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What changed in nVent Electric plc's 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of nVent Electric plc's 2023 and 2024 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 2024 report.

+241 added−259 removedSource: 10-K (2025-02-18) vs 10-K (2024-02-20)

Top changes in nVent Electric plc's 2024 10-K

241 paragraphs added · 259 removed · 196 edited across 9 sections

Item 1. Business

Business — how the company describes what it does

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Biggest changeBacklog 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.
Biggest changeSeasonality We generally experience increased demand for Electrical & Fastening Solutions products during the spring and summer months in the Northern Hemisphere. 2 Backlog of Orders by Segment December 31 In millions 2024 2023 $ change % change Enclosures $ 665.9 $ 373.1 $ 292.8 78.5 % Electrical & Fastening Solutions 83.4 89.7 (6.3) (7.0) Total $ 749.3 $ 462.8 $ 286.5 61.9 % A majority of our revenues result from orders received and products delivered in the same month and products generally ship within 90 days of the date on which a customer places an order.
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.
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.
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.
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. Our Code of Conduct outlines our commitment to equal opportunity and fair treatment for all.
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.
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, retail, contractors and original equipment manufacturers, our success also depends on building and partnering with a strong channel and distribution network.
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.
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 2024 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 of all ethics and compliance trainings.
From that starting point, we have grown both organically and via acquisition. Our Enclosures business first applied lean principles within the organization in the 1990s, leveraging its culture of customer service and operational excellence.
From that starting point, we have grown both organically and via acquisitions. Our Enclosures business first applied lean principles within the organization in the 1990s, leveraging its culture of customer service and operational excellence.
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.
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. ECM Industries is a leading provider of high-value electrical connectors, tools and test instruments and cable management.
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.
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 2024, we conducted three pulse surveys with questions focused on our Inclusion Index and employee satisfaction.
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.
We believe that trends like electrification, 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, both liquid and air, control buildings and power distribution solutions help protect operating environments for mission critical applications. Our solutions help make systems more resilient, helping avoid downtime.
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.
BUSINESS AND PRODUCTS Enclosures Our Enclosures business provides innovative solutions to help protect electronics, systems and data in mission critical applications, including data centers, that improve resiliency and energy efficiency. We are an enclosures and liquid cooling leader in the U.S. and globally.
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.
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.
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.
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. We continue to grow our employees in their capabilities to lead through change and transition.
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.
HUMAN CAPITAL MATTERS As of December 31, 2024, we employed approximately 12,100 people worldwide, of which approximately 39% 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.
Raw materials The principal materials we use in manufacturing our products are mild steel, stainless steel, electronic components, plastics (resins, fiberglass, epoxies), copper and paint (powder and liquid). In addition to the purchase of raw materials, we purchase some finished goods for distribution through our sales channels.
We expect the majority of our backlog at December 31, 2024 will be shipped in 2025. Raw materials The principal materials we use in manufacturing our products are mild steel, stainless steel, electronic components, copper, aluminum and paint (powder and liquid). In addition to the purchase of raw materials, we purchase some finished goods for distribution through our sales channels.
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.
In 2024, our ERG membership grew to over 1,900 members. 3 The following sets forth information regarding our workforce as of December 31, 2024, including the Thermal Management business, but excluding businesses we acquired in 2024 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) 22% 22% 44% Women (3) 40% 27% 26% (1) Our executive leadership is defined as the Chief Executive Officer and the Executive Leadership Team.
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.
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. The increase in backlog from 2023 to 2024 was primarily the result of the acquisition of Trachte, LLC.
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 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 focus on developing our employees through Continuous Conversation development discussions between employees and people leaders.
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.
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.
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.
Our offerings enhance end-user safety, reduce installation time and provide resiliency for critical systems. We are a leading global provider known for our application expertise and innovative labor saving solutions. Our cable management, electrical connections and solutions, and power connections help make electrical systems safe, efficient and resilient.
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.
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. 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.
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.
Workplace Health and Safety We are committed to maintaining a healthy and safe work environment and preventing workplace injuries. We use a safety model based on three pillars: employee engagement, controlled hazards and management commitment. We have strong participation in safety committees and behavior-based safety activities, and we empower employees to actively identify areas for improvement and solutions.
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.
ITEM 1. BUSINESS COMPANY OVERVIEW nVent Electric plc is a leading global provider of systems protections and electrical connection solutions. We believe our inventive electrical solutions enable safer systems and ensure a more secure world. We connect and protect some of the world's most critical systems to make them safer, more efficient and resilient.
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.
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 1 expand our products and solutions and to continue to differentiate our company by creating solutions that solve problems for our customers.
Together, they provide the mindset and operating system to propel the success of our company.
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.
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. 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.
(2) Data for U.S. employee population only. (3) Global data. 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.
Our backlog typically has a short manufacturing cycle and products generally ship within 90 days of the date on which a customer places an order. However, a portion of our backlog, particularly from orders for major capital projects, can take more than one year depending on the size and type of order.
However, a growing portion of our backlog, particularly in the infrastructure vertical, has a longer design and manufacturing process, and can take more than one year depending on the size and type of order.
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.
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 through regular employee engagement surveys. Since 2018, our employee response rate has increased by 20 points, and we have achieved a 6 point increase in our employee engagement score.
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.
We currently have nine Employee Resource Groups (“ERGs”) designed to create opportunities for development while assisting in meeting business objectives. 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.
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.
We sell globally but serve locally with regional manufacturing and supply chains. Our solutions are used by hyperscalers, utilities, original equipment manufacturers, panel builders and contractors. Our Enclosures brands include nVent HOFFMAN, nVent SCHROFF and nVent TRACHTE. Electrical & Fastening Solutions Our Electrical & Fastening Solutions business provides innovative solutions that connect power and data infrastructure.
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.
In the first quarter of 2025, we will be renaming our Enclosures segment to Systems Protection, and our Electrical & Fastening Solutions segment to Electrical Connections. Our portfolio of premier, industry-leading brands, some of which have a history spanning over 100 years, includes nVent CADDY, ERICO, HOFFMAN, ILSCO, SCHROFF and TRACHTE.
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.
Our broad range of products and solutions support industrial, infrastructure, commercial and residential, and energy applications around the world. Our solutions help our customers improve energy efficiency, ensure resiliency and protection, increase customer productivity, enhance safety and contribute to more sustainable operations. At nVent, we operate across two segments: Enclosures and Electrical & Fastening Solutions.
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In 2012, Pentair merged with Tyco International Ltd.’s Flow Control division, which included our Thermal Management business and the nVent RAYCHEM brand, a global leader in heat tracing solutions.
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We design, manufacture, market, install and service high performance products and solutions that are helping to build a more sustainable and electrified world. We have a comprehensive portfolio of cable management, control buildings, cooling solutions both liquid and air, electrical connections, enclosures, equipment protection, power connections and power management solutions, and we are recognized globally for quality, reliability and innovation.
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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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In 2024, we completed the acquisition of the Trachte, LLC ("Trachte") as part of our Enclosures reporting segment, for approximately $687.5 million in cash. Trachte is a leading manufacturer of engineered control building solutions designed to protect critical infrastructure assets.
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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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On July 31, 2024, we entered into a definitive agreement to sell our Thermal Management business to BCP VI Summit Holdings LP (assignee of BCP Acquisitions LLC), an affiliate of funds managed by Brookfield Asset Management, for a purchase price of $1.7 billion in cash, subject to certain customary purchase price adjustments.
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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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The Thermal Management business was previously disclosed as a stand-alone reporting segment, and is now presented as a discontinued operations in our Consolidated Financial Statements for all periods presented. On January 30, 2025, we completed the sale of the Thermal Management business.
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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 and solutions are primarily used by contractors, electrical utilities, electricians and panel builders. Our Electrical & Fastening Solutions brands include nVent CADDY, nVent ERICO and nVent ILSCO. Competition The markets for our products and services are geographically diverse and highly competitive.
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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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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. 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.
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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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Career development was identified as an area of focus following our 2023 engagement survey, and we continued our efforts to develop our people throughout 2024.
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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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Code of Conduct Training In 2024, our Code of Business Conduct and Ethics training was offered in 12 different languages to employees in 35 countries. 100% of professional employees completed the training, including topics such as safety, safeguarding company assets, conflict of interest, gifts and hospitality, anti-corruption, unconscious bias and age discrimination.
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Seasonality We generally experience increased demand for Electrical & Fastening Solutions products during the spring and summer months in the Northern Hemisphere and increased demand for Thermal Management products and services during the fall and winter months in the Northern Hemisphere.
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In 2024, we trained 97% of our offline, factory team members globally on our Code of Conduct. 4 We offer a number of resources to report concerns, including a confidential helpline, website, text messaging support and dedicated email inbox. We prohibit any form of retaliation against anyone reporting in good faith and take all reported concerns seriously.
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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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We actively encourage employees to report all incidents so that we can identify opportunities to improve before significant events occur. We have established a detailed list of safety standards, hold sites accountable to those standards and continuously look for ways to improve and comply with relevant regulations and expectations.
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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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Our managers invest in continuous improvement, lead by example, communicate openly, lead safety initiatives, build trust within teams and consistently model the right safety behavior to create an environment where employee safety is prioritized.
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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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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.
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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.
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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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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.
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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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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.
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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 continue to grow our employees in their capabilities to lead through change and transition.
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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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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.
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We provide multiple ways for employees to ask for help and report misconduct and illegal or unethical behavior, including doing so anonymously. A Helpline is available on our website (www.nventethics.com) and is available 24/7 and accessible in over 200 languages.
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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.
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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.
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Globally, we have adopted guidelines from the Occupational Safety and Health Administration (“OSHA”) in the United States to determine recordable injuries. We have achieved a strong safety track record through employee engagement, behavior based safety and proactive risk management.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeAs an Irish company, we are governed by the Companies Act 2014, which differs in some material respects from laws generally applicable to U.S. corporations and shareholders, including, among others, differences relating to interested director and officer transactions and shareholder lawsuits. Likewise, the duties of directors and officers of an Irish company generally are owed to the company only.
Biggest changeTherefore, a final judgment for the payment of money rendered by any U.S. federal or state court based on civil liability, whether or not based solely on U.S. federal or state securities laws, would not automatically be enforceable in Ireland. 13 As an Irish company, we are governed by the Companies Act 2014, which differs in some material respects from laws generally applicable to U.S. corporations and shareholders, including, among others, differences relating to interested director and officer transactions and shareholder lawsuits.
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.
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 infrastructure and commercial and residential markets, unemployment rates, availability of commercial financing, interest rates, inflation rates, and energy and commodity prices.
To the extent our customers, particularly our energy and industrial customers, are subject to any of these or other similar proposed or newly enacted laws and regulations, we are exposed to risks that the additional costs incurred by customers to comply with such laws and regulations could impact their ability or desire to continue to operate at similar levels in certain jurisdictions as historically seen or as currently anticipated, which could negatively impact their demand for our products and services.
To the extent our customers, particularly our industrial customers, are subject to any of these or other similar proposed or newly enacted laws and regulations, we are exposed to risks that the additional costs incurred by customers to comply with such laws and regulations could impact their ability or desire to continue to operate at similar levels in certain jurisdictions as historically seen or as currently anticipated, which could negatively impact their demand for our products and services.
If we are unable to generate sufficient cash flow from operations in the future to service our debt and meet our other cash requirements, we may be required, among other things: • to seek additional financing in the debt or equity markets; • to refinance or restructure all or a portion of our indebtedness; • to sell selected assets or businesses; or • to reduce or delay planned capital or operating expenditures.
If we are unable to generate sufficient cash flow from operations in the future to service our debt and meet our other cash requirements, we may be required, among other things: • to seek additional financing in the debt or equity markets; • to refinance or restructure all or a portion of our indebtedness; 11 • to sell selected assets or businesses; or • to reduce or delay planned capital or operating expenditures.
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.
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.
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.
If negative market 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.
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.
We compete based on technical expertise, reputation for quality and reliability, timeliness of delivery, previous 5 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.
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. 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.
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.
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.
Environmental Protection Agency ("EPA") has published findings that emissions of carbon dioxide, methane, and other greenhouse gases ("GHGs") present an endangerment to public health and the environment because emissions of such gases are, according to the EPA, contributing to the warming of the earth's atmosphere and other climate changes.
Environmental Protection Agency ("EPA") has published findings that emissions of carbon dioxide, methane, and other greenhouse gases ("GHGs") present an endangerment to public health and the environment because 9 emissions of such gases are, according to the EPA, contributing to the warming of the earth's atmosphere and other climate changes.
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 compete in various geographic regions and product markets around the world. Among these, the most significant are global industrial, infrastructure and commercial and residential markets. We expect to experience fluctuations in revenues and results of operations due to economic and business cycles.
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 6 or improve productivity could have a material adverse effect on our business, financial condition, results of operations and cash flows.
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.
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, international hostilities, 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.
If we are unable to meet our targets or successfully implement our strategy, or our ESG reporting is inaccurate or incomplete, then we could suffer from reputational damage and incur adverse reaction from investors and other stakeholders, which could adversely impact the perception of our brands and our products and services by current and potential investors and customers, which could in turn adversely impact our business, results of operations or financial condition.
If we are unable to meet our targets or successfully implement our strategy, or our sustainability reporting is inaccurate or incomplete, then we could suffer from reputational damage and incur adverse reaction from investors and other stakeholders, which could adversely impact the perception of our brands and our products and services by current and potential investors and customers, which could in turn adversely impact our business, results of operations or financial condition.
The market price of nVent ordinary shares may fluctuate widely, depending on many factors, some of which may be beyond our control, including: • actual or anticipated fluctuations in our results of operations due to factors related to our business; • success or failure of our business strategy; • our quarterly or annual earnings, or those of other companies in our industry; • our ability to obtain third-party financing as needed; • announcements by us or our competitors of significant acquisitions or dispositions; • changes in accounting standards, policies, guidance, interpretations or principles; • changes in earnings estimates by us or securities analysts or our ability to meet those estimates; • the operating and share price performance of other comparable companies; • investors' perceptions of us; • natural or other environmental disasters that investors believe may affect us; • overall market fluctuations; • results from any material litigation, including government investigations or environmental liabilities; • changes in laws and regulations affecting our business; and • general economic conditions and other external factors.
The market price of nVent ordinary shares may fluctuate widely, depending on many factors, some of which may be beyond our control, including: • actual or anticipated fluctuations in our results of operations due to factors related to our business; • success or failure of our business strategy; • our quarterly or annual earnings, or those of other companies in our industry; • our ability to obtain third-party financing as needed; • announcements by us or our competitors of significant acquisitions or dispositions; • changes in accounting standards, policies, guidance, interpretations or principles; • changes in earnings estimates by us or securities analysts or our ability to meet those estimates; 14 • the operating and share price performance of other comparable companies or of companies in industries that are our customers; • investors' perceptions of us; • natural or other environmental disasters that investors believe may affect us; • overall market fluctuations; • results from any material litigation, including government investigations or environmental liabilities; • changes in laws and regulations affecting our business; and • general economic conditions and other external factors.
We operate in many parts of the world that are recognized as having governmental and commercial corruption and in certain circumstances, strict compliance with anti-bribery laws may conflict with local customs and practices. Because many of our customers and end users are involved in infrastructure construction and energy production, they are often subject to increased scrutiny by regulators.
We operate in many parts of the world that are recognized as having governmental and commercial corruption and in certain circumstances, strict compliance with anti-bribery laws may conflict with local customs and practices. Because many of our customers and end users are involved in infrastructure construction, they are often subject to increased scrutiny by regulators.
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.
These risks include: • changes in diplomatic and trade relationships, as well as 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; 7 • 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.
Any of the following risks could materially and adversely affect our business, financial condition, results of operations, cash flows and the actual outcome of matters as to which forward-looking statement are made in this document. Risks Relating to Our Business General global economic and business conditions affect demand for our products.
Any of the following risks could materially and adversely affect our business, financial condition, results of operations, cash flows and the actual outcome of matters as to which forward-looking statements are made in this document. Risks Relating to Our Business General global economic and business conditions affect demand for our products.
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.
As investors and other stakeholders are increasingly focused on sustainability matters, and as stakeholder sustainability 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 sustainability initiatives.
Changes in data privacy laws and our ability to comply with them could have a material adverse effect on us. We collect and store data that is sensitive to us and our employees, customers, dealers and suppliers.
Changes in data privacy laws and our ability to comply with them could have a material adverse effect on us. We collect and store data that is sensitive to us and our employees, customers, distributors and 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.
We use a variety of raw materials in the production of our products including steel, copper, aluminum and paints. We also purchase certain electronic components, electrical and packaging materials from a number of suppliers.
Violations of the U.S. Foreign Corrupt Practices Act and similar anti-corruption laws outside the U.S. or international trade compliance regulations could have a material adverse effect on us. The U.S.
Foreign Corrupt Practices Act and similar anti-corruption laws outside the U.S. or international trade compliance regulations could have a material adverse effect on us. The U.S.
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.
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, 2024 accounted for approximately 28% of our net sales. Our financial statements reflect translation of items denominated in non-U.S. currencies to U.S. dollars.
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.
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, 2024 accounted for approximately 28% of our net sales. Further, our business obtains some products, components and raw materials from non-U.S. suppliers.
We cannot predict the outcome of 14 any specific legislative proposals.
We cannot predict the outcome of any specific legislative proposals.
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.
The European Union adopted the European Sustainability Reporting Standards and the Corporate Sustainability Reporting Directive ("CSRD") that imposes disclosure of the risks and opportunities arising from social and environmental issues, and on the impact of companies’ activities on people and the environment.
As a result of changes to U.S. and foreign government administrative policy, there may be changes to existing trade agreements, greater restrictions on free trade generally, significant increases in tariffs on goods imported into the U.S. particularly tariffs on products manufactured in China, Canada and Mexico, among other possible changes.
As a result of changes to U.S. and foreign government administrative policy, there may be changes to existing trade agreements, greater restrictions on free trade generally, the imposition of or significant increases in tariffs on goods imported into the U.S. particularly tariffs on products manufactured in China, Canada and Mexico, and adverse responses by foreign governments to U.S. trade policies, among other possible changes.
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.
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, 2024 was $749.3 million.
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.
In 2024 and 2023, we experienced inflationary increases of raw materials, logistics and labor costs. 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.
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.
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.
Shareholders of Irish companies generally do not have a personal right of action against directors or officers of the company and may exercise such rights of action on behalf of the company only in limited circumstances.
Likewise, the duties of directors and officers of an Irish company generally are owed to the company only. Shareholders of Irish companies generally do not have a personal right of action against directors or officers of the company and may exercise such rights of action on behalf of the company only in limited circumstances.
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.
A trade war, other governmental action related to tariffs or trade agreements, 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 purchase, 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. 8 Violations of the U.S.
Risks Relating to Legal, Regulatory and Compliance Matters Changes in U.S. and foreign government administrative policy, including changes to existing trade agreements and U.S government sanctions, could have a material adverse effect on us.
Risks Relating to Legal, Regulatory and Compliance Matters Changes in U.S. and foreign government administrative policy, including the imposition of or increases in tariffs and changes to existing trade agreements could have a material adverse effect on us.
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.
As of December 31, 2024, our goodwill and intangible assets were $3.8 billion and represented 57% 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.
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.
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. 12 Risks Relating to Our Jurisdiction of Incorporation in Ireland and Tax Residency in the U.K.
Under Irish law, we must have authority from our shareholders to issue any ordinary shares, including shares that are part of our authorized but unissued share capital.
Irish law differs from the laws in effect in the U.S., which may negatively impact our ability to issue ordinary shares. Under Irish law, we must have authority from our shareholders to issue any ordinary shares, including shares that are part of our authorized but unissued share capital.
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.
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.
During 2023 and 2022, we continued execution of certain business restructuring initiatives aimed at reducing our fixed cost structure and realigning our business.
We may not achieve some or all of the expected benefits of our business initiatives. During 2024 and 2023, we continued execution of certain business restructuring initiatives aimed at reducing our fixed cost structure and realigning our business.
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.
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 and capital expenditures.
These threats pose a risk to the security of our systems and networks and the confidentiality, availability and integrity of the data we process and maintain and pose a risk of theft to our assets. Establishing systems and processes to address these threats and changes in legal requirements relating to data collection and storage may increase our costs.
These threats pose a risk to the security of our systems and networks and the confidentiality, availability and integrity of the data we process and maintain and pose a risk of theft to our assets.
Any acquisitions or investments may not be successful and may ultimately result in impairment charges and have a material adverse effect on our business, financial condition, results of operations and cash flows. 7 We may not achieve some or all of the expected benefits of our business initiatives.
It may be difficult for us to complete transactions quickly and to integrate acquired operations efficiently into our business operations. Any acquisitions or investments may not be successful and may ultimately result in impairment charges and have a material adverse effect on our business, financial condition, results of operations and cash flows.
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.
Similarly, the State of California recently passed the Climate Corporate Data Accountability Act and the Climate-Related Financial Risk Act that will impose broad climate-related disclosure obligations on certain companies doing business in California, including us, starting in 2026. We will likely need to be prepared to contend with overlapping, yet distinct, climate-related disclosure requirements in multiple jurisdictions.
We and our subsidiaries may incur additional indebtedness in the future, subject to limitations in our debt agreements.
As of December 31, 2024, we had $2.2 billion of total debt on a consolidated basis. We and our subsidiaries may incur additional indebtedness in the future, subject to limitations in our debt agreements.
Our revenue from major projects depends in part on the level of capital expenditures in some of our principal end markets, including the energy, chemical processing and power generation industries. The number of such projects we win in any year fluctuates, and is dependent upon the number of projects available and our ability to bid successfully for such projects.
The number of such projects we win in any year fluctuates, and is dependent upon the number of projects available and our ability to bid successfully for such projects.
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. 13 Disruptions in the financial markets could adversely affect us, our customers and our suppliers by increasing funding costs or reducing availability of credit.
For the year ended December 31, 2024, foreign currency translations did not have an 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.
Under Irish law, the proper claimant for wrongs committed against nVent, including by our directors, is considered to be nVent itself.
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.
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.
Establishing systems and processes to address these threats and changes in legal requirements relating to data collection and storage may increase our costs. Previous cybersecurity incidents have not materially affected us, including our 10 business strategy, results of operations or financial condition. T here can be no assurance of similar results in the future.
Removed
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.
Added
Our revenue from major projects depends in part on the level of capital expenditures in some of our principal end markets, particularly in the infrastructure vertical, which includes our data solutions and power utilities businesses.
Removed
It may be difficult for us to complete transactions quickly and to integrate acquired operations efficiently into our business operations.
Added
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.
Removed
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.
Added
The U.S. administration has announced it intends to implement or increase tariffs and it remains unclear what the U.S. administration or foreign governments will or will not do with respect to tariffs or trade agreements and policies.
Removed
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.
Added
The risk of cybersecurity attacks may increase as artificial intelligence capabilities improve and are increasingly used to identify vulnerabilities and construct increasingly sophisticated cybersecurity attacks, with the possibility of additional vulnerabilities being introduced through our own use of artificial intelligence and its use by our stakeholders, including vendors and customers.
Removed
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.
Added
Additionally, our credit agreements generally include an increase in interest rates if the ratings for our debt are downgraded.
Removed
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.
Added
For example, the Organization for Economic Co-operation and Development introduced an international tax framework under Pillar II (the "Pillar II framework") which includes a global minimum tax of 15%.
Removed
In addition, from time to time, the U.S. government has imposed sanctions restricting U.S. companies from conducting business with specified non-U.S. individuals and companies. For example, the U.S. government has imposed sanctions through several executive orders and legislation restricting U.S. companies from conducting business with specified Russian and Ukrainian individuals and companies.
Added
The Pillar II framework has been implemented by several jurisdictions, including jurisdictions in which we operate, with effect from January 1, 2024, which resulted in an increase to our effective tax rate in 2024.
Removed
The sanctions imposed by the U.S. government may be expanded in the future to restrict or further restrict us from engaging with customers or vendors.
Removed
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
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
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.
Removed
For the year ended December 31, 2023, foreign currency translations did not have an impact on our net sales.
Removed
For example, several countries in which we operate, including the U.K., have begun to enact legislation to implement the Organization for Economic Cooperation and Development's international tax framework, including the Pillar II Model Rules for a global 15.0% minimum tax regime with effect from January 1, 2024 or later.
Removed
We expect the Pillar II global minimum tax regime will negatively impact our effective tax rate and results of operations beginning in 2024.
Removed
Therefore, a final judgment for the payment of money rendered by any U.S. federal or state court based on civil liability, whether or not based solely on U.S. federal or state securities laws, would not automatically be enforceable in Ireland.
Removed
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. 15 Irish law differs from the laws in effect in the U.S., which may negatively impact our ability to issue ordinary shares.

Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeIncident Response and Recovery Planning We have established and maintain comprehensive incident response and business continuity plans that address our response to, and mitigation and remediation of, a cybersecurity incident.
Biggest changeIncident Response and Recovery Planning We have established and maintain comprehensive incident response and business continuity plans that address our response to, and mitigation and remediation of, a cybersecurity incident, which includes the support of external cyber-specialist resources when deemed necessary, in addition to managed services to support our Security Operations Center function.
See Item 1A, Risk Factors, “Increased cybersecurity threats and computer crime pose a risk to our systems, networks, products and services, which expose us to potential regulatory, financial and reputational risks.” for a discussion of cybersecurity risks.
See Item 1A, Risk Factors, “Increased cybersecurity threats and computer crime pose a risk to our systems, networks, products and services, which expose us to potential regulatory, financial and reputational risks.” for a discussion of cybersecurity risks. 16
The Board of Directors and the Audit Committee work with management to help ensure that our cybersecurity program is effective in addressing the risks associated with cybersecurity threats and are committed to continuously improving our cybersecurity program to stay ahead of emerging threats. The CTO oversees our cybersecurity program, including assessing and managing material risks from cybersecurity threats.
The Board of Directors and the Audit Committee work with management to help ensure that our cybersecurity program is effective in addressing the risks associated with cybersecurity threats and are committed to continuously improving our cybersecurity program to stay apprised of emerging threats. The CTO oversees our cybersecurity program, including assessing and managing material risks from cybersecurity threats.
Previous cybersecurity incidents have not materially affected us, including our business strategy, results of operations or financial condition. However, risks from cybersecurity threats, including but not limited to exploitation of vulnerabilities, ransomware, denial of service, supply chain disruption, or other similar incidents may mate rially affect us, including our execution of business strategy, reputation, results of operations and/or financial condition.
However, risks from cybersecurity threats, including but not limited to exploitation of vulnerabilities, ransomware, denial of service, supply chain disruption, or other similar incidents may mate rially affect us, including our execution of business strategy, reputation, results of operations and/or financial condition.
We have implemented controls and procedures that provide for the prompt escalation of cybersecurity incidents to the ELT and the Audit Committee when appropriate, so that decisions regarding the public disclosure and reporting of such incidents can be made by management in a timely manner.
We have implemented controls and procedures that provide for the prompt escalation of cybersecurity incidents to the ELT, and the Board of Directors when appropriate, so that decisions regarding the public disclosure and reporting of such incidents can be made by management in a timely manner.
The Chief Information Security Officer ("CISO") reports to the CTO and leads the cybersecurity program and team. The CTO has served in various roles in information technology and information security for over 25 years. The CTO holds a PhD in engineering and degrees in technology and management.
The Chief Information Security Officer ("CISO") reports to the CTO and leads the cybersecurity program and team. 15 The CTO has served in various roles in technology for over 25 years and in information security including product security for over a decade. The CTO holds a PhD in engineering and degrees in technology and management.
We maintain cybersecurity insurance coverage to help mitigate the financial impact of a cybersecurity incident. 17 Technical Safeguards We deploy technical safeguards that are designed to protect our information systems from cybersecurity incidents, including firewalls, intrusion prevention and detection systems, anti-malware functionality and access controls, all of which are evaluated and improved through vulnerability assessments and cybersecurity threat intelligence.
Technical Safeguards We deploy technical safeguards that are designed to protect our information systems from cybersecurity incidents, including firewalls, intrusion prevention and detection systems, anti-malware functionality and access controls, all of which are evaluated and improved through vulnerability assessments and cybersecurity threat intelligence.
Risk Management We have processes in place to assess, identify, and manage material risks from cybersecurity threats. We track cybersecurity risk as an enterprise risk through our enterprise-wide risk management ("ERM") framework. The Board of Directors is actively involved in oversight of our ERM framework and receives regular reports on risks, including cybersecurity risks.
We track cybersecurity risk as an enterprise risk through our enterprise-wide risk management ("ERM") framework. The Board of Directors is actively involved in oversight of our ERM framework and receives regular reports on risks, including cybersecurity risks.
We engage third parties to conduct assessments, tests, and simulation exercises to validate and further mature our cybersecurity program, the results of which are reported to the Executive Leadership Team, including CTO, and the Board of Directors.
We engage third parties to conduct threat assessments, information system penetration tests, and simulation exercises to validate and further mature our cybersecurity program, the results of which are reported to the Executive Leadership Team, including CTO, and the Board of Directors. We maintain cybersecurity insurance coverage to help mitigate the financial impact of a cybersecurity incident.
The CISO has served in various roles in information technology and information security for over 25 years, including serving as a cybersecurity leader for public companies for more than 10 years. The CISO holds a degree in engineering and a master's degree in business.
The CISO has served in various roles in information technology and information security for over 25 years, including serving as a cybersecurity leader for public companies for over a decade. The CISO holds a degree in engineering and a master's degree in business. Risk Management We have processes in place to assess, identify, and manage material risks from cybersecurity threats.
Added
Additionally, the ELT and Board of Directors have conducted cybersecurity incident and response simulation exercises. Previous cybersecurity incidents have not materially affected us, including our business strategy, results of operations or financial condition.

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 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
Biggest changeThe following is a summary of our principal manufacturing and distribution properties: Number of Facilities Manufacturing Plant Locations Manufacturing Plants Distribution Facilities Enclosures U.S. and 10 other countries 24 16 Electrical & Fastening Solutions U.S. and 4 other countries 14 8 We believe that our production facilities are suitable for their purpose and are adequate to support our businesses.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeA 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.
Biggest changeA substantial number of these lawsuits and claims are insured and accrued for by Tonka Bay, a captive insurance subsidiary of nVent. Tonka Bay records a liability for these claims based on actuarial projections of ultimate losses.
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.
In our opinion, the amounts accrued are appropriate based on facts and circumstances as currently known. As of December 31, 2024, 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.

Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

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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.
Biggest changeWacker also served as an accountant with the public accounting firm Larson, Allen, Weishair & Co., LLP (n/k/a CliftonLarsonAllen) from 1988 – 1993.
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.
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 56 Executive Vice President and Chief Technology Officer since 2019; Mr.
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.
Wozniak 60 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.
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.
ITEM 4. MINE SAFETY DISCLOSURES Not applicable. 17 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.
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.
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 60 Executive Vice President and General Counsel and Secretary since 2018; Mr.
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.
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 60 Senior Vice President and Chief Accounting Officer since 2018 and Treasurer since 2019; Mr.
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.
Martha C. Bennett 52 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.
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.
Robert J. van der Kolk 56 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.
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.
Heath 57 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.
Mr. van der Kolk previously served as the Executive Vice President, Sales for ERICO from 2011 – 2015, and held various sales, development, and manufacturing leadership roles with ERICO from 2001 – 2008. Mr. van der Kolk held Plant Superintendent and Production Management roles for Cargill in the Netherlands and Germany from 1993 – 2001. Michael B.
Mr. van der Kolk previously served as the Executive Vice President, Sales for ERICO from 2011 – 2015, and held various sales, development, and manufacturing leadership roles with ERICO from 2001 – 2008. Mr. van der Kolk held Plant Superintendent and Production Management roles for Cargill in the Netherlands and Germany from 1993 – 2001. 18 PART II
(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.
(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 was the Senior Vice President Finance and Treasurer of the Company from 2018 – 2019. Ms.
Zawoyski 50 Executive Vice President and Chief Financial Officer since 2019, and Interim President of Enclosures since June 2024; Ms. Zawoyski was the Senior Vice President Finance and Treasurer of the Company from 2018 – 2019. Ms.
Removed
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.
Removed
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.
Removed
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.
Removed
He was the Vice President, Marketing of Pentair’s Thermal Management Unit from 2010 – 2013. Mr. Faulconer held various general management and marketing leadership roles with Tyco Thermal Controls in the U.S. and Asia from 2001 – 2010. From 1991 – 2000, Mr. Faulconer held various sales roles with Valquip Corporation. 21 PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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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.
Biggest changeBase Period December 31 INDEXED RETURNS Years ended December 31, Company / Index 2019 2020 2021 2022 2023 2024 nVent Electric plc $ 100 $ 94.32 $ 157.66 $ 162.90 $ 254.09 $ 296.34 S&P Mid Cap 400 Index 100 113.66 141.80 123.28 143.54 163.54 S&P Mid Cap 400 Industrials Index 100 116.49 149.62 132.42 174.04 197.51 19 Purchases of Equity Securities The following table provides information with respect to purchases we made of our ordinary shares during the fourth quarter of 2024: (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 26, 2024 269 $ 75.71 — $ 400,000,005 October 27 – November 23, 2024 846 72.86 — 400,000,005 November 24 – December 31, 2024 3,134 76.03 — 400,000,005 Total 4,249 — (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.
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.
The following graph sets forth the cumulative total shareholder return on our ordinary shares from December 31, 2019, assuming the investment of $100 and the reinvestment of all dividends since that date to December 31, 2024.
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.
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, 2024, there were 11,711 shareholders of record.
(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.
(d) On May 17, 2024, the Board of Directors authorized the repurchase of our ordinary shares up to a maximum dollar limit of $500.0 million (the "2024 Authorization"). The 2024 Authorization began on July 23, 2024 and expires on July 22, 2027. As of December 31, 2024, we had $400.0 million available for repurchases under the 2024 Authorization. ITEM 6.

Item 7. Management's Discussion & Analysis

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

82 edited+26 added−17 removed56 unchanged
Biggest changeOur 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.
Biggest changeThe following table is a reconciliation of free cash flow: Years ended December 31 In millions 2024 2023 2022 Net cash provided by (used for) operating activities of continuing operations $ 501.0 $ 422.2 $ 273.3 Capital expenditures (74.0) (65.6) (40.5) Proceeds from sale of property and equipment 0.5 0.1 2.0 Free cash flow of continuing operations 427.5 356.7 234.8 Net cash provided by (used for) operating activities of discontinued operations 142.1 105.9 121.3 Capital expenditures of discontinued operations (7.8) (5.4) (5.4) Proceeds from sale of property and equipment of discontinued operations 0.2 7.4 — Total free cash flow $ 562.0 $ 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. 31 While we believe that a material impact on our consolidated financial position, results of operations or cash flows from any such future claims or potential claims is unlikely, given the inherent uncertainty of litigation, a remote possibility exists that a future adverse ruling or unfavorable development could result in future charges that could have a material impact.
The applicable margin will be based on, at nVent Finance’s election, the Company's leverage level or public credit rating. In April 2023, nVent and nVent Finance entered into a loan agreement providing for another unsecured term loan facility of $300.0 million for five years (the "2023 Term Loan Facility"), which was used to fund the acquisition of ECM Industries.
The applicable margin will be based on, at nVent Finance’s election, the Company's leverage level or public credit rating. In April 2023, nVent and nVent Finance entered into a loan agreement providing for another senior unsecured term loan facility of $300.0 million for five years (the "2023 Term Loan Facility"), which was used to fund the acquisition of ECM Industries.
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.
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.
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.
In addition, subject to certain qualifications and exceptions, the Senior Credit Facilities, the 2023 Term Loan Facility and the 2024 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.
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.
We recognize potential liabilities and record tax liabilities for anticipated tax audit issues 34 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.
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").
As of December 31, 2024, 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").
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.
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 $4.6 million.
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
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. 35
As a result, the current estimates of the potential impact on our consolidated financial position, results of operations and cash flows for the proceedings and claims described in ITEM 8, Note 17 of the Notes to the Consolidated Financial Statements could change in the future.
As a result, the current estimates of the potential impact on our consolidated financial position, results of operations and cash flows for the proceedings and claims described in ITEM 8, Note 1 8 of the Notes to the Consolidated Financial Statements could change in the future.
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.
As of December 31, 2024, the borrowing capacity under the Revolving Credit Facility was $600.0 million. 29 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.
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%.
The six year growth rates for revenues and operating profits vary for each reporting unit being evaluated. Revenues and operating profit beyond 2030 are projected to grow at a perpetual growth rate of 3.0%.
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.
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, 2024 include principal and interest on long-term debt as well as payments for lease liabilities.
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.
The 2023 Term Loan Facility bears interest at a rate equal to an adjusted base rate or adjusted term SOFR 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.
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.
Our debt agreements contain certain financial covenants, the most restrictive of which are in the Senior Credit Facilities, the 2023 Term Loan Facility and the 2024 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) 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.
On May 18, 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.
On May 18, 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. ECM Industries is a leading provider of high-value electrical connectors, tools and test instruments and cable management.
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.
Among these factors are adverse effects on our business operations or financial results, including 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 Trachte acquisition; 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; 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.
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.
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 10.0% discount rate for each reporting unit in determining the discounted cash flows in our fair value analysis.
The purchase price was funded primarily through borrowings under the 2033 Notes and 2023 Term Loan Facility (as defined below). On July 10, 2023, we acquired TEXA Industries for approximately $34.8 million in cash, subject to customary purchase price adjustments.
The purchase price was funded primarily through borrowings under the 2033 Notes and 2023 Term Loan Facility (as defined below). 21 On July 10, 2023, we acquired TEXA Industries for approximately $34.8 million in cash.
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.
The discount rates on our pension plans ranged from 1.00% to 5.39%, 1.00% to 4.88% and 1.00% to 5.22% in 2024, 2023 and 2022, 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.
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.
We have contractual purchase obligations of $66.7 million for 2025, 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 2025 are not material. The total gross liability for uncertain tax positions at December 31, 2024 was estimated to be $11.7 million.
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.
Our distributable reserve balance was $2.4 billion and $2.7 billion as of December 31, 2024 and 2023, respectively. 30 Authorized shares Our authorized share capital consists of 400.0 million ordinary shares with a par value of $0.01 per share.
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 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. LIQUIDITY AND CAPITAL RESOURCES The primary source of liquidity for our business is cash flows provided by operations.
As of December 31, 2023, we have liabilities of $2.1 million for the possible payment of penalties and $2.3 million related to the possible payment of interest expense, which are recorded in Other current liabilities in the Consolidated Balance Sheet.
As of December 31, 2024, we have liabilities of $2.0 million for the possible payment of penalties and $1.4 million related to the possible payment of interest expense, which are recorded in Other current liabilities in the Consolidated Balance Sheet.
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.
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 both of our reportable segments (Enclosures and Electrical & Fastening Solutions). Both of these segments comprise various product offerings that serve multiple end users.
There are no significant restrictions on the ability of nVent to obtain funds from its subsidiaries by dividend or loan. None of the assets of nVent or its subsidiaries represents restricted net assets pursuant to the guidelines established by the SEC.
There are no significant restrictions on the ability of nVent to obtain funds from its subsidiaries by dividend or loan. None of the assets of nVent or its subsidiaries represents restricted net assets pursuant to the guidelines established by the Securities and Exchange Commission.
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.
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, 2024 and 2023, the outstanding value of bonds, letters of credit and bank guarantees totaled $10.7 million and $10.5 million, respectively.
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.
Financing activities Net cash provided by financing activities was $146.2 million in 2024, which primarily related to proceeds from long-term debt of $500.0 million, partially offset by dividends paid of $126.8 million, repayments of long-term debt of $126.5 million and share repurchases of $100.0 million. 28 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.
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.
There are no known or anticipated changes in our discount rate assumptions that will materially impact our pension expense in 2025. Expected rates of return The expected rates of return on our pension plan assets ranged from 1.00% to 3.25%, 1.00% to 3.75% and 1.00% to 2.25% in 2024, 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.
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.
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.
We record penalties and interest related to unrecognized tax benefits in Provision (benefit) for income taxes and Net interest expense , respectively in the Consolidated Statements of Operations and Comprehensive Income, which is consistent with our past practices.
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.
Net cash provided by operating activities in 2022 primarily reflects net income of $306.2 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 $47.3 million increase in net working capital.
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.
The balance of dividends payable included in Other current liabilities on our Consolidated Balance Sheets was $33.9 million and $32.6 million at December 31, 2024 and 2023, respectively.
Selling, general and administrative ("SG&A") The 0.4 percentage point increase in SG&A expense as a percentage of net sales in 2023 from 2022 was driven by: • restructuring and acquisition transaction and integration costs of $25.8 million in 2023 compared to $12.5 million in 2022; • inflationary increases impacting our labor costs, professional fees and other administrative costs; and • investments in capacity, digital, new products, selling and marketing to drive growth.
The 0.5 percentage point increase in SG&A expense as a percentage of net sales in 2023 from 2022 was driven by: • inflationary increases impacting our labor costs, professional fees and other administrative costs; and • investments in capacity, digital, new products, selling and marketing to drive growth.
This 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.
This 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. 26 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 2024 2023 2022 2024 vs 2023 2023 vs 2022 Net sales $ 1,182.8 $ 1,063.0 $ 791.4 11.3% 34.3% Segment income 354.5 330.6 219.9 7.2% 50.3% % of net sales 30.0% 31.1% 27.8% (1.1 pts) 3.3 pts Net sales The components of the change in Electrical & Fastening Solutions net sales from the prior period were as follows: 2024 vs 2023 2023 vs 2022 Volume (1.7) % (2.3) % Price 0.2 5.9 Organic growth (1.5) % 3.6 % Acquisition 12.8 30.4 Currency — 0.3 Total 11.3 % 34.3 % The 11.3 percent increase in Electrical & Fastening Solutions net sales in 2024 from 2023 was primarily the result of: • sales of $136.3 million in 2024 as a result of the ECM Industries acquisition.
We recognize changes in the fair value of plan assets and net actuarial gains or losses for pension and other post-retirement benefits annually in the fourth quarter each year (“mark-to-market adjustment”) and, if applicable, in any quarter in which an interim remeasurement is triggered.
Differences in actual experience or changes in assumptions may affect our pension and other post-retirement obligations and future expense. 33 We recognize changes in the fair value of plan assets and net actuarial gains or losses for pension and other post-retirement benefits annually in the fourth quarter each year (“mark-to-market adjustment”) and, if applicable, in any quarter in which an interim remeasurement is triggered.
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.
As of December 31, 2024, we had $131.2 million of cash on hand, of which $53.2 million is held in certain countries in which the ability to repatriate is limited due to local regulations or significant potential tax consequences.
Net interest expense The increase in net interest expense in 2023 from 2022 was the result of: • increased debt due to the acquisition of ECM Industries; • increased variable interest rates compared to the same periods of the prior year; and • the amortization of debt issuance costs of $3.6 million during 2023 related to financing commitments for the bridge loan facility established in connection with the acquisition of ECM Industries.
The increase in net interest expense in 2023 from 2022 was the result of: • increased debt due to the acquisition of ECM Industries; • increased variable interest rates compared to the same periods of the prior year; and • the amortization of debt issuance costs of $3.6 million during 2023 related to financing commitments for the bridge loan facility established in connection with the acquisition of ECM Industries. 24 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.
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.
Not Meaningful Net sales The components of the change in consolidated net sales were as follows: 2024 vs 2023 2023 vs 2022 Volume 2.6 % (0.4) % Price (0.2) 5.5 Organic growth 2.4 % 5.1 % Acquisition 10.3 11.0 Currency (0.1) 0.2 Total 12.6 % 16.3 % The 12.6 percent increase in net sales in 2024 from 2023 was primarily the result of: • sales of $274.4 million in 2024 as a result of the ECM Industries, Trachte and TEXA Industries acquisitions; and • organic sales growth contribution of approximately 2.5% from our infrastructure business in 2024 from 2023, which includes selective increases in selling prices. 23 The 16.3 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 2.5%, 1.5%, and 1.0% from our infrastructure, commercial & residential and industrial businesses, respectively, in 2023 from 2022, which primarily includes selective increases in selling prices.
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.
On February 17, 2025, the Board of Directors declared a quarterly cash dividend of $0.20 per ordinary share payable on May 9, 2025 to shareholders of record at the close of business on April 25, 2025.
The impairment test is performed by comparing the fair value of each reporting unit with its carrying amount, and recognizing an impairment expense for the amount by which the carrying amount exceeds the reporting unit's fair value, not to exceed the total amount of goodwill allocated to the reporting unit.
The impairment test is performed by comparing the fair value of each reporting unit with its carrying amount, and recognizing an impairment expense for the amount by which the carrying amount exceeds the reporting unit's fair value, not to exceed the total amount of goodwill allocated to the reporting unit. 32 The fair value of each reporting unit is determined using a discounted cash flow analysis and market approach.
These plans take into consideration numerous factors including historical experience, anticipated future economic conditions, and growth expectations for the industries and end markets in which the reporting unit participates. The level of judgment and estimation is inherently high.
These plans take into consideration numerous factors including historical experience, anticipated future economic conditions, and growth expectations for the industries and end markets in which the reporting unit participates. The level of judgment and estimation is inherently high. These assumptions are determined over a six year long-term planning period.
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.
Net cash provided by operating activities in 2023 primarily reflects net income from continuing operations of $420.4 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 $2.4 million increase in net working capital. Net cash provided by operating activities from continuing operations was $273.3 million in 2022.
We expect these megatrends to continue and further drive sales growth in 2024. • We have invested in innovation and new products, which has led to sales growth in all our segments. We expect continued investment in new products to further drive sales growth in 2024.
We expect these megatrends to continue and further drive sales growth in 2025. • We have invested in innovation and new products, which has contributed to sales growth. We expect continued investment in new products to further drive sales growth in 2025.
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 Enclosures segment income as a percentage of net sales from the prior period were as follows: 2024 vs 2023 2023 vs 2022 Growth/acquisition 2.0 pts (0.4 pts) Price (0.3) 4.2 Currency 0.1 (0.4) Net productivity (1.3) 1.2 Total 0.5 pts 4.6 pts The 0.5 percentage point increase in segment income for Enclosures as a percentage of net sales in 2024 from 2023 was primarily the result of: • higher sales volume resulting in increased leverage on fixed expenses; and • increased productivity as a result of supply chain management and manufacturing efficiencies.
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.
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 $0.1 million in 2024, a pre-tax loss of $13.4 million in 2023, and a pre-tax gain of $61.9 million in 2022.
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.
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.
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.
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 2024.
Provision (benefit) for income taxes The 28.9 percentage point decrease in the effective tax rate in 2023 from 2022, respectively, was primarily the result of: • $72.0 million of non-cash benefit recorded in 2023 for the recognition of deferred tax assets for a step up in tax basis of intangible assets in Switzerland, partially offset by valuation allowances of $12.0 million.
The 35.3 percentage point decrease in the effective tax rate in 2023 from 2022 was primarily the result of: • $55.4 million of non-cash benefit recorded in 2023 for the recognition of deferred tax assets for a step up in tax basis of intangible assets in Switzerland, partially offset by valuation allowances of $5.1 million.
Identifiable intangible assets not subject to 36 amortization are tested for impairment annually or more frequently if events warrant. We complete our annual impairment test during the fourth quarter each year for those identifiable assets not subject to amortization.
Identifiable intangible assets not subject to amortization are tested for impairment annually or more frequently if events warrant. We complete our annual impairment test during the fourth quarter each year for those identifiable assets not subject to amortization. The impairment test for trade names consists of a comparison of the fair value of the trade name with its carrying value.
We determine our estimated values by applying these comparable EBITDA multiples to the operating results of our reporting units. The ultimate fair value of each reporting unit is determined considering the results of both valuation methods.
We determine our estimated values by applying these comparable EBITDA multiples to the operating results of our reporting units. The ultimate fair value of each reporting unit is determined considering the results of both valuation methods. There was no impairment expense recorded in 2024, 2023 or 2022 related to goodwill.
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.
Servicing these obligations includes the following estimated cash outflows from December 31, 2024: In millions Within 1 year Greater than 1 year Total Debt obligations $ 37.5 $ 2,128.8 $ 2,166.3 Interest obligations on fixed-rate debt 59.3 318.2 377.5 Lease obligations, net of sublease rentals 33.1 142.7 175.8 Total $ 129.9 $ 2,589.7 $ 2,719.6 We also incur purchase obligations in the ordinary course of business that are enforceable and legally binding.
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.
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 2024 2023 2022 2024 vs 2023 2023 vs 2022 Net sales $ 1,823.3 $ 1,605.9 $ 1,503.7 13.5% 6.8% Segment income 403.1 346.6 256.0 16.3% 35.4% % of net sales 22.1% 21.6% 17.0% 0.5 pts 4.6 pts 25 Net sales The components of the change in Enclosures net sales from the prior period were as follows: 2024 vs 2023 2023 vs 2022 Volume 5.4 % 0.6 % Price (0.4) 5.3 Organic growth 5.0 % 5.9 % Acquisition 8.6 0.8 Currency (0.1) 0.1 Total 13.5 % 6.8 % The 13.5 percent increase in Enclosures net sales in 2024 from 2023 was primarily the result of: • organic sales growth contribution of approximately 4.5% from our infrastructure business in 2024 from 2023, which includes selective increases in selling prices and growth in the data solutions business; and • sales of $138.1 million in 2024 as a result of the Trachte and TEXA Industries acquisitions.
Our standard and custom protective enclosures, cooling solutions and power distribution solutions help manage power and protect operating environments for mission critical applications in industrial, infrastructure, commercial and energy verticals. • Electrical & Fastening Solutions —The Electrical & Fastening Solutions segment provides innovative solutions that connect and protect in power and data infrastructure.
Our standard and custom protective enclosures, cooling solutions, both liquid and air, control buildings and power distribution solutions help protect operating environments for mission critical applications in industrial, infrastructure, commercial and energy verticals. • Electrical & Fastening Solutions (to be renamed Electrical Connections beginning in the first quarter of 2025) —The Electrical & Fastening Solutions segment provides innovative solutions that connect power and data infrastructure.
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.
In 2025, our operating objectives include the following: • Executing our sustainability strategy focused on People, Products, Planet and Governance; • Enhancing and supporting employee engagement, development and retention; • Achieving differentiated revenue growth through focus on higher growth verticals, new products and innovation, global expansion and acquisitions; • Integrating recent acquisitions with our existing operations; • 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. 22 CONSOLIDATED RESULTS OF OPERATIONS The consolidated results of operations were as follows: Years ended December 31 % / point change In millions 2024 2023 2022 2024 vs 2023 2023 vs 2022 Net sales $ 3,006.1 $ 2,668.9 $ 2,295.1 12.6 % 16.3 % Cost of goods sold 1,797.0 1,593.7 1,472.2 12.8 % 8.3 % Gross profit 1,209.1 1,075.2 822.9 12.5 % 30.7 % % of net sales 40.2 % 40.3 % 35.9 % (0.1) pts 4.4 pts Selling, general and administrative 615.9 557.3 468.3 10.5 % 19.0 % % of net sales 20.5 % 20.9 % 20.4 % (0.4) pts 0.5 pts Research and development 66.1 55.2 45.6 19.7 % 21.1 % % of net sales 2.2 % 2.1 % 2.0 % 0.1 pts 0.1 pts Operating income 527.1 462.7 309.0 13.9 % 49.7 % % of net sales 17.5 % 17.3 % 13.5 % 0.2 pts 3.8 pts Net interest expense 106.0 79.4 31.2 N.M.
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.
Net cash used for investing activities from continuing operations was $1,166.7 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 $65.6 million.
(“nVent Finance” or "Subsidiary Issuer"), a 100-percent owned subsidiary of nVent, issued $300.0 million aggregate principal amount of 3.950% senior notes due 2023 (the "2023 Notes") and $500.0 million aggregate principal amount of 4.550% senior notes due 2028 (the "2028 Notes").
(“nVent Finance” or "Subsidiary Issuer"), a 100-percent owned subsidiary of nVent, issued $500.0 million aggregate principal amount of 4.550% senior notes due 2028 (the "2028 Notes"). In November 2021, nVent Finance issued $300.0 million aggregate principal amount of 2.750% fixed rate senior notes due 2031 (the "2031 Notes").
If the actual results differ from the estimates and judgments used in these fair values, the amounts recorded in the consolidated financial statements could result in a possible impairment of the intangible assets and goodwill or require acceleration of the amortization expense of finite-lived intangible assets. 35 Allocations of the purchase price for acquisitions are based on estimates of the fair value of the net assets acquired and are subject to adjustment upon finalization of the purchase price allocation.
If the actual results differ from the estimates and judgments used in these fair values, the amounts recorded in the consolidated financial statements could result in a possible impairment of the intangible assets and goodwill or require acceleration of the amortization expense of finite-lived intangible assets.
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.
This decrease was partially offset by: • increased productivity as a result of supply chain management and manufacturing efficiencies. 27 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, manufacturing and other efficiencies; and • the impact of favorable product mix.
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.
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. The amounts recognized in our consolidated financial statements related to our defined-benefit pension and other post-retirement plans are determined from actuarial valuations.
Gross profit The 3.4 percentage point increase in gross profit 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. 27 This increase was partially offset by: • $17.7 million of expense related to inventory step-up recorded in 2023 as a result of the ECM Industries acquisition; and • inflationary increases, primarily related to labor costs, compared to 2022.
The 4.4 percentage point increase in gross profit 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.
TEXA Industries is an Italian manufacturer of industrial cooling applications that we will market as part of the nVent HOFFMAN product line within our Enclosures segment.
TEXA Industries is an Italian manufacturer of industrial cooling applications that we will market as part of the nVent HOFFMAN product line within our Enclosures segment. On July 16, 2024, we completed the acquisition of the Trachte, LLC ("Trachte") as part of our Enclosures reporting segment, for approximately $687.5 million in cash.
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.
Other expense (income) In 2024, 2023 and 2022, we recognized a pre-tax, non-cash pension and other post-retirement mark-to-market gain of $0.1 million, a loss of $13.4 million and a gain of $61.9 million, respectively. In 2024, we recorded $12.5 million of income related to the release of a guarantee liability.
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.
Key Trends and Uncertainties Regarding our Existing Business The following trends and uncertainties affected our financial performance in 2023 and 2024, and are reasonably likely to impact our results in the future: • During 2023 and 2024, we experienced inflationary increases, primarily related to labor and raw material costs.
We experience seasonal cash flows primarily due to increased demand for Electrical & Fastening Solutions products during the spring and summer months in the Northern Hemisphere and increased demand for Thermal Management products and services during the fall and winter months in the Northern Hemisphere.
We experience seasonal cash flows primarily due to increased demand for Electrical & Fastening Solutions products during the spring and summer months in the Northern Hemisphere. Operating activities Net cash provided by operating activities from continuing operations was $501.0 million in 2024.
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.
Projecting discounted future cash flows requires us to make significant estimates regarding future revenues and expenses, projected capital expenditures, changes in working capital and the appropriate discount rate. 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.
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.
During the year ended December 31, 2024, we repurchased 1.5 million of our ordinary shares for $100.0 million under the 2024 Authorization and we did not repurchase ordinary shares under the 2021 Authorization. As of December 31, 2024, we had $400.0 million available for share repurchases under the 2024 Authorization.
The amounts recognized in our consolidated financial statements related to our defined-benefit pension and other post-retirement plans are determined from actuarial valuations. Inherent in these valuations are assumptions, including: expected return on plan assets, discount rates and rate of increase in future compensation levels.
Inherent in these valuations are assumptions, including: expected return on plan assets, discount rates and rate of increase in future compensation levels. These assumptions are updated annually and are disclosed for our Direct Plans in ITEM 8, Note 13 to the Notes to Consolidated Financial Statements.
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.
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. This method requires us to estimate the future revenue for the related brands, the appropriate royalty rate and the weighted-average cost of capital.
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.
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: 2024 vs 2023 2023 vs 2022 Growth/acquisition (1.7) pts 1.1 pts Price 0.2 4.0 Net productivity 0.4 (1.8) Total (1.1) pts 3.3 pts The 1.1 percentage point decrease in segment income for Electrical & Fastening Solutions as a percentage of net sales in 2024 from 2023 was primarily the result of: • the impact of unfavorable product mix; • inflationary increases, primarily related to labor costs and raw materials, compared to 2023; and • investments in digital to drive growth.
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.
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 2024. Pension and other post-retirement plans We sponsor defined-benefit pension plans and a post-retirement health plan.
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.
On December 16, 2024, the Board of Directors declared a quarterly cash dividend of $0.20 that was paid on February 7, 2025 to shareholders of record at the close of business on January 17, 2025.
This increase was partially offset by: • savings generated from restructuring and other lean initiatives.
This increase was partially offset by: • savings generated from restructuring and other lean initiatives. Net interest expense The increase in net interest expense in 2024 from 2023 was the result of: • increased debt due to the acquisition of Trachte.
This decrease was partially offset by: • organic sales growth contribution of approximately 1.0% from our energy business in 2023 from 2022, which includes selective increases in selling price.
This increase was partially offset by: • organic sales decline of approximately 1.5% from our commercial & residential business in 2024 from 2023.
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.
We have taken pricing actions and implemented productivity improvements that could help offset these cost increases. We expect inflationary cost increases, including the impacts of tariffs, to continue into 2025, which could negatively impact our results of operations. • Our global operations make our effective tax rate sensitive to significant tax law changes.
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.
N.M. Gain on sale of investment — (10.3) — N.M. N.M. Other expense (income) (8.1) 18.3 (58.5) N.M. N.M. Income before income taxes 429.2 375.3 336.3 14.4 % 11.6 % Provision (benefit) for income taxes 188.4 (84.4) 43.2 N.M. N.M.
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.
Our offerings enhance end-user safety, reduce installation time and provide resiliency for critical systems. Our cable management, electrical connections and solutions, and power connections help make electrical systems safe, efficient and resilient, and are used across a wide range of verticals, including commercial and residential, infrastructure, industrial and energy.
We evaluate performance based on sales and segment income and use a variety of ratios to measure performance of our reporting segments.
We evaluate performance based on net sales and reportable segment income ("segment income") and use a variety of ratios to measure performance of our reporting segments. Segment income represents operating income, which includes certain corporate overhead allocations, exclusive of intangible amortization, acquisition related expenses, costs of restructuring activities, impairments and other unusual non-operating items.
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.
In the first quarter of 2025, we will be renaming our Enclosures segment to Systems Protection, and our Electrical & Fastening Solutions segment to Electrical Connections. • Enclosures (to be renamed Systems Protection beginning in the first quarter of 2025) —The Enclosures segment provides innovative solutions to help protect electronics, systems and data in mission critical applications, including data centers, that improve resiliency and energy efficiency.
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.
We utilized a royalty rate ranging from 1.0% to 5.5% for each trade name in our fair value analysis. There was no impairment expense recorded in 2024, 2023 or 2022 related to identifiable intangible assets.
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.
We connect and protect some of the world's most critical electrical systems to make them safer, more efficient and resilient. We design, manufacture, market, install and service high performance products and solutions that connect and protect mission critical equipment, buildings and essential processes.

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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 changeAt 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.
Biggest changeAt December 31, 2024 and 2023, we had a gross notional U.S. dollar equivalent amount of $135.6 million and $133.3 million designated as a net investment hedge for a portion of our net investment in our Euro denominated subsidiaries.
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.
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, 2024 was comprised of debt denominated in U.S. dollars.
The 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.
The rates used to perform this analysis were based on the market exchange rates in effect on December 31, 2024. 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 $13.6 million.
The debt portfolio is comprised of approximately 73% fixed-rate debt and 27% variable-rate debt. Changes in interest rates have different impacts on the fixed and variable-rate portions of our debt portfolio. A change in interest rates on the fixed portion of the debt portfolio impacts the fair value, but has no impact on interest incurred or cash flows.
The debt portfolio is comprised of approximately 60% fixed-rate debt and 40% variable-rate debt. Changes in interest rates have different impacts on the fixed and variable-rate portions of our debt portfolio. A change in interest rates on the fixed portion of the debt portfolio impacts the fair value, but has no impact on interest incurred or cash flows.
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, 2024 and 2023, 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 $259.3 million and $340.5 million, 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.
Based on the fixed-rate debt included in our debt portfolio, as of December 31, 2024, a 100 basis point increase or decrease in interest rates would result in a $63.1 million decrease or a $67.5 million increase in fair value, respectively.
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 variable-rate debt included in our debt portfolio as of December 31, 2024, a 100 basis point increase or decrease in interest rates would result in a $8.7 million increase or decrease in interest incurred. 36

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