nVent (NVT) Q2 EPS Up 28 Revenue Up 30

Globe and Mail

2 days ago

Key Points
Adjusted EPS surged 28% to $0.86, topping the $0.79 analyst estimate (non-GAAP) and exceeding expectations by 8.9% on a non-GAAP basis.
Revenue (GAAP) climbed 30% to $963 million, beating consensus by 6.0% (GAAP revenue) and reflecting both organic and acquisition-driven growth.
Operating margins and free cash flow declined from the prior year, primarily due to acquisition mix and tariff costs.
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nVent Electric Plc (NYSE:NVT), a global provider of electrical connection and protection solutions for infrastructure and industrial markets, published its second quarter 2025 earnings on August 1, 2025. The headline news was a significant beat on both adjusted earnings per share (EPS) (non-GAAP) and revenue (GAAP). Adjusted EPS reached $0.86, up 28% (non-GAAP), outperforming the $0.79 consensus forecast for adjusted EPS (non-GAAP). Reported revenue grew to $963 million (GAAP), outpacing the $908.38 million GAAP estimate and up 30% year-over-year. Most of this growth was driven by large acquisitions in power utilities and data centers, as well as robust product launches. Despite this, both reported and adjusted operating margins (return on sales) and free cash flow (non-GAAP) declined year-over-year. Overall, the quarter demonstrated nVent's ability to deliver on its growth strategy, but also surfaced challenges in margin management and cash flow.
Source: Analyst estimates provided by FactSet. Management expectations based on management's guidance, as provided in Q1 2025 earnings report.
About nVent Electric Plc and Its Strategy
nVent Electric Plc designs and manufactures products that connect and protect electrical systems. Its portfolio includes enclosures, electrical connections, and engineered solutions that serve industries such as data centers, utilities, renewables, and industrial automation. The business supports the growing need for safe and reliable power across global infrastructure.
The company's current strategy focuses on acquiring businesses that expand its reach in the rapidly growing sectors of electrical infrastructure, data centers, and renewable energy. nVent has made several large acquisitions, including ECM Industries and Trachte, to bolster these offerings. Key to success are continued innovation, reliable supply chain channels, and operational efficiency using lean principles. A strong culture of employee engagement also supports its long-term strategic aims.
Quarter Highlights: Financial and Operational Drivers
The second quarter featured standout headline growth, with reported revenue up 30%. Organic sales growth, which strips out the effects of acquired businesses and currency, was 9%. Acquisitions contributed 20.7 percentage points to the reported growth, while currency effects were negligible. This growth strategy has intentionally shifted nVent's business mix toward longer-cycle, high-growth infrastructure domains. As a result, power utilities and data centers now make up an estimated 40% of overall company sales.
Earnings (non-GAAP) also exceeded expectations. Adjusted EPS climbed to $0.86, an 8.9% beat over consensus and a 28% year-over-year increase. Adjusted operating income also rose by 18%. These gains were supported by strong performances in newly acquired product families like control buildings, bus systems, and switchgear. These are essential systems for managing power distribution and supporting growth in sectors like data centers, power utilities, and renewables. Across product lines, the business launched 35 new offerings in Q1, aiding both organic growth and the company's push into sustainable, electrification-focused markets.
While sales momentum was clear, profitability faced pressure. Both operating margin (GAAP) and adjusted return on sales (non-GAAP) dropped from a year earlier -- the adjusted return on sales margin (non-GAAP) fell to 20.8% from 22.9%. This reduction was attributed to margin dilution from acquisitions, additional costs from tariffs, and investments to support second-half growth. The impact was seen across both major segments. Systems Protection's adjusted return on sales reached 21.7%, down 1.8 percentage points, while Electrical Connections adjusted return on sales fell to 28.7%, down 2.2 percentage points year-over-year.
Free cash flow (non-GAAP) was $74 million, declining from $100.6 million in Q2 2024. However, the company continued balanced capital allocation, including $253.1 million in share repurchases year-to-date as of Q1 and a dividend of $0.20 per share, which was a 5% increase from the prior year.
Business and Product Developments
Strategic acquisitions remained central to nVent's expansion this quarter. The integration of Trachte -- a provider of control building systems -- and Avail EPG enhanced nVent's capabilities in high-growth sectors like utilities and data centers. According to management, both acquisitions performed better than expected and contributed to growth synergies. A direct quote from leadership noted: 'The Trachte and Electrical Products Group acquisitions performed better than expected, further strengthening our position in the high growth infrastructure vertical, including power utilities, data centers and renewables.'
Product innovation was another highlight. The company introduced 35 new products in the quarter, helping drive double-digit growth in orders and backlog in Q1. Many solutions were designed to meet the growing global demand for electrification, sustainability, and digital transformation. The business emphasized opportunities in data centers, renewables, and electrical grid expansion, with new products tailored for improved energy efficiency and resiliency. These launches complemented nVent's existing portfolio of enclosures and electrical connectors, keeping it aligned with the latest industry trends.
The business relies on an extensive distribution network. Over 60% of nVent's revenue now flows through distribution partners, providing broad market access. Management reported strong double-digit order growth, particularly in infrastructure segments for Q1. Growing backlog -- now more than a four-fold increase -- has given the company good visibility for the rest of the year.
Operational efficiency is a key part of nVent's culture, with lean manufacturing practices dating back decades. The company called out the doubling of control building output at Trachte as the result of lean improvements. Management also noted that investments and costs related to tariffs weighed on profit margins, but it expects these to be offset over time through pricing, productivity, and integration benefits as new acquisitions are fully absorbed into operations.
Looking Ahead: Guidance and Focus Areas
nVent raised its full-year 2025 guidance based on strong results and order momentum. Management now expects reported sales growth of 24–26% and organic sales growth of 8–10%. The adjusted EPS (non-GAAP) range was also lifted to $3.22–$3.30, from $3.03–$3.13 previously. For Q3, the business projects reported sales growth of 27–29%, organic growth of 11–13%, and adjusted EPS between $0.86 and $0.88. The company cited its expanded backlog, double-digit order growth, and robust demand in its core infrastructure markets as reasons for its more optimistic full-year outlook.
Investors should keep an eye on several areas in the coming quarters. Management has highlighted a $120 million tariff headwind, with plans to offset these costs through pricing, productivity, and supply chain actions. Margin recovery is a top priority, with expectations that synergy capture and pricing actions will improve profitability in the second half of the year. Additionally, trends toward electrification and digital infrastructure are likely to sustain demand for nVent's solutions in years ahead.
The quarterly dividend was raised 5% to $0.20 per share, payable in Q3.
Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.
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