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What changed in nVent Electric plc's 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of nVent Electric plc's 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+274 added−274 removedSource: 10-K (2024-02-20) vs 10-K (2023-02-28)

Top changes in nVent Electric plc's 2023 10-K

274 paragraphs added · 274 removed · 196 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

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Biggest changeWe participate in and review remuneration surveys from leading, independent consultants for all of our countries so that we have the information to set competitive wages and salaries. We are dedicated to providing equitable compensation as a commitment to our people. By focusing on equitable pay, we enhance our ability to grow, retain and motivate diverse employees on our team.
Biggest changeCompensation and Benefits We strive to offer our employees across the world comprehensive benefit programs that reflect the market practices in their country of employment. We participate in and review remuneration surveys from leading, independent consultants for all of our countries so that we have the information to set competitive wages and salaries.
Reserves for policy claims are established based on actuarial projections of ultimate losses. Accruals are established with respect to liabilities insured by third parties, such as liabilities arising from acquired businesses, pre-Tonka Bay liabilities and those of certain non-U.S. operations. Matters pertaining to Tonka Bay are discussed in ITEM 3, included in this Form 10-K.
Reserves for policy claims are established based on actuarial projections of ultimate losses. Accruals are established with respect to liabilities 3 insured by third parties, such as liabilities arising from acquired businesses, pre-Tonka Bay liabilities and those of certain non-U.S. operations. Matters pertaining to Tonka Bay are discussed in ITEM 3, included in this Form 10-K.
We do not expect the termination of patents, patent applications or license agreements to have a material adverse effect on our financial position, results of operations or cash flows. 3 Captive insurance subsidiary We insure certain general and product liability, property, workers' compensation and automobile liability risks through our regulated wholly-owned captive insurance subsidiary, Tonka Bay Insurance Company ("Tonka Bay").
We do not expect the termination of patents, patent applications or license agreements to have a material adverse effect on our financial position, results of operations or cash flows. Captive insurance subsidiary We insure certain general and product liability, property, workers' compensation and automobile liability risks through our regulated wholly-owned captive insurance subsidiary, Tonka Bay Insurance Company ("Tonka Bay").
The scorecard focuses on five quantitative metrics to help drive year-over-year improvement in the following categories: • Inclusion Index score from our employee engagement survey and two employee pulse surveys • Diverse candidate slates • Global gender representation for our professional and management populations • U.S. racial representation for our professional and management populations • Reduction in Scope 1 and Scope 2 CO 2 emissions Additional details on our ESG Scorecard will be provided in our annual Proxy Statement for our 2023 annual general meeting of shareholders.
The scorecard focuses on five quantitative metrics to help drive year-over-year improvement in the following categories: • Inclusion Index score from our employee engagement survey and two employee pulse surveys • Diverse candidate slates • Global gender representation for our professional and management populations • U.S. racial representation for our professional and management populations • Reduction in Scope 1 and Scope 2 CO 2 emissions Additional details on our ESG Scorecard will be provided in our annual Proxy Statement for our 2024 annual general meeting of shareholders.
We record as part of our backlog all orders from external customers, which represent firm commitments, and are supported by a purchase order or other legitimate contract. We expect the majority of our backlog at December 31, 2022 will be shipped in 2023.
We record as part of our backlog all orders from external customers, which represent firm commitments, and are supported by a purchase order or other legitimate contract. We expect the majority of our backlog at December 31, 2023 will be shipped in 2024.
Additionally, we assess the EHS maturity of our locations by measuring progress against nVent's EHS Lean Assessment and Standards and region specific regulatory compliance evaluations, as well as nVent's employee driven risk notification program. Results are reviewed monthly to reduce recordable injury rates and to drive improvement within our EHS programs.
Additionally, we assess the Environmental, Health and Safety ("EHS") maturity of our locations by measuring progress against nVent's EHS Lean Assessment and Standards and region-specific regulatory compliance evaluations, as well as nVent's employee driven risk notification program. Results are reviewed monthly to reduce recordable injury rates and to drive improvement within our EHS programs.
We are committed to investigating and responding to reported concerns. nVent prohibits retaliation against anyone who raises concerns or makes good-faith reports regarding possible breaches of law, policy or ethical violations. Workplace Health and Safety The safety and well-being of our employees is our top priority. We are committed to preventing workplace injuries and maintaining a positive, healthy work environment.
We are committed to investigating and responding to reported concerns. nVent prohibits retaliation against anyone who raises concerns or makes good-faith reports regarding possible breaches of law, policy or ethical violations. Workplace Health and Safety The safety and well-being of our employees is our top priority.
Spark supports the high performance culture we are building at nVent. • People are at the core of Spark, positively impacting our business and growing their careers. • Growth is the foundation of Spark, driving shareholder, customer and employee value. • Lean is the relentless pursuit of eliminating waste and increasing velocity. • Digital transforms our products and how we do business, improving both customer and employee experiences. • Velocity is increasing speed in all we do for each other and our customers. 1 BUSINESS AND PRODUCTS We operate across three segments: Enclosures, Electrical & Fastening Solutions and Thermal Management.
Spark supports the high performance culture we are building at nVent. • People are at the core of Spark, positively impacting our business and growing their careers. • Growth is the foundation of Spark, driving shareholder, customer and employee value. • Lean is the relentless pursuit of eliminating waste and increasing velocity. • Digital transforms our products and how we do business, improving both customer and employee experiences. • Velocity is increasing speed in all we do for each other and our customers.
The fund provides financial assistance to eligible employees worldwide who experience an unforeseen disaster or hardship and allows all nVent employees to support their coworkers through donations to the fund. The fund operates through donations from nVent and individual employees. Employee donations are eligible for matching through our nVent in Action program.
The fund provides financial assistance to eligible employees worldwide who experience an unforeseen disaster or hardship and allows all nVent employees to support their coworkers through donations to the fund. The fund operates through donations from nVent and individual employees.
In 2015, Pentair acquired ERICO Global Company, a leading global manufacturer of superior engineered electrical and fastening products, which operates as our Electrical & Fastening Solutions business, broadening our product offering and enabling us to provide additional global solutions to our combined customers.
In 2015, Pentair acquired ERICO Global Company, a leading global manufacturer of superior engineered electrical and fastening products, which operates as our Electrical & Fastening Solutions business, broadening our product offering and enabling us to provide additional global solutions to our combined customers. Since the separation, our business strategy has included acquisitions and making investments that complement our existing business.
ITEM 1. BUSINESS COMPANY OVERVIEW nVent Electric plc is a leading global provider of electrical connection and protection solutions. We believe our inventive electrical solutions enable safer systems and ensure a more secure world. We design, manufacture, market, install and service high performance products and solutions that connect and protect mission critical equipment, building and essential processes.
ITEM 1. BUSINESS COMPANY OVERVIEW nVent Electric plc is a leading global provider of electrical connection and protection solutions. We believe safer systems ensure a more secure world. We connect and protect with inventive electrical solutions. We design, manufacture, market, install and service high performance products and solutions that are helping to build a more sustainable and electrified world.
HUMAN CAPITAL MATTERS As of December 31, 2022, we employed approximately 10,400 people worldwide, of which approximately 35% are located in the U.S. Outside the U.S., we have employees in certain countries, particularly in Europe, that are represented by an employee representative organization, such as a union, works council or employee association.
HUMAN CAPITAL MATTERS As of December 31, 2023, we employed approximately 11,300 people worldwide, of which approximately 35% are located in the U.S. Outside the U.S., we have employees in certain countries that are represented by an employee representative organization, such as a union, works council or employee association. Inclusion and Diversity We are an equitable, inclusive and diverse company.
Backlog of Orders by Segment December 31 In millions 2022 2021 $ change % change Enclosures $ 361.9 $ 296.2 $ 65.7 22.2 % Electrical & Fastening Solutions 78.7 70.8 7.9 11.2 Thermal Management 166.7 191.5 (24.8) (13.0) Total $ 607.3 $ 558.5 $ 48.8 8.7 % A substantial portion of our revenues result from orders received and products delivered in the same month.
Backlog of Orders by Segment December 31 In millions 2023 2022 $ change % change Enclosures $ 373.1 $ 361.9 $ 11.2 3.1 % Electrical & Fastening Solutions 89.7 78.7 11.0 14.0 Thermal Management 176.3 166.7 9.6 5.8 Total $ 639.1 $ 607.3 $ 31.8 5.2 % A substantial portion of our revenues result from orders received and products delivered in the same month.
The goal of these reviews is to ensure internal pay alignment and equitable treatment for employees, as well as providing competitive and performance-based pay. 4 Environmental, Social and Governance ("ESG") Scorecard In 2021, we introduced a People and Culture Scorecard performance metric in our annual incentive compensation plan for management employees.
The goal of these reviews is to ensure internal pay alignment and equitable treatment for employees, as well as providing competitive and performance-based pay. 4 Environmental, Social and Governance ("ESG") Scorecard A portion of our annual incentive compensation plan for management employees consists of an ESG Scorecard that is intended to align with our ESG goals reported in our 2022 ESG Report.
Inclusion and Diversity We are an equitable, inclusive and diverse company. We believe that the unique contributions of individuals with varying backgrounds and experiences will benefit our businesses. Guided by our Win Right values, we are committed to creating a workplace culture where everyone is included and respected.
We believe that the unique contributions of individuals with varying backgrounds and experiences will benefit our businesses. Guided by our Win Right values, we are committed to creating a workplace culture where everyone is included and respected. Our Code of Conduct outlines our commitment to equal opportunity and fair treatment for all.
We believe diverse teams drive innovation, connection and growth for our employees. As part of this commitment to our people, we conduct pay parity reviews of our compensation systems.
We are dedicated to providing equitable compensation as a commitment to our people. By focusing on equitable pay, we enhance our ability to grow, retain and motivate diverse employees on our team. We believe diverse teams drive innovation, connection and growth for our employees. As part of this commitment to our people, we conduct pay parity reviews of our compensation.
Action items in the people manager goal included: completing all performance processes including goal setting, mid-year, and annual reviews on time; creating an action plan from the 2022 employee engagement survey results; ensuring new employees complete one nVent culture training; supporting an increase in the diversity of our candidate slates; and helping to ensure that people managers and their direct reports completed all ethics and compliance training on time.
Action items in the people leader goal included: completing all performance processes including goal setting, mid-year, and annual reviews; creating an action plan from the 2023 employee engagement survey results; focusing on our safety-first approach; ensuring new employees complete nVent culture training; driving diverse slates within the interviewing process; and helping to ensure the completion all ethics and compliance trainings.
Our success depends on a variety of factors, including technical expertise, reputation for quality and reliability, timeliness of delivery, new product innovation, previous installation history, contractual terms and price.
Our success depends on a variety of factors, including technical expertise, reputation for quality and reliability, timeliness of delivery, new product innovation, previous installation history, contractual terms and price. As many of our products sell through electrical distributors, contractors and original equipment manufacturers, our success also depends on building and partnering with a strong channel and distribution network.
We focus on growing our leaders through coaching and feedback with enterprise-wide, and senior level mentorship programs. We also offer a rotational program for early career hires to grow in their careers. We continue to grow our leaders in leading through change and transition.
We focus on developing our employees through Continuous Conversation development discussions between employees and people leaders. We provide development opportunities for employees to learn through interactions with other leaders in our enterprise-wide and senior level mentorship programs. We also offer a rotational program for early career hires to grow in their careers.
In addition, throughout 2022, we conducted two pulse surveys with questions focused on our Inclusion Index and employee satisfaction. Results from each of the pulse surveys were shared with people managers, who were encouraged to discuss results and potential improvement areas with their teams.
All of our people leaders were required to share survey results with their teams and develop action plans to address specific areas of improvement. In addition, throughout 2023, we conducted two pulse surveys with questions focused on our Inclusion Index and employee satisfaction.
We are also focused on the well-being of our employees. Well-being was identified as an area of focus following our 2022 employee engagement survey. During 2022, we launched the Employee Assistance Programs ("EAPs") in all of our global locations. Our EAPs provides free, confidential resources to employees who may be experiencing personal difficulties and need help navigating through them.
We are also focused on the well-being of our employees. Well-being was identified as an area of focus following our 2022 Employee Engagement Survey. Since then, we have introduced a number of programs to support and enhance employee well-being including: • Employee Assistance Programs ("EAPs") in all of our global locations.
Lastly, we launched a revised performance process within the U.S. for our hourly production employees, and expect to launch the revised process throughout the globe so that our leaders continue to regularly engage with their employees to discuss performance, development and career aspirations. Code of Conduct Training We released a refreshed Code of Conduct in June 2022.
Lastly, we are continuing to digitalize and standardize our performance process for our global hourly production employees so that our leaders continue to regularly engage with their employees to discuss performance, development and career aspirations. 5 Code of Conduct Training We launched a web version of our Code of Conduct in December 2023 for employees on our intranet site.
Our leaders actively support and encourage employee development and engagement, including through our CEO Inclusion Council and an active Inclusion & Diversity Advisory Council. These councils promote inclusion across all dimensions of diversity.
Our leaders actively support and encourage employee development and engagement, including through our CEO Inclusion Council and our Inclusion & Diversity Advisory Council. These councils promote inclusion across all dimensions of diversity. We currently have nine Employee Resource Groups (“ERGs”) designed to create opportunities for development while assisting in meeting business objectives.
Employee Engagement and Development We believe it is important to hear from our employees to learn about what we are doing well, and where we can become stronger. In 2022, we completed our third global Employee Engagement Survey with targeted questions about inclusion and our strengths as an employer.
Employee Engagement and Development We believe it is important to hear from our employees to learn about what we are doing well and where we can become stronger. In 2023, we invited all employees (including employees from our two acquisitions in 2023, ECM Industries and TEXA Industries) to participate in our fourth full Employee Engagement Survey.
Our Spark management system defines how we operate. The five elements of Spark are People, Growth, Lean, Digital and Velocity. Together, they provide the mindset and operating system to propel the success of our company.
Together, they provide the mindset and operating system to propel the success of our company.
As part of our annual goal planning process, all of our people managers were assigned a people manager goal focused on engaging and developing their employees.
Results from each of the pulse surveys were shared with people leaders, who were encouraged to discuss results and potential improvement areas with their teams. As part of our annual goal planning process, all of our people leaders were assigned a people leader goal focused on engaging and developing their employees.
We continued our efforts to develop our people throughout 2022, with focused efforts on developing our leaders. Throughout 2022, our senior level employees participated in McKinsey’s Connected Leadership Academies, and our early- to mid-career employees participated in their Management Accelerator programs. We offer internal leadership development programs to team leads, people leaders, and senior level leaders.
We continued our efforts to develop our people throughout 2023. We offered senior level employees the opportunity to participate in McKinsey’s Connected Leadership Academies; our mid-career managers the ability to participate in the Management Accelerator programs; and our early career, individual contributors the opportunity to participate in Leadership Essentials.
We are “One nVent”, with a unified focus on commercial excellence, digital transformation, scaled and integrated technology, and global presence and capabilities. As we continue scaling our capabilities under our umbrella brand of nVent, we expect to expand our products and solutions and to continue to differentiate our company by creating solutions that solve problems for our customers.
As we continue scaling our capabilities under our umbrella brand of nVent, we expect to expand our products and solutions and to continue to differentiate our company by creating solutions that solve problems for our customers. 1 Our Spark management system defines how we operate. The five elements of Spark are People, Growth, Lean, Digital and Velocity.
Topics included nVent’s Code of Business Conduct & Ethics, Creating an Inclusive Environment, and Conflicts of Interest. In 2022, we completed the training with a 100% completion rate among professional employees. Additionally, we launched role-based training in the areas of Bribery, Kickbacks, Gifts & Hospitality, Conflicts of Interest and Data Privacy.
In 2023, 100% of professional employees completed the training. Additionally, we launched role-based training in the areas of Bribery, Kickbacks, Gifts & Hospitality, Conflicts of Interest, Data Privacy and Cybersecurity. In 2023, we trained 90% of our offline, factory team members globally on our Code of Conduct.
We offer a comprehensive range of enclosures, electrical fastening solutions and thermal management solutions across industry-leading brands that are recognized globally for quality, reliability and innovation. Our broad range of products and solutions connect and protect our customers’ mission-critical equipment from hazardous conditions, improving their utilization, lowering costs and minimizing downtime.
We have a comprehensive portfolio of enclosures, electrical fastening solutions and thermal management solutions, and we are recognized globally for quality, reliability and innovation. Our broad range of products and solutions support industrial, commercial and residential, infrastructure, and energy applications around the world.
We have a portfolio of premier, industry-leading brands, including nVent CADDY, ERICO, HOFFMAN, RAYCHEM, SCHROFF and TRACER, some of which have a history spanning over 100 years, that cover a wide range of verticals, including Industrial, Commercial & Residential, Infrastructure and Energy.
Our solutions help our customers improve energy efficiency, ensure resiliency and protection, increase customer productivity, design for extended lifespan and serviceability, enhance safety and contribute to more sustainable operations. Our portfolio of premier, industry-leading brands, some of which have a history spanning over 100 years, includes nVent CADDY, ERICO, GARDNER BENDER, HOFFMAN, ILSCO, RAYCHEM, SCHROFF and TRACER.
We utilize a common safety standard identified within our EHS Lean Assessment highlighting expectations surrounding management commitment, employee engagement, metrics, regulatory compliance and hazard control. We monitor and track health and safety data, including employee injuries, environmental releases and regulatory inspections.
We are committed to maintaining a healthy and safe work environment and preventing workplace injuries. We utilize a safety model based on three pillars: management commitment, controlled hazards and employee engagement. We monitor and track health and safety data, including employee injuries, environmental releases and regulatory inspections.
Applications include pipe freeze protection, roof and gutter deicing, surface snow melting, hot water temperature maintenance, floor heating, fire rated wiring and leak detection for healthcare, recreation, hospitality, commercial offices and education facilities. 2 Competition The markets for our products and services are geographically diverse and highly competitive.
For commercial, residential and infrastructure, we provide products such as pipe freeze protection, surface deicing, hot water temperature maintenance, floor heating, fire rated wiring and leak detection. We offer services and advanced engineering tools to complement our solutions, and our design and after-sales services help to extend the lifespan of our products.
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The cost of our products typically represents a small proportion of the total cost of our customers’ end systems. We also are a small cost relative to the potential cost of failure that our products help avoid.
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In 2023, as part of our Electrical & Fastening Solutions reporting segment, we completed the acquisition of ECM Investors, LLC, the parent of ECM Industries, LLC ("ECM Industries"), for approximately $1.1 billion in cash, subject to customary adjustments. ECM Industries is a leading provider of high-value electrical connectors, tools and test instruments and cable management.
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The following is a brief description of each of the Company's reportable segments and business activities. Enclosures Our Enclosures business provides innovative solutions to connect and protect critical electronics, communication, control and power equipment.
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We are “One nVent”, with a unified focus on commercial excellence, digital transformation, scaled and integrated technology, and global presence and capabilities.
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We are a leader in the enclosures sector, and our key brands, nVent HOFFMAN and SCHROFF, have a long history of solving customers’ problems by providing high quality solutions. We also are a leading data solutions provider.
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BUSINESS AND PRODUCTS At nVent, we operate across three segments: Enclosures, Electrical & Fastening Solutions and Thermal Management. Our products and solutions are used in a wide range of verticals, including, Industrial, Commercial & Residential, Infrastructure and Energy. The following is a brief description of each of the Company's reportable segments and business activities.
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Our cooling, power distribution and enclosures solutions manage power and create protected operating environments for mission critical applications. nVent HOFFMAN provides trusted enclosure solutions for challenging operating environments and is one of the largest brands of enclosures in North America and a leader globally.
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Enclosures Our Enclosures business provides innovative solutions to help protect electronics and data in mission critical applications, including data solutions, that improve reliability and energy efficiency. We are an enclosures leader in the U.S. and globally.
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The offerings connect and protect through reliable solutions that protect, power and cool equipment used by panel builders, original equipment manufacturers and directly by other end-users, including customized products.
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We believe that trends like industrial automation, sustainability and digitalization, including increased use of artificial intelligence, are helping to drive the need for our products. Our standard and custom protective enclosures, cooling solutions and power distribution solutions help manage power and protect operating environments for mission critical applications. Our solutions help make systems more resilient, helping avoid downtime.
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The nVent HOFFMAN brand is over 75 years old and is recognized for delivering superior design, testing, certification and overall product quality. nVent HOFFMAN’s product customization and global footprint, along with reputation, have helped it garner long-standing relationships with many of the world’s largest industrial companies. nVent SCHROFF provides highly-customized and technologically-advanced enclosures.
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We sell globally but serve locally with local manufacturing and regional supply chains. We offer digital and automation solutions, easy system integrations and global service. Our solutions are deployed by panel builders, original equipment manufacturers and directly by other end users across key verticals, including large cloud service providers. Our Enclosures brands include nVent HOFFMAN and SCHROFF.
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These products connect and protect mission-critical electronics and communications equipment by providing a wide range of innovative standard products and customized solutions. nVent SCHROFF’s innovation is demonstrated by its constant flow of new product designs, including a focus on smart products capable of providing connectivity and remote management.
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Electrical & Fastening Solutions Our Electrical & Fastening Solutions business provides innovative solutions that connect and protect in power and data infrastructure. Our offerings enhance end-user safety, reduce installation time and provide resiliency for critical systems. We are a leading global electrical and fastening solutions provider known for industry expertise and innovation.
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The nVent SCHROFF brand is a leader due to its product flexibility and customer-first focus. Electrical & Fastening Solutions Our Electrical & Fastening Solutions business provides fastening solutions that connect and protect electrical and mechanical systems and civil structures.
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Our power connections, fastening solutions, cable management solutions, grounding and bonding systems, tools and test instruments help provide efficiencies to contractors and provide resiliency for critical systems. We have deep application expertise across our products and verticals we serve. Our products and solutions are primarily used by contractors, electrical utilities, electricians, lightening protection installers and panel builders.
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We are a global leader in fastening solutions with spring steel and specialty metal fixings and reinforced steel connections, and our products are primarily marketed under the nVent CADDY brand.
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Our Electrical & Fastening Solutions brands include nVent CADDY, ERICO, GARDNER BENDER and ILSCO. Thermal Management Our Thermal Management business provides mission critical heat management solutions that protect people and assets and enhance process efficiency and performance. Our offerings help ensure critical safety, maximize uptime and deliver lower total cost of ownership.
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Our products reduce total installed cost by ease of installation, provide design flexibility and increase structural integrity in electrical and mechanical fastening applications through inventive products and solutions and customer intimacy. These products are targeted towards commercial and industrial verticals with applications in fire & seismic, data & telecommunications, electrical fastening and heating, ventilation and air conditioning.
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We are a global leader in thermal management solutions with a large installed base. For industrial and energy, our products and solutions include heat tracing for freeze protection and process temperature maintenance and temperature control.
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These products are primarily used by electricians, telecommunications installers and roof top contractors. We are also a global leader in bonding, grounding, lightning protection and low voltage power distribution products and solutions. These products are primarily marketed under the nVent ERICO brand.
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These services include auditing heat trace systems, connected controls, remote monitoring and annual service programs. Our products and solutions are primarily deployed by building owners, facility managers, operators and other end users across key verticals. Our Thermal Management brands include nVent RAYCHEM and TRACER. 2 Competition The markets for our products and services are geographically diverse and highly competitive.
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We offer a comprehensive range of facility electrical connection and protection solutions to protect against electrical transients to improve safety and reliability of electrical systems. Our products reduce total cost of ownership and provide design flexibility by offering maintenance free and reliable products and global end-user application expertise and intimacy.
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All ERGs are employee-led and employee-driven and open to all nVent employees. They provide a support system to foster awareness, inclusion and respect. In 2023, our ERG membership grew to over 1,600 members. All executive officers manage diversity action plans for their respective business segments and functions.
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These products are targeted towards commercial, infrastructure and industrial verticals with applications in telecommunication, power distribution and facility electrical protection. These products and solutions are primarily used by electricians, panel builders, energy contractors and lightning protection installers. Thermal Management Our Thermal Management business provides electric thermal solutions that connect and protect critical buildings, infrastructure, industrial processes and people.
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These action plans are aligned with our public-facing goals and highlight focused efforts on improving human capital metrics, engagement, and awareness of inclusion and diversity initiatives.
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Its highly reliable and easy-to-install solutions lower total cost of ownership to building owners, facility managers, operators and end users. Thermal Management’s products have been installed in some of the world’s most iconic buildings.
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The following sets forth information regarding the diversity of our workforce as of December 31, 2023, excluding businesses we acquired in 2023 and direct field labor employees, representing workers with contractual agreements for short-term labor: Percent of executive leadership (1) Percent of management Percent of all other employees Racially diverse (2) 14% 21% 44% Women (3) 38% 27% 26% (1) Our executive leadership is defined as the Chief Executive Officer and the direct reports of the Chief Executive Officer that are officers of nVent.
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For industrial and energy, we provide industrial heat-tracing and wiring, control and monitoring, sensing, engineering and construction services under industry leading nVent RAYCHEM and TRACER brands, primarily serving chemical and other industries. Products and solutions include heat tracing for freeze protection and process temperature maintenance, temperature control and monitoring systems, heat-traced tubing bundles, instrument winterization and tank heating systems.
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(2) Data for U.S. employee population only. (3) Global data. Our Supplier Diversity Program promotes engagement, growth and innovation through diverse business relationships. We have trained our supply teams on the importance of supplier diversity and providing them the tools to seek and include diverse suppliers in our competitive sourcing.
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For commercial, residential and infrastructure, we provide products and services primarily under our nVent RAYCHEM brand.
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Our participation rate was 81%, exceeding the benchmark by six points, and we received comments from 39% of respondents. We have achieved a six point increase in our employee engagement score since our first survey in 2018.
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As many of our products sell through electrical distributors, data center contractors, original equipment manufacturers and maintenance contractors, our success also depends on building and partnering with a strong channel and distribution network.
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Our EAPs provides free, confidential resources worldwide to employees or their household family members who may be experiencing personal difficulties and need help navigating through them. • Employee Relief Fund, providing opportunities for employees to support each other during difficult times.
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Our Code of Conduct outlines our commitment to equal opportunity and fair treatment for all. We do not tolerate acts of harassment, including any conduct or statements made on the basis of protected status that are intimidating, hostile or abusive.
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Employee donations are eligible for matching through our nVent in Action program. • Caregiving Program in the U.S., providing back-up care for children, elders and pets along with a paid caregiver leave for immediate family member care. • Musculoskeletal Support Program, in the U.S. offering personalized physical therapy from prevention to pre- and post-surgery support.
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We also support our Employee Resource Groups (“ERGs”), which were created organically by our employees and which provide a support system to foster awareness, promote inclusion and respect and provide a sounding board on strategic initiatives for nVent. Open to all employees, the ERGs are designed to create connections and opportunities for development, training and community involvement.
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We continue to grow our employees in their capabilities to lead through change and transition.
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In 2022, we had approximately 1,000 members globally in our ERGs. All of our executive officers have diversity action plans for their business segments and functions, highlighting focused efforts on improving human capital metrics, engagement and a deeper awareness of inclusion & diversity.
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This interactive version includes videos and animations to make it easier for employees to access resources and navigate the Code of Conduct. In 2023, our Code of Conduct training was offered in 12 different languages to employees in 35 countries. Topics included Sexual Harassment, Bribery, Cybersecurity, Modern Slavery and a module on Ethical Leadership tailored for people leaders.
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Global Gender Diversity In The Workplace, as based on EEO-1 Report categories (as of December 31, 2022): • 38% of our executive leadership team are female; 62% are male • 26% of our global management team are female; 74% are male • 25% of all other employees are female; 75% are male In 2021, we launched a formal Supplier Diversity program which promotes engagement, growth and innovation through diverse business relationships.
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Since then, we have trained many internal stakeholders on Supplier Diversity and created supporting tools and resources for our sourcing teams. Compensation and Benefits We strive to offer our employees across the world comprehensive benefit programs that reflect the market practices in their country of employment.
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To broaden the focus of the scorecard and further align with our ESG goals reported in our 2021 ESG Report, we renamed it the ESG Scorecard for the 2022 plan year.
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All employees were invited to participate in the survey and provide confidential feedback. We had an 82% participation rate, and achieved a two point favorability increase in employee satisfaction compared to our 2020 survey. All of our people managers were required to share survey results with their teams, and develop action plans to address specific areas of improvement.
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There is no charge for employees or their household family members to use the program, which provides support for a range of topic, from stress-related challenges to substance abuse, financial concerns to legal matters. Also in 2022, we launched an Employee Relief Fund to provide opportunities for employees to support each other during difficult times.
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Our updated Code of Conduct reinforces our strong foundation and reflects our evolving culture by integrating emerging areas such as our commitment to ESG and Inclusion & Diversity. Our Code of Conduct training was offered in 12 different languages to employees in 36 countries.
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In 2022, we trained 60% of our offline, factory 5 team members globally on our Code of Conduct. In 2022, we launched targeted training to managers in our North American plants to reinforce their responsibility on creating an ethical culture and how to respond to concerns raised by employees.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeFor the year ended December 31, 2022, foreign currency translations had a 4% negative impact on our net sales. Fluctuations in foreign currency exchange rates, most notably the strengthening of the U.S. dollar against the euro, could have a material adverse effect on our reported revenue and income in future periods.
Biggest changeFluctuations in foreign currency exchange rates, most notably the strengthening of the U.S. dollar against the euro, could have a material adverse effect on our reported revenue and income in future periods. 13 Disruptions in the financial markets could adversely affect us, our customers and our suppliers by increasing funding costs or reducing availability of credit.
In addition, demand for a portion of our products and services depends upon the level of capital expenditure by companies in the energy industry, which depends, in part, on prices of oil and gas, which are volatile and declines in such prices may result in 6 suspensions or delays in large capital projects within the energy sector.
In addition, demand 6 for a portion of our products and services depends upon the level of capital expenditure by companies in the energy industry, which depends, in part, on prices of oil and gas, which are volatile and declines in such prices may result in suspensions or delays in large capital projects within the energy sector.
We use a variety of raw materials in the production of our products including steel, electronic components, plastics, copper and paints. We also purchase certain electrical and electronic components and packaging materials from a number of suppliers.
We use a variety of raw materials in the production of our products including steel, electronic components, plastics, copper and paints. We also purchase certain electrical and packaging materials from a number of suppliers.
If negative market 8 conditions arise, or if we fail to secure adequate financial arrangements or required governmental approvals, we may not be able to pursue particular projects or win new contracts, which could have a material adverse effect on our business, financial condition, results of operations and cash flows.
If negative market conditions arise, or if we fail to secure adequate financial arrangements or required governmental approvals, we may not be able 8 to pursue particular projects or win new contracts, which could have a material adverse effect on our business, financial condition, results of operations and cash flows.
In addition, these types of events may negatively impact consumer, commercial and industrial spending in impacted regions or, depending on the severity, globally. As a result, any of such events could have a material adverse effect our business, financial condition, results of operations and cash flows.
In addition, these types of events may negatively impact consumer, commercial and industrial spending in impacted regions or, depending on the severity, globally. As a result, any of such events could have a material adverse effect on our business, financial condition, results of operations and cash flows.
In addition, as a result of such claims, we may lose our rights to utilize critical technology, may be required to pay substantial damages or license fees with respect to the infringed rights or may be 11 required to redesign our products at a substantial cost, any of which could have a material adverse effect on our business, financial condition, results of operations and cash flows.
In addition, as a result of such claims, we may lose our rights to utilize critical technology, may be required to pay substantial damages or license fees with respect to the infringed rights or may be required to redesign our products at a substantial cost, any of which could have a material adverse effect on our business, financial condition, results of operations and cash flows.
Violations of these laws may require self-disclosure to governmental agencies and result in criminal or civil sanctions, which could disrupt our business, cause denial of import or export privileges, and result in a material adverse effect on our reputation, business, financial condition, results of operations and cash flows. We are exposed to potential environmental laws, liabilities and litigation.
Violations of these laws may require self-disclosure to governmental agencies and result in criminal or civil sanctions, which 10 could disrupt our business, cause denial of import or export privileges, and result in a material adverse effect on our reputation, business, financial condition, results of operations and cash flows. We are exposed to potential environmental laws, liabilities and litigation.
The occurrence of any of these events could have a material adverse effect on our reputation, business, financial condition, results of operations and cash flows. We may be negatively impacted by litigation, including product liability claims. We are currently, and may in the future become, subject to litigation and other claims.
The occurrence of any of these events could have a material adverse effect on our reputation, business, financial condition, results of operations and cash flows. 12 We may be negatively impacted by litigation, including product liability claims. We are currently, and may in the future become, subject to litigation and other claims.
The occurrence of any of these events could have a material adverse effect on our reputation, business, financial condition, results of operations and cash flows. In addition, such cybersecurity incidents could result in litigation, 12 regulatory action and potential liability and the costs and operational consequences of implementing further cybersecurity measures.
The occurrence of any of these events could have a material adverse effect on our reputation, business, financial condition, results of operations and cash flows. In addition, such cybersecurity incidents could result in litigation, regulatory action and potential liability and the costs and operational consequences of implementing further cybersecurity measures.
Payment of Irish stamp duty is generally a legal obligation of the transferee. 15 We currently intend to pay (or cause one of our affiliates to pay) stamp duty in connection with share transfers made in the ordinary course of trading by a seller who holds shares directly to a buyer who holds the acquired shares beneficially.
Payment of Irish stamp duty is generally a legal obligation of the transferee. We currently intend to pay (or cause one of our affiliates to pay) stamp duty in connection with share transfers made in the ordinary course of trading by a seller who holds shares directly to a buyer who holds the acquired shares beneficially.
Stock markets in general have experienced volatility that has often been unrelated to the operating performance of a particular company. These broad market fluctuations could have a material adverse effect on our share price. Our success depends on attracting and retaining qualified personnel.
Stock markets in general have experienced volatility that has often been unrelated to the operating performance of a particular company. These broad market fluctuations could have a material adverse effect on our share price. 16 Our success depends on attracting and retaining qualified personnel.
In order to align our resources with our growth strategies, operate more efficiently and control costs, we may periodically announce in the future restructuring plans, which may include workforce reductions, global plant closures and consolidations, asset impairments and other cost reduction initiatives.
In order to align our resources with our growth strategies, operate more efficiently and control costs, we may periodically announce future restructuring plans, which may include workforce reductions, global plant closures and consolidations, asset impairments and other cost reduction initiatives.
If operations at any of our manufacturing facilities or those of our suppliers were to be disrupted as a result of significant equipment failures, natural disasters, earthquakes, power outages, fires, explosions, terrorism, military conflicts, cybersecurity attacks, adverse weather conditions, labor disputes, public health epidemics or other catastrophic events or events outside of our control, we may be unable to fill customer orders and otherwise meet customer demand for our products.
If operations at any of our manufacturing facilities or those of our suppliers were to be disrupted as a result of significant equipment failures, natural disasters, earthquakes, power outages, fires, explosions, terrorism, military conflicts, cybersecurity incidents, adverse weather conditions, labor disputes, public health epidemics or other catastrophic events or events outside of our control, we may be unable to fill customer orders and otherwise meet customer demand for our products.
Transfers of nVent ordinary shares may be subject to Irish stamp duty. Transfers of nVent ordinary shares effected by means of the transfer of book entry interests in the Depository Trust Company ("DTC") will not be subject to Irish stamp duty.
Transfers of nVent ordinary shares effected by means of the transfer of book entry interests in the Depository Trust Company ("DTC") will not be subject to Irish stamp duty.
However, any recovery under our insurance policies may not offset the lost sales or increased costs that may be experienced during the disruption of operations, which could have a material adverse effect our business, financial condition, results of operations and cash flows. ITEM 1B. UNRESOLVED STAFF COMMENTS None. 17
However, any recovery under our insurance policies may not offset the lost sales or increased costs that may be experienced during the disruption of operations, which could have a material adverse effect on our business, financial condition, results of operations and cash flows. ITEM 1B. UNRESOLVED STAFF COMMENTS None.
We have been named as defendant, target or a potentially responsible party ("PRP") in a number of environmental cleanups relating to our current or former business units. We may be named as a PRP at other sites in the future for existing business units, as well as both divested and acquired businesses.
We have been named as defendant, target or a potentially responsible party ("PRP") in a number of environmental cleanups relating to our current or former businesses. We may be named as a PRP at other sites in the future for existing businesses, as well as both divested and acquired businesses.
In addition, investors and other stakeholders are increasingly focused on ESG matters, and as stakeholder ESG expectations and standards are evolving, we may not be able to sufficiently respond to these evolving standards and expectations. Furthermore, we could be criticized for the accuracy or completeness of the disclosure of our ESG initiatives.
As investors and other stakeholders are increasingly focused on ESG matters, and as stakeholder ESG expectations and standards are evolving, we may not be able to sufficiently respond to these evolving standards and expectations. Furthermore, we could be criticized for the accuracy or completeness of the disclosure of our ESG initiatives.
Within the United States, many states are considering adopting, or have already adopted privacy regulations, including, for example, the California Privacy Rights Act. These laws and regulations are rapidly evolving and changing, and could have an adverse effect on our operations.
Within the United States, many states are considering adopting, or have already adopted privacy regulations, including, for example, the California Consumer Privacy Act. These laws and regulations are rapidly evolving and changing, and could have an adverse effect on our operations.
A variety of state, national, foreign and international laws and regulations apply to the collection, use, retention, protection, security, disclosure, transfer and other processing of personal and other data. Many foreign data privacy regulations, including the General Data Protection Regulation (the “GDPR”) in the European Union and the United Kingdom, are more stringent than federal regulations in the United States.
A variety of state, national, foreign and international laws and regulations apply to the collection, use, retention, protection, security, disclosure, transfer and other processing of personal and other data. Many foreign data privacy regulations, including the General Data Protection Regulation (the “GDPR”) in the European Union and the U.K., are more stringent than federal regulations in the United States.
We compete in various geographic regions and product markets around the world. Among these, the most significant are global industrial markets and commercial markets. We expect to experience fluctuations in revenues and results of operations due to economic and business cycles.
We compete in various geographic regions and product markets around the world. Among these, the most significant are global industrial, commercial and residential, infrastructure and energy markets. We expect to experience fluctuations in revenues and results of operations due to economic and business cycles.
We have experienced cyber security incidents, and, although we have determined such cybersecurity incidents to be immaterial and such incidents have not had a material adverse effect on our financial condition, results of operations or cash flows, there can be no assurance of similar results in the future.
We have experienced cybersecurity incidents, and, although we have determined such cybersecurity incidents to be immaterial and such incidents have not had a material adverse effect on our business strategy, financial condition, results of operations or cash flows, there can be no assurance of similar results in the future.
Other jurisdictions may also seek to assert taxing jurisdiction over us. 14 Effective for tax periods beginning on or after November 1, 2019, where a company is treated as tax resident under the domestic laws of both the U.K. and Ireland, the Double Tax Convention between the U.K. and Ireland (the “Convention”) signed on June 2, 1976, and as modified by paragraph 1 of Article 4 of the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting (the “Multilateral Instrument” or “MLI”) provides that the residence of a dual-resident entity should be determined by way of mutual agreement between the Irish Revenue Commissioners and His Majesty’s Revenue Commissioners.
Effective for tax periods beginning on or after November 1, 2019, where a company is treated as tax resident under the domestic laws of both the U.K. and Ireland, the Double Tax Convention between the U.K. and Ireland (the “Convention”) signed on June 2, 1976, and as modified by paragraph 1 of Article 4 of the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting (the “Multilateral Instrument” or “MLI”) provides that the residence of a dual-resident entity should be determined by way of mutual agreement between the Irish Revenue Commissioners and His Majesty’s Revenue Commissioners.
During 2022, 2021 and 2020, we continued execution of certain business restructuring initiatives aimed at reducing our fixed cost structure and realigning our business.
During 2023 and 2022, we continued execution of certain business restructuring initiatives aimed at reducing our fixed cost structure and realigning our business.
These risks include: • the imposition of tariffs, exchange controls or other trade restrictions; • changes in general economic and political conditions in countries where we operate, particularly in emerging markets; • relatively more severe economic conditions in some international markets than in the U.S.; • the difficulty of enforcing agreements and collecting receivables through non-U.S. legal systems; • the difficulty of communicating and monitoring standards and directives across our global facilities; • trade protection measures and import or export licensing requirements and restrictions; • the possibility of terrorist action or military conflict affecting us or our operations; • the threat of nationalization and expropriation; • difficulty in staffing and managing widespread operations in non-U.S. labor markets; • changes in tax treaties, laws or rulings that could have a material adverse impact on our effective tax rate; • limitations on repatriation of earnings; 9 • the difficulty of protecting intellectual property in non-U.S. countries; and • changes in and required compliance with a variety of non-U.S. laws and regulations.
These risks include: • the imposition of tariffs, sanctions, duties, exchange controls, currency restrictions or other trade restrictions; • changes in general economic and political conditions in countries where we operate, particularly in emerging markets; • relatively more severe economic conditions in some international markets than in the U.S.; • the difficulty of enforcing agreements and collecting receivables through non-U.S. legal systems; • the difficulty of communicating and monitoring standards and directives across our global facilities; • the difficulty of ensuring that our products, services and supply chains meet ever-changing regional regulations and requirements; • trade protection measures and import or export licensing requirements and restrictions; • the possibility of terrorist action or military conflict affecting us, our operations, supply chains or end-markets or economies generally; • the threat of nationalization and expropriation; • difficulty in staffing and managing widespread operations in non-U.S. labor markets; • changes in tax treaties, laws or rulings that could have a material adverse impact on our effective tax rate; • limitations on repatriation of earnings; • the difficulty of protecting intellectual property in non-U.S. countries; and • changes in and required compliance with a variety of non-U.S. laws and regulations.
Backlog may increase or decrease based on the addition of large multi-year projects and their subsequent completion. Backlog may also be favorably or unfavorably affected by foreign currency rate fluctuations. The dollar amount of backlog as of December 31, 2022 was $607.3 million.
Backlog may increase or decrease based on the addition of large multi-year projects and their subsequent completion. Backlog may also be favorably or unfavorably affected by foreign currency rate fluctuations. The dollar amount of backlog as of December 31, 2023 was $639.1 million.
Based on these findings, the EPA has implemented regulations that require reporting of GHG emissions, or that limit emissions of GHGs from certain mobile or stationary sources. In addition, the U.S.
Based on these findings, the EPA has implemented regulations that require reporting of GHG emissions, or that limit emissions of GHGs from certain mobile or stationary sources.
Our credit agreements and indentures contain customary financial covenants, including those that limit the amount of our debt, which may restrict the operations of our business and our ability to incur additional debt to finance acquisitions.
Covenants in our debt instruments may adversely affect us. Our credit agreements and indentures contain customary financial covenants, including those that limit the amount of our debt, which may restrict the operations of our business and our ability to incur additional debt to finance acquisitions.
Important factors for our business and the businesses of our customers include the overall strength of the economy and our customers’ confidence in the economy, industrial and governmental capital spending, the strength of the commercial market, unemployment rates, availability of commercial financing, interest rates and energy and commodity prices.
Important factors for our business and the businesses of our customers include the overall strength of the global economy and our customers’ confidence in the economy, industrial and governmental capital spending, the strength of commercial and residential and infrastructure markets, unemployment rates, availability of commercial financing, interest rates, inflation rates, and energy and commodity prices.
As of December 31, 2022, our goodwill and intangible assets were $3.2 billion and represented 66% of our total assets. Changes in economic and operating conditions impacting the assumptions used in our impairment tests could result in future goodwill and intangible asset impairment expense.
As of December 31, 2023, our goodwill and intangible assets were $4.1 billion and represented 66% of our total assets. Changes in economic and operating conditions impacting the assumptions used in our impairment tests could result in future goodwill and intangible asset impairment expense.
If we fail to successfully enforce our intellectual property rights or register new patents, our competitive position could suffer, which could have a material adverse effect on our business, financial condition, results of operations and cash flows.
If we fail to successfully enforce our intellectual property rights or register new patents, our competitive position could suffer, which could have a material adverse effect on our business, financial condition, results of operations and cash flows. 9 We have significant goodwill and intangible assets and future impairment of our goodwill and intangible assets could have a material adverse effect on our results of operations.
We rely on materials, components and finished goods that are sourced from or manufactured outside the U.S., including Mexico, China and other countries, and these countries may experience political or trade instability, which could disrupt our supply of products or materials. We rely on our suppliers to produce high quality materials, components and finished goods according to our specifications.
We rely on materials, components and finished goods that are sourced from or manufactured in locations outside the U.S., including Mexico, China and other countries, and these countries may experience political or trade instability, which could disrupt our supply of products or materials.
Congress and federal and state regulatory agencies have considered other legislation and regulatory proposals to reduce emissions of GHGs, and many states have already taken legal measures to reduce emissions of GHGs, primarily through the development of GHG inventories, GHG permitting and/or regional GHG cap-and-trade programs.
In addition, various federal, state and international regulatory agencies have considered other legislation and regulatory proposals to reduce emissions of GHGs, and many have already taken legal measures to reduce emissions of GHGs, primarily through the development of carbon tax, GHG inventories, GHG permitting and/or regional GHG cap-and-trade programs.
Under domestic U.K. law, a company that is centrally managed and controlled in the U.K. is regarded as resident in the U.K. for taxation purposes unless it is treated as resident in another jurisdiction pursuant to any appropriate double tax treaty with the U.K.
Under domestic U.K. law, a company that is centrally managed and controlled in the U.K. is regarded as resident in the U.K. for taxation purposes unless it is treated as resident in another jurisdiction pursuant to any appropriate double tax treaty with the U.K. Other jurisdictions may also seek to assert taxing jurisdiction over us.
Successful claims against us for significant amounts could have a material adverse effect on our reputation, business, financial condition, results of operations and cash flows. Risks Relating to Financial Markets and Our Debt and Liquidity Volatility in currency exchange rates could have a material adverse effect on our financial condition, results of operations and cash flows.
Successful claims against us for significant amounts could have a material adverse effect on our reputation, business, financial condition, results of operations and cash flows. Risks Relating to Financial Markets and Our Debt and Liquidity Increased leverage may harm our financial condition and results of operations.
If we are unable to conduct business with new or existing customers or vendors or pursue business opportunities in Russia or Ukraine, it could have a material adverse effect on our business, financial condition, results of operations and cash flows. 10 Changes in U.S. social, political, regulatory and economic conditions or in laws and policies governing foreign trade, manufacturing, development and investment in the territories and countries where we currently manufacture and sell products, and any resulting negative sentiments towards the U.S. as a result of such changes, could have a material adverse effect on our business, financial condition, results of operations and cash flows.
Changes in U.S. social, political, regulatory and economic conditions or in laws and policies governing foreign trade, manufacturing, development and investment in the territories and countries where we currently manufacture and sell products, and any resulting negative sentiments towards the U.S. as a result of such changes, could have a material adverse effect on our business, financial condition, results of operations and cash flows.
Although we have quality control procedures in place, there is a risk that products may not meet our specifications which could impact our ability to ship quality products to our customers on a timely basis.
We rely on our suppliers to produce high quality materials, components and finished goods according to our specifications. Although we have quality control procedures in place, there is a risk that products may not meet our specifications which could impact our ability to ship quality products to our customers on a timely basis.
However, these actions may not be successful in managing our costs or increasing our productivity. Continued cost inflation or failure of our initiatives to increase prices, generate cost savings or improve productivity could have a material adverse effect on our business, financial condition, results of operations and cash flows.
Continued cost inflation or failure of our initiatives to increase prices, generate cost savings or improve productivity could have a material adverse effect on our business, financial condition, results of operations and cash flows.
It may not be possible to enforce court judgments obtained in the U.S. against us in Ireland based on the civil liability provisions of the U.S. federal or state securities laws.
Irish law differs from the laws in effect in the U.S. and may afford less protection to holders of our securities. It may not be possible to enforce court judgments obtained in the U.S. against us in Ireland based on the civil liability provisions of the U.S. federal or state securities laws.
Disruptions in the financial markets in the past have had adverse effects on other areas of the economy and have led to a slowdown in general economic activity that may adversely affect our businesses.
Disruptions in the financial markets in the past have had adverse effects on other areas of the economy and have led to a slowdown in general economic activity that may adversely affect our businesses. One or more of these factors could adversely affect our business, financial condition, results of operations and cash flows.
For example, current macroeconomic and political instability caused by global supply chain disruptions, inflation, the strengthening of the U.S. dollar and the conflict between Russia and Ukraine, have and could continue to adversely impact our results of operations. The businesses of many of our industrial customers are to varying degrees cyclical and have experienced periodic downturns.
Macroeconomic and political instability caused by global supply chain disruptions, inflation and the strengthening of the U.S. dollar could adversely impact our results of operations. In addition, military conflicts and their impact on economies may adversely impact our results of operations. The businesses of many of our industrial customers are to varying degrees cyclical and have experienced periodic downturns.
Sales outside of the U.S. for the year ended December 31, 2022 accounted for approximately 37% of our net sales. Further, our business obtains some products, components and raw materials from non-U.S. suppliers. Accordingly, our business is subject to the political, regulatory, economic and other risks that are inherent in operating in numerous countries.
We are exposed to political, regulatory, economic and other risks that arise from operating a multinational business. Sales outside of the U.S. for the year ended December 31, 2023 accounted for approximately 34% of our net sales. Further, our business obtains some products, components and raw materials from non-U.S. suppliers.
Furthermore, acceleration of any obligation under any of our material debt instruments will permit the holders of our other material debt to accelerate their obligations, which could have a material adverse effect on our financial condition. Our indebtedness, and any future increase in debt or raising of additional capital, could affect our financial condition, and may decrease our profitability.
Furthermore, acceleration of any obligation under any of our material debt instruments will permit the holders of our other material debt to accelerate their obligations, which could have a material adverse effect on our financial condition.
Additionally, our credit agreements generally include an increase in interest rates if the ratings for our debt are downgraded. Risks Relating to Our Jurisdiction of Incorporation in Ireland and Tax Residency in the U.K.
Additionally, our credit agreements generally include an increase in interest rates if the ratings for our debt are downgraded. To the extent that our interest rates increase, our interest expense will increase, which could adversely affect our financial condition, results of operations and cash flows. Risks Relating to Our Jurisdiction of Incorporation in Ireland and Tax Residency in the U.K.
Disruptions in the financial markets could adversely affect us, our customers and our suppliers by increasing funding costs or reducing availability of credit. In the normal course of our business, we may access credit markets for general corporate purposes, which may include repayment of indebtedness, acquisitions, additions to working capital, repurchase of shares, capital expenditures and investments in our subsidiaries.
In the normal course of our business, we may access credit markets for general corporate purposes, which may include repayment of indebtedness, acquisitions, additions to working capital, repurchase of shares, capital expenditures and investments in our subsidiaries.
Some of our competitors, in particular smaller companies, attempt to compete based primarily on price, localized expertise and local relationships. In addition, economic downturns could adversely affect pricing as market participants compete more aggressively on price.
We compete based on technical expertise, reputation for quality and reliability, timeliness of delivery, previous installation history, contractual terms and price. Some of our competitors attempt to compete based primarily on price, localized expertise and local relationships. In addition, economic downturns could adversely affect pricing as market participants compete more aggressively on price.
In particular, legislative action could be taken by the U.S., the U.K., Ireland or the European Union which could override tax treaties or modify tax statutes or regulations upon which we expect to rely and adversely affect our effective tax rate. We cannot predict the outcome of any specific legislative proposals.
In addition, legislative or administrative action could be taken by the U.S., the U.K., Ireland or the European Union which could override tax treaties or modify tax statutes or regulations upon which we expect to rely, limit the availability of tax benefits or deductions we currently claim or otherwise affect the taxes imposed on our worldwide operations and materially adversely affect our effective tax rate.
Our actual effective tax rate may vary from our expectation and that variance may be material. Also, the tax laws of the U.S.
Our actual effective tax rate may vary from our expectation and that variance may be material. Also, the tax laws of the U.S., the U.K., Ireland and other jurisdictions could change in the future, and such changes could cause a material change in our worldwide effective corporate tax rate.
We strive for productivity improvements and implement increases in selling prices to help mitigate cost increases in raw materials, freight, energy, wage and other costs such as pension, health care and insurance. We continue to implement operational initiatives in order to mitigate the impact of this inflation and continuously reduce our costs.
In 2023 and 2022, we experienced inflationary increases of raw materials, logistics and labor costs due to availability constraints and high demand. We strive for productivity improvements and implement increases in selling prices to help mitigate cost increases in raw materials, freight, energy, wage and other costs such as pension, health care and insurance.
Failure to ensure that we have the depth and breadth of personnel with the necessary skill set and experience, or the loss of key employees, could impede our ability to deliver our growth objectives and execute our strategy. 16 Catastrophic and other events beyond our control may disrupt operations at our manufacturing facilities and those of our suppliers, which could cause us to be unable to meet customer demands or increase our costs or reduce customer spending.
Catastrophic and other events beyond our control may disrupt operations at our manufacturing facilities and those of our suppliers, which could cause us to be unable to meet customer demands or increase our costs or reduce customer spending.
Sales outside of the U.S. for the year ended December 31, 2022 accounted for approximately 37% of our net sales. Our financial statements reflect translation of items denominated in non-U.S. currencies to U.S. dollars.
Volatility in currency exchange rates could have a material adverse effect on our financial condition, results of operations and cash flows. Sales outside of the U.S. for the year ended December 31, 2023 accounted for approximately 34% of our net sales. Our financial statements reflect translation of items denominated in non-U.S. currencies to U.S. dollars.
During 2022, we experienced inflationary increases of raw materials, logistics and labor costs due to availability constraints and high demand, and we expect inflationary cost increases to continue in 2023.
During 2022, we experienced inflationary increases of raw materials, logistics, labor and energy costs, and supply chain challenges, including increased lead times due to availability constraints and high demand. During 2023, supply chain challenges moderated, but we continued to experience inflationary increases, primarily related to labor costs.
It is uncertain whether, when and in what form a federal mandatory carbon dioxide emissions reduction program, or other state programs, may be adopted. Similarly, certain countries have adopted the Kyoto Protocol and in February 2021 the U.S. rejoined the Paris Accord, and these and other existing international initiatives or those under consideration could affect our international operations.
It is uncertain whether, when and in what form a federal mandatory carbon dioxide emissions reduction program, or other state or international programs, may be adopted.
Under Irish law, the proper claimant for wrongs committed against nVent, including by our directors, is considered to be nVent itself. Irish law permits a shareholder to initiate a lawsuit on behalf of a company such as nVent only in limited circumstances and requires court permission to do so.
Under Irish law, the proper claimant for wrongs committed against nVent, including by our directors, is considered to be nVent itself.
The lenders who hold such debt could also accelerate amounts due, which could potentially trigger a default or acceleration of any of our other debt. Further, we may increase our debt or raise additional capital in the future, subject to restrictions in our debt agreements.
We may increase our debt or raise additional capital, our credit ratings may be downgraded in the future, or our interest rates may increase, each of which could affect our financial condition, and may decrease our profitability. We may increase our debt or raise additional capital in the future, subject to restrictions in our debt agreements.
Removed
We compete against large and well-established national and global companies, as well as regional and local companies and lower-cost manufacturers. We compete based on technical expertise, reputation for quality and reliability, timeliness of delivery, previous installation history, contractual terms and price.
Added
We compete against large and well-established national and global companies, as well as regional and local companies and lower-cost manufacturers. Competition may also result from new entrants into the markets we serve offering products and/or services that compete with ours.
Removed
During 2021 and 2022, we experienced supply chain challenges, including increased lead times, due to availability constraints and high demand, and we expect supply chain pressures to continue in 2023.
Added
We continue to implement operational initiatives in order to mitigate the impact of this inflation and continuously reduce our costs. However, these actions may not be successful in managing our costs or increasing our productivity.
Removed
Our business, financial condition, results of operations and cash flows have been, and may in the future be, adversely affected by epidemics or pandemics such as the COVID-19 pandemic. We may face risks related to health epidemics and pandemics or other outbreaks of communicable diseases.
Added
Accordingly, our business is subject to the political, regulatory, economic and other risks that are inherent in operating in numerous countries.
Removed
A public health epidemic or pandemic, such as the COVID-19 pandemic, poses the risk that our employees, contractors, suppliers, customers and other business partners may be prevented from conducting business activities for an indefinite period of time, including due to shutdowns that may be requested or mandated by governmental authorities, or that such epidemic or pandemic may otherwise interrupt or impair business activities.
Added
We may not realize the anticipated benefits of the ECM Industries acquisition and any benefit may take longer to realize than we expect. The ECM Industries acquisition involves the integration of ECM Industries’ operations with our existing operations, and there are uncertainties inherent in such an integration.
Removed
The COVID-19 pandemic continues to cause disruption to the global economy, including in the regions in which we, our suppliers, distributors, business partners, and customers do business.
Added
We are required to devote significant management attention and resources to integrating ECM Industries’ operations. Delays or unexpected difficulties in the integration process could adversely affect our business, financial results and financial condition.
Removed
We continue to monitor the COVID-19 pandemic, and while periodic local increases and decreases in COVID-19 cases are likely, generally the restrictions due to and in response to the pandemic continue to relax in most locations.
Added
Even if we are able to integrate ECM Industries’ operations successfully, this integration may not result in the realization of the full benefits of revenue synergies, cost savings and operational efficiencies that we expect, or the achievement of these benefits within a reasonable period of time or at all.
Removed
However, the COVID-19 pandemic and efforts to manage it, including those by governmental authorities, have had, and could continue to have, an adverse effect on the global economy and our business in many ways, including global supply chain shortages for materials and component parts used in our products and associated escalating prices.
Added
If we are unable to conduct business with new or existing customers or vendors or pursue business opportunities in Russia or Ukraine, it could have a material adverse effect on our business, financial condition, results of operations and cash flows.
Removed
In addition to supply shortages, constrained transportation capacities have led to significant price increases in transportation costs.
Added
Further, we are subject to additional federal, state, international and national European and U.S. regulations relating to climate and environmental risk, which are continually evolving. Regulators in Europe and the U.S. have focused efforts on increased disclosure related to climate change and mitigation efforts.
Removed
We expect to continue to be affected by supply chain issues due to factors largely beyond our control, including, a global shortage of components used in our products, a strain on raw materials and cost inflation, all of which could escalate in the future.
Added
The European Union recently adopted the European Sustainability Reporting Standards and the Corporate Sustainability Reporting Directive ("CSRD") that will impose disclosure of the risks and opportunities arising from social and environmental issues, and on the impact of companies’ activities on people and the environment.
Removed
Although economic conditions have generally improved since the height of the COVID-19 pandemic, the strength of the economic recovery is uncertain and may vary across industries, customers and from country to country.
Added
Similarly, the State of California recently passed the Climate Corporate Data Accountability Act and the Climate- 11 Related Financial Risk Act that will impose broad climate-related disclosure obligations on certain companies doing business in California, including us, starting in 2026. The SEC has included in its regulatory agenda potential rulemaking on climate change disclosures.
Removed
The ultimate extent and robustness of any economic recovery from the impact of the COVID-19 pandemic imposes a significant degree of uncertainty and complexity, and may adversely affect our operations, customer demand and our costs of production.
Added
We will likely need to be prepared to contend with overlapping, yet distinct, climate-related disclosure requirements in multiple jurisdictions. Compliance may significantly increase compliance burdens and associated regulatory costs and complexity, and the failure to comply with such legislation and regulations could result in fines to us, and could affect our business, financial condition, results of operations and cash flows.
Removed
Failure of economic recovery to continue and adverse or weakening economic conditions may also result in deterioration in the collection of customer accounts receivable, as well as a reduction in sales.
Added
As of December 31, 2023, we had $1.8 billion of total debt on a consolidated basis. Our indebtedness increased materially in connection with the ECM Industries acquisition.
Removed
The foregoing and other impacts of the COVID-19 pandemic could have the effect of heightening many of the other risks described herein and any of these impacts could materially adversely affect our business, financial condition, results of operations and cash flows. We are exposed to political, regulatory, economic and other risks that arise from operating a multinational business.
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We funded the ECM Industries acquisition with borrowings under the 2023 Term Loan Facility and net proceeds from the issuance of the 2033 Notes (described more fully in ITEM 8, Note 9 of the Notes to Consolidated Financial Statements), together with cash on hand and borrowings under our revolving credit facility, for an aggregate amount of approximately $900.0 million of new indebtedness in connection with the ECM Industries acquisition.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeThe following is a summary of our principal manufacturing, distribution, and service center properties: Number of Facilities Manufacturing Plant Locations Manufacturing Plants Distribution Facilities Service Centers Enclosures U.S. and 9 other countries 18 12 — Electrical & Fastening Solutions U.S. and 2 other countries 8 6 — Thermal Management U.S. and 3 other countries 5 4 5 We believe that our production facilities are suitable for their purpose and are adequate to support our businesses. 18
Biggest changeThe following is a summary of our principal manufacturing, distribution, and service center properties: Number of Facilities Manufacturing Plant Locations Manufacturing Plants Distribution Facilities Service Centers Enclosures U.S. and 10 other countries 19 16 — Electrical & Fastening Solutions U.S. and 4 other countries 17 8 — Thermal Management U.S. and 3 other countries 4 3 4 We believe that our production facilities are suitable for their purpose and are adequate to support our businesses. 18

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeEnvironmental matters We have been named as defendant, target or a potentially responsible party ("PRP") in a number of environmental clean-ups relating to our current or former business units. We may be named as a PRP at other sites in the future for existing business units, as well as both divested and acquired businesses.
Biggest changeEnvironmental matters We have been named as defendant, target or a potentially responsible party ("PRP") in a number of environmental clean-ups relating to our current or former businesses. We may be named as a PRP at other sites in the future for existing businesses, as well as both divested and acquired businesses.
In our opinion, the amounts accrued are appropriate based on facts and circumstances as currently known. As of December 31, 2022, our recorded reserves for environmental matters were not material. We do not anticipate these environmental conditions will have a material adverse effect on our financial position, results of operations or cash flows.
In our opinion, the amounts accrued are appropriate based on facts and circumstances as currently known. As of December 31, 2023, our recorded reserves for environmental matters were not material. We do not anticipate these environmental conditions will have a material adverse effect on our financial position, results of operations or cash flows.
A substantial number of lawsuits and claims incurred prior to the effective date of the separation on April 30, 2018 are insured and accrued for by Pentair's captive insurance subsidiary. Lawsuits and claims incurred after the separation are insured and accrued for by Tonka Bay, a captive insurance subsidiary of nVent.
A substantial number of lawsuits and claims incurred prior to the effective date of the separation on April 30, 2018 are insured by and an obligation of Pentair's captive insurance subsidiary. Lawsuits and claims incurred after the separation are insured and accrued for by Tonka Bay, a captive insurance subsidiary of nVent.

Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

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Biggest changeHe served over 10 years in corporate controlling and external reporting roles in various public companies. Mr. Wacker also served as an accountant with the public accounting firm Larson, Allen, Weishair & Co., LLP (n/k/a CliftonLarsonAllen) from 1988 – 1993. Joseph A. Ruzynski 47 President of Enclosures since 2018; Mr.
Biggest changeWacker also served as an accountant with the public accounting firm Larson, Allen, Weishair & Co., LLP (n/k/a CliftonLarsonAllen) from 1988 – 1993. 20 Joseph A. Ruzynski 48 President of Enclosures since 2018; Mr. Ruzynski was the Vice President of Pentair’s Enclosures Strategic Business Unit and served in that role during 2017. Mr.
(a software-industrial company) from 2011 – 2015 and President of the Sensing and Controls Unit of Honeywell International Inc. from 2006 – 2011, and she held various leadership positions at Honeywell International Inc. and its predecessor AlliedSignal Inc. from 1990 – 2006. Sara E. Zawoyski 48 Executive Vice President and Chief Financial Officer since 2019; Ms.
(a software-industrial company) from 2011 – 2015 and President of the Sensing and Controls Unit of Honeywell International Inc. from 2006 – 2011, and she held various leadership positions at Honeywell International Inc. and its predecessor AlliedSignal Inc. from 1990 – 2006. Sara E. Zawoyski 49 Executive Vice President and Chief Financial Officer since 2019; Ms.
Heath previously held various human resources roles with General Electric Company from 2000 – 2009, with McKesson Corporation from 1996 – 2000 and with Northern States Power Company (n/k/a Xcel Energy Inc.) from 1992 – 1996. Aravind Padmanabhan 54 Executive Vice President and Chief Technology Officer since 2019; Mr.
Heath previously held various human resources roles with General Electric Company from 2000 – 2009, with McKesson Corporation from 1996 – 2000 and with Northern States Power Company (n/k/a Xcel Energy Inc.) from 1992 – 1996. Aravind Padmanabhan 55 Executive Vice President and Chief Technology Officer since 2019; Mr.
Zawoyski also previously held various investor relations and managerial finance leadership positions at PepsiAmericas from 2002 – 2010 and various positions in the audit practice of PricewaterhouseCoopers LLP from 1996 – 2002. Jon D. Lammers 58 Executive Vice President and General Counsel and Secretary since 2018; Mr.
Zawoyski also previously held various investor relations and managerial finance leadership positions at PepsiAmericas from 2002 – 2010 and various positions in the audit practice of PricewaterhouseCoopers LLP from 1996 – 2002. Jon D. Lammers 59 Executive Vice President and General Counsel and Secretary since 2018; Mr.
Faulconer 53 President of Thermal Management since 2018; Mr. Faulconer was the Vice President of Pentair’s Thermal Management Strategic Business Unit of the Electrical segment and served in that role during 2017. Mr. Faulconer previously served as the Vice President of Pentair’s Thermal Building Solutions Unit from 2014 – 2016.
Faulconer 54 President of Thermal Management since 2018; Mr. Faulconer was the Vice President of Pentair’s Thermal Management Strategic Business Unit of the Electrical segment and served in that role during 2017. Mr. Faulconer previously served as the Vice President of Pentair’s Thermal Building Solutions Unit from 2014 – 2016.
Heath 55 Executive Vice President and Chief Human Resources Officer since 2018; Ms. Heath was the Senior Vice President, Global Human Resources of Entrust Datacard (a privately held global security and identity company) from 2009 – 2017. Ms.
Heath 56 Executive Vice President and Chief Human Resources Officer since 2018; Ms. Heath was the Senior Vice President, Global Human Resources of Entrust Datacard (a privately held global security and identity company) from 2009 – 2017. Ms.
ITEM 4. MINE SAFETY DISCLOSURES Not applicable. 19 INFORMATION ABOUT OUR EXECUTIVE OFFICERS Current executive officers of nVent Electric plc, their ages, current position and their business experience during at least the past five years are as follows: Name Age Current Position and Business Experience Beth A. Wozniak 58 Chief Executive Officer since 2018; Ms.
ITEM 4. MINE SAFETY DISCLOSURES Not applicable. 19 INFORMATION ABOUT OUR EXECUTIVE OFFICERS Current executive officers of nVent Electric plc, their ages, current position and their business experience during at least the past five years are as follows: Name Age Current Position and Business Experience Beth A.
He was the Vice President, Operations of Pentair’s Equipment Protection and Technical Solutions Global Business Units from 2012 – 2014, and held various supply leadership positions with Pentair from 2003 – 2012. Mr.
He was the Vice President, Operations of Pentair’s Equipment Protection and Technical Solutions Global Business Units from 2012 – 2014, and held various supply leadership positions with Pentair from 2003 – 2012. Mr. Ruzynski was a Manager with Ernst & Young from 1997 – 2003.
Ruzynski was the Vice President of Pentair’s Enclosures Strategic Business Unit and served in that role during 2017. Mr. Ruzynski previously served as Vice President of Pentair’s Engineered Projects Strategic Business Group in its Valves & Controls Global Business Unit from 2016 – 2017 and Vice President of Pentair’s Fluid Motion Business Group from 2015 – 2016.
Ruzynski previously served as Vice President of Pentair’s Engineered Projects Strategic Business Group in its Valves & Controls Global Business Unit from 2016 – 2017 and Vice President of Pentair’s Fluid Motion Business Group from 2015 – 2016.
Wozniak was the President of Pentair’s Electrical segment during 2017. Ms. Wozniak previously served as President of Pentair’s Flow & Filtration Solutions Global Business Unit from 2015 – 2016. Ms. Wozniak was President of the Environmental and Combustion Controls unit of Honeywell International Inc.
Wozniak 59 Chief Executive Officer since 2018 and Chair of the Board since 2023; Ms. Wozniak was the President of Pentair’s Electrical segment during 2017. Ms. Wozniak previously served as President of Pentair’s Flow & Filtration Solutions Global Business Unit from 2015 – 2016. Ms. Wozniak was President of the Environmental and Combustion Controls unit of Honeywell International Inc.
Ruzynski was a Manager with Ernst & Young from 1997 – 2003. 20 Robert J. van der Kolk 54 President of Electrical & Fastening Solutions since 2018; Mr. van der Kolk was the Vice President of Pentair’s Engineered & Fastening Solutions Strategic Business Unit of the Electrical segment and served in that role from 2015 – 2017.
Robert J. van der Kolk 55 President of Electrical & Fastening Solutions since 2018; Mr. van der Kolk was the Vice President of Pentair’s Engineered & Fastening Solutions Strategic Business Unit of the Electrical segment and served in that role from 2015 – 2017.
Randolph A. Wacker 58 Senior Vice President and Chief Accounting Officer since 2018 and Treasurer since 2019; Mr. Wacker was the Assistant Corporate Controller of Pentair and served in that role from 2005-2017. Mr. Wacker served as the U.S. Controller of Computer Network Technologies from 2004 – 2005.
Wacker was the Assistant Corporate Controller of Pentair and served in that role from 2005-2017. Mr. Wacker served as the U.S. Controller of Computer Network Technologies from 2004 – 2005. He served over 10 years in corporate controlling and external reporting roles in various public companies. Mr.
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Martha C. Bennett 51 Executive Vice President and Chief Marketing Officer since January 2024; Ms. Bennett was the Chief Marketing Officer and Senior Vice President from 2023 – 2024, and the Vice President of Global Marketing Excellence from 2020 – 2023, of the Safety & Industrial Business Group at 3M Company. Ms.
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Bennett previously held various marketing and leadership roles with 3M Company from 2004 – 2020, with Diamond Aircraft from 2003 – 2004 and with Bombardier Aerospace from 1998 – 2003. Randolph A. Wacker 59 Senior Vice President and Chief Accounting Officer since 2018 and Treasurer since 2019; Mr.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeBase Period 2018 INDEXED RETURNS Years ended December 31, Company / Index April 30 2018 2019 2020 2021 2022 nVent Electric plc 100 102.99 117.30 113.84 190.38 196.71 S&P Mid Cap 400 Index 100 88.82 110.18 128.87 160.77 139.78 S&P Mid Cap 400 Industrials Index 100 90.13 118.98 137.03 174.59 160.76 22 Purchases of Equity Securities The following table provides information with respect to purchases we made of our ordinary shares during the fourth quarter of 2022: (a) (b) (c) (d) Total number of shares purchased Average price paid per share Total number of shares purchased as part of publicly announced plans or programs Dollar value of shares that may yet be purchased under the plans or programs October 1 – October 29, 2022 121 $ 33.33 — $ 200,000,000 October 30 – November 26, 2022 660,365 39.05 660,025 174,214,645 November 27 – December 31, 2022 862,010 39.02 861,563 140,577,960 Total 1,522,496 1,521,588 (a) The purchases in this column includes shares repurchased as part of our publicly announced plans and shares deemed surrendered to us by participants in the nVent Electric plc 2018 Omnibus Incentive Plan (the "2018 Plan") and earlier Pentair stock incentive plans that are now outstanding under the 2018 Plan (collectively the "Plans") to satisfy the exercise price or withholding of tax obligations related to the exercise of stock options, vesting of restricted shares and vesting of performance shares.
Biggest changeBase Period December 31 INDEXED RETURNS Years ended December 31, Company / Index 2018 2019 2020 2021 2022 2023 nVent Electric plc $ 100 $ 120.75 $ 113.90 $ 190.38 $ 196.71 $ 306.82 S&P Mid Cap 400 Index 100 113.38 128.87 160.77 139.78 162.75 S&P Mid Cap 400 Industrials Index 100 121.40 141.42 181.65 160.76 211.30 22 Purchases of Equity Securities The following table provides information with respect to purchases we made of our ordinary shares during the fourth quarter of 2023: (a) (b) (c) (d) Total number of shares purchased Average price paid per share Total number of shares purchased as part of publicly announced plans or programs Dollar value of shares that may yet be purchased under the plans or programs October 1 – October 28, 2023 1,086 $ 52.04 — $ 127,333,026 October 29 – November 25, 2023 605,964 51.49 605,726 96,133,146 November 26 – December 31, 2023 269,607 53.79 267,401 81,754,255 Total 876,657 873,127 (a) The purchases in this column includes shares repurchased as part of our publicly announced plans and shares deemed surrendered to us by participants in the nVent Electric plc 2018 Omnibus Incentive Plan (the "2018 Plan") and earlier Pentair stock incentive plans that are now outstanding under the 2018 Plan (collectively the "Plans") to satisfy the exercise price or withholding of tax obligations related to the exercise of stock options, vesting of restricted shares and vesting of performance shares.
(d) On May 14, 2021, the Board of Directors authorized the repurchase of our ordinary shares up to a maximum dollar limit of $300.0 million (the "2021 Authorization"). The 2021 Authorization began on July 23, 2021 and expires on July 22, 2024. As of December 31, 2022, we had $140.6 million available for repurchases under the 2021 Authorization. ITEM 6.
(d) On May 14, 2021, the Board of Directors authorized the repurchase of our ordinary shares up to a maximum dollar limit of $300.0 million (the "2021 Authorization"). The 2021 Authorization began on July 23, 2021 and expires on July 22, 2024. As of December 31, 2023, we had $81.8 million available for repurchases under the 2021 Authorization. ITEM 6.
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Our ordinary shares are listed for trading on the New York Stock Exchange and trade under the symbol "NVT." As of December 31, 2022, there were 13,094 shareholders of record.
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Our ordinary shares are listed for trading on the New York Stock Exchange and trade under the symbol "NVT." As of December 31, 2023, there were 12,426 shareholders of record.
The following graph sets forth the cumulative total shareholder return on our ordinary shares from the date of the separation of nVent from Pentair, assuming the investment of $100 on April 30, 2018 and the reinvestment of all dividends since that date to December 31, 2022.
The following graph sets forth the cumulative total shareholder return on our ordinary shares from December 31, 2018, assuming the investment of $100 and the reinvestment of all dividends since that date to December 31, 2023.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeThis increase was partially offset by: • inflationary increases of raw materials, logistics, labor and energy costs, and supply chain challenges, including increased lead times, due to availability constraints and high demand compared to 2021. 29 Electrical & Fastening Solutions The net sales and segment income for Electrical & Fastening Solutions were as follows: Years ended December 31 % / point change In millions 2022 2021 2022 vs 2021 Net sales $ 791.4 $ 657.5 20.4 % Segment income 219.9 181.5 21.2 % % of net sales 27.8% 27.6% 0.2 pts Net sales The components of the change in Electrical & Fastening Solutions net sales were as follows: 2022 vs 2021 Volume 2.7 % Price 20.8 Organic growth 23.5 Currency (3.1) Total 20.4 % The 20.4 percent increase in Electrical & Fastening Solutions net sales in 2022 from 2021 was primarily the result of: . • organic sales growth contribution of approximately 10.5% and 10.0% from our commercial & residential and infrastructure businesses, respectively, in 2022 from 2021, which includes increases in selling prices.
Biggest changeThis increase was partially offset by: • inflationary increases, primarily related to labor cost, compared to 2022; and • investments in capacity, digital, and new products to drive growth. 29 Electrical & Fastening Solutions The net sales, segment income and segment income as a percentage of net sales for Electrical & Fastening Solutions were as follows: Years ended December 31 % / point change In millions 2023 2022 2023 vs 2022 Net sales $ 1,063.0 $ 791.4 34.3 % Segment income 330.6 219.9 50.3 % % of net sales 31.1 % 27.8 % 3.3 pts Net sales The components of the change in Electrical & Fastening Solutions net sales from the prior period were as follows: 2023 vs 2022 Volume (2.3) % Price 5.9 Organic growth 3.6 Acquisition 30.4 Currency 0.3 Total 34.3 % The 34.3 percent increase in Electrical & Fastening Solutions net sales in 2023 from 2022 was primarily the result of: • sales of $240.7 million in 2023 as a result of the ECM Industries acquisition; and • organic sales growth contribution of approximately 1.5% from both our infrastructure and commercial & residential businesses in 2023 from 2022, which primarily includes selective increases in selling prices.
The Subsidiary Issuer’s principal source of cash flow is interest income from its subsidiaries. None of the subsidiaries of the Parent Company Guarantor or the Subsidiary Issuer is under any direct obligation to pay or otherwise fund amounts due on the Notes or the guarantees, whether in the form of dividends, distributions, loans or other payments.
The Subsidiary Issuer’s principal source of cash flow is 32 interest income from its subsidiaries. None of the subsidiaries of the Parent Company Guarantor or the Subsidiary Issuer is under any direct obligation to pay or otherwise fund amounts due on the Notes or the guarantees, whether in the form of dividends, distributions, loans or other payments.
In September 2022, nVent exercised the delayed draw provision of the Term Loan Facility, increasing the total borrowings under the Term Loan Facility by $200.0 million to $300.0 million. nVent Finance has the option to request to increase the Revolving Credit Facility in an aggregate amount of up to $300.0 million, subject to customary conditions, including the commitment of the participating lenders.
In September 2022, nVent exercised the delayed draw provision of the 2021 Term Loan Facility, increasing the total borrowings under the 2021 Term Loan Facility by $200.0 million to $300.0 million. nVent Finance has the option to request to increase the Revolving Credit Facility in an aggregate amount of up to $300.0 million, subject to customary conditions, including the commitment of the participating lenders.
Without limitation, any statements preceded or followed by or that include the words "targets," "plans," "believes," "expects," "intends," "will," "likely," "may," "anticipates," "estimates," "projects," "forecasts," "should," "would," "positioned," "strategy," "future," "are confident," or words, phrases or terms of similar substance or the negative thereof, are forward-looking statements.
Without limitation, any statements preceded or followed by or that include the words "targets," "plans," "believes," "expects," "intends," "will," "likely," "may," "anticipates," "estimates," "projects," "forecasts," "should," "would," "could," "positioned," "strategy," "future," "are confident," or words, phrases or terms of similar substance or the negative thereof, are forward-looking statements.
Use of the market approach consists of comparisons 36 to comparable publicly-traded companies that are similar in size and industry. Actual results may differ from those used in our valuations.
Use of the market approach consists of comparisons to comparable publicly-traded companies that are similar in size and industry. Actual results may differ from those used in our valuations.
We record penalties and interest related to unrecognized tax benefits in Provision for income taxes and Net interest expense , respectively, which is consistent with our past practices.
We record penalties and interest related to unrecognized tax benefits in Provision (benefit) for income taxes and Net interest expense , respectively, which is consistent with our past practices.
Key trends and uncertainties regarding our existing business The following trends and uncertainties affected our financial performance in 2021 and 2022, and are reasonably likely to impact our results in the future: • During 2021 and 2022, we experienced inflationary increases of raw materials, logistics, labor and energy costs, and supply chain challenges, including increased lead times due to availability constraints and high demand.
Key Trends and Uncertainties Regarding our Existing Business The following trends and uncertainties affected our financial performance in 2022 and 2023, and are reasonably likely to impact our results in the future: • During 2022, we experienced inflationary increases of raw materials, logistics, labor and energy costs, and supply chain challenges, including increased lead times due to availability constraints and high demand.
We design, manufacture, market, install and service high performance products and solutions that connect and protect mission critical equipment, buildings and critical processes. We offer a comprehensive range of enclosures, electrical connections and fastening and thermal management solutions across industry-leading brands that are recognized globally for quality, reliability and innovation.
We design, manufacture, market, install and service high performance products and solutions that connect and protect mission critical equipment, buildings and essential processes. We offer a comprehensive range of enclosures, electrical fastening solutions and thermal management solutions across industry-leading brands that are recognized globally for quality, reliability and innovation.
There are no known or anticipated changes in our discount rate assumptions that will materially impact our pension expense in 2023. Expected rates of return The expected rates of return on our pension plan assets ranged from 1.00% to 4.75%, 1.00% to 4.50% and 1.00% to 5.00% in 2022, 2021 and 2020, respectively.
There are no known or anticipated changes in our discount rate assumptions that will materially impact our pension expense in 2024. Expected rates of return The expected rates of return on our pension plan assets ranged from 1.00% to 5.50%, 1.00% to 4.75% and 1.00% to 4.50% in 2023, 2022 and 2021, respectively.
Material cash requirements In general, we require cash to fund working capital investments, acquisitions, capital expenditures, debt and interest payments, taxes, dividends and share repurchases. Our material contractual cash requirements as of December 31, 2022 include principal and interest on long-term debt as well as payments for operating lease liabilities.
Material cash requirements In general, we require cash to fund working capital investments, acquisitions, capital expenditures, debt and interest payments, taxes, dividends and share repurchases. Our material contractual cash requirements as of December 31, 2023 include principal and interest on long-term debt as well as payments for operating lease liabilities.
We recognize the effect of income tax positions only if those positions are more likely than not to be sustained. Recognized income tax positions are measured at the largest amount that is more likely than not to be realized. Changes in recognition or measurement are reflected in the period in which the change in judgment occurs. 39
We recognize the effect of income tax positions only if those positions are more likely than not to be sustained. Recognized income tax positions are measured at the largest amount that is more likely than not to be realized. Changes in recognition or measurement are reflected in the period in which the change in judgment occurs. 38
Interest on the 2028 Notes is payable semi-annually in arrears on April 15 and October 15 of each year, and interest on the 2031 Notes is payable semi-annually in arrears on May 15 and November 15 of each year. 32 The Notes are fully and unconditionally guaranteed as to payment by nVent (the "Parent Company Guarantor").
Interest on the 2028 Notes is payable semi-annually in arrears on April 15 and October 15 of each year, and interest on the 2031 Notes and 2033 Notes is payable semi-annually in arrears on May 15 and November 15 of each year. The Notes are fully and unconditionally guaranteed as to payment by nVent (the "Parent Company Guarantor").
As of December 31, 2022, we were in compliance with all financial covenants in our debt agreements, and there is no material uncertainty about our ongoing ability to meet those covenants. 33 Share repurchases On May 14, 2021, the Board of Directors authorized the repurchase of our ordinary shares up to a maximum dollar limit of $300.0 million (the "2021 Authorization").
As of December 31, 2023, we were in compliance with all financial covenants in our debt agreements, and there is no material uncertainty about our ongoing ability to meet those covenants. Share repurchases On May 14, 2021, the Board of Directors authorized the repurchase of our ordinary shares up to a maximum dollar limit of $300.0 million (the "2021 Authorization").
The six year growth rates for revenues and operating profits vary for each reporting unit being evaluated. Revenues and operating profit beyond 2028 are projected to grow at a perpetual growth rate of 3.0%.
The six year growth rates for revenues and operating profits vary for each reporting unit being evaluated. Revenues and operating profit beyond 2029 are projected to grow at a perpetual growth rate of 3.0%.
In September 2021, the Company and its subsidiaries nVent Finance and Hoffman Schroff Holdings, Inc. entered into an amended and restated credit agreement (the "Credit Agreement") with a syndicate of banks providing for a five-year $300.0 million senior unsecured term loan facility (the "Term Loan Facility") and a five-year $600.0 million senior unsecured revolving credit facility (the "Revolving Credit Facility" and, together with the Term Loan Facility, the "Senior Credit Facilities"), which amended and restated the March 2018 credit agreement.
Senior credit facilities In September 2021, the Company and its subsidiaries nVent Finance and Hoffman Schroff Holdings, Inc. entered into an amended and restated credit agreement (the "Credit Agreement") with a syndicate of banks providing for a five-year $300.0 million senior unsecured term loan facility (the "2021 Term Loan Facility") and a five-year $600.0 million senior unsecured revolving credit facility (the "Revolving Credit Facility" and, together with the 2021 Term Loan Facility, the "Senior Credit Facilities").
Borrowings under the Term Loan Facility are permitted on a delayed draw basis during the first year of the five-year term of the Term Loan Facility, and borrowings under the Revolving Credit Facility are permitted from time to time during the full five-year term of the Revolving Credit Facility.
Borrowings under the 2021 Term Loan Facility were permitted on a delayed draw basis during the first year of the five-year term of the 2021 Term Loan Facility, and borrowings under the Revolving Credit Facility are permitted from time to time during the full five-year term of the Revolving Credit Facility.
Sensitivity to changes in key assumptions A 0.25 percentage point change in the discount rates used to measure our pension and other post-retirement benefit plans is estimated to have an impact on our total projected benefit obligation of approximately $5.0 million.
Sensitivity to changes in key assumptions A 0.25 percentage point change in the discount rates used to measure our pension and other post-retirement benefit plans is estimated to have an impact on our total projected benefit obligation of approximately $6.1 million.
The discussion and analysis of fiscal year 2020 and changes in the financial condition and results of operations for fiscal year 2021 compared to fiscal year 2020 that are not included in this Form 10-K may be found in Part II, ITEM 7 of our Annual Report on Form 10-K for the fiscal year ended December 31, 2021, filed with the SEC on February 25, 2022.
The discussion and analysis of fiscal year 2021 and changes in the financial condition and results of operations for fiscal year 2022 compared to fiscal year 2021 that are not included in this Form 10-K may be found in Part II, ITEM 7 of our Annual Report on Form 10-K for the fiscal year ended December 31, 2022, filed with the SEC on February 28, 2023.
The following is the discussion and analysis of changes in the financial condition and res ults of operations for fiscal year 2022 compared to fiscal year 2021.
The following is the discussion and analysis of changes in the financial condition and res ults of operations for fiscal year 2023 compared to fiscal year 2022.
Discount rate assumptions for each reporting unit take into consideration our assessment of risks inherent in the future cash flows of the respective reporting unit and our weighted-average cost of capital. We utilized a discount rate ranging from 11.5% to 13.0% for each reporting unit in determining the discounted cash flows in our fair value analysis.
Discount rate assumptions for each reporting unit take into consideration our assessment of risks inherent in the future cash flows of the respective reporting unit and our weighted-average cost of capital. We utilized a discount rate ranging from 10.5% to 12.0% for each reporting unit in determining the discounted cash flows in our fair value analysis.
In addition, subject to certain qualifications and exceptions, the Senior Credit Facilities also contain covenants that, among other things, restrict our ability to create liens, merge or consolidate with another person, make acquisitions and incur subsidiary debt.
In addition, subject to certain qualifications and exceptions, the Senior Credit Facilities and the 2023 Term Loan Facility also contain covenants that, among other things, restrict our ability to create liens, merge or consolidate with another person, make acquisitions and incur subsidiary debt.
Among these factors are the adverse effects on our business operations or financial results, including due to the overall global economic and business conditions impacting our business; the ability to achieve the benefits of our restructuring plans; the ability to successfully identify, finance, complete and integrate acquisitions; competition and pricing pressures in the markets we serve, including the impacts of tariffs; volatility in currency exchange rates, interest rates and commodity prices; inability to generate savings from excellence in operations initiatives consisting of lean enterprise, supply management and cash flow practices; inability to mitigate material and other cost inflation; risks related to the availability of, and cost inflation in, supply chain inputs, including labor, raw materials, commodities, packaging and transportation; increased risks associated with operating foreign businesses, including risks associated with the conflict between Russia and Ukraine and related sanctions; the ability to deliver backlog and win future project work; failure of markets to accept new product introductions and enhancements; the impact of changes in laws and regulations, including those that limit U.S. tax benefits; the impact of the novel coronavirus 2019 ("COVID-19") pandemic; the outcome of litigation and governmental proceedings; and the ability to achieve our long-term strategic operating goals.
Among these factors are adverse effects on our business operations or financial results, including due to the overall global economic and business conditions impacting our business; the ability to achieve the benefits of our restructuring plans; the ability to successfully identify, finance, complete and integrate acquisitions, including the ECM Industries and other recent acquisitions; competition and pricing pressures in the markets we serve, including the impacts of tariffs; volatility in currency exchange rates, interest rates and commodity prices; inability to generate savings from excellence in operations initiatives consisting of lean enterprise, supply management and cash flow practices; inability to mitigate material and other cost inflation; risks related to the availability of, and cost inflation in, supply chain inputs, including labor, raw materials, commodities, packaging and transportation; increased risks associated with operating foreign businesses, including risks associated with military conflicts, such as that between Russia and Ukraine, and related sanctions; the ability to deliver backlog and win future project work; failure of markets to accept new product introductions and enhancements; the impact of changes in laws and regulations, including those that limit U.S. tax benefits; the outcome of litigation and governmental proceedings; and the ability to achieve our long-term strategic operating goals.
Our debt agreements contain certain financial covenants, the most restrictive of which are in the Senior Credit Facilities, including that we may not permit (i) the ratio of our consolidated debt (net of our consolidated unrestricted cash in excess of $5.0 million but not to exceed $250.0 million) to our consolidated net income (excluding, among other things, non-cash gains and losses) before interest, taxes, depreciation, amortization and non-cash share-based compensation expense ("EBITDA") on the last day of any period of four consecutive fiscal quarters (each, a "testing period") to exceed 3.75 to 1.00 (or, at nVent Finance’s election and subject to certain conditions, 4.25 to 1.00 for four testing periods in connection with certain material acquisitions) and (ii) the ratio of our EBITDA to our consolidated interest expense for the same period to be less than 3.00 to 1.00.
Our debt agreements contain certain financial covenants, the most restrictive of which are in the Senior Credit Facilities and the 2023 Term Loan Facility, including that we may not permit (i) the ratio of our consolidated debt (net of our consolidated unrestricted cash in excess of $5.0 million but not to exceed $250.0 million) to our consolidated net income (excluding, among other things, non-cash gains and losses) before interest, taxes, depreciation, amortization and non-cash share-based compensation expense ("EBITDA") on the last day of any period of four consecutive fiscal quarters (each a "testing period") to exceed 3.75 to 1.00 (or, at nVent Finance's election and subject to certain conditions, 4.25 to 1.00 for four testing periods in connection with certain material acquisitions, which we elected in connection with the acquisition of ECM Industries in May 2023 for each of the next four fiscal quarters beginning in the second quarter of 2023) and (ii) the ratio of our EBITDA to our consolidated interest expense for the same period to be less than 3.00 to 1.00.
The discount rates on our pension plans ranged from 1.00% to 5.25%, 0.25% to 3.25% and 0.00% to 2.75% in 2022, 2021 and 2020, respectively. The discount rates are determined by matching high-quality, fixed-income debt instruments with maturities corresponding to the expected timing of benefit payments as of the annual measurement date for each of the various plans.
The discount rates on our pension plans ranged from 1.00% to 4.88%, 1.00% to 5.25% and 0.25% to 3.25% in 2023, 2022 and 2021, respectively. The discount rates are determined by matching high-quality, fixed-income debt instruments with maturities corresponding to the expected timing of benefit payments as of the annual measurement date for each of the various plans.
Our distributable reserve balance was $2.8 billion and $2.9 billion as of December 31, 2022 and 2021, respectively. Authorized shares Our authorized share capital consists of 400.0 million ordinary shares with a par value of $0.01 per share.
Our distributable reserve balance was $2.7 billion and $2.8 billion as of December 31, 2023 and 2022, respectively. Authorized shares Our authorized share capital consists of 400.0 million ordinary shares with a par value of $0.01 per share.
In addition, we issue financial stand-by letters of credit primarily to secure our performance to third parties under self-insurance programs. As of December 31, 2022 and 2021, the outstanding value of bonds, letters of credit and bank guarantees totaled $38.0 million and $38.2 million, respectively.
In addition, we issue financial stand-by letters of credit primarily to secure our performance to third parties under self-insurance programs. As of December 31, 2023 and 2022, the outstanding value of bonds, letters of credit and bank guarantees totaled $45.5 million and $38.0 million, respectively.
We have contractual purchase obligations of $103.9 million for 2023, which represent commitments for raw materials to be utilized in the normal course of business for which all significant terms have been confirmed. Contractual purchase obligations beyond 2023 are not material. The total gross liability for uncertain tax positions at December 31, 2022 was estimated to be $13.4 million.
We have contractual purchase obligations of $59.7 million for 2024, which represent commitments for raw materials to be utilized in the normal course of business for which all significant terms have been confirmed. Contractual purchase obligations beyond 2024 are not material. The total gross liability for uncertain tax positions at December 31, 2023 was estimated to be $13.9 million.
These tax liabilities are reflected net of related tax loss carryforwards. As events change or resolution occurs, these liabilities are adjusted, such as in the case of audit settlements with taxing authorities. The ultimate resolution may result in a payment that is materially different from our current estimate of the tax liabilities.
As events change or resolution occurs, these liabilities are adjusted, such as in the case of audit settlements with taxing authorities. The ultimate resolution may result in a payment that is materially different from our current estimate of the tax liabilities.
Dividends Dividends paid per ordinary share were $0.70 for both the years ended December 31, 2022 and 2021. On December 12, 2022, the Board of Directors declared a quarterly cash dividend of $0.175 that was paid on February 3, 2023 to shareholders of record at the close of business on January 20, 2023.
Dividends Dividends paid per ordinary share were $0.70 for both the years ended December 31, 2023 and 2022. On December 12, 2023, the Board of Directors declared a quarterly cash dividend of $0.19 that was paid on February 2, 2024 to shareholders of record at the close of business on January 19, 2024.
The balance of dividends payable included in Other current liabilities on our Consolidated Balance Sheets was $30.4 million and $30.5 million at December 31, 2022 and 2021, respectively.
The balance of dividends payable included in Other current liabilities on our Consolidated Balance Sheets was $32.6 million and $30.4 million at December 31, 2023 and 2022, respectively.
A 0.25 percentage point change in the assumed rate of return on pension assets or discount rates for our pension and other post-retirement benefit plans is estimated to have no material impact on our ongoing pension expense. These estimates exclude any potential mark-to-market adjustments.
A 0.25 percentage point change in the assumed rate of return on pension assets or discount rates for our pension and other post-retirement benefit plans is estimated to have no material impact on our ongoing pension expense.
We expect to continue to have cash requirements to support working capital needs and capital expenditures, to pay interest and service debt, to pay dividends to shareholders quarterly and otherwise as described below under "Material cash requirements." We believe we have the ability and sufficient capacity to meet these cash requirements in the short term and long term by using available cash, internally generated funds and borrowing under committed credit facilities.
We expect to continue to have cash requirements to support working capital needs and capital expenditures, to pay interest and service debt and to pay dividends to shareholders quarterly. We believe we have the ability and sufficient capacity to meet these cash requirements by using available cash, internally generated funds and borrowing under committed credit facilities.
In 2023, our operating objectives include the following: • Executing our Environmental, Social and Governance ("ESG") strategy focused on People, Products and Planet; 25 • Enhancing and supporting employee engagement, development and retention; • Achieving differentiated revenue growth through new products and innovation and expansion in higher growth verticals across all regions globally; • Optimizing our technological capabilities to increasingly generate innovative new and connected products and advance digital transformation; • Driving operational excellence through lean and agile, with specific focus on our digital transformation and supply chain resiliency; • Optimizing working capital through inventory reduction initiatives across business segments and focused actions to optimize customer and vendor payment terms; and • Deploying capital strategically to drive growth and value creation. 26 CONSOLIDATED RESULTS OF OPERATIONS The consolidated results of operations were as follows: Years ended December 31 % / point change In millions 2022 2021 2022 vs 2021 Net sales $ 2,909.0 $ 2,462.0 18.2 % Cost of goods sold 1,812.3 1,520.1 19.2 % Gross profit 1,096.7 941.9 16.4 % % of net sales 37.7 % 38.3 % (0.6 pts) Selling, general and administrative 595.9 537.9 10.8 % % of net sales 20.5 % 21.8 % (1.3 pts) Research and development 60.4 48.6 24.3 % % of net sales 2.1 % 2.0 % 0.1 pts Operating income 440.4 355.4 23.9 % % of net sales 15.1 % 14.4 % 0.7 pts Net interest expense 31.2 32.3 N.M.
In 2024, our operating objectives include the following: • Executing our Environmental, Social and Governance ("ESG") strategy focused on People, Products and Planet; • Enhancing and supporting employee engagement, development and retention; • Achieving differentiated revenue growth through new products and innovation and expansion in higher growth verticals across all regions globally; • Integrating recent acquisitions with our existing operations; • Optimizing our technological capabilities to increasingly generate innovative new and connected products and advance digital transformation; 25 • Driving operational excellence through lean and agile, with specific focus on our digital transformation and supply chain resiliency; • Optimizing working capital through inventory reduction initiatives across business segments and focused actions to optimize customer and vendor payment terms; and • Deploying capital strategically to drive growth and value creation. 26 CONSOLIDATED RESULTS OF OPERATIONS The consolidated results of operations were as follows: Years ended December 31 % / point change In millions 2023 2022 2023 vs 2022 Net sales $ 3,263.6 $ 2,909.0 12.2 % Cost of goods sold 1,921.5 1,812.3 6.0 % Gross profit 1,342.1 1,096.7 22.4 % % of net sales 41.1 % 37.7 % 3.4 pts Selling, general and administrative 683.2 595.9 14.7 % % of net sales 20.9 % 20.5 % 0.4 pts Research and development 71.5 60.4 18.4 % % of net sales 2.2 % 2.1 % 0.1 pts Operating income 587.4 440.4 33.4 % % of net sales 18.0 % 15.1 % 2.9 pts Net interest expense 79.4 31.2 N.M.
This accounting method also results in the potential for volatile and difficult to forecast mark-to-market adjustments. Mark-to-market adjustments resulted in a pre-tax gain of $66.3 million and $15.2 million in 2022 and 2021, respectively, and a pre-tax expense of $8.7 million in 2020.
This accounting method also results in the potential for volatile and difficult to forecast mark-to-market adjustments. Mark-to-market adjustments resulted in a pre-tax loss of $13.9 million in 2023, and a pre-tax gain of $66.3 million and $15.2 million in 2022 and 2021, respectively.
While our business activity in Russia is not material to our operations, an escalation or expansion of economic disruption or the conflict's current scope could disrupt sales to our customers or our supply chain, increase inflationary costs and have a material adverse effect on our results of operations.
While our historical business activity in Russia is not material to our operations, an escalation or expansion of economic disruption or the conflict's current scope could disrupt sales to our customers or our supply chain, increase inflationary costs and have a material adverse effect on our results of operations. • Our global operations make our effective tax rate sensitive to significant tax law changes.
The following table is a reconciliation of free cash flow: Years ended December 31 In millions 2022 2021 Net cash provided by (used for) operating activities $ 394.6 $ 373.3 Capital expenditures (45.9) (39.5) Proceeds from sale of property and equipment 2.0 0.6 Free cash flow $ 350.7 $ 334.4 35 COMMITMENTS AND CONTINGENCIES We have been, and in the future may be, made parties to a number of actions filed or have been, and in the future may be, given notice of potential claims relating to the conduct of our business, including those pertaining to commercial or contractual disputes, product liability, environmental, safety and health, patent infringement and employment matters.
Our measure of free cash flow may not be comparable to similarly titled measures reported by other companies. 34 The following table is a reconciliation of free cash flow: Years ended December 31 In millions 2023 2022 Net cash provided by (used for) operating activities $ 528.1 $ 394.6 Capital expenditures (71.0) (45.9) Proceeds from sale of property and equipment 7.5 2.0 Free cash flow $ 464.6 $ 350.7 COMMITMENTS AND CONTINGENCIES We have been, and in the future may be, made parties to a number of actions filed or have been, and in the future may be, given notice of potential claims relating to the conduct of our business, including those pertaining to commercial or contractual disputes, product liability, environmental, safety and health, patent infringement and employment matters.
Financing activities Net cash used for financing activities was $82.1 million in 2022, which primarily related to dividends paid of $117.0 million, net repayments of revolving long-term debt of $106.7 million and share repurchases of $65.9 million, partially offset by $200.0 million of proceeds from long-term debt.
Net cash used for financing activities was $82.1 million in 2022, which primarily related to dividends paid of $117.0 million, net repayments of revolving credit facility of $106.7 million and share repurchases of $65.9 million, partially offset by $200.0 million of proceeds from long-term debt. Senior notes In March 2018, nVent Finance S.à r.l.
As of December 31, 2022, we had $297.5 million of cash on hand, of which $37.6 million is held in certain countries in which the ability to repatriate is limited due to local regulations or significant potential tax consequences.
As of December 31, 2023, we had $185.1 million of cash on hand, of which $31.0 million is held in certain countries in which the ability to repatriate is limited due to local regulations or significant potential tax consequences.
Our significant accounting policies are more fully described in ITEM 8, Note 1 of the Notes to Consolidated Financial Statements. Certain of our accounting policies require the application of significant judgment by management in selecting the appropriate assumptions for calculating financial estimates. By their nature, these judgments are subject to an inherent degree of uncertainty.
Certain of our accounting policies require the application of significant judgment by management in selecting the appropriate assumptions for calculating financial estimates. By their nature, these judgments are subject to an inherent degree of uncertainty.
A 10% decrease in the fair values determined in the quantitative impairment assessment for each of the reporting units would not have changed our determination that the fair value of each reporting unit was in excess of its carrying value for 2022.
A 10% decrease in the fair values determined in the quantitative impairment assessment for each of the reporting units would not have changed our determination that the fair value of each reporting unit was in excess of its carrying value for 2023. There was no impairment expense recorded in 2023, 2022 or 2021 related to goodwill.
The 2021 Authorization began on July 23, 2021, and expires on July 22, 2024. During the year ended December 31, 2022, we repurchased 1.6 million of our ordinary shares for $63.3 million under the 2021 Authorization. As of December 31, 2022, we had $140.6 million available for share repurchases under the 2021 Authorization.
The 2021 Authorization began on July 23, 2021, and expires on July 22, 2024. 33 During the year ended December 31, 2023, we repurchased 1.2 million of our ordinary shares for $58.8 million under the 2021 Authorization. As of December 31, 2023, we had $81.8 million available for share repurchases under the 2021 Authorization.
Segment income represents operating income exclusive of intangible amortization, acquisition related expenses, costs of restructuring activities, impairments and other unusual non-operating items. 28 Enclosures The net sales and segment income for Enclosures were as follows: Years ended December 31 % / point change In millions 2022 2021 2022 vs 2021 Net sales $ 1,503.7 $ 1,244.8 20.8 % Segment income 256.0 202.1 26.7 % % of net sales 17.0% 16.2% 0.8 pts Net sales The components of the change in Enclosures net sales were as follows: 2022 vs 2021 Volume 7.8 % Price 12.8 Organic growth 20.6 Acquisition 3.8 Currency (3.6) Total 20.8 % The 20.8 percent increase in Enclosures net sales in 2022 from 2021 was primarily the result of: • organic sales growth contribution of approximately 10.5%, 6.5% and 2.5% from our industrial, infrastructure and commercial & residential businesses, respectively, in 2022 from 2021, which includes increases in selling prices; and • increased sales of $47.1 million in 2022 as a result of the Vynckier and CIS Global acquisitions.
Segment income represents operating income exclusive of intangible amortization, acquisition related expenses, costs of restructuring activities, impairments and other unusual non-operating items. 28 Enclosures The net sales, segment income and segment income as a percentage of net sales for Enclosures were as follows: Years ended December 31 % / point change In millions 2023 2022 2023 vs 2022 Net sales $ 1,605.9 $ 1,503.7 6.8 % Segment income 346.6 256.0 35.4 % % of net sales 21.6 % 17.0 % 4.6 pts Net sales The components of the change in Enclosures net sales from the prior period were as follows: 2023 vs 2022 Volume 0.6 % Price 5.3 Organic growth 5.9 Acquisition 0.8 Currency 0.1 Total 6.8 % The 6.8 percent increase in Enclosures net sales in 2023 from 2022 was primarily the result of: • organic sales growth contribution of approximately 3.5% from our infrastructure business in 2023 from 2022, which includes increases in selling prices and growth in the data solutions business; and 1.5% and 1.0% from our industrial and commercial & residential businesses, respectively, in 2023 from 2022, which includes increases in selling prices; and • sales of $12.0 million in 2023 as a result of the TEXA Industries acquisition.
On February 28, 2023, the Board of Directors declared a quarterly cash dividend of $0.175 per ordinary share payable on May 12, 2023 to shareholders of record at the close of business on April 28, 2023.
On February 20, 2024, the Board of Directors declared a quarterly cash dividend of $0.19 per ordinary share payable on May 10, 2024 to shareholders of record at the close of business on April 26, 2024.
In November 2021, nVent Finance issued $300.0 million aggregate principal amount of 2.750% fixed rate senior notes due 2031 (the "2031 Notes" and, collectively with the 2028 Notes, the "Notes"). In December 2021, we redeemed the $300 million aggregate principal amount of our 3.950% fixed rate senior notes due 2023.
In November 2021, nVent Finance issued $300.0 million aggregate principal amount of 2.750% fixed rate senior notes due 2031 (the "2031 Notes"). In December 2021, we redeemed the $300 million aggregate principal amount of our 3.950% fixed rate senior notes due 2023. We incurred costs of $15.2 million related to the early extinguishment of the 2023 Notes.
Income taxes In determining taxable income for financial statement purposes, we must make certain estimates and judgments. These estimates and judgments affect the calculation of certain tax liabilities and the determination of the recoverability of certain of the deferred tax assets, which arise from temporary differences between the tax and financial statement recognition of revenue and expense.
These estimates and judgments affect the calculation of certain tax liabilities and the determination of the recoverability of certain of the deferred tax assets, which arise from temporary differences between the tax and financial statement recognition of revenue and expense.
SEGMENT RESULTS OF OPERATIONS The summary that follows provides a discussion of the results of operations of our three reportable segments (Enclosures, Electrical & Fastening Solutions and Thermal Management). Each of these segments comprises various product offerings that serve multiple end users.
This decrease was partially offset by: • increased earnings in higher tax rate jurisdictions. SEGMENT RESULTS OF OPERATIONS The summary that follows provides a discussion of the results of operations of each of our three reportable segments (Enclosures, Electrical & Fastening Solutions and Thermal Management). Each of these segments comprises various product offerings that serve multiple end users.
Free cash flow is a non-GAAP financial measure that we use to assess our cash flow performance. We believe free cash flow is an important measure of liquidity because it provides us and our investors a measurement of cash generated from operations that is available to pay dividends, make acquisitions, repay debt and repurchase shares.
We believe free cash flow is an important measure of liquidity because it provides us and our investors a measurement of cash generated from operations that is available to pay dividends, make acquisitions, repay debt and repurchase shares. In addition, free cash flow is used as a criterion to measure and pay annual incentive compensation.
Operating activities Net cash provided by operating activities was $394.6 million in 2022, compared to $373.3 million in 2021. Net cash provided by operating activities in 2022 primarily reflects net income of $447.7 million, net of non-cash depreciation, amortization, and pension and other post-retirement mark-to-market gain, partially offset by a $55.9 million increase in net working capital.
Net cash provided by operating activities in 2022 primarily reflects net income of $434.1 million, net of non-cash depreciation, amortization, changes in deferred taxes and pension and other post-retirement mark-to-market gain, partially offset by a $55.9 million increase in net working capital.
There was no impairment expense recorded in 2022 or 2021 related to identifiable intangible assets. 37 Pension and other post-retirement plans We sponsor defined-benefit pension plans and a post-retirement health plan. The defined benefit plans cover certain non-U.S. employees and retirees and the pension benefits are based principally on an employee's years of service and/or compensation levels near retirement.
Pension and other post-retirement plans We sponsor defined-benefit pension plans and a post-retirement health plan. The defined benefit plans cover certain non-U.S. employees and retirees and the pension benefits are based principally on an employee's years of service and/or compensation levels near retirement.
Segment income The components of the change in Enclosures segment income as a percentage of net sales from the prior period were as follows: 2022 vs 2021 Growth/acquisition 2.4 pts Price 9.5 Currency 0.4 Net productivity (11.5) Total 0.8 pts The 0.8 percentage point increase in segment income for Enclosures as a percentage of net sales in 2022 from 2021 was primarily the result of: • increases in selling prices to mitigate inflationary cost increases; and • higher sales volume resulting in increased leverage on fixed expenses.
Segment income The components of the change in Enclosures segment income as a percentage of net sales from the prior period were as follows: 2023 vs 2022 Growth/acquisition (0.4) pts Price 4.2 Currency (0.4) Net productivity 1.2 Total 4.6 pts The 4.6 percentage point increase in segment income for Enclosures as a percentage of net sales in 2023 from 2022 was primarily the result of: • increases in selling prices to mitigate inflationary cost increases; and • increased productivity as a result of supply chain management and manufacturing efficiencies.
Segment income The components of the change in Thermal Management segment income as a percentage of net sales from the prior period were as follows: 2022 vs 2021 Growth 1.3 pts Price 4.8 Currency (0.1) Net productivity (4.8) Total 1.2 pts The 1.2 percentage point increase in segment income for Thermal Management as a percentage of net sales in 2022 from 2021 was primarily the result of: • increases in selling prices to mitigate inflationary cost increases. • higher sales volume resulting in increased leverage on fixed expenses.
Segment income The components of the change in Thermal Management segment income as a percentage of net sales from the prior period were as follows: 2023 vs 2022 Growth (1.7) pts Price 2.9 Net productivity (0.8) Total 0.4 pts The 0.4 percentage point increase in segment income for Thermal Management as a percentage of net sales in 2023 from 2022 was primarily the result of: • increases in selling prices to mitigate inflationary cost increases; and • savings generated from restructuring and other lean initiatives.
We perform reviews of our income tax positions on a quarterly basis and accrue for uncertain tax positions. We recognize potential liabilities and record tax liabilities for anticipated tax audit issues in the tax jurisdictions in which we operate based on our estimate of whether, and the extent to which, additional taxes will be due.
We recognize potential liabilities and record tax liabilities for anticipated tax audit issues in the tax jurisdictions in which we operate based on our estimate of whether, and the extent to which, additional taxes will be due. These tax liabilities are reflected net of related tax loss carryforwards.
Identifiable intangible assets that are subject to amortization are evaluated for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. Identifiable intangible assets not subject to amortization are tested for impairment annually or more frequently if events warrant.
Identifiable intangibles with definite lives are amortized and those identifiable intangibles with indefinite lives are not amortized. Identifiable intangible assets that are subject to amortization are evaluated for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable.
Segment income The components of the change in Electrical & Fastening Solutions segment income as a percentage of net sales from the prior period were as follows: 2022 vs 2021 Growth/acquisition 1.9 pts Price 12.5 Currency 0.1 Net productivity (14.3) Total 0.2 pts The 0.2 percentage point increase in segment income for Electrical & Fastening Solutions as a percentage of net sales in 2022 from 2021 was primarily the result of: • increases in selling prices to mitigate inflationary cost increases; and • higher sales volume resulting in increased leverage on fixed expenses.
Segment income The components of the change in Electrical & Fastening Solutions segment income as a percentage of net sales from the prior period were as follows: 2023 vs 2022 Growth/acquisition 1.1 pts Price 4.0 Net productivity (1.8) Total 3.3 pts The 3.3 percentage point increase in segment income for Electrical & Fastening Solutions as a percentage of net sales in 2023 from 2022 was primarily the result of: • increases in selling prices to mitigate inflationary cost increases; • increased productivity as a result of supply chain management and manufacturing efficiencies; and • the impact of favorable product mix.
Changes in tax laws and rates could also affect recorded deferred tax assets and liabilities in the future. Management records the effect of a tax rate or law change on nVent’s deferred tax assets and liabilities in the period of enactment.
Management records the effect of a tax rate or law change on nVent’s deferred tax assets and liabilities in the period of enactment. Future tax rate or law changes could have a material effect on nVent’s financial condition, results of operations or cash flows.
Servicing these obligations includes the following estimated cash outflows from December 31, 2022: In millions Within 1 year Greater than 1 year Total Debt obligations $ 15.0 $ 1,073.8 $ 1,088.8 Interest obligations on fixed-rate debt 31.0 168.4 199.4 Operating lease obligations, net of sublease rentals 22.1 96.6 118.7 Total $ 68.1 $ 1,338.8 $ 1,406.9 We also incur purchase obligations in the ordinary course of business that are enforceable and legally binding.
Servicing these obligations includes the following estimated cash outflows from December 31, 2023: In millions Within 1 year Greater than 1 year Total Debt obligations $ 31.9 $ 1,760.6 $ 1,792.5 Interest obligations on fixed-rate debt 59.3 377.5 436.8 Operating lease obligations, net of sublease rentals 31.1 114.9 146.0 Total $ 122.3 $ 2,253.0 $ 2,375.3 We also incur purchase obligations in the ordinary course of business that are enforceable and legally binding.
There is a risk that changes in economic and operating conditions affecting the assumptions used in our impairment tests, including changes due to the evolving nature of the COVID-19 pandemic, could adversely affect future estimates or fair value and result in additional goodwill or other intangible asset impairment expense in the future.
There is a risk that changes in economic and operating conditions affecting the assumptions used in our impairment tests could adversely affect future estimates or fair value and result in additional goodwill or other intangible asset impairment expense in the future. Identifiable intangible assets Our primary identifiable intangible assets include: customer relationships, trade names, proprietary technologies and patents.
A 10% decrease in the fair values determined in the quantitative impairment assessment for each of the trade names would not have changed our determination that the fair value of each trade name was in excess of its carrying value for 2022. In 2020, we recognized pre-tax, non-cash impairment expense of $8.2 million related to certain trade names.
A 10% decrease in the fair values determined in the quantitative impairment assessment for each of the trade names would not have changed our determination that the fair value of each trade name was in excess of its carrying value for 2023. There was no impairment expense recorded in 2023, 2022 or 2021 related to identifiable intangible assets.
Impairment of goodwill and indefinite-lived intangibles Goodwill Goodwill represents the excess of the cost of acquired businesses over the net of the fair value of identifiable tangible net assets and identifiable intangible assets purchased and liabilities assumed.
All changes that do not qualify as measurement period adjustments are included in current period earnings. Impairment of goodwill and indefinite-lived intangibles Goodwill Goodwill represents the excess of the cost of acquired businesses over the net of the fair value of identifiable tangible net assets and identifiable intangible assets purchased and liabilities assumed.
In estimating future taxable income, we develop assumptions including the amount of future pre-tax operating income, the reversal of temporary differences and the implementation of feasible and prudent tax planning strategies.
In estimating future taxable income, we develop assumptions including the amount of future pre-tax operating income, the reversal of temporary differences and the implementation of feasible and prudent tax planning strategies. These assumptions require significant judgment about the forecasts of future taxable income and are consistent with the plans and estimates we are using to manage the underlying businesses.
Any reduction in future taxable income including but not limited to any future restructuring activities may require that we record an additional valuation allowance against our deferred tax assets. An increase in the valuation allowance could result in additional income tax expense in such period and could have a significant impact on our future earnings.
The realization of our remaining deferred tax assets is primarily dependent on future taxable income in the appropriate jurisdiction. Any reduction in future taxable income including but not limited to any future restructuring activities may require that we record an additional valuation allowance against our deferred tax assets.
This increase was partially offset by: • inflationary increases of raw materials, logistics, labor and energy costs, and supply chain challenges, including increased lead times, due to availability constraints and high demand compared to 2021. 30 Thermal Management The net sales and segment income for Thermal Management were as follows: Years ended December 31 % / point change In millions 2022 2021 2022 vs 2021 Net sales $ 613.9 $ 559.7 9.7 % Segment income 140.8 121.2 16.2 % % of net sales 22.9% 21.7% 1.2 pts Net sales The components of the change in Thermal Management net sales were as follows: 2022 vs 2021 Volume 7.8 % Price 6.5 Organic growth 14.3 Currency (4.6) Total 9.7 % The 9.7 percent increase in Thermal Management net sales in 2022 from 2021 was primarily the result of: • organic sales growth contribution of approximately 10.5% and 2.5% from our industrial and commercial & residential businesses, respectively, in 2022 from 2021, which includes increases in selling prices; and This increase was partially offset by: • unfavorable foreign currency effects .
This increase was partially offset by: • inflationary increases, primarily related to labor costs, compared to 2022; • lower sales volume resulting in decreased leverage on fixed expenses; and • investments in digital, selling and marketing to drive growth. 30 Thermal Management The net sales, segment income and segment income as a percentage of net sales for Thermal Management were as follows: Years ended December 31 % / point change In millions 2023 2022 2023 vs 2022 Net sales $ 594.7 $ 613.9 (3.1) % Segment income 138.5 140.8 (1.6) % % of net sales 23.3 % 22.9 % 0.4 pts Net sales The components of the change in Thermal Management net sales from the prior period were as follows: 2023 vs 2022 Volume (6.5) % Price 3.9 Organic growth (2.6) Currency (0.5) Total (3.1) % The 3.1 percent decrease in Thermal Management net sales in 2023 from 2022 was primarily the result of: • organic sales decline of approximately 2.5% and 1.5% from our commercial & residential and industrial businesses, respectively, in 2023 from 2022, partially offset by selective increases in selling prices; and • unfavorable foreign currency effects.
Other expense (income) In 2022 and 2021, we recognized a pre-tax, non-cash pension and other post-retirement mark-to-market gain of $66.3 million and $15.2 million, respectively.
Gain on sale of investment In 2023, we recorded a $10.3 million gain related to the sale of a $3.8 million equity investment recorded on a cost basis. Other expense (income) In 2023 and 2022, we recognized a pre-tax, non-cash pension and other post-retirement mark-to-market loss of $13.9 million and gain of $66.3 million, respectively.
Not Meaningful Net sales The components of the consolidated net sales change were as follows: 2022 vs 2021 Volume 6.5 % Price 13.5 Organic growth 20.0 Acquisition 1.9 Currency (3.7) Total 18.2 % The 18.2 percent increase in net sales in 2022 from 2021 was primarily the result of: • organic sales growth contribution of approximately 8.0%, 6.0% and 4.5% from our industrial, infrastructure and commercial & residential businesses, respectively, in 2022 from 2021, which includes increases in selling prices; and • increased sales of $47.1 million in 2022 as a result of the Vynckier and CIS Global acquisitions. 27 This increase was partially offset by: • unfavorable foreign currency effects.
Not Meaningful Net sales The components of the change in consolidated net sales were as follows: 2023 vs 2022 Volume (1.7) % Price 5.2 Organic growth 3.5 Acquisition 8.7 Total 12.2 % The 12.2 percent increase in net sales in 2023 from 2022 was primarily the result of: • sales of $252.7 million in 2023 as a result of the ECM Industries and TEXA Industries acquisitions; and • organic sales growth contribution of approximately 2.0% from our infrastructure business in 2023 from 2022, which primarily includes selective increases in selling prices.
Net cash provided by operating activities in 2021 primarily reflects net income of $366.1 million, net of non-cash depreciation, amortization, and pension and other post-retirement mark-to-market gain, partially offset by a $9.2 million increase in net working capital. Investing activities Net cash used for investing activities was $52.5 million in 2022, which primarily related to capital expenditures of $45.9 million.
Net cash provided by operating activities in 2023 primarily reflects net income of $543.8 million, net of non-cash depreciation, amortization, changes in deferred taxes and pension and other-post retirement mark-to-market loss, partially offset by a $17.2 million increase in net working capital. Net cash provided by operating activities was $394.6 million in 2022.
As of December 31, 2022, we had recorded $2.0 million for the possible payment of penalties and $2.2 million related to the possible payment of interest. 34 Other financial measures In addition to measuring our cash flow generation or usage based upon operating, investing and financing classifications included in the Consolidated Statements of Cash Flows, we also measure our free cash flow.
Other financial measures In addition to measuring our cash flow generation or usage based upon operating, investing and financing classifications included in the Consolidated Statements of Cash Flows, we also measure our free cash flow. Free cash flow is a non-GAAP financial measure that we use to assess our cash flow performance.
These assumptions require significant judgment about the forecasts of future taxable income and are consistent with the plans and estimates we are using to manage the underlying businesses. 38 We maintain valuation allowances with respect to our deferred tax assets unless it is more likely than not that all or a portion of such deferred tax assets will be realized.
We maintain valuation allowances with respect to our deferred tax assets unless it is more likely than not that all or a portion of such deferred tax assets will be realized. Our income tax expense recorded in the future may be reduced to the extent of decreases in our valuation allowances.
Net cash used for financing activities was $166.8 million in 2021, which primarily related to dividends paid of $117.7 million and share repurchases of $111.5 million, partially offset by net receipts of revolving long-term debt of $72.1 million.
Financing activities Net cash provided by financing activities was $516.7 million in 2023, which primarily related to proceeds from long-term debt of $800.0 million, partially offset by dividends paid of $116.8 million, repayments of long-term debt of $101.1 million and share repurchases of $60.8 million.
We operate across three segments: Enclosures, Electrical & Fastening Solutions and Thermal Management, which represented approximately 52%, 27% and 21% of total revenues during 2022 , respectively. • Enclosures —The Enclosures segment provides innovative solutions to connect, protect, power and cool critical controls systems, electronics, data and electrical equipment.
We operate across three segments: Enclosures, Electrical & Fastening Solutions and Thermal Management, which represented approximately 49%, 33% and 18% of total revenues during 2023 , respectively. • Enclosures —The Enclosures segment provides innovative solutions to help protect electronics and data in mission critical applications, including data solutions, that improve reliability and energy efficiency.
We utilized a royalty rate ranging from 1.0% to 5.5% for each trade name in our fair value analysis.
This method requires us to estimate the future revenue for the related brands, the appropriate royalty rate and the weighted average cost of capital. We utilized a royalty rate ranging from 1.0% to 5.5% for each trade name in our fair value analysis.
Net cash used for investing activities was $274.0 million in 2021, which primarily related to cash paid for the CIS Global and Vynckier acquisitions of $228.0 million, net of cash acquired, and capital expenditures of $39.5 million.
Investing activities Net cash used for investing activities was $1,164.7 million in 2023, which primarily related to cash paid for the ECM Industries and TEXA Industries acquisitions of $1,120.1 million, net of cash acquired, and capital expenditures of $71.0 million. Net cash used for investing activities was $52.5 million in 2022, which primarily related to capital expenditures of $45.9 million.
NEW ACCOUNTING STANDARDS See ITEM 8, Note 1 of the Notes to Consolidated Financial Statements, included in this Form 10-K, for information pertaining to recently adopted accounting standards or accounting standards to be adopted in the future. CRITICAL ACCOUNTING ESTIMATES We have adopted various accounting policies to prepare the consolidated financial statements in accordance with GAAP.
CRITICAL ACCOUNTING ESTIMATES We have adopted various accounting policies to prepare the consolidated financial statements in accordance with GAAP. Our significant accounting policies are more fully described in ITEM 8, Note 1 of the Notes to Consolidated Financial Statements.
Loss on early extinguishment of debt — 15.2 N.M. Other expense (income) (63.4) (12.8) N.M. Income before income taxes 472.6 320.7 N.M. Provision for income taxes 72.8 47.8 52.3 % Effective tax rate 15.4 % 14.9 % 0.5 pts Net income 399.8 272.9 46.5 % N.M.
Gain on sale of investment (10.3) — N.M. Other expense (income) 18.8 (63.4) N.M. Income before income taxes 499.5 472.6 5.7 % Provision (benefit) for income taxes (67.6) 72.8 N.M. Effective tax rate (13.5) % 15.4 % (28.9) pts Net income $ 567.1 $ 399.8 41.8 % N.M.
Borrowings under the Senior Credit Facilities bear interest at a rate equal to an adjusted base rate, London Interbank Offered Rate (“LIBOR”), Euro Interbank Offer Rate (“EURIBOR”) or Sterling Overnight Index Average (“SONIA”), plus, in each case, an applicable margin. The applicable margin will be based on, at nVent Finance’s election, the Company's leverage level or public credit rating.
The 2023 Term Loan Facility bears interest at a rate equal to an adjusted base rate or adjusted term SOFR plus an applicable margin. The applicable margin will be based on, at nVent Finance’s election, the Company's leverage level or public credit rating.
This increase was partially offset by: • inflationary increases of raw materials, logistics, labor and energy costs, and supply chain challenges, including increased lead times, due to availability constraints and high demand compared to 2021. 31 LIQUIDITY AND CAPITAL RESOURCES The primary source of liquidity for our business is cash flows provided by operations.
This increase was partially offset by: • lower sales volume resulting in decreased leverage on fixed expenses; and • inflationary increases, primarily related to labor costs, compared to 2022. 31 LIQUIDITY AND CAPITAL RESOURCES The primary source of liquidity for our business is cash flows provided by operations.
This method assumes the trade name has value to the extent that the owner is relieved of the obligation to pay royalties for the benefits received from them. This method requires us to estimate the future revenue for the related brands, the appropriate royalty rate and the weighted average cost of capital.
The impairment test for trade names consists of a comparison of the fair value of the trade name with its carrying value. Fair value is measured using the relief-from-royalty method. This method assumes the trade name has value to the extent that the owner is relieved of the obligation to pay royalties for the benefits received from them.
We expect the inflationary trends and supply chain pressures that we have encountered in 2022 to continue into 2023. Beginning in February 2022, in response to the conflict between Russia and Ukraine, many countries have initiated a variety of sanctions targeting Russia and associated entities. With the ongoing conflict, we have suspended new business activities in Russia.
While we have taken pricing actions and we have implemented and plan to continue to implement productivity improvements that could help offset these cost increases, we expect inflationary cost increases to continue into 2024, which could negatively impact our results of operations. • Beginning in February 2022, in response to the conflict between Russia and Ukraine, many countries have initiated a variety of sanctions targeting Russia and associated entities.
Future tax rate or law changes could have a material effect on nVent’s financial condition, results of operations or cash flows. In addition, the calculation of our tax liabilities involves dealing with uncertainties in the application of complex tax regulations in a multitude of jurisdictions across our global operations.
In addition, the calculation of our tax liabilities involves dealing with uncertainties in the application of complex tax regulations in a multitude of jurisdictions across our global operations. We perform reviews of our income tax positions on a quarterly basis and accrue for uncertain tax positions.
In December 2022, we amended the Senior Credit Facilities to replace the LIBOR-based interest rate benchmark with the Secured Overnight Financing Rate ("SOFR"). As of December 31, 2022, the borrowing capacity under the Revolving Credit Facility was $600.0 million.
As of December 31, 2023, the borrowing capacity under the Revolving Credit Facility was $600.0 million. Borrowings under the Senior Credit Facilities bear interest at a rate equal to an adjusted base rate, the Secured Overnight Financing Rate ("SOFR"), Euro Interbank Offer Rate (“EURIBOR”) or Sterling Overnight Index Average (“SONIA”), plus, in each case, an applicable margin.
Its engineered electrical and fastening products are innovative, cost efficient and time saving connections that are used across a wide range of verticals, including commercial, infrastructure, industrial and energy. • Thermal Management —The Thermal Management segment provides electric thermal solutions that connect and protect critical buildings, infrastructure, industrial processes and people.
Our power connections, fastening solutions, cable management solutions, grounding and bonding systems, tools and test instruments help provide efficiencies to contractors and provide resiliency for critical systems that are used across a wide range of verticals, including commercial and residential, infrastructure, industrial and energy. 24 • Thermal Management —The Thermal Management segment provides mission critical heat management solutions that protect people and assets and enhance process efficiency and performance.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeThe rates used to perform this analysis were based on the market exchange rates in effect on December 31, 2022. A 10% appreciation or depreciation of the U.S. dollar relative to the Euro would result in a $5.8 million net increase or a $7.1 million net decrease, respectively, in Accumulated other comprehensive income (loss) .
Biggest changeThe rates used to perform this analysis were based on the market exchange rates in effect on December 31, 2023. A 10% appreciation or a 10% depreciation of the U.S. dollar relative to the Euro would result in a change in Accumulated other comprehensive loss of $13.3 million.
Gains and losses related to a hedge are deferred and recorded in the Consolidated Balance Sheets as a component of Accumulated other comprehensive income (loss) and subsequently recognized in the Consolidated Statements of Operations and Comprehensive Income (Loss) when the hedged item affects earnings.
Gains and losses related to a hedge are deferred and recorded in the Consolidated Balance Sheets as a component of Accumulated other comprehensive loss and subsequently recognized in the Consolidated Statements of Operations and Comprehensive Income when the hedged item affects earnings.
However, these increases or decreases in Accumulated other comprehensive income (loss) would be offset by decreases or increases in the hedged net investments on our balance sheet due to currency translation. Interest rate risk Our debt portfolio as of December 31, 2022 was comprised of debt denominated in U.S. dollars.
However, the change in Accumulated other comprehensive loss would be offset by decreases or increases in the hedged net investments on our balance sheet due to currency translation. Interest rate risk Our debt portfolio as of December 31, 2023 was comprised of debt denominated in U.S. dollars.
At December 31, 2022 and 2021, we had outstanding foreign currency derivative contracts, including those related to cross currency swaps that qualify as a hedge of future cash flows, with gross notional U.S. dollar equivalent amounts of $462.6 million and $482.2 million, respectively.
At December 31, 2023 and 2022, we had outstanding foreign currency derivative contracts, including those related to cross currency swaps that qualify as a hedge of future cash flows, with gross notional U.S. dollar equivalent amounts of $344.3 million and $462.6 million, respectively.
At December 31, 2022 and 2021, we had a gross notional U.S. dollar equivalent amount of $63.7 million and $68.1 million designated as a net investment hedge for a portion of our net investment in our Euro denominated subsidiaries.
At December 31, 2023 and 2022, we had a gross notional U.S. dollar equivalent amount of $133.3 million and $63.7 million designated as a net investment hedge for a portion of our net investment in our Euro denominated subsidiaries.
Based on the variable-rate debt included in our debt portfolio as of December 31, 2022, a 100 basis point increase or decrease in interest rates would result in a $2.9 million increase or decrease in interest incurred. 40
Based on the variable-rate debt included in our debt portfolio as of December 31, 2023, a 100 basis point increase or decrease in interest rates would result in a $4.9 million increase or decrease in interest incurred. 39
Based on the fixed-rate debt included in our debt portfolio, as of December 31, 2022, a 100 basis point increase or decrease in interest rates would result in a $39.8 million decrease or a $42.7 million increase in fair value, respectively.
Based on the fixed-rate debt included in our debt portfolio, as of December 31, 2023, a 100 basis point increase or decrease in interest rates would result in a $72.5 million decrease or a $78.2 million increase in fair value, respectively.

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