Manufacturers

nVent Misses Q4 EPS by $.01, Revenues Beat

LONDON — nVent Electric plc today announced financial results for the fourth quarter and full-year of 2018 and provided guidance for the first quarter and full-year 2019.

Fourth quarter sales of $568 million grew 5 percent relative to the fourth quarter 2017 and grew 6 percent organically, which excludes the impact from currency fluctuations. Fourth quarter 2018 earnings per diluted share (“EPS”) were $0.37 while on an adjusted basis, the company had EPS of $0.45. Full-year sales of $2.2 billion grew 6 percent relative to full-year 2017 and grew 5 percent organically. Full-year 2018 EPS were $1.28 while on an adjusted basis, the company had EPS of $1.74. Segment income, adjusted net income, free cash flow and adjusted EPS are described in the attached schedules.

Fourth quarter 2018 operating income was $86 million, up from $59 million in the same quarter in 2017. On an adjusted basis, fourth quarter segment income excluding corporate and other costs was $120 million versus $117 million in 2017. Full-year 2018 operating income was $311 million versus $316 million in 2017. On an adjusted basis, segment income excluding corporate and other costs was $474 million, up 5 percent compared to full-year 2017.

Full-year net cash provided by operating activities was $344 million and total pro forma free cash flow was $301 million, which includes $43 million of tax effected separation and related costs. The company delivered full-year free cash flow of 96 percent of adjusted net income.

“Our fourth quarter sales were above the high end of our guidance marking the fourth consecutive quarter of sales acceleration giving us confidence our strategy is working,” said Beth Wozniak, nVent’s chief executive officer. “I’m very proud of our team for successfully launching nVent as a new public company and achieving 6 percent sales growth. We enter 2019 with momentum to grow and expand margins with our focus on One nVent, key verticals, and new product launches.”

FOURTH QUARTER PERFORMANCE ($ in millions)

Enclosures’ sales growth was broad based across geographic regions and verticals. Fourth quarter ROS improved 70 basis points and segment income grew 13 percent as the company saw positive price while continuing to make progress to improve segment margin.

Thermal Management saw positive organic growth driven by strong Industrial Maintenance, Repair and Overhaul (“MRO”) and Commercial sales. The company’s longer cycle Energy business continued to recover. Fourth quarter ROS contracted due to higher inflation and a difficult year-over-year comparison.

EFS sales growth was driven by growth in Industrial and Commercial sales, along with strong price realization. Fourth quarter ROS was negatively impacted due to production inefficiencies.

FULL-YEAR PERFORMANCE ($ in millions)

Enclosures saw strong global growth led by Industrial and Infrastructure sales. Segment income and ROS improved throughout the year as the company continued to execute on its plan to expand margins within the Enclosures segment.

Thermal Management saw strong Industrial MRO and Commercial growth throughout the year, offset by a slowdown in the longer cycle Energy business. The 100 basis point expansion in ROS was driven by product mix to higher margin products.

EFS saw strong Commercial growth in 2018 while driving price to offset higher inflation. Margin contraction was due to negative product mix and inflationary pressure.

GUIDANCE FOR FULL-YEAR AND FIRST QUARTER 2019

The company is introducing 2019 sales guidance of flat to up 3 percent on a reported basis, which represents 2 to 4 percent organic growth versus the prior year. The company expects full-year 2019 EPS on a GAAP basis of $1.52 to $1.62 and $1.80 to $1.90 on an adjusted basis.

In addition, the company estimates reported sales for the first quarter of 2019 to be in the range of down 1 percent to up 1 percent, which represents 2 to 4 percent on an organic basis. The company estimates first quarter 2019 EPS on a GAAP basis of $0.29 to $0.33 and adjusted EPS of $0.36 to $0.40.

DIVIDENDS

nVent previously announced on September 18, 2018 that its Board of Directors approved a regular cash dividend of $0.175 per ordinary share, which was paid during the fourth quarter on November 2, 2018. nVent also announced on December 11, 2018 that its Board of Directors approved a regular cash dividend of $0.175 per ordinary share, payable during the first quarter on February 8, 2019.

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