01—Abstract
Summary
Summary of the 10-K filed February 28, 2023. Cited figures are marked; the original filing is the authoritative source.
nVent Electric plc, a leading global provider of electrical connection and protection solutions, reported net sales of $2,909.0 milliona for 2022, up from $2,462.0 million in 2021, an 18.2 percent increase driven primarily by price (13.5 percent) and volume (6.5 percent).
Net income rose to $399.8 millionb, or $2.38 per diluted share, from $272.9 million in 2021. Operating income was $440.4 million, or 15.1 percent of net sales, compared with $355.4 million in 2021. Gross margin declined slightly to 37.7 percent from 38.3 percent, as inflation in raw materials, logistics, labor and energy costs was partially offset by pricing actions and productivity improvements.
Pension mark-to-market gains of $66.3 millionc also contributed to pre-tax income. Segment performance was led by Enclosures, with net sales of $1,503.7 million and segment income of $256.0 million, followed by Electrical & Fastening Solutions ($791.4 million net sales) and Thermal Management ($613.9 million). Backlog at December 31, 2022 totaled $607.3 million, up 8.7 percent from the prior year.
Cash flow from operations was $394.6 milliond and free cash flow, a non-GAAP measure, was $350.7 million. The company ended the year with $297.5 million of cash and $1.1 billion of total debt, and it remained in compliance with its financial covenants. Capital allocation included dividends paid of $117.0 million, share repurchases of $65.9 million, and $140.6 million remaining under the 2021 Authorization.
The Board declared a quarterly dividend of $0.175 per share on February 28, 2023. Management expects inflationary and supply chain pressures to continue into 2023, and the filing notes goodwill and intangible assets of $3.2 billion, representing 66 percent of total assets.
02—Key points
Key Highlights
- Net sales rose 18.2 percent to $2,909.0 million in 2022, with price contributing 13.5 percentage points and volume 6.5 percentage points.
- Net income increased 46.5 percent to $399.8 million; diluted EPS was $2.38 versus $1.61 in 2021.
- Gross profit margin declined to 37.7 percent from 38.3 percent due to inflationary cost pressures, partly offset by pricing and productivity.
- Enclosures is the largest segment at $1,503.7 million in net sales (52 percent of revenue) and $256.0 million in segment income.
- Backlog at December 31, 2022 was $607.3 million, up 8.7 percent from $558.5 million a year earlier.
- Free cash flow was $350.7 million in 2022, compared with $334.4 million in 2021, supported by $394.6 million of operating cash flow.
- Goodwill and intangible assets total $3.2 billion, representing 66 percent of total assets, which creates impairment risk if conditions weaken.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2022, nVent Electric kept $0.17.
- Revenue$2.30B100.0%
- Cost of revenue−$1.47B64.1%
- Gross profit$822.9M35.9%
- Operating costs−$513.9M22.4%
- Operating income$309.0M13.5%
- Interest, other & tax$90.8M4.0%
- Net income$399.8M17.4%
Where FY2022 revenue went
$2.30B- Cost of revenue: $1.47B, 64% of revenue
- SG&A: $468.3M, 20% of revenue
- Operating income: $309.0M, 13% of revenue
- R&D: $45.6M, 2.0% of revenue
Kept 13% as operating income
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2022filed February 28, 2023Financial Statements
FY2022 against FY2021
| Line item | FY2022FY2021 | Change |
|---|---|---|
| Revenue | $2.30B$2.46B | −6.8% |
| Cost of Revenue | $1.47B$1.52B | −3.2% |
| Gross Profit | $822.90M$941.90M | −12.6% |
| R&D Expenses | $45.60M$48.60M | −6.2% |
| SG&A Expenses | $468.30M$537.90M | −12.9% |
| Operating Income | $309.00M$355.40M | −13.1% |
| Interest Expense | $31.20M$32.30M | −3.4% |
| Net Income | $399.80M$272.90M | +46.5% |
| EPS (Basic) | $2.40$1.63 | +47.2% |
| EPS (Diluted) | $2.38$1.61 | +47.8% |
| Shares Outstanding (Basic) | 166.30M167.90M | −1.0% |
| Shares Outstanding (Diluted) | 168.30M169.70M | −0.8% |
05—Questions
Frequently Asked Questions
How did nVent perform financially in 2022?
Net sales grew 18.2 percent to $2,909.0 million, operating income rose 23.9 percent to $440.4 million, and net income increased to $399.8 million from $272.9 million. Results were supported by price increases and higher volumes, while gross margin decreased slightly to 37.7 percent.
Which business segments drove results?
Enclosures generated $1,503.7 million in net sales and $256.0 million in segment income, with segment margin of 17.0 percent. Electrical & Fastening Solutions had net sales of $791.4 million and segment income of $219.9 million, and Thermal Management had net sales of $613.9 million and segment income of $140.8 million.
What are the main risks flagged for 2023?
The company expects inflationary cost increases and supply chain pressures to continue into 2023. Other risks include global economic conditions, competition, currency volatility (foreign currency translation had a 4 percent negative impact on net sales in 2022), dependence on energy-sector capital spending, and the Russia-Ukraine conflict.
How is nVent returning capital to shareholders and managing debt?
In 2022 nVent paid $117.0 million in dividends and repurchased $65.9 million of shares. The Board declared a quarterly dividend of $0.175 per share on February 28, 2023. Total debt was $1.1 billion at year-end, and $140.6 million remained available under the 2021 share repurchase authorization.
What did the auditor report on the financial statements?
Deloitte & Touche LLP issued an unqualified opinion on the consolidated financial statements and an unqualified opinion on internal control over financial reporting as of December 31, 2022. The critical audit matter identified was the goodwill evaluation for the Thermal Management reporting unit, with a goodwill balance of $711.7 million and no impairment recognized.
06—Continue