nVent has Mission-Critical Solutions That Create Value Mission-Critical Customer Productivity & High Cost of Failure Solutions Total Cost of Ownership Our products… Our products… Our products… • Protect equipment • • Reduce labor cost in Connect and protect and electronics in installation across broad range of hazardous applications • Improve utilization environments • Meet stringent • Minimize downtime • Help avoid the high regulatory standards • Reduce total cost of cost of failure and certifications ownership Hazardous Rail Surge Purge and Stainless Location Protection Reduced facilities Pressurizatio Steel Cooling operating costs by ~75% n Systems Enclosures Our Value and Differentiation Drive Customer Loyalty 15 February 13, 2018 nVent Investor Day
nVent Leadership Team LYNNETTE HEATH STACY McMAHAN JON LAMMERS BEN SOMMERNESS EVP & Chief EVP & Chief Human EVP, General Counsel EVP, Chief Growth & Resources Officer Financial Officer & Secretary Strategy Officer BETH WOZNIAK Chief Executive Officer TOM PETTIT JOE RUZYNSKI BRAD FAULCONER ROBERT Van der KOLK EVP & Chief Integrated President President President Supply Chain Officer Enclosures EFS Thermal Management New Leadership Team in Place 16 February 13, 2018 nVent Investor Day
The nVent Strategy One nVent Accelerate Focus on Attractive Grow Globally & in Innovation & Verticals Developing Regions Connected Solutions Drive Productivity & Velocity Pursue Targeted Bolt-on Acquisitions 17 February 13, 2018 nVent Investor Day
Macro Trends are Favorable Technology & Electrification & Urbanization Connectivity Demographic Safety & Security Shifts Trends Drive use of More Electrical Products 18 February 13, 2018 nVent Investor Day
One nVent Aligned Go to Market Teams for Key Verticals Customers Key Partnerships and Account Management Channels Capability Commercial Excellence Digitizing the Customer Experience Digital Common Processes & Systems Scale 19 February 13, 2018 nVent Investor Day
Focus on Attractive Verticals 2018 Macro Growth Focus Outlook • New products, global Industrial focus (45% of Sales) • Connected solutions & digital tools • Lower cost of ownership Commercial & and installation Residential • Specification selling (27% of Sales) • Global new products • MRO focus Energy (16% of Sales) • Connected solutions • New products • Aligned go to market Infrastructure and key account (12% of Sales) penetration • New products Global Synchronous Growth in 2018 20 February 13, 2018 nVent Investor Day
Accelerate Innovation and Connected Solutions Advanced Flexible Busbar Thermal Industrial Controller • • Unique low-smoke, halogen- Safe and reliable free, and flame-retardant temperature control insulation • Connected controls and • Reduces Total Installed Cost monitoring solutions • Improves safety and reliability Integrated Liquid Cooling Solutions Thermal Commercial Controller • • Differentiated air to water & Advanced connected water to water high density controls platform heat exchangers for heat tracing and leak detection • Critical need in datacenters • for high density heat loads Building Management System connectivity Innovative and Connected Solutions Addressing Unmet Needs 21 February 13, 2018 nVent Investor Day
Grow Globally and in Developing Regions • Developed Regions : Accelerate product coverage and penetration • Developing Regions : Enhance local capabilities and localized solutions • Localizing products • Increasing global design capability Manufacturing Facilities Global Footprint Supports Global Growth 22 February 13, 2018 nVent Investor Day
Drive Productivity and Velocity Accelerating Performance Our Solid Foundation Lean Enterprise Lean Enterprise • Standard Work • Lean Information Flow • Creating Flow • Integrated Supply Chain • Strategy Deployment Digital Transformation • Digitization Enterprise-wide platforms • Digital customer experience Standardization • ERP Systems Continue Standardization • • Processes Across all processes Drive Productivity and Velocity 23 February 13, 2018 nVent Investor Day
nVent Values Retain our Win Right Values and Culture Living our Values is Fundamental to Achieving Our Goals 24 February 13, 2018 nVent Investor Day
Evolution of Our Management System PIMS Foundation Introducing spark Growth spark ▪ Growth Rapid Growth Process 3D Innovation ▪ People Commercial Excellence ▪ Lean Enterprise PENTAIR ▪ Velocity INTEGRATED MANAGEMENT SYSTEM ▪ Digital Talent Mgmt. Standard Work Org. Development Creating Flow “Win Right” Values Strategy Deployment Lean Enterprise Talent Building on a Strong Foundation 25 February 13, 2018 nVent Investor Day
The 5 elements of Spark Growth Mindset, Commercial Excellence Growth Energize Employees & Create Value People Lean Lean Information Flow Enterprise Drive Velocity in Everything We Do Velocity Digitize the Customer Experience, Digital Products and Processes 26 February 13, 2018 nVent Investor Day
Key Priorities by Segment • Grow Industrial and Infrastructure Enclosures • Expand margins via productivity and price • Digitize customer experience • Grow Industrial, Commercial and Infrastructure Thermal • Focus on Industrial MRO Management • Launch new products and connected solutions Electrical & • Grow Commercial and Infrastructure Fastening • Launch new products and solutions • Expand margins via productivity and price Solutions Focused Growth Globally 27 February 13, 2018 nVent Investor Day
CEO Priorities Set up nVent as a Separate Public Company Drive Organic Growth Expand Margins via Productivity and Velocity Continue Strong Cash Flow Drive Disciplined Capital Allocation 28 February 13, 2018 nVent Investor Day
Long-Term Financial Framework Long-Term Goals Differentiated growth Revenue 1-2% above GDP Margin Segment Income Expansion Top Tier Performance EPS Free Cash Flow = Cash Flow 100% Adjusted Net Income Long-Term Value Creation Goals 29 February 13, 2018 nVent Investor Day
Key Takeaways We are a Leader in Connection and Protection • We have industry leading positions in growing verticals • We have attractive segments with differentiated growth opportunities • We have a clear strategy and are focused on driving organic growth • Our One nVent approach can accelerate performance Building a High Performance Growth Company 30 February 13, 2018 nVent Investor Day
Countdown to Target Spin Date ~ 76 Days, 19 hours, 55 min. 31 February 13, 2018 nVent Investor Day
Growth Strategy Ben Sommerness Chief Growth & Strategy Officer
nVent’s Verticals are Attractive and Growing • Characteristics Large, attractive verticals • Strong fundamentals Total accelerating growth Addressabl Expected Verticals e – Technology/Connectivity Growth Size – Electrification/Urbanization ($B) – Demographic Shifts Commercial & – Safety and Security ~22 ~3% Residential • Good mix across verticals Industrial ~18 ~4% • Many leadership positions • Infrastructure ~11 ~4% Lots of opportunity, globally Energy ~9 ~3% Total ~60 ~3-4% Solid Vertical Growth and nVent Position 33 February 13, 2018 nVent Investor Day
We Have a Leading Portfolio of Electrical Products Electrical & Fastening Enclosures Thermal Management Solutions ($935M) ($622M) ($541M) Electronics Equipment Building Industrial Fastening Electrical Protection Protection Infrastructure Heating Solutions Solutions Solutions Solutions 2017 Revenue by Segment 34 February 13, 2018 nVent Investor Day
Unifying Our Strong Brands Under nVent 2015 2012 2018 1994 1988 1966 A “Branded House” That Better Enables Portfolio Selling 35 February 13, 2018 nVent Investor Day
The nVent Strategy One nVent Accelerate Focus on Attractive Grow Globally & in Innovation & Verticals Developing Regions Connected Solutions Drive Productivity & Velocity Pursue Targeted Bolt-on Acquisitions 36 February 13, 2018 nVent Investor Day
Drive “One nVent” via Commercial Excellence Framework Developing Addressing Executing Growing 1 2 3 4 5 6 7 8 9 10 11 Communication Development Management Customer Commercial Effectiveness Branding & Creation & Generation Value Market & Market Innovation Service & Strategy Demand Product Analysis Support Insights Pricing Selling Near-Term Priorities to Drive Growth • Product Management • Customer Insights • Innovation Velocity • Strategic Pricing • Commercial Effectiveness Growth Mindset…With Rigorous Execution to Deliver on Commitments 37 February 13, 2018 nVent Investor Day
“One nVent” - Pursuing a Digital Strategy to Enable Growth Business strategy • Focus in 2018 – New web site Digitize Go-To-Market Connected Solutions – CRM launch – Product data – Configurators • Transformation over time Digitize Operations Digitize Support – 2018 – 2019 Digitize the Core Functions – 2020 – 2021 Digital End-to-End – 2021+ World Class Accelerators (People, Technology, Analytics) Customer Experience 38 February 13, 2018 nVent Investor Day
Configurators Allow Better Customer Experience • Enhancing the Digital Example: Schroff Configurator customer experience • Driving velocity by simplifying processes • Expanding configurator capability to more product lines Design Your Electronics Cabinet or Front Panel in Minutes! Connecting Our Customers to Create Value 39 February 13, 2018 nVent Investor Day
Attractive Verticals - Infrastructure DataCom & Networking Solutions • Infrastructure is a large, global vertical with attractive growth – ~$11B, ~4% growth • DataCom & Networking Solutions (DNS) is one key growth opportunity • Increase DNS sales via: – Dedicated enterprise team – Selling solutions – Building on strong Racks & Accessories Cable Pathways relationships – Bring global differentiation Cooling Grounding Coordinated Approach to Drive Infrastructure Opportunities 40 February 13, 2018 nVent Investor Day
Attractive Verticals - Commercial Commercial Building • Commercial vertical is large and growing – ~$22B, ~3% growth • Increase Commercial sales via: – Dedicated enterprise leader – Project pipeline expansion – Specification selling – Clear value propositions – Collaboration across nVent – Aligned channel to deliver Thermal Management Cable Management Fire Protection Seismic Protection DNS Lightning Protection 41 February 13, 2018 nVent Investor Day
Accelerate Innovation - 3D Process for Organic Growth 3D Product Development Process • Established, robust process driving velocity Discover Identify, Evaluate & Prioritize – Vitality up 25% since 2015 • Increasing investment with focus on ‘bigger’ ideas Develop – Technology differentiation Optimize & Validate – Better VOC, tools, and training Design – Continued 3D rigor • Expect strong new product Deploy sales contribution Execute Launch – ~50 launches in 2018 – Target ~20% vitality longer term Process Bearing Fruit, But Much More to Come 42 February 13, 2018 nVent Investor Day
Growth Globally and in Developing Regions Developed Regions Developing Regions • Approach: • Approach: – Vertical growth initiatives – Align nVent, go-to-market approach – Segment coordination – Product & manufacturing localization – Sell existing portfolio – Expanded in-region marketing – Innovative solutions – Broader channel partnerships – Aligned channel partnerships – Prioritize, such as Silk Road • Growth Examples: – ERIFLEX FLEXIBAR busbar in U.S. – CADDY fasteners in Europe – RAYCHEM XL-TRACE heat trace Sell Our Existing Portfolio…Globally! 43 February 13, 2018 nVent Investor Day
Key Takeaways • nVent is in attractive, growing verticals • We have strong, well-positioned brands and products • We are unifying under One nVent to drive portfolio growth • nVent has an exciting future with a clear, focused strategy • Underpin growth with commercial excellence velocity nVent is Poised for Strong Growth 44 February 13, 2018 nVent Investor Day
Enclosures Joe Ruzynski President, Enclosures
What You Will Hear Today • Enclosures is growing and is well positioned to grow − Strong brands positioned well in favorable verticals − Sustainable competitive advantages • We expect to grow by: − Driving growth in Industrial and Infrastructure verticals − Supporting the transformation in our channel and digitizing our front end − Growing in Developing Regions • We plan to expand margins by: − Driving productivity and lean in our newly expanded footprint − Optimizing price − Leveraging digital and increasing velocity Positioned to Drive Growth and Expand Margin 46 February 13, 2018 nVent Investor Day
Who We Are: Enclosures Description 2017 Financials We provide innovative solutions $935M that protect, connect, and manage Revenue heat in critical electronics, communication, control, and ~17% power equipment. ROS Geographies Verticals 1% 11% Other Developed Energy 69% 11% 60% Developing US & 10% Industrial Canada Commercial 18% Western Europe 19% Infrastructure 47 February 13, 2018 nVent Investor Day
We Connect and Protect Critical Controls and Components Modular Equipment Enclosure Solutions Protection Industrial controls and automation Industrial Cooling Oil & gas controls Food and beverage Hazardous Location Commercial construction Enclosures Data centers & networking Electronic Subracks and Cases Protection Data Center Solutions Rail signaling and control Test and measurement Aerospace and defense Server Cabinets Power Supplies Data centers & networking 48 February 13, 2018 nVent Investor Day
Did you know? • More than 30 million nVent enclosures are in use around the globe today • Our 4X stainless steel enclosure with POWERGLIDE handle withstood hurricane flooding for four days • Data centers with high heat densities are deploying nVent closed loop cooling systems globally • nVent backplanes provide millions of passengers a pleasant inflight entertainment experience Providing Innovative Solutions for More Than 70 Years 49 February 13, 2018 nVent Investor Day
Key 2018+ Priorities to Support nVent Strategy • Strategic channel partnerships 1 One nVent • Digitize customer experience • Accelerate in higher growth DNS Focus on Attractive 2 Verticals • Global industrial expansion • Flow capital to best opportunity Stabilize Performance & 3 • Partnered distribution model Strengthen Margin • Value based pricing • Streamlined offering in growth regions Grow Globally & in • 4 Localization of design Developing Regions • Globally serve key OEMs 50 February 13, 2018 nVent Investor Day
Well Positioned to Continue Capturing Macro Trends Macro-Trends Example Sub-Trends Segment Implications Industrial & Infrastructure Demographi c Shifts Investments in Developing Broad Footprint and Portfolio Regions Technology & Increased Data Needs … Leading Data, Networking, and Connectivity Everywhere Cooling Solutions Safety & Remote Monitoring, Predictive Security Connected Cooling and Power Maintenance Electrification & Urbanization Channel Velocity and Value Configurator and Modification Add Solutions 51 February 13, 2018 nVent Investor Day
Enclosures Has Strong Competitive Advantages • Specialized • Deep history in our engineering and Hoffman and testing expertise Schroff brands and Strong Brand Technical enables ability to Recognition reputation for Expertise deliver high quality and performance, lower reliability cost designs • Broad enclosure, • Ability to tailor cooling, and Broad products and accessory product Customized Product provide innovative offering Products and Offering and solutions to meet • Strong availability Solutions Availability complex customer through global requirements channel 52 February 13, 2018 nVent Investor Day
Differentiated Solutions Driving Customer Value • Differentiated corrosion protection solution Customer needs: • Implemented at Leading Tire Harsh environments cause “general Manufacturer for a 24 month pilot purpose” products SPECTRACOOL air to fail • Strong results at customer: conditioners with Advanced • Uptime improvement of ~500% • Rusting and Corrosion Protection • Cost savings of ~$1.4m corrosion • Equipment failures Testimonial: “Production can run • Down time more smoothly without worrying about downtime since we • Lost revenue introduced protected AC units and • Incremental remote monitoring.” Smart - Remote expense Monitoring of Air Conditioners Extends Life 53 February 13, 2018 nVent Investor Day
Using Digital to Improve the Customer Experience EASY SEARCH CONFIGURE & PRICE FULFILL & TRACK VELOCITY • Improve customer’s digital journey with flexible search and collaborative design tools • Provide better customer service through quick quoting, fast fulfillment, order tracking and online support • Support channel’s effort to add value by integrating with their sites Setting the Base for Digital Transformation 54 February 13, 2018 nVent Investor Day
Driving Growth With New Products PROTECTING PEOPLE CONTRACTOR INNOVATION Product : Product : Internal Disconnect Shield Angled Trough Customer Need: Customer Need: Reduce risk of electric shock and arc flash Cut total installation time by the elimination of costly 90-degree conduit bends Differentiating features: Differentiating features: − Angled design allows pulls through front and − Open back with holes for easy mounting eliminates need for conduit bends − Door stop to prevent incidental contact − Simple cover design for up to 80% installation − Automatic latching labor savings Strong Pipeline, Well Positioned for Growth 55 February 13, 2018 nVent Investor Day
Improving Performance and Margin Expansion Investment Execution Acceleration Past: 2015-2017 Today: 2018 Future: 2019-2022 Integrated Supply Chain Capacity Expansion Supply Chain Velocity Logistics Optimization Factory Consolidation Digital End to End Digital Front End New Distribution Center Improved Customer Experience Pricing Automation Growth and Margin Growth and Lean Stabilization and Growth Expansion Enterprise Path to Margin Expansion and Improved Customer Experience 56 February 13, 2018 nVent Investor Day
Enclosures Financial Overview Revenue ($M) ROS +4-6% $959 $935 21% $911 20% 17% ~Flat 2015 2016 2017 2018 Outlook 2015 2016 2017 2018 Outlook • • Improve the customer experience Optimize pricing • • Drive growth in key verticals Drive productivity and lean • • Introduce innovative products Remove complexity • • Grow in developing regions Leverage digital Accelerating Growth and Expanding Margins in the Second Half of 2018 57 February 13, 2018 nVent Investor Day
Key Takeaways • Enclosures is growing and is well positioned to grow − Strong brands positioned well in favorable verticals − Sustainable competitive advantages • We expect to grow by: − Driving growth in Industrial and Infrastructure verticals − Supporting the transformation in our channel and digitizing our front end − Growing in Developing Regions • We plan to expand margins by: − Driving productivity and lean in our newly expanded footprint − Optimizing price − Leveraging digital and increasing velocity Positioned to Drive Growth and Expand Margin 58 February 13, 2018 nVent Investor Day
Thermal Management Brad Faulconer President, Thermal Management
What You Will Hear Today • Our Thermal Management segment has improved profitability and we believe is positioned for sustained growth − Highly differentiated products and solutions − Diversified to capitalize on key global trends • We expect to grow by: − Launch of new products & software − Delivering Vertical growth in Industrial, Commercial and Infrastructure − Expanding regional presence through localization • We plan to expand margins by: − Driving productivity, pricing and velocity Differentiated Solutions Positioned for Growth 60 February 13, 2018 nVent Investor Day
Who We Are: Thermal Management Description 2017 Financials We provide electric thermal $622M solutions that connect and protect Revenue people, critical infrastructure, industrial processes and ~24% buildings. ROS Geographies Verticals 2% Other Developed 55% 14% 43% Developing US & 26% Industrial Canada Commercial & Residential 29% Western Europe 31% Energy 61 February 13, 2018 nVent Investor Day
A Global Leader in Thermal Management Solutions Industrial Heating Heat Tracing for Heating System Plant Piping & Components Solutions Vessels Turnkey Control, Monitoring Services & Sensing Pipe freeze protection Process temperature maintain Pipeline heating Tank & vessel heating Fire Rated Heat Tracing for Building & Wiring Cables Pipes & Surfaces Infrastructure Solutions Floor Heating Thermostats, Cables & Mats Controls Snow melting & de-Icing Radiant floor warming Liquid leak detection Life safety power cables 62 February 13, 2018 nVent Investor Day
Did you know? The world’s longest Inventor of New York High Rise buildings use heated pipeline in Self-Regulating Heating Cables with Raychem heating India uses Raychem more than a Billion technology for efficient heating technology, hot water design for engineered by Tracer Feet installed worldwide instant hot water on every floor Thermal Management Connects and Protects Around the World 63 February 13, 2018 nVent Investor Day
Key 2018+ Priorities to Support nVent Strategy • Strategic channel partnerships 1 One nVent • Digitize the customer experience • Industrial MRO Focus on Attractive 2 Verticals • Commercial & Infrastructure • Smarter, IoT enabled products Product Innovation to 3 • Capitalize on Attractive Fire, Safety and Sustainability Global Trends • Flow Assurance • Build local commercial capability Grow Globally & in 4 Developing Regions • Regionalization of products 64 February 13, 2018 nVent Investor Day
Well Positioned to Continue Capturing Macro Trends Segment Macro-Trends Differentiated Solutions Implications Connected: Heat Trace Control & Monitoring Connected Solutions Technology & Connectivity Sustainability: Systems for Fire: Life Sustainability Energy & Water savings in Safety Buildings Circuits Electrification & Urbanization Enhanced Fire and Life Safety Standards Safety: Anti-icing for Ships and Offshore Platforms, De-icing for Buildings Safety & Security Flow Assurance Demographi Flow Assurance: Protecting Critical c Shifts Regional Expansion & Pipelines Localization 65 February 13, 2018 nVent Investor Day
Thermal Has Strong Competitive Advantages • History of • Specialized innovative and engineering Strong Brand Technical high-quality Recognition Expertise expertise for products & optimized solutions services • Highly Reliable • Offer one-stop Ease of solutions that lower Installation Complete shop from products and Reduced total cost of Solutions to complete Total Cost ownership installations 66 February 13, 2018 nVent Investor Day
Differentiated Solutions Driving Customer Value Thermal Management 3D Design & Optimization Software Customer Results: TracerLynx Platform: • • Heating & Insulation optimization resulting Single database heat management in significant power load reduction design software • • Power distribution savings from reduced Imports electronic piping files and power cable and cable tray specs • • Customer case studies support 1% in overall Powerful design optimization and Heat Management System savings change management 67 February 13, 2018 nVent Investor Day
Driving Growth With New Products Innovation in Heating Innovation in Connected Technology Controls • Product: Raychem • Product: Raychem XL-Trace Control & Monitoring • Customer Need: • Customer Need: Ease Enhanced Fire Safety of use, connectivity • Differentiating • Differentiating Industrial Process Heat Tracing Controller features: features: − Low smoke, zero − Touch user interface halogen polymers − Full connectivity − 50% less smoke − Global standards 02:05 02:05 over standard cables Multi Application Controller Strong Pipeline, Well Positioned for Growth 68 February 13, 2018 nVent Investor Day
Business Performance Improvement Through PIMS • ~800 bps improvement in Operating Margins since 2012 New Product Lean Manufacturing Lean Engineering Development Redwood City Plant: Global Engineering Centers: NPD Process: • • • ~50% cycle time reduction Standard work and visual mgmt. Standard work, visual • • ~25% square foot reduction Work share across 8 offices management • • • 3 shifts to 2 shifts with ~80% lead time reduction ~10% to 20% vitality • • increased production ~100% improvement in ~25% annual increase in production output 5YIR incremental revenue Significant Process Improvements Delivering Financial Results 69 February 13, 2018 nVent Investor Day
Thermal Financial Overview Revenue ($M) ROS $703 $692 $622 +1-3% 24% 50-70 bps 22% 18% 2015 2016 2017 2018 Outlook 2015 2016 2017 2018 Outlook • Drive productivity and lean • Deliver new products & software • Remove complexity • Grow in focused verticals • Leverage digital • Regional expansion, China • Deliver pricing and velocity Thermal Sales Declined With Non-Recurring Projects, Profit Grew Solidly 70 February 13, 2018 nVent Investor Day
Key Takeaways • Our Thermal Management segment has improved profitability and we believe is positioned for sustained growth − Highly differentiated products and solutions − Diversified to capitalize on key global trends • We expect to grow by: − Launch of new products & software − Delivering Vertical growth in Industrial, Commercial and Infrastructure − Expanding regional presence through localization • We plan to expand margins by: − Driving productivity, pricing and velocity Differentiated Solutions Positioned for Growth 71 February 13, 2018 nVent Investor Day
Electrical & Fastening Solutions (EFS) Robert van der Kolk President, EFS
What You Will Hear Today • Our Electrical & Fastening Solutions (EFS) segment is well positioned for sustained growth with • Innovative solutions • End-user focused applications • Strong brands with well-defined value propositions • We expect to grow by: • Innovative new products and solutions • Targeted vertical and regional focus • Further enhanced customer experience • We plan to expand margins by: • Price/Cost, productivity, lean enterprise and simplicity Sustained Profitable Growth 73 February 13, 2018 nVent Investor Day
Who We Are: Electrical & Fastening Solutions Description 2017 Financials We provide electrical and $541M fastening solutions that Revenue connect and protect electrical and mechanical systems ~26% and civil structures. ROS Geographies Verticals 2% Other Developed 14% 57% 70% 10% Infrastructure Commercial Developing US & Canada 19% 18% Industrial Western Europe 10% Energy 74 February 13, 2018 nVent Investor Day
A Global Leader in Electrical & Fastening Solutions Electrical Solutions • .77 Electrical Installation & Protection Rail & Transit Telecom Electrical Rail & Transit Utility & Industrial Facilities Protection Fastening Solutions Electrical Installation Seismic & Fire Protection Data Communications Electrical Data HVAC Installation Communications 75 February 13, 2018 nVent Investor Day
Did you know? With over 100,000,000 nVent manufactures connections nVent sells and sells over 5,000 installed globally, ERICO products to miles of CADDY ERICO CADWELD sets all major Telescoping Screw the standard in the North American and Gun Brackets annually exothermic welding most method in the industry major international since 1939 rail companies Electrical & Fastening Solutions Connects and Protects Around the World 76 February 13, 2018 nVent Investor Day
Key 2018+ Priorities to Support nVent Strategy • Strategic channel partnerships 1 One nVent • Digitize customer experience • Innovative New Products Innovation with strong value propositions 2 & Solutions • Supported by macro trends • Focus on Solution selling across nVent portfolio 3 Attractive Verticals • Aligned approach to focused verticals • Targeted Geographic Right product, right place, right time 4 Expansion • Efficient local teams 77 February 13, 2018 nVent Investor Day
Well Positioned to Continue Capturing Macro Trends Macro-Trends Implications Differentiated Solutions CADDY Prefab Solutions Electrification & • Modular Urbanization Products • Ease of Installation ERIFLEX CADDY Seismic ERICO Rail FLEXIBAR • Reliable Safety & Products Security • Code Compliant Solutions Seismic Prefab Configurator Calculator Technology & • Ease of Use Connectivity • Interactive Solutions 78 February 13, 2018 nVent Investor Day
EFS Has Strong Competitive Advantages to Leverage WITHOUT WITH Total Cost of AID AID Ownership 53% | 83% Well-defined Brand Value Recognition Propositions 29% | 81% Design Flexibilit y 115 YEARS Regions & Innovation Diversification Verticals 79 February 13, 2018 nVent Investor Day
Differentiated Solutions Drive Customer Value Before After Panel Manufacturer Need : ▪ Save time ▪ Save space Differentiations: ▪ Flexible ▪ Customizable solution ▪ Reduce total installed cost ▪ Safety & Reliability Customer Results: ▪ Reduced installation time ▪ Less congestion in panel ▪ Improved panel performance 80 February 13, 2018 nVent Investor Day
Driving Growth With New Products Rail Switch Heating Stamped Bracing Systems Differentiated Conductors Systems CADDY ERICO ERIFLEX Stamped Seismic Bracing Rail Switch Heating System FLEXIBAR ADVANCED • Differentiating features: • Differentiating features: • Differentiating features: − Reduce total installed cost − Safety & Reliability − Unique − Ease of installation − Energy efficient − Safer − Customized solutions − Flexible Strong Pipeline, Well Positioned for Growth 81 February 13, 2018 nVent Investor Day
EFS Financial Overview Revenue ($M) ROS $541 +3-5% $513 28% 26% 26% 30-50 bps $147 2015 2016 2017 2018 Outlook 2015 2016 2017 2018 Outlook • Innovative new products & solutions • Price / Cost • Targeted vertical & regional focus • Productivity and lean enterprise • Strong brands with well defined value • Simplicity proposition Profitable Growth with More Opportunity Ahead 82 February 13, 2018 nVent Investor Day
Key Takeaways ▪ Our EFS segment is well positioned for sustained growth with ▪ Innovative solutions ▪ End-user focused applications ▪ Strong brands with well-defined value propositions ▪ We expect to grow by: ▪ Innovative new products and solutions ▪ Targeted vertical and regional focus ▪ Further enhanced customer experience ▪ We plan to expand margins by: ▪ Price/Cost, productivity, lean enterprise and simplicity Sustained Profitable Growth 83 February 13, 2018 nVent Investor Day
Investment Thesis & Financial Outlook Stacy McMahan Chief Financial Officer
What You Will Hear Today • Expect Industry Growth • Positive Macro Environment • Highly Profitable Business with Sustained Margin Performance • Consistent, Strong Cash Flow • Disciplined Capital Allocation An Attractive Long-Term Investment 85 February 13, 2018 nVent Investor Day
Differentiated Growth Organic: • Favorable macro trends • Differentiated opportunities in verticals • New products and connected solutions • Underpenetrated in certain global verticals Inorganic: • Attractive bolt-on targets in highly fragmented markets Focus on Establishing Reliable Growth Profile 86 February 13, 2018 nVent Investor Day
Favorable Margin Profile 2017 Adj. EBITDA Margin 1 of Select Electrical Peers 23.9% 23.7% 22.5% Starting from a position of 21.0% 18.2% competitive margin… 17.3% 17.3% 16.5% Sales & Adjusted EBITDA Margin 1 …with established margin $2,116 $2,098 performance via : $1,809 • Diversification • Growth in new regions and new products 21% 21% 20% • MRO business mix • Lean enterprise 2015 2016 2017 Sales Adj. EBITDA Margin Note: Adjusted EBITDA Margin excludes the impact of non-cash amortization, certain acquisition related expenses, costs of restructurin g activities, “mark -to- market” gain (loss) for pension and other post-retirement plans, impairments, and other unusual non-operating items. ¹ 2017A adj. EBITDA margins for Littelfuse, nVent, and Hubbell, 2017E adj. EBITDA margins for Amphenol, Legrand, Thermon, Eaton, and Schneider Electric based on IBES estimates. Hubbell not pro forma for the acquisition of Aclara. February 13, 2018 nVent Investor Day
A Clear Opportunity to Drive Margin Expansion • Drive profitable growth ‒ Commercial excellence ‒ Pricing optimization ‒ Product vitality acceleration • Expand lean enterprise ‒ Lean information flow ‒ Integrated supply chain • Driving common processes and systems Runway for Sustained Profitability Improvement 88 February 13, 2018 nVent Investor Day
Strong Cash Flow Generation Free Cash Flow 1 Capital Expenditures $75 $334 $251 $232 $47 $32 3.5% 86% 2.6% 115% 109% 1.5% 2015 2016 2017 2015 2016 2017 Capex % of Sales (%) Free Cash Flow % Adj. Net Income • • Target free cash flow at 100% of Low capital intensity adjusted net income • Expect capital expenditures to • Drive working capital velocity equal depreciation Consistent and Strong Free Cash Flow Generation 1.Free cash flow represents net cash provided by operating activities, less capital expenditures, plus proceeds from sale of property and equipment. February 13, 2018 nVent Investor Day
Conservative Capital Structure and Allocation Philosophy • Target investment grade metrics • Balanced capital deployment strategy • Competitive dividend policy • Share repurchases to offset dilution at a minimum • Bolt-on acquisitions targeting focused growth areas Committed and Disciplined 90 February 13, 2018 nVent Investor Day
M&A Strategy Key Considerations: • How does the target fit nVent’s strategy? • How compelling are the financials of the deal? • Why are we the right buyer? • What’s our integration plan? • Who’s the integration team? Example of Financial Targets: • ROIC crosses cost of capital at 24 months • Accretive at 12 months Well Prepared to Execute 91 February 13, 2018 nVent Investor Day
nVent Financial Overview Revenue ($B) Segment Income ($M) ~$420 $404 $401 $2.12 $2.10 +3-5% $339 * $1.81 * 2015 2016 2017 2018 Outlook 2015 2016 2017 2018 Outlook Pro Forma Adjusted EPS Summary $1.70-$1.80 • • $1.58 Interest: $40M in Sales expected to be up 3-5% on 2-4% 2017, ~30M in 2018 core sales growth • +~10% Segment Income growth, inclusive of • Tax rate: 20% in 2017, ~18% in 2018 incremental growth investment • Target free cash flow = Adj. Net Income • Share count: 184M • Tax rate tailwind in 2018 in 2017, ~183M in 2018 2017 2018 Outlook Expecting Solid Top Line and Adjusted EPS Growth February 13, 2018 nVent Investor Day 92 *Includes 3 months from ERICO acquisition
2017 and 2018 Revenue Performance 2017 2018E ~$2.2B $2.1B $12M $2.1B $2.1B $1M ~$25M ~$15M $58M ~$40M ($89M) -0.9% +3-5% YoY YoY 3 pts 0 pts (4 pts) 1 pts ~2 pts ~1 pts ~1 pts (1 pt) (1 pt) Acq./ 2016 Volume Price FX 2017 2017 Volume Price FX 2018E Large Jobs Summary Summary Adjusted Core Sales Up ~3% Core Sales Up 2-4% • • Enclosures Up 2% Enclosures Up 3-5% • • Thermal Management Up 4% Thermal Management Up 0-2% • • EFS Up 2% EFS Up 2-4% Focused Initiatives Drive Growth in 2018 93 February 13, 2018 nVent Investor Day
2017 and 2018 Segment Income Performance 2017 2018E $28M $50M $15M $2M ~$15M ~$5M $401M $404M ~$420M $404M ($42M) ($55M) 1% ~4% YoY YoY Net of Growth Investment ROS ROS ROS ROS 19% 19% 19% ~19% (1 pt) (1 pt) Growth/ Growth/ 2016 FX Inflation Prod. 2017 2017 FX Inflation Prod. 2018E Price/Acq. Price Summary Summary • • Income up 1%, ROS +20 bps Income up ~4% • • Price lagged inflation, positive exit rate Flat ROS inclusive of growth investments • • Stabilizing productivity headwinds in Expect Enclosures margin improvement Enclosures in 2H 2018 Investing in Growth and Accelerating Productivity February 13, 2018 nVent Investor Day 94
2017 and 2018 Adjusted EPS and Free Cash Flow Adjusted EPS Free Cash Flow ~$35M $1.70-$1.80 ~$.03 ~$.04 ~$320M ~$320M ~$.08 ~$0M $1.58 - Restructuring (~$35M) - Taxes + Working __Capital +~10% YoY ~5% ~2% ~3% (1 pt) (1 pt) 2017 Pro Segment 2018 Adj. 2018 Adj. Net Work Cap/ Interest Tax Rate Depreciation Capex 2018E EPS Outlook Forma EPS Income Inc. Outlook Other Summary Summary • • Interest expense dependent on final Business is not capital intensive capital structure • Capex is ~2% of estimated 2018 sales • Effective tax rate improves to ~18%, • Target free cash flow to equal adjusted down 2 points from 2017 rate net income • Shares of ~183M Expecting to Deliver Double Digit Adjusted EPS Growth 95 February 13, 2018 nVent Investor Day
Full Year 2018 nVent Outlook Enclosures Thermal EFS Total Core Sales Up 3-5% Up 0-2% Up 2-4% Up 2-4% ROS ~Flat +50-70bps +30-50bps ~Flat Corporate Expenses ~$45M Interest Expense ~$30M Tax Rate ~18% Adjusted EPS $1.70 - $1.80 Shares ~183M Key Considerations • • FX sales benefit of ~1% Capital expenditures ~2% of sales • • ROS inclusive of growth investments Total D&A of ~$100M + ~$13M of non- • Tax rate benefit of ~2% from tax cash stock compensation reform Stand Up nVent While Growing the Top Line and Investing in Growth 96 February 13, 2018 nVent Investor Day
Long-Term Financial Outlook Strong - GDP growth plus one or two points Growth - EPS grows multiple points faster than sales Disciplined - Competitive dividend policy Capital - Repurchase shares to offset dilution Allocation - Active and disciplined M&A program Robust Cash - Free Cash Flow conversion at 100% of Adjusted Net Income Generation - Best in class Working Capital management Strong -Target Investment grade metrics Balance - Sustain prudent liquidity levels Sheet 97 February 13, 2018 nVent Investor Day
Investment Thesis Mission-Critical Solutions Maximize Customer Efficiency Conservative Leading Industry Capital Structure Positions, Brands & Capital and Footprint Allocation Philosophy Value Creation Diversified Across Strong Cash Flow Products, Verticals Generation and Customers Strong Financial Profile and Operational Focus Generate Shareholder Value with Leading Brands and a Competitive Playbook 98 February 13, 2018 nVent Investor Day
10 Minute Break
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