NVT Q2 2025: Backlog Quadruples, Data Center Surge Drives 24%+ Full-Year Growth Outlook

August 1, 2025 | By EarningsIQ Research

Invent’s portfolio transformation and data center exposure delivered a record quarter, with a fourfold increase in backlog signaling durable demand visibility into 2026 and beyond. Acquisitions and organic initiatives in infrastructure, especially data center and power utility verticals, are now the main growth engines, offsetting softness in legacy segments. Management’s raised outlook and continued capacity investments point to a structural growth inflection, with margin discipline and capital allocation under close watch as tariff and input cost volatility persists.

Summary

• Backlog Visibility Extends Through 2026: Order book quadrupled, underpinned by data center and utility demand.
• Acquisitions Accelerate Infrastructure Shift: Trachte and EPG integration outperformed, fueling high-growth vertical exposure.
• Margin Management Remains Central: Pricing and productivity actions offset tariff headwinds as reinvestment ramps up.

Performance Analysis

Invent’s Q2 results showcased a decisive pivot to high-growth infrastructure verticals, with reported sales up sharply and organic growth led by data center and power utility demand. The infrastructure vertical now comprises over 40% of total sales, up from the smallest vertical at spin, reflecting both organic and acquisition-driven expansion. Trachte and EPG, recent acquisitions focused on engineered building solutions and electrical products, contributed strongly, with both businesses delivering double-digit sales growth and robust backlogs.

Margin performance remained resilient despite over $35 million in inflationary pressure, including $15 million in tariffs. Return on sales held above 20%, though both segment margins declined year-over-year due to inflation, acquisition mix, and stepped-up growth investments, especially in data solutions. Free cash flow was healthy, supporting ongoing capacity expansion and shareholder returns. Commercial residential and industrial segments were mixed, with commercial resi up mid-single digits and industrial down slightly, reinforcing the company’s strategic emphasis on infrastructure-led growth.

• Infrastructure Dominates Growth: Data center and power utility sales drove over 20% organic growth in the segment, now each ~20% of total sales.
• Acquisition Synergy Realization: Trachte and EPG added 21 points to total sales growth, with integration ahead of plan and new cross-selling opportunities emerging.
• Tariff and Cost Headwinds Mitigated: Price and productivity actions largely offset inflation, allowing for margin stability amid volatile input costs.

Geographically, Americas and Europe led growth, with Asia Pacific contributing at a lower rate. The company’s raised full-year guidance reflects higher organic and acquisition-driven growth, tempered by continued investment and tariff-related cost vigilance.

Executive Commentary

Strategic Positioning

1. Infrastructure Vertical Transformation

Invent’s portfolio overhaul is now bearing fruit, with infrastructure—especially data centers and power utilities—becoming the company’s largest and fastest-growing vertical. This strategic pivot, accelerated by the divestiture of thermal management and targeted acquisitions, positions Invent to capitalize on secular trends in electrification, digitalization, and sustainability. Management expects infrastructure to represent over 40% of sales in 2025, with data centers and power utilities each comprising about 20%.

2. Data Center and Liquid Cooling Expansion

The AI-driven data center build-out is a powerful growth engine, with Invent’s data solutions business seeing record orders and backlog. The company is investing heavily in liquid cooling solutions, which management notes are growing three times faster than legacy cooling. New product launches and partnerships with hyperscalers and chipmakers are expanding Invent’s footprint in both “white space” (IT equipment) and “gray space” (power/cooling infrastructure) within data centers. Modular and outdoor enclosure trends are creating additional pull-through for core product lines.

3. Acquisition Integration and Growth Synergies

Trachte and EPG integration has outperformed initial expectations, delivering both immediate sales growth and longer-term backlog visibility. The acquisitions extend Invent’s reach in engineered building solutions and utility infrastructure, while also enabling cross-selling into data center opportunities. Management highlighted rapid identification of new growth avenues and disciplined execution of its integration playbook, with ongoing capacity and operational investments to support sustained demand.

4. Margin and Cost Discipline Amid Volatility

Margin management remains a core focus, as inflation and tariffs continue to pressure input costs. The company’s ability to pass through price increases and drive productivity gains is critical to maintaining profitability, especially given stepped-up investment in growth initiatives. Management expects price and productivity to fully offset tariff impacts in the back half, with incremental margins improving as volume and mix shift toward higher-value solutions.

5. Capital Allocation and Growth Investment

Invent’s capital allocation remains growth-first, with increased CapEx directed at expanding data solutions and acquisition-related capacity. The company returned over $319 million to shareholders in the first half, but maintains a disciplined approach to leverage and dealmaking. Management emphasized a robust M&A pipeline, but signaled that future deals will remain focused on high-growth, complementary product areas within infrastructure and electrification.

Key Considerations

This quarter’s results mark a structural inflection in Invent’s business model, with infrastructure and data center demand now providing multi-year growth visibility. However, execution risk and margin discipline remain central as the company ramps investment and navigates input cost volatility.

Key Considerations:

• Durable Demand Visibility: Backlog now extends into 2026 and beyond, de-risking near-term revenue and supporting continued investment.
• Acquisition Execution: Successful integration of Trachte and EPG is unlocking new verticals and cross-selling opportunities, but ongoing synergy capture and cost control will be essential.
• Tariff and Inflation Exposure: Pricing power and productivity gains are offsetting cost headwinds for now, but sustained volatility could pressure margins if demand softens.
• Capacity and Supply Chain Scaling: Rapidly expanding production and supply chain resilience are required to meet order growth, with CapEx and OpEx rising accordingly.
• Balanced Portfolio and Channel Strategy: Growth is concentrated in infrastructure, but legacy segments (industrial, commercial resi) remain mixed, underscoring the need for continued portfolio agility and channel execution.

Risks

Tariff escalation and input cost inflation remain persistent risks, potentially challenging Invent’s ability to sustain margin expansion. While backlog provides revenue visibility, execution risk around capacity scaling, acquisition integration, and product innovation is elevated as the company pivots to more complex, higher-value solutions. Any slowdown in data center or utility investment, or a reversal in electrification trends, could pressure the growth narrative.

Forward Outlook

For Q3 2025, Invent guided to:

• Reported sales growth of 27% to 29%, with acquisitions contributing ~15 points
• Organic sales growth of 11% to 13%
• Adjusted EPS of $0.86 to $0.88, up 38% at midpoint YoY

For full-year 2025, management raised guidance:

• Reported sales growth of 24% to 26%
• Organic sales growth of 8% to 10% (previously 5% to 7%)
• Adjusted EPS range of $3.22 to $3.30, up 29% to 33%
• Free cash flow conversion of 90% to 95%

Management cited accelerating data center and utility demand, ongoing price/cost discipline, and continued investment in capacity as central to the updated outlook.

• Capacity expansion will continue into 2026 and beyond
• Tariff impacts expected to be offset by pricing and productivity actions

Takeaways

Invent’s transformation is yielding clear results, with infrastructure and data center demand now the primary growth levers and backlog providing durable visibility. Margin management, acquisition integration, and capacity scaling will determine the sustainability of this inflection as the company faces persistent cost and competitive pressures.

• Infrastructure-Led Growth: The company’s pivot to electrification and data center verticals is now the engine of both top-line and margin expansion, with long-cycle backlog supporting multi-year planning.
• Disciplined Capital Deployment: Ongoing investment in organic capacity and M&A is balanced with healthy shareholder returns and a robust pipeline of future opportunities.
• Execution Watchpoints: Investors should monitor ongoing margin discipline, integration of recent and future acquisitions, and the timing of backlog conversion as capacity ramps to meet accelerating demand.

Conclusion

Invent’s record quarter and raised outlook confirm a successful transformation into a growth-centric infrastructure leader, but the coming quarters will test its ability to execute on capacity, integration, and margin management as demand surges and cost pressures persist.

Industry Read-Through

Invent’s results reinforce the secular strength of electrification and data center infrastructure investment, with AI and cloud build-outs driving multi-year demand for power, cooling, and modular solutions. Competitors and adjacent suppliers should expect continued order strength and backlog growth in these verticals, but also face rising input cost and tariff volatility. The shift toward modular, integrated, and service-driven offerings is accelerating, requiring operational agility and supply chain resilience across the sector. Margin management and pricing power will be critical differentiators as the cycle matures and competitive intensity rises.

NVT Industrials Electrical Equipment Infrastructure Data centers Acquisitions Electrification Tariffs