Sara Zawoyski
Thank you, Beth. To begin, I am honoured for the opportunity to lead the systems protection segment, and I'm thrilled to have Gary part of the team. We have been working closely together to ensure a smooth transition.
Now turning to the business performance, we are off to a great start to the year with double-digit growth in both sales and adjusted earnings, along with robust free cash flow.
Let's begin on slide five with our first quarter results. Sales of $809 million were up 11% relative to last year. Organically, sales grew 2%, driven by volume on top of six points of volume growth last year.
Acquisitions added $71 million to sales or 10 points to growth. Foreign exchange was roughly a 1-point headwind.
First quarter segment income was $162 million up 4%. As expected, return on sales was down in the quarter at rough [indiscernible]. Inflation was approximately $25 million. Productivity partially offset inflation, and we also continue to make investments for growth, particularly in data solutions. Q1 adjusted EPS was $0.67, up 10% at the high end of our guidance range.
We generated robust free cash flow of $44 million up 32% compared to a year ago. Now please turn to slide six for a discussion of our first quarter segment performance. Starting with systems protection, sales of $508 million increased 16%, driven by the Tracy acquisition. Trachte has performed extremely well with sales up double digits versus a year ago and a strong backlog.
Organically sales were flat on top of 11% growth a year ago. Infrastructure grew mid-teens with continued strength and data solutions. This was offset by declines in both industrial and commercial resi. Geographically, Americans declined low single digits while Europe was flat, and Asia Pacific grew double digits.
First quarter segment income was $104 million up 10%. Return on sales of 20.5% decreased 110 basis points year by year, impacted by inflation and growth investments. Moving to electrical connections, sales of $301 million increased 3%. Organic sales were up 4%, reflecting strong volume.
Infrastructure and industrial each grew double digits in the quarter while commercial resi would download single digits. Geographically, organic sales were up mid-single digits in the Americas, while Europe and Asia Pacific declined.
Segment income was $85 million flat year to year. Return on sales was 28.3%, down 90 basis points, mainly due to higher inflation.
And that wraps with the quarter, and I will now hand it over to Gary.
Gary Corona
Thanks, Sara. I really appreciate the warm welcome from you and Beth. I'm excited to be part of Invent. I've been impressed with the strength of the broader team.
The disciplined, capital allocation, and focus on execution. The culture of the company. Focused on innovation, growth, and performance is a powerful combination. I look forward to getting to meet many of you in the investment community in the coming months.
Turning to the balance sheet and cash flow on slide seven. We ended the quarter with over $1.3 billion of cash on hand, including the proceeds from the thermal management divestiture.
We also had $600 million available on our revolver. In addition, we repaid $390 million of term loans in the first quarter. Reducing our overall debt. Pre-cash flow was robust in the quarter, growing 32% year over year.
We believe our healthy balance sheet and strong liquidity position support our disciplined capital allocation strategy. Turning to slide eight, where we outline our capital allocation priorities.
We continue to prioritize growth. And execute a balanced and disciplined approach to capital allocation to deliver great returns. We are investing in the business via R&D and CapEx for growth and supply chain resiliency.
In addition, we returned significant capital to shareholders already this year. We repurchased approximately $250 million in shares here to date. Exceeding our plan. Resulting in a lower share count.
And we believe at a great value. As previously announced, our quarterly dividend increased 5%. We have additional capacity for capital deployment with our first priority being to invest in growth.
Moving to slide nine. As Jeff, as Beth shared earlier, we are raising our full year reported sales and adjusted EPS guidance. We now forecast reported sales growth of 19% to 21%. For organic sales growth, we now expect to grow 5% to 7% versus our prior guidance of 4% to 6%.
Mainly reflecting visibility and strength and data solutions and power utilities. We expect acquisitions to now contribute 14 points to sales, up from 5 points previously, reflecting the Ava EPG acquisition.
We now expect foreign exchange to be approximately flat. We are raising our full year adjusted EPS range to $3.03 to $3.13 up 22% to 26% versus our original guidance of $298 to %308.
This new guidance assumes tariff impacts of approximately $120 million based on what we know today. We expect to offset the impact with price, productivity, and supply chain mitigating actions.
It also includes approximately $0.05 for the Avail EPG acquisition. A few modelling assumptions to note.
First, full year net interest expense is now expected to be approximately $75 million reflecting the cash deployed to M&A, share repurchases, and debt pay down year-to-date.
Second, we anticipate share count to be approximately $165 million. Lastly, we are raising our CapEx forecast to approximately $100 million. The increase is for additional data solutions capacity, supply chain resiliency.
And he expected CapEx for the Avail EPG acquisition. Looking at our second quarter outlook on slide 10. We forecast reported sales to grow 22% to 24%, with acquisitions contributing approximately 18 points to sales. Organic sales growth is expected to be up 4% to 6%.
The Additional price increases coupled with productivity are not expected to fully upset the tariff impacts in Q2. We anticipate price plus productivity to more than offset the impacts as we get to the back half of the year.
We expect adjusted EBITDA to be $0.77 to $0.79 in the second quarter, which at the midpoint reflects 16% growth relative to last year. Wrapping up, we are pleased with our first quarter performance. We delivered strong sales and earnings growth and are well positioned for another great year.
I will now turn the call back over to Beth.
Beth Wozniak
Thank you, Gary. On slide 11, you can see the actions we have taken in our portfolio transformation.
The divestiture of the thermal management business and the two most recent acquisitions Trachte and Avail's Electrical Products Group have reshaped our portfolio to increase our presence in the electrical infrastructure vertical.
We believe these actions have positioned us as a more focused, higher growth connection and protection company. In addition, we have grown our data solutions business to over $600 million in sales.
The infrastructure vertical, which was our smallest vertical it's been, is now the largest. We believe it is the highest growth vertical with the trends of electrification, sustainability, and digitalization.
This year, the infrastructure vertical is expected to be over 40% of our sales with data solutions and power utilities, each approximately 20% of sales.
Our portfolio is now a balance between short cycle and long cycle with a growing backlog. As a result, we believe we are better positioned for growth and value creation.
Turning to slide 12.
Yesterday we closed on our acquisition of the Avail Electrical Products Group, a leading provider of control buildings, switch gear, and bus systems. This acquisition builds on our control buildings platform acquired with the track the acquisition and expands our offerings and capabilities in new applications.
The addition of the electrical products group further strengthens our solutions and high growth verticals with approximately 85% of its sales in power utilities, data centres, and renewables. This business has been growing sales strong double digits with a robust backlog, giving us visibility into 2026.
Overall, the demand for electrical infrastructure products is increasing with the need to expand the overall grid, the move to more renewable energy, and the increase in data centres. Recently, NEA, the National Electrical Manufacturers Association, released an independent grid study showing electricity demand is forecasted to grow by 50% by 2050.
This study shows the electrification trend is upon us and electrical solutions and innovation will be required to meet the increasing demand.
Demand. It is an exciting time for the electrical industry, and intent is well positioned to be a part of this energy transition.
Please turn to slide 13 title 2024 sustainability report. At event, we are building a more sustainable and electrified world.
Last month, we published our latest sustainability report that outlines our commitment to sustainability and the meaningful progress we are making.
Our focus is on people, products, planet, and governance. A few highlights from the report. In 2024, we achieved above the global benchmark for employee satisfaction.
On products, 85% of our new product introduction funnel has a positive sustainability impact.
On planet, we've reduced our normalized CO2 emissions by 47% since 2019.
Lastly, we were recognized as one of the world's most ethical companies by Ethisphere for the second consecutive year.
Our sustainability efforts are key to our strategy and how we operate. I'm very proud of everything we've accomplished and the journey we are on.
Wrapping up on slide 14, we are off to a strong start to the year with double digit growth in orders, sales, adjusted EPS, and free cash flow. Our portfolio transformation is on track, and we expect another year of strong growth and value creation.
And we believe we're well positioned with the electrification, sustainability, and digitalization trends. Our future is bright. With that, I will now turn the call over to the operator to start a Q&A.
Operator
(Operator Instructions) Dean Gray, RBC Capital Markets.
Deane Dray
Thank you. Good morning, everyone. Happy Friday.
Thanks. So first, welcome to Gary. It was great to meet you in New York a couple of weeks ago and then best of luck to Sarah. I'm not going to say it's a new role because it's not. You've been wearing the two hats. So, but now it's a dedicated role and so best of luck there. So look, I know there'll be lots of questions about tariffs.
It looked very much in line with what we were expecting, but I'd rather put the spotlight first on the data solutions business and if you could give us further caller, Sara, before you write off the pace of orders.
Any pushouts, just kind of like the tone of demand there and then you said double digit growth, but how's that square with America's being flat in for the segment. Thanks.
Sara Zawoyski
Yeah, I would just start, Dean, by thank you, and, excited to take on this new role and work with a fantastic team in systems protection. So I would just frame it up this way, we exited 2024 with roughly $600 million sales and we expect this to grow strong double digits this year, with a strengthening back half, that was alluded to in the prepared remarks, and we continue to see overall orders, strong.
Every year in the quarter, backlog through double digits sequentially, and that's providing some very good visibility as we head into the back half. I would also point out that this is broad-based growth, not just in liquid cooling solutions, but also in power distribution units, cable management as well, and I would say characterize it as seeing an acceleration, an increased demand for our solutions, from our customers. Maybe a couple more quick highlights. We expected another strong year in new products, launches.
I think the team is making some very good progress there, building on our strengths of performance, reliability, serviceability, and that's both across liquid cooling and power distribution units, so stay tuned there. I think the other thing we're seeing is that we're beginning to see the growth really extend from hyper scalars, into, the multi-tenants and enterprise space and also growth outside of the US.
So you saw a little bit of that in that geographical commentary. Well, I would say largely excited about what we're seeing, but also, suggest that that growth is still largely in front of us because it's early in that investment cycle. And of course, we continue to make investments this year really focusing on R&D and building out our lab capabilities.
Deane Dray
That's a great recap there. And just as a follow up, can you talk about the latest deals Avail and Trackee, just the contribution. Are there any synergies between those businesses? And did I hear Gary correctly? Avail's contribution, $0.05 in [ '25 ]?
Beth Wozniak
Yes, you did. I, so I'll start recall when we acquired Tracy, we said this is a new platform for us. It's a different type of enclosure if you like, with more enclosures in it. But we saw that there were opportunities both on the cost energy side because we buy a lot of steel, but our ability to transform to lean manufacturing and to drive integration, and we saw the opportunity for these types of buildings are growing not just for utilities and the grid build out, but even for data centres. So, with Avail, it is now building on that plat.
And giving us further integration capabilities from switch gear and from bus systems, etc. So we believe that it's going to be very synergistic building a more scaled platform here and maybe I'll just have Sarah talk about some of the early things that we're seeing with tracking in terms of our winds because I think it's a very exciting space for us.
Sara Zawoyski
Yeah, thanks, but. I mean, it may be just another commentary on that end market. The other thing we're seeing is a trend of data centres really freeing up that computing space, moving that IT equipment, IT gear backup power into control building. So, we're seeing a nice kind of white space application as well in addition to the power utilities. So maybe a couple things on track because I think it helps frame up, how we're thinking about ail EPG.
A quick reminder, while we don't put sales synergies in our deal models, it is a top area of focus for us by way of value creation. And for Trachte we're already seeing opportunity here specifically in data centres where we're able to provide control building solutions to our customers, in addition some exciting things happening in the battery energy storage system space as well.
And then as it relates to cost energies, we had talked about a five year or a $5 million run rate cost energy and sort of that 23 year time frame, and I would suggest here that we're well on track. Sourcing team has done an excellent job here executing on the procurement savings, really ahead of plan with a focus. On the metals, for example, and another, quick area of focus here for us has been lean, and I'm really proud of the team. I was just, visiting one of our plants here last week from Trachte, and a quick data point there since July when we acquired Trachte, and as of today, that team has more than doubled.
The output of buildings per month in a particular value stream, and this is driving capacity, productivity, ultimately better, customer experience. So it's just giving you a flavour for the sales synergies and cost synergies that we would look to apply as we welcome, the available EPG team members, here with our day one celebrations yesterday.
Gary Corona
And Dean, just to jump in on financial impact, as best said, we love the growth. It's been growing double digits and it'll contribute 9 of the 14 points of incremental acquisition growth, EPG will be accreted in the first year, it drops an additional $0.05 to our EPS, and that's net of the interest of benefit coming out.
As Sara mentioned, strong cost synergies, and we also expect a nice cash tax benefit of approximately $15 million a year, and, from a margin perspective, it, it's a bit lower, but like Tracy, we expect it to improve over time.
Deane Dray
Great, thank you.
Operator
Julian Mitchell, Barclays.
Julian Mitchell
Hi, good morning, and I'll echo the congratulations to Sara and welcome Gary to this call. Maybe just my first question would be around the organic sales outlook. So, I think you're guiding the first half organic sales, up, sort of low single digits year on year.
The second half implied is up, high single digits, year on year. So just sort of in the context of this macro backdrop, kind of help us understand, confidence in that second half acceleration. I see the orders the last six months very good.
I'm not sure how much lead time there is from those into your 2H revenue though, and maybe any clarification around what drives the acceleration in terms of price step up or a specific end market or segment Or segments.
Beth Wozniak
Well, let me start on this. So, as we look forward, so yes, we had strong orders growth, and we also talked about our backlog building. As we look at data solutions and power utilities in particular, here's where we see that growth accelerating. And I would make a comment, Troy, which is performing very well, we closed on that deal last July, so that turns into organic growth starting, the back half, into August. So the growth that we're seeing in those particular that infrastructure is strong, our backlog is strong, our orders are strong, and then of course from a reported standpoint, it's the addition of.
Sara Zawoyski
EDG.
Gary Corona
And I would just add in addition to the confidence that we have in the in the orders backlog and underlying growth, the comps as you look at it were much stronger last year in the first half versus the second half. We were up mid-single digits last year in the first half and flattish in the second half.
Julian Mitchell
That's helpful, thank you. And then my second question just around the operating margins. So, I think those were about 20% in the first quarter. It looks like the guide is embedding maybe 20% in Q2 and in the second half. So, I just wanted to double check if that math is roughly right and how we should think about the tariffs. Affecting the margins, in those quarters in the balance of the year.
Gary Corona
Sure, I'll take that, and I'll paint the picture for the year first and then I'll talk about Q2. On the base business, we are expecting first half margins to be down a bit on price/cost timing from tariffs and as well as the investments that we're putting into the business to support the second half of strong growth. On the base business, we expect margins to flip positive in the second half as pricing, and the other mitigating productivity and supply chain actions fully take hold, and we have a really strong growth contribution.
When we layer in a LEPG, we are expecting margin dilution, for both the Q2 and the year. Again, as we talked about, with a path on improving over time, we love the growth and it's delivering a creative top and bottom line to overall invent, but it will impact. Will impact our reported margins. On the Q2 front, we expect Q2 to be up modestly on a sequential basis, but it will be down versus a year ago, as I mentioned, primarily driven by. The timing of price costs with tariffs, but the most important thing we want you to take away is, the actions that we're taking will put us in place to grow our base margins in the second half.
Julian Mitchell
That's great. Thank you.
Operator
Brian Drab, William Blair.
Brian Drab
Hey, good morning. Thanks for taking my questions. First one, just on the tariff situation, if you see, if we see a reversal or, the trade war died down with China. what sort of impact could that have to the upside for your 2025 and your estimate of that $120 million in tariff headwind.
Beth Wozniak
It's really so uncertain to be able to make a comment on that, I think part of our offsets with the tariff, it's pricing, productivity, and supply chain actions. So, I would say this, we're managing our price as we see these additional.
Cost impacts. I think it takes longer for us in terms of any supply chain, reconfiguration that we do. So, I wouldn't, I'd like to say it, we're just neutral and that that has been our goal as we go forward is just to manage to offset the impact of tariffs through numerous actions.
Brian Drab
Okay. And then can you just put a finer point on the order growth, double digit order growth, but is that organic and which segment is contributing the most to that order growth? If you could just kind of peel that back a little bit, that would be great.
Beth Wozniak
Yeah, so as I said in my prepared remarks, organic orders were up mid-teens and strong double digits in data solutions with, the rest of the business growing mid-single digits, and I would characterize it this way, where we see infrastructure, which of course is data centres and power utilities and renewables, that's where we're seeing the strongest growth and that's also where we have that backlog.
Brian Drab
Okay, thanks very much.
Beth Wozniak
Thank you.
Operator
Joesph Ritchie, Goldman Sachs.
Joseph Ritchie
Hey guys, good morning. Good morning. So, Sara, thanks so much for all the help throughout the year. Wish you the best, in your, in your kind of new role, but, and then, and Gary, welcome on board. So, I guess just My first question is, if you think about just let's just start with the veil, it's kind of surprising to me that the contribution is only $0.05.
It just seems like the margins are a little bit lower. I'm calculating to let's just call it like roughly a 10% EBITDA margin, for the rest of the year. So help me just kind of understand what the, what's going on there, what the expectation is for that business.
Gary Corona
Yeah, Joe, I'll take that, I'll take that one and, please keep in mind that the nickel that we talked about the EPS is net of the interest that we assumed in our guide coming out, we're expecting on a gross basis the EPS impact to be much higher than that nickel in the margins that we're seeing. Are higher than what you suggested as well. So while the avail EBITDA margins are a bit lower, than the overall invent margins, we love the top and bottom line growth, and as Sarah talked about with Trachte, we've got a nice plan to improve them over time.
Joseph Ritchie
Okay, great, yeah, I can walk through kind of the math I guess offline, but then the following question is look at the guidance range, that you've now reset and increased, it it's interesting because it seems like a lot of that is being driven by, the extra point and volumes, but clearly with the tariffs, there's going to be some incremental pricing as well. And so I know you're not breaking out the pricing anymore, but like I'm just curious like if the $120 million that that kind of equates like roughly 4 points of 4 points on top line.
So are you expecting to offset most of it with price and if that's the case then ultimately if the tariffs are in place throughout the year, would we expect the organic growth number to go up commensurately?
Beth Wozniak
Well, here's the thing. There's, as we said in our remarks, there's a lot of uncertainty. And so, as we looked at, going forward, yes, we have the backlog and infrastructure is growing, we, and as we looked at our quarter and how we performed in industrial and commercial resi, we think there's just uncertain. Background there and so we believe there's a balance of yes, we'll likely get more price but maybe there is some volume impact as a result. And so that's how we thought of it going forward and I'll let Gary add some more color to that.
Gary Corona
Yeah, coming into the year, our guidance assumed really a primarily a volume driven year, and, based on the environment changing and the uncertainty as Beth said. We'll have more price and, that I think that syncs up with your comments, as I think about the pluses and minuses on the EPS, you, we mentioned the Ava EPG nickel, and we mentioned the strength in in data solutions and power utilities in the back half, in addition, we've got. We have fewer shares outstanding than our initial guide, it is worth mentioning, we talked about the softness and the prepared remarks in commercial resi, and, as Beth said, we're managing the tariffs with our playbook, which is pricing, supply chain productivity and some mitigating actions. So that's the construct, of the guide for the balance of the year.
Joseph Ritchie
Okay, helpful, guys. Thank you.
Operator
Jeffrey Sprague, Vertical Research.
Jeffrey Sprague
Hey thank you good morning, everyone. Good morning. Hey, just, coming back to sort of, the commercial resi, like all the stuff that implicitly, didn't grow or declined, right, in the Americas. I think the comment was that you did have the single digit growth in those, kind of recently sluggish markets. Can you just speak a little bit to, that side of the portfolio, what you're seeing from a demand standpoint.
Do you think inventories are now in the right place, kind of a set of questions around sort of the shorter cycle, elements of the portfolio.
Beth Wozniak
Yeah, I, as we came into this year, we said for, we expected industrial to grow, and we still do, and we said commercial resi would be low would be low single digits growth, and I just, updated that and said now we think that's flattish because we think this may have more of an impact coming from the tariffs in terms of just the demand side. But I would say this is we look a lot of our short cycle business goes through distribution. Our sellout is positive there. Sellin has been positive as well, so we think that inventories are, in alignment there, but we just, with the uncertainty, we just think commercial resi is going to be softer and some short cycle maybe a little bit softer.
Jeffrey Sprague
Understood. And then just back on tariffs, is this number you're sharing all China or we've got some other countries, we've got steel and aluminium, can you put a little bit finer point on this kind of the origination of the tariff number?
Beth Wozniak
Yeah, as we looked at this is everything that we know as of today, so of course, things may change, but the biggest impact, one of the biggest impacts for us is the 232 on steel and aluminium, and as we make a lot of enclosures and other products. Then China, and not, China, just the magnitude of that tariff as an impact, then we look at all other countries and the impact there, of course, we have a lot of things where we have coverage through USMCA.
Could change, but what we know today and then we also thought about some of the secondary or 3rd level tariffs through our supply base. So that that was how we constructed that number as best as we could determine it at this point in time.
Jeffrey Sprague
Yeah, okay, but steel and aluminium’s number one, not China, okay, and then, yeah, just maybe a little bit more color on what you are seeing on the power utility side, I think we've probably given us about all you want to say on data solutions. I appreciate that, but, I mean just how the portfolio is coming together there, kind of trajectory of orders in that business and, how you see the year playing out a little bit more specifically.
Beth Wozniak
Yeah, I think the exciting thing for us is where we are today now with the most recent acquisition. We believe power utilities is about 20% of our overall sales. So that's significant for us from where we started. And it's not just the roti and avail acquisition. I mean, certainly that gives a scale and what we like about those businesses is that on ail, it's grown at double digits.
It has a nice backlog into 2026. Similarly, we've shared with you the results on Tracy, which was very strong growth and backlog building. But within our electrical connections segment, we also have some of the products aimed at utility space as well and they have also been growing in that double digit range. So, we think overall just with that infrastructure build out that is going to be a strong growth driver just like data solutions has been for us. So, the two of them together really 40% of our portfolio now.
Jeffrey Sprague
Great, thank you. Good luck, Sara. I hope we'll still see you around. I'm sure we will.
Operator
Nicole DeBlase, Deutsche Bank.
Nicole DeBlase
Yeah, good morning, thanks, and congrats to both Sara and Gary. I guess maybe just starting with a follow up question on the comments you made, Gary, around margins for the business for the rest of the year. Does that commentary hold for both businesses and maybe that kind of dovetails with the question of, is the tariff and price/cost impact kind of spread relatively similarly across the businesses, or is there one versus the other that's more impacted?
Gary Corona
Yeah, Nicole, it's there's nothing unique to call out, both of the businesses are juggling, a pretty dynamic environment and, both of the businesses are deploying the playbook that I mentioned, we, from a growth perspective, we will see differential growth from system protection in the second half. And a lot of that best and Sarah talked about, the first half, I also mentioned impacting our margins in, with the investments that we're making in data solutions and that'll be an entire year but that first half investment really was to support the growth that we'll see in that business in the second half.
Nicole DeBlase
Okay perfect thank you and then just a clarification question on what you guys are doing from a pricing perspective is this via list price increases or surcharges or some combination of the two and have those price increases already been fully implemented and was that like an April 1, sort of date?
Beth Wozniak
Thanks. Yeah, well, as over 60% of our portfolio goes through distribution, and so, we typically will increase our prices there as long as we give them notification and, our playbook and as we've seen through other inflationary times is that often you're doing multiple price increases just as you're adjusting over the course of the year. So, we've done some. Price increases and we'll monitor the situation if there's more impact, we can certainly manage price effectively there and then we also ensure with some of our more direct business that we you know manage price with those customers on a project by project basis so we're actively managing pricing right now.
Nicole DeBlase
Thanks, Beth. I'll pass it on.
Operator
Nigel coe, Wolf Research.
Nigel Coe
Thanks. Good morning, everyone, and Sarah, congrats and Gary, look forward to seeing you soon.
So the, yeah, look, maybe a couple of follow ons here. So, I understand that the organic uplift is basically the price associated with the tariff measures volume unchanged, but if I put an extra point of price, I'm getting about $30 million extra price, versus $120 million of the tariff impact. So. I'd like to understand a little bit better the kind of the offsets against that $120million.
Beth Wozniak
Well, I just want to start by saying, it's not, we assumed that it shifts between price and volume, but really what we what we drove the uplift with was just stronger orders and backlog. That was the number one reason for updating our organic guidance.
Gary Corona
Yeah, and I just to clarify again, we came into the year with a very strong volume, plan, and as Beth mentioned, we have now more price into the market and our assumption is a bit less volume as we, as we've taken our organic guidance up a point.
Nigel Coe
Okay, so there's more than a point of price, but it doesn't seem like there's 4 points of price, to offset the $120million. So, I'm just curious, if you could maybe provide a bit more color there. But maybe moving on to the avail acquisition.
I have to agree with Joe. I'm getting more than $0.05 as well. So, I'm curious, on the assumption that we've got a like a high 10s EBITDA margin, which maybe clarify that. Are there any integration expenses or investment spending against that $0.05?
Gary Corona
Yeah, so just to reiterate, the nickel was a net impact to invent, which is, the profitability of the business coming in, but now our assumption that we'll no longer be gaining, the interest benefit, on the investment.
So it's a net number, mid-teens, mid-teens margins, and keep in mind we closed. Business yesterday and we're just getting under the hood, and we've got a good playbook from Tracy to improve margins, and we'll plan to do that and update this group as we have more to share.
Nigel Coe
Yeah, we're still getting higher numbers, but we will follow up offline and then just maybe just a quick one on data solutions. I mean, if you just back into the mid-teens, kind of all in call and then 5 mid-signal digits X data solutions, we're getting to like 50% type numbers for data solutions. Is that in the right zone of growth there?
Sara Zawoyski
Yeah, Nigel, they were very strong in Q1, on top of strong growth in Q1 of a year ago.
Nigel Coe
Right, okay, thanks guys.
Operator
Vladimir Bystricky, Citigroup.
Vladimir Bystricky
Hey, good morning team and congrats to, both Gary and Sara. Thanks for taking my questions here. I guess just a quick clarification on the increased CapEx outlook. Can you kind of Dissect how much of that is related to avail coming into the portfolio versus sort of core investments in legacy invent if you all.
Gary Corona
Yeah, I'm glad you, as you noticed, we did take our cap assumptions up and the majority of the increase is really related, to the core business, and supporting growth, not just in the second half, but beyond, but we did layer in, CapEx associated with the EPG, acquisition, in the guide as well.
Vladimir Bystricky
Got it. That's helpful, Gary. I appreciate it. And then, maybe just one follow up. So when I look at the segments, I guess, can you just talk a little about, the divergence between Declining America's sales and systems protection versus, the robust America's sales worth you saw in electrical connections and sort of what you think is Some of the driving factors behind the that that divergence and, how we should think about either as potentially a leading indicator going forward.
Beth Wozniak
Yeah, I think some of that is really just the comp of a year ago because we had really strong growth a year ago out of systems protection, and we were a little weaker on the electrical connection side. So that's really one of the primary reasons.
Gary Corona
So I wouldn't, I wouldn't extrapolate that plan going.
Tony Riter
Forward.
Vladimir Bystricky
Alright, that's helpful I appreciate it.
Operator
Scott Graham, Seaport Research.
Scott Graham
Hey, thanks for taking my question and, welcome aboard, Gary, great to meet you a couple of weeks back, and, Sarah, best of luck to you. You've been truly excellent. I wanted to ask a couple of questions, and I'll just ask them both and let you go at it. Is that the incremental margin in the quarter was sort of below what we've been seeing. Is that all inflation and investments and or was there maybe something else there and does that improve in the second half of the year? And then on acquisitions, how is the pipeline is, and is pricing better?
Gary Corona
So I'll take the I'll take the margin question in the, in the quarter and as you mentioned Q1 margins were down, that net productivity bar was down $17 million and as you mentioned, it reflects, both the inflation, offset, somewhat by positive productivity, but also net of investments that are ramping. For the back half, going forward, as we mentioned, gross productivity will ramp, tariffs will ramp.
And then the pricing in our playbook will flow throughout the year, as I mentioned, excluding, the EPG deal, we did expect margins, to grow, in the second half modestly, as we get our playbook in place, as we layer in the deal, as we said, it comes in with a bit of a nice. Top and bottom line contribution, but it, it will impact margins a bit, but we feel good about our margin game plan in the back half, that will be put into place.
Beth Wozniak
And on the acquisition, M&A pipeline question, I would like to say that, where we play in this connect and protect space, it's about $100 billion opportunity and remember at $3 billion we're one of the larger players, so it's very fragmented.
And I think there's a lot of opportunities and you've seen, the last couple of deals that we've had, and I think we've been very disciplined, this is our eight deal and we always, want our deals to cross the weighted average cost of capital in two to three years and a bill will do that and I think for us as we go forward, it's just looking to see that there is the right deal and the right timing and our capacity to be able to execute on it as well, but.
We do have more capital to allocate and feel, we're in a good position if there's the right opportunities for us to continue to do deals in the near term, I would say.
Scott Graham
Thank you.
Beth Wozniak
Thanks, Scott.
Operator
This concludes, sorry, go ahead. No, go ahead. This concludes our question-and-answer session. I would like to turn the conference back over to Beth Wozniak for any closing remarks.
Beth Wozniak
Well, thank you for joining us today. I am proud of our performance in the first quarter. We will continue to focus on delivering for our customers, employees, and shareholders by executing on our growth strategy. We believe Invent is a top tier high performance electrical company well positioned for the electrification, sustainability, and digitalization trends. Thanks again for joining us. This concludes the call.
Operator
The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.
