nVent Electric plc Q4 FY2024 Earnings Call

Good day, and welcome to the nVent Electric Fourth Quarter 2024 Earnings Conference Call. Operator instructions: please note, this event is being recorded. I would now like to turn the conference over to Tony Riter, Vice President of Investor Relations. Please go ahead.

Thank you, and welcome to nVent's Fourth Quarter 2024 Earnings Call. On the call with me are Beth Wozniak, Chair and Chief Executive Officer; and Sara Zawoyski, Chief Financial Officer. Today, we'll provide details on our fourth quarter and full year performance and our outlook for 2025. As a reminder, starting in Q3 2024, the company began reporting the results of the Thermal Management business as discontinued operations. 2023 and 2024 results for all prior periods along with guidance are presented on a continuing operations basis. All results referenced throughout the presentation are on a continuing operations basis, unless otherwise stated. Before we begin, let me remind you that any statements made about the company's anticipated financial results are forward-looking statements subject to future risks and uncertainties such as the risks outlined in today's press release and nVent's filings with the Securities and Exchange Commission. Forward-looking statements are made as of today, and the company undertakes no obligation to update publicly such statements to reflect subsequent events or circumstances. Actual results could differ materially from anticipated results. Today's webcast is accompanied by a presentation, which you can find in the Investors section of nVent's website. References to non-GAAP financials are reconciled in the appendix of the presentation. We will have time for questions after our prepared remarks. With that, please turn to Slide 3 and I will now turn the call over to Beth.

Thank you, Tony, and good morning, everyone. It's great to be with you today to share our fourth quarter and full year results. 2024 marked a pivotal year for nVent with our strong performance and portfolio transformation. Q4 had 9% reported sales growth, margin expansion, and adjusted EPS growth of 7%. For the full year, we had 13% reported sales growth, continued margin expansion, strong earnings growth, and outstanding cash flow. I'm very proud of our nVent team and everything we have accomplished. We have made great progress on transforming our portfolio. Last week, we closed on the sale of the Thermal Management business. We expect to have nearly $2 billion in capital available to deploy in 2025. I'm very excited with how we are repositioning the nVent Electric plc portfolio to be more focused around the trends of electrification, sustainability, and digitalization. Our 2025 guidance at the midpoint reflects approximately 9% sales growth and 22% adjusted earnings per share growth. We are well positioned for strong sales and earnings driven by our focus on high-growth verticals, new products, and acquisitions. Slide four summarizes our Q4 and full-year performance. Fourth-quarter sales were up 9%, organic sales were slightly down. Sales to our key distribution partners were down more than expected as they managed their inventory positions. Importantly, sellout remained positive. Segment income grew 12% year over year with return on sales up 50 basis points. Adjusted EPS grew 7%, and we generated $150 million of free cash flow. Looking at sales performance across our key verticals, infrastructure led, up low single digits organically, industrial was flat. Commercial resi declined mid-single digits with continued softness. Finally, energy was up mid-teens. Turning to organic sales by geography, North America declined low single digits and Europe was up slightly. Asia Pacific grew in the mid-teens with solid growth in China. Lastly, organic orders were up low teens in the quarter, including double-digit order growth in data solutions. For the full year, we had sales of $3 billion, an increase of 13% and 2% organically. Segment income grew 15% with margins expanding 50 basis points. Adjusted EPS was up 7%. For the full year, we had strong free cash flow of $427 million, growing 20%. Let me share a few more highlights. First, we launched approximately 90 new products in 2024, contributing more than two points to our sales growth. We have great momentum in our innovation pipeline. Second, organic growth was led by the infrastructure vertical. Within infrastructure, data solutions now represent approximately $600 million in sales and grew approximately 30% in 2024. Overall, I am proud of our nVent Electric plc team and the strong results we delivered in 2024. We believe 2025 will be a year of strong growth and value creation. Moving to slide five, we have been on a journey to transform our portfolio. 2024 was a pivotal year. Divestiture of thermal management positions nVent Electric plc as a more focused, higher growth electrical connection and protection company. Approximately 70% of our portfolio is exposed to secular trends, and one-third of our sales are in the infrastructure vertical, up from low teens when we spun as a company nearly seven years ago. We also have done seven acquisitions to date, adding significantly to the offerings of our business segments. Now is the right time to rename our segments to better reflect what they do for our customers. Beginning in Q1 2025, the enclosure segment will be known as systems protection. This segment includes enclosures but is far beyond that with power distribution units, cooling solutions, both liquid and air, and control buildings. We provide our customers with products and solutions that protect electronics, systems, and data. In addition, the electrical and fastening segment will be known as electrical connections to represent the expansion of this portfolio to power connections, along with electrical and fastening solutions. This segment offers products and solutions that make electrical systems safe, efficient, and resilient. Turning to slide six and our outlook for the verticals in 2025, infrastructure is expected to grow the fastest, up low double digits. Data center CapEx is expected to continue to increase. Also, electrical infrastructure is expected to continue to expand in power utilities, renewables, and energy storage given the increasing electrical demand. Industrial is expected to grow low to mid-single digits with improving CapEx investment in North America. Commercial resi is expected to be up low single digits as commercial improves with electrification demand for both new construction and existing buildings. Now onto slide seven, I would like to talk more about how we are growing in the infrastructure vertical. Overall, we have expanded our product portfolio both organically and inorganically in infrastructure. Data solutions is approximately 20% of our sales, with products in liquid cooling, power distribution units, enclosures, and cable management. We have seen strong growth across the portfolio and expect another year of double-digit growth in 2025, supported by a growing backlog. We are investing in new products and expanding our offerings in liquid cooling, also in cable management, with innovation in our wire basket tray, for example, and extending our power distribution offering. Also in infrastructure, power utilities now represent approximately 10% of our sales. The acquisition of Trackfy last year more than doubled our exposure to power utilities and creates an entirely new growth platform of control buildings. The demand for control buildings is increasing with an aging electrical infrastructure that needs upgrading, and the need to expand the overall grid, to move to more renewable energy, and the increase in data centers. We continue to see the backlog grow in this business, supporting our forecast for double-digit growth in power utilities this year. Moving to slide eight, new products and innovation are a core part of our strategy and a strong contributor to our sales growth. We are focused on six core technology platforms. These include cable management, control buildings, equipment protection, liquid cooling, power connections, and power management. We are prioritizing innovation on these platforms to drive differentiation, modularity for flexibility and velocity, and are actively expanding our global certifications. Last year, we opened a new technology center in Bangalore to allow us to build more R&D capability, from design, modeling, simulation, and expanding our technical capabilities. Looking at 2025, we expect to launch over 75 new products, helping to drive over two points of sales growth in the year. In addition, we expect new product vitality to be above 22%. At our core, nVent Electric plc is a products and solutions company. So our strong focus on products and innovation are key to our growth strategy and our customer experience. This wraps up my remarks. I will now turn the call over to Sara Zawoyski for details on our results as well as our 2025 outlook. Sara, please go ahead.

Thank you, Beth. I am pleased to share another quarter of solid sales and earnings growth, margin expansion, and robust free cash flow. Let's begin on slide nine with our fourth-quarter results. Sales of $752 million were up 9% compared to last year. Organic sales were down 1% with price and volume each slightly down. Acquisitions added a meaningful $66 million in sales or ten points to growth. Fourth-quarter adjusted operating income was $158 million, up 12%. Return on sales was 21%, up 50 basis points year over year. Our performance was driven by acquisitions and strong productivity, partially offset by higher investments and inflation of approximately $25 million. Q4 adjusted EPS was $0.59, up 7% and at the midpoint of our guidance range. And we generated robust free cash flow of $150 million. Now please turn to slide ten for a discussion of our fourth-quarter segment performance. Starting with Enclosures, now systems protection, sales of $466 million increased 16% and down 1% on an organic basis. The Trackfy acquisition contributed 16 points to sales, continues to perform very well, up strong double digits versus a year ago, and backlog continues to grow. From a vertical perspective, infrastructure grew with continued strength in data solutions. Industrial and commercial resi each declined. Geographically, organic sales in Europe grew low single digits and Asia Pacific grew over 20% while North America declined low to mid-single digits. Fourth-quarter segment income was $100 million, up 18%. Return on sales of 21.5% increased 40 basis points year over year, driven by strong execution. Moving to electrical and fastening, now electrical connections, sales of $287 million were flat organically. Industrial and infrastructure each grew in the quarter. This was offset by a decline in commercial resi. Geographically, organic sales were flat in North America and Europe. Fourth-quarter segment income was $84 million, down 1%. Return on sales was 29.4%, down 20 basis points mainly due to Mexico. I'll turn to slide eleven for a recap of our full-year 2024 results. We ended the year with sales of $3 billion, up 13% or 2% organically. Acquisitions contributed ten points to growth for the year. Adjusted operating income grew 15% to $652 million. Overall, return on sales expanded 50 basis points to 21.7%. Adjusted EPS for the full year was $2.49, up 7%. Free cash flow was $427 million, up 20% with a 102% conversion of adjusted net income. This included higher CapEx investments for growth and capacity. In summary, 2024 was a year of strong performance and execution. Now turning to slide twelve titled balance sheet and cash flow. We exited the year with $190 million of cash on hand and $600 million available on our revolver, putting us in a very strong liquidity position, even prior to the proceeds from the thermal sale. Our debt stands at just under $2.2 billion, and we paid down approximately $100 million in the fourth quarter. Our strong free cash flow was driven by improvements in working capital, particularly inventory. We believe our healthy balance sheet and strong cash position provide us with ample capacity to execute on our growth strategy and create shareholder value. Turning to slide thirteen where we outline our capital allocation priorities. We continue to prioritize growth and execute a balanced, disciplined approach to capital allocation to deliver strong returns. We invested $74 million in CapEx in 2024, up 13%. This included expanding our footprint to increase our liquid cooling capacity for data centers and support our growing backlog. We returned $227 million to shareholders in 2024, including share repurchases of $100 million. And we increased our quarterly dividend by 5%. Looking ahead, we have significant optionality for further capital deployment. This year, we expect to have nearly $2 billion in available capital to deploy, including the net cash proceeds from the thermal sales and our strong cash flow. Moving to slide fourteen and our 2025 outlook. We forecast another year of strong sales and earnings growth. Reported sales are expected to grow 8% to 10% with organic growth in the range of 4% to 6%. Acquisitions are expected to contribute approximately 5 points. Our outlook for full-year adjusted EPS is $2.98 to $3.08, which represents growth of 20% to 24%. And we expect free cash flow conversion to be between 95% and 100%. A few other important items to note for the year. First, we are assuming shares of 166 million, which includes share buybacks beyond dilution. And second, for modeling purposes, for now, we are assuming net interest expense of approximately $60 million. This assumes the net cash proceeds from the thermal management sale earn interest, and we pay down a portion of the Trackfy acquisition debt. As we have said, we intend to use these proceeds for acquisitions and share repurchases. And third, we expect our adjusted tax rate to be similar to 23% in 2024. And lastly, we continue to evaluate the impacts of potential tariffs and have not yet reflected them in our guidance. A couple of additional 2025 assumptions of note. Corporate costs are forecasted to be approximately $100 million. These costs include some indirect costs that did not get allocated to the thermal management sale that we are actively working to reduce and expect to come down through the year. And finishing up, we expect CapEx of $75 million to $80 million. Moving to slide fifteen and our first-quarter outlook. We expect organic sales growth in the range of flat to 2%, and for earnings per share, we expect adjusted EPS in the range of $0.65 to $0.67, 7% to 10% year over year. Wrapping up, our team delivered a strong year, and I believe we are well-positioned for a great 2025. With that, please turn to slide sixteen, and I will now turn the call back to Beth.

Thank you, Sara. Key to our success has been our people and our culture, and making nVent Electric plc a great place to work. We are focused on delivering for our customers and having a positive impact on our communities. On this slide, you can see numerous awards and recognition that we have received as we focus on our people and building a more sustainable and electrified world. For the first time last year, we were recognized as one of the world's most ethical companies by Ethisphere. We also earned a silver sustainability rating from EcoVadis, and we were certified as a great place to work for the third consecutive year. These are just a few of the many awards and recognitions we have received. I am extremely proud of our nVent Electric plc team and everything we have accomplished. And there's always more that we can do. Wrapping up on slide seventeen, 2024 was another year of strong performance for nVent Electric plc while transforming the portfolio. We are well-positioned with the electrification of everything, sustainability, and digitalization trends. And we expect 2025 to be another year of strong sales, earnings, and cash flow. Our future is bright. With that, I will now turn the call over to the operator to start the Q&A.

To ask a question, you may press star. If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, our first question comes from Joe Ritchie of Goldman Sachs. Go ahead, please.

Thank you. Good morning, everybody.

Good morning.

Hi. So maybe why don't we just start off with the organic growth expectations? A little bit of a slower start to the year on that zero to two percent but then ultimately accelerating as the year progresses. I know the comps certainly get easier. Beth, maybe you can walk us through your expectations, and I'm particularly interested in slide six on the industrial and commercial businesses, and what you're seeing in those businesses today that gives you confidence that you will see organic growth accelerate as the year progresses.

Okay. Thank you, Joe, for the question. You are correct. Last year, our strongest quarter was Q1, so we are lapping some strong growth from a year ago. A couple of things when we think of our outlook: first, we have growing backlogs in both our data solutions and power utilities verticals. We see that backlog growing and ramping, which we believe will progress through our sales over the course of the year. Second, we ended the year with less organic growth than we were expecting, and that was driven by distribution managing inventory at year-end. Orders have continued to be positive, and we see things ramping as we go through the year. As we talk to our sales teams and our channel partners, our funnels are building, particularly with smaller CapEx projects, and we are seeing that across many industrial applications and verticals. Infrastructure will continue to be the strongest for us, and backlogs are growing. Industrial is improving with a funnel supporting that, and mega projects are later in the cycle but we expect momentum there. We also expect commercial to resi to improve over the course of the year.

Thanks. That's helpful. I should have clarified also: in terms of pricing for the year, what is embedded in your assumption?

So, Joe, like last year, we expect the organic growth of 4% to 6% to be more heavily weighted towards volume, but price does play an important factor in that equation. Managing price plus productivity offsets inflation, so we would expect price to be positive in 2025.

Okay. Great. And one last one: slide eight—the six core technology platforms—also great that you're in a position to be very front-footed with capital deployment. As you think about M&A, is it logical that these are the areas you'd potentially invest in? Or are you looking at other platforms?

Slide eight highlights how we're investing organically in new product areas to drive differentiation. For M&A, we look at high-growth verticals and great products. We could add to this product portfolio and remain very focused on growing in the infrastructure vertical. We have a flywheel of great products we can scale and invest in. We'll continue to apply discipline within that framework.

Thank you.

The next question comes from Julian Mitchell of Barclays. Go ahead, please.

Hi. Good morning.

Good morning.

Maybe to start with the operating margin guidance. It looks like operating margins are down in the first quarter and then sort of flattish for the year as a whole. Is that correct? Any main divergences between the margin performance year on year of the two segments we should be aware of?

Let me start with Q1. Embedded in that Q1 guide, we do see return on sales down modestly. A couple of factors: corporate costs tend to be highest in Q1, and we have some indirect costs that did not go with the thermal sale that will take time to reduce through the year. Second, we continue to invest in our infrastructure vertical, particularly data solutions and power utilities, and our backlog gives us confidence in second-half growth. We expect price/cost to ramp in Q2 and more in the back half, so there's some impact early in the year. Also, Trackfy affects return on sales; we begin lapping it mid-July, and while it contributes nicely to top and bottom line, it has an impact on overall return on sales. Embedded in the guidance is good drop-through on expected volume growth and top-line growth for the year.

That's helpful. One follow-up on revenue: you gave good color on revenue. For the non-infrastructure pieces, the improvement seems to be partly comps and seasonality versus fundamental improvement. How much of that is comps versus fundamental improvement? And was any of the Q4 order strength in non-infrastructure verticals?

In Q4, we saw positive orders in non-infrastructure, so the improvement is not solely infrastructure. For industrial, we are seeing smaller CapEx projects across different verticals in our funnel, which we believe will pick up momentum and translate to orders and sales. We expect commercial to improve over the course of the year. Some of the Q1 comp is a factor, but with backlogs in infrastructure and momentum in projects, we see improvement through the year.

Great. Thank you.

The next question comes from Deane Dray of RBC Capital Markets. Go ahead, please.

Thank you. Good morning, everyone.

Good morning, Deane.

Question broadly about potential implications from Deepseek and any feedback from your customers and partners. Specifically, what might be the impact on liquid cooling if they can use older generation AI chips? Do the thermal loads and assumptions change, or is it binary that once you're using AI chips you must use liquid cooling and differences in thermal loads don't matter? Any color would be helpful.

Thank you, Deane. We were doing liquid cooling in data centers before the latest GPUs were launched, because depending on the hyperscaler and system design, customers found it more efficient. Moving forward, there will be different ways to deploy AI, but liquid cooling remains important and drives energy efficiency. Customers have committed to CapEx investments and are not slowing down, so we expect continued demand for liquid cooling solutions. The demand for power in data centers is significant, and liquid cooling offers energy efficiency. We believe innovation in AI will drive further adoption and scale, reinforcing the importance of this infrastructure and liquid cooling's role.

That's great to hear. A related follow-up: you expanded liquid cooling capacity last year. Do you still need to add test capacity, and can you give a directional sense of your utilization entering 2025?

We are continuing expansion. When we forecast capacity, some was base capacity; we're continuing to invest in lines and build out lab and testing capability. We're in that phase now and continuing to invest in capacity expansion and innovation. 2025 will be a strong year of new product launches in data solutions, and we see opportunity and growth ahead.

Thank you for the color.

The next question comes from Nicole DeBlase of Deutsche Bank. Go ahead, please.

Thanks. Good morning.

Good morning.

Maybe some more color around channel inventory. You mentioned it was a factor in Q4 relative to initial expectations. How do you feel current channel inventory stands today relative to what's needed for next year?

As we progressed through Q4, order patterns dropped off in the third month, reflecting distributor inventory adjustments. Our orders have picked up through January, and sellout has been positive. We expect to see improvements through the year.

Thanks. And regarding tariffs, could you help by sizing your exposure from a COGS perspective to Mexico, Canada, and China?

We have very little imported from China, so the announced tariffs have minimal impact and we have it covered. We have plans for Mexico and Canada. Canada is minimal. For Mexico, exposure is in the low teens as a percent of COGS. We have a good track record managing tariffs through supply chain actions and pricing, and we are working those levers now.

Thank you. I'll pass it on.

The next question comes from Jeffrey Sprague of Vertical Research. Go ahead, please.

Good morning, everyone. Thank you.

Good morning, Jeffrey.

Can we dig into the order commentary? Orders in Q4 were meaningful and continued into January. Can you unpack that a bit, what the comp was and any subverticals that stand out driving that growth?

In Q4 we saw good infrastructure orders and orders across the board, not just infrastructure. As we get into Q1, we are seeing broad-based orders across the portfolio.

Could you quantify the top-line headwind in Q4 by sizing the difference between sell-in and sell-out?

We don't normally comment on that. What we saw was distributor inventory reductions or adjustments were more than we expected. We expected positive growth and ended slightly negative to flat, and that was the impact in the quarter.

One last on price: slightly negative in Q4, but you expect it to go positive in 2025. Is the Q4 weakness mainly in enclosures, and what drives it positive in 2025? Are you planning price increases?

In Q4, pricing was slightly negative in enclosures and slightly positive in the electrical and fastening segment for the year. Despite modest price declines, we saw margin expansion driven by productivity, product simplification, and other initiatives. For 2025, we expect inflation to continue and labor to be a significant driver, and we will look to pricing actions plus productivity to offset inflation. We have a broad productivity funnel across factories, distribution centers, transportation, indirect spend, and business simplification to help offset inflation, as we have historically.

Great. Thank you.

The next question comes from Nigel Coe of Wolfe Research. Go ahead, please.

Thanks. Good morning, everyone.

Morning.

I want to delineate infrastructure from the rest of the portfolio. Infrastructure is driving most growth. For industrial, residential, and commercial verticals, is the plan flat to low single-digit growth?

In Q4, infrastructure was a big driver of growth. We did see industrial growth in the electrical and fastening business. For our outlook, we expect infrastructure to grow low double digits, industrial low to mid-single digits, and commercial low single digits. Infrastructure and backlogs will contribute more strongly to growth than the other areas.

And residential, which is small, is likely down mid-single digits?

Yes, residential was softer.

Double-click into Trackfy: contribution to Q4 from acquisitions was strong. Trackfy isn't organic until the second half. What are you seeing in Trackfy growth for 2025 and the verticals driving that growth?

Trackfy is a new growth platform for control buildings. We have seen backlog growth and sales strength. Similar to our enclosures, control buildings apply to utilities, data centers, backup power, and energy storage. We see good momentum and expect this platform to be a strong contributor to the infrastructure vertical.

Okay. Thank you.

The next question comes from Jeffrey Hammond of KeyBanc. Go ahead, please.

Hey, good morning.

Good morning.

On liquid cooling, with many new entrants, what are you seeing in win rates, pricing in the backlog, and any early traction from the NVIDIA collaboration you announced?

Broadly, we continue to build our liquid cooling portfolio and we have offerings that work with NVIDIA. For some customers, the NVIDIA partnership is important and is a positive for us. We continue to see existing customer content grow and to add new customers. In 2025 we will launch several new products expanding our solutions for hyperscalers, enterprise, colos, and integrator customers through distribution. The backlog is building and we have strong momentum going into 2025.

Thanks. On capital allocation, how actionable is the pipeline and what do you have baked in for buybacks? How flexible is buyback if deals don't close?

Our acquisition pipeline is robust. Timing is not fully controllable, but our goal is to complete a couple of deals if possible during the year. We are disciplined in targeting high-growth verticals with great products and ability to execute.

The outlook provided this morning reflects share buybacks of roughly $200 million, which aligns to guidance of 166 million shares versus 168 million in 2024, and the pay down of part of the Trackfy acquisition debt. With the net proceeds of $1.4 billion plus our 2024 EBITDA and net debt, our net leverage is less than one times, emphasizing that we have ample capacity to deploy capital in 2025 for growth and shareholder returns.

Okay. Thank you.

The next question comes from Brian Drab of William Blair. Go ahead, please.

Hi. Thanks for taking my questions. You said for power solutions the expectation is double-digit growth in 2025. Can you be more specific and remind us the growth for power solutions in full-year 2024?

On the chart we said power utilities represent about 10% of overall sales and double-digit growth is driven by that plus the Trackfy acquisition and our core products in the utility segment. Trackfy and other products together support that stronger growth.

For data solutions, you said it's about 20% of sales—how much did it grow in 2024 and what is the expectation for 2025? Are you expecting better than 20% growth?

Data solutions grew about 30% last year, and we expect double-digit growth again in 2025.

Trackfy contribution: it was roughly a $250 million business coming into 2024. Could it contribute materially to organic growth in H2 2025?

We said Trackfy was roughly a $250 million business and contributed about ten points to growth last year. Expect power utilities and data centers in that business to be part of the infrastructure vertical and contribute nicely to the back half. Our backlog exiting 2024 was $750 million, up meaningfully year over year, including Trackfy. That backlog and demand gives us confidence in the back half.

Thanks. It seems like a great acquisition and could materially accelerate organic growth. I'll follow up later.

It's a great growth platform and we're excited about the broad applications. Off to a strong start.

The next question comes from Vladimir Bystricky of Citigroup. Go ahead, please.

Morning, team. Thanks for taking my call.

Good morning, Vladimir.

On capital deployment versus the six core technology platforms on slide eight, are there particular areas that stand out for M&A where you see more actionability to layer onto those platforms?

Yes. We look at technology platforms overlaid with high-growth verticals to ensure the flywheel—acquiring companies with differentiated products we can scale. When the product platform and high-growth vertical align, there's strong momentum and actionability for M&A.

On liquid cooling timing of deliveries, are you seeing material movements from customers as they refine designs and thermal approaches?

Awareness and interest in liquid cooling have increased. Existing customers are scaling programs and adding capacity, and new customers are testing solutions and system architectures. Activity is strong across hyperscalers, enterprise, and other customers, supporting backlog growth and continued demand.

Got it. Thanks, Beth. I'll get back in queue.

The next question comes from Scott Graham of Seaport. Go ahead, please.

Hey, good morning. Thanks for taking my question. I wanted to understand the EPS impact from Trackfy in Q1 and what's embedded in the 2025 guide.

We haven't given that specific detail, Scott, but we previously provided guardrails: Trackfy is roughly a $250 million business with strong double-digit growth and a modest return on sales profile. You can do the math to infer contribution. Importantly, the back half contribution from organic growth and drop-through plays a meaningful part in our overall growth and earnings.

Second question on inflation: is the Q4 inflation number a decent run rate for 2025 quarters?

It's a good baseline; you can take Q4 and extend it. Another view is to look at full-year inflation as a starting point. We expect 2025 to be inflationary, with labor the biggest driver.

You talked about orders spreading out vertical-wise in January and the organic ramp. How much of the ramp includes projects you referred to, and is there timing risk around those projects?

For timing of projects in data solutions and Trackfy, we have a good sense of how projects execute through the year and believe that to be fairly stable. We see other areas ramping from Q1 to Q2. We noted a slower start to the year because of Q1 comps and how orders are laying in.

To add, our Q1 comp at the nVent Electric plc level is organic growth of 6% last year, and we're lapping systems protection growth of 11% in Q1. So timing and comps are factors.

Thank you for the details.

This concludes our question and answer session. I would like to turn the conference back over to Beth Wozniak, CEO and Chair of the Board, for any closing remarks.

Thank you for joining us this morning. We are proud of our strong 2024 performance and believe the electrification of everything, sustainability, and digitalization trends are driving demand for our products and solutions. We are excited for 2025 with our portfolio transformation. I'm grateful for the outstanding work of our team to support our customers and execute on a growth strategy. Thanks again for joining us. This concludes the call.

The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.