SEC Info - nVent Electric plc - ‘10-Q’ for 3/31/22

Net sales

i 694.7

i 548.9

Cost of goods sold

i 447.4

i 339.9

Gross profit

i 247.3

i 209.0

Selling, general and administrative

i 142.0

i 117.2

Research and development

i 15.2

i 11.4

Operating income

i 90.1

i 80.4

Net interest expense

i 7.2

i 8.1

Other expense

i 0.6

Income before income taxes

i 82.3

i 71.7

Provision for income taxes

i 14.5

i 6.3

Net income

i 67.8

i 65.4

Comprehensive income, net of tax

Net income

i 67.8

i 65.4

Changes in cumulative translation adjustment

i 3.0

Changes in market value of derivative financial instruments, net of tax

( i 3.7)

i 19.3

Comprehensive income

i 67.1

i 87.7

Earnings per ordinary share

Basic

i 0.41

i 0.39

Diluted

i 0.40

i 0.39

Weighted average ordinary shares outstanding

Basic

i 166.2

i 167.7

Diluted

i 168.2

i 168.8

Cash dividends paid per ordinary share

i 0.175

See accompanying notes to condensed consolidated financial statements.

nVent Electric plc

Condensed Consolidated Balance Sheets (Unaudited)


	March 31, 2022		December 31, 2021
In millions, except per-share data
Assets
Current assets
Cash and cash equivalents	$	i 51.1	$	i 49.5
Accounts and notes receivable, net of allowances of $ i 7.9 and $ i 6.7, respectively	i 441.7		i 438.1
Inventories	i 348.3		i 321.9
Other current assets	i 123.8		i 102.0
Total current assets	i 964.9		i 911.5
Property, plant and equipment, net	i 287.5		i 291.1
Other assets
Goodwill	i 2,185.2		i 2,186.7
Intangibles, net	i 1,125.8		i 1,143.8
Other non-current assets	i 140.2		i 141.1

Total other assets	i 3,451.2		i 3,471.6
Total assets	$	i 4,703.6	$	i 4,674.2
Liabilities and Equity
Current liabilities
Current maturities of long-term debt and short-term borrowings	$	i 5.0	$	i 5.0
Accounts payable	i 263.7		i 261.0
Employee compensation and benefits	i 84.7		i 113.9
Other current liabilities	i 234.9		i 256.4

Total current liabilities	i 588.3		i 636.3
Other liabilities
Long-term debt	i 1,040.8		i 994.2
Pension and other post-retirement compensation and benefits	i 204.1		i 208.1
Deferred tax liabilities	i 210.0		i 210.3
Other non-current liabilities	i 126.5		i 129.2
Total liabilities	i 2,169.7		i 2,178.1
Equity

Ordinary shares $ i i 0.01 / par value, i i 400.0 / authorized, i 166.3 and i 166.1 issued at March 31, 2022 and December 31, 2021, respectively	i 1.7		i 1.7
Additional paid-in capital	i 2,402.8		i 2,403.1
Retained earnings	i 213.3		i 174.5
Accumulated other comprehensive loss	( i 83.9)		( i 83.2)
Total equity	i 2,533.9		i 2,496.1
Total liabilities and equity	$	i 4,703.6	$	i 4,674.2

See accompanying notes to condensed consolidated financial statements.

nVent Electric plc

Condensed Consolidated Statements of Cash Flows (Unaudited)


	Three months ended
In millions	March 31, 2022		March 31, 2021
Operating activities
Net income	$	i 67.8	$	i 65.4


Adjustments to reconcile net income to net cash provided by (used for) operating activities

Depreciation	i 10.7		i 9.7
Amortization	i 17.8		i 15.9
Deferred income taxes	( i 0.1)		( i 1.5)

Share-based compensation	i 6.6		( i 0.2)





Changes in assets and liabilities, net of effects of business acquisitions
Accounts and notes receivable	( i 5.5)		( i 42.2)
Inventories	( i 29.1)		( i 6.2)
Other current assets	( i 22.7)		( i 12.6)
Accounts payable	i 6.3		i 10.1
Employee compensation and benefits	( i 28.4)		i 7.1
Other current liabilities	( i 16.9)		i 2.5
Other non-current assets and liabilities	i —		i 1.9


Net cash provided by (used for) operating activities	i 6.5		i 49.9
Investing activities
Capital expenditures	( i 11.1)		( i 9.9)
Proceeds from sale of property and equipment	i 1.9		i 0.1

Acquisitions, net of cash acquired	i —		( i 3.9)

Net cash provided by (used for) investing activities	( i 9.2)		( i 13.7)
Financing activities


Net receipts of revolving long-term debt	i 47.8		i —

Repayments of long-term debt	( i 1.4)		( i 5.0)



Dividends paid	( i 29.0)		( i 29.4)

Shares issued to employees, net of shares withheld	( i 3.0)		i 2.0
Repurchases of ordinary shares	( i 8.5)		( i 20.0)


Net cash provided by (used for) financing activities	i 5.9		( i 52.4)
Effect of exchange rate changes on cash and cash equivalents	( i 1.6)		( i 1.4)
Change in cash and cash equivalents	i 1.6		( i 17.6)
Cash and cash equivalents, beginning of period	i 49.5		i 122.5
Cash and cash equivalents, end of period	$	i 51.1	$	i 104.9

See accompanying notes to condensed consolidated financial statements.

nVent Electric plc

Condensed Consolidated Statements of Changes in Equity (Unaudited)

In millions

Ordinary shares

Additional paid-in capital

Retained earnings

Accumulated
other
comprehensive loss

Total

Number

Amount

i 166.1

i 1.7

i 2,403.1

i 174.5

( i 83.2)

i 2,496.1

Net income

—

i 67.8

—

i 67.8

Other comprehensive loss, net of tax

—

( i 0.7)

Dividends declared

—

( i 29.0)

—

( i 29.0)

Share repurchases

( i 0.1)

i —

( i 3.9)

—

( i 3.9)

Exercise of options, net of shares tendered for payment

i —

—

i 1.4

—

i 1.4

Issuance of restricted shares, net of cancellations

i 0.4

—

i —

Shares surrendered by employees to pay taxes

( i 0.1)

—

( i 4.4)

—

( i 4.4)

Share-based compensation

—

i 6.6

—

i 6.6

i 166.3

i 1.7

i 2,402.8

i 213.3

( i 83.9)

i 2,533.9

In millions

Ordinary shares

Additional paid-in capital

Retained earnings

Accumulated
other
comprehensive loss

Total

Number

Amount

December 31, 2020

i 168.2

i 1.7

i 2,482.6

i 20.7

( i 95.2)

i 2,409.8

Net income

—

i 65.4

—

i 65.4

Other comprehensive income, net of tax

—

i 22.3

Dividends declared

—

( i 29.4)

—

( i 29.4)

Share repurchases

( i 0.9)

—

( i 20.0)

—

( i 20.0)

Exercise of options, net of shares tendered for payment

i 0.2

—

i 4.1

—

i 4.1

Issuance of restricted shares, net of cancellations

i 0.3

—

i —

Shares surrendered by employees to pay taxes

( i 0.1)

—

( i 2.0)

—

( i 2.0)

Share-based compensation

—

( i 0.2)

—

( i 0.2)

March 31, 2021

i 167.7

i 1.7

i 2,464.5

i 56.7

( i 72.9)

i 2,450.0

See accompanying notes to condensed consolidated financial statements.

nVent Electric plc

Notes to condensed consolidated financial statements (unaudited)

1. i Basis of Presentation and Responsibility for Interim Financial Statements

Business

nVent Electric plc ("nVent," "we," "us," "our" or the "Company") is a leading global provider of electrical connection and protection solutions. The Company is comprised of i three reporting segments: Enclosures, Electrical & Fastening Solutions and Thermal Management.

The Company was incorporated in Ireland on May 30, 2017. Although our jurisdiction of organization is Ireland, we manage our affairs so that we are centrally managed and controlled in the United Kingdom (the "U.K.") and have tax residency in the U.K.

Basis of presentation

The accompanying unaudited condensed consolidated financial statements of nVent have been prepared following the requirements of the Securities and Exchange Commission ("SEC") for interim reporting. As permitted under those rules, certain footnotes or other financial information that are normally required by accounting principles generally accepted in the United States of America ("GAAP") can be condensed or omitted.

We are responsible for the unaudited condensed consolidated financial statements included in this document. The financial statements include all normal recurring adjustments that are considered necessary for the fair presentation of our financial position and operating results. As these are condensed financial statements, one should also read our consolidated financial statements and notes thereto, which are included in our Annual Report on Form 10-K for the year ended December 31, 2021.

Revenues, expenses, cash flows, assets and liabilities can and do vary during each quarter of the year. Therefore, the results and trends in these interim financial statements may not be indicative of those for a full year.

In March 2020, the World Health Organization declared novel coronavirus 2019 (“COVID-19”) a pandemic. The effects of the COVID-19 pandemic have had and may continue to have an unfavorable impact on our business. The broader implication of COVID-19 on our results of operations and overall financial performance remains uncertain. We may experience changes in customer demand or constrained supply that could materially adversely impact our business, financial condition, results of operations and overall financial performance in future periods.

2. i Revenue

Disaggregation of revenue

We disaggregate our revenue from contracts with customers by geographic location and vertical for each of our segments, as we believe these best depict how the nature, amount, timing and uncertainty of our revenue and cash flows are affected by economic factors.

i Geographic net sales information, based on geographic destination of the sale, was as follows:

Three months ended March 31, 2022

In millions

Enclosures

Electrical & Fastening Solutions

Thermal Management

Total

U.S. and Canada

i 236.6

i 137.9

i 87.2

i 461.7

Developed Europe (1)

i 81.3

i 34.7

i 33.0

i 149.0

Developing (2)

i 36.9

i 10.9

i 22.4

i 70.2

Other Developed (3)

i 4.6

i 4.1

i 5.1

i 13.8

Total

i 359.4

i 187.6

i 147.7

i 694.7

nVent Electric plc

Notes to condensed consolidated financial statements (unaudited)

Three months ended March 31, 2021

In millions

Enclosures

Electrical & Fastening Solutions

Thermal Management

Total

U.S. and Canada

i 175.7

i 103.9

i 63.8

i 343.4

Developed Europe (1)

i 73.4

i 30.8

i 30.5

i 134.7

Developing (2)

i 24.4

i 9.0

i 27.0

i 60.4

Other Developed (3)

i 3.5

i 4.2

i 2.7

i 10.4

Total

i 277.0

i 147.9

i 124.0

i 548.9

(1) Developed Europe includes Western Europe and Eastern Europe included in European Union.

(2) Developing includes China, Eastern Europe not included in European Union, Latin America, Middle East and Southeast Asia.

(3) Other Developed includes Australia and Japan.

Vertical net sales information was as follows:

Three months ended March 31, 2022

In millions

Enclosures

Electrical & Fastening Solutions

Thermal Management

Total

Industrial

i 209.4

i 19.2

i 72.6

i 301.2

Commercial & Residential

i 40.3

i 95.8

i 46.6

i 182.7

Infrastructure

i 80.3

i 65.1

i 5.0

i 150.4

Energy

i 29.4

i 7.5

i 23.5

i 60.4

Total

i 359.4

i 187.6

i 147.7

i 694.7

Three months ended March 31, 2021

In millions

Enclosures

Electrical & Fastening Solutions

Thermal Management

Total

Industrial

i 172.1

i 15.4

i 50.6

i 238.1

Commercial & Residential

i 28.6

i 77.6

i 46.0

i 152.2

Infrastructure

i 55.6

i 48.9

i 4.3

i 108.8

Energy

i 20.7

i 6.0

i 23.1

i 49.8

Total

i 277.0

i 147.9

i 124.0

i 548.9

Contract balances

i Contract assets and liabilities consisted of the following:

In millions

$ Change

% Change

Contract assets

i 53.5

i 48.9

i 4.6

i 9.4

Contract liabilities

i 18.6

i 17.8

i 0.8

i 4.5

Net contract assets

i 34.9

i 31.1

i 3.8

i 12.2

The $ i 3.8 million increase in net contract assets from December 31, 2021 to March 31, 2022 was primarily the result of timing of milestone payments. The majority of our contract liabilities at December 31, 2021 were recognized in revenue during the three months ended March 31, 2022. There were i no material impairment losses recognized on our contract assets for the three months ended March 31, 2022 and 2021.

Remaining performance obligations

We have elected the practical expedient to disclose only the value of remaining performance obligations for contracts with an original expected length of one year or more. On March 31, 2022, we had $ i 33.1 million of remaining performance obligations on contracts with an original expected duration of one year or more. We expect to recognize the majority of our remaining performance obligations on these contracts within the next i 12 to i 18 months.

nVent Electric plc

Notes to condensed consolidated financial statements (unaudited)

3. i Restructuring

During the three months ended March 31, 2022 and the year ended December 31, 2021, we initiated and continued execution of certain business restructuring initiatives aimed at reducing our fixed cost structure and realigning our business.

Restructuring related costs included in Selling, general and administrative expense in the Condensed Consolidated Statements of Income and Comprehensive Income included costs for severance and other restructuring costs as follows:

Three months ended

In millions

Severance and related costs

i 2.0

i 0.2

Other

i —

i 0.6

Total restructuring costs

i 2.0

i 0.8

Other restructuring costs primarily consist of asset impairment and various contract termination costs.

i Restructuring costs by reportable segment were as follows:

Three months ended

In millions

Enclosures

i 0.2

i 1.0

Electrical & Fastening Solutions

i —

i 0.2

Thermal Management

i —

i 0.2

Other

i 1.8

( i 0.6)

Total

i 2.0

i 0.8

i Activity related to accrued severance and related costs recorded in Other current liabilities in the Condensed Consolidated Balance Sheets is summarized as follows:


	Three months ended
In millions	March 31, 2022		March 31, 2021
Beginning balance	$	i 2.4	$	i 6.6

Costs incurred	i 2.0		i 0.2
Cash payments and other	( i 2.2)		( i 3.2)
Ending balance	$	i 2.2	$	i 3.6

nVent Electric plc

Notes to condensed consolidated financial statements (unaudited)

4. i Earnings Per Share

i Basic and diluted earnings per share were calculated as follows:

Three months ended

In millions, except per-share data

Net income

i 67.8

i 65.4

Weighted average ordinary shares outstanding

Basic

i 166.2

i 167.7

Dilutive impact of stock options, restricted stock units and performance share units

i 2.0

i 1.1

Diluted

i 168.2

i 168.8

Earnings per ordinary share

Basic earnings per ordinary share

i 0.41

i 0.39

Diluted earnings per ordinary share

i 0.40

i 0.39

Anti-dilutive stock options excluded from the calculation of diluted earnings per share

i 0.2

i 2.0

5. i Acquisitions

On April 1, 2021, we acquired substantially all of the assets of Vynckier Enclosure Systems, Inc. ("Vynckier") for approximately $ i 27.0 million in cash. Vynckier is a U.S. based manufacturer of high-quality non-metallic enclosures that we market as part of the nVent HOFFMAN product line within our Enclosures segment.

The excess purchase price over tangible net assets and identified intangible assets acquired has been allocated to

goodwill in the amount of $ i 13.5 million, substantially all of which is expected to be deductible for income tax purposes.

Identifiable intangible assets acquired included $ i 6.1 million of definite-lived customer relationships with an estimated useful life of i 11 years.

On June 30, 2021, we acquired CIS Global LLC ("CIS Global") for approximately $ i 202.4 million in cash. The CIS Global business is a leading provider of intelligent rack power distribution and server slides products, and operates within our Enclosures segment. The purchase price was funded primarily through borrowings under our Revolving Credit Facility (as defined in Note 9).

The excess purchase price over tangible net assets and identified intangible assets acquired has been preliminarily allocated to goodwill in the amount of $ i 83.3 million, of which $ i 30.9 million is expected to be deductible for income tax purposes. Identifiable intangible assets acquired included $ i 78.0 million of definite-lived customer relationships with an estimated useful life of i 16 years and $ i 24.5 million of developed technology with an estimated useful life of i 9 years to i 12 years. The preliminary purchase price allocation is subject to further refinement and may require significant adjustments to arrive at the final purchase price allocation, primarily related to the impacts associated with income taxes and certain working capital accounts.

The pro forma impact of these acquisitions is not material individually or in the aggregate.

6. i Goodwill and Other Identifiable Intangible Assets

i The changes in the carrying amount of goodwill by reportable segment were as follows:

In millions

December 31,
2021

Acquisitions/
divestitures

Foreign currency
translation/other

Enclosures

i 420.4

i —

( i 2.5)

i 417.9

Electrical & Fastening Solutions

i 1,052.0

i —

i 1,052.0

Thermal Management

i 714.3

i —

i 1.0

i 715.3

Total goodwill

i 2,186.7

i —

( i 1.5)

i 2,185.2

nVent Electric plc

Notes to condensed consolidated financial statements (unaudited)

i i Identifiable intangible assets consisted of the following:

In millions

Cost

Accumulated amortization

Net

Cost

Accumulated
amortization

Net

Definite-life intangibles

Customer relationships

i 1,295.4

( i 471.1)

i 824.3

i 1,295.4

( i 454.0)

i 841.4

Proprietary technology and patents

i 40.8

( i 12.4)

i 28.4

i 40.8

( i 11.5)

i 29.3

Total definite-life intangibles

i 1,336.2

( i 483.5)

i 852.7

i 1,336.2

( i 465.5)

i 870.7

Indefinite-life intangibles

Trade names

i 273.1

—

i 273.1

—

i 273.1

Total intangibles

i 1,609.3

( i 483.5)

i 1,125.8

i 1,609.3

( i 465.5)

i 1,143.8

/ /

Identifiable intangible asset amortization expense was $ i 17.8 million and $ i 15.9 million for the three months ended March 31, 2022 and 2021, respectively.

i Estimated future amortization expense for identifiable intangible assets during the remainder of 2022 and the next five years is as follows:


	Q2-Q4
In millions	2022		2023		2024		2025		2026		2027
Estimated amortization expense	$	i 53.3	$	i 70.9	$	i 70.2	$	i 70.2	$	i 70.2	$	i 70.2

nVent Electric plc

Notes to condensed consolidated financial statements (unaudited)

7. i Supplemental Balance Sheet Information i


In millions	March 31, 2022		December 31, 2021
Inventories
Raw materials and supplies	$	i 119.9	$	i 104.5
Work-in-process	i 38.7		i 33.3
Finished goods	i 189.7		i 184.1
Total inventories	$	i 348.3	$	i 321.9
Other current assets
Contract assets	$	i 53.5	$	i 48.9
Prepaid expenses	i 61.6		i 49.6
Prepaid income taxes	i 5.1		i 2.2
Other current assets	i 3.6		i 1.3
Total other current assets	$	i 123.8	$	i 102.0
Property, plant and equipment, net
Land and land improvements	$	i 38.9	$	i 39.8
Buildings and leasehold improvements	i 181.9		i 184.5
Machinery and equipment	i 493.2		i 488.5
Construction in progress	i 25.1		i 25.5
Total property, plant and equipment	i 739.1		i 738.3
Accumulated depreciation and amortization	i 451.6		i 447.2
Total property, plant and equipment, net	$	i 287.5	$	i 291.1
Other non-current assets



Deferred compensation plan assets	$	i 19.0	$	i 21.4
Lease right-of-use assets	i 79.1		i 79.1
Deferred tax assets	i 14.3		i 14.6
Other non-current assets	i 27.8		i 26.0
Total other non-current assets	$	i 140.2	$	i 141.1
Other current liabilities

Dividends payable	$	i 30.0	$	i 30.5

Accrued rebates	i 57.6		i 88.2
Contract liabilities	i 18.6		i 17.8
Accrued taxes payable	i 30.7		i 32.4
Current lease liabilities	i 17.4		i 17.4
Other current liabilities	i 80.6		i 70.1
Total other current liabilities	$	i 234.9	$	i 256.4
Other non-current liabilities

Income taxes payable	$	i 30.2	$	i 30.3

Deferred compensation plan liabilities	i 19.0		i 21.4
Non-current lease liabilities	i 66.8		i 66.5
Other non-current liabilities	i 10.5		i 11.0
Total other non-current liabilities	$	i 126.5	$	i 129.2

/ /

nVent Electric plc

Notes to condensed consolidated financial statements (unaudited)

8. i Derivatives and Financial Instruments

Derivative financial instruments

We are exposed to market risk related to changes in foreign currency exchange rates. To manage the volatility related to this exposure, we periodically enter into a variety of derivative financial instruments. Our objective is to reduce, where it is deemed appropriate to do so, fluctuations in earnings and cash flows associated with changes in foreign currency exchange rates. The derivative contracts contain credit risk to the extent that our bank counterparties may be unable to meet the terms of the agreements. The amount of such credit risk is generally limited to the unrealized gains, if any, in such contracts. Such risk is minimized by limiting those counterparties to major financial institutions of high credit quality.

Foreign currency contracts

We conduct business in various locations throughout the world and are subject to market risk due to changes in the value of foreign currencies. We manage our economic and transaction exposure to certain market-based risks through the use of derivative instruments. These derivative instruments primarily consist of forward foreign currency contracts used to mitigate foreign currency exposure for certain foreign currency assets and liabilities. Our objective in holding these derivatives is to reduce the volatility in net earnings and cash flows associated with changes in foreign currency rates. The majority of our foreign currency contracts have an original maturity date of less than one year. These foreign currency contracts are not designated as hedging instruments; accordingly, changes in the fair value are recorded in current period earnings.

At March 31, 2022 and December 31, 2021, we had outstanding foreign currency derivative contracts with gross notional U.S. dollar equivalent amounts of $ i 163.4 million and $ i 180.1 million, respectively. The impact of these contracts on the Condensed Consolidated Statements of Income and Comprehensive Income was not material for any period presented.

Cross currency swaps

At March 31, 2022 and December 31, 2021, we had outstanding cross currency swap agreements with a combined notional amount of $ i 360.6 million and $ i 369.1 million, respectively. The agreements are accounted for as either cash flow hedges, to hedge foreign currency fluctuations on certain intercompany debt, or as net investment hedges, to manage our exposure to fluctuations in the Euro-U.S. Dollar exchange rate. At March 31, 2022 and December 31, 2021, we had deferred foreign currency gains of $ i 12.9 million and $ i 16.7 million, respectively, in Accumulated other comprehensive loss associated with our cross currency swap activity.

Interest rate swaps

We are also exposed to interest rate risk fluctuations in connection with the planned issuance of long-term debt. To manage the volatility related to this exposure, we may use forward starting interest rate swaps to fix a portion of the interest cost associated with anticipated future financings. In 2020, we entered into a forward starting interest rate swap to hedge the variability of cash flows attributable to changes in the benchmark swap interest rate (London Inter-Bank Offer Rate) associated with the anticipated refinancing of the 2023 Notes (as defined below). The interest rate swap contract had a notional amount of $ i 200.0 million, and was settled in the fourth quarter of 2021 in conjunction with the issuance of the 2031 Notes (as defined below). Accordingly, cash flows of $ i 9.6 million relating to the settlement of interest rate swaps hedging the forecasted issuance of debt have been reflected as a component of financing cash flows. The resulting gain from the settlement is deferred to Accumulated other comprehensive loss, and is being reclassified to interest expense over the term of the 2031 Notes (underlying debt). This reclassification of the deferred gain impacts the interest expense recognized on the underlying debt that was hedged, and is therefore reflected as a component of operating cash flows in periods subsequent to settlement.

Fair value of financial instruments

The following methods were used to estimate the fair values of each class of financial instruments:

•short-term financial instruments (cash and cash equivalents, accounts and notes receivable, accounts and notes payable and variable-rate debt) — recorded amount approximates fair value because of the short maturity period;

•long-term fixed-rate debt, including current maturities — fair value is based on market quotes available for issuance of debt with similar terms, which are inputs that are classified as Level 2 in the valuation hierarchy defined by the accounting guidance;

•foreign currency contract and interest rate swap agreements — fair values are determined through the use of models that consider various assumptions, including time value, yield curves, as well as other relevant economic measures, which are inputs that are classified as Level 2 in the valuation hierarchy defined by the accounting guidance; and

nVent Electric plc

Notes to condensed consolidated financial statements (unaudited)

•deferred compensation plan assets (mutual funds, common/collective trusts and cash equivalents for payment of certain non-qualified benefits for retired, terminated and active employees) — fair value of mutual funds and cash equivalents are based on quoted market prices in active markets that are classified as Level 1 in the valuation hierarchy defined by the accounting guidance; fair value of common/collective trusts are valued at net asset value ("NAV"), which is based on the fair value of underlying securities owned by the fund divided by the number of shares outstanding.

i The recorded amounts and estimated fair values of total debt, excluding unamortized issuance costs and discounts, were as follows:

December 31,
2021

In millions

Recorded
Amount

Fair
Value

Recorded
Amount

Fair
Value

Variable rate debt

i 252.0

i 205.5

Fixed rate debt

i 800.0

i 1,045.4

i 800.0

i 866.8

Total debt

i 1,052.0

i 1,297.4

i 1,005.5

i 1,072.3

Financial assets and liabilities measured at fair value on a recurring basis were as follows:

Recurring fair value measurements

In millions

Level 1

Level 2

Level 3

NAV

Total

Cross currency swap liabilities

i —

( i 0.6)

i —

( i 0.6)

Cross currency swap assets

i —

i 11.7

i —

i 11.7

Foreign currency contract liabilities

i —

( i 1.7)

i —

( i 1.7)

Foreign currency contract assets

i —

i 1.5

i —

i 1.5

Deferred compensation plan assets

i 13.9

i —

i 5.1

i 19.0

Total recurring fair value measurements

i 13.9

i 10.9

i —

i 5.1

i 29.9

Recurring fair value measurements

In millions

Level 1

Level 2

Level 3

NAV

Total

Cross currency swap liabilities

i —

( i 1.7)

i —

( i 1.7)

Cross currency swap assets

i —

i 9.5

i —

i 9.5

Foreign currency contract liabilities

i —

( i 0.2)

i —

( i 0.2)

Foreign currency contract assets

i —

i 0.4

i —

i 0.4

Deferred compensation plan assets

i 15.5

i —

i 5.9

i 21.4

Total recurring fair value measurements

i 15.5

i 8.0

i —

i 5.9

i 29.4

nVent Electric plc

Notes to condensed consolidated financial statements (unaudited)

9. i Debt

i Debt and the average interest rates on debt outstanding were as follows:

In millions

Average interest rate at March 31, 2022

Maturity
Year

December 31,
2021

Revolving credit facility

i 1.552%

2026

i 154.5

i 106.7

Senior notes - fixed rate

i 2.750%

2031

i 300.0

Senior notes - fixed rate

i 4.550%

2028

i 500.0

Term loan facility

i 1.697%

2026

i 97.5

i 98.8

Unamortized debt issuance costs and discounts

N/A

( i 6.2)

( i 6.3)

Total debt

i 1,045.8

i 999.2

Less: Current maturities and short-term borrowings

( i 5.0)

Long-term debt

i 1,040.8

i 994.2

Senior notes

In March 2018, nVent Finance S.à r.l. (“nVent Finance” or "Subsidiary Issuer"), a 100-percent owned subsidiary of nVent, issued $ i 300.0 million aggregate principal amount of i 3.950% senior notes due 2023 (the "2023 Notes") and $ i 500.0 million aggregate principal amount of i 4.550% senior notes due 2028 (the "2028 Notes").

In November 2021, nVent Finance issued $ i 300.0 million aggregate principal amount of i 2.750% senior notes due 2031 (the "2031 Notes" and, collectively with the 2028 Notes, the "Notes"). In December 2021, the Company redeemed the $ i 300.0 million aggregate principal amount of the 2023 Notes.

Interest on the 2028 Notes is payable semi-annually in arrears on April 15 and October 15 of each year, and interest on the 2031 Notes is payable semi-annually in arrears on May 15 and November 15 of each year.

The Notes are fully and unconditionally guaranteed as to payment by nVent (the "Parent Company Guarantor"). There are no subsidiaries that guarantee the Notes. The Parent Company Guarantor is a holding company that has no independent assets or operations unrelated to its investments in consolidated subsidiaries. The Subsidiary Issuer is a holding company that has no independent assets or operations unrelated to its investments in consolidated subsidiaries and the issuance of the Notes and other external debt. The Parent Company Guarantor’s principal source of cash flow, including cash flow to make payments on the Notes pursuant to the guarantees, is dividends from its subsidiaries. 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, there may be statutory and regulatory limitations on the payment of dividends from certain subsidiaries of the Parent Company Guarantor or the Subsidiary Issuer. If such subsidiaries are unable to transfer funds to the Parent Company Guarantor or the Subsidiary Issuer and sufficient cash or liquidity is not otherwise available, the Parent Company Guarantor or the Subsidiary Issuer may not be able to make principal and interest payments on their outstanding debt, including the Notes or the guarantees.

The Notes constitute general unsecured senior obligations of the Subsidiary Issuer and rank equally in right of payment with all existing and future unsubordinated and unsecured indebtedness and liabilities of the Subsidiary Issuer. The guarantees of the Notes by the Parent Company Guarantor constitute general unsecured obligations of the Parent Company Guarantor and rank equally in right of payment with all existing and future unsubordinated and unsecured indebtedness and liabilities of the Subsidiary Issuer. Subject to certain qualifications and exceptions, the indenture pursuant to which the Notes were issued contains covenants that, among other things, restrict nVent’s, nVent Finance’s and certain subsidiaries’ ability to merge or consolidate with another person, create liens or engage in sale and lease-back transactions.

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.

nVent Electric plc

Notes to condensed consolidated financial statements (unaudited)

Senior credit facilities

In March 2018, the Company and its subsidiaries nVent Finance and Hoffman Schroff Holdings, Inc. entered into a credit agreement with a syndicate of banks providing for a i five-year $ i 200.0 million senior unsecured term loan facility and a i five-year $ i 600.0 million senior unsecured revolving credit facility.

In September 2021, the Company and its subsidiaries nVent Finance and Hoffman Schroff Holdings, Inc. entered into an amended and restated credit agreement (the "Credit Agreement") with a syndicate of banks providing for a i five-year $ i 300.0 million senior unsecured term loan facility (the "Term Loan Facility") and a i five-year $ i 600.0 million senior unsecured revolving credit facility (the "Revolving Credit Facility" and, together with the Term Loan Facility, the "Senior Credit Facilities"), which amended and restated the March 2018 credit agreement. Borrowings under the Term Loan Facility are permitted on a delayed draw basis during the first year of the i five-year term of the Term Loan Facility, and borrowings under the Revolving Credit Facility are permitted from time to time during the full i five-year term of the Revolving Credit Facility. nVent Finance has the option to request to increase the Revolving Credit Facility in an aggregate amount of up to $ i 300.0 million, subject to customary conditions, including the commitment of the participating lenders.

Borrowings under the Senior Credit Facilities bear interest at a rate equal to an adjusted base rate, London Interbank Offered Rate (“LIBOR”), Euro Interbank Offer Rate (“EURIBOR”) or Sterling Overnight Index Average (“SONIA”), plus, in each case, an applicable margin. The applicable margin will be based on, at nVent Finance’s election, the Company's leverage level or public credit rating.

As of March 31, 2022, the borrowing capacity under the Term Loan Facility on a delayed draw basis was $200.0 million, and the borrowing capacity under the Revolving Credit Facility was $ i 445.5 million.

Our debt agreements contain certain financial covenants, the most restrictive of which are in the Senior Credit Facilities, including that we may not permit (i) the ratio of our consolidated debt (net of our consolidated unrestricted cash in excess of $ i 5.0 million but not to exceed $ i 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 i 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 i 3.00 to 1.00. In addition, subject to certain qualifications and exceptions, the Senior Credit Facilities also contain covenants that, among other things, restrict our ability to create liens, merge or consolidate with another person, make acquisitions and incur subsidiary debt. As of March 31, 2022, we were in compliance with all financial covenants in our debt agreements, and there is no material uncertainty about our ongoing ability to meet those covenants.

i Debt outstanding, excluding unamortized issuance costs and discounts, at March 31, 2022 matures on a calendar year basis as follows:


	Q2-Q4
In millions	2022		2023		2024		2025		2026		2027		Thereafter		Total
Contractual debt obligation maturities	$	i 3.8	$	i 5.0	$	i 5.6	$	i 7.5	$	i 230.1	$	i —	$	i 800.0	$	i 1,052.0

10. i Income Taxes

The effective income tax rate for the three months ended March 31, 2022 was i 17.6%, compared to i 8.8% for the three months ended March 31, 2021. The liability for uncertain tax positions was $ i 15.5 million and $ i 15.6 million at March 31, 2022 and December 31, 2021, respectively. We record penalties and interest related to unrecognized tax benefits in Provision for income taxes and Net interest expense, respectively, on the Condensed Consolidated Statements of Income and Comprehensive Income, which is consistent with our past practices.

In the three months ended March 31, 2021, we recorded a $ i 5.2 million discrete tax benefit related to a foreign subsidiary.

nVent Electric plc

Notes to condensed consolidated financial statements (unaudited)

11. i Shareholders' Equity

Share repurchases

On July 23, 2018, the Board of Directors authorized the repurchase of our ordinary shares up to a maximum dollar limit of $ i 500.0 million (the "2018 Authorization"). On February 19, 2019, the Board of Directors authorized the repurchase of our ordinary shares up to a maximum dollar limit of $ i 380.0 million (the "2019 Authorization"). The 2018 Authorization and 2019 Authorization expired on July 23, 2021.

On May 14, 2021, the Board of Directors authorized the repurchase of our ordinary shares up to a maximum dollar limit of $ i 300.0 million (the "2021 Authorization"). The 2021 Authorization began on July 23, 2021 upon expiration of the 2018 Authorization and the 2019 Authorization, and expires on July 22, 2024.

During the three months ended March 31, 2022, we repurchased i 0.1 million of our ordinary shares for $ i 3.9 million under the 2021 Authorization. During the three months ended March 31, 2021, we repurchased i 0.9 million of our ordinary shares for $ i 20.0 million under the 2018 Authorization. As of March 31, 2022 and December 31, 2021, outstanding share repurchases recorded in Other current liabilities were zero and $4.6 million, respectively.

As of March 31, 2022, we have $ i 200.0 million available for share repurchases under the 2021 Authorization.

Dividends payable

On February 21, 2022, the Board of Directors declared a quarterly cash dividend of $ i 0.175 per ordinary share payable on May 6, 2022, to shareholders of record at the close of business on April 22, 2022. The balance of dividends payable included in Other current liabilities on our Condensed Consolidated Balance Sheets was $ i 30.0 million and $ i 30.5 million at March 31, 2022 and December 31, 2021, respectively.

12. i Segment Information

We evaluate performance based on net sales and segment income and use a variety of ratios to measure performance of our reporting segments. These results are not necessarily indicative of the results of operations that would have occurred had each segment been an independent, stand-alone entity during the periods presented. Segment income represents operating income exclusive of intangible amortization, acquisition related expenses, costs of restructuring activities, impairments and other unusual non-operating items.

i Financial information by reportable segment is as follows:

Three months ended

In millions

Net sales

Enclosures

i 359.4

i 277.0

Electrical & Fastening Solutions

i 187.6

i 147.9

Thermal Management

i 147.7

i 124.0

Total

i 694.7

i 548.9

Segment income (loss)

Enclosures

i 50.3

i 48.8

Electrical & Fastening Solutions

i 47.1

i 39.2

Thermal Management

i 32.4

i 21.0

Other

( i 19.6)

( i 11.9)

Total

i 110.2

i 97.1

nVent Electric plc

Notes to condensed consolidated financial statements (unaudited)

i The following table presents a reconciliation of segment income to income before income taxes:

Three months ended

In millions