- Third quarter net sales of $1,743 million, 18% higher than the
third quarter of 2022 and organic net sales growth(1) of 17%
- Third quarter orders up 11% (excluding foreign exchange) from
last year. Record high $5.0 billion backlog
- Third quarter operating profit of $251 million and adjusted
operating profit(1) of $296 million, exceeding high-end of guidance
range by $36 million
- Adjusted operating margin(1) of 17.0%, up 790 basis points
compared to last year’s third quarter
- Operating cash flow of $249 million and adjusted free cash
flow(1) of $221 million, an increase of $242 million over the third
quarter 2022
- Net leverage of 2.4x at end of third quarter and forecasted to
be ~2.1x by year-end
- Raising full year 2023 operating profit guidance to $842
million to $852 million and adjusted operating profit to $1,020
million to $1,030 million
- Raising full year 2023 adjusted free cash flow guidance to $600
million to $650 million
Vertiv Holdings Co (NYSE: VRT), a global provider of critical
digital infrastructure and continuity solutions, today reported
financial results for its third quarter ended September 30, 2023.
Vertiv reported third quarter net sales of $1,743 million, an
increase of $262 million, or 18%, compared with last year’s third
quarter and a 17% organic net sales increase, which excludes the
impact of foreign currency. Foreign currency positively impacted
third quarter sales by approximately $6 million as compared to
third quarter last year. Orders increased 11% (excluding foreign
exchange), as underlying market demand remained strong, and the
book-to-bill ratio was 1.1x for third quarter 2023.
Third quarter operating profit of $251 million increased $171
million and adjusted operating profit of $296 million increased
$162 million from the prior year third quarter. Adjusted operating
margin expanded 790 basis points to 17.0% compared to third quarter
2022. These increases were primarily driven by benefits from
pricing, volume and productivity partially offset by net inflation
and growth investments in R&D and capacity. Third quarter 2023
adjusted operating profit was above the prior guidance range
primarily due to additional price-cost favorability.
“Third quarter results exceeded our expectations, driven by an
intense focus on operational execution and robust market demand for
Vertiv’s products and services,” said Giordano Albertazzi, Vertiv’s
Chief Executive Officer. “As a result, we are again raising our
full year 2023 guidance for all financial metrics. Our end markets
remain healthy and momentum continues. This sets a great foundation
for 2024.”
“We are still in the early stages, but the industry is gearing
up to deploy the data center infrastructure needed to meet the
compute capacity that AI is demanding,” Albertazzi added. “As the
only pure-play data center infrastructure company able to deliver
across the entire spectrum of thermal and power technologies,
Vertiv is uniquely positioned to partner with our customers to meet
their data center needs for the present and the future. I look
forward to sharing more on Vertiv’s strategy and how we see the
data center infrastructure trends unfolding, including AI, at our
upcoming investor conference on November 29th.”
Dave Cote, Vertiv’s Executive Chairman, added: “Vertiv’s
positive momentum continues as Gio and his team deliver another
quarter of improved performance, profitability and adjusted free
cash flow through an unrelenting focus on operational improvement,
a high-performing culture and exceptional customer service. Combine
this with favorable market trends underpinning strong long-term
market demand and I am more confident than ever in the future of
Vertiv and its potential for long-term value creation.”
Adjusted Free Cash Flow and
Liquidity
Net cash generated by operating activities in the third quarter
was $249 million, an increase of $244 million from the prior year
quarter, and adjusted free cash flow was $221 million, an increase
of $242 million from the prior year quarter. Third quarter adjusted
free cash flow performance was driven by higher adjusted operating
profit and improvement in working capital management, further
strengthening the balance sheet. Liquidity increased to $1,046
million in the third quarter and borrowings under our ABL credit
facility remained at zero at the end of September 2023. Net
leverage at the end of the third quarter was 2.4x and based on
current financial guidance, we anticipate net leverage will
decrease to approximately 2.1x by the end of 2023.
Full Year and Fourth Quarter 2023
Guidance
Underlying market demand continues to be strong and sales
pipeline activity continues to be healthy. Full year financial
guidance has been increased across all financial metrics.
Fourth Quarter 2023 Guidance
Net sales
$1,828M - $1,853M
Organic net sales growth(2)
10.7% - 12.2%
Adjusted operating profit(1)
$295M - $305M
Adjusted operating margin(2)
15.9% - 16.7%
Adjusted diluted EPS(1)
$0.48 - $0.52
Adjusted free cash flow(2)
$127M - $177M
Full Year 2023 Guidance
Net sales
$6,826M - $6,851M
Organic net sales growth(2)
20.9% - 21.4%
Adjusted operating profit(1)
$1,020M - $1,030M
Adjusted operating margin(2)
14.6% - 15.4%
Adjusted diluted EPS(1)
$1.69 - $1.73
Adjusted free cash flow(2)
$600M - $650M
(1) This release contains certain non-GAAP
metrics. For reconciliations to the relevant GAAP measures and an
explanation of the non-GAAP measures and reasons for their use,
please refer to sections of this release entitled “Non-GAAP
Financial Measures” and “Reconciliation of GAAP and non-GAAP
Financial Measures.”
(2) This is a forward-looking non-GAAP
financial measure that cannot be reconciled for those reasons set
forth under “Non-GAAP Financial Measures” of this release.
Third Quarter 2023 Earnings Conference
Call
Vertiv’s management team will discuss the Company’s results
during a conference call on Wednesday, October 25, starting at 11
a.m. Eastern Time. The call will contain forward-looking statements
and other material information regarding Vertiv’s financial and
operating results. A webcast of the live conference call will be
available for interested parties to listen to by going to the
Investor Relations section of the Company’s website at
investors.vertiv.com. A slide presentation will be available before
the call and will be posted to the website, also at
investors.vertiv.com. A replay of the conference call will also be
available for 30 days following the webcast.
Upcoming Events
Vertiv will host a 2023 Investor Conference on November 29,
2023, in New York, NY. Vertiv’s management team will review
strategic initiatives, market trends and innovations at Vertiv.
Further details will be provided closer to the event.
About Vertiv Holdings Co
Vertiv (NYSE: VRT) brings together hardware, software, analytics
and ongoing services to enable its customers’ vital applications to
run continuously, perform optimally and grow with their business
needs. Vertiv solves the most important challenges facing today’s
data centers, communication networks and commercial and industrial
facilities with a portfolio of power, cooling and IT infrastructure
solutions and services that extends from the cloud to the edge of
the network. Headquartered in Westerville, Ohio, USA, Vertiv does
business in more than 130 countries. For more information, and for
the latest news and content from Vertiv, visit vertiv.com.
Category: Financial News
Non-GAAP Financial
Measures
Financial information included in this release has been prepared
in accordance with Generally Accepted Accounting Principles
(“GAAP”). Vertiv has included certain non-GAAP financial measures
in this news release, as indicated above, that may not be directly
comparable to other similarly titled measures used by other
companies and therefore may not be comparable among companies.
These non-GAAP financial measures include organic net sales growth
(including on a segment basis), adjusted operating profit, adjusted
operating margin, adjusted diluted EPS and adjusted free cash flow,
which management believes provides investors with useful
supplemental information to evaluate the Company’s ongoing
operations and to compare with past and future periods. Management
also uses certain non-GAAP measures internally for forecasting,
budgeting and measuring its operating performance. These measures
should be viewed as supplementing, and not as an alternative or
substitute for, the Company's financial results prepared in
accordance with GAAP. Pursuant to the requirements of Regulation G,
Vertiv has provided reconciliations of non-GAAP financial measures
to the most directly comparable GAAP financial measures.
Information reconciling certain forward-looking GAAP measures to
non-GAAP measures related to fourth quarter and full-year 2023
guidance, including organic net sales growth, adjusted free cash
flow and adjusted operating margin, is not available without
unreasonable effort due to high variability, complexity and
uncertainty with respect to forecasting and quantifying certain
amounts that are necessary for such reconciliations. For those
reasons, we are unable to compute the probable significance of the
unavailable information, which could have a potentially
unpredictable, and potentially significant, impact on our future
GAAP financial results.
See “Reconciliation of GAAP and Non-GAAP Financial Measures” in
this release for Vertiv’s reconciliations of non-GAAP financial
measures to the most directly comparable GAAP financial
measures.
Cautionary Note Concerning
Forward-Looking Statements
This news release, and other statements that Vertiv may make in
connection therewith, may contain forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of 1995
with respect to Vertiv’s future financial or business performance,
strategies or expectations, and as such are not historical facts.
This includes, without limitation, statements regarding Vertiv’s
financial position, capital structure, indebtedness, business
strategy and plans, and objectives of Vertiv management for future
operations, as well as statements regarding growth, anticipated
demand for our products and services, and our business prospects
during 2023, as well as expected impacts from our pricing actions,
and our guidance for fourth quarter and full year 2023. These
statements constitute projections, forecasts and forward-looking
statements, and are not guarantees of performance. Vertiv cautions
that forward-looking statements are subject to numerous
assumptions, risks and uncertainties, which change over time. Such
statements can be identified by the fact that they do not relate
strictly to historical or current facts. When used in this news
release, words such as “anticipate,” “believe,” “continue,”
“could,” “estimate,” “expect,” “intend,” “may,” “might,” “plan,”
“possible,” “potential,” “predict,” “project,” “should,” “strive,”
“would” and similar expressions may identify forward-looking
statements, but the absence of these words does not mean that a
statement is not forward-looking.
The forward-looking statements contained in this release are
based on current expectations and beliefs concerning future
developments and their potential effects on Vertiv. There can be no
assurance that future developments affecting Vertiv will be those
that Vertiv has anticipated. Vertiv undertakes no obligation to
update or revise any forward-looking statements, whether as a
result of new information, future events or otherwise, except as
may be required under applicable securities laws. These
forward-looking statements involve a number of risks, uncertainties
(some of which are beyond Vertiv’s control) or other assumptions
that may cause actual results or performance to be materially
different from those expressed or implied by these forward-looking
statements. Should one or more of these risks or uncertainties
materialize, or should any of the assumptions prove incorrect,
actual results may vary in material respects from those projected
in these forward-looking statements. Vertiv has previously
disclosed risk factors in its Securities and Exchange Commission
(“SEC”) reports, including those set forth in the Vertiv 2022
Annual Report on Form 10-K filed with the SEC on February 27, 2023.
These risk factors and those identified elsewhere in this release,
among others, could cause actual results to differ materially from
historical performance and include, but are not limited to: risks
relating to the continued growth of Vertiv’s customers’ markets;
disruption of Vertiv’s customers’ orders or Vertiv’s customers’
markets; less favorable contractual terms with large customers;
risks associated with governmental contracts; failure to mitigate
risks associated with long-term fixed price contracts; competition
in the infrastructure technologies industry; failure to obtain
performance and other guarantees from financial institutions;
failure to realize sales expected from Vertiv’s backlog of orders
and contracts; failure to properly manage Vertiv’s supply chain or
difficulties with third-party manufacturers; our ability to
forecast changes in prices, including due to inflation in material,
freight and/or labor costs, and timely implement measures necessary
to mitigate the impacts of any such changes; risks associated with
our significant backlog, including that the impacts of any measures
taken to mitigate inflation will not be reflected in our financial
statements immediately; failure to meet or anticipate technology
changes; risks associated with information technology disruption or
security; risks associated with the implementation and enhancement
of information systems; failure to realize the expected benefit
from any rationalization, restructuring and improvement efforts;
Vertiv’s ability to realize cost savings in connection with
Vertiv’s restructuring program; disruption of, or changes in,
Vertiv’s independent sales representatives, distributors and
original equipment manufacturers; changes to tax law; ongoing tax
audits; costs or liabilities associated with product liability; the
global scope of Vertiv’s operations; risks associated with Vertiv’s
sales and operations in emerging markets; risks associated with
future legislation and regulation of Vertiv’s customers’ markets
both in the U.S. and abroad; Vertiv’s ability to comply with
various laws and regulations, and the costs associated with legal
compliance; adverse outcomes to any legal claims and proceedings
filed by or against Vertiv; risks associated with current or
potential litigation or claims against Vertiv; Vertiv’s ability to
protect or enforce its proprietary rights on which its business
depends; third-party intellectual property infringement claims;
liabilities associated with environmental, health and safety
matters, including risks associated with the COVID-19 pandemic;
failure to achieve environmental, social and governance goals;
failure to realize the value of goodwill and intangible assets;
exposure to fluctuations in foreign currency exchange rates;
exposure to increases in interest rates set by central banking
authorities; failure to maintain internal controls over financial
reporting; the unpredictability of Vertiv’s future operational
results, including the ability to grow and manage growth
profitably; potential net losses in future periods; Vertiv’s level
of indebtedness and the ability to incur additional indebtedness;
Vertiv’s ability to comply with the covenants and restrictions
contained in our credit agreements including restrictive covenants
that restrict operational flexibility; Vertiv's ability to comply
with the covenants and restrictions contained in our credit
agreements that is not fully within our control; Vertiv’s ability
to access funding through capital markets; the significant
ownership and influence certain stockholders have over Vertiv;
resales of Vertiv's securities may cause volatility in the market
price of our securities; Vertiv's organizational documents contain
provisions that may discourage unsolicited takeover proposals;
Vertiv's certificate of incorporation includes a forum selection
clause, which could discourage or limit stockholders’ ability to
make a claim against it; the ability of Vertiv's subsidiaries to
pay dividends; the ability of Vertiv to grow and manage growth
profitably, maintain relationships with customers and suppliers,
and retain its management and key employees; Vertiv’s ability to
manage the succession of its key employees; factors relating to the
business, operations and financial performance of Vertiv and its
subsidiaries, including: global economic weakness and uncertainty;
Vertiv’s ability to attract, train and retain key members of its
leadership team and other qualified personnel; the adequacy of
Vertiv’s insurance coverage; a failure to benefit from future
corporate transactions; risks associated with Vertiv’s limited
history of operating as an independent company; and other risks and
uncertainties indicated in Vertiv’s SEC reports or documents filed
or to be filed with the SEC by Vertiv.
Forward-looking statements included in this news release speak
only as of the date of this news release or any earlier date
specified for such statements. All subsequent written or oral
forward-looking statements attributable to Vertiv or persons acting
on Vertiv’s behalf may be qualified in their entirety by this
Cautionary Note Concerning Forward-Looking Statements.
UNAUDITED CONDENSED
CONSOLIDATED STATEMENTS OF EARNINGS (LOSS)
Vertiv Holdings Co
(Dollars in millions except
for per share data)
Three months ended September 30,
2023
Three months ended September 30,
2022
Nine months ended September 30,
2023
Nine months ended September 30,
2022
Net sales
Net sales - products
$
1,381.3
$
1,135.4
$
3,928.2
$
3,039.8
Net sales - services
361.3
345.7
1,069.6
997.1
Net sales
1,742.6
1,481.1
4,997.8
4,036.9
Costs and expenses
Cost of sales - products
894.2
838.5
2,626.6
2,301.7
Cost of sales - services
220.8
213.3
654.1
630.8
Cost of sales
1,115.0
1,051.8
3,280.7
2,932.5
Operating expenses
Selling, general and administrative
expenses
327.2
295.2
963.5
875.0
Amortization of intangibles
45.5
54.2
136.1
167.7
Restructuring costs
1.3
(1.5
)
23.5
0.1
Foreign currency (gain) loss, net
2.7
0.2
13.3
1.8
Other operating expense (income)
—
1.2
(6.3
)
(1.2
)
Operating profit (loss)
250.9
80.0
587.0
61.0
Interest expense, net
43.5
38.8
137.2
101.5
Change in fair value of warrant
liabilities
61.6
9.8
103.4
(124.0
)
Income (loss) before income
taxes
145.8
31.4
346.4
83.5
Income tax expense
51.7
10.2
118.8
33.5
Net income (loss)
$
94.1
$
21.2
$
227.6
$
50.0
Earnings (loss) per share:
Basic
$
0.25
$
0.06
$
0.60
$
0.13
Diluted
$
0.24
$
0.06
$
0.59
$
(0.20
)
Weighted-average shares outstanding:
Basic
380,899,419
377,016,981
379,666,002
376,531,805
Diluted
388,240,664
377,444,002
383,832,268
378,038,809
UNAUDITED CONDENSED
CONSOLIDATED BALANCE SHEETS
Vertiv Holdings Co
(Dollars in millions)
September 30, 2023
December 31, 2022
ASSETS
Current assets:
Cash and cash equivalents
$
500.0
$
260.6
Accounts receivable, less allowances of
$26.6 and $18.4, respectively
2,020.7
1,888.8
Inventories
921.7
822.0
Other current assets
178.6
187.3
Total current assets
3,621.0
3,158.7
Property, plant and equipment,
net
508.6
489.4
Other assets:
Goodwill
1,284.3
1,284.7
Other intangible assets, net
1,674.1
1,816.1
Deferred income taxes
46.7
46.4
Right-of-use assets, net
157.1
166.4
Other
122.5
134.0
Total other assets
3,284.7
3,447.6
Total assets
$
7,414.3
$
7,095.7
LIABILITIES AND EQUITY
Current liabilities:
Current portion of long-term debt
$
21.8
$
21.8
Accounts payable
931.9
984.0
Deferred revenue
543.3
358.7
Accrued expenses and other liabilities
555.4
513.7
Income taxes
49.1
19.7
Total current liabilities
2,101.5
1,897.9
Long-term debt, net
2,923.1
3,169.1
Deferred income taxes
177.8
176.5
Warrant liabilities
140.5
58.7
Long-term lease liabilities
125.9
132.0
Other long-term liabilities
231.6
219.6
Total liabilities
5,700.4
5,653.8
Equity
Preferred stock, $0.0001 par value,
5,000,000 shares authorized, none issued and outstanding
—
—
Common stock, $0.0001 par value,
700,000,000 shares authorized, 381,349,156 and 377,368,837 shares
issued and outstanding at September 30, 2023 and December 31, 2022,
respectively
—
—
Additional paid-in capital
2,698.3
2,630.7
Accumulated deficit
(915.0
)
(1,142.6
)
Accumulated other comprehensive (loss)
income
(69.4
)
(46.2
)
Total equity
1,713.9
1,441.9
Total liabilities and equity
$
7,414.3
$
7,095.7
UNAUDITED CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
Vertiv Holdings Co
(Dollars in millions)
Three months ended September 30,
2023
Three months ended September 30,
2022
Nine months ended September 30,
2023
Nine months ended September 30,
2022
Cash flows from operating
activities:
Net income (loss)
$
94.1
$
21.2
$
227.6
$
50.0
Adjustments to reconcile net income (loss)
to net cash provided by (used for) operating activities:
Depreciation
18.9
17.8
54.6
53.3
Amortization
49.3
57.9
147.5
178.6
Deferred income taxes
(2.3
)
(12.8
)
(0.7
)
(22.0
)
Amortization of debt discount and issuance
costs
1.6
2.6
6.3
7.4
Change in fair value of warrant
liabilities
61.6
9.8
103.4
(124.0
)
Changes in operating working capital
17.7
(70.2
)
(17.8
)
(448.0
)
Stock based compensation
6.5
6.3
18.8
20.1
Payment of contingent consideration
—
—
—
(8.7
)
Other
1.3
(28.2
)
4.6
(40.2
)
Net cash provided by (used for)
operating activities
248.7
4.4
544.3
(333.5
)
Cash flows from investing
activities:
Capital expenditures
(26.5
)
(23.5
)
(80.1
)
(61.7
)
Investments in capitalized software
(0.9
)
(1.3
)
(3.4
)
(8.0
)
Acquisition of Business, net of cash
acquired
—
—
—
(5.0
)
Proceeds from disposition of property,
plant and equipment
—
—
12.4
—
Net cash provided by (used for)
investing activities
(27.4
)
(24.8
)
(71.1
)
(74.7
)
Cash flows from financing
activities:
Borrowings from ABL revolving credit
facility and short-term borrowings
64.9
130.8
224.6
578.4
Repayments of ABL revolving credit
facility and short-term borrowings
(64.9
)
(26.8
)
(459.6
)
(281.5
)
Repayment of long-term debt
(5.4
)
—
(21.8
)
(10.9
)
Debt issuance costs
—
(0.5
)
—
(0.5
)
Payment of tax receivable agreement
—
(12.5
)
—
(25.0
)
Payment of contingent consideration
—
—
—
(12.8
)
Exercise of employee stock options
12.9
0.2
22.9
1.3
Employee taxes paid from shares
withheld
(0.3
)
—
(2.8
)
(4.3
)
Net cash provided by (used for)
financing activities
7.2
91.2
(236.7
)
244.7
Effect of exchange rate changes on cash
and cash equivalents
(3.7
)
(7.4
)
(4.7
)
(14.9
)
Increase (decrease) in cash, cash
equivalents and restricted cash
224.8
63.4
231.8
(178.4
)
Beginning cash, cash equivalents and
restricted cash
280.2
205.3
273.2
447.1
Ending cash, cash equivalents and
restricted cash
$
505.0
$
268.7
$
505.0
$
268.7
Changes in operating working
capital
Accounts receivable
$
(7.8
)
$
(87.2
)
$
(136.7
)
$
(257.0
)
Inventories
(5.0
)
(15.2
)
(101.5
)
(202.3
)
Other current assets
21.1
5.8
28.5
(4.2
)
Accounts payable
(8.3
)
21.6
(44.9
)
42.2
Deferred revenue
23.3
(3.7
)
184.6
35.8
Accrued expenses and other liabilities
18.0
2.6
45.5
(51.5
)
Income taxes
(23.6
)
5.9
6.7
(11.0
)
Total changes in operating working
capital
$
17.7
$
(70.2
)
$
(17.8
)
$
(448.0
)
Reconciliation of GAAP and non-GAAP Financial
Measures
To supplement this news release, we have included certain
non-GAAP financial measures in the format of performance metrics.
Management believes these non-GAAP financial measures provide
investors with additional meaningful financial information that
should be considered when assessing our underlying business
performance and trends. Further, management believes these non-GAAP
financial measures also enhance investors' ability to compare
period-to-period financial results. Non-GAAP financial measures
should be viewed in addition to, and not as an alternative for, the
company's reported results prepared in accordance with GAAP. Our
non-GAAP financial measures do not represent a comprehensive basis
of accounting. Therefore, our non-GAAP financial measures may not
be comparable to similarly titled measures reported by other
companies. Reconciliations of each of these non-GAAP financial
measures to GAAP information are also included. Management uses
these non-GAAP financial measures in making financial, operating,
compensation and planning decisions and in evaluating the company's
performance. Disclosing these non-GAAP financial measures allows
investors and management to view our operating results excluding
the impact of items that are not reflective of the underlying
operating performance.
Vertiv’s non-GAAP financial measures include:
- Adjusted operating profit (loss), which represents operating
profit (loss), adjusted to exclude amortization of
intangibles;
- Adjusted operating margin, which represents adjusted operating
profit (loss) divided by net sales;
- Organic net sales growth, which represents the change in net
sales adjusted to exclude the impacts of foreign currency exchange
rate;
- Adjusted free cash flow, which represents net cash provided by
(used for) operating activities adjusted to exclude capital
expenditures, investments in capitalized software and include
proceeds from disposition of PP&E; and
- Adjusted diluted EPS, which represents diluted earnings per
share adjusted to exclude amortization of intangibles and change in
warranty liability.
Regional Segment Results
Three months ended September
30,
Nine months ended September
30,
2023
2022
Δ
Δ%
Organic Δ%(2)
2023
2022
Δ
Δ%
Organic Δ%(2)
Net sales
(1)
Americas
$
1,003.2
$
712.6
$
290.6
40.8
%
40.1
%
$
2,824.9
$
1,894.9
$
930.0
49.1
%
48.8
%
APAC
388.6
436.1
(47.5
)
(10.9
)%
(7.1
)%
1,097.4
1,176.1
(78.7
)
(6.7
)%
(1.6
)%
EMEA
350.8
332.4
18.4
5.5
%
0.3
%
1,075.5
965.9
109.6
11.3
%
11.3
%
Total
$
1,742.6
$
1,481.1
$
261.5
17.7
%
17.2
%
$
4,997.8
$
4,036.9
$
960.9
23.8
%
25.2
%
Adjusted
operating profit (loss)(3)
Americas
$
254.0
$
115.2
$
138.8
120.5
%
$
684.4
$
255.6
$
428.8
167.8
%
APAC
74.1
83.3
(9.2
)
(11.0
)%
175.8
193.3
(17.5
)
(9.1
)%
EMEA
96.9
57.4
39.5
68.8
%
262.4
152.4
110.0
72.2
%
Corporate (4)
(128.6
)
(121.7
)
(6.9
)
5.7
%
(399.5
)
(372.6
)
(26.9
)
7.2
%
Total
$
296.4
$
134.2
$
162.2
120.9
%
$
723.1
$
228.7
$
494.4
216.2
%
Adjusted
operating margins (5)
Americas
25.3
%
16.2
%
9.1
%
24.2
%
13.5
%
10.7
%
APAC
19.1
%
19.1
%
—
%
16.0
%
16.4
%
(0.4
)%
EMEA
27.6
%
17.3
%
10.3
%
24.4
%
15.8
%
8.6
%
Vertiv
17.0
%
9.1
%
7.9
%
14.5
%
5.7
%
8.8
%
(1) Segment net sales are presented
excluding intercompany sales.
(2) Organic basis is adjusted to exclude
foreign currency exchange rate impact.
(3) Adjusted operating profit (loss) is
only adjusted at the Corporate segment. There are no adjustments at
the reportable segment level between operating profit (loss) and
adjusted operating profit (loss).
(4) Corporate costs consist of
headquarters management costs, stock-based compensation, other
incentive compensation, change in fair value of warrant
liabilities, asset impairments and costs that support centralized
global functions including Finance, Treasury, Risk Management,
Strategy & Marketing, IT, Legal, and global product platform
development and offering management.
(5) Adjusted operating margins calculated
as adjusted operating profit (loss) divided by net sales.
Sales by product and service
offering
Three months ended September
30,
2023
2022
Δ
Δ %
Americas:
Critical infrastructure &
solutions
$
670.8
$
417.3
$
253.5
60.7
%
Services & spares
206.2
203.6
2.6
1.3
%
Integrated rack solutions
126.2
91.7
34.5
37.6
%
$
1,003.2
$
712.6
$
290.6
40.8
%
Asia Pacific:
Critical infrastructure &
solutions
$
244.3
$
265.7
$
(21.4
)
(8.1
)%
Services & spares
103.1
113.3
(10.2
)
(9.0
)%
Integrated rack solutions
41.2
57.1
(15.9
)
(27.8
)%
$
388.6
$
436.1
$
(47.5
)
(10.9
)%
EMEA:
Critical infrastructure &
solutions
$
223.2
$
224.3
$
(1.1
)
(0.5
)%
Services & spares
84.0
71.1
12.9
18.1
%
Integrated rack solutions
43.6
37.0
6.6
17.8
%
$
350.8
$
332.4
$
18.4
5.5
%
Total:
Critical infrastructure &
solutions
$
1,138.3
$
907.3
$
231.0
25.5
%
Services & spares
393.3
388.0
5.3
1.4
%
Integrated rack solutions
211.0
185.8
25.2
13.6
%
$
1,742.6
$
1,481.1
$
261.5
17.7
%
Nine months ended September
30,
2023
2022
Δ
Δ %
Americas:
Critical infrastructure &
solutions
$
1,868.2
$
1,080.5
$
787.7
72.9
%
Services & spares
602.5
555.9
46.6
8.4
%
Integrated rack solutions
354.2
258.5
95.7
37.0
%
$
2,824.9
$
1,894.9
$
930.0
49.1
%
Asia Pacific:
Critical infrastructure &
solutions
$
646.9
$
692.5
$
(45.6
)
(6.6
)%
Services & spares
317.3
330.8
(13.5
)
(4.1
)%
Integrated rack solutions
133.2
152.8
(19.6
)
(12.8
)%
$
1,097.4
$
1,176.1
$
(78.7
)
(6.7
)%
EMEA:
Critical infrastructure &
solutions
$
699.1
$
642.6
$
56.5
8.8
%
Services & spares
248.3
208.0
40.3
19.4
%
Integrated rack solutions
128.1
115.3
12.8
11.1
%
$
1,075.5
$
965.9
$
109.6
11.3
%
Total:
Critical infrastructure &
solutions
$
3,214.2
$
2,415.6
$
798.6
33.1
%
Services & spares
1,168.1
1,094.7
73.4
6.7
%
Integrated rack solutions
615.5
526.6
88.9
16.9
%
$
4,997.8
$
4,036.9
$
960.9
23.8
%
Organic growth by product and service
offering
Three months ended September 30,
2023
Net Sales Δ
FX Δ
Organic growth
Organic Δ %(1)
Americas:
Critical infrastructure &
solutions
$
253.5
$
(11.2
)
$
242.3
58.1
%
Services & spares
2.6
7.7
10.3
5.1
%
Integrated rack solutions
34.5
(1.7
)
32.8
35.8
%
$
290.6
$
(5.2
)
$
285.4
40.1
%
Asia Pacific:
Critical infrastructure &
solutions
$
(21.4
)
$
11.4
$
(10.0
)
(3.8
)%
Services & spares
(10.2
)
4.1
(6.1
)
(5.4
)%
Integrated rack solutions
(15.9
)
1.1
(14.8
)
(25.9
)%
$
(47.5
)
$
16.6
$
(30.9
)
(7.1
)%
EMEA:
Critical infrastructure &
solutions
$
(1.1
)
$
(15.4
)
$
(16.5
)
(7.4
)%
Services & spares
12.9
(0.1
)
12.8
18.0
%
Integrated rack solutions
6.6
(2.0
)
4.6
12.4
%
$
18.4
$
(17.5
)
$
0.9
0.3
%
Total:
Critical infrastructure &
solutions
$
231.0
$
(15.2
)
$
215.8
23.8
%
Services & spares
5.3
11.7
17.0
4.4
%
Integrated rack solutions
25.2
(2.6
)
22.6
12.2
%
$
261.5
$
(6.1
)
$
255.4
17.2
%
(1) Organic growth percentage change is
calculated as organic growth divided by net sales for the three
months ended September 30, 2023.
Nine months ended September 30,
2023
Net Sales Δ
FX Δ
Organic growth
Organic Δ %(1)
Americas:
Critical infrastructure &
solutions
$
787.7
$
(20.8
)
$
766.9
71.0
%
Services & spares
46.6
20.1
66.7
12.0
%
Integrated rack solutions
95.7
(4.4
)
91.3
35.3
%
$
930.0
$
(5.1
)
$
924.9
48.8
%
Asia Pacific:
Critical infrastructure &
solutions
$
(45.6
)
$
36.2
$
(9.4
)
(1.4
)%
Services & spares
(13.5
)
17.3
3.8
1.1
%
Integrated rack solutions
(19.6
)
6.3
(13.3
)
(8.7
)%
$
(78.7
)
$
59.8
$
(18.9
)
(1.6
)%
EMEA:
Critical infrastructure &
solutions
$
56.5
$
(0.5
)
$
56.0
8.7
%
Services & spares
40.3
0.6
40.9
19.7
%
Integrated rack solutions
12.8
(0.4
)
12.4
10.8
%
$
109.6
$
(0.3
)
$
109.3
11.3
%
Total:
Critical infrastructure &
solutions
$
798.6
$
14.9
$
813.5
33.7
%
Services & spares
73.4
38.0
111.4
10.2
%
Integrated rack solutions
88.9
1.5
90.4
17.2
%
$
960.9
$
54.4
$
1,015.3
25.2
%
(1) Organic growth percentage change is
calculated as organic growth divided by net sales for the nine
months ended September 30, 2023.
Segment operating profit (loss)
Operating profit
(loss)
Three months ended September 30,
2023
Three months ended September 30,
2022
Nine months ended September 30,
2023
Nine months ended September 30,
2022
Americas
$
254.0
$
115.2
$
684.4
$
255.6
Asia Pacific
74.1
83.3
175.8
193.3
Europe, Middle East & Africa
96.9
57.4
262.4
152.4
Total reportable segments
425.0
255.9
1,122.6
601.3
Foreign currency gain (loss)
(2.7
)
(0.2
)
(13.3
)
(1.8
)
Corporate and other
(125.9
)
(121.5
)
(386.2
)
(370.8
)
Total corporate, other and
eliminations
(128.6
)
(121.7
)
(399.5
)
(372.6
)
Amortization of intangibles
(45.5
)
(54.2
)
(136.1
)
(167.7
)
Operating profit (loss)
$
250.9
$
80.0
$
587.0
$
61.0
Reconciliation of net cash provided by
(used for) operating activities to adjusted free cash flow
Three months ended September 30,
2023
Three months ended September 30,
2022
Nine months ended September 30,
2023
Nine months ended September 30,
2022
Net cash provided by (used for) operating
activities
$
248.7
$
4.4
$
544.3
$
(333.5
)
Capital expenditures
(26.5
)
(23.5
)
(80.1
)
(61.7
)
Investments in capitalized software
(0.9
)
(1.3
)
(3.4
)
(8.0
)
Proceeds from disposition of PP&E
—
—
12.4
—
Adjusted free cash flow
$
221.3
$
(20.4
)
$
473.2
$
(403.2
)
Reconciliation from operating profit
(loss) to adjusted operating profit (loss)
Three months ended September 30,
2023
Three months ended September 30,
2022
Nine months ended September 30,
2023
Nine months ended September 30,
2022
Operating profit (loss)
$
250.9
$
80.0
$
587.0
$
61.0
Amortization of intangibles
45.5
54.2
136.1
167.7
Adjusted operating profit
(loss)
$
296.4
$
134.2
$
723.1
$
228.7
Reconciliation from operating margin to
adjusted operating margin
Three months ended September 30,
2023
Three months ended September 30,
2022
Δ
Nine months ended September 30,
2023
Nine months ended September 30,
2022
Δ
Vertiv net sales
$
1,742.6
$
1,481.1
$
261.5
$
4,997.8
$
4,036.9
$
960.9
Vertiv operating profit (loss)
250.9
80.0
170.9
587.0
61.0
526.0
Vertiv operating margin
14.4
%
5.4
%
9.0
%
11.7
%
1.5
%
10.2
%
Amortization of intangibles
$
45.5
$
54.2
$
(8.7
)
$
136.1
$
167.7
$
(31.6
)
Vertiv adjusted operating profit
(loss)
296.4
134.2
162.2
723.1
228.7
494.4
Vertiv adjusted operating
margin
17.0
%
9.1
%
7.9
%
14.5
%
5.7
%
8.8
%
Reconciliation of Diluted EPS to
Adjusted Diluted EPS
Three months
ended September 30, 2023
Operating profit
(loss)
Interest expense, net
Change in Warrant
Liability
Income tax expense
Net income (loss)
Diluted EPS (1)
GAAP
$
250.9
$
43.5
$
61.6
$
51.7
$
94.1
$
0.24
Amortization of intangibles
45.5
—
—
—
45.5
0.12
Change in warrant liability
—
—
(61.6
)
—
61.6
0.16
Non-GAAP Adjusted
$
296.4
$
43.5
$
—
$
51.7
$
201.2
$
0.52
(1) Diluted EPS and adjusted diluted EPS
based on 388.2 million shares (includes 380.9 million basic shares
and 7.3 million dilutive stock options and restricted stock units).
We believe that this presentation is more representative of
operating results by removing the impact of warrant liability
accounting and the associated impact on diluted share count.
Three months
ended September 30, 2022
Operating profit
(loss)
Interest expense, net
Change in Warrant
Liability
Income tax expense
Net income (loss)
Diluted EPS (1)
GAAP
$
80.0
$
38.8
$
9.8
$
10.2
$
21.2
$
0.06
Amortization of intangibles
54.2
—
—
—
54.2
0.14
Change in warrant liability
—
—
(9.8
)
—
9.8
0.03
Non-GAAP Adjusted
$
134.2
$
38.8
$
—
$
10.2
$
85.2
$
0.23
(1) Diluted EPS and adjusted diluted EPS
based on 377.4 million shares (includes 377.0 million basic shares
and 0.4 million potential dilutive stock options and restricted
stock units). We believe that this presentation is more
representative of operating results by removing the impact of
warrant liability accounting and the associated impact on diluted
share count.
Nine months ended
September 30, 2023
Operating profit
(loss)
Interest expense, net
Change in Warrant
Liability
Income tax expense
Net income (loss)
Diluted EPS (1)
GAAP
$
587.0
$
137.2
$
103.4
$
118.8
$
227.6
$
0.59
Amortization of intangibles
136.1
—
—
—
136.1
0.35
Change in warrant liability
—
—
(103.4
)
—
103.4
0.27
Non-GAAP Adjusted
$
723.1
$
137.2
$
—
$
118.8
$
467.1
$
1.21
(1) Diluted EPS and adjusted diluted EPS
based on 383.8 million shares (includes 379.7 million basic shares
and 4.1 million potential dilutive stock options and restricted
stock units). We believe that this presentation is more
representative of operating results by removing the impact of
warrant liability accounting and the associated impact on diluted
share count.
Nine months ended
September 30, 2022
Operating profit
(loss)
Interest expense, net
Change in Warrant
Liability
Income tax expense
Net income (loss)
Diluted EPS (1)
GAAP
$
61.0
$
101.5
$
(124.0
)
$
33.5
$
50.0
$
(0.20
)
Amortization of intangibles
167.7
—
—
—
167.7
0.44
Change in warrant liability
—
—
124.0
—
(124.0
)
—
Non-GAAP Adjusted
$
228.7
$
101.5
$
—
$
33.5
$
93.7
$
0.25
(1) Diluted EPS and adjusted diluted EPS
based on 378.0 million shares (includes 376.5 million basic shares
and 1.5 million dilutive warrants). Diluted EPS and adjusted
diluted EPS includes an adjustment to exclude $124.0 million from
net income which is attributable to the warrants as they were
dilutive in the period. We believe that this presentation is more
representative of operating results by removing the impact of
warrant liability accounting and the associated impact on diluted
share count.
Vertiv Holdings Co
2023 Adjusted Guidance
Reconciliation of Diluted EPS
to Adjusted Diluted EPS (1)
Fourth Quarter 2023
Operating profit
(loss)
Interest expense, net
Income tax expense
Net income (loss)
Diluted EPS (2)
GAAP
$
258.5
$
42.4
$
64.3
$
151.8
$
0.39
Amortization of intangibles
41.5
—
—
41.5
0.11
Non-GAAP Adjusted
$
300.0
$
42.4
$
64.3
$
193.3
$
0.50
Full Year 2023
Operating profit
(loss)
Interest expense, net
Change in Warrant
Liability
Income tax expense
Net income (loss)
Diluted EPS (3)
GAAP
$
845.6
$
179.5
$
103.4
$
183.0
$
379.7
$
0.98
Amortization of intangibles
177.6
—
—
—
177.6
0.46
Change in warrant liability
—
—
(103.4
)
—
103.4
0.27
Non-GAAP Adjusted
$
1,023.2
$
179.5
$
—
$
183.0
$
660.7
$
1.71
(1) Information reconciling certain
forward-looking GAAP measures to non-GAAP measures related to FY
2023 guidance, including organic net sales growth, adjusted
operating margin and adjusted free cash flow, is not available
without unreasonable effort due to high variability, complexity and
uncertainty with respect to forecasting and quantifying certain
amounts that are necessary for such reconciliations. For the same
reasons, we are unable to compute the probable significance of the
unavailable information, which could have a potentially
unpredictable, and potentially significant, impact on our future
GAAP financial results.
(2) Diluted EPS and adjusted diluted EPS
based on 389.7 million shares (includes 381.7 million basic shares
and a weighted average 8.0 million potential dilutive stock options
and restricted stock units).
(3) Diluted EPS and adjusted diluted EPS
based on 386.1 million shares (includes 380.2 million basic shares
and a weighted average 5.9 million potential dilutive stock options
and restricted stock units).
View source
version on businesswire.com: https://www.businesswire.com/news/home/20231024143183/en/
For investor inquiries, please contact: Lynne Maxeiner
Vice President, Global Treasury & Investor Relations Vertiv T
+1 614-841-6776 E : lynne.maxeiner@vertiv.com For media
inquiries, please contact: Peter Poulos FleishmanHillard for
Vertiv T +1 646-284-4991 E: peter.poulos@fleishman.com
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