see that already come through, like, in your customer conversations, in your pipeline, in your orders? We are. I mean, the automation trend, very strong. Data solutions, 5G, yes. I mean, we're seeing those investments are starting to get made. Got it. I mean, I've had this question for a few other companies, and maybe it'll be helpful to frame it as you automate a new facility, like let's take for instance, semiconductors moving fabs to the U.S., is there a way to size how much content nVent would have on, like, the average manufacturing facility that's state-of-the-art with automation, or is that just too tricky to do? It's a little tricky to do. I mean, although here's what we generally think, 'cause we try to look at this for, say, if you move to a new EV line and you're automating and you think about all the more touch points that are no longer mechanical and automated, we know that it increases the content for us in terms of, say, enclosures. So all of this automation increases content, but it's really difficult to size because it depends on the, you know, how big of the automation is. But it's more than a one-to-one replacement. We're gonna see an uptake in increased content. Got it. Okay. That's a good way to frame it. Maybe on the topic of 5G and utility investment, which also kind of ties into a similar theme, have you already started to see that ramp? Some of it. You know, I would say in terms of a couple of areas where investments have been made to just do some grid hardening, right? You know, even like Texas, we've seen some of what we saw with some of the challenges last year with the ice, the freeze effect and utilities going down. There's investments that we've seen in our Thermal Management business to help ensure that we're for de-icing or freeze protection. We've also seen as investments are being made in solar, for example, or wind in other areas that we're seeing some demand for our Enclosures and Electrical & Fastening Solutions products. I think we're starting to see that, but then the infrastructure bill is really going to be a bigger catalyst as we go forward in that utility sector. Some of the resiliency that we've seen in our EFS portfolio has been due to investments there. Got it. Okay. On the topic of new product introductions, I know that's an important piece of the growth strategy here. I think you guys are targeting 50 new products to be launched this year. Is that a normal year for nVent, or is that elevated? Like, how do we think about the contribution to organic growth from new products in an average year? Yeah. I mean, last year we did 50 new products, and that was our biggest year ever. This year now we're doing 50 new products, so it seems like we're gonna, you know, that's becoming our capability, right? To do 50 new products. I'd say more importantly are two metrics that we look at. The first is, are we getting 1 point of growth from those new products? We're realizing that this year. Obviously, that was difficult last year in a down year, right, with the pandemic, but that is really what we wanna see, is over 1 point of growth. The second thing that we're looking at is new product vitality, and that really is looking at the revenue generated from new products over the last 5 years, and we're in the high teens%. Now, when we started as a new public company, we were in the low teens. We look at that as just a measure of, is the investment that we're making in new products, are we getting the return, right? The investment in R&D and everything, is it generating that return? Both of those have been moving in the right direction, and, you know, we expect that to continue. I think we're getting better and more efficient and more effective, you know, more velocity in that process. That's a big part of our growth as we go forward. Got it. Okay. Maybe shifting to the topic of digital. When you think about your digital strategy from here, what are the key aspects of it? And maybe how do we think about the amount of investment that will be required to get you where you wanna be from a digital perspective? Okay. Maybe I'll take the first part, and let Sara talk about investment. You know, when we look at our digital strategy, there's the first piece around digitizing our go-to-market and building on the customer experience. There's things that we've done there from whether it's just our website to ensuring that we have all of our product information digitized and translated to be able to provide that, syndicate that, if you will, to all of our distribution partners as well as have it on our own website. 'Cause here what we're trying to do is improve the customer experience so they can search, select, configure, price, quote. We have CPQ tools. This is where we talk about even like HOFFMAN on Demand pointing customers to more standard products that they could configure and get delivered within weeks or days, right? Which generates velocity. I think, you know, there's a journey there that we're on, and we're seeing some nice benefits there. The next area for us was to sort of digitize our core and our back office in terms of just investments in our own factories, ensuring that, you know, our back office, that we were automating things. There's a third piece that we're doing around data analytics, and that's probably the area that we're, maybe, newer at, but it's the idea that we can get a 360-degree view of a customer. It's the idea that we can gain insights by really mining some of the data, spend analytics, things like that. I'd say that we're still on a journey here. We're pretty pleased with, you know, how far we've come in a short period of time, but more to do, and I think we're also getting more efficient and effective because we think about a platform architecture so that when we're driving some of these investments, we can scale it or reuse it between segments, for example. I'll let Sara respond to the investment side. Yeah. I would just say add to that, I mean, two things that I think has enabled us to really stay focused on the what and then, you know, the value piece, and that is bringing a very agile framework to our digital investment portfolio. We do look at this as a portfolio of opportunities, and that helps guide us to say, what do we work on first, you know, second, third, and ensure that we're allocating those resources. I think the second piece is we're laser focused on the business value. And if we can't, right, put our thumb on that business value, right, it's something that doesn't kinda come to the top of the list. I think that agile framework and the focus on returns is been a key element of that. I think the last thing I would just add is just the commitment for these investments. I think last year, our cash flow or CapEx remained consistent with 2019 levels. I think we were one of the few that didn't take that, you know, that down. Because it was a very intentional decision of our team to say we have to continue investing in the future growth. That was both digital as well as on the new product R&D front. Okay, great. That's helpful. Thank you both for that. Maybe we could talk a little bit about the Strategic Distribution Alliance initiative and the progress you guys have made to date and the work that remains to be done. Yeah. You know, Again, I always say, you know, a unique situation where as a company, when we started, our segments hadn't been fully integrated, and yet we were really a top supplier in the electrical distribution area. We decided that, you know, we wanted to build more strategic relationships, and we were making investments in digital. I think as the distribution partners, they're consolidating. We've seen a lot over this past year of the big electricals buying others. They're making investments in digital, and I think they really wanna have fewer strategic relationships. We just ensured that we had good alignment in terms of where we could drive conversion, where we could displace maybe other things that were in from other suppliers that they were carrying. We made those investments along with them in digital. I would say in North America, this is where, you know, we have seen nice, strong growth over the last couple of years. More recently, we decided that we then were going to try to develop the same level of engagement in Europe and have been working at that for the last 18 months. I think, you know, we also didn't have a full product portfolio. We acquired Eldo, for example. That was really key to ensure that we had the portfolio. You know, we talked about this in our last earnings call that we've saw really strong growth With European distribution. I think we have more opportunity there. I would say, you know, there's Asia too, and, you know, we still have work to do, but I think this is a multi-year journey in terms of building those relationships and partnerships and investing in digital because that really is all of those things come together. Okay, got it. That's really helpful. Maybe shifting to the margin outlook. At your Analyst Day, you laid out a target for a 20%+ return on sales. When I look back pre-COVID, you were already at 19.3%, so making really good progress towards that target. I guess it feels like there should be a lot more margin expansion opportunity here, particularly with the potential to get to 30% incremental. Why not be a bit more aggressive on the longer term margin outlook? Well, I would start by saying that was a 20%+ number, right? I would say this. I mean, a couple things. One, I mean, we're really proud of our top-tier margins as well as free cash flow. I think, you know, we did a nice job, even through a pandemic, right, of retaining and managing those decrementals and delivering lots of cash. As we move forward, we do believe that there is incremental margin expansion, and not just because of the volume leverage, but a couple different things. I mean, we are driving more digital within our factories, as Beth mentioned, and we're seeing as we pilot this in some of our larger factories, we're seeing, you know, great underlying productivity as well as working capital efficiencies. Lean enterprise, and you know this, Nicole, we're very rooted in terms of our lean enterprise, you know, mindset and methodologies, but we still have more runway in some of the segments like Electrical & Fastening Solutions. We've seen if we roll that out and begin to really, you know, develop deeper capabilities that that's paying out as well. I think the other piece is just automation. You know, as we, you know, we're gonna benefit on the top line, and we're also driving it within our factories. As we drive that automation, that's providing, you know, a capacity, right, but also underlying productivity. We believe that there's great runway on the margin side, you know, beyond just the volume leverage that our teams are working, you know, very vehemently every day. Got it. That's great to hear. Last topic that I wanted to hit on today before we run out of time is free cash flow conversion as well as capital allocation. The free cash flow generation has continued to increase year-over-year, as a lot of companies have struggled this year with what's going on from a supply chain perspective. Kudos to you for that performance. I think, you know, what I'd be interested in hearing is, what are the thoughts around free cash flow conversion from here and the net working capital opportunity? Yes. I would say, you know, again, we've been able to deliver consistently in that free cash flow at or above that 100% conversion rate, while investing for growth. I think one of the key things there is our focus on that working capital opportunity. As we look at working capital as a percentage of sales, you know, today being in that, you know, 23%-ish range, and we look at best in class being more in the teens, we believe that there's targeted, you know, opportunities there for us. We've already made good progress. I think we shared a little bit of that earlier on this year, you know, taking days out of, you know, inventory as well as payables. I really think, you know, a couple of different things are driving that. One is our very data-driven approach to where these opportunities are, so we've been very surgical in that. I think as well as our digital maturity and what that gives us in terms of the visibility into where those opportunities are. Got it. Okay. Thank you for that. The last topic I wanted to hit on is just M&A. If you could take the opportunity to comment on the M&A pipeline appetite for deals now. There's definitely been a focus on bolt-ons up to this point. Would there ever be a scenario where nVent would be interested in a larger transaction? Yeah, I think we've demonstrated in both the financial returns and the growth performance of these acquisitions and that we've now developed a rigorous integration playbook that we could do a larger deal. You know, early on, we wanted to ensure that, you know, we could execute well, and I think we've proven that. We always say, you know, we're in a $60 billion space. It's very fragmented. We have a robust pipeline. I think you can expect us to do a couple of deals every year, you know, with our strong cash flow generation. I think, you know, we could do a larger deal aligned to our strategy, of course, of just electrification of everything and protect and connect. You know, our execution has proven out and I think, you know, the value we're creating from these deals is a key part of our, you know, long-term value creation overall. Got it. Okay. Thanks, Beth. I think that's it. We got through my entire list of questions. That was an impressive 30 minutes. Very productive. I guess I'll wrap it up here. Thank you so much, Sara and Beth, for your participation in the conference. Really great to see you today, and I enjoyed the conversation and hope you have a great rest of the day. Thank you very much. Thank you. Bye-bye.