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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly period ended September 30, 2021
or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from __to__
Commission File No. 001-38518
Vertiv Holdings Co
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction of
incorporation or organization)
81-2376902
(I.R.S Employer
Identification No.)
1050 Dearborn Dr, Columbus, Ohio 43085
(Address of principal executive offices including zip code)
614-888-0246
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Trading Symbol(s) Name of each exchange on which registered
Class A common stock, $0.0001 par value per share
VRT New York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act:
Large accelerated filer Accelerated filer
Non-accelerated filer Smaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in 12b-2 of the Exchange Act).
Yes ☐ No ☒
As of October 29, 2021, there were 352,591,505 shares of our Class A common stock, par value $0.0001, issued and outstanding.



TABLE OF CONTENTS
Page
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1



Part I. Financial Information

ITEM 1. UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS (LOSS)
VERTIV HOLDINGS CO
(Dollars in millions except for per share data)
Three months ended September 30, 2021
Three months ended September 30, 2020
Nine months ended September 30, 2021
Nine months ended September 30, 2020
Net sales
Net sales - products $ 926.0  $ 891.1  $ 2,746.5  $ 2,288.5 
Net sales - services 302.9  270.9  841.1  776.5 
Net sales 1,228.9  1,162.0  3,587.6  3,065.0 
Costs and expenses
Cost of sales - products 678.4  596.7  1,958.0  1,575.2 
Cost of sales - services 168.8  152.3  480.6  443.4 
Cost of sales 847.2  749.0  2,438.6  2,018.6 
Operating expenses
Selling, general and administrative expenses 257.8  251.7  779.6  742.8 
Amortization of intangibles 31.6  32.5  95.3  97.1 
Restructuring costs (3.8) 71.7  (0.7) 73.0 
Foreign currency (gain) loss, net 4.9  11.7  2.1  16.3 
Asset impairments 8.7  9.4  8.7  21.7 
Other operating expense (income) 0.7  0.9  0.2  2.0 
Operating profit (loss) 81.8  35.1  263.8  93.5 
Interest expense, net 22.4  26.4  66.5  125.4 
Loss on extinguishment of debt —  —  0.4  174.0 
Change in fair value of warrant liabilities (32.5) 87.7  52.3  109.3 
Income (loss) before income taxes 91.9  (79.0) 144.6  (315.2)
Income tax expense 35.7  24.5  47.0  52.6 
Net income (loss) $ 56.2  $ (103.5) $ 97.6  $ (367.8)
Earnings (loss) per share:
Basic $ 0.16  $ (0.32) $ 0.28  $ (1.23)
Diluted $ 0.15  $ (0.32) $ 0.27  $ (1.23)
Weighted-average shares outstanding:
Basic 352,482,900 328,411,705 351,439,095 299,266,849
Diluted 363,198,701 328,411,705 355,974,628 299,266,849












See accompanying Notes to Unaudited Condensed Consolidated Financial Statements
2

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
VERTIV HOLDINGS CO
(Dollars in millions)
Three months ended September 30, 2021 Three months ended September 30, 2020 Nine months ended September 30, 2021 Nine months ended September 30, 2020
Net income (loss) $ 56.2  $ (103.5) $ 97.6  $ (367.8)
Other comprehensive income (loss), net of tax:
Foreign currency translation (28.0) 46.1  (43.9) 3.7 
Interest rate swaps 2.7  (2.3) 28.0  (37.8)
Tax receivable agreement 2.2  (11.1) (3.1) 5.1 
Pension 0.1  —  (0.5) (0.2)
Other comprehensive income (loss), net of tax (23.0) 32.7  (19.5) (29.2)
Comprehensive income (loss) $ 33.2  $ (70.8) $ 78.1  $ (397.0)













































See accompanying Notes to Unaudited Condensed Consolidated Financial Statements
3

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
VERTIV HOLDINGS CO
(Dollars in millions)
September 30, 2021
December 31, 2020
ASSETS
Current assets:
Cash and cash equivalents $ 743.6  $ 534.6 
Accounts receivable, less allowances of $13.0 and $15.0, respectively
1,386.1  1,354.4 
Inventories 577.4  446.6 
Other current assets 154.4  183.2 
Total current assets 2,861.5  2,518.8 
Property, plant and equipment, net 388.4  427.6 
Other assets:
Goodwill 588.6  607.2 
Other intangible assets, net 1,191.3  1,302.5 
Deferred income taxes 15.4  20.9 
Other 216.5  196.8 
Total other assets 2,011.8  2,127.4 
Total assets $ 5,261.7  $ 5,073.8 
LIABILITIES AND EQUITY
Current liabilities:
Current portion of long-term debt $ 21.8  $ 22.0 
Current portion of warrant liabilities —  68.5 
Accounts payable 768.8  730.5 
Accrued expenses and other liabilities 825.6  901.8 
Income taxes 30.6  18.8 
Total current liabilities 1,646.8  1,741.6 
Long-term debt, net 2,118.4  2,130.5 
Deferred income taxes 86.6  116.5 
Warrant liabilities 140.0  87.7 
Other long-term liabilities 484.2  485.4 
Total liabilities 4,476.0  4,561.7 
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, 352,499,706 and 342,024,612 shares issued and outstanding at September 30, 2021 and December 31, 2020, respectively
—  — 
Additional paid-in capital 1,987.3  1,791.8 
Accumulated deficit (1,233.6) (1,331.2)
Accumulated other comprehensive (loss) income 32.0  51.5 
Total equity 785.7  512.1 
Total liabilities and equity $ 5,261.7  $ 5,073.8 













See accompanying Notes to Unaudited Condensed Consolidated Financial Statements
4

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW
VERTIV HOLDINGS CO
(Dollars in millions)
Nine months ended September 30, 2021 Nine months ended September 30, 2020
Cash flows from operating activities:
Net income (loss) $ 97.6  $ (367.8)
Adjustments to reconcile net income (loss) to net cash used for operating activities:
Depreciation 51.6  42.9 
Amortization 105.5  107.8 
Deferred income taxes (22.3) (7.7)
Amortization of debt discount and issuance costs 4.6  9.0 
Loss on extinguishment of debt 0.4  174.0 
Change in fair value of warrant liabilities 52.3  109.3 
Asset impairment 8.7  21.7 
Changes in operating working capital (160.0) (102.1)
Stock based compensation 17.5  7.0 
Changes in tax receivable agreement 3.3  18.8 
Other 15.2  1.5 
Net cash provided by operating activities 174.4  14.4 
Cash flows from investing activities:
Capital expenditures (43.3) (21.3)
Investments in capitalized software (9.5) (4.9)
Proceeds from disposition of property, plant and equipment 6.1  — 
Net cash used for investing activities (46.7) (26.2)
Cash flows from financing activities:
Borrowings from ABL revolving credit facility —  324.2 
Repayments of ABL revolving credit facility —  (370.5)
Proceeds from short-term borrowings —  22.0 
Repayment of short-term borrowings —  (3.8)
Borrowing on Term Loan, net of discount —  2,189.0 
Repayment on Term Loan (16.4) (11.0)
Repayment on Prior Term Loan —  (2,070.0)
Repayment of Prior Notes —  (1,370.0)
Payment of redemption premiums —  (75.0)
Payment of debt issuance costs —  (11.2)
Proceeds from reverse recapitalization, net —  1,832.5 
Payment to Vertiv Stockholder —  (341.6)
Proceeds from the exercise of warrants 107.5  — 
Exercise of employee stock options 2.6  — 
Employee taxes paid from shares withheld (7.2) — 
Other financing —  (2.3)
Net cash provided by financing activities 86.5  112.3 
Effect of exchange rate changes on cash and cash equivalents (5.2) (1.9)
Increase (decrease) in cash, cash equivalents and restricted cash 209.0  98.6 
Beginning cash, cash equivalents and restricted cash 542.6  233.7 
Ending cash, cash equivalents and restricted cash $ 751.6  $ 332.3 
Changes in operating working capital
Accounts receivable $ (67.8) $ (76.5)
Inventories (147.7) (64.5)
Other current assets 2.4  8.0 
Accounts payable 63.1  20.8 
Accrued expenses and other liabilities 5.7  (2.8)
Income taxes (15.7) 12.9 
Total changes in operating working capital $ (160.0) $ (102.1)




See accompanying Notes to Unaudited Condensed Consolidated Financial Statements
5

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (DEFICIT)
VERTIV HOLDINGS CO
(Dollars in millions)
Share Capital
Shares Amount Additional Paid in Capital Accumulated Deficit Accumulated Other Comprehensive Income (Loss) Total
Balance at December 31, 2019, as originally reported
1,000,000  $ —  $ 277.7  $ (1,000.6) $ 18.1  $ (704.8)
Conversion of units of share capital 117,261,955  —  —  —  —  — 
Balance at December 31, 2019, as recasted (1)
118,261,955  —  277.7  (1,000.6) 18.1  (704.8)
Tax Receivable Agreement —  (133.4) —  —  (133.4)
Net income (loss) —  —  (208.3) —  (208.3)
Stock issuance 123,900,000  —  1,195.1  —  —  1,195.1 
Merger recapitalization (2)
86,249,750  —  179.5  —  —  179.5 
Stock-based compensation —  —  0.7  —  —  0.7 
Other comprehensive income (loss), net of tax —  —  —  —  (52.6) (52.6)
Balance at March 31, 2020
328,411,705  $ —  $ 1,519.6  $ (1,208.9) $ (34.5) $ 276.2 
Net income (loss) —  —  —  (56.0) —  (56.0)
Stock-based compensation —  —  2.5  —  —  2.5 
Other merger adjustment —  —  (0.4) —  —  (0.4)
Other comprehensive income (loss), net of tax —  —  —  —  (9.3) (9.3)
Balance at June 30, 2020
328,411,705  $ —  $ 1,521.7  $ (1,264.9) $ (43.8) $ 213.0 
Net income (loss) —  —  —  (103.5) —  (103.5)
Stock-based compensation —  —  3.9  —  —  3.9 
Other merger adjustment —  —  —  —  —  — 
Other comprehensive income (loss), net of tax —  —  —  —  32.7  32.7 
Balance at September 30, 2020
328,411,705  $ —  $ 1,525.6  $ (1,368.4) $ (11.1) $ 146.1 
Balance at December 31, 2020
342,024,612  $ —  $ 1,791.8  $ (1,331.2) $ 51.5  $ 512.1 
Net income (loss) —  —  —  31.7  —  31.7 
Exercise of employee stock options 76,047  —  0.9  —  —  0.9 
Employee 401K match with Vertiv stock 69,309  —  1.3  —  —  1.3 
Exercise of warrants (3)
9,346,822  —  176.0  —  —  176.0 
Stock-based compensation —  —  5.6  —  —  5.6 
Other comprehensive income (loss), net of tax —  —  —  —  1.1  1.1 
Balance at March 31, 2021
351,516,790  $ —  $ 1,975.6  $ (1,299.5) $ 52.6  $ 728.7 
Net income (loss) —  —  —  9.7  —  9.7 
Exercise of employee stock options 120,721  —  1.4  —  —  1.4 
Stock comp activity, net of withholdings for tax (4)
586,139  —  (0.8) —  —  (0.8)
Employee 401K match with Vertiv stock 107,890  —  2.3  —  —  2.3 
Other comprehensive income (loss), net of tax —  —  —  —  2.4  2.4 
Balance at June 30, 2021
352,331,540  $ —  $ 1,978.5  $ (1,289.8) $ 55.0  $ 743.7 
Net income (loss) —  —  —  56.2  —  56.2 
Exercise of employee stock options 51,122  —  0.8  —  —  0.8 
Stock comp activity, net of withholdings for tax (5)
27,069  —  5.5  —  —  5.5 
Employee 401K match with Vertiv stock 89,975  —  2.5  —  —  2.5 
Other comprehensive income (loss), net of tax —  —  —  —  (23.0) (23.0)
Balance at September 30, 2021
352,499,706  $ —  $ 1,987.3  $ (1,233.6) $ 32.0  $ 785.7 
(1)The shares and earnings per share available to holders of the Company’s capital stock, prior to the business combination, have been recasted as shares reflecting the exchange ratio established in the business combination (1.0 Vertiv Holdings share to 118.261955 Vertiv Holdings Co shares).
(2)The merger recapitalization includes the fair value of $116.3 of Public Warrants and Private Placement Warrants as of February 7, 2020.
(3)The exercise of warrants includes $107.5 of cash received during the three months ended March 31, 2021 for the exercise of Public Warrants.
(4)Net stock compensation activity includes 906,197 vested shares offset by 320,058 shares withheld for taxes valued at $7.0 and stock-based compensation of $6.2.
(5)Net stock compensation activity includes 29,605 vested shares offset by 2,536 shares withheld for taxes valued at $0.2 and stock-based compensation of $5.7.
See accompanying Notes to Unaudited Condensed Consolidated Financial Statements
6


Vertiv Holdings Co
Notes to Condensed Consolidated Financial Statements (Unaudited)
(Dollars in millions, except as otherwise specified and per share amounts)
(1) DESCRIPTION OF BUSINESS
Vertiv Holdings Co ("Holdings Co", and together with its majority-owned subsidiaries, “Vertiv”, "we", "our", or "the Company"), formerly known as GS Acquisition Holdings Corp ("GSAH"), provides mission-critical infrastructure technologies and life cycle services for data centers, communication networks, and commercial and industrial environments. Vertiv’s offerings include power conditioning and uninterruptible power systems, thermal management, integrated data center control devices, software, monitoring, and service. Vertiv manages and reports results of operations for three reportable segments: Americas; Asia Pacific; and Europe, Middle East & Africa.
(2) BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The unaudited condensed consolidated interim financial statements have been prepared in accordance with generally accepted accounting principles ("GAAP") in the United States of America and the rules and regulations of the Securities and Exchange Commission ("SEC") and include the accounts of the Company and its subsidiaries in which the Company has a controlling interest. These condensed consolidated interim financial statements do not include all of the information and footnotes required for complete financial statements. In management’s opinion, these financial statements reflect all adjustments of a normal, recurring nature necessary for a fair presentation of the results for the interim periods presented.
The presentation of certain prior period amounts includes the reclassification of intangible amortization expense, restructuring costs and net foreign currency (gain) loss into separate components within operating expenses to conform to the current period presentation. In addition certain prior period amounts have been reclassed to conform with current year presentation.
The preparation of financial statements in conformity with GAAP in the United States requires the Company to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and reported amounts of revenues and expenses during the reporting period. Actual amounts could differ from the estimates. On an ongoing basis, management reviews its estimates based on currently available information. Changes in facts and circumstances may result in revised estimates. Results for these interim periods are not necessarily indicative of results to be expected for the full year due to, among other reasons, the continued uncertainty of general economic conditions due to the COVID-19 pandemic that has impacted, and may continue to impact, our sales channels, supply chain, manufacturing operations, workforce, or other key aspects of our operations.
The notes included herein should be read in conjunction with the Company's audited consolidated financial statements included in the Company's Annual Report on Form 10-K/A filed with the SEC on April 30, 2021 (the "2020 Form 10-K/A").
Held for Sale
During the third quarter of 2021, the Company determined a heavy industrial UPS business within the Europe, Middle East & Africa reportable segment, met the held for sale accounting and reporting criteria. As a result of the held for sale classification, the Company recorded a $8.7 impairment in "Asset impairment" on the Condensed Consolidated Statement of Earnings (Loss), to adjust the business to the current fair value, less expected costs to sell. As of September 30, 2021, current assets, property plant and equipment, net and other current assets of $30.9, $9.0 and $3.1, respectively have been classified as held for sale and included in "Other current assets", current liabilities and other long-term liabilities of $16.5 and $3.9, respectively, have been classified as held of sale and included in "Accrued expenses and other liabilities" on the Unaudited Condensed Consolidated Balance Sheets. In October 2021, the Company signed an agreement for approximately 20.0 EUR in cash proceeds from the transaction.
(3) REVENUE
The Company recognizes revenue from the sale of manufactured products and services when control of promised goods or services are transferred to customers in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods or services.
7

Disaggregation of Revenues
Beginning in 2020, sales were moved within product and service offering categories to reflect a strategic realignment within the Company's matrix organizational structure. Comparative results for the three and nine months ended September 30, 2020 have been adjusted to reflect this modification. Additionally, product and service offering category names were revised as follows: Services & software solutions changed to Service & spares, and I.T. edge & infrastructure changed to Integrated rack solutions. There was no change in the description of the Critical infrastructure & solutions offering.
The following table disaggregates our revenue by business segment, product and service offering and timing of transfer of control:
Three Months Ended September 30, 2021
Americas Asia Pacific Europe, Middle East, & Africa Total
Sales by Product and Service Offering:
Critical infrastructure & solutions $ 291.9  $ 234.0  $ 180.4  $ 706.3 
Services & spares 180.2  104.4  80.8  365.4 
Integrated rack solutions 65.1  56.2  35.9  157.2 
Total $ 537.2  $ 394.6  $ 297.1  $ 1,228.9 
Timing of revenue recognition:
Products and services transferred at a point in time $ 363.5  $ 316.0  $ 253.3  $ 932.8 
Products and services transferred over time 173.7  78.6  43.8  296.1 
Total $ 537.2  $ 394.6  $ 297.1  $ 1,228.9 
Three Months Ended September 30, 2020
Americas Asia Pacific Europe, Middle East, & Africa Total
Sales by Product and Service Offering: (1)
Critical infrastructure & solutions $ 278.7  $ 239.6  $ 138.2  $ 656.5 
Services & spares 168.3  94.8  77.9  341.0 
Integrated rack solutions 85.0  45.2  34.3  164.5 
Total $ 532.0  $ 379.6  $ 250.4  $ 1,162.0 
Timing of revenue recognition:
Products and services transferred at a point in time $ 376.7  $ 302.6  $ 185.9  $ 865.2 
Products and services transferred over time 155.3  77.0  64.5  296.8 
Total $ 532.0  $ 379.6  $ 250.4  $ 1,162.0 
(1)Comparative results for Critical infrastructure & solutions, Services & spares and Integrated rack solutions for the three months ended September 30, 2020 have been adjusted by $5.8, $0.9, and $(6.7), respectively, to reflect the strategic realignment described above.
Nine Months Ended September 30, 2021
Americas Asia Pacific Europe, Middle East, & Africa Total
Sales by Product and Service Offering:
Critical infrastructure & solutions $ 877.2  $ 690.0  $ 494.1  $ 2,061.3 
Services & spares 513.4  305.8  229.9  1,049.1 
Integrated rack solutions 213.0  154.1  110.1  477.2 
Total $ 1,603.6  $ 1,149.9  $ 834.1  $ 3,587.6 
Timing of revenue recognition:
Products and services transferred at a point in time $ 1,111.1  $ 913.3  $ 696.6  $ 2,721.0 
Products and services transferred over time 492.5  236.6  137.5  866.6 
Total $ 1,603.6  $ 1,149.9  $ 834.1  $ 3,587.6 
8

Nine Months Ended September 30, 2020
Americas Asia Pacific Europe, Middle East, & Africa Total
Sales by Product and Service Offering: (1)
Critical infrastructure & solutions $ 769.9  $ 549.6  $ 343.0  $ 1,662.5 
Services & spares 491.0  260.5  207.8  959.3 
Integrated rack solutions 222.4  116.3  104.5  443.2 
Total $ 1,483.3  $ 926.4  $ 655.3  $ 3,065.0 
Timing of revenue recognition:
Products and services transferred at a point in time $ 1,022.3  $ 720.4  $ 505.1  $ 2,247.8 
Products and services transferred over time 461.0  206.0  150.2  817.2 
Total $ 1,483.3  $ 926.4  $ 655.3  $ 3,065.0 
(1)Comparative results for Critical infrastructure & solutions, Services & spares and Integrated rack solutions for the nine months ended September 30, 2020 have been adjusted by $15.6, $5.6, and $(21.3), respectively, to reflect the strategic realignment described above.

The opening and closing balances of our current and long-term contract assets and current and long-term deferred revenue were as follows:
Balances at
September 30, 2021
Balances at December 31, 2020
Deferred revenue - current (1)
$ 234.4  $ 199.6 
Deferred revenue - noncurrent (2)
44.4  38.8 
Other contract liabilities - current (1)
61.8  36.1 
(1)    Current deferred revenue and contract liabilities are included within accrued expenses and other liabilities.
(2)    Noncurrent deferred revenue is recorded within other long-term liabilities.
Deferred revenue - noncurrent consists primarily of maintenance, extended warranty and other service contracts. We expect to recognize revenue of $9.1, $19.7 and $15.6 in fiscal year 2022, fiscal year 2023, and thereafter, respectively.
(4) RESTRUCTURING COSTS
Restructuring costs include expenses associated with the Company's efforts to continually improve operational efficiency and reposition its assets to remain competitive on a worldwide basis. Plant closing and other costs include costs of moving fixed assets, employee training, relocation, and facility costs.
Restructuring costs by business segment were as follows:
Three Months Ended September 30, 2021 Three Months Ended September 30, 2020 Nine Months Ended September 30, 2021 Nine Months Ended September 30, 2020
Americas $ 0.3  $ 13.7  $ 2.4  $ 14.8 
Asia Pacific —  10.6  3.4  10.8 
Europe, Middle East & Africa(1)
(4.1) 41.4  (6.8) 42.2 
Corporate —  6.0  0.3  5.2 
Total $ (3.8) $ 71.7  $ (0.7) $ 73.0 
(1)    During the third quarter of 2021, a previously recorded restructuring reserve was reversed due to the planned sale of a heavy industrial UPS business, refer to Note 2 for more information.
The change in the liability for the restructuring of operations during the nine months ended September 30, 2021 were as follows:
December 31, 2020  Expense Paid/Utilized September 30, 2021
Severance and benefits $ 68.9  $ (4.8) $ (21.0) $ 43.1 
Plant closing and other 0.4  4.1  (3.9) 0.6 
Total $ 69.3  $ (0.7) $ (24.9) $ 43.7 

9

The change in the liability for the restructuring of operations during the nine months ended September 30, 2020 were as follows:
December 31, 2019  Expense Paid/Utilized September 30, 2020
Severance and benefits $ 21.6  $ 70.7  $ (15.6) $ 76.7 
Plant closing and other 0.6  2.3  (2.3) 0.6 
Total $ 22.2  $ 73.0  $ (17.9) $ 77.3 
(5) DEBT
Long-term debt, net, consisted of the following as of September 30, 2021 and December 31, 2020:
September 30, 2021 December 31, 2020
Term Loan due 2027 at 2.83% and 3.15% at September 30, 2021 and December 31, 2020, respectively.
$ 2,167.1  $ 2,183.5 
Unamortized discount and issuance costs (26.9) (31.0)
2,140.2  2,152.5 
Less: Current Portion (21.8) (22.0)
Total long-term debt, net of current portion $ 2,118.4  $ 2,130.5 
Contractual maturities of the Company’s debt obligations as of September 30, 2021 are shown below:
Term Loan
Remainder of 2021 $ 5.5 
2022 21.8 
2023 21.8 
2024 21.8 
2025 21.8 
2026 21.8 
Thereafter 2,052.6 
Total $ 2,167.1 
Amendment to the Term Loan due 2027
On March 10, 2021, Vertiv Group Corporation, a Delaware corporation and an indirect wholly owned subsidiary of the Company ("Vertiv Group" or the "Borrower"), Vertiv Intermediate Holding II Corporation, a Delaware corporation and the direct parent of Vertiv Group ("Holdings"), and certain direct and indirect subsidiaries of the Borrower, as guarantors, entered into an Amendment No. 1 to Term Loan Credit Agreement (the "Term Loan Amendment" and, the Original Term Loan Credit Agreement as amended by the Term Loan Amendment, the "Credit Agreement") with Citibank, N.A., as administrative agent (in such capacity, the “Term Agent”) and various financial institutions from time to time party thereto ("Term Lenders"), which Term Loan Amendment made certain modifications to the Term Loan Credit Agreement entered into by Borrower and the other parties on March 2, 2020 (the "Original Term Loan Credit Agreement"), including reducing the interest rate margins.
Pursuant to the Term Loan Amendment, among other modifications, the interest rate margin for the Borrower’s outstanding term loans under the Credit Agreement was reduced by 0.25%, to 2.75% in respect of term loans bearing interest based on the LIBOR rate and to 1.75% in respect of term loans bearing interest based on a base rate defined in the Credit Agreement. The Company recognized a loss on the extinguishment of debt of $0.4 related to the Amendment for the nine months ended September 30, 2021.
The maturity date for such term loans remains March 2, 2027, and all other material provisions of the Credit Agreement remain materially unchanged.
ABL Revolving Credit Facility
At September 30, 2021, Vertiv Group as the Borrower and certain subsidiaries of the Borrower as co-borrowers (the "Co-Borrowers") had $435.2 of availability under the Asset Based Revolving Credit Facility (the "ABL Revolving Credit Facility") (subject to customary conditions, and subject to separate sublimits for letters of credit, swingline borrowings and borrowings made to certain non-U.S. Co-Borrowers), net of letters of credit outstanding in the aggregate principal amount of $19.8, and taking into account the borrowing base limitations set forth in the ABL Revolving Credit Facility. At September 30, 2021, there was no borrowing balance on the ABL Revolving Credit Facility.
10

(6) LEASES
The Company leases office space, warehouses, vehicles, and equipment. Leases have remaining lease terms of 1 year to 20 years, some of which have renewal and termination options. Termination options are exercisable at the Company's option. Terms and conditions to extend or terminate are recognized as part of the right-of-use assets and lease liabilities where prescribed by the guidance. The majority of our leases are operating leases. Finance leases, which are recorded in "Property, Plant, and Equipment", are immaterial to our condensed consolidated financial statements.
Operating lease expenses are recorded in "Cost of sales" and "Selling, general and administrative expenses" on the Unaudited Condensed Consolidated Statements of Earnings (Loss). Refer to the below table for a summary of these lease expenses:
Three months ended September 30, 2021 Three months ended September 30, 2020 Nine months ended September 30, 2021 Nine months ended September 30, 2020
Operating lease cost $ 14.0  $ 12.8  $ 42.6  $ 38.3 
Short-term and variable lease cost 5.6  6.7  16.1  19.5 
Total lease cost $ 19.6  $ 19.5  $ 58.7  $ 57.8 
Supplemental cash flow information related to operating leases is as follows:
Nine months ended September 30, 2021 Nine months ended September 30, 2020
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash outflows - Payments on operating leases $ 42.1  $ 38.3 
Right-of-use assets obtained in exchange for new lease obligations:
Operating leases $ 52.5  $ 42.0 
Supplemental balance sheet information related to operating leases is as follows:
Financial statement line item September 30, 2021 December 31, 2020
Operating lease right-of-use assets Other assets $ 158.0  $ 145.8 
Operating lease liabilities Accrued expenses and other liabilities 45.9  42.3 
Operating lease liabilities Other long-term liabilities 115.9  107.3 
Total lease liabilities $ 161.8  $ 149.6 
Weighted average remaining lease terms and discount rates for operating leases are as follows:
September 30, 2021 December 31, 2020
Weighted Average Remaining Lease Term 5.6 years 4.5 years
Weighted Average Discount Rate 5.4  % 5.8  %
Maturities of lease liabilities are as follows:
September 30, 2021 December 31, 2020
Operating Leases
2021 $ 13.7  $ 51.0 
2022 49.9  41.4 
2023 41.4  33.4 
2024 28.7  20.9 
2025 17.4  10.4 
Thereafter 42.9  17.2 
Total Lease Payments 194.0  174.3 
Less: Imputed Interest (32.2) (24.7)
Present value of lease liabilities $ 161.8  $ 149.6 

11

(7) INCOME TAXES
The Company's effective tax rate was 38.8%, 32.5%, (31.0)% and (16.7)% for the three and nine months ended September 30, 2021 and 2020, respectively. The effective rates in the current three and nine month periods are influenced by the mix of income between our U.S. and non-U.S. operations, net of changes in valuation allowances, and reflect the impact of non-taxable/non-deductible changes in fair value of the warrant liabilities, as well as a discrete tax adjustment related to legislative changes enacted in the second quarter. The effective tax rate in the nine months ended September 30, 2021 includes the benefit of certain internal reorganizations and tax elections outside the U.S. recognized in the second quarter. The effective rates for the comparative three and nine month periods were primarily influenced by the mix of income between our U.S. and non-U.S. operations, net of changes in valuation allowances. The prior periods also reflect a discrete tax benefit related to a change in our indefinite reinvestment liability caused by legislative changes enacted during the periods and movement in foreign currencies.
The Company has provided for U.S. federal income taxes and foreign withholding taxes on all temporary differences attributed to basis differences in foreign subsidiaries that are not considered indefinitely reinvested. As of September 30, 2021, the Company has certain earnings of certain foreign affiliates that continue to be indefinitely reinvested, but it was not practicable to determine the impact.
(8) RELATED PARTY TRANSACTIONS
Services Agreement
The Company received certain corporate and advisory services from Platinum Equity Advisors, LLC ("Advisors"), and affiliates of Advisors. These services were provided pursuant to a corporate advisory services agreement (the "CASA") between Advisors and the Company. During the three months ended March 31, 2020, the Company recorded $0.5 in charges related to the CASA. This agreement was terminated on February 7, 2020.
During the three months ended March 31, 2020, the Company recorded $25.0 in charges relating to services performed in connection with the business combination. These charges were recorded as a reduction of the cash acquired from GSAH within additional paid-in capital.
During the three months ended March 31, 2020, the Company recorded $5.5 of cash related to a true-up of merger consideration in connection with the business combination.
Transactions with Affiliates of Advisors
The Company also purchased and sold goods in the ordinary course of business with affiliates of Advisors. For the three and nine months ended September 30, 2021 and 2020 purchases were $24.8, $64.9, $17.0 and $40.3, respectively. For the three and nine months ended September 30, 2021 sales were $45.8 and $45.9, respectively. Accounts payable to affiliates of Advisors were $2.6 as of September 30, 2021. Accounts receivable from affiliates of Advisors were $31.9 as of September 30, 2021. There were an insignificant amount of sales, accounts receivable, and accounts payable in 2020 with affiliates of Advisors.
Tax Receivable Agreement
See Note 10 — Financial Instruments and Risk Management for additional information.

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(9) OTHER FINANCIAL INFORMATION
September 30, 2021 December 31, 2020
Reconciliation of cash, cash equivalents, and restricted cash
Cash and cash equivalents $ 743.6  $ 534.6 
Restricted cash included in other current assets 8.0  8.0 
Total cash, cash equivalents, and restricted cash $ 751.6  $ 542.6 
September 30, 2021 December 31, 2020
Inventories
Finished products $ 240.7  $ 201.0 
Raw materials 229.4  155.7 
Work in process 107.3  89.9 
Total inventories $ 577.4  $ 446.6 
September 30, 2021 December 31, 2020
Property, plant and equipment, net
Machinery and equipment $ 338.1  $ 322.4 
Buildings 242.8  255.5 
Land 42.4  47.4 
Construction in progress 19.2  23.1 
Property, plant and equipment, at cost 642.5  648.4 
Less: Accumulated depreciation (254.1) (220.8)
Property, plant and equipment, net $ 388.4  $ 427.6 
September 30, 2021 December 31, 2020
Accrued expenses and other liabilities
Deferred revenue $ 234.4  $ 199.6 
Accrued payroll and other employee compensation 129.1  138.5 
Litigation reserve (see note 14)
—  96.6 
Contract liabilities (see note 3)
61.8  36.1 
Operating lease liabilities 45.9  42.3 
Product warranty 29.9  36.5 
Restructuring (see note 4)
43.7  69.3 
Other 280.8  282.9 
Total $ 825.6  $ 901.8 
2021 2020
Change in product warranty accrual
Beginning balance, January 1 $ 36.5  $ 43.3 
Provision charge to expense 11.2  18.6 
Paid/utilized (17.8) (28.7)
Ending balance, September 30,
$ 29.9  $ 33.2 
(10) FINANCIAL INSTRUMENTS AND RISK MANAGEMENT
In accordance with ASC 820, the Company uses a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. Observable inputs are from sources independent of the Company. Unobservable inputs reflect the Company’s assumptions about the factors market participants would use in valuing the asset or liability developed based upon the best information available in the circumstances. These tiers include the following:
Level 1 — inputs include observable unadjusted quoted prices in active markets for identical assets or liabilities
Level 2 — inputs include other than quoted prices in active markets that are either directly or indirectly observable
Level 3 — inputs include unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions
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In determining fair value, the Company uses various valuation techniques and prioritizes the use of observable inputs. The availability of observable inputs varies from instrument to instrument and depends on a variety of factors including the type of instrument, whether the instrument is actively traded and other characteristics particular to the instrument. For many financial instruments, pricing inputs are readily observable in the market, the valuation methodology used is widely accepted by market participants and the valuation does not require significant management judgment. For other financial instruments, pricing inputs are less observable in the marketplace and may require management judgment.
Recurring fair value measurements
We elected to apply fair value option accounting to the Tax Receivable Agreement. A summary of the Company's financial instruments recognized at fair value, and the fair value measurements used, follows:
Balance Sheet Location Total Quoted prices in active markets for identical assets (Level 1) Other observable inputs (Level 2) Unobservable inputs (Level 3)
September 30, 2021
Assets:
Interest rate swaps Other noncurrent assets $ 5.4  $ —  $ 5.4  $ — 
Total assets $ 5.4  $ —  $ 5.4  $ — 
Liabilities:
Interest rate swaps Accrued expenses and other liabilities $ 10.2  $ —  $ 10.2  $ — 
Tax Receivable Agreement Other long-term liabilities 162.0  —  —  162.0 
Private warrants Warrant liabilities 140.0  —  140.0  — 
Total liabilities $ 312.2  $ —  $ 150.2  $ 162.0 
Balance Sheet Location Total Quoted prices in active markets for identical assets (Level 1) Other observable inputs (Level 2) Unobservable inputs (Level 3)
December 31, 2020
Liabilities:
Tax Receivable Agreement Other long-term liabilities $ 155.6  $ —  $ —  $ 155.6 
Interest rate swaps Accrued expenses and other liabilities 10.3  —  10.3  — 
Interest rate swaps Other long-term liabilities 22.5  —  22.5  — 
Public warrants Current portion of warrant liabilities 68.5  68.5  —  — 
Private warrants Warrant liabilities 87.7  —  87.7  — 
Total liabilities $ 344.6  $ 68.5  $ 120.5  $ 155.6 

Tax Receivable Agreement — The Company has estimated total payments of approximately $191.5 on an undiscounted basis. The initial fair value of the estimated liability resulting from the business combination of $133.4 was included as an adjustment to Additional paid in capital. Subsequent measurements are recorded in "Interest expense, net" in the Unaudited Condensed Consolidated Statements of Earnings (Loss) and "Accumulated other comprehensive income" in the Unaudited Condensed Consolidated Balance Sheets, as appropriate based on the passage of time, change in risk-free rate and implied credit spread. Cash flows of the Tax Receivable Agreement are discounted at an appropriate rate for the applicable duration of the instrument adjusted for our own credit spread. The fair value movement on the tax receivable agreement attributable to our own credit risk spread is recorded in "Accumulated other comprehensive income" in the Unaudited Condensed Consolidated Balance Sheets. These estimates and assumptions are subject to change, which may materially affect the measurement of the liability.
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We recorded $1.6, $3.3, $2.7 and $18.8 of accretion expense in "Interest expense, net" for the three and nine months ended September 30, 2021 and 2020, respectively, in the Unaudited Condensed Consolidated Statement of Earnings (Loss). An unrealized gain (loss) of $2.2, $(3.1), $(11.1) and $5.1 was recorded in "Accumulated other comprehensive income" in the Unaudited Condensed Consolidated Balance Sheets, related to the change in fair value of the tax receivable liability for the three and nine months ended September 30, 2021 and 2020, respectively.
The value of the Tax Receivable Agreement is determined using Level 3 inputs. The measurement is calculated using unobservable inputs based on the Company’s own assumptions including the timing and amount of future taxable income and realizability of tax attributes. When valuing the tax receivable liability at September 30, 2021, we utilized a discount rate of 3.1%. The discount rate was determined based on the risk-free rate and Vertiv's implied credit spread. A one percentage point change in the discount rate would result in a change in value of approximately $11.0 at September 30, 2021. Significant changes in unobservable inputs could result in material changes to the tax receivable liability.
Details of the changes in value for the Tax Receivable Agreement are as follows:
2021 2020
Beginning liability balance, January 1 $ 155.6  $ — 
Tax receivable agreement, initially recorded —  133.4 
Change in fair value 6.4  13.7 
Ending liability balance, September 30,
$ 162.0  $ 147.1 

Interest rate swaps — From time to time the Company may enter into derivative financial instruments designed to hedge the variability in interest expense on floating rate debt. Derivatives are recognized as assets or liabilities in the Consolidated Balance Sheets at their fair value. When the derivative instrument qualifies as a cash flow hedge, changes in the fair value are deferred through other comprehensive earnings, depending on the nature and effectiveness of the offset.
Concurrent with the refinancing on March 2, 2020, the Company designated certain interest rate swaps with an initial notional amount of $1,200.0 as cash flow hedges effectively swapping such amount in LIBOR based floating rate debt for fixed rate debt.
The Company uses interest rate swaps to manage the interest rate mix of our total debt portfolio and related overall cost of borrowing. At September 30, 2021 interest rate swap agreements designated as cash flow hedges effectively swapped a notional amount of $1,000.0 of LIBOR based floating rate debt for fixed rate debt. Our interest rate swaps mature in March 2027. As of September 30, 2021 the fair value of interest rate swaps was $4.8 and was recorded in "Accumulated other comprehensive (loss) income" on the Unaudited Condensed Consolidated Balance Sheets. The total fair value at September 30, 2021 consisted of $10.2 current portion recorded in "Accrued expenses and other liabilities" in the Unaudited Condensed Consolidated Balance Sheets and a $5.4 non-current portion recorded in "Other assets". The Company recognized $2.7, $7.9, $2.9 and $3.4 in earnings for the three and nine months ended September 30, 2021 and 2020, respectively. At September 30, 2021, the Company expects that approximately $10.2 of pre-tax net losses on cash flow hedges will be reclassified from Accumulated other comprehensive income (loss) into earnings during the next twelve months.
The interest rate swaps are valued using the LIBOR yield curves at the reporting date. Counterparties to these contracts are highly rated financial institutions. The fair values of the Company’s interest rate swaps are adjusted for nonperformance risk and creditworthiness of the counterparty through the Company’s credit valuation adjustment (“CVA”). The CVA is calculated at the counterparty level utilizing the fair value exposure at each payment date and applying a weighted probability of the appropriate survival and marginal default percentages.
Net investment hedge — During the three months ended September 30, 2021, the Company designated certain intercompany debt to hedge a portion of its investment in foreign subsidiaries and affiliates. Realized and unrealized translation adjustments from these hedges were insignificant and are included in "Foreign currency translation" in the Unaudited Condensed Consolidated Statement of Other comprehensive income (loss). As of September 30, 2021, approximately $50 of the Company's intercompany debt were designated to hedge investments in certain foreign subsidiaries and affiliates.
Public warrants — as the Company's Public warrants were traded in active markets, their value was derived using quoted market prices and are classified as Level 1 financial instruments.
Private warrants — the fair value of the Private warrants is considered a Level 2 valuation and is determined using the Black-Sholes-Merton valuation model.
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The significant assumptions which the Company used in the model are:
Warrant valuation inputs September 30, 2021 December 31, 2020
Stock price $ 24.09  $ 18.67 
Strike price $ 11.50  $ 11.50 
Remaining life 3.35 4.10
Volatility 33.4  % 29.0  %
Interest rate (1)
0.61  % 0.27  %
Dividend yield (2)
0.04  % 0.05  %
(1)    Interest rate determined from a constant maturity treasury yield
(2)    September 30, 2021 and December 31, 2020 dividend yield assumes $0.01 per share per annum.

Foreign currency exchange rate risk management
We conduct business in several major international currencies and are, therefore, subject to risks associated with changing foreign currency exchange rates. We enter into various contracts that change in value as foreign currency exchange rates change to manage this exposure. Such contracts limit exposure to both favorable and unfavorable currency exchange rate fluctuations.
Other fair value measurements
We determine the fair value of debt using Level 2 inputs based on quoted market prices. The following table presents the estimated fair value and carrying value of long-term debt, including the current portion of long-term debt as of September 30, 2021 and December 31, 2020.
  September 30, 2021 December 31, 2020
  Fair Value
Par Value (1)
Fair Value
Par Value (1)
Term Loan due 2027 $ 2,153.6  $ 2,167.1  $ 2,169.9  $ 2,183.5 
(1)See Note 5 — Debt for additional information

(11) ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)
Activity in accumulated other comprehensive income (loss) is as follows:
Three months ended September 30, 2021 Three months ended September 30, 2020 Nine months ended September 30, 2021 Nine months ended September 30, 2020
Foreign currency translation, beginning $ 89.0  $ (9.5) $ 104.9  $ 32.9 
Other comprehensive income (loss) (28.0) 46.1  (43.9) 3.7 
Foreign currency translation, ending 61.0  36.6  61.0  36.6 
Interest rate swaps, beginning (7.5) (35.5) (32.8) — 
Unrealized gain (loss) deferred during the period (1)
2.7  (2.3) 28.0  (37.8)
Interest rate swaps, ending (4.8) (37.8) (4.8) (37.8)
Pension, beginning (20.3) (15.0) (19.7) (14.8)
Actuarial gains (losses) recognized during the period, net of income taxes 0.1  —  (0.5) (0.2)
Pension, ending (20.2) (15.0) (20.2) (15.0)
Tax receivable agreement, beginning (6.2) 16.2  (0.9) — 
Unrealized gain (loss) during the period (2)
2.2  (11.1) (3.1) 5.1 
Tax receivable agreement, ending (4.0) 5.1  (4.0) 5.1 
Accumulated other comprehensive income (loss) $ 32.0  $ (11.1) $ 32.0  $ (11.1)
(1)During the three and nine months ended September 30, 2021 and 2020, $2.7, $7.9, $2.9 and $3.4, respectively, was reclassified into earnings.
(2)The fair value movement on the Tax Receivable Agreement attributable to our own credit risk spread is recorded in other comprehensive (loss) income.

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(12) SEGMENT INFORMATION
Beginning in 2021, the primary income measure used for assessing segment performance and making operating decisions is operating profit (loss). Segment performance is assessed exclusive of Corporate and other costs, foreign currency gain (loss), and amortization of intangibles. Corporate and other costs primarily include headquarters management costs, stock-based compensation, other incentive compensation, global IT costs, change in warrant liabilities, asset impairments, and costs that support global product platform development and offering management.
Vertiv determines its reportable segments based on how operations are managed internally for the products and services sold to customers, including how the results are reviewed by the chief operating decision maker (CODM), which includes determining resource allocation methodologies used for reportable segments. During 2021, we reorganized our internal reporting and realigned our operating segment structure to how our CODM, our Chief Executive Officer, now allocates resources and makes decisions. The changes resulted in the identification of two new operating segments, 1) Greater China and 2) Australia & New Zealand, South East Asia and India (ASI) which previously were reported as our legacy Asia Pacific operating segment. Given the similarities of economic characteristics and other qualitative factors, we aggregate these operating segments, such that our reportable segments are unchanged.
In conjunction with the realignment, the Company concluded the new operating segments also comprised reporting units and the company tested goodwill for impairment for each reporting unit both immediately before and immediately after the business realignment. The Company allocated goodwill to the two new reporting units based on their relative fair value. The goodwill impairment tests under both the legacy and new reporting unit structures concluded that no impairment existed as of the date of the change.
Summarized information about the Company’s results of operations by reportable segment and product and service offering follows:
Americas includes products and services sold for applications within the data center, communication networks and commercial/industrial markets in North America and Latin America. This segment’s principal product and service offerings include:
Critical infrastructure & solutions includes AC and DC power management, thermal management, and modular hyperscale type data center sites.
Integrated rack solutions includes racks, rack power, rack power distribution, rack thermal systems, and configurable integrated solutions; and hardware for managing I.T. equipment.
Services & spares includes preventative maintenance, acceptance testing, engineering and consulting, performance assessments, remote monitoring, training, spare parts, and digital critical infrastructure software.
Asia Pacific includes products and services sold for applications within the data center, communication networks and commercial/industrial markets throughout North Asia and ASI. Products and services offered are similar to the Americas segment.
Europe, Middle East & Africa includes products and services sold for applications within the data center, communication networks and commercial/industrial markets in Europe, Middle East & Africa. Products and services offered are similar to the Americas segment.
Reportable Segments
Sales Three months ended September 30, 2021 Three months ended September 30, 2020 Nine months ended September 30, 2021 Nine months ended September 30, 2020
Americas $ 542.1  $ 537.4  $ 1,616.2  $ 1,494.8 
Asia Pacific 417.2  395.6  1,211.1  975.2 
Europe, Middle East & Africa 306.4  262.7  867.0  690.6 
1,265.7  1,195.7  3,694.3  3,160.6 
Eliminations (36.8) (33.7) (106.7) (95.6)
Total $ 1,228.9  $ 1,162.0  $ 3,587.6  $ 3,065.0 
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Intersegment sales (1)
Three months ended September 30, 2021 Three months ended September 30, 2020 Nine months ended September 30, 2021 Nine months ended September 30, 2020
Americas $ 4.9  $ 5.4  $ 12.6  $ 11.5 
Asia Pacific 22.6  16.0  61.2  48.8 
Europe, Middle East & Africa 9.3  12.3  32.9  35.3 
Total $ 36.8  $ 33.7  $ 106.7  $ 95.6 
(1)Intersegment selling prices approximate market prices.
Operating profit (loss) (1)
Three months ended September 30, 2021 Three months ended September 30, 2020 Nine months ended September 30, 2021 Nine months ended September 30, 2020
Americas $ 113.4  $ 133.1  $ 368.4  $ 354.6 
Asia Pacific 69.4  53.6  185.3  130.6 
Europe, Middle East & Africa 59.0  0.9  154.8  49.2 
Total reportable segments 241.8  187.6  708.5  534.4 
Foreign currency gain (loss) (4.9) (11.7) (2.1) (16.3)
Corporate and other (123.5) (108.3) (347.3) (327.5)
Total corporate, other and eliminations (128.4) (120.0) (349.4) (343.8)
Amortization of intangibles (31.6) (32.5) (95.3) (97.1)
Operating profit (loss) $ 81.8  $ 35.1  $ 263.8  $ 93.5 
(1)Beginning in the first quarter of 2021, operating profit (loss) is the primary income measure used for assessing segment performance and making operating decisions. Comparative results for the three and nine months ended September 30, 2020 have been presented in conformity with the updated format.
(13) EARNINGS (LOSS) PER SHARE
Basic earnings per ordinary share is computed by dividing net earnings attributable to holders of the Company's Class A common shares by the weighted average number of common shares outstanding during the period. Diluted earnings per ordinary share is computed by dividing net earnings attributable to holders of the Company's Class A common shares by the weighted average number of common shares outstanding during the period increased by the number of additional shares that would have been outstanding related to potentially dilutive securities or instruments, if the impact is dilutive.
The details of the earnings per share calculations for the three and nine months ended September 30, 2021 and 2020 are as follows (in millions, except per share and per share amounts):
Three months ended September 30, 2021 Three months ended September 30, 2020 Nine months ended September 30, 2021 Nine months ended September 30, 2020
Net income (loss) attributable to common shareholders $ 56.2  $ (103.5) $ 97.6  $ (367.8)
Weighted-average number of ordinary shares outstanding - basic 352,482,900  328,411,705  351,439,095  299,266,849 
Dilutive effect of equity-based compensation and warrants 10,715,801  —  4,535,533  — 
Weighted-average number of ordinary shares outstanding - diluted 363,198,701  328,411,705  355,974,628  299,266,849 
Net income per share attributable to common shareholders
Basic $ 0.16  $ (0.32) $ 0.28  $ (1.23)
Diluted 0.15  (0.32) 0.27  (1.23)
The dilutive effect of stock awards and warrants was 10.7 million and 4.5 million shares during the three and nine months ended September 30, 2021, respectively. Additional stock awards and warrants were also outstanding during the three and nine months ended September 30, 2021, but were not included in the computation of diluted earnings per common share because the effect would be anti-dilutive. Such anti-dilutive stock awards represented 1.8 million shares for the three months ended September 30, 2021. Such anti-dilutive stock awards and warrants represented 2.1 million and 5.7 million shares for the nine months ended September 30, 2021, respectively.
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The dilutive effect of stock awards was zero during the three and nine months ended September 30, 2020. Additional stock awards and warrants were also outstanding during the three and nine months ended September 30, 2020, but were not included in the computation of diluted earnings per common share because the effect would be anti-dilutive. Such anti-dilutive stock awards and warrants represented zero and 33.5 million shares for the three months ended September 30, 2020, and 1.6 million and 33.5 million shares for the nine months ended September 30, 2020, respectively.
(14) COMMITMENTS AND CONTINGENCIES
The Company is a party to a number of pending legal proceedings and claims, including those involving general and product liability and other matters. The Company accrues for such liabilities when it is probable that future costs will be incurred and such costs can be reasonably estimated. Accruals are based on developments to date; management’s estimates of the outcomes of these matters; the Company’s experience in contesting, litigating and settling similar matters; and any related insurance coverage. While the Company believes that a material adverse impact is unlikely, given the inherent uncertainty of litigation, a future development in these matters could have a material adverse impact on the Company. The Company is unable to estimate any additional loss or range of loss that may result from the ultimate resolution of these matters, other than those described below.
On May 10, 2018, the jury in the case of Bladeroom Group Limited, et al. v. Facebook, Inc., Emerson Electric Co., Emerson Network Power Solutions, Inc. (now known as Vertiv Solutions, Inc.) and Liebert Corporation returned a verdict in favor of the plaintiff in the amount of $30.0. The jury found the defendants breached a confidentiality agreement with Bladeroom, were unjustly enriched by such breach, improperly disclosed or used certain of the plaintiff’s trade secrets and the misappropriation of such trade secrets was willful and malicious. On March 11, 2019, the court entered orders in the case affirming the original award of $30.0 and imposing an additional award for punitive damages of $30.0 as well as attorney fees and interest. Under the terms of the purchase agreement with Emerson, the Company is indemnified for damages arising out of or relating to this case, including the above amounts. On August 12, 2019, judgment was entered, confirming the award entered on March 11, 2019. Emerson submitted an appeal, and in connection with the appeal submitted a surety bond underwritten by a third-party insurance company in the amount of $120.1. As of December 31, 2020, the Company had accrued $96.2 in accrued expenses, the full amount of the judgment, and recorded an offsetting indemnification receivable of $96.2 in other current assets related to this matter.
On August 30, 2021, the appellate court entered a judgment that the district court erred in its prior rulings and vacated the district court's judgment and post-verdict orders on appeal and remanded the case back to the district court for a new trial; and further vacated orders related to attorneys' and expert witness' fees. As a result of the appellate court’s ruling, the Company reversed the prior accrual of $96.2 in accrued expenses for the full amount of the judgment, and reversed the associated indemnification receivable as of September 30, 2021. On September 27, 2021 Bladeroom filed a petition requesting a rehearing en banc with the 9th Circuit.
On December 28, 2017, Vertiv acquired Energy Labs, Inc. (“Energy Labs”). The purchase agreement contained a provision for contingent consideration in the form of an earn-out payment based on the achievement of 2018 operating results. The range of outcomes was zero to $34.5. On June 4, 2019, Vertiv notified the selling shareholders of Energy Labs of Vertiv’s determination that the applicable 2018 operating results had not been achieved and that no contingent consideration was due to the selling shareholders. On September 6, 2019, the selling shareholders of Energy Labs notified Vertiv of their dispute regarding the contingent consideration due to them. The selling shareholders assert that the applicable 2018 operating results were exceeded and that Vertiv owes $34.5 in earn-out, the highest amount of earn-out possible under the agreement. As of September 30, 2021 and December 31, 2020, the Company had accrued $2.8 in accrued expenses. Discovery is underway and a trial has been scheduled for February 2022. While Vertiv believes it has meritorious defenses against the assertions of the selling shareholders of Energy Labs, Vertiv is unable at this time to predict the outcome of this dispute. If Vertiv is unsuccessful, the ultimate resolution of this dispute could result in a loss of up to $31.7 in excess of the $2.8 accrued as well as costs and legal fees.
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On August 3, 2021, an American Arbitration Association arbitration hearing commenced with respect to a 2018 claim filed by Vertiv against SVO Building One, LLC (“SVO”) alleging damages of approximately $12.0 with respect to (i) unremitted payment for work and materials in connection with, the design, engineering, procurement, installation, construction, and commissioning of a data center located in Sacramento, California and (ii) damages and injunctive relief relating to SVO’s unauthorized use of Vertiv’s intellectual property and work product. SVO filed a counterclaim in 2018 alleging damages of approximately $18.0 relating to (i) allegations that Vertiv was not a duly licensed contractor at all times during the project in violation of California’s contractor license regulations, (ii) breach of warranty, and (iii) gross negligence. On September 3, 2021, the arbitrator issued an interim phase one ruling finding (1) that Vertiv was in violation of California contractor license regulations and was barred from recovery of approximately $9.0 for work performed and equipment delivered in connection with the project, as well as requiring disgorgement plus interest of $10.0, (2) SVO was not in violation of California’s contractor license regulations, and (3) Vertiv and SVO agreed to a traditional baseball arbitration provision under the terms and conditions for the project, wherein each party is required to submit a proposed final award to the arbitrator for consideration, and the arbitrator is required to select one of the proposed awards submitted by the parties as the final award in the arbitration and is prohibited from issuing an alternative award. The second phase of the arbitration is expected to commence in the fourth quarter of 2021. As of September 30, 2021, SVO has amended its damages claim to approximately $75.0. While Vertiv believes its claims are meritorious and defenses against certain assertions of SVO, Vertiv is unable at this time to predict the outcome of this dispute. Vertiv also has both a right to appeal the ultimate arbitration ruling and claims for indemnification against third parties and insurers for part or all of any judgment that may ultimately be entered against it.
At September 30, 2021, there were no known contingent liabilities (including guarantees, taxes and other claims) that management believes will be material in relation to the Company’s consolidated financial statements, nor were there any material commitments outside the normal course of business other than those described above.
(15) SUBSEQUENT EVENTS
Acquisition
On September 8, 2021, Vertiv Holdings Ireland DAC, a private company limited by shares incorporated in Ireland (the "Irish buyer"), Vertiv International Holding Corporation, an Ohio corporation (the “US Buyer” and together with the Irish Buyer, the “Buyers” and each a “Buyer”) and the Company entered into a sale and purchase agreement (the "Acquisition Agreement") to acquire the shares of E+I Engineering Ireland Limited, a private company limited by shares incorporated in Ireland, and Powerbar Gulf LLC - Foreign Direct Investment, a non-freezone limited liability company incorporated and registered in Ras Al Khaimah Economic Zone-Government of Ras Al Khaimah ("E+I"). Under the terms of the Acquisition Agreement, E+I will receive upfront consideration of approximately $1.8 billion, consisting of $1.2 billion in cash and approximately $630.0 of Vertiv common stock, issued at the volume-weighted average closing price per share over the 60-day trading period ended September 7, 2021, and equating to 23.1 million shares of Vertiv common stock. Vertiv will pay $100.0 of additional cash consideration if E+I achieves EBITDA of $146.0 in 2022 and an incremental $100.0 cash consideration if E+I achieves EBITDA of $156.0 or higher in 2022. The Acquisition closed on November 1, 2021.
E+I was founded in 1986 and is a leading independent provider of switchgear, busway and modular power units serving data center and C&I customers in Europe. The combination is expected to broaden our power infrastructure portfolio, expand our services opportunities by providing additional upfront project start-up and ongoing maintenance services, enable us to offer complete integrated power and modular solutions, help Vertiv continue its participation with Hyperscale cloud providers and expand its existing relationships as well as gain new customers with enhanced offerings and ultimately, offer customers more flexible and scalable power deployment options.
In conjunction with the acquisition mentioned above, the Company, through a wholly owned subsidiary, issued $850.0 of Senior Secured Notes as of October 22, 2021.
Senior Secured Notes due 2028
On October 22, 2021, Vertiv Group Corporation (the “Issuer”), completed its offering (the “Offering”) of $850.0 aggregate principal amount of its Senior Secured Notes due 2028 (the “Notes”) in a private placement at par. The Notes will bear interest at 4.125% per annum and mature on November 15, 2028. The Company incurred $12.0 of debt issuance costs that will be capitalized as part of the Notes.

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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Unless the context otherwise indicates or requires, references to (1) “the Company,” “we,” “us” and “our” refer to Vertiv Holdings Co, a Delaware corporation, and its consolidated subsidiaries following the business combination; (2) “GSAH” refers to GS Acquisition Holdings Corp prior to the business combination; and (3) “Holdings” refers to Vertiv Holdings, LLC and its subsidiaries prior to the business combination. In addition, dollar amounts are stated in millions, except for per share amounts. You should read the following discussion and analysis of our financial condition and results of operations in conjunction with the condensed consolidated financial statements and the notes thereto included elsewhere in this Quarterly Report on Form 10-Q and our Annual Report on Form 10-K/A filed April 30, 2021 for the year ended December 31, 2020.
Cautionary Note Regarding Forward-looking Statements
This Quarterly Report on Form 10-Q, and other statements that Vertiv may make, 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 the financial position, capital structure, indebtedness, business strategy and plans and objectives of Vertiv management for future operations. 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 Quarterly Report on Form 10-Q, 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 or incorporated by reference in this Quarterly Report on Form 10-Q 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 its Annual
Report on Form 10 K/A for the year ended December 31, 2020 filed with the SEC on April 30, 2021. These risk factors and those identified elsewhere in this Quarterly Report on Form 10-Q, among others, could cause actual results to differ materially from historical performance and include, but are not limited to: competition, the ability of Vertiv to grow and manage growth profitably, maintain relationships with customers and suppliers and retain its management and key employees; and factors relating to the business, operations and financial performance of Vertiv and its subsidiaries, including: global economic weakness and uncertainty; risks relating to the continued growth of Vertiv’s customers’ markets; failure to meet or anticipate technology changes; the unpredictability of Vertiv’s future operational results, including the ability to grow and manage growth profitably; 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; risks associated with information technology disruption or security; risks associated with the implementation and enhancement of information systems; failure to properly manage Vertiv’s supply chain or difficulties with third-party manufacturers; competition in the infrastructure technologies industry; failure to realize the expected benefit from any rationalization, restructuring and improvement efforts; disruption of, or changes in, Vertiv’s independent sales representatives, distributors and original equipment manufacturers; failure to obtain performance and other guarantees from financial institutions; failure to realize sales expected from Vertiv’s backlog of orders and contracts; changes to tax law; ongoing tax audits; risks associated with future legislation and regulation of Vertiv’s customers’ markets both in the United States and abroad; costs or liabilities associated with product liability; 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 acquisitions; failure to realize the value of goodwill and intangible assets; the global scope of the Vertiv’s operations; risks associated with Vertiv’s sales and operations in emerging markets; exposure to fluctuations in foreign currency exchange rates; 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; 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,
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including risks associated with the COVID-19 pandemic; risks associated with litigation or claims against Vertiv; Vertiv's ability to realize cost savings in connection with Vertiv's restructuring program; risks associated with Vertiv’s limited history of operating as an independent company; potential net losses in future periods; failure to remediate internal controls over financial reporting; the Company’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 is not fully within our control; the Company’s ability to access funding through capital markets; the Vertiv Stockholder’s significant ownership and influence over the Company; risks associated with Vertiv's obligations to pay the Vertiv Stockholder portions of the tax benefits relating to pre-business combination tax assets and attributes; 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; volatility in Vertiv's stock price due to various market and operational factors; Vertiv's ability to maintain its listing on the NYSE and comply with listing requirements; risks associated with the failure of industry analysts to provide coverage of Vertiv's business or securities; 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 Quarterly Report on Form 10-Q speak only as of the date of this Quarterly Report on Form 10-Q or any earlier date specified for such statements. The Company 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 filed with the SEC by Vertiv required under applicable securities laws. All subsequent written or oral forward-looking statements attributable to the Company or persons acting on the Company’s behalf may be qualified in their entirety by this Cautionary Note Regarding Forward-Looking Statements.
Overview
We are a global leader in the design, manufacturing and servicing of critical digital infrastructure technology that powers, cools, deploys, secures and maintains electronics that process, store and transmit data. We provide this technology to data centers, communication networks and commercial and industrial environments worldwide. We aim to help create a world where critical technologies always work, and where we empower the vital applications of the digital world.
Key Developments and Trends
Below is a summary of selected key developments affecting our business in the nine months ended September 30, 2021:
On December 17, 2020, the Company announced its plans to redeem for cash all of its outstanding public warrants to purchase shares of our Class A common stock. In December 2020, $156.5 of cash was generated from the exercise of 13.6 million public warrants. In January 2021, 9.3 million public warrants were exercised generating cash proceeds of $107.5. Public warrants that remained unexercised as of 5 p.m. New York City time on January 19, 2021 were no longer exercisable, and the registered holders of such unexercised public warrants became entitled to receive the redemption price of $0.01 per warrant. All public warrants were exercised or redeemed as of January 22, 2021.
On March 10, 2021, Vertiv Group Corporation, a Delaware corporation (the “Borrower”) and an indirect wholly owned subsidiary of Vertiv Holdings Co, Vertiv Intermediate Holding II Corporation, a Delaware corporation (“Holdings”) and the direct parent of Vertiv Group, and certain direct and indirect subsidiaries of the Borrower entered into an Amendment No. 1 to Term Loan Credit Agreement (the "Term Loan Amendment") with Citibank, N.A., as administrative agent (in such capacity, the “Term Agent”), and the lenders party thereto, which amended the Term Loan Credit Agreement, dated as of March 2, 2020 (as so amended the “Term Loan Credit Agreement”), by and among Holdings, the Borrower, the Term Agent and the lenders from time to time party thereto, to, among other things, reduce the interest rate margin for the Borrower’s outstanding term loans under the Term Loan Credit Agreement by 0.25%, to 2.75% in respect of term loans bearing interest based on the LIBOR rate and to 1.75% in respect of term loans bearing interest based on a base rate defined in the Term Loan Credit Agreement. The maturity date for such term loans remains March 2, 2027, and all other material provisions of the original Term Loan Credit Agreement remain materially unchanged.
As previously disclosed in our 2020 Annual report on Form 10-K/A as filed on April 30, 2021, we restated the Company’s previously issued consolidated financial statements as of and for the year ended December 31, 2020, as well each of the quarters within 2020 to make the necessary accounting corrections related to warrant accounting.
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On September 8, 2021, Vertiv Holdings Ireland DAC, a private company limited by shares incorporated in Ireland (the “Irish Buyer”), Vertiv International Holding Corporation, an Ohio corporation (the “US Buyer” and together with the Irish Buyer, the “Buyers” and each a “Buyer”) and the Company entered into a sale and purchase agreement (the “Acquisition Agreement”), to acquire shares of E+I Engineering Ireland Limited, a private company limited by shares incorporated in Ireland, and Powerbar Gulf LLC – Foreign Direct Investment, a non-freezone limited liability company incorporated and registered in Ras Al Khaimah Economic Zone-Government of Ras Al Khaimah, from the parties set forth in the Acquisition Agreement (the “Acquisition").
The aggregate purchase price payable by the Buyers is approximately $1.8 billion in upfront consideration plus an additional potential $200.0 in cash, with the additional consideration subject to achieving certain future profit milestones. The upfront consideration consists of $1.2 billion in cash and shares of the Company’s common stock valued at approximately $630.0. The Acquisition closed on November 1, 2021.
In conjunction with the Acquisition, on October 22, 2021, Vertiv Group Corporation (the “Issuer”), completed its offering (the “Offering”) of $850.0 aggregate principal amount of its Senior Secured Notes due 2028 (the “Notes”) in a private placement at par. The Notes will bear interest at 4.125% per annum and mature on November 15, 2028.
Unprecedented measures have been taken by governments and businesses to address the COVID-19 pandemic. These measures have included shelter-in-place orders, restrictions on travel and business operations, temporary closures of businesses, and quarantines. As a result of this pandemic, global economic activity has been curtailed, causing significant volatility and disruption in global financial markets. These responsive measures taken by many countries have affected and could in the future materially impact the Company’s business, results of operations, financial condition and stock price.
During the third quarter of 2021, aspects of the Company’s business continued to be affected by the COVID-19 pandemic. Despite strong market demand, supply chain challenges continued, with critical part shortages driving the need for additional spot buys at increased costs. Additionally, logistical issues have significantly delayed the receipt of materials and, in some cases, the Company cannot procure critical parts at any price, creating production and delivery challenges pressuring the top-line. The Company continues to take actions to address these challenges, which are expected to continue through the first half of 2022.
The extent of the continuing impact of the COVID-19 pandemic on the Company’s operational and financial performance is uncertain and will depend on many factors outside the Company’s control, including, without limitation, the extent, timing and duration of the pandemic; the availability, distribution and effectiveness of vaccines; the imposition of protective public safety measures; and the impact of the pandemic on the global economy and demand for products. Refer to Part I, Item 1A of the 2020 Form 10-K under the heading “Risk Factors,” for more information. The Company continues to monitor the situation and will take further actions as may be required by federal, state, or local governmental authorities, or that we determine are in the best interests of our associates, customers, and shareholders.
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RESULTS OF OPERATIONS
Comparison of the Three Months Ended September 30, 2021 and Three Months Ended September 30, 2020
(Dollars in millions)
Three months ended September 30, 2021
Three months ended September 30, 2020
$ Change % Change
Net sales $ 1,228.9  $ 1,162.0  $ 66.9  5.8  %
Cost of sales 847.2  749.0  98.2  13.1  %
Gross profit 381.7  413.0  (31.3) (7.6) %
Selling, general and administrative expenses 257.8  251.7  6.1  (2.4) %
Amortization of intangibles 31.6  32.5  (0.9) 2.8  %
Restructuring costs (3.8) 71.7  (75.5) 105.3  %
Foreign currency (gain) loss, net 4.9  11.7  (6.8) 58.1  %
Asset impairments 8.7  9.4  (0.7) 7.4  %
Other operating expense (income) 0.7  0.9  (0.2) 22.2  %
Operating profit (loss) 81.8  35.1  46.7  (133.0) %
Interest expense, net 22.4  26.4  (4.0) 15.2  %
Change in fair value of warrant liabilities (32.5) 87.7  (120.2) 137.1  %
Income tax expense 35.7  24.5  11.2  (45.7) %
Net income (loss) $ 56.2  $ (103.5) $ 159.7  154.3  %
Net Sales
Net sales were $1,228.9 in the third quarter of 2021, an increase of $66.9, or 5.8%, compared with $1,162.0 in the third quarter of 2020. The increase in sales was primarily driven by recovery from the COVID-19 pandemic and positive impacts from foreign currency of $21.0. By offering, critical infrastructure & solutions sales increased $49.8 including the positive impacts from foreign currency of $13.8. Services & spares sales increased $24.4, including positive impacts from foreign currency of $4.7. Integrated rack solutions sales decreased $7.3 offset by the positive impacts from foreign currency of $2.5.
Excluding intercompany sales, net sales were $537.2 in the Americas, $394.6 in Asia Pacific and $297.1 in EMEA. Movements in net sales by segment and offering are each detailed in the Business Segments section below.
Cost of Sales
Cost of sales were $847.2 in the third quarter of 2021, an increase of $98.2, or 13.1% compared to the third quarter of 2020. The increase in cost of sales was primarily due to the flow-through impact of higher net sales volume and increased commodity and logistic costs. Gross profit was $381.7 in the third quarter of 2021, or 31.1% of sales, compared to $413.0, or 35.5% of sales in the third quarter of 2020.
Selling, General and Administrative Expenses
Selling, general and administrative expenses (SG&A) were $257.8 in the third quarter of 2021, an increase of $6.1 compared to the third quarter of 2020. SG&A as a percentage of sales were 21.0% in the third quarter of 2021 compared with 21.7% in the third quarter of 2020. The increase in SG&A was primarily driven by prior year fixed cost reduction actions in the response to the COVID-19 pandemic, which did not recur in 2021.
Other Operating Expense
Other operating expenses includes amortization of intangibles, restructuring costs, foreign currency (gain) loss, asset impairments, and other operating expense (income). Other operating expenses were $42.1 for the third quarter of 2021, which was an $84.1 decrease from the third quarter of 2020. The decrease was primarily due to a decrease in restructuring costs of $75.5 and the change in foreign currency loss of $6.8.
Change in Fair Value of Warrant Liabilities
Change in Fair Value of Warrant Liabilities represents the mark-to-market fair value adjustments to the outstanding warrants issued in connection with the initial public offering ("IPO") of GSAH. The change in fair value of the outstanding warrants during the third quarter of 2021 and 2020 resulted in a gain $32.5 and a loss of $87.7, respectively. The change in fair value of stock warrants is the result of changes in market prices and other observable inputs deriving the value of the financial instruments.
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Interest Expense
Interest expense, net, was $22.4 in the third quarter of 2021 compared to $26.4 in the third quarter of 2020. The $4.0 decrease is primarily driven by a $2.3 decrease related to the lower interest rates secured in the amendment to the Term Loan due 2027 during the first quarter of 2021, a $1.1 decrease in accretion expense associated with the Tax Receivable Agreement, and a $0.4 decrease due to net settlement payments on the Company's interest rate swaps as described in Note 10 to the unaudited condensed consolidated financial statements.
Income Taxes
Income tax expense was $35.7 in the third quarter of 2021 versus $24.5 in the third quarter of 2020. The effective rate in the three months ended September 30, 2021 was primarily influenced by the mix of income between our U.S. and non-U.S. operations, net of valuation allowances, and reflects the impact of non-taxable changes in fair value of the warrant liabilities. For the three months ended September 30, 2020, income tax expense was primarily influenced by the mix of income between our U.S. and non-U.S. operations, net of changes in valuation allowances, and discrete tax benefits related to a change in our indefinite reinvestment liability caused by legislative changes and movement in foreign currencies.
Tax expense in the third quarter of 2021 was $11.2 higher than the third quarter of 2020 primarily due to improved performance as well as the change in the mix of income.
Business Segments
The following is detail of business segment results for the three months ended September 30, 2021. Segment profitability is defined as operating profit (loss). Segment margin represents segment operating profit (loss) expressed as a percentage of segment net sales. For reconciliations of segment net sales and earnings to the Company’s consolidated results, see Note 12 — Segment Information, of the Company's condensed consolidated financial statements. Segment net sales are presented excluding intercompany sales.
Americas
(Dollars in millions) Three Months Ended September 30, 2021 Three Months Ended September 30, 2020 $ Change % Change
Net sales $ 537.2  $ 532.0  $ 5.2  1.0  %
Operating profit (loss) 113.4  133.1  (19.7) (14.8) %
Margin 21.1  % 25.0  %
Americas net sales of $537.2 in the third quarter of 2021 increased $5.2, or 1.0% from the third quarter of 2020. By product offering, net sales increased in critical infrastructure & solutions by $13.2 driven by strong growth in Thermal, AC Power, and Custom Solutions offerings, service & spares increased by $11.9 due to improved customer site availability, and partially offset by a $19.9 decrease in integrated rack solutions primarily due to supply chain constraints. Additionally, Americas net sales were positively impacted by foreign currency of approximately $2.3.
Operating profit (loss) in the third quarter of 2021 was $113.4, a decrease of $19.7 compared with the third quarter of 2020. Margin decreased primarily due to increased commodity and logistic costs and supply chain constraints, partially offset by decreased year over year restructuring charges of $13.4.
Asia Pacific
(Dollars in millions) Three Months Ended September 30, 2021 Three Months Ended September 30, 2020 $ Change % Change
Net sales $ 394.6  $ 379.6  $ 15.0  4.0  %
Operating profit (loss) 69.4  53.6  15.8  29.5  %
Margin 17.6  % 14.1  %
Asia Pacific net sales were $394.6 in the third quarter of 2021, an increase of $15.0, or 4.0% from the third quarter of 2020. Sales increases were primarily due to growth in Thermal, AC Power and Rack UPS. By product offering, net sales improved in integrated rack solutions and service & spares by $11.0 and $9.6, respectively, and decreased by $5.6 in critical infrastructure & solutions. Additionally, Asia Pacific net sales were positively impacted by foreign currency of approximately $16.6.
Operating profit (loss) in the third quarter of 2021 was $69.4, an increase of $15.8 compared with the third quarter of 2020. Margin increased primarily due to decreased year over year restructuring charges of $10.6 and fixed cost improvement, partially offset by increased commodity, logistic costs and supply chain constraints.
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Europe, Middle East & Africa
(Dollars in millions) Three Months Ended September 30, 2021 Three Months Ended September 30, 2020 $ Change % Change
Net sales $ 297.1  $ 250.4  $ 46.7  18.7  %
Operating profit (loss) 59.0  0.9  58.1  n/m
Margin 19.9  % 0.4  %
EMEA net sales were $297.1 in the third quarter of 2021, an increase of $46.7, or 18.7% from the third quarter of 2020. Sales increased primarily due to deployment of large colocation data centers, strong execution on backlog, and continued focus on service deliveries. By product offering, net sales improved in all product offering categories including increases in critical infrastructure & solutions, service & spares, and integrated rack solutions by $42.2, $2.9, and $1.6, respectively. Additionally, EMEA net sales were positively impacted by foreign currency of approximately $2.1.
Operating profit (loss) in the third quarter of 2021 was $59.0, an increase of $58.1 compared with the third quarter of 2020. Margin improved primarily due to decreased year over year restructuring charges of $45.5, fixed cost volume leveraging on higher sales, improved operational productivity and new product introductions, partially offset by increased commodity, logistic costs and supply chain constraints.
Vertiv Corporate and Other
Corporate and other costs include costs associated with our headquarters located in Columbus, Ohio, as well as centralized global functions including Finance, Treasury, Risk Management, Strategy & Marketing, IT, Legal, and global product platform development and offering management. Corporate and other costs were $123.5 and $108.3 in the third quarter of 2021 and 2020, respectively. Corporate and other costs increased $15.2 compared with the third quarter of 2020 primarily due to $9.0 of costs related to merger and acquisition costs, a $14.0 increase in costs related to research and development and growth initiatives, partially offset by decreased year over year restructuring charges of $6.0.
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Comparison of the Nine Months Ended September 30, 2021 and Nine Months Ended September 30, 2020
(Dollars in millions) Nine months ended September 30, 2021 Nine months ended September 30, 2020 $ Change % Change
Net sales $ 3,587.6  $ 3,065.0  $ 522.6  17.1  %
Cost of sales 2,438.6  2,018.6  420.0  20.8  %
Gross profit 1,149.0  1,046.4  102.6  9.8  %
Selling, general and administrative expenses 779.6  742.8  36.8  (5.0) %
Amortization of intangibles 95.3  97.1  (1.8) 1.9  %
Restructuring costs (0.7) 73.0  (73.7) 101.0  %
Foreign currency (gain) loss, net 2.1  16.3  (14.2) 87.1  %
Asset impairments 8.7  21.7  (13.0) 59.9  %
Other operating expense (income) 0.2  2.0  (1.8) 90.0  %
Operating profit (loss) 263.8  93.5  170.3  (182.1) %
Interest expense, net 66.5  125.4  (58.9) 47.0  %
Loss on extinguishment of debt 0.4  174.0  (173.6) 99.8  %
Change in fair value of warrant liabilities 52.3  109.3  (57.0) 52.2  %
Income tax expense 47.0  52.6  (5.6) 10.6  %
Net income (loss) $ 97.6  $ (367.8) $ 465.4  126.5  %
Net Sales
Net sales were $3,587.6 in the first nine months of 2021, an increase of $522.6, or 17.1%, compared with $3,065.0 in the first nine months of 2020. The increase in sales was primarily driven by demand gains across each of the Company's product and service offerings, positive impacts from foreign currency of $96.5 and recovery from the COVID-19 pandemic. By product offering, critical infrastructure & solutions sales increased $398.8, which included positive impacts from foreign currency of $58.6. Services & spares sales increased $89.8, which included negative impacts from foreign currency of $24.4. Integrated rack solutions sales increased $34.0, which included the negative impacts from foreign currency of $13.5.
Excluding intercompany sales, net sales were $1,603.6 in the Americas, $1,149.9 in Asia Pacific and $834.1 in EMEA. Movements in net sales by segment and offering are each detailed in the Business Segments section below.
Cost of Sales
Cost of sales were $2,438.6 in the first nine months of 2021, an increase of $420.0, or 20.8% compared to the first nine months of 2020. The increase in cost of sales was primarily due to the flow-through impact of higher net sales volume increased commodity and logistic costs, and supply chain constraints. Gross profit was $1,149.0 in the first nine months of 2021, or 32.0% of sales, compared to $1,046.4, or 34.1% of sales, in the first nine months of 2020.
Selling, General and Administrative Expenses
Selling, general and administrative expenses (SG&A) were $779.6 in the first nine months of 2021, an increase of $36.8 compared to the first nine months of 2020. SG&A as a percentage of sales was 21.7% for the nine months ended September 30, 2021 compared with 24.2% in the nine months ended September 30, 2020. The increase in SG&A was primarily driven by prior year fixed cost reduction actions in the response to the COVID-19 pandemic, including discretionary spending cuts, that resulted in approximately $30.0 of one-time cost savings during 2020 that were not replicated in 2021. These cost saving were offset by one-time transaction related bonuses in 2020.
Other Operating Expenses
Other operating expenses include amortization of intangibles, restructuring costs, foreign currency (gain) loss, and other operating expense (income). Other expenses were $105.6 for the first nine months of 2021, which was a $104.5 decrease from the first nine months of 2020. The decrease was primarily due to a decrease in restructuring costs of $73.7, change in foreign currency (gain) loss of $14.2, and a decrease in asset impairment of $13.0.
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Loss on Extinguishment of Debt
Loss on extinguishment of debt was $0.4 in the first nine months of 2021 and related to lender fees associated with the Term Loan Amendment. This was a $173.6 decrease from the first nine months of 2020 loss that resulted from the repayment of indebtedness from the business combination and the subsequent refinancing transactions.
Change in Fair Value of Warrant Liabilities
Change in Fair Value of Warrant Liabilities represents the mark-to-market fair value adjustments to the outstanding warrants issued in connection with the IPO of GSAH. The change in fair value of the outstanding warrants liability during the first nine months of 2021 and 2020 resulted in a loss of $52.3 and $109.3, respectively. The change in fair value of stock warrants was the result of changes in market prices and other observable inputs deriving the value of the financial instruments.
Interest Expense
Interest expense, net, was $66.5 in the first nine months of 2021 compared to $125.4 in the first nine months of 2020. The $58.9 decrease was primarily due to a $25.4 reduction in interest expense resulting from the repayment of indebtedness in the first half of 2020, a $20.4 decrease related to lower interest rates secured through the debt refinancing, as described in Note 5 to the unaudited condensed consolidated financial statements, a $15.5 decrease in accretion expense associated with the Tax Receivable Agreement, and partially offset by a $4.5 increase due to net settlement payments on the Company's interest rate swaps.
Income Taxes
Income tax expense was $47.0 in the first nine months of 2021 compared to $52.6 in the first nine months of 2020. The effective rate in the first nine months of 2021 was primarily influenced by the mix of income between our U.S. and non-U.S. operations, net of changes in valuation allowances, and reflects the benefit of impact of non-deductible changes in fair value of the warrant liabilities, as well as a discrete tax adjustment related to legislative changes enacted in the period. The effective tax rate includes the benefit of certain internal reorganizations and tax elections outside the U.S. In the first nine months of 2020, income tax expense was primarily influenced by the mix of income between our U.S. and non-U.S. operations, net of changes in valuation allowances, and discrete tax benefits related to a change in our indefinite reinvestment liability caused by legislative changes and movement in foreign currencies.
The tax expense in the first nine months of 2021 was $5.6 lower than the first nine months of 2020 primarily due to the change in mix of income, non-U.S. tax elections and changes in valuation allowances in the U.S.
Business Segments

The following is detail of business segment results for the nine months ended September 30, 2021. Segment profitability is defined as operating profit (loss). Segment margin represents segment operating profit (loss) expressed as a percentage of segment net sales. For reconciliations of segment net sales and earnings to the Company’s consolidated results, see Note 12 — Segment Information, of the Company's condensed consolidated financial statements. Segment net sales are presented excluding intercompany sales.
Americas
(Dollars in millions)