NVT - Earnings call transcript Q1 2020

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Operator

Ladies and gentlemen, thank you for standing by, and welcome to the nVent Q1 Earnings Conference Call. At this time, all participants are in a listen-only. After the speaker presentation, there will be a question-and-answer session. [Operator Instructions]

I would now like to hand the conference over to Mr. J.C. Weigelt. you. Thank sir. ahead, go Please

J.C. Weigelt

Wozniak, performance you, Shelby, XXXX of Financial on nVent's quarter actions are taking what well our we Quarter are everyone our Chief Relations; provide seeing Sara Officer; and Call. on I'm welcome, COVID-XX Beth we call Earnings business. Today, the are President also Officer. to Chief J.C. Executive and and First on Zawoyski, as Thank in our Weigelt, Investor will a we details first as update our business Vice and

let nVent's statements the future as begin, results with Exchange and filings risks company's we are me about financial and such uncertainties, risks Before the remind Securities outlined you any anticipated to and Commission. made in that forward-looking today's subject statements release the press

Forward-looking which Today's is of website. could appendix References of made prepared by a financials after to circumstances. publicly and nVent's section have such for undertakes events the company non-GAAP materially in to differ as questions can Investors the presentation, time from Actual update reconciled our the webcast or are no reflect presentation. accompanied results. subsequent to of We'll the obligation remarks. statements results statements are today, in found be anticipated

will I the now turn Beth. to And call over

Beth Wozniak

Thank you, you and morning, for thank joining J.C. Good us.

on some Our results. goal today is to update around first quarter time provide and spend a COVID-XX business

were our themes I and making communities our across support we common another. want those nVent hope safe are support of you take healthy. survey, all a whom recent one to support emerged extraordinary our also First, a that and there In to employees, you two to and are nVent. that efforts moment customers, thank around

I employees, right grateful. the second was see and our and I each results, and first every now. especially am The proud day with these so caring, was qualities and

like X. Slide I would three to goals. term our to share Turning near

we've of our adopted hygiene our and from employees. practices focusing social First, working our and safety sites, expanded we on possible. the are Across well-being are distancing, where home

checklists, follow of best our from all to out laying one plants practices In learn addition, have another. and

We've health, social, launched on updated financial focused and components. employees, for well-being nutrition mental programs

taking are proactive We safety measures.

facilities of plans. COVID-XX our All readiness have

a the have many and process already added of implemented for are program, these rolling is safety. critical out in temperature facemasks testing We sites times. during Communication

best Many with Our information are regularly a developing practices. their daily, informed to hub leadership what conducting that is the team office are the meets keep employees we're a we halls cross-functional employees we on, them meetings global of working returning team from our updated home, coronavirus plans town time. Early and resources actions to and and and established taking of and over listening is latest with to for team concerns.

support our and critical second to Our continue operations business is serve customers to infrastructure. goal

with mission-critical we discussed, applications serve As have protect and our connect portfolio. we

We local practices. implement to have closely worked with safety guidelines authorities and followed

As a sites remain today, result, facilities India Reynosa, Europe, Mexico. across our operational and including sites all in our of

from are a current as we to company. stronger actions emerge taking Third, this situation

the improving in I'll continuing like that experience. customer new share shortly. and are products, to invest about areas digital more We critical And

our to continue well world, operate the helping new customers, find is our serve we While and respond serving and customers our quickly ability today to us for around us future.

performance. I the discussion We impacted a the pandemic. will our demand to Summary now of turn geographies for in of Executive four by titled COVID-XX deteriorate presentation slide saw quarter first

North the America. we of Europe then it was and then demand quarter, First, saw China. weaken And in end toward the

quarter performance. EFS our were impacts. to our with line generally first exception Enclosures of COVID-XX and in expectations, the Turning with

prices at winter. material in during oil quarter the the drop pressure Thermal Management saw increased warmer-than-usual a macro from

grew fell modestly over segment quarter pressured points. and Eldon during new margin the income Management return sales and margin. while quarter the volume both expanded grow XXX on to Our continued as and improved basis WBT In during XX% acquisitions, negative well. XXX Eldon on performed and return contracted basis and Thermal WBT Enclosures, points, sales

and year began free to importantly, as cash improved declined EPS capital Adjusted initiatives prior working versus flow our $X.XX take of XX%, hold.

slide five, trends. Turning we to provide to on want update an April

Although important this at view, term quarter. we end deterioration of is the we the short review think a the first given is it to saw

down In Enclosures April, Management, year-over-year. XX%; EFS, daily organic XX%; XX% approximately XX%. down and Thermal down sales was down were

was down approximately Looking approximately at North America daily geographies. Europe XX%. down XX%. were sales And

Asia, us XX%. up is for is almost which mostly China,

enter is to COVID-XX an less how recover. China phase not the rest will the the do of view we While X% of than it of and the to pandemic, recovery first as blueprint the business our world exact

seeing weakness significant across we're the specific subverticals, pandemic. from Looking our

Examples areas However, in investments are infrastructure, strength of especially IT build oil and and distribution includes weak networking strength. companies pockets areas. and specifically centers gas seeing there are centers we data and in Not such Internet invest solutions surprisingly, in rural trends commercial the in and of systems, utilities, construction. as as out in

identifies Slide to response X the in we taken COVID-XX. have actions

a begun reductions actions myself and other for reduce temporary $XX costs plan as executives include fees. to reduction approximately downturn as Board executing salary have on We of well by scenario These the million.

actions demand discretionary response other instituted These today, actions and limited to see We've we we deteriorate should identified week freeze such trends two We've a T&E. hiring spending, furlough further. have additional demand also globally. and a as actions in are and implemented

is CapEx to critical, reducing On preserve taking such year, are prioritizing cash, we cash while necessary as and investments. for actions the still strategic budgets allocation, capital

our important to our dividend. expect our to current also dividend continue have an part buybacks. and We We pay temporarily suspended strategy view of shareholder return share as

goal take manage be in COVID-XX, these cash preserve we and ready is response decrementals, actions to As our a for recovery. to

X, Now please titled Slide turn to Stronger. Emerging

taking decisions nVent. making are We to stronger and a build actions

HOFFMAN to responding Demand. demand as are dynamics such with needs customer programs We new and on

customers. the seeing which has regional of and servicing worked are benefits distributors We our chain, supply well, new

beneficial, to new seeking in our are to help us meeting extending customer out be reach partnerships These reached Distributors to our demand. customers. have mutually proving

investments. to continue new to XX we first launched products and prioritizing in market the with just bring development research quarter, and are We

for team connect digitally established sessions, are sales channel and customers enabled finding a new and training contractors. We're quickly our ways and driving electrical training orders with virtual addition, these as through In and ways with result, to video new engagement. partners of

is Digital to digital system, our continue a part smart and management transformation. we of accelerate our

go-to-market product programs have enriched external-facing and new users. sales marketing and We focused for websites, expanded on data end tools

functions Officer quickly begun an launches. and driving Our to drive productivity. and established We've project an new delivery back-office new automation process velocity opportunity Technology software Chief for robotic all enable practice agile identified quality to for

near-term we our the safety executing and we are goals while to customers. on that employees serving prioritize of well-being summarize, are our To ensuring

and current address We expect we are the will emerge help stronger. taking steps us challenges

With turn Sara the of thinking we go the different to the the some will ways Sara, detail call that, some on our about balance for share I and first are results please year. over of quarter ahead.

Sara Zawoyski

Thank you, Beth.

first WBT were organically. Sales X% and and growth Let's $XXX Slide well on overall expectations. against down last Eldon year to to acquisitions declined approximately five quarter million XXXX results. X turn X% relative to of review added a and points performed The of to reported our basis

ending for during X%. quarter, trends digits at last we quarter most quickly daily single of deteriorated declined As the of however, quarter, the down the several orders the roughly low March, looked in average weeks

was as lower finished working We inventory flow good than quarter free to initiatives early take despite capital quarter, our improvements during reducing better saw EFS inventory. made began cash prior goods in some the profits First hold. year specifically, progress

full for year. conversion We the target XXX% continue cash to

Enclosures. Now Sales turn a X% please of to quarter X with $XXX Starting of million grew X% first organically. Slide of the and our addition performance. for with Eldon discussion segment declined

and the segment expected, slow our and we strong from continued had the execute due expanding quarter, growing begin XX%, the of mainly volumes vertical Enclosures on and cost during we quarter over basis As additional weakness second points declining balance Eldon We a to with did the COVID-XX. sales in on to should declined initiate the industrial in on impact return that actions COVID-XX, sales integration quarter income the from during year. plan. as resulting out basis read points. was to XXX quarter return XXX X% lower

$XXX impacting Thermal Thermal sales quarter. Management. million of factors There this XX% organically. Moving Management two were declined main Sales to

lower pressure and oil vertical the in saw immediately gas which to prices, impacted we oil due First, spend. MRO

as demand. Second, to winter a commercial COVID-XX well difficult revenue a comparative simply warmer on quarter. And as impact lower was due the negative amplified

trended Orders MRO bit weakness in reflecting and the with generally performing line commercial projects better. with a sales,

continued double time. over be translate up reflecting funnel to sales into Importantly, digits year-over-year, belief that can a backlog the growth continued

in XX% wanted Management's XX% I relates to and gas our background, overall it mix and detail as approximately oil on some oil Management. Thermal of Today, down Thermal sales, gas from represents provide For to XXXX.

approximately overall, are of gas. attributed sales oil nVent and For to XX%

and and approximately Within XX% sales, roughly and make gas while the oil thermal, midstream downstream balance equally. upstream split represents the of up

downstream and We COVID-XX levels. to deterioration to midstream, spend again, mix XXX are the while sales. are sales total refinery both supply a industrial dynamics, commercial, the nVent we X% in lower-than-expected pockets have In But along tend with of significant impacting seeing and which of are storage and declined on basis is MRO some certainly component. this around due Return only volume points seeing global higher-margin upstream. in transport resiliency demand roughly

second fixed will our actions begin read cost year. we realign In in reduce the half thermal, to that quarter and back have to out taken the of incremental structure business and

productivity grew from on of Now combined return with and points. with on positive of Overall, very million translated volume. XX organically, strong expansion a basis to quarter. EFS. both price Sales $XXX X% into we had This, sales strong contributions gains,

on transaction and as portfolio, management as line applications. cable one-stop for great for pathways nVent nVent We product customers a complement us and labor-saving offer a to data quarter. solutions HOFFMAN and industrial CADDY also well networking our solution cable the to the closed unique and This and commercial allowing trade is during WBT

Healthy Liquidity to slide XX, Position. Turning titled

strong a liquidity have position. We

leverage revolver credit $XXX from quarter proactively million in March our net and limited the the our of first was ratio cash $XXX available We at our maturities additional on bolster $XXX an times. million until facility to Our had X.X cash, We in end drew million position. XXXX.

We a covenants. questions debt number of around received have

EBITDA maximum covenant of Specifically, decline X.XX ratio XX% our net to would consecutive over for leverage need reach quarters four times. to

activities this we we So in from liquidity where year. cash remain position our generation confident addition stand to in today, our

XX, slide titled Sheet Cash Flow. On and Balance

quarter first a true us, is this The remains quarter. and quarter cash-usage this typically for

another focus free flow mainly position we that a our can end lower the which of spend the stronger as progress is we capital. due our decreased full our to strategic emerge year, trend to estimate, continue versus We we ended in last Importantly, cash a quarter on this improving working better through the believe investments. is prioritizes of to $XX CapEx and We expect year original as million, nVent. a how example targeting year

Moving XX. to slide

we today. our evaluated believe current is the the we to it amount of prudent uncertainty the environment, As withdraw given guidance XXXX market in

type of preserving growth and expect guidance map help We year. of this while what cash. have manage we some take to guidance, prepared of later In would providing decrementals scenarios lieu a to we number to actions investments driving evaluate

Specifically, would continue take to factor mild, a a we of to importantly, at ability continue dividend our over severe moderate decrementals, what our XX-month recover scenarios period ensure declines strengthen we fast. in manage that we and revenue operations, and to looked pay and range actions

through Acquisitions these in have temporary a and reductions. scenarios. can actions restructuring combination cost driving in are mix activities of impact changes an and We

provide and it scenarios would helpful walk detail. I you be thought additional these to through

mild scenario, with me to before digits. scenario, is target this acquisitions low In margin Let decrementals be impact a would revenue the range. from XX% any double where we down start in

double cash assumptions, by low down such component to improvements cash expect the be or reduction flow in We spend, with digits line free some sales, actions. in in cost part in CapEx working of with capital, as offset a a to

similar I XXXX year. which In a financial to sales the scenario, a and XXXX XX% a modeled as scenario for crisis. moderate would We down full roughly characterize

reductions, temporary actions We've moderate targeted near current margin cost extensions to flow changes. including along expectations spend of additional for incentives, We'd further to range, lower to cost XX%. decrementals some Our scenario. full cash with and this mild between the identified year XX% keep expect the be down free are footprint XXXX reductions, discretionary XX%

actions, the plants far more assumes revenue decrementals the and plans free to we cash in or XX% XX%. at to would would in we flow paying over we down that we dividends. We ensure are have the help be scenario, this segment at breakeven of margin we sales after these having meaning risk the free Again, closer down to more. each ready have also scenarios cash place level cash XX% to assume and enterprise, execute. modeled and could have cost how a decline before Looking flow call negative analysis, would Post severe

Our strategic growth. cash to preserve goal is recover and drive fast and return to to help growth manage decrementals, investments us

While second we how it I are quarter, we not as providing we guidance were share would thinking thought for close I about the April.

Looking think that the at throughout and down it could quarter organic the second sales XX% logical business, in year-over-year. rates trends daily sales current to to seems XX% be

timing margin closer drop-through the be quarter based to economic expect on do the current on Based sequential weakest to with quarter on the of we cost We be the the would actions, XX% decrementals to expect in second improvement. second quarter our forecasts.

today. viewpoint on evolves, change. Hhowever, As is are seeing this can certainly this we situation this based what

we the progress throughout we a V-shaped year, are or quick expecting recovery. not As a

throughout while quarter with rate most what costs we challenged, environment. moderate we current the the align of the decline of the continue being market. in our duration year to with longer a expect expect second are seeing may And the We the to

as A full XXXX. other of couple points year for guideposts

We $XX million closer share and a in continue tax more back interest this XX%. $XXX XX% and million, to diluted to buy versus lower any be On our year. but do expect shares, to million prior would we not between year, if the count still $XX rate range

Our recovering to are that taking confident emerge. and when managing on fast. am focus preserving actions actively I appropriate we create the nVent cash stronger a we is decrementals,

my This over quarter, will I now first the the Beth. comments turn call back concludes on to and

Beth Wozniak

our Sara. XX, you, summarizing today. to Slide remarks Thank prepared turn Please

clear. are times challenging these during goals Our

the we on well-being are safety focusing of and our employees. First,

customers Our goal is to support continue critical and infrastructure. to business our second serve operations

from company. Third, to emerge actions we a are as situation taking this current stronger

a We have position. liquidity and healthy balance sheet solid

on to capital executing with begun our already cash working levers have unlock We initiatives.

a Our win, many and longer-term These where can intact. we nVent remains verticals key we accelerated introductions. we focus of and geographic our include on strategy And One new expanded product think initiatives. expansion have

our of to We continue are in as transformation the and velocity and as to and midst customer business the experience. improve across drive productivity analytics digital a well employee

evaluate to capital with continue our with of strategy the will finding cash. return We allocation the best our goal

to a for strategy. way performed. of focused on our is are execute and times, the our team results. We growth growth drive continues believe and priority us, our These we to team areas Long-term has the deliver and are in uncertain right proud positive I'm

We goal these As remain COVID-XX, nVent we we in to to your thank support, to company. is for actions you take making committed and response a ultimate our performance emerge stronger. top-tier

to will to I that, operator With the now turn the call over start Q&A.

Operator

from Jeff Your Instructions] comes Research. [Operator question Sprague of first Vertical

Jeff Sprague

Hope morning, Good you. Thank as well. everyone. everyone

the discussion additionally temporary? to balance have over on of is do from Just out you then would Could appreciate at up what minutes much And the couple a of couple managing $XX year? the the of million do of sorry, Kind I me, that missed of But of the looking challenging decrementals. remain of if wondering teed on you first I and things kind cost XXXX. elaborate the call. how for I'm

Beth Wozniak

Jeff. morning, Good Yes.

start question reduction on cost the efforts. by answering So I'll the just

specific that on actions The roughly that is really more million carryover to targeted that reductions reductions $XX of cost roughly million those some $XX from in of half of QX XXXX. with talked about temporary $XX and the that we'd is terms really of in So temporary. million XXXX, remaining we million structural. that salary is $XX of furloughs. expect of And see for

be here largely the the out half should that year. So in of first reading

largely out XXXX, QX. that and and going rest QX, structural, in to the incremental in we're And is that taking read actions of that's QX

largely thermal as annualized well a more so that's like cost-out $XX it looks saw. Enclosures we So targeted space, and oil of savings. as And the that gas million around in in really more

Jeff Sprague

the Great. And things here? then you're what we if are problem that looking at

Beth Wozniak

Yes.

some So the cost focused actions extending least of temporary some additional of sitting cost today, really currently actions at on that these we've, QX. here include are

we some you spend, some discretionary It's footprint largely adjusting inventory compensation some in spaces benefit compensation expense. We'd the further intact see QX, would in as our targeted and office early from would taking of real targeted incremental a QX and but expect. be in as well Secondarily also reduction in year, T&E here estate, would be on our as typically QX. That's including incentive actions.

we actions terms are in things progress there would would So of take, incremental or additional as that duration. obviously, depth

Jeff Sprague

do guess challenging, your And then getting follow-up of best other and making is ball, our appreciate through really, we now a are now? liquidation I here. one we for inventory. us end none question right But How to Or work have demand? channel to simplistically, equation pacing closely right me. all sales linked the of with the right before kind I is crystal inventory wonder I actually stand? reconnect at has demand on put business channel demand the your of guess where so notable we're end inventories some kind to

Beth Wozniak

I that's things Beth, is business. think the This one in our Jeff. of And

shared revenue 'XX, channels. As that repositioning. the off 'XX, shared, of drop because the X/X models of faster sales especially we've goes through distribution And our our inventory in we've past always where

our think to we're some been type think healthy there's of channels. quarters, some in strong channel that the first sales I April Inventory including expect the look had and through quarter, reduction. likely has further as When But sequentially second going the I that now. degradation you of are same inventory in see our partners in at is quarter. where EFS

drop that So there. to see

our I that through QX, now. XX% on at. end sales why of is through likely XX% framing that's up the expect continue that see And we're think we're to is which going channel going some reduction to right that's inventory to where up we

Operator

is of question Capital Hammond Jeff Markets. KeyBanc Your next from

Jeff Hammond

versus versus color of numbers the what to that you EFS. maybe in trend a you more match can same distributor Besides trying the just or showing seeing you're weaker? just then telling Beth, is to the destocking, April gave? trends might the on order terms business And that be in add sales? what is different little a sales maybe speak little I'm So order maybe maybe you why just up

Beth Wozniak

Yes.

it's So let a American-based mostly think in of just many one me mostly know. turn sites can off have with you've certainly quickly, the that a distributors I parts turn shut you seen country And North where commercial with that etc. start down. construction as EFS job inventory, EFS. and of that And on business latter of typically, business, the part is been off and type

that's nice we're Because I believe So seeing. exactly what in growth EFS.

In fact, all were through QX. up orders

coming in So orders add to started we more see into QX, And Sara general inventory some that I'll in April. repositioning. on color let

Sara Zawoyski

Yes.

So Sara. is this Jeff,

So better orders little really actually trended sales bit April, in daily a to the XX% rate XX%. than down

saw That give me up some wins by good reflective LNG the was regions of the regions outside with some bit better. was America. XX%. little bit and color down outside sales. of around Enclosures that's digit U.S. our of in intake of some Let in project in, orders a Thermal good that just some in really were orders. order segment. We particularly April, in double generally actually of EFS line came was And the of a North

Jeff Hammond

costs and some in XQ second the get if through. to did and in color, Okay. And is you of you half? Sara, a there you kind What those how million way then do look much savings, that of temporary how expect $XX flow XQ? you But at Great. just gave on

Sara Zawoyski

Yes.

that would salary closer We million. really the the in and function expect savings, actually from was those QX. et largely probably was million that's to really a that furloughs, of because QX, those $X carryover of We we're in cetera. large $XX about the roughly salary cost-out ramp in be XXXX. we So we temporary reductions And That savings reductions, took. essentially incremental savings around got spend talked incremental to in discretionary part that, the that reductions, of double

actions say, to to we're ramp be going that and and adjust From the based Jeff, we there, see. prepared, cost demand those discretionary would those I on temporary

Jeff Hammond

Okay. one. real And then just quick

the from customers came backlog, hearing risk orders, thermal in that the or that the Thanks. your deferral around are you orders on orders what the are On just risk? in cancellation

Sara Zawoyski

Yes.

think, evaluating is I there's everyone pausing. certainly, and

the going So we the right was projects, that those because some the term, the business and an be execution capital to MRO would now, we've it's spend, timing under as their It's short those in impact on received. immediately feel adjusted construction everyone that orders good the what of that I just we side just are especially continue we saw of about projects. say to the of expect duration.

had significant of. see side, things or haven't out. than we So the haven't to on pushed MRO going anything other cancellations delayed we likely, to had speak we're many some really But

matter going we the are timing. just work that So those They'll in off. believe are of projects jobs to finish continue. a It's

Jeff Hammond

Okay, much. so thanks

Operator

Your Mitchell next question Barclays. Julian of is from

Julian Mitchell

Thanks, Good morning.

Beth Wozniak

morning. Good

Julian Mitchell

there MRO pressure? something margin? Or the first year-on-year the business, assume the remain that? behind was the top margins just talk very Is in in nosediving, as margins the and decline around high and gas through it that? And margins Maybe just in from Management Thermal oil should as those very and there, we question is drivers heavy Maybe gas all severe decremental particular, about heavy under long line quarter. MRO aside oil that's first else that and

Sara Zawoyski

Sara. is this Julian,

temporary improve QX reduction well that that I in say, QX from of due part the cost first. in that in So ROS contraction latter there actions QX. is the the structural to as taking decrementals would incremental team to question the the to would large answer incremental actions part expect We as in cost

those So improve. to expect we do

sharp Specifically, that worse the expected side. MRO first saw of a decline what is on kind than couple in what's we different the that significant from It drivers and we perspective. probably, of QX, foremost, a really ROS driving

impact been commercial mix the declines, more and a MRO and business commercial, severity MRO those is MRO we has to contribution a of have immediate MRO more remember, high and and versus bit and But roughly just little oil tends margin, And spends to to gas projects. of saw severe that sales. given you a be X/X the the OpEx X/X business thermal rates a more If X/X resilient relatively the because CapEx.

double So taking and driver. commercial that as that is is of beyond improvement the digits way of team actions as Obviously, said, impacted ROS a well cost well. reductions down by function that really as structural also was the temporary like I probably in well. QX being the cost the actions But cost as incremental largest really, incremental

Julian Mitchell

you. firmwide Thank then my a And be follow-up would question.

your margins first quarter obviously XX% heavy, plus. decremental were So in the

maybe quarter, framework. I XX% on slide as mild whole, talked think we a Second you're If about you a about decremental moderate. margin to look XX, as a talking a good the year the at

plan. don't I on or maybe, So a know, that the XX%, XX% as for moderate decremental XX%, year mild sorry, to whole XX%

So decrementals XX%. that's second was given XX-plus the implying very percent and QX was half, narrow in QX

And that touched so, you half thermal that saves second and just a those that narrowing at I'm perhaps headwinds if wondered reading those that mix if upon? of of right. abatement is cost of Just function an some

Sara Zawoyski

cost is largest to the that really part action. be of the timing going Julian, Yes. the of

those structural was cost take we just on timing in based actions. of those that of as actions, the So incremental QX really, none

expect and fold back would QX into into to we half. that the So extend

back We but line decrementals would be year. overall top an in also the get i.e., QX heaviest do of And talked we this a with sort decrementals XX% the half top that, expect that being of we range, better to also perspective. and impact from bit to to ease expect line about, in ease,

Operator

Your RBC Deane next Dray of Capital. from question is

Deane Dray

in to add Not through to that year. decline analysis. just want daily in that takes the companies a just full rates, we you on sales. as have decline? What's looking the for effort a are you you thank many it But cost I the rate nimble what want sense a know the additional Are that's month? Because on know lot factor willing total how the go monitoring tracking of what the terms at the here is scenario so that can is, appreciate of sounds be. get of sort And and this. I sales be you'll outline of take. as that's the cutting the sensitivity order that. questions been of the like for to just work I how planning planning, you of to sense to additional gating I trailing some you'll the nimble

start So let please. there, me

Beth Wozniak

Yes.

I a of things. couple think, Deane,

We tracking are daily orders.

to this, labor, QX with understand some seeing. of also of what I Part trends at We channel more partners in just issue, would talking a our part managing April say, early looking key they're or our was capacity an customers of right, are us and our of our just you we then employees, down shut and some with capacity. can get time were but plants imagine, our as did China, these everyone starting to deemed And factories because the essential, as there. understand to orders, had manage for stay-at-home we it took our including

from and that to is look the our respond then indicators. manage we customers can so the are way be then at on up things we're are that what other we and our the And down those trying what's flex our our back to distributors, So workforce on equally. I respond way and telling plant trends the how just we look at us performing, economic think

Deane Dray

you And down you since take the dealed you would with? the those inventory, ramp on working us though But how watching That's be more rates on infection accounts hospitalizations feel than I You're issues and be and some receivable? you'll some of a and in through seeing certainly from can being inventory. free as I areas helpful. capital. be ISM we'll flow just follow-up the selling credit just about this production, the And news cash color Sara, then are also focus certainly there. some time. question appreciate own your

a flow. gives actually liquidation inventory that so And to cash lift free

So dynamics, please. take those us of just through some

Sara Zawoyski

Yes.

have we a working historically, a So in typically in capital downturn. seen tailwind

suggest, see what than faster on you comes front. inventory As the down sales we

help. top And we the an priority and a excellent this But on focus I done certainly came will working with capital. year clearly, that So job. into think team has

But we're where important supply continuity, for I some is also reduction COVID-XX, We're areas, absolutely to customers. targeting it which that inventory. we're and in with balancing managing have opportunity specific for critical excess chain we our think things. is service

example in And goods. I supply maybe QX longer EFS taking specifically parts really the some the team to finished cross-functional of gave approach purchased chain around some where in excess they data-driven, specifically inventory, some saw a and

making there So we're progress overall. good some

on asked AR You front. the

is kind we've this been of focused our on of that in One to since nVent really relation spin. Some focus

look of of just is that our relationships, of One we of we of maybe where opportunity consistently are some at very kind brands. always for areas extension folks providing pockets a did to terms. out capital COVID-XX, strategic in looking top, of program, this context and terms there's And while didn't harmonize as our some of larger have as working we overall as on some we with good nVent rolling of of in kind in pressure of terms terms From some one

can I needs of all business cash our think, managing working support of to ensure of again, that, and maintain our customers. we're doing a hold, support the good to just we really really to that job help and our continue profile

Deane Dray

best That's real everyone. And luck, Thank helpful. of you.

Beth Wozniak

Thank you Deane.

Operator

Joe Ritchie of Sachs. Your next question Goldman is from

Joe Ritchie

Thank well. morning, Good you. all everyone. Hope you're

Sara Zawoyski

morning. Good

Beth Wozniak

morning. Good

Joe Ritchie

really, helpful. is really the least as would positive, just that negative? remain guys, the you are you type data difficult you on any in this verticals know progressing, environment of centers. Just kind I'm to stay color expect including predict. would see these less highlighted like environment or be year at that curious and But positive around that a verticals to of I demand X, So like Slide few

Beth Wozniak

Yes.

are of I it's to some hard areas, if think think things be maybe to year, these positive negative. I all less going but say

data kids right? infrastructure I everyone America with from that that online for shopping. centers mean, stay of And run a home, solutions. home, doing and bandwidth there's With to up the so in having at seeing everyone we're rural the just take speeds. build-out just working networking Networks example, or

And seeing that so we're out. build

as is Now this some execution there's projects, long-term projects, nice of orders of could there think said seeing a construction, as strength. area general, again, strategy, be we're there, in an we some But with delays. that, those we've those the while

that think full in that's these So Are it's based we're year? that is, are commercial areas our to be where our now, environment focusing But effort. of the Don't know. just and view right of here strength on going we we're to hard positive some they say.

Joe Ritchie

that missed a quarterly That have makes that of kind may more was through Or the this sense. comment? But trends, of And April? was like earlier. I

Beth Wozniak

of was performance. quarter that first saw we some positive generally as April. were areas more and the Those It

Joe Ritchie

Okay, great. And question. then maybe just my follow-up

the Just thinking about price the dynamic for rest year. of cost the

was I year equation you environment. commented look quarter. that You a this does $X the We're about in for Like guys progresses? deflationary million think, a how as price, positive

Sara Zawoyski

Yes.

Sara. is this So Hi.

offset to the So some to our productivity investments. price we well as continue plus is of going as strategic inflation manage

and QX. QX was color our that But of I'll spend million $XX discretionary of productivity on expense maybe this did on of good starts million give million. We even factories some on Beth overall some a a see of the in see our was earlier. inflation help impacts in work little some kind productivity and And was of will of of number. on So contain because with roughly From to that COVID-XX kind year. did included just the shape perspective, QX of we a $X balance price. about we bit of that fits the got the talked And I of think kind productivity some $X about operating point we as side

do some the just range still decrementals as XX% ramp, productivity material look to QX, expect pace we our that actions. of as include So which into productivity, cost-out our well but we of some would those due be to to as actions would expect cost of we structural in

we year, full targeting just that productivity driving also our material actions, hard, cost structural, productivity on to range. And we're in to we X% the expect the but see, that temporary for continue and continue not price inflation, but price, Just side.

So to some capture environment trying that deflationary of we're that seeing.

Operator

next G.research. Your Justin of comes question from Bergner

Justin Bergner

here. XXXX? plus questions those I you of thinking slide sales to Couple how on your had that column about at in on represent five, they of roughly present verticals start, much the or guess do

Sara Zawoyski

of and show overall. less or talked talked XX% the of side, haven't brand. brand these infrastructure, and So let X% predominantly some typically our of little color less then we that, than that our subverticals, segment. up the me maybe maybe as right? that's that's in utilities on sales, to have about give going in But ERICO XX% a range. that's to bit another be going Enclosures EFS we in our business, to that's automotive about, Enclosures subvertical And X% And that than and again, that's on again, particularly particularly much that's in our So

are commercial, largest and sales. infrastructure then to industrial, verticals solutions these that being our the that on roughly we've others very in being of the side. second is networking of buckets million and in Data centers $XXX of talked big Some terms about

Justin Bergner

to want I of a of decrementals EFS? includes the like of followed for gets temporary cuts. a the at in decrementals being the or decrementals. the across Would sort business I'm the I first look to scenarios helpful. thermal Okay. ask assuming that year the of by followed we as order the the it rank challenged, units benefit different Enclosures, the similar the That's split about whole quarter guess terms in most what look looked by as cost the of

Sara Zawoyski

Well, I things a going there's impact are to that couple decrementals. of would say that different

pressure, to talked I come with be EFS really as are in and on to that put dollars are we going It folds XX% top bottom going incremental couple on that a targeting the initially. line, about that. least does things of acquisitions. think impacted Enclosures play in that the at decremental, line. by Well, some into QX, the

up of on kind ramp those get we so ROSs the margins decrementals. And

that's I think one note. to So piece

the well. that in to meaningfully expect QX But piece We decrementals is, to to other note the by think thermal pace of be are maybe we EFS expecting again, to as the improve some I that would the of heavier. expect would we mix decline, specifically to just more from still way QX. due decrementals headwinds

Justin Bergner

And helpful. to quarters sort do Where a using Okay. see sheet that your of how of today? lastly, acquisition would do couple be? balance Fantastic. to keep want That's you you would you'll opportunities. is And focus something before that you for Or wait mentioned eye out an that bolt-on more? the world looks

Beth Wozniak

Yes.

acquired we're our integrations. and to still it's fair on QX, in liquidity WBT focused think very We're we I in busy quite we're cash. so Eldon, say, integrating those just

would be a M&A well. out, and always see able lots So from right, that fragmented though, and integrate do we've It's there's said meanwhile, be from think further our I And just we to because would very to M&A, an of M&A. wanted we executing space. execute to of opportunities

be pipeline. we execute know, are we our when in time is that and the have visibility under at a we're so that think think by are As would more a when stable And that's and again. process you do relationships, things team feel doing stabilization, good to or which position I M&A to we good you ready build to that that rich we having M&A when

So it's certainly term. the not near in

Operator

next Silver of question CL King. David is from Your

David Silver

Yes thanks. with to your industrial would I marketing commercializing or programs. new have have one it do particular of question. And product

or of better change the to wondering channel, that environment might mentioned require the no of the I'm your you've commercialized think new new current us maybe the year there delays this time supply new for maybe of product if rollout an In worse, But the going products if a the environment. receptiveness wondering products that record kind products in. your cause was the that of get a or new choose don't you in of better customers by markets you with are a launched give other in-market or was demonstration, assuming some might So if like new introductions. But affected through launch to in overview schedule words, product be current kind to align products how be for the for I could targeted I testing distributor the or markets. present. toward end the that maybe might past, for you of I'm And be schedule just XX-plus strategic

some So products your commercializing year. new comments on XX-plus this just

Beth Wozniak

right. our full with that area not not launches. sometimes trying suppliers steam gain ahead That's this All product challenges to as for through maybe with and to new But Well, an aren't velocity slowing we're there tooling. say we us is or we're work going working down.

product we And agile. as introduction. with we so about we've about think launching products, new rolled new out And think

it's that launched And the with So aspects. in commercial take, high these QX, for very us. example, new for also XX was products which these

new Our product in And we're where with we've product. we're have from gotten we've at a launches. thing couple video a sessions doing new and creative a stay one finding, had home, of gone everybody working terms teams out said, of launching

in our is and when some that to first sessions, XX amazing and to the it like X,XXX with our session training what's so hands. been of customers In second And put we're hours, physically we sold out, to within their cases, have training, had had product those doing so been we one on. a we've know the people they training within speak, enclosures, I session. products HOFFMAN be were to hours. in There'll able doing a some sign sessions ship up

reception to time. products these launching finding we're this at So great

because we thing think don't I key in their to quickly hands. ability is being And our people, getting to creative video or want product move the to but over-PowerPoint

can received great orders. product, seen EFS of new especially our video taken orders proposition the the see we've with fact, is products, some once a that, see for customer we've In because value some

distributors continue and to or applications. labor our to savings data And for have targeted or think down very going we some this. I we're cases, path. targeted So for receptive that been food and In products are they're for solutions this networking they're also have beverage targeted

fact about we So because still important. is is that right force of one original critical those think here, areas stronger, for when market now, we think seeded a sales getting what talk for down those longer, full just we're emerging this But to we may take the we're the really the is ways to we that think profile in our And it's one ramp nVent going we of had. us.

David Silver

calls. past I was you've panel Slide X break conference think looking with I at the panels, stole And discussed of but was it was I my another digital kind you priority you company that down that. in new the where thunder transformation. for and into you Thank middle right-most this your three products, then of panel but guess follow-up, that

or think have wanted on you new the effort be. take operate the check it, you. where are you point advantage on environment? need accelerate digital want might I like to to you there I to development they Thank an accelerate gotten your current the touched resources the area Or the this where but is to to tools, whether capabilities sales to or just in And think

Beth Wozniak

I mean, absolutely.

So this that always can where area more there's I is be an mean, done.

to to velocity. driving we an And is up. home to so the no way, really do lot tremendous. with held had issues was our driving again, this But more looked working as we everything It virtually. virtual went when by agile time a infrastructure at at we approach We working and

found we enriched digital work, data, we able is we what as process more they're expanding working our that to have, do data product with their more But the were more channel capability. some tools expand cleansing, of partners

So it's some using more an and on there. we're focus area tools putting drive to velocity

on. And robotics of process strategy. we're because been an automation part always momentum a the really is getting doing future. there's it's our there, lot focused area just So on going that But it's

David Silver

slides And effort ahead meant did appreciate send time. Relations first, your but Investor of to say Okay. along I this I the to

help some ahead done getting call. the things did me of Thank you. with that this So morning

Beth Wozniak

Thank you.

Sara Zawoyski

Thanks.

Operator

question of Your Scott from comes Rosenblatt Securities. Graham final

Scott Graham

Good Yes, in Hi. good to health you all morning. for here.

Beth Wozniak

[Indiscernible]

Scott Graham

you So could your filing model with little of in help I hoping a here. bit was front Q, of the your

Enclosures, sales thermal in industrial down? numbers? For quarter. in example, Do sales down the you have what like energy was those were What

Sara Zawoyski

us a give Scott, Yes. just second here.

Scott Graham

could Sure. in me up, J.C., center Well, or you that entirely that looking Enclosures? business, you're the while Beth data maybe tell is

Beth Wozniak

No.

and expanded around cooling, the a Thermal when into piece it's basket piece we a I Management tray, there's extended predominantly EFS. detection. And But Enclosures, but do liquid our some space. EFS but smaller do Enclosures, which leak further we with is recall, with of you more is we've mean, If now new our product there's line. And WBT, majority then CADDY wire it's in that acquisition

Scott Graham

Okay.

should of of a cost disproportionate have will you the at how maybe give on how we of do get sort course, hit us of sales? Additionally, an Can idea assuming, could reductions, segment? percent thermal by you any look guidance segment, you on kind by of they that

Sara Zawoyski

Yes.

is Sara. this Scott, So

as the well summary. a I'll the little view bit questions, two of as the So take cost-out by vertical segment

and of So there as cost-out of actions. is they're in temporary thermal, actions reflective might declines. the given expect, cost oil challenges the discretionary half and going well it be that That's nearly you the to million as cost just incremental gas of incremental of in that structural some taking $XX and savings really the as

then Second enterprise be as some you've and cost actions then to that is going to got closures. also in on And EFS, well.

thermal was a mean, of to across vertical than that down well So by perspective is really then I that where saw and high kind roughly That From segment. you've commercial we showing down what in that, side. mid- digits. of the XX%, in expect, X% these magnitude up so And are of a XX%. sales. And organic, better. bit single you your you might biggest Enclosures that because savings performed gives down for an as up that's that think those cost those I order got the From with was a commercial vertical higher strength order on industrial, commercial segments. lines kind perspective, percentage quarter the in three the overall, of industrial up

part our utilities business, being up strength And the we then an you've largest got bit the EFS call, up that that about and more the less. ERICO in strength infrastructure perspective, brand. energy really X%, on From with really, a that down than showing down talked we saw in of

that, in we commercial. also to Second grew

industrial see that's good And portfolio. declines only that so EFS. of did overall, strength in XX% we but EFS, there in some saw We

Scott Graham

Q And will today, Yes. out That's Sara? very be helpful. the

Sara Zawoyski

Yes.

Scott Graham

Great. Awesome.

is of bit another of the balancing which question, a just a Here's act. question sort a about

productivity, look we now, as are So at so right lower. right, volumes

forward the away off more outs does volumes, not whereby take go there's to But less hand on let's the down, a from the as manage and put cost thing. do the how time that? are productivity mask, social distancing So you do people for say, from suffer their and mask, washing we

Beth Wozniak

lean reacted and we've it one with all with productivity I just a things other answer forward, being hygiene states of measures the with as one just question. I distancing the that down Scott, started side would have seen we're saying in the our try there's think is your to initiatives, things. plants, in shutting seen we areas maybe And of with we levels. improve actually some not of those Europe I around sure what lack ways to of execute we us different and continuing say, social some place, that and for continuing capital, areas that productivity, we even to while world, think manage continuing there's to as invested you're drive shut on we've productivity as in China, to me let just Well, And I'm guess just on but down, But the maybe we'd Are execute believe the cases. we've of things, we've either attendance or some where execute had knew practicing attendance PPE enough, some were you still pause of and down levels go things as I good of in that were on our to inefficient. interestingly

absolutely place. ways think that But some can that go differently as that believe Maybe that take rolls measures we know out forward. it there's of we still productivity I expected. we we So can what of we than all drive those there's first

Scott Graham

all that an was versus a you. a That's production there'd interesting bit to and you. what COVID truthfully, because answer act Well, with needed the be how got companies, have thought tend that have line would I for of you balancing

about saying whether it's generating lean after cutting or the then, for ideas like some sounds productivity mean you're it that, So distancing, usher by you're that even in Does if of further whether hands washing practices. momentum, that that losing down, might social line? you're attendance that cost concerned extension, best with not it's down

Beth Wozniak

safety new mentioned to it. to and with and accelerating and And great just where think growth, products make I customers. drive launch would China I That's project we're operationally share I culture other and one our allows we share potentially. right? we comment right? we pandemic practices of all about practices, and first, there's is the think finding engage act digital That's environment But to better now, around ways Or sharing certainly, creating other across Well, that way best ramp, environment a it the networking And we in plants. started the around that have. to is virtually we're I the in think, these from right, measures, us because that that performance, learned as create areas itself checklists think best

ever And virtual using I our very I so believe down. one sharing of it's go become of can tools what we've today, impressive. to of connected our other ago. And been In where I we've are that's say way, of were three plants more that's to I operational, the plants, here companies the that just as reasons, many our across back Mexico, all done including shut are we going months And continue. a think also than than

of successful ahead proved very putting safety that things us. of were we to terms listening in fact to employees, authorities, be has The in for working practices, with

the we're that working continuing so to And company. practices just across best get virtually keep implemented to going learning and and sharing

Scott Graham

earlier. was good absent about Thank caller think you. day. the conference has echo been this in sending cost side. before work something Guys, the a that I calls been around prior you. deck has some really Have I And great also transparency. J.C. out the And nice That

Beth Wozniak

you Scott. Thank

Sara Zawoyski

Thank you, Scott.

Operator

There are questions in no other queue.

Beth Wozniak

us morning. you for joining this Well, thank

customers near-term time, through employees, best the communities, and Thank interest we shareholders. in on your for manage and remain to the and We're working you emerge we're aligned is you team safe. Our stronger. this confident goals hope of again our

the you Operator, now may conclude call.

Operator

concludes you call. this Ladies gentlemen for and today's your conference participation. Thank

disconnect. now may You

nVent Electric (NVT) 29 Apr 202020 Q1 Earnings call transcript