Pentair becomes two on Monday with the spinoff of nVent Electric PLC
A year ago, Beth Wozniak was only four months into her new job as the head of Pentairs $2.1 billion electrical division when the CEO suggested they talk.
Pentairs board had just decided to spin off her electrical division into a separate, public company in an effort to maximize growth opportunities for shareholders. What did she think? If all went well, the Pentair Electric division she ran would become a stand-alone company called nVent Electric PLC.
I was caught off guard. But I have always aspired to be a CEO at some point in my career. Im excited, said Wozniak, a longtime Honeywell executive who joined Pentair in 2015.
On Monday, Pentair will execute the spinoff. On Tuesday, nVent will start trading on the New York Stock Exchange under the ticker symbol NVT.
Pentair will continue as a water filtration and pumps company. NVent run from a new U.S. headquarters in St. Louis Park but like Pentair officially headquartered in England will be grounded in electrical capabilities from protecting servers and machinery to connecting cables and sealing out moisture and corrosives from outdoor and factory electrical boxes.
The spinoff was actually the second bold decision Pentair made last year. The first was selling off the volatile energy-related valves and controls business it bought from Tyco in 2012.
After the divestiture, Pentair CEO Randy Hogan said the company had $5 billion in revenue and two businesses that were largely unrelated, with separate management teams and lean manufacturing structures. And there is no common [sales] channel and no common customers between the two, said Hogan, who will retire as CEO Monday and become chairman of nVent. Strategically, there was no reason to keep them together.
Whats left, he said, are two profitable and sizable companies. Executives learned last week that nVent will be big enough to grace a spot on the top 50 list of mid-cap companies.
This is the second Pentair reinvention that Hogan has shepherded. The first one was highly successful. The company exited from power tools and dove into water equipment technologies and later valves and controls, growing its revenue from $2 billion in 2000 to $7 billion by 2017. During the same period, Pentairs market capitalization increased sixfold as the stock attracted more investors and shot from $14 a share to $65.
When Pentair and nVent officially split Monday, Pentair will become a company with annual revenue of $2.8 billion. NVent begins its journey with $2.1 billion in sales and 9,000 employees, 1,600 of them in Minnesota.
The tax-free spinoff will give each Pentair shareholder one share of nVent stock for every share of Pentair owned.
NVent has three core products: electrical and equipment enclosures; thermal management systems; and fasteners used in construction.
With this full suite of products, we have tremendous opportunity to grow both organically and through acquisitions, said Wozniak, who spent years as the president of Honeywells Environmental and Combustion Controls unit and its Sensing and Controls unit before joining Pentair.
Were going to be a fast-paced, dynamic-growth company focused on the customer and moving with velocity, Wozniak told Wall Street analysts days ago, when she hosted her first earnings call as the head of nVent.
For now, several financial analysts who follow Pentair for major investment houses will also follow nVent, and they were full of questions during an investment day earlier this year and the recent earnings call.
NVent is in some very lucrative markets with businesses carrying healthy margins, said UBS Investment Bank analyst Steve Winoker during Pentairs investor day. But Winoker also questioned whether nVent will invest enough money into research and development to drive growth long term.
Josh Pokrzywinski, an equity analyst with Wolfe Research, also wanted more details on how nVent will focus its growth strategy. There are a lot of different elements that you guys can pursue here and a lot of megatrends that youre tapping into, he told Wozniak and nVent Chief Financial Officer Stacy McMahan. I wasnt clear on how you guys think about growth.
Only time will tell. Wozniak said the budding company just increased its sales and marketing staff and is working on getting customers to understand the breadth of offerings.
During the past 12 months, Wozniak and her team have been busy. They had to invent the nVent brand, spark-like logo, establish credit, a board of directors, and find a new corporate headquarters for the 200 Pentair head office employees who are making the jump to nVent.
Last week, contractors, electricians and furniture movers scurried to prepare the sixth and seventh floors of 1665 Utica Av. in St. Louis Park. The new headquarters sits about eight blocks from Pentairs U.S. headquarters in Golden Valley.
A few days ago, Wozniak dodged boxes, half-built desks, delivery carts and window washers to admire workstations in the making and the bright stretch of windows overlooking Hwy. 100 and Interstate 394.
I think our employees are going to be blown away when they see this, Wozniak said.
The expansive employee break room sports booths with TVs, polished concrete floors, a long, white marble bar complete with coffee station and a cloud of funky lights dangling like copper anemone.
In her short time at Pentair, Wozniak has already had a chance to prove herself.
Pentair acquired Tycos thermal management and valves and controls business in 2012, which largely catered to oil and gas companies. In 2014, the oil and gas downturn hit, shoving Pentair into crisis control.
When Wozniak joined Pentair in 2015, she took charge of one troubled water unit, which helped Hogan and Pentair CFO John Stauch who will replace Hogan as Pentair CEO focus on the tough valves business.
She stabilized the execution and customer service, which was needed and built quickly a higher accountability among the folks and a higher execution, Hogan said. That impressed me.
So when it came time to pick a new head for Pentairs electrical division, the choice was obvious, he said.
Now that nVent will be its own company, I am really excited about where [Wozniak] can take it, Hogan said. I think Beth brings an enormous set of skills and experience to this. She is a great leader.
As for his own future, Hogan admits to some uncertainty. Admittedly, [retirement] will be a little terrifying. I will have a little bit of time on my hands, he said, laughing. But I promised Beth that I would not use that time to annoy her.
Dee DePass 612-673-7725