Executive Summary / Key Takeaways

• Strategic Pivot & Growth Acceleration: nVent Electric plc has undergone a significant portfolio transformation, divesting its Thermal Management business and acquiring Trachte and Avail Electrical Products Group (EPG). This strategic pivot has reshaped its focus towards high-growth electrical connection and protection solutions, accelerating its presence in the critical infrastructure vertical.
• Infrastructure Dominance & AI Tailwinds: The company is strategically aligned with megatrends of electrification, sustainability, and digitalization. Its Data Solutions business, particularly in liquid cooling for AI data centers, is experiencing record orders and backlog, driving strong double-digit growth. Power Utilities is also emerging as a substantial growth engine.
• Robust Financial Performance & Outlook: NVT delivered record sales exceeding $1 billion and adjusted EPS of $0.91 in Q3 2025, surpassing guidance. The full-year 2025 guidance projects impressive reported sales growth of 27% to 28% and adjusted EPS growth of 33% to 34%, underpinned by successful acquisitions and organic momentum.
• Technological Edge & Capacity Expansion: NVT differentiates itself through deep application expertise, comprehensive system designs, and a modular approach in liquid cooling. Significant R&D investments and manufacturing capacity expansions, including doubling its liquid cooling footprint, are bolstering its competitive moat and ability to meet surging demand.
• Disciplined Capital Allocation: With nearly $2 billion in capital available following the Thermal Management divestiture, nVent prioritizes growth investments in R&D, CapEx, and M&A. Concurrently, it maintains a healthy balance sheet and returns capital to shareholders through share repurchases and dividends.

A Transformed Powerhouse for the Electrified World

nVent Electric plc, a global leader in electrical connection and protection solutions, is undergoing a profound transformation, repositioning itself at the forefront of an increasingly electrified, sustainable, and digitalized world. Since its spin-off in 2017, the company has strategically shifted its portfolio, with the infrastructure vertical growing from a low-teens percentage of sales to its largest segment, projected to exceed 40% of total sales in 2025. This strategic evolution is driven by a clear vision to capitalize on converging megatrends, particularly the escalating demand for robust electrical infrastructure.

The company's core business revolves around designing, manufacturing, marketing, installing, and servicing high-performance products that connect and protect mission-critical equipment, buildings, and essential processes. In Q1 2025, nVent streamlined its reporting segments, renaming "Enclosures" to Systems Protection and "Electrical & Fastening Solutions" to Electrical Connections. Systems Protection offers solutions like protective enclosures, cooling systems (liquid and air), control buildings, and power distribution, safeguarding electronics and data in critical applications such as data centers. Electrical Connections provides cable management, electrical connections, and power connections to enhance safety, reduce installation time, and ensure resilience in electrical systems.

The competitive landscape for nVent is dynamic, featuring large, diversified industrial conglomerates like Eaton Corporation plc (ETN), ABB Ltd (ABB), Schneider Electric SE (SBGSF), and Siemens AG (SIEGY). These rivals often possess broader product portfolios and greater scale. However, nVent carves out its niche through specialized offerings, strong brand recognition (e.g., nVent CADDY, ERICO, HOFFMAN, ILSCO, SCHROFF, TRACHTE), and deep application expertise. While larger competitors may lead in overall market reach and broad digital integration, nVent's focus on specific, high-performance solutions, particularly in thermal management and engineered enclosures, provides a distinct competitive edge. The company's strategic acquisitions and organic innovation are designed to build scale and leverage this expertise, allowing it to compete effectively in targeted, high-growth segments.

Technological Leadership in a Data-Driven Era

A cornerstone of nVent's investment thesis lies in its technological differentiation, particularly in liquid cooling solutions for data centers. The company boasts over a decade of experience in this critical area, with more than 1 gigawatt of cooling deployed globally. This expertise is vital as the AI build-out drives unprecedented demand for advanced thermal management. Liquid cooling is not merely a preference but an essential technology for new GPU chips, offering up to 50% energy efficiency compared to legacy cooling methods.

nVent's liquid cooling technology differentiates itself through several tangible benefits. Its strength lies in the ability to design modular, service-friendly, high-performance systems that simplify deployment and provide resiliency across large-scale environments. The company offers deep application expertise, complete system designs, robust lab capabilities, and rigorous testing, coupled with a proven ability to manufacture at scale. This comprehensive approach allows nVent to offer solutions that are flexible and integrate with various cooling technologies, including immersion and two-phase systems, ensuring it can meet diverse customer needs.

The company's commitment to innovation is evident in its R&D initiatives. In September 2025, nVent announced a new manufacturing facility in Minnesota, representing its second liquid cooling expansion in two years. This facility is expected to commence production early next year, effectively doubling its overall footprint to support record orders and backlog. Furthermore, nVent was recently named to NVIDIA's (NVDA) partner network as a solution adviser for cooling solutions and design architecture, enhancing its credibility and awareness among global customers designing next-generation AI facilities. At the upcoming Supercomputing Conference, nVent plans to debut over 10 new products, including its newest generation of high-performance, high-reliability, modular liquid cooling solutions, purpose-built for the growing power and thermal demands of AI data centers.

For investors, this technological leadership translates into a significant competitive moat. The ability to provide specialized, high-efficiency cooling solutions positions nVent for sustained growth in a rapidly expanding market. The modularity of its new offerings is expected to facilitate broader market penetration beyond hyperscalers, potentially leading to higher margins as these products scale through distribution channels. This innovation pipeline, coupled with strategic partnerships and capacity expansion, underpins nVent's long-term growth strategy and its ability to capture a substantial share of the burgeoning data center market.

Strategic Acquisitions Fueling Infrastructure Growth

nVent's strategic narrative is further enriched by its disciplined approach to mergers and acquisitions, which has significantly bolstered its position in the infrastructure vertical. A pivotal move was the acquisition of Trachte, LLC, completed in July 2024 for approximately $687.50 million. Trachte, a leading manufacturer of engineered control building solutions, more than doubled nVent's exposure to power utilities and established a new growth platform in control buildings designed to protect critical infrastructure assets. This acquisition has performed ahead of expectations, with its team doubling the output of buildings per month in a particular value stream, driving capacity, productivity, and an improved customer experience.

Building on this foundation, nVent acquired the Electrical Products Group (EPG) in May 2025 for approximately $978.70 million. This acquisition further strengthened nVent's presence in high-growth infrastructure verticals, including power utilities and data centers, by expanding its offerings in control buildings, switchgear, and bus systems. The EPG acquisition has also performed ahead of expectations, contributing double-digit "apples-to-apples" growth and is expected to have an approximately $0.10 impact on EPS, net of lost interest benefit, higher than the initial $0.05 estimate. The divestiture of the Thermal Management business in January 2025 for $1.70 billion in net cash proceeds further sharpened nVent's focus, providing substantial capital for these growth-oriented acquisitions and other strategic deployments.

These strategic initiatives are directly aligned with the increasing demand for electrical infrastructure products, driven by the need to expand the overall grid, the shift towards renewable energy, and the proliferation of data centers. An independent grid study by NEMA forecasts electricity demand to grow by 50% by 2050, underscoring the long-term tailwinds for nVent's core markets. The company's operating objectives for 2025 include enhancing employee engagement, achieving differentiated revenue growth through high-growth verticals and new products, integrating recent acquisitions, optimizing technological capabilities, and driving operational excellence through lean and agile practices.

Financial Strength and Compelling Outlook

nVent's strategic transformation is clearly reflected in its robust financial performance. For the third quarter ended September 30, 2025, the company achieved record net sales of $1,054 million, a significant 35% increase over the prior year. Organic sales growth stood at an impressive 16%, primarily driven by volume and price, while acquisitions contributed 18 points to sales, exceeding guidance. Adjusted operating income grew 27% year-over-year, with a return on sales of 20.2%, and adjusted EPS surged 44% to $0.91, surpassing the high end of guidance.

Looking at the first nine months of 2025, net sales from continuing operations reached $2,826.4 million, a 25.4% increase from the prior year. Net income from continuing operations was $312.7 million, up 21.5%. Gross profit as a percentage of net sales was 37.4% in Q3 2025 and 38.2% for the nine months, experiencing some pressure from inflationary increases, including tariffs, and investments in capacity. However, these impacts were partially offset by higher sales volume and increased productivity. Selling, general, and administrative (SGA) expenses as a percentage of net sales saw a 1 percentage point decrease in Q3 2025, benefiting from organic sales growth leverage and restructuring savings, though partially offset by higher intangible amortization from acquisitions and inflationary labor costs.

The company's liquidity position remains strong. As of September 30, 2025, nVent held $126.9 million in cash and cash equivalents and had $569.6 million available under its revolving credit facility. Net cash provided by operating activities from continuing operations for the first nine months of 2025 was $426.6 million. This robust cash generation supports nVent's disciplined capital allocation strategy, which prioritizes investments in growth (R&D, CapEx, M&A) while also returning capital to shareholders. During the first nine months of 2025, the company repurchased $253.1 million of ordinary shares and paid $98 million in dividends.

nVent's outlook for 2025 reflects continued confidence in its strategy. The company has raised its full-year guidance, now forecasting reported sales growth of 27% to 28%, with organic sales growth expected between 10% and 11%. Adjusted EPS is projected to be in the range of $3.31 to $3.33, representing 33% to 34% growth over the prior year. For Q4 2025, nVent anticipates reported sales growth of 31% to 33% and adjusted EPS between $0.87 and $0.89. This guidance assumes a tariff impact of approximately $90 million, which the company expects to offset through pricing actions, supply chain productivity, and other mitigating measures.

Risks and Challenges

Despite the compelling growth narrative, nVent faces several pertinent risks. General inflationary increases, particularly in labor, transportation, and raw material costs, continue to exert pressure on margins. The dynamic tariff environment, including potential impacts related to China, presents ongoing uncertainty, requiring continuous monitoring and mitigating actions. While nVent has a strong track record of offsetting these costs, the potential for sustained inflationary pressures could impact profitability.

The successful integration of recent acquisitions like Trachte and Avail EPG is crucial for realizing anticipated synergies and growth. Any challenges in integration or slower-than-expected market acceptance of new products could affect financial performance. Furthermore, while the AI data center boom provides significant tailwinds, the rapid pace of technological change and intense competition in the liquid cooling space could pose challenges. The ability to scale manufacturing capacity and manage supply chain dependencies effectively in a high-growth environment is also a critical operational challenge.

Conclusion

nVent Electric plc is executing a powerful transformation, strategically aligning its portfolio with the secular megatrends of electrification, sustainability, and digitalization. The company's sharpened focus on the infrastructure vertical, particularly its high-growth Data Solutions and Power Utilities businesses, is yielding impressive financial results, marked by record sales and adjusted EPS in Q3 2025 and a robust outlook for the full year. NVT's technological leadership in liquid cooling, coupled with disciplined acquisitions and ongoing capacity expansions, forms a strong competitive moat, positioning it to capitalize on the surging demand for advanced electrical infrastructure, especially from the AI data center build-out.

While challenges such as inflation and tariffs persist, management's proactive approach to pricing, productivity, and supply chain optimization demonstrates resilience. The growing backlog and strategic investments in innovation and manufacturing capacity provide significant visibility and confidence in nVent's continued accelerated growth. For investors, nVent represents a compelling opportunity to participate in the fundamental rewiring of the global economy, driven by a focused strategy, technological differentiation, and a proven ability to deliver strong financial performance.