Good day and thank you for standing by. Welcome to the nVent Q2 Earnings Conference Call. This time, all participants are in a listen only mode. After the speakers' presentation, there will be a question and answer session. Please be advised that today's conference call is being recorded.
I would now like to hand the conference over to your speaker today, J. C. Weigelt. Thank you. Please go ahead.
Thank you, Stephanie, and welcome, everyone, to nVent's second quarter twenty twenty one earnings call. I'm J. C. Weigelt, Vice President of Investor Relations. And on the call are Beth Wozniak, our Chief Executive Officer and Sarah Zawitsky, our Chief Financial Officer.
Today, we will provide details on our second quarter performance and provide an outlook for the third quarter as well as an update to our full year 2021 outlook. 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 InMed'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 can be found in the Investors section of nMEN'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. And now I will turn the call over to Das.
Thank you, JC, and good morning, everyone. It's great to be with you today to share our strong second quarter performance. I first want to thank our nVent team. Our people remain key to our success, focused on driving performance for our customers. Our teams are working tirelessly to meet strong global demand.
I'm especially proud of our execution. We've done a tremendous job responding to increasing customer demand by ensuring strong product availability. This has allowed us to acquire new customers and grow our sales. Turning to Slide three, titled Executive Summary. First, the safety and well-being of our employees remains our top priority, and we continue to learn, adapt and respond to this changing environment.
We're executing well and seeing broad based global growth driving our sales and earnings well ahead of guidance. We completed two acquisitions during the quarter, executing on our capital allocation strategy to invest in growth. The first was Zynquier, which expands our Enclosures portfolio more broadly into infrastructure. The second, CIS Global strengthens our global position in data centers and networking solutions with advanced capabilities and technologies and power management. These acquisitions are aligned with the megatrend of the electrification of everything, are expected to be accretive this year and generate attractive returns.
We are again in full year guidance given our strong second quarter results, the positive impact from acquisitions and an improved outlook supported by strong order growth. Orders grew 38% in the second quarter, outpacing sales, and we exited the quarter with record backlog. Our new adjusted EPS guidance represents a 9% increase from the midpoint of our previous guidance, which is a zero one six dollars improvement. I am confident in our ability to execute on this improved outlook. On Slide four, sales during the quarter were $6.00 $1,000,000 up 34% year over year and about $60,000,000 ahead of the second quarter nineteen.
Return on sales was 18.3, up 300 basis points with incrementals of 27%, reflecting our strong execution. We generated $85,000,000 in free cash flow, and our adjusted EPS of $0.50 was up 72% from the prior period. Both sales and adjusted EPS were well ahead of the guidance we provided in April. Our growth initiatives are delivering results with a focus on high growth verticals, new products and digital, all supported by the electrification of everything. In addition, our ability to manage our supply chain has resulted in high product availability, which has allowed us to respond to strong customer demand.
Overall, growth was broad based across key verticals and geographies. Industrial growth accelerated, up approximately 35%. Commercial and residential had strong growth across all three segments. Infrastructure also grew double digits, and we expect this to accelerate in the back half driven by strong orders as well as our acquisitions. Energy continues to recover and saw nice growth this quarter.
Geographically, we saw broad based global growth with strong double digit growth in Europe and North America. We are pleased with the progress we are making to grow our European distribution network, building upon the success we have had in North America. Our strategic distribution accounts grew more than 35% globally as we continue to position nVent as a strong strategic partner. On new products, we launched 14 this quarter, spanning all segments, and we remain on track to launch more than 50 new products this year. New product introductions contributed over one point of growth in the quarter.
The most significant launch was our new nVent Raychem HTV heating cable. This cable offers superior levels of high power retention during a design life of more than three decades and meets stringent demands for maximum process integrity while protecting people, processes and infrastructure. Our execution is playing a critical role with customer conversions as we continue to have better product availability. We believe better than many in the industry. I have been impressed by what a great job our teams are doing to keep up with demand for our high runner standard products with minimal impact to our stated lead times.
We believe this is a contributor to our strong orders growth. Overall, I'm pleased with our performance as we are building momentum and emerging stronger. I will now turn the call over to Sarah for some detail on our second quarter results and our updated outlook for 2021. Sarah, please go ahead. Thank you, Beth.
I am pleased to share with you another quarter of great performance with sales and adjusted EPS exceeding our expectations and strong free cash flows. Let's turn to Slide five to review second quarter performance. Sales of $6.00 $1,000,000 were up 34% relative to last year or 29% organically. Volume was a big contributor to this growth, adding 23 points, while price added almost six points. Price played a significant role in offsetting inflation during the quarter.
Given our strong volume and price realization, we were able to expand margins 300 basis points year over year to 18.3%. Adjusted EPS of $0.50 increased 72% and was above our guidance range of $0.36 to $0.40 Free cash flow of $85,000,000 was 11% above prior year, even with working capital investments that come with growth. Turning to our segment performance on Slide six. I am pleased to report that all segments were above 2019 sales levels and expanded margins in the quarter. Enclosures had sales of $300,000,000 an increase of 30% organically.
This growth was broad based with a significant acceleration in the industrial vertical. Eldon continues to be a standout, helping drive global growth with our expanded IEC portfolio. Orders were particularly strong in this segment. Enclosures segment income increased 90% with return on sales expanding 500 basis points to 17.9%. Price and productivity more than offset inflation during the quarter with strong contribution from higher sales volume.
Within Electrical and Fastening, sales of $169,000,000 increased 24% organically, demonstrating the continued strength and resiliency of this portfolio. Its largest vertical, Commercial, was up approximately 30% in the quarter. Both Power Utilities and Data Centers and Networking Solutions contributed strong double digit growth. Global sales continued to perform well across all regions, especially Europe. Electrical and Fasting segment income was up 41%, and return on sales of 28.9% was up two sixty basis points relative to last year.
Price added seven points to growth and helped to offset higher year over year inflation. Thermal Management grew 30% organically with sales of $132,000,000 driven mainly by commercial and residential and industrial projects. Notably, industrial MRO returned to growth in the quarter and continued to trend positively. Thermal Management segment income was up 73% and return on sales expanded three ninety basis points driven by higher sales volume, and we are starting to see a positive mix impact with return of Industrial MRO. On Slide seven, you'll see we ended the quarter with a cash balance of $102,000,000 On our revolver, we drew $200,000,000 to fund the CIS Global acquisition, leaving $400,000,000 available.
I continue to be pleased with the progress we are making on our working capital goals. Slide eight gives an update on our capital allocation. We ended the second quarter with a net debt to adjusted EBITDA ratio at 2.3x, in line with our target range of two to 2.5x. We continue to execute on our capital allocation strategy and prioritizing growth. We believe the two acquisitions completed in the quarter can generate solid returns as have Eldon and WBT, both of which are trending well above nVent growth rates this year and tracking nicely above 10% returns in year two.
Over the past eight quarters, we have added over $200,000,000 of annualized revenue via acquisitions centered around the electrification of everything, and we are excited about scaling these businesses and generating strong returns. We believe our strong balance sheet and cash generation puts us in a good position to continue to invest in growth and execute on our M and A strategy. You'll see our 2021 outlook on Slide nine. We are raising full year guidance for the following reasons: first is our terrific second quarter performance Second, our order book and backlog give us confidence in our continued growth. Orders outpaced sales in the quarter, up 38%.
Third, we believe our strong operational performance and ability to serve increased demand is a competitive advantage in this environment. And last, this updated guidance reflects the added benefit of acquisitions, which is approximately two points in sales for the full year. Our updated guidance also includes higher inflation, along with increasing costs and investments related to the surge in demand and stronger recovery. As a reminder, we took a number of temporary cost actions last year totaling roughly $30,000,000 and we expect these to feather back in at a higher rate in the second half of twenty twenty one versus first half. Additionally, our guidance takes into account some of the supply chain inefficiencies that come with rapid growth.
And lastly, we are making additional investments in our workforce, digital and supply chain capacity, all of which we believe will help future growth. Let me take a moment to discuss inflation and specifically how we are managing price cost. We are expecting another meaningful uptick in inflation in the back half, including raw materials, labor and logistics. Specifically, we are modeling approximately $40,000,000 of inflation in both the third and fourth quarters, which compares to roughly $30,000,000 in the second quarter. We expect pricing to largely offset inflation with an updated outlook of over five points of price this year.
We managed through these headwinds in the second quarter and believe our pricing actions, strong volume and operational execution can help deliver solid margins in the second half of the year. All in, our margins in the second half are expected to be slightly less than the first half margins of roughly 18%. To summarize our full year outlook, we now expect sales growth of 15% to 18%. Organically, this translates into sales growth of 10% to 13% versus our prior guidance of 5% to 8%. We are raising and tightening our adjusted EPS guidance, which is now expected to be in the range of $1.84 to $1.9 versus our prior guide of $1.67 to 1.75 This new guidance reflects 25% earnings growth versus 2020 at the midpoint.
From a segment perspective, we expect a stronger recovery in the industrial vertical to benefit our Enclosures segment the most. Strength in industrial and infrastructure are expected to drive sales in our Electrical and Fasting segment with continued growth in commercial. For Thermal Management, industrial MRO continues to improve and should be a bigger contributor in the back half of the year, along with continued strength in commercial and residential. On free cash flow, we are one hundred and 20 six million dollars for the first half of the year, which is $50,000,000 ahead of last year. We anticipate another year of strong cash flow with cash conversion of adjusted net income at or above 100%.
This translates to roughly $315,000,000 in free cash flow, a 9% increase versus our previous outlook. And lastly, we expect corporate costs to increase relative to our previous guidance by approximately $5,000,000 mainly due to higher compensation accruals related to our strong results. This updated guidance reflects double digit sales, earnings and cash flow growth in all above 2019 levels. Looking at our third quarter outlook on Slide 10, we expect reported sales to increase 16% to 20% and organic sales to be up 10% to 13%. This represents a continuation of the broad based growth we saw in the second quarter as well as strong orders and backlog.
We expect acquisitions to add approximately four points to sales growth, and we expect adjusted EPS in the third quarter to be between $0.45 and $0.48 Wrapping up, I am pleased with our performance at the halfway point, and we are well positioned for a strong year. We are executing at a high level, demonstrating the strength of our team and our portfolio and deploying capital to growth with great returns. It is certainly an exciting time at nVent. Now I will turn the call back over to Beth. Thank you, Sarah.
Turning to Slide 11. I would like to cover two topics before turning to Q and A. First is our recent acquisition of CIS Global, which helps us accelerate our strategy in data centers and networking solutions, now totaling more than $200,000,000 across our portfolio. CIS Global extends our protection capabilities, where we can now offer smart power management along with our high performance cooling solutions, enclosures and cable management.
CIS Global
is a leading provider of mission critical power distribution units and server rack slides that have been growing double digits with attractive margins. Their 2020 sales were approximately $80,000,000 and this expecting double digit growth. With CIS Global, we can now provide our customers a greater breadth of solutions with an extended global reach. This is a highly scalable business and opens up a new $2,000,000,000 opportunity for us. The second topic is social responsibility.
Slide 12 shows highlights from our recently published 2020 Social Responsibility Report. Our social responsibility efforts are centered on three areas: people, products and planet. And for the first time, this report details our goals around these pillars. I'm very proud of the progress that we have made to date. Let me spend a moment on people.
Last year, during the pandemic, our employee engagement scores improved across nVent, indicating we are listening and acting upon our employee feedback. Employee resource groups, or ERGs, are a key focus area at nVent and continue to expand. These ERGs are critical in connecting employees globally and helping to support our efforts on sustainability, recruitment, and inclusion and diversity. On that topic, I'm very proud that 60% of our Board of Directors are diverse along with half of our executive team. Our focus on people and our culture are differentiators and are helping us to attract and retain talent.
At nVent, our commitment to social responsibility and continuous improvement guides us towards a more sustainable future. I am proud of our accomplishments and the steps we've taken to strengthen this commitment. And I'm excited about the future we're creating and our role in social responsibility. Wrapping up on Slide 13. We continue to see broad based growth across verticals and geographies.
As we look at our portfolio, we are excited by the tremendous growth opportunities around the electrification of everything. With our mission to connect and protect and the need for resiliency in electrical infrastructure, our solutions are critical and are in high demand. We are executing well on our strategy. New products are adding about a point of growth as we focus on higher performance solutions, labor efficiency and global capabilities. Our digital efforts are improving the customer experience as well as making us more productive.
Our M and A strategy is adding high quality assets and strengthening our long term growth profile. In summary, our future is bright. Our outlook for the year has improved, and we are executing at a high level, driving growth and strong results. With that, I will now turn the call over to the operator to start Q and A.
Your first question comes from the line of Julian Mitchell. Hi, good morning.
Good morning.
Morning. Just wanted to follow-up on the second half guidance. So it looks like the fourth quarter may be a slightly lower sort of sales and earnings perhaps sequentially than Q3, but not very different. Just wondered if you could talk any major moving parts between third quarter and fourth quarter as you see it today, whether it's in terms of price versus cost or the temporary costs coming back or on a segment level, you know, anything that you sort of highlight as as moving around very differently between the third and fourth quarters?
Yeah. I mean, let me maybe start by framing it just in terms of the second half. So from a second half perspective, you know, we do expect, you know, to see those q two, you know, strength in sales continue in the back half. You know, more from an earnings and from a cost perspective, we do expect a couple different things, you know, to be impacting those margins. One, those temporary costs are feathering back in.
And so as we would have expected, q three is actually more one of our most difficult just from a year over year Ross perspective as well as incrementals. And we would expect those temporary costs to continue to accelerate really into Q4. And that's where we expect to be at the most robust levels, those folding back in around T and E, around some of those discretionary costs and professional fees, etcetera. So that would be one thing I would point out. From an inflation price perspective, we did talk about this a little bit in our prepared remarks.
We are expecting an uptick from an inflationary perspective, just shy of $40,000,000 there in Q3, and we expect that to be just above that $40,000,000 there in Q4. So we are, seeing some compression from an overall Ross perspective. But from a sales perspective, would say we continue to expect that strength in Q2 for us to see that in Q3 and Q4. We do have some seasonality that comes into play. Thermal, it tends be our strongest overall.
And then, EFS tends to step down, from a q three to q four perspective, as well as enclosures. So some of that is gonna be just a bit more of seasonality.
Thanks very much. And then, as you look sort of into early next year, as things stand today in terms of your pricing actions and where, input and labor and logistics costs are sitting, is there a major sort of net headwind as you see it today in early next year? Or do you think a lot of these headwinds sort of balance out, entering 2022?
Well, I would start by saying, we've done a good job of managing that price cost equation. You saw that in the first half. And even as we've talked about that inflation, essentially ticking up here in the back half across commodities, wages and freight. We are expecting that pricing to largely offset that. As we roll into next year, we would expect that inflation to essentially carry over in large part into Q1 and Q2 of a year ago.
But to be sure, our teams are continuing to look at that price cost equation, not just as we kind of end the year, but as we go into next year as well.
Great. Thank you.
Your next question is from Jeff Hammond.
Hey, good morning.
Good morning. Good morning.
Maybe, Sherry, you could give us the temp costs that came back in 2Q and then what it steps up to in 3Q and 4Q?
Yes. So we've talked about the temporary costs being roughly $30,000,000 A lot of that, from a comparison perspective, showed up in Q2 and Q3 of a year ago. Just that's where kind of the height of the impact of the pandemic was, and we began to see that really feather in as early as Q4 of a year ago with some of those furloughs and salary reductions being essentially halted, if you will. When you think about those temporary cost actions, roughly onethree of it is related to T and E, A third of it is more discretionary, professional fees, etcetera, sort of investing in in in the growth. I mean, as those sales are covered and and a third of those are those, furloughs and salary reductions.
So when you think about it, we we saw a little bit of that in the context of q two, but most of the temporary costs, in terms of feathering back in are really gonna be in q three and accelerating into q four.
Okay.
Yes, I guess I'm not terribly surprised by the cyclical recovery in Enclosures and Thermal. I know EFS was much more resilient last year. Maybe just speak to what's driving the strength there and maybe speak specifically to commercial vertical in terms of the momentum that you're seeing on a commercial construction recovery?
Yes. And you're right in saying that EFS was our strongest performing segment in 2019. And so we continue to see that strength. And remember, it's not just a portfolio based on commercial. The Electrical Solutions side of that business is really focused on infrastructure, power utilities, etcetera.
So we've seen that be very strong, the infrastructure segment. But commercial, especially as we started to see some of the restocking and distribution, and then we've just seen commercial projects. And that can be everything from warehouse and institutional and etcetera. And with our product availability, I wanted to make a comment on that. We've done a really good job making sure that for our core products that our lead times have been minimally impacted.
So I think as we go forward, we expect to see that continued strength in, commercial for, across our entire portfolio, but also that electrical infrastructure driving some of the other growth that we're seeing in EFS.
And then just last
Yes. I was just going say one more point there. As we talked a lot about new products, I would say that we continue to do a good job innovating with new products in the EFS segment, which always allow us to drive contractor conversions.
Okay, great. And then just, on the supply chain friction and challenges, I mean, great job this quarter. Is there anything in particular that's getting particularly worse as you go into the second half or or conversely, you know, starting to get better?
I wouldn't say there's anything that's getting particularly worse. I think we've done a really good job, and we started in q four last year just looking at, you know, how we were positioned with inventory. And I'd say over the last several years, you know, we've done a lot of work to regionalize our supply chains and our capacity. So I think we've done very well in terms of just ensuring that we've got raws available. You know, as we go forward, I think, you know, we're gonna see continued challenges with labor, but, you know, we've been manage managing that with a temporary workforce and overtime.
And I I think it's really much of the same, but I I believe that we're managing that very well. And again, I just speak to how we've managed standard product lead times that have been, minimally impacted and our ability to service that demand. So I think it's much to say that we're going to see as we go in the back half of the year.
Okay. Thanks so much.
Thank you.
Thank you. Your next question comes from the line of Joe Ritchie.
Thanks. Good morning, everyone.
Good morning. Hey,
Beth, maybe just starting off on that point around product availability. That's something that came up a few times in your prepared remarks. And I remember when EFS struggled a few years ago with with with ensuring that you guys had enough products to meet demand. I guess, can you just maybe talk a little bit about some of steps that you that you're making and you're taking there? And then also, like, whether you think it's leading to market share gains at this point?
Yes. I mean, here's what we've done. One, it starts with just ensuring that you've got resiliency in your supply chain. And so for us, it was looking at how do we regionalize supply chains, how do we invest in capacity in our factories with equipment, with digital, how do we make sure we've got a good, trained skilled labor force. And we've done all of those things with this view of, as we're planning our supply chain for our core products, we want to meet these standard lead times and ensuring we've built a supply chain to do that.
And I would say that's one of the key things that we've done in EFS, but it's also something that we've done in closures. And we've talked to you before about our digital efforts and looking at products with Hoffman on Demand and how we configure products from standard products. So we've been driving and managing demand that way. And I think that's paid off for us, right, in the strength of the orders that we're seeing. And we do know as we talk channel partners and our big strategic distributors that they have said that relative to other suppliers, we really have done a good job in being within a day or so of meeting lead times, right, where others have been impacted by weeks, it's not been on allocation.
So I absolutely think it is a driver for us in terms of our overall orders and, you know, enhanced sales growth and converting customers.
No. That's that's that's great to hear. And I guess maybe just my follow on. You know, obviously, you guys you guys closed on those two acquisitions, recently. We got a large acquisition announced across our coverage yesterday.
And I'm just curious, you're kind of thinking about M and A going forward, maybe just tell us a little bit about the pipeline right now. Are there are like are there some sizable things in the pipeline that you're looking at? Just any color around that would be helpful.
Yes. Our M and A pipeline has been very robust. And we always characterize it that we're just over a $2,000,000,000 company in a $60,000,000,000 space, which is largely fragmented. And so we see that there are plenty And the two deals that we did this year, I think, are characterized that.
And I would say this, Sarah made a comment about how well Eldon and WBT have performed for us. And one of the things that I'm very proud of is our integration process. We've developed a really robust playbook that allows us to not just focus on operational synergies, but really the growth component because that's really the strategy behind why we're doing these deals to help us grow globally or to help us grow in a high growth vertical. And because of that integration success, I think we will look at larger sized deals if they make sense for us and are strategic because we have the confidence in our ability to execute. So I would say that our portfolio does have some larger deals as well as in the size that we've also done recently.
Okay, great. Thank you.
Your next question comes from the line of Deane Dray.
Thank you. Good morning, everyone.
Good morning. Good morning.
Hey, maybe we could start with Thermal. Just very encouraging to see the upside coming through there. And as you look across the businesses in Thermal, is this a turning point? Because we've been waiting for this industrial MRO to start to kick in. That looks like it's coming through.
Any comments on the energy side as well? Thanks.
Yes. Absolutely. I think it's a turning point for us. And we started the year with really good growth in well, I'm going to say really great growth in commercial and residential, and that has continued. And then we started to see industrial MRO recover, which is, the point that we made.
So I believe that is a turning point for us. And, we started to see margins expand as well, and that's a portion of that mix as we see industrial MRO come back because it's very strong from a margin standpoint. And and I think, you know, just the other areas of our strategy that been that we've been working on with new products, with digital, all of those things are contributing. And so we have confidence as we go forward that that portfolio is has turned the corner there and on a good path with growth and margin expansion.
That's really good to hear. And any comments on how July played out, either in total or within comments on specific businesses?
Yes. Maybe I'll take that, Dean, and just talk a bit about orders. I mean it starts with just a great order growth even in the context of Q2, up 38%, with Enclosures really with standout performance showing that strength in Industrial. Also, just to get colored in a little bit by geography, from a geographic standpoint, we really saw broad based growth across each one of the regions. Enclosures showed particular strength in Q2 in the context of North America.
We talked about with Electrical and Fasting showing particular strength in Europe. And Thermal Management, again, growth all around, but showing particular strength in APAC. So I would say broad based growth across the segments as well as across the geographies. In July, specifically, we continue to see double digit order growth, really giving us the confidence in our Q3 overall sales trends and really strength across each one of the segments with, again, that particular strength in Enclosures continuing with the Industrial side.
That's good to hear. Just last one, if I could. And could you expand on the labor situation? We had a company report this morning who said their issue is not on actual materials or components, but it's labor. And you said that you had, I'm not surprised about overtime, but the use of temporary workers.
Just what's the labor situation? How does this play out over the next couple of quarters?
Yeah. The labor has been a challenge without a doubt. Now there's several things that we've done in terms of just looking at hourly increases, looking at some, bonuses where that made sense, as well as looking at, how we drive better programs for onboarding our hourly workforce or showing the career path for temporary workers to become a permanent employee, etcetera. So we've done a lot at looking at both availability, retention. And, so, you know, we've as a result of those actions, we've seen some better progress in terms of attracting and retaining some of our talent.
But I do think that, you know, this is a challenge that every company is facing. And and so we're, we've got several, you know, key programs we're working. I think we're managing right now in terms of our workforce, ensuring that we're keeping them safe, number one, and then really flexing our workforce and overtime to ensure that we're responding to the the high level of demand.
That's great color. Thank you.
Thank you. Your next question comes from Nigel Cole.
Federico Marendi on for Nigel. My first question is on the price. And how how does the 6% price compare to prior prior inflationary cycles? And and do you see any pocket of lagging price? Or and where do you have a stronger pricing power?
And for the second half, you you mentioned that the received the inflation. Where do you see where do you assume pricing to to be in the second half?
Let me start first by saying, we always target around a point of price every year, just kind of our focus. And in highly inflationary periods, and we had one not too long ago, we'll see that even greater than two points of price. So this is really, as we discussed even in the quarter, the price realization that we've had, I think, just indicative of such a highly inflationary environment. And I'll let Sarah add some more color on just kinda how we think about inflation as we go forward. Yeah.
So a couple of things there. I mean, one, in I think the question was around just, you know, how does it compare in terms of prior inflationary environment. I think I I I do believe we're seeing unprecedented inflation as we sit here today. So we have been in an inflationary environment where we've executed multiple price increases and then above that one to two points of price increase that we would target per year just depending on where inflation sits. But I think we're at unprecedented levels.
Now with that being said, I also think the team has done a tremendous job across all three of our segments, really managing that price cost equation, and executing on multiple price increases. And so as we look for the full year and really with an eye towards, that inflationary pressure increasing here in the back half, we do expect full year price to add roughly over five points for the full year. And I think that's largely indicative too of just the overall strength of our portfolio, the value proposition and much of our products do go through channel as well that also helps.
Thank you. And if I can ask a second one, I would ask about the M and A and how do you see M and A contribution in the second half of the year from CIS and Binkier?
Yes. So earlier in our Q1 call, we had talked about BinkyA adding roughly a point to sales and seeing that contributing more to EPS, really in the context of next year. CIS Global, our more recent acquisition, we believe that to add roughly four points to our back half sales growth, and seeing that adding roughly $02 to $03 of EPS. That was incorporated in our updated overall EPS guidance, which we raised $0.16 really at the midpoint.
You very much.
Alright. And with that, I wanna thank you for joining us today. We are emerging stronger and continue to execute on our strategy to make nVent a top tier high performance electrical company. We hope you remain safe and look forward to speaking to you again. This concludes the call.
Thank you.
Thank you. This concludes today's conference call. You may now disconnect.