Ladies and gentlemen, thank you for standing by, and welcome to the nVent Q1 Earnings Conference Call. [Operator Instructions] I would now like to hand the conference over to your first speaker today, J.C. Weigelt. Please go ahead. J. C. Weigelt: Thank you, Amy, and welcome, everyone to nVent's First Quarter 2021 Earnings Call. I'm J.C. Weigelt, Vice President of Investor Relations. And on the call are Beth Wozniak, our Chief Executive Officer; and Sara Zawoyski, our Chief Financial Officer. Today, we will provide details on our first quarter performance and provide an outlook for the second quarter as well as an update to our full year 2021 outlook. Before we begin, let me remind you that 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'll have time for questions after our prepared remarks. And now I will turn the call over to Beth.

Thank you, J.C., and good morning, everyone. Our first quarter performance was ahead of our expectations on sales, earnings and cash. This was a result of stronger-than-anticipated demand as well as channel restocking, both of which were particularly strong in March. Execution was another highlight as we saw good price realization that increased customer demand while delivering strong productivity and continue to make progress on our growth initiatives. I am so proud of how well our teams are executing in this challenging environment. Overall, it was a great start to the year. Beginning on slide 3 titled Executive Summary. Our employee safety and wellbeing remains our top priority, and we continue to execute on our priority to emerge stronger. We returned to growth in the quarter, and our financial results are well ahead of the guidance we provided in February as well as ahead of the update in early March. We saw particular strength in Enclosures with strong sales within the industrial and infrastructure verticals. For nVent, we saw a pickup in sales globally, reflecting the broader recovery. Return on sales for the quarter was 17.7%, marking an increase of 210 basis points. And we generated $40 million in cash flow. We believe a faster global recovery and our strong execution were the main drivers to our performance -- to our over-performance this quarter. Our adjusted EPS of $0.43 was up 26% year-over-year. Given the strong start to the year, we are raising our full year guidance. Now on to slide 4, [technical difficulty] of our first quarter performance. Sales during the quarter were $549 million, up 5% reported or 2% organically. This was well ahead of the down 9% to down 4% we originally guided to. Incrementals were robust at 56%. We believe a number of factors drove our top line performance. One of those is the accelerated recovery of the global economy. Recall, our expectation was that Enclosures would recover first, and that is playing out. Enclosures sales were up 4% organically, and industrial sales within Enclosures were up 7% organically. Another factor was channel restocking, where we saw a meaningful improvement in March. We believe that this restocking activity was due to a combination of low inventory levels, the uncertainty around supply chains and the buy ahead of inflation. While this likely will pull some sales into the first quarter, we still believe the underlying global economy continues to recover, and we are optimistic about further strength as we progress through 2021. One more factor driving our strong results is our focus on higher growth verticals around the electrification of everything, where we believe we are one of the best positioned companies to grow with this mega-trend. Infrastructure was up mid-single digits as data center and networking solution sales were up 20%. A number of other sub-verticals saw strong growth, including telecom, 5G and renewables. Rounding out the vertical discussion, we continue to see weakness in energy, particularly in North America and MRO, which [Technical difficulty] double digits. In commercial and residential, Electrical & Fastening saw modest growth, and Thermal Management saw strong growth driven by fire-rated wiring and pipe freeze protection. Turning to our geographical performance. Sales within North America were down modestly, although ahead of expectations. Europe continued to improve, with sales up almost 4% organically year-over-year and high-teens growth within European distribution, which is a focus area for us. Emerging geographies such as China saw strong double-digit growth as they continue to lead the recovery. Looking ahead, we are raising our full year guidance. This reflects the strength we saw in the first quarter in our order momentum. While our outlook is positive, we remain cautious, given supply chain constraints and the fact that regions of the world are still struggling with COVID-19. Regarding inflation, we've raised our outlook for the year around input costs and are executing well on a number of price increases with strong realization thus far. Over the last several years, we've invested in capacity and resiliency in our supply chain and have been able to respond well to the increased demand. I'm proud to say that due to our new products, strong execution and product availability, we are converting customers and emerging stronger. I will now turn the call over to Sara for some detail on our first quarter results and our updated outlook for 2021. Sara, please go ahead.

Thank you, Beth. It is exciting to begin the year with such great performance. Let's turn to slide 5 to review first quarter performance. Sales of $549 million were up 5% relative to last year or 2% organically. We saw strong price realization adding approximately 1.5 points to growth. March was our strongest month during the quarter, particularly in Enclosures and Electrical & Fastening. Orders in the quarter turned positive and outpaced sales across all three segments, with particular strength in Enclosures. Price plus productivity more than offset inflation, and we delivered incrementals of 56%. Segment income increased 19%, driven by top line strength, good operational execution and productivity from the cost actions we took in 2020. Adjusted EPS of $0.43 increased 26% and was above our original guidance range of $0.32 to $0.36. Free cash flow during the quarter was a positive $40 million. In summary, this was another quarter of strong execution and a return to growth. Now please turn to slide 6 for a discussion of our first quarter segment performance. Starting with Enclosures, sales of $277 million grew 4% organically. We saw volumes increase, driven by a broad-based recovery in industrial and accelerated growth in infrastructure. In particular, data and networking solution sales returned to strong double-digit growth, and our expanded IEC portfolio grew high single digits. Enclosures segment income increased 19%, with return on sales expanding 180 basis points to 17.6%. Incrementals of 43% reflected strong operational productivity. Now on to Electrical & Fastening. Sales of $148 million were up 1% organically, demonstrating the continued strength and resiliency of this portfolio with double-digit growth in industrial, low single-digit growth in commercial and, as expected, modest declines in infrastructure due to difficult comps. Global sales outperformed expectations with strength in Europe and APAC. Order growth in power utilities and data center and networking solutions, all critical areas in the electrification of everything, gives us confidence our infrastructure vertical sales can improve as we progress through the year. Electrical & Fastening segment income was up 17%. And return on sales was 26.5%, up 290 basis points relative to last year. Incrementals were very strong at 94%. The team continues to perform at a high level, focusing on fast growing verticals, new products, channel and contractor conversions, all improving return on sales relative to -- all while improving the return on sales relative to last year. Moving to Thermal Management. Sales of $124 million declined 1% organically. While orders improved sequentially in industrial MRO, sales remained down double digits due to continued spend reductions. Commercial and residential sales were up low double digits with particular strength in fire-rated wiring, and we continued to see the benefit from longer cycle projects globally. Thermal Management segment income was up 3%. And return on sales expanded 10 basis points, as the structural changes we made last year are reading out. The business continued to see a negative mix impact to margins due to declines in industrial MRO. On slide 7, titled Balance Sheet and Cash Flow, we ended the quarter with a cash balance of $105 million. We have an additional $565 million available on our revolver. We continue to make progress in our working capital goals. And we're pleased with robust positive free cash flow during the quarter versus our typical usage. This was the result of strong operational performance as well as working capital improvements. Turning to slide 8 titled Capital Allocation Update, we exited the first quarter with a net debt to adjusted EBITDA ratio at 2.1 times, which remains at the low end of our target range of two to 2.5 times. We completed the bolt-on acquisition of Vynckier early in the second quarter, which expands our Enclosures portfolio further into infrastructure. We also repurchased $20 million in shares earlier in the quarter to help offset dilution. We believe our strong balance sheet and cash generation puts us in a good position to invest in growth and execute our M&A strategy. Moving to slide 9 titled 2021 nVent Outlook, we are raising our full year guidance for the following reasons. First is our strong sales performance in the first quarter, which reflected a faster recovery, particularly in the industrial vertical. Second, our order book gives us confidence that the global economy continues to recover. Third is our strong operational performance, which we believe is a competitive advantage with our ability to service increased demand. Offsetting some of these positives is an updated view on inflation, which has meaningfully increased. We have successfully executed multiple price increases in Enclosures and Electrical & Fastening. We continue to monitor inflation and evaluate our pricing and productivity actions with the goal of protecting profit. We are off to a strong start and are confident in our team's ability to execute, but it is still early in the year. We now expect to grow sales 8% to 11% versus our prior guidance of 4% to 8% and now expect adjusted EPS to be in the range of $1.67 to $1.75 versus our original guidance of $1.58 to $1.68. This new guidance reflects earnings growth of 11% to 17% versus 2020. From a segment perspective, we expect a stronger recovery in the industrial vertical to benefit our Enclosures segment the most. Strength in infrastructure and industrial is expected to drive Electrical & Fastening sales with continued resiliency in commercial. For Thermal Management, we are encouraged, given positive order trends in commercial and sequential improvements in industrial MRO, and continue to expect this to be a more gradual recovery. On currency, we now expect a two point tailwind to sales this year. We expect another year of strong cash flow and conversion of adjusted net income at or above 100%. And lastly, we expect corporate costs to increase relative to our initial guidance by approximately $5 million. This is related to higher compensation accruals in response to such a strong start to the year, some temporary costs coming in sooner, along with continued strategic investments. Looking at our second quarter outlook on slide 10. We expect organic sales to be up 14% to 17%, as we wrap a quarter that was significantly impacted by global shutdowns in the peak of the pandemic. This outlook is supported by high single-digit order growth in the first quarter with particular strength in March. We expect adjusted EPS to be between $0.36 and $0.40, which at the midpoint reflects 31% growth relative to last year. Recall, the second quarter of 2020 included actions around furloughs and salary reductions during the peak of the pandemic, causing a headwind this quarter. Still, we expect margin expansion and attractive incrementals due to strong execution, the benefit of structural actions taken in 2020 and increasing volumes. Wrapping up, I'm pleased with our first quarter performance. We executed well to meet strong customer demand. We believe we have a good handle on price-cost in this inflationary environment and expect to take the necessary actions to protect profit. With the successful first quarter in order momentum, we believe we are set up for a great year with strong sales growth, margin expansion and robust cash generation. This concludes my remarks, and I will now turn the call back over to Beth.

Thank you, Sara. Turning to slide 11, I would like to review the progress we've made on our 2021 priorities. Our first priority remains the safety and wellbeing of our employees. We continue to engage in regular conversations with our employees to ensure they feel safe and supported as we continue to navigate through this crisis. Growth remains a priority for us, both organic and inorganic. We've recently seen a marked improvement in global sales with particular strength in Europe and other global geographies. Our strategic initiative to build stronger relationships with European distributors is paying off with high-teens growth during the quarter. We saw 20%-plus growth in our focused verticals such as data and networking solutions and rail as well as high single-digit growth among our strategic distribution alliances. We launched nine new products during the quarter across the business. These include connected solutions in Thermal Management as well as a Universal Free-Stand portfolio of Enclosures. We are on track to launch over 50 products this year. Recall, we are tracking our progress by measuring new product vitality, which continues to rise into the high teens. And we are seeing a strong revenue and margin contribution from these products. On the digital front, we continue to launch new capabilities on go-to-market, automation and digitization of our back-office functions and factories. We're expanding our use of data and intelligence, helping us drive insights to support our growth. We also expect this to drive productivity and working capital improvements. On M&A, we completed the Vynckier acquisition earlier this month, which strengthens our Enclosures segment, providing us with an expanded nonmetallic portfolio positioned in high-growth verticals such as solar, utilities and 5G. We also formed a strategic partnership with CoolIT Systems. They are a leader in cooling solutions for data center and networking, and we see this further strengthening our cooling capabilities. Our M&A strategy is to build upon our great brands, leading positions and to expand globally. We are very pleased with the successful integration of Eldon and WBT. Both are performing very well with orders up double digits in the quarter. We have robust integration playbooks and believe we are capable of delivering value through acquisitions. We see ourselves competing in a highly fragmented space and have a strong M&A pipeline around the mega-trend of the electrification of everything. We believe M&A will continue to play a key role to grow our business and create shareholder value. The global recovery is under way and even a little earlier than anticipated. We said we would see the recovery first in Enclosures, and that is what's transpired here in the first quarter. Since then, we have invested in our capacity and improved the planning and management of our supply chain across all segments and believe we are well positioned to meet a continued increase in global demand. We have a healthy balance sheet and continue to look for attractive M&A opportunities that deliver high returns. Over the past year, we've made decisions in advance to put us in a position to emerge stronger. Our first quarter results as well as our order book give us the confidence that we are indeed emerging stronger. Our outlook for the year has improved, and we're executing at a high level to deliver both sales and income growth as well as improved cash generation. Wrapping up on slide 12. We have a strong foundation with many bright growth prospects. Because of the macro trends toward the electrification of everything, we believe we can drive more demand for our products and solutions. With our strong brands, our Spark management system and our momentum on marketing and sales excellence, new products and digital, we believe we are well positioned to benefit from these trends. Our future is bright as we continue to gain traction within high-growth verticals, global growth and strategic alliances. In addition to growth, we're executing at a high level to deliver margin expansion and strong cash flow generation. We are emerging stronger and are on a path to making nVent a high-performance electrical company. With that, I will now turn the call over to the operator to start Q&A.

[Operator Instructions] Your first question today comes from the line of Jeff Sprague with Vertical Research. Please proceed with your question.

Thank you. Good morning, everyone. Maybe just a little bit more on price-cost, if we could. So you shared that price was up 1.5% in Q1. What are you anticipating for the full year on price? And would that be dollar-for-dollar covering the cost pressures that you anticipate at this point?

Good morning.

Good morning. Maybe just a little bit more on price-cost, if we could. So you shared that price was up 1.5% in Q1. What are you anticipating for the full year on price? And would that be dollar-for-dollar covering the cost pressures that you anticipate at this point?

Yes. Hi, Jeff. I'll take that. So I mean I would just start by saying we've got a good track record in terms of realizing price, especially in these inflationary periods. And I think Q1 -- and evident of that is a good start to the year with pricing strong at 1.5 points. We do anticipate sequentially, as we move into Q2, that inflation will increase. If you recall, we've got a locking strategy that gives us a bit of a lead time in terms of when that inflation kind of rolls in. So we are anticipating inflation to uptick sequentially here from Q1 to Q2, sort of in that $10 million magnitude. But at the same time, we would expect pricing to increase as well as our productivity initiatives. So for the full year, we expect to manage sort of that price-cost and cost defined by that material side of the equation to run sort of neutral to positive. And I think the last point I would just leave you with is, overall, even with these temporary costs coming in as well as the more inflationary environment, we continue to expect modest gross expansion to the year. And I think that really is more of a testament of the volume that we're seeing, surely helped from a productivity standpoint, but also the cost structure work that we did last year along with the execution on price and operational equations -- and operational execution. So price, cost is something that we're going to continue [Technical difficulty] during the year, Jeff.

And on the channel side, the behavior you saw in Enclosures, is there any indication that, that's unfolding in EFS on kind of preordering? And just how would you describe kind of the level of channel inventories relative to what it looks like it's unfolding on the demand side?

Yes. So we did -- in March, we started to see some improvements across the channel also in EFS, so Enclosures first being strong, but then EFS. And I think a couple of dynamics there, the recovery is starting a little bit earlier. I also think that some of the distributors were trying to take a position, because they're seeing that some other components or suppliers are at allocation or not. So they think they're trying to ensure that they've got stock. But I think it's still going to continue to improve. I wouldn't say that they have fully restocked. I think it's improving as they see global demand. So I think there's still some runway there in terms of the channel globally.

Great, thanks. I'll pass it on.

Thank you.

Your next question comes from the line of Nigel Coe with Wolfe. Please proceed with your question.

Thanks. Good morning, everyone.

Good morning.

So good details on Thermal. I'm just -- obviously, still -- MRO still remains under the water. But wondering maybe if you could just talk about what you're seeing, in a bit more detail, on the moving pieces going forward on Thermal? And specifically with MRO, I mean, obviously, we're running into much easier comps now. So I presume we get back to growth in 2Q. But would you expect sequential growth 1Q to 2Q in thermal? Thanks.

Yes. On the MRO, that was a -- significant impact was in 2020, and we saw that improving every quarter, including into this first quarter. We would expect a return to growth across all of Thermal in Q2. But it's an area where I would say we have seen activity and quoting, and we're seeing some of those projects and some of those -- that spend getting released. So I think we're going to see it continue to improve throughout 2021.

Great. And this quarter, comps, we've seen much stronger commercial constructional trends pretty much across the globe, but particularly in North America. And you've got some pluses and some minuses here across the portfolio. But just generally speaking, what do you see in commercial construction? And again, expectations for this year would be improving growth? I mean are you more confident now in that end market?

Yes. I would say that we are. At our Investor Day, we talked about commercial being down slightly. And I think we see it improving. So it could be flat to maybe a slight positive. One thing that I think we're watching very carefully, as what I've heard through our distribution channel, is that there are supply constraints, not in our products, but products even just lumber. And so that may change the timing of when some of these commercial projects get executed. So we feel that we're in a good position. We feel that we're -- have launched new products, in particular, from our EFS business that is allowing to -- us to convert customers and contractors. And I think it's going to be -- commercial will definitely be healthier. Just some timing based on some of the other supply chain constraints is what we're just being cautious about.

Thanks for that. I leave it at that.

Thank you.

Your next question comes from the line of Jeff Hammond with KeyBanc. Please proceed with your question.

Hi. Good morning, everyone.

Good morning.

Just on the revenue guide, is it fair to say that the increase is just largely Enclosures and you're leaving the other unchanged? And if not, where are you kind of up in it -- in the other two segments? And then just give us what you're putting in there for Vynckier from a contribution standpoint within the guide?

Yes. So let me just kind of walk the top line first. That increase in guidance, so all in, was at 4% to 8%, and now it's 8% to 11%. And it includes almost a point for Vynckier, another point for currency, and again, that's going to predominantly show up here in the first half, and then roughly two points of organic growth. And that really reflects the stronger start to the year that's mostly industrial, mostly Enclosures. But I would also say we're also seeing some strength on the infrastructure side, which would benefit EFS as well. And I think from -- and then from an EPS perspective, look, Vynckier is probably on the smaller bolt-on size for us. We see it having a more meaningful contribution next year from an EPS perspective, as really we focus on integrating that acquisition this year, but believe that it really sets us up nicely in terms of additional presence there in the infrastructure space.

Okay. And then back on price-cost, I mean the incrementals in the price and productivity versus cost in Vynckier 1Q was pretty exceptional. Just when do you think -- which quarter is kind of most challenging for you? And where, if any, are you seeing any pushback on price?

So I'll take the first question first, and then Beth can maybe comment upon the price comment. I would say, from an incremental perspective, clearly, Q1, we feel great about kind of the execution and being able to deliver incrementals of 56%. We do expect that to ease in Q2. The biggest factor there is just going to be the temporary cost. If you remember, a lot of our temporary cost actions sort of peaked, if you will, in Q2 and Q3 of last year in concert where the pandemic was at its peak in terms of impact to our business. So as the temporary cost headwinds kind of fold in here in Q2 and Q3 and as some of our temporary costs begin to fold in as well as it relates to T&E and some of our more discretionary spend and also the corporate costs, we'll expect that to more show up here in Q3. So from an incremental standpoint, for Q2, we still feel like those incrementals are going to look pretty good just because of the contribution from the overall volume and probably expect Q3 to be our most challenged just because of the lack of those temporary costs as well as some of the temporary costs coming in this year. And I don't know if...

Yes. And I would say this, again, recall that the majority of our products are sold through distribution and the distributors completely understand the inflationary environment that we're in. Now we have some -- we have to give them due notification so that they're able to then adjust their pricing and pass it along. But that process, I think, we've got down very well. And a smaller portion of our business may go direct. And usually, we have some material clauses in there that we're able to adjust some pricing. So I would say we're not seeing any pushback. It's more just timing of how we manage, especially when we see rising inflation quickly. It's just the timing and our ability to manage that.

Okay. Excellent. Thanks so much.

Thank you.

Your next question comes from the line of Deane Dray with RBC Capital Markets. Please proceed with your question.

Thank you. Good morning, everyone.

Good morning.

Hi. Like to circle back on Enclosures for the quarter. And Beth, you in your prepared remarks said there may have been some pull-in. Is there any way you can quantify that? And just kind of indications, is it just the inventory in the channel that gave you that insight that there might have been some pull-in? But any color or quantification there would be helpful.

Yes. Deane, it's hard to quantify that exactly, because we've got multiple factors going on. When I -- first, one I said pull-in, I referred to that because our initial view was that we were going to see return to growth in Q2, and that happened in Q1. So as far as our planning and phasing was -- that happened earlier. And so what we had thought would be restocking in Q2 seemed to happen in Q1. The second point I would make is because we are hearing about significant supply chain challenges in other parts of the electrical world, we're actually responding really well and have been managing demand. So we think that there are distributors that are taking a position to ensure that they have access, given that they've got constraints in other areas. And the third, I would just say with this inflationary environment, we usually see this behavior. The distributors sometimes want to stock in advance of some of that inflation. So it's that -- it's the compounding of all those factors is why we actually think we saw some strength in Q1 that we anticipated more in Q2.

All right. That's really helpful. And I appreciate that additional color. And then in terms of the guidance boost for the year, I see you're leaving free cash flow unchanged, even though you've got higher earnings. And yes, it's 100% free cash flow or better. But just how you're thinking about the drop-through reading into free cash flow for the year?

Yes. So Deane, we would expect those free cash flow dollars, right, to [Technical difficulty] along with the better net income performance. And so while the percentage of net income we still see at or above, right, the dollars would increase in concert with that. I think Q1 is a good indication there, just a great start. I mean you see the positive impact by way of just the stronger performance and that flowing through to free cash flow. And we're really pleased with some of the early reads of our working capital initiatives, some of that being even carried over from last year activity.

Good. And just last question. And Sara, you were one of the first in the sector that we heard using the term feathering back in temporary costs. And so you've given good visibility in terms of how these come back into the P&L. You did say that there's some additional temporary costs that are like starting to come back sooner. Could you frame for us what those are and the timing and the impact?

Yes. So we talked about temporary costs last year being roughly $30 million. And a lot of that really was in the -- and again, concentrated in Q2, Q3. Roughly one-third of that was T&E. Roughly one-third of that was just salary reductions. And then one-third of that was more discretionary spend. And I think what you're seeing is that T&E, that will begin to drop in, I think, in Q2, but more from a Q3 perspective. And I think what we're seeing is as the volume continues to recover, we're going to invest in the business and return in some of those more discretionary costs. So it's a matter of some of these strategic investments that is investing kind of in the here and now as well as in that future growth. I think the other piece, maybe just to keep in mind too, Deane, is just the higher compensation accruals that would come with a stronger performance.

Of course. That's great. Great color there. Thanks.

Your next question comes from the line of Julian Mitchell with Barclays. Please proceed with your question.

Hi. Good morning. Maybe I just wanted to circle back to the margin guide. So I think the margins in the first half at the operating level are guided to be up maybe 150 bps or so. It looks like the full year is not up very much. So the second half margins implied, I think, are down year-on-year. Just confirm whether that's correct? And if so, I understood the temporary cost aspect, but obviously, your organic growth should also be stronger, I guess, in the second half versus Q1. So is there anything else kind of in the moving parts that are weighing on those second half margins year-on-year that we haven't yet discussed?

No. I think they are really going to be the things that we've already highlighted. I mean I think I pointed to Q3 probably being our most difficult quarter just from an incremental standpoint already. And then just as you look at that back half, you are going to have more of a -- we're anticipating more of that inflationary environment, coupled with these temporary costs and not necessarily -- still seeing strong growth, but not necessarily the year-over-year growth that we're seeing here in Q2 just because of ROS. I think there continues to be some moving pieces here, but what I'm confident in is we continue to run the scenario, continue to take actions quickly and execute well. So we're going to continue to manage all these levers to get to that ROS expansion for the year, despite some of the inflationary and temporary costs that we're seeing.

Understood. Thank you. And then on a segment basis, when we look at the margins being up for the full year, companywide, is there anything to call out on the segments where we should see a bigger increase or smaller increase perhaps relative to that firm wide average?

Yes. So consistent really with how we entered the year, we continue to see the largest ROS expansion in Enclosures as well as in Thermal. Enclosures really because of that industrial cart recovery that we're seeing. And really, the team is doing an excellent job managing the price-cost as well as productivity on the operational side. Thermal, part of this is just kind of bouncing off the lows that we had, and again, seeing the benefit from the cost structure that the team executed in last year as well as anticipating some recovery in the back half with MRO. EFS, a little bit more flattish, in part because they had a great ROS performance last year, and they continue to manage that price-cost equation very well as well. So really Enclosures, we'd expect the most ROS expansion and then Thermal and a bit more muted on the EFS side.

Great. Thank you.

Your next question comes from the line of Joe Ritchie with Goldman Sachs. Please proceed with your question.

Thank you. Good morning, everybody.

Good morning.

Good morning.

Hi, guys. When you think about the 2Q guide, the organic 14% to 17% and you think through the different segments, maybe provide a little bit of color on what your expectation is on a sub segment level? And also, if there's any color to provide from April trends at this point, that would be helpful as well.

Okay. And just from a top line perspective for Q2, obviously, we're expecting strong double-digit growth at an nVent level. And really, that flows through to each one of the segments. We would expect Enclosures to be leading the pack, if you will. I mean part of this, again, is due to an easier comp, but it really is more indicative of that industrial recovery that we're seeing. And I think the order rate in Q1 helps point to that. But we'd expect to see strong Electrical & Fastening and Thermal Management growth as well. Maybe the other comment I would make, Thermal, we do expect a more gradual recovery here. And so we see that kind of playing out here in the first half. From an April perspective, it becomes a little less helpful from a year-over-year perspective, because April last year was probably one of our lowest months in terms of sales per day. But what I will tell you is that it does continue to point to that underlying recovery. If we look at it just on a per day basis for nVent, it might not be at those -- at the March levels, because we do think that, that benefited from some of the restocking and prebuys, but it's ahead of January and February. And it's particularly that way, right, in Enclosures. So again, as we look at it from a per day basis, it puts us well on track to the Q2 guidance.

That's helpful. And I guess my follow-on question, just sticking with maybe Thermal for a second. You've seen Brent oil now sitting there at the high 60s. And you're not the only company that hasn't really experienced a recovery yet on oil and gas spending. I guess maybe just some color on what your customers are saying? Do you think that the second half of the year is going to be much better? A commentary around that would be helpful.

We do think that we're going to see a continued gradual recovery. And we based it on the discussions that we've had with our customers, but also the activity that we have on quoting opportunities. And so it seems like kind of, as we planned it, that is just going to improve over the course of the year. And remember, we were at lows last year. So that's the expectation. We're going to see that gradually recover.

Thank you.

[Operator Instructions] Your next question comes from the line of David Silver with CL King. Please proceed with your question.

Yes. Hi. Good morning. Thank you very much.

Good morning.

Yes. Hi. My first question would just be to kind of get your -- I'm going to just touch on maybe some costs or logistics issues that may challenge you to meet your guidance. So firstly, I was just wondering, beyond steel, I was just wondering if you might highlight what are your other principle raw materials or purchased inputs. And in particular, beyond cost, but I mean, is there anything that might be a customized or processed product that just might have a naturally limited number of suppliers? And then along those lines, freight has been an issue. I'm more thinking about availability of freight, maybe airborne freight going overseas. I mean is there, from your perspective, any risk to the availability there that you need? And maybe just the last point, are you sensitive at all or dependent at all in any meaningful way to the semiconductor type of shortages that have been prevailing in autos and maybe a couple of other niches within the industrial sector? Thank you.

Okay. Well, the majority of our products use steel, copper, nickel, right? There are some resins and some electronics in what we do. But we feel we've got very good positions when it comes to our sources of metal. And over the last several years, even before we were a public company, we always had really good supply relationships there. And I would say some of the other secondary suppliers, we've done a lot to ensure we've got regional supply chains. That in some cases, we've got dual sources. So as we sit here today, I think we've managed that and planned for that very well. And as we've talked with -- as I've said, we've talked with our distribution partners, and they've said many other electrical suppliers are in allocation. That is not the case for us, and we are responding and, I think, driving some conversions as a result. When it comes to your comment around what's going on with semiconductors and electronics, again, I'll say, for us, we've been able to manage that. It's not as big of a spend item for us. But obviously, we do have controls and we do have some electronics in some of our products. But I think that we've managed that very well. Our bigger concern is what happens if something else in the supply chain is a disruptor. So you might be able to get the Enclosures and the fastening solutions. But if there's another product, maybe it's wire and cable or maybe that it may slow things up, for instance, in terms of just some capital projects or could slow things down in terms of some construction. We even hear lumber is -- so I think we're well positioned to convert. And I think we're managing our supply chain really well. And that's the feedback that we get from our distributors. But I think this is the cautiousness that we have in just terms of the rate or pace of recovery, given these other disruptions. And then I think your other comment was around logistics and freight. And I would say, yes, earlier in the year, like many other companies, we had issues in just terms of containers. But I believe we've been able to work through all that, and our product availability remains very high. And so it's not without a lot of work, because our teams are working really hard to do that. But I'm very pleased with how we've been able to respond to the demand that we're seeing and confident that we're going to be able to continue to respond as demand improves.

Thank you for that. And I'll apologize in advance, this next question might be a little wordy. But I was hoping that you could provide some perspective from your perch. What parts of the company are you thinking might -- this is a 2019 versus 2020 question? So which parts of the company, as you look out in 2021 and beyond, are going to maybe revert back to a pre-pandemic kind of strategy or operation kind of method? And which parts of the company operations and which functions may take the lessons from the pandemic year environment and continue them on into the future? On the last point, one thing I would say was you talked about the success with the virtual new product demonstrations. My sense is that's something that's probably going to persist long into the future and might even be enhanced. But I'm thinking in a rising price environment, managing customer relationships, restoring a certain amount of business travel. I mean I think some things you're going to keep from how you've been operating during the pandemic and some things, I think, to hit your growth targets, you're going to have to open up or revert back to pre-pandemic operations. So I was just wondering if you might call out one or two highlights in each area where you think significant change to get back to pre-pandemic versus things that you're doing in the pandemic era that will persist.

All right. Well, to talk a lot about emerging stronger and looking forward and going forward, and by that, I think we've become digitally agile. And so as we think about what we needed to do this year in terms of -- we have embraced the agile methodology to how we drove all our digital programs. That's now extending into how we launch our new products. It allows us to reduce our cycle time, get velocity. And I would say, as we go forward, all of that digital capability that we've built to launch new products, to move with velocity, to market digitally, to have our information available to and do training digitally, that is not going away. Now I would see us, in some cases, having to supplement, because we will get customers or channel partners who will ask for face-to-face meetings and that there will be times when that's very important. But I think the level of that will be reduced, because we found we can be more effective operating in a very digital way. And I think the way forward is really to have a flexible working environment. We think that is a competitive advantage for our company. We think that it's important. We found that we can be even more productive. We had more new products and more digital launches operating in this way. So I really don't see us kind of going back. I see us going forward. And I think it's the digital approach and agile approach to everything that we do that we're just going to continue to build momentum on.

Okay. Great. And then I had just one last one for Sara. But in the first quarter, you spent $20 million on buybacks. And I believe your comment was that it was targeted to offset the share creep or share dilution. And I'm just wondering if you could maybe -- and I'm sorry if I missed this. But is that $20 million spend in the first quarter sufficient to offset a full year of share creep? Or might there be $20 million per quarter this year to offset the creep or something in between? Just capital deployment to offset share creep would be helpful. Thank you.

Yes. I mean I think it puts us in a pretty good spot, right? So we exited Q4 with a diluted share count of roughly 169 million shares. And with what we did in Q4, along with what we've done here in Q1, we sit at an exit rate for Q1 in that 169 million shares. So it's something that we're going to continue to monitor, right? From a dilution perspective, we'd expect us to continue to offset any dilution. But again, I think what we did in Q4 and what we did in Q2 here puts us in a good spot.

Thank you Very much.

Thank you. Operator Your next question comes from the line of Justin Bergner with G Research. Please proceed with your question.

Good morning, Beth. Good morning, Sarah. Nice starts the year.

Thank you.

I have just a couple of questions around sort of price-cost and volume. I guess on the 200 basis point increase in your organic sales guide, how would you break that out between incremental price and incremental volume? Or maybe just how much is price within your full year organic revenue guide now?

Yes. So in terms of that incremental guide, you could probably think about a point of that being volume and a point of that being price. I think from a full year guide on price, I think that's going to be somewhat dependent upon, again, how inflation unfolds, because it's still relatively fluid, and we're going to continue to monitor and act upon that, right, as we see that inflationary pressure. But again, I think Q1 gives you a good indication of kind of the start, and that's not even getting fully realized, if you will, in terms of the pricing actions that we took here in Q1. So we would expect pricing overall for the year to be over two points. And again, some segments are going to be higher than that just based on some of the inflationary pressures that they're seeing.

Okay. That makes sense. I mean I'm impressed with your ability to forecast positive price-cost. And I guess some of your competitors are not forecasting positive price-cost. And maybe this is hard to answer, but I guess [Technical difficulty] on a FIFO inventory accounting system and not all your competitors are. And I was just wondering, is any of that positive price-cost, in your opinion, are sort of aided by this FIFO inventory accounting? Or what do you think you're doing better than your competitors to put you in that positive camp versus the slight negative camp that some of them are in?

Well, let me respond to just -- we always think that price is -- both it offsets inflation, but it's also a matter of value. We teach our salespeople to sell on value. And so one of the things I commented on is when we launch new products, particularly in our EFS business, we look at how do we take out labor, right, which is value. And so therefore, we launch new products with stronger margins or higher price points as a result of that value creation. So I think that's one of the things that we do very well as a company is think about value. And so therefore, that gets reflected in how we manage price. And I'll let Sara talk about the FIFO comment.

Yes. I mean I think what that does is it just gives you some time period, right, some visibility in order to make the right pricing actions. But I think for us, it comes back into the value creation, as Beth just talked about, and just capability. I mean we have good capability here in regards to pricing and the analytics. I also think it comes down to just a testament to our brand strength, our channel strength, our customer service. We're servicing the increased demand well right now. So I think all of that combined puts us in a good spot here. It's not without a lot of hard work to manage the pricing side of the equation along with productivity. But again, I think we've got a good track record here, and we're going to continue to manage it going forward.

Okay. Then maybe just to wrap up that line of questioning on a more positive note, you mentioned that some of the distributor suppliers are on allocation. Do you see this environment as giving you incremental outgrowth opportunities, because some of your competitive -- competitors are constrained in terms of what they can bring to market and you're less constrained?

We do believe there is that opportunity, because we're able to supply that -- when I talk about conversions at distributors or conversions at contractors. That is one of those factors that allow -- because we can respond.

Okay. Thank you.

All right. Well, thank you, and thank you for joining us today. We are pleased with our first quarter performance and believe we are executing at a high level. Our outlook has improved, and we're continuing to invest and focus on growth, which remains a top priority. Investments in people, R&D, digital, manufacturing capability and social responsibility are critical for our long-term success. We believe we can make nVent a top-tier high-performance electrical company. We hope you remain safe, and look forward to speaking to you again. Thanks for joining us. This concludes the call.

This concludes this conference call. Thank you for your participation. You may now disconnect.