- Strong demand continued. Second quarter orders up 17% (10% from
price) from last year. Record high $4.4 billion backlog
- Strong net sales growth of 11.0% and organic net sales growth
of 7.9% compared with second quarter 2021
- Lowering full year adjusted operating profit guidance to $475
million - $500 million, $37.5 million lower at mid-point of
guidance range including $25 million from foreign currency
- Increasing fourth quarter sales and adjusted operating profit
guidance which positions us well for a strong 2023
Vertiv Holdings Co (NYSE: VRT), a global provider of critical
digital infrastructure and continuity solutions, today reported
financial results for its second quarter ended June 30, 2022.
Vertiv reported second quarter net sales of $1,399 million, an
increase of $139 million, or 11.0%, compared with last year’s
second quarter and a 7.9% organic net sales increase excluding the
impact of foreign currency, acquisitions and divestitures. Foreign
currency negatively impacted second quarter sales by approximately
$60 million. Americas net sales increased 14.6% and were up 6.6%
organically, driven primarily by price realization. APAC net sales
increased 2.3% and were up 5.9% organically, primarily driven by
price realization and volume increases outside of China. China
volume was down slightly in the second quarter due to COVID-19
lockdowns but is anticipated to return to growth in third quarter
2022 and had double-digit growth in the month of June. EMEA net
sales increased 16.0% and were up 13.3% organically, driven equally
by volume and price realization. Vertiv’s second quarter orders
increased 17% compared to the prior year quarter, with 11% from
higher volume and 10% from pricing, partially offset by a 4%
foreign exchange headwind. Backlog remained strong with another
record quarter end of $4.4 billion at the end of June, increasing
39% from the end of 2021.
Second quarter operating profit decreased $76 million to $26
million and adjusted operating profit of $82 million decreased $52
million from the prior year second quarter. Benefits from pricing,
the E&I acquisition and volume were more than offset by
material and freight inflation, higher fixed costs, foreign
exchange and other cost headwinds. Pricing of $80 million was
consistent with expectations and doubled sequentially from the
first quarter. Our full year $360 million pricing plan remains on
track with $120 million recognized in the first half and $240
million expected in the second half with approximately 75% of this
second half pricing already in backlog and the remaining 25% based
upon pricing actions already implemented on anticipated book and
ship business.
“We saw sequential financial improvement in our second quarter
results as we anticipated,” said Rob Johnson, Vertiv’s Chief
Executive Officer. “Supply chain constraints are being addressed by
additional sources of supply coming online while continued strong
demand for our products is enabling us to take price and continue
to meet our pricing plan. The benefits of the aggressive actions
we’ve taken are reflected in the sequential improvement in adjusted
operating margins in all regions, demonstrating broad-based
strength across our business. We’ve revised down full year adjusted
operating profit guidance, primarily due to foreign exchange. Our
first half results are consistent with expectations communicated
earlier this year, and while third quarter guidance is lower than
originally anticipated, it is expected to be a significant increase
from second quarter, indicating that our actions are taking hold
and will bridge us to a very strong fourth quarter and 2023.”
Dave Cote, Vertiv’s Executive Chairman, added: “Halfway through
2022, we are executing on the plan we laid out in February,
delivering sequential margin improvement and achieving pricing
increases that should outpace inflation in the second half and
addressing the cost issues, primarily in the Americas. We expect
our strong competitive position, buoyed by robust market demand and
strengthened supply chain sources, and our focus on better
execution should drive improved performance, profitability and
value-creation in the second half of 2022, and position us well for
2023 and beyond.”
Free Cash Flow and
Liquidity
Net cash used by operating activities in the second quarter was
$206 million, $265 million less cash generated compared to the
prior year quarter, and free cash flow was a use of cash of $232
million, a decline of $274 million from the free cash flow
generated in the prior year quarter. Our year-to-date free cash
flow has been lower than expected, primarily due to increased
inventory to support a projected strong second half sales outlook,
as well as additional inventory due to challenging supply chain
dynamics. We expect free cash flow for the full year to be in the
range of a $25 million generation of cash to a $25 million use of
cash, which implies strong second half 2022 free cash flow mainly
concentrated in the fourth quarter. Sales are projected to be more
heavily weighted toward the fourth quarter, which is a normal
seasonal pattern, with the cash benefit from those sales primarily
realized in 2023. Liquidity at the end of the second quarter was
$457 million.
Third Quarter, Fourth Quarter and Full
Year 2022 Guidance
End market demand continues to be strong, as evidenced by
continued strength in cloud and colocation markets. The change in
full year 2022 adjusted operating profit guidance – down $37.5
million at the mid-point of the range – is driven by higher sales
volume more than offset by foreign exchange, additional material
inflation, lower expected profit from E&I, higher fixed costs
due to the timing of the volume ramp-up in the second half and
other cost headwinds. Price realization remains on plan and supply
chain constraints have started to ease with new suppliers coming
online in support of the higher expected volume in the second half.
We continue to anticipate a strong second half 2022 with sequential
acceleration of financial performance that will position Vertiv
well for 2023.
Third Quarter 2022 Guidance
Prior Third Quarter 2022
Guidance
Net sales
$1,460M - $1,500M
$1,530M
Organic net sales growth(2)
18% – 21%
17%
Adjusted operating profit
$130M – $150M
$180M - $200M
Adjusted operating margin(2)
9.1% – 9.7%
12% - 13%
Adjusted diluted EPS
$0.20 – $0.26
$0.31
Fourth Quarter 2022 Guidance
Prior Fourth Quarter 2022
Guidance
Net sales
$1,680M - $1,720M
$1,680M
Organic net sales growth(2)
22% - 26%
16%
Adjusted operating profit
$240M – $265M
$230M - $255M
Adjusted operating margin(2)
15%
14% - 15%
Adjusted diluted EPS
$0.39
$0.39
Full Year 2022 Guidance
Prior Full Year 2022 Guidance
Net sales
$5,700M - $5,770M
$5,600M - $5,800M
Organic net sales growth(2)
13% - 14%
7.0% - 11.0%
Adjusted operating profit
$475M - $500M
$500M - $550M
Adjusted operating margin(2)
8.3% - 8.7%
9.0% - 9.4%
Adjusted diluted EPS
$0.61 - $0.67
$0.67 - $0.77
Free Cash Flow(2)
($25M) - $25M
$125M - $175M
(1)
This release contains certain non-GAAP
metrics. For reconciliations to the relevant GAAP measures and an
explanation of the non-GAAP measures and reasons for their use,
please refer to sections of this release entitled “Non-GAAP
Financial Measures” and “Reconciliation of GAAP and non-GAAP
Financial Measures.”
(2)
This is a non-GAAP financial measure that
cannot be reconciled for those reasons set forth under “Non-GAAP
Financial Measures” of this release.
Second Quarter 2022 Earnings Conference
Call
Vertiv’s management team will discuss the Company’s results
during a conference call on Wednesday, August 3, starting at 11
a.m. Eastern Time. The call will contain forward-looking statements
and other material information regarding Vertiv’s financial and
operating results. A webcast of the live conference call will be
available for interested parties to listen to by going to the
Investor Relations section of the Company’s website at
investors.vertiv.com. A slide presentation will be available before
the call and will be posted to the website, also at
investors.vertiv.com. A replay of the conference call will also be
available for 30 days following the webcast.
About Vertiv Holdings Co
Vertiv (NYSE: VRT) brings together hardware, software, analytics
and ongoing services to enable its customers’ vital applications to
run continuously, perform optimally and grow with their business
needs. Vertiv solves the most important challenges facing today’s
data centers, communication networks and commercial and industrial
facilities with a portfolio of power, cooling and IT infrastructure
solutions and services that extends from the cloud to the edge of
the network. Headquartered in Columbus, Ohio, USA, Vertiv employs
approximately 24,000 people and does business in more than 130
countries. For more information, and for the latest news and
content from Vertiv, visit vertiv.com.
Category: Financial News
Non-GAAP Financial
Measures
Financial information included in this release has been prepared
in accordance with Generally Accepted Accounting Principles
(“GAAP”). Vertiv has included certain non-GAAP financial measures
in the news release, as further described above, that may not be
directly comparable to other similarly titled measures used by
other companies and therefore may not be comparable among
companies. These non-GAAP financial measures may include organic
net sales growth (including on a segment basis), adjusted operating
profit, adjusted operating margin, adjusted diluted EPS, and free
cash flow, which management believes provides investors with useful
supplemental information to evaluate the Company’s ongoing
operations and to compare with past and future periods. Management
also uses certain non-GAAP measures internally for forecasting,
budgeting and measuring its operating performance. These measures
should be viewed as supplementing, and not as an alternative or
substitute for, the Company's financial results prepared in
accordance with GAAP. Pursuant to the requirements of Regulation G,
Vertiv has provided reconciliations of non-GAAP financial measures
to the most directly comparable GAAP financial measures.
Information reconciling certain forward-looking GAAP measures to
non-GAAP measures related to third quarter, fourth quarter and
full-year 2022 guidance, including organic net sales growth, free
cash flow, and adjusted operating margin, is not available without
unreasonable effort due to high variability, complexity and
uncertainty with respect to forecasting and quantifying certain
amounts that are necessary for such reconciliations. For the same
reasons, we are unable to compute the probable significance of the
unavailable information, which could have a potentially
unpredictable, and potentially significant, impact on our future
GAAP financial results.
See “Reconciliation of GAAP and Non-GAAP Financial Measures” in
this release for Vertiv’s reconciliations of non-GAAP financial
measures to the most directly comparable GAAP financial
measures.
Cautionary Note Concerning
Forward-Looking Statements
This news release, and other statements that Vertiv may make in
connection therewith, may contain forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of 1995
with respect to Vertiv’s future financial or business performance,
strategies or expectations, and as such are not historical facts.
This includes, without limitation, statements regarding Vertiv’s
financial position, capital structure, indebtedness, business
strategy and plans and objectives of Vertiv management for future
operations, as well as statements regarding growth, anticipated
demand for our products and services and our business prospects
during 2022, as well as expected impacts from our pricing actions,
and our guidance for third quarter, fourth quarter and full year
2022. These statements constitute projections, forecasts and
forward-looking statements, and are not guarantees of performance.
Vertiv cautions that forward-looking statements are subject to
numerous assumptions, risks and uncertainties, which change over
time. Such statements can be identified by the fact that they do
not relate strictly to historical or current facts. When used in
this news release, words such as “anticipate,” “believe,”
“continue,” “could,” “estimate,” “expect,” “intend,” “may,”
“might,” “plan,” “possible,” “potential,” “predict,” “project,”
“should,” “strive,” “would” and similar expressions may identify
forward-looking statements, but the absence of these words does not
mean that a statement is not forward-looking.
The forward-looking statements contained in this release are
based on current expectations and beliefs concerning future
developments and their potential effects on Vertiv. There can be no
assurance that future developments affecting Vertiv will be those
that Vertiv has anticipated. Vertiv undertakes no obligation to
update or revise any forward-looking statements, whether as a
result of new information, future events or otherwise, except as
may be required under applicable securities laws. These
forward-looking statements involve a number of risks, uncertainties
(some of which are beyond Vertiv’s control) or other assumptions
that may cause actual results or performance to be materially
different from those expressed or implied by these forward-looking
statements. Should one or more of these risks or uncertainties
materialize, or should any of the assumptions prove incorrect,
actual results may vary in material respects from those projected
in these forward-looking statements. Vertiv has previously
disclosed risk factors in its Securities and Exchange Commission
(“SEC”) reports, including those set forth in the 2021 Form 10-K.
These risk factors and those identified elsewhere in this release,
among others, could cause actual results to differ materially from
historical performance and include, but are not limited to: risks
relating to the continued growth of Vertiv’s customers’ markets;
disruption of Vertiv’s customers’ orders or Vertiv’s customers’
markets; less favorable contractual terms with large customers;
risks associated with governmental contracts; failure to mitigate
risks associated with long-term fixed price contracts; competition
in the infrastructure technologies industry; failure to obtain
performance and other guarantees from financial institutions;
failure to realize sales expected from Vertiv’s backlog of orders
and contracts; failure to properly manage Vertiv’s supply chain or
difficulties with third-party manufacturers; our ability to
forecast changes in prices, including due to inflation in material,
freight and/or labor costs, and timely implement measures necessary
to mitigate the impacts of any such changes; risks associated with
our significant backlog, including that the impacts of any measures
taken to mitigate inflation will not be reflected in our financial
statements immediately; failure to meet or anticipate technology
changes; risks associated with information technology disruption or
security; risks associated with the implementation and enhancement
of information systems; failure to realize the expected benefit
from any rationalization, restructuring and improvement efforts;
Vertiv’s ability to realize cost savings in connection with
Vertiv’s restructuring program; disruption of, or changes in,
Vertiv’s independent sales representatives, distributors and
original equipment manufacturers; changes to tax law; ongoing tax
audits; costs or liabilities associated with product liability; the
global scope of Vertiv’s operations; risks associated with Vertiv’s
sales and operations in emerging markets; risks associated with
future legislation and regulation of Vertiv’s customers’ markets
both in the U.S. and abroad; Vertiv’s ability to comply with
various laws and regulations, and the costs associated with legal
compliance; adverse outcomes to any legal claims and proceedings
filed by or against Vertiv; risks associated with current or
potential litigation or claims against Vertiv; Vertiv’s ability to
protect or enforce its proprietary rights on which its business
depends; third-party intellectual property infringement claims;
liabilities associated with environmental, health and safety
matters, including risks associated with the COVID-19 pandemic;
failure to realize the value of goodwill and intangible assets;
exposure to fluctuations in foreign currency exchange rates;
exposure to increases in interest rates set by central banking
authorities; failure to maintain internal controls over financial
reporting; the unpredictability of Vertiv’s future operational
results, including the ability to grow and manage growth
profitably; potential net losses in future periods; Vertiv’s level
of indebtedness and the ability to incur additional indebtedness;
Vertiv’s ability to comply with the covenants and restrictions
contained in our credit agreements including restrictive covenants
that restrict operational flexibility; Vertiv's ability to comply
with the covenants and restrictions contained in our credit
agreements that is not fully within our control; Vertiv’s ability
to access funding through capital markets; the significant
ownership and influence certain stockholders have over Vertiv;
risks associated with Vertiv’s obligations to pay 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; risks
associated with the failure of industry analysts to provide
coverage of Vertiv's business or securities; the ability of Vertiv
to grow and manage growth profitably, maintain relationships with
customers and suppliers and retain its management and key
employees; factors relating to the business, operations and
financial performance of Vertiv and its subsidiaries, including:
global economic weakness and uncertainty; Vertiv’s ability to
attract, train and retain key members of its leadership team and
other qualified personnel; the adequacy of Vertiv’s insurance
coverage; a failure to benefit from future acquisitions; risks
associated with Vertiv’s limited history of operating as an
independent company; and other risks and uncertainties indicated in
Vertiv’s SEC reports or documents filed or to be filed with the SEC
by Vertiv.
Forward-looking statements included in this news release speak
only as of the date of this news release or any earlier date
specified for such statements. All subsequent written or oral
forward-looking statements attributable to Vertiv or persons acting
on Vertiv’s behalf may be qualified in their entirety by this
Cautionary Note Concerning Forward-Looking Statements.
UNAUDITED CONDENSED
CONSOLIDATED STATEMENTS OF EARNINGS (LOSS)
Vertiv Holdings Co
(Dollars in millions except
for per share data)
Three months ended June 30,
2022
Three months ended June 30,
2021
Six months ended June 30,
2022
Six months ended June 30,
2021
Net sales(1)
Net sales - products
$
1,055.0
$
926.6
$
1,904.4
$
1,730.3
Net sales - services
344.4
333.7
651.4
628.4
Net sales
1,399.4
1,260.3
2,555.8
2,358.7
Costs and expenses(1)
Cost of sales - products
807.4
653.4
1,463.2
1,217.0
Cost of sales - services
220.5
197.6
417.5
374.4
Cost of sales
1,027.9
851.0
1,880.7
1,591.4
Operating expenses
Selling, general and administrative
expenses
287.6
271.7
579.8
521.8
Amortization of intangibles
55.8
31.9
113.5
63.7
Restructuring costs
0.8
1.1
1.6
3.1
Foreign currency (gain) loss, net
2.9
4.1
1.6
(2.8
)
Other operating expense (income)
(1.8
)
(1.7
)
(2.4
)
(0.5
)
Operating profit (loss)
26.2
102.2
(19.0
)
182.0
Interest expense, net
33.4
20.0
62.7
44.1
Loss on extinguishment of debt
—
—
—
0.4
Change in fair value of warrant
liabilities
(38.9
)
71.2
(133.8
)
84.8
Income (loss) before income
taxes
31.7
11.0
52.1
52.7
Income tax expense
11.4
1.3
23.3
11.3
Net income (loss)
$
20.3
$
9.7
$
28.8
$
41.4
Earnings (loss) per share:
Basic
$
0.05
$
0.03
$
0.08
$
0.12
Diluted
$
0.05
$
0.03
$
(0.28
)
$
0.12
Weighted-average shares outstanding:
Basic
376,594,660
352,199,184
376,285,196
350,908,612
Diluted
377,257,854
356,652,811
378,493,214
354,883,869
(1)
Refer to Exhibit 99.2 to Vertiv’s current
report on Form 8-K filed on April 27, 2022 for a fiscal year 2021
summary of changes made to conform with the current year
presentation for product and service net sales and cost of
sales.
UNAUDITED CONDENSED
CONSOLIDATED BALANCE SHEETS
Vertiv Holdings Co
(Dollars in millions)
June 30, 2022
December 31, 2021
ASSETS
Current assets:
Cash and cash equivalents
$
194.4
$
439.1
Accounts receivable, less allowances of
$15.4 and $14.1, respectively
1,676.2
1,536.4
Inventories
794.6
616.3
Other current assets
148.4
106.8
Total current assets
2,813.6
2,698.6
Property, plant and equipment, net
473.8
489.3
Other assets:
Goodwill
1,283.9
1,330.1
Other intangible assets, net
1,926.0
2,138.2
Deferred income taxes
49.0
47.9
Other
280.8
235.5
Total other assets
3,539.7
3,751.7
Total assets
$
6,827.1
$
6,939.6
LIABILITIES AND EQUITY
Current liabilities:
Current portion of long-term debt
$
21.8
$
21.8
Accounts payable
867.2
858.5
Accrued expenses and other liabilities
916.7
953.4
Income taxes
14.7
21.1
Total current liabilities
1,820.4
1,854.8
Long-term debt, net
3,117.5
2,950.5
Deferred income taxes
179.6
198.8
Warrant liabilities
15.8
149.6
Other long-term liabilities
342.1
368.2
Total liabilities
5,475.4
5,521.9
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, 376,721,173 and 375,801,857 shares
issued and outstanding at June 30, 2022 and December 31, 2021,
respectively
—
—
Additional paid-in capital
2,612.6
2,597.5
Accumulated deficit
(1,186.6
)
(1,215.4
)
Accumulated other comprehensive (loss)
income
(74.3
)
35.6
Total equity (deficit)
1,351.7
1,417.7
Total liabilities and equity
$
6,827.1
$
6,939.6
UNAUDITED CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
Vertiv Holdings Co
(Dollars in millions)
Three months ended June 30,
2022
Three months ended June 30,
2021
Six months ended June 30,
2022
Six months ended June 30,
2021
Cash flows from operating
activities:
Net income (loss)
$
20.3
$
9.7
$
28.8
$
41.4
Adjustments to reconcile net loss to net
cash used for operating activities:
Depreciation
17.6
18.3
35.5
35.2
Amortization
59.4
35.2
120.7
70.5
Deferred income taxes
(4.6
)
(14.8
)
(9.2
)
(22.3
)
Amortization of debt discount and issuance
costs
2.5
1.5
4.8
3.3
Loss on extinguishment of debt
—
—
—
0.4
Change in fair value of warrant
liabilities
(38.9
)
71.2
(133.8
)
84.8
Changes in operating working capital
(261.7
)
(81.5
)
(377.8
)
(126.1
)
Stock based compensation
7.2
6.2
13.8
11.8
Payment of contingent consideration
—
—
(8.7
)
—
Changes in tax receivable agreement
—
(0.2
)
—
1.6
Other
(7.5
)
13.7
(12.0
)
19.4
Net cash provided by (used for)
operating activities
(205.7
)
59.3
(337.9
)
120.0
Cash flows from investing
activities:
Capital expenditures
(23.1
)
(13.6
)
(38.2
)
(30.4
)
Investments in capitalized software
(3.6
)
(4.3
)
(6.7
)
(5.4
)
Acquisition of Business, net of cash
acquired
(5.0
)
—
(5.0
)
—
Net cash used for investing
activities
(31.7
)
(17.9
)
(49.9
)
(35.8
)
Cash flows from financing
activities:
Borrowings from ABL revolving credit
facility and short-term borrowings
371.8
—
447.6
—
Repayments of ABL revolving credit
facility and short-term borrowings
(194.7
)
—
(254.7
)
—
Repayment of long-term debt
(5.4
)
(5.4
)
(10.9
)
(10.9
)
Proceeds from the exercise of warrants
—
—
—
107.5
Payment of tax receivable agreement
(12.5
)
—
(12.5
)
—
Payment of contingent consideration
—
—
(12.8
)
—
Exercise of employee stock options
0.1
1.2
1.1
2.1
Employee taxes paid from shares
withheld
(4.3
)
(7.0
)
(4.3
)
(7.0
)
Net cash provided by (used for)
financing activities
155.0
(11.2
)
153.5
91.7
Effect of exchange rate changes on cash
and cash equivalents
(8.8
)
1.4
(7.5
)
(1.7
)
Increase (decrease) in cash, cash
equivalents and restricted cash
(91.2
)
31.6
(241.8
)
174.2
Beginning cash, cash equivalents and
restricted cash
296.5
685.2
447.1
542.6
Ending cash, cash equivalents and
restricted cash
$
205.3
$
716.8
$
205.3
$
716.8
Changes in operating working
capital
Accounts receivable
$
(165.0
)
$
(75.5
)
$
(169.8
)
$
(28.4
)
Inventories
(26.7
)
(38.9
)
(187.1
)
(107.3
)
Other current assets
4.5
(2.8
)
(10.0
)
(8.1
)
Accounts payable
(12.4
)
30.2
20.6
50.9
Accrued expenses and other liabilities
(45.1
)
25.5
(14.6
)
(16.0
)
Income taxes
(17.0
)
(20.0
)
(16.9
)
(17.2
)
Total changes in operating working
capital
$
(261.7
)
$
(81.5
)
$
(377.8
)
$
(126.1
)
Reconciliation of GAAP and non-GAAP Financial
Measures
To supplement this news release, we have included certain
non-GAAP financial measures in the format of performance metrics.
Management believes these non-GAAP financial measures provide
investors with additional meaningful financial information that
should be considered when assessing our underlying business
performance and trends. Further, management believes these non-GAAP
financial measures also enhance investors' ability to compare
period-to-period financial results. Non-GAAP financial measures
should be viewed in addition to, and not as an alternative for, the
company's reported results prepared in accordance with GAAP. Our
non-GAAP financial measures do not represent a comprehensive basis
of accounting. Therefore, our non-GAAP financial measures may not
be comparable to similarly titled measures reported by other
companies. Reconciliations of each of these non-GAAP financial
measures to GAAP information are also included. Management uses
these non-GAAP financial measures in making financial, operating,
compensation and planning decisions and in evaluating the company's
performance. Disclosing these non-GAAP financial measures allows
investors and management to view our operating results excluding
the impact of items that are not reflective of the underlying
operating performance.
Vertiv’s non-GAAP financial measures include:
- Adjusted operating profit (loss), which represents operating
profit (loss), adjusted to exclude amortization of
intangibles;
- Adjusted operating margin, which represents adjusted operating
profit (loss) divided by net sales;
- Organic net sales growth, represents the change in net sales
adjusted to exclude the impacts foreign currency exchange rate,
acquisition, and divestiture;
- Free cash flow, which represents net cash provided by (used
for) operating activities adjusted to exclude capital expenditures,
investments in capitalized software and include proceeds from
disposition of PP&E; and
- Adjusted diluted EPS, which represents diluted earnings per
share adjusted to exclude amortization of intangibles, and change
in warranty liability.
Regional Segment Results
Three months ended June 30,
Six months ended June 30,
2022
2021
Δ
Δ%
Organic Δ%(2)
2022
2021
Δ
Δ%
Organic Δ%(2)
Net sales
(1)
Americas
$
647.2
$
564.9
$
82.3
14.6
%
6.6
%
$
1,182.3
$
1,066.4
$
115.9
10.9
%
5.0
%
APAC
407.2
398.0
9.2
2.3
%
5.9
%
740.0
755.4
(15.4
)
(2.0
)%
(0.1
)%
EMEA
345.0
297.4
47.6
16.0
%
13.3
%
633.5
536.9
96.6
18.0
%
9.6
%
Total
$
1,399.4
$
1,260.3
$
139.1
11.0
%
7.9
%
$
2,555.8
$
2,358.7
$
197.1
8.4
%
4.4
%
Adjusted
operating profit (loss)
Americas
$
82.5
$
128.6
$
(46.1
)
(35.8
)%
$
140.4
$
255.0
$
(114.6
)
(44.9
)%
APAC
68.5
62.8
5.7
9.1
%
110.0
115.9
(5.9
)
(5.1
)%
EMEA
61.8
62.4
(0.6
)
(1.0
)%
95.0
95.8
(0.8
)
(0.8
)%
Corporate (3)
(130.8
)
(119.7
)
(11.1
)
9.3
%
(250.9
)
(221.0
)
(29.9
)
13.5
%
Total
$
82.0
$
134.1
$
(52.1
)
(38.9
)%
$
94.5
$
245.7
$
(151.2
)
(61.5
)%
Adjusted
operating margins (4)
Americas
12.7
%
22.8
%
(10.1
)%
11.9
%
23.9
%
(12.0
)%
APAC
16.8
%
15.8
%
1.0
%
14.9
%
15.3
%
(0.4
)%
EMEA
17.9
%
21.0
%
(3.1
)%
15.0
%
17.8
%
(2.8
)%
Vertiv
5.9
%
10.6
%
(4.7
)%
3.7
%
10.4
%
(6.7
)%
(1)
Segment net sales are presented excluding
intercompany sales.
(2)
Organic basis is adjusted to exclude
foreign currency exchange rate impact and the change in acquisition
and divestiture sales.
(3)
Corporate costs consist of headquarters
management costs, stock-based compensation, other incentive
compensation, change in fair value of warrant liabilities, asset
impairments, and costs that support centralized global functions
including Finance, Treasury, Risk Management, Strategy &
Marketing, IT, Legal, and global product platform development and
offering management.
(4)
Adjusted operating margins calculated as
adjusted operating profit (loss) divided by net sales.
Sales by Product and Service Offering
Three months ended June 30,
2022
2021
Δ
Δ %
Americas:
Critical infrastructure &
solutions
$
368.9
$
305.3
$
63.6
20.8
%
Services & spares
187.6
179.6
8.0
4.5
%
Integrated rack solutions
90.7
80.0
10.7
13.4
%
$
647.2
$
564.9
$
82.3
14.6
%
Asia Pacific:
Critical infrastructure &
solutions
$
243.0
$
239.8
$
3.2
1.3
%
Services & spares
112.9
106.3
6.6
6.2
%
Integrated rack solutions
51.3
51.9
(0.6
)
(1.2
)%
$
407.2
$
398.0
$
9.2
2.3
%
EMEA:
Critical infrastructure &
solutions
$
234.8
$
181.7
$
53.1
29.2
%
Services & spares
68.7
77.3
(8.6
)
(11.1
)%
Integrated rack solutions
41.5
38.4
3.1
8.1
%
$
345.0
$
297.4
$
47.6
16.0
%
Total:
Critical infrastructure &
solutions
$
846.7
$
726.8
$
119.9
16.5
%
Services & spares
369.2
363.2
6.0
1.7
%
Integrated rack solutions
183.5
170.3
13.2
7.8
%
$
1,399.4
$
1,260.3
$
139.1
11.0
%
Six months ended June 30,
2022
2021
Δ
Δ %
Americas:
Critical infrastructure &
solutions
$
663.2
$
584.8
$
78.4
13.4
%
Services & spares
352.3
333.7
18.6
5.6
%
Integrated rack solutions
166.8
147.9
18.9
12.8
%
$
1,182.3
$
1,066.4
$
115.9
10.9
%
Asia Pacific:
Critical infrastructure &
solutions
$
426.8
$
455.8
$
(29.0
)
(6.4
)%
Services & spares
217.5
201.8
15.7
7.8
%
Integrated rack solutions
95.7
97.8
(2.1
)
(2.1
)%
$
740.0
$
755.4
$
(15.4
)
(2.0
)%
EMEA:
Critical infrastructure &
solutions
$
421.6
$
314.1
$
107.5
34.2
%
Services & spares
133.6
149.4
(15.8
)
(10.6
)%
Integrated rack solutions
78.3
73.4
4.9
6.7
%
$
633.5
$
536.9
$
96.6
18.0
%
Total:
Critical infrastructure &
solutions
$
1,511.6
$
1,354.7
$
156.9
11.6
%
Services & spares
703.4
684.9
18.5
2.7
%
Integrated rack solutions
340.8
319.1
21.7
6.8
%
$
2,555.8
$
2,358.7
$
197.1
8.4
%
Organic growth by Product and Service Offering
Three months ended June 30,
2022
Net Sales Δ
FX Δ
Acquisition/ Divestiture Δ(1)
Organic growth
Organic Δ %(2)
Americas:
Critical infrastructure &
solutions
$
63.6
$
1.8
$
(47.0
)
$
18.4
6.0
%
Services & spares
8.0
—
—
8.0
4.5
%
Integrated rack solutions
10.7
—
—
10.7
13.4
%
$
82.3
$
1.8
$
(47.0
)
$
37.1
6.6
%
Asia Pacific:
Critical infrastructure &
solutions
$
3.2
$
8.1
$
—
$
11.3
4.7
%
Services & spares
6.6
4.5
—
11.1
10.4
%
Integrated rack solutions
(0.6
)
1.6
—
1.0
1.9
%
$
9.2
$
14.2
$
—
$
23.4
5.9
%
EMEA:
Critical infrastructure &
solutions
$
53.1
$
27.3
$
(50.6
)
$
29.8
16.4
%
Services & spares
(8.6
)
10.0
—
1.4
1.8
%
Integrated rack solutions
3.1
5.3
—
8.4
21.9
%
$
47.6
$
42.6
$
(50.6
)
$
39.6
13.3
%
Total:
Critical infrastructure &
solutions
$
119.9
$
37.2
$
(97.6
)
$
59.5
8.2
%
Services & spares
6.0
14.5
—
20.5
5.6
%
Integrated rack solutions
13.2
6.9
—
20.1
11.8
%
$
139.1
$
58.6
$
(97.6
)
$
100.1
7.9
%
(1)
The change in acquisition and divestiture
sales includes E&I sales for the three months ended June 30,
2022 of $47.0 and $67.2 included in Americas; and Europe, Middle
East & Africa reportable segments, respectively, partially
offset by the divested heavy industrial UPS business sales for the
three months ended June 30, 2021 of $16.6 included in the Europe,
Middle East & Africa reportable segment.
(2)
Organic growth percentage change is
calculated as organic growth divided by net sales for the three
months ended June 30, 2021.
Six months ended June 30,
2022
Net Sales Δ
FX Δ
Acquisition/ Divestiture Δ(1)
Organic growth
Organic Δ %(2)
Americas:
Critical infrastructure &
solutions
$
78.4
$
1.4
$
(64.0
)
$
15.8
2.7
%
Services & spares
18.6
0.6
—
19.2
5.8
%
Integrated rack solutions
18.9
(0.2
)
—
18.7
12.6
%
$
115.9
$
1.8
$
(64.0
)
$
53.7
5.0
%
Asia Pacific:
Critical infrastructure &
solutions
$
(29.0
)
$
8.3
$
—
$
(20.7
)
(4.5
)%
Services & spares
15.7
4.9
—
20.6
10.2
%
Integrated rack solutions
(2.1
)
1.4
—
(0.7
)
(0.7
)%
$
(15.4
)
$
14.6
$
—
$
(0.8
)
(0.1
)%
EMEA:
Critical infrastructure &
solutions
$
107.5
$
37.5
$
(105.2
)
$
39.8
12.7
%
Services & spares
(15.8
)
15.6
—
(0.2
)
(0.1
)%
Integrated rack solutions
4.9
7.3
—
12.2
16.6
%
$
96.6
$
60.4
$
(105.2
)
$
51.8
9.6
%
Total:
Critical infrastructure &
solutions
$
156.9
$
47.2
$
(169.2
)
$
34.9
2.6
%
Services & spares
18.5
21.1
—
39.6
5.8
%
Integrated rack solutions
21.7
8.5
—
30.2
9.5
%
$
197.1
$
76.8
$
(169.2
)
$
104.7
4.4
%
(1)
The change in acquisition and divestiture
sales includes E&I sales for the six months ended June 30, 2022
of $64.0 and $137.7 included in Americas; and Europe, Middle East
& Africa reportable segments, respectively, partially offset by
the divested heavy industrial UPS business sales for the six months
ended June 30, 2021 of $32.5 included in the Europe, Middle East
& Africa reportable segment.
(2)
Organic growth percentage change is
calculated as organic growth divided by net sales for the six
months ended June 30, 2021.
Segment information
Operating profit
(loss)
Three months ended June 30,
2022
Three months ended June 30,
2021
Six months ended June 30,
2022
Six months ended June 30,
2021
Americas
$
82.5
$
128.6
$
140.4
$
255.0
Asia Pacific
68.5
62.8
110.0
115.9
Europe, Middle East & Africa
61.8
62.4
95.0
95.8
Total reportable segments
212.8
253.8
345.4
466.7
Foreign currency gain (loss)
(2.9
)
(4.1
)
(1.6
)
2.8
Corporate and other
(127.9
)
(115.6
)
(249.3
)
(223.8
)
Total corporate, other and
eliminations
(130.8
)
(119.7
)
(250.9
)
(221.0
)
Amortization of intangibles
(55.8
)
(31.9
)
(113.5
)
(63.7
)
Operating profit (loss)
$
26.2
$
102.2
$
(19.0
)
$
182.0
Reconciliation of net cash provided by (used for) operating
activities to free cash flow
Three months ended June 30,
2022
Three months ended June 30,
2021
Six months ended June 30,
2022
Six months ended June 30,
2021
Net cash provided by (used for) operating
activities
$
(205.7
)
$
59.3
$
(337.9
)
$
120.0
Capital expenditures
(23.1
)
(13.6
)
(38.2
)
(30.4
)
Investments in capitalized software
(3.6
)
(4.3
)
(6.7
)
(5.4
)
Free cash flow
$
(232.4
)
$
41.4
$
(382.8
)
$
84.2
Reconciliation from operating profit (loss) to adjusted
operating profit (loss)
Three months ended June 30,
2022
Three months ended June 30,
2021
Six months ended June 30,
2022
Six months ended June 30,
2021
Operating profit (loss)
$
26.2
$
102.2
$
(19.0
)
$
182.0
Amortization of intangibles
55.8
31.9
113.5
63.7
Adjusted operating profit
(loss)
$
82.0
$
134.1
$
94.5
$
245.7
Reconciliation from operating margin to adjusted operating
margin
Three months ended June 30,
2022
Three months ended June 30,
2021
Δ
Six months ended June 30,
2022
Six months ended June 30,
2021
Δ
Vertiv net sales
1,399.4
1,260.3
$
139.1
$
2,555.8
$
2,358.7
$
197.1
Vertiv operating profit (loss)
26.2
102.2
(76.0
)
(19.0
)
182.0
(201.0
)
Vertiv operating margin
1.9
%
8.1
%
(6.2
)%
(0.7
)%
7.7
%
(8.4
)%
Amortization of intangibles
55.8
31.9
23.9
$
113.5
$
63.7
$
49.8
Vertiv adjusted operating profit
(loss)
82.0
134.1
(52.1
)
94.5
245.7
(151.2
)
Vertiv adjusted operating
margin
5.9
%
10.6
%
(4.7
)%
3.7
%
10.4
%
(6.7
)%
Reconciliation of Diluted EPS to Adjusted Diluted EPS
Three months
ended June 30, 2022
Operating profit
(loss)
Interest expense, net
Change in Warrant
Liability
Income tax expense
Net income (loss)
Diluted EPS (1)
GAAP
$
26.2
$
33.4
$
(38.9
)
$
11.4
$
20.3
$
0.05
Amortization of intangibles
55.8
—
—
—
55.8
0.15
Change in warrant liability
—
—
38.9
—
(38.9
)
(0.10
)
Non-GAAP Adjusted
$
82.0
$
33.4
$
—
$
11.4
$
37.2
$
0.10
(1)
Diluted EPS and adjusted diluted EPS based
on 377.3 million shares (includes 376.6 million basic shares and
0.7 million dilutive stock options and restricted stock units). We
believe that this presentation is more representative of operating
results by removing the impact of warrant liability accounting and
the associated impact on diluted share count.
Three months
ended June 30, 2021
Operating profit
(loss)
Interest expense, net
Change in Warrant
Liability
Income tax expense
Net income (loss)
Diluted EPS (1)
GAAP
$
102.2
$
20.0
$
71.2
$
1.3
$
9.7
$
0.03
Amortization of intangibles
31.9
—
—
—
31.9
0.09
Change in warrant liability
—
—
(71.2
)
—
71.2
0.20
Pro-forma share count
—
—
—
—
—
(0.01
)
Non-GAAP Adjusted
$
134.1
$
20.0
$
—
$
1.3
$
112.8
$
0.31
(1)
Diluted EPS based on 356.7 million shares
(includes 352.2 million basic shares and 4.5 million potential
dilutive stock options and restricted stock units). Adjusted
diluted EPS based on pro-forma share count 362.1 million shares
(includes 352.2 million basic shares and 9.9 million potential
dilutive warrants, stock options and restricted stock units). We
believe that this presentation is more representative of operating
results by removing the impact of merger and acquisition related
costs, warrant liability accounting, and the associated impact on
diluted share count.
Six months ended
June 30, 2022
Operating profit
(loss)
Interest expense, net
Change in Warrant
Liability
Income tax expense
Net income (loss)
Diluted EPS (1)
GAAP
$
(19.0
)
$
62.7
$
(133.8
)
$
23.3
$
28.8
$
(0.28
)
Amortization of intangibles
113.5
—
—
—
113.5
0.30
Change in warrant liability
—
—
133.8
—
(133.8
)
—
Non-GAAP Adjusted
$
94.5
$
62.7
$
—
$
23.3
$
8.5
$
0.02
(1)
Diluted EPS and adjusted diluted EPS based
on 378.5 million shares (includes 376.3 million basic shares and
2.2 million dilutive warrants). Diluted EPS and adjusted diluted
EPS includes an adjustment to exclude $133.8 million from net
income which is attributable to the warrants as they were dilutive
in the period. We believe that this presentation is more
representative of operating results by removing the impact of
warrant liability accounting and the associated impact on diluted
share count.
Six months ended
June 30, 2021
Operating profit
(loss)
Interest expense, net
Loss on extinguishment of
debt
Change in Warrant
Liability
Income tax expense
Net income (loss)
Diluted EPS (1)
GAAP
$
182.0
$
44.1
$
0.4
$
84.8
$
11.3
$
41.4
$
0.12
Amortization of intangibles
63.7
—
—
—
—
63.7
0.18
Change in warrant liability
—
—
—
(84.8
)
—
84.8
0.24
Pro-forma share count
—
—
—
—
—
—
(0.01
)
Non-GAAP Adjusted
$
245.7
$
44.1
$
0.4
$
—
$
11.3
$
189.9
$
0.53
(1)
Diluted EPS based on 354.9 million shares
(includes 350.9 million basic shares and 4.0 million potential
dilutive stock options and restricted stock units). Adjusted
diluted EPS based on pro-forma share count 361.4 million shares
(includes 350.9 million basic shares and 10.5 million potential
dilutive warrants, stock options and restricted stock units). We
believe that this presentation is more representative of operating
results by removing the impact of merger and acquisition related
costs, warrant liability accounting, and the associated impact on
diluted share count.
Vertiv Holdings Co
2022 Adjusted Guidance
Reconciliation of Diluted EPS
to Adjusted Diluted EPS (1)
Third Quarter 2022
Operating profit
(loss)
Interest expense, net
Income tax expense
Net income (loss)
Diluted EPS (2)
GAAP
$
85.0
$
37.0
$
17.0
$
31.0
$
0.08
Amortization of intangibles
55.0
—
—
55.0
0.15
Non-GAAP Adjusted
$
140.0
$
37.0
$
17.0
$
86.0
$
0.23
Fourth Quarter 2022
Operating profit
(loss)
Interest expense, net
Income tax expense
Net income (loss)
Diluted EPS (3)
GAAP
$
204.0
$
41.3
$
62.7
$
100.0
$
0.26
Amortization of intangibles
49.0
—
—
49.0
0.13
Non-GAAP Adjusted
$
253.0
$
41.3
$
62.7
$
149.0
$
0.39
Full Year 2022
Operating profit
(loss)
Interest expense, net
Change in Warrant
Liability
Income tax expense
Net income (loss)
Diluted EPS (4)
GAAP
$
270.0
$
141.0
$
(133.8
)
$
103.0
$
159.8
0.42
Change in warrant liability
—
—
133.8
—
(133.8
)
(0.35
)
Amortization of intangibles
217.5
—
—
—
217.5
0.57
Non-GAAP Adjusted
$
487.5
$
141.0
$
—
$
103.0
$
243.5
$
0.64
(1)
Information reconciling certain
forward-looking GAAP measures to non-GAAP measures related to FY
2022 guidance, including organic net sales growth, adjusted
operating margin and free cash flow, is not available without
unreasonable effort due to high variability, complexity, and
uncertainty with respect to forecasting and quantifying certain
amounts that are necessary for such reconciliations. For the same
reasons, we are unable to compute the probable significance of the
unavailable information, which could have a potentially
unpredictable, and potentially significant, impact on our future
GAAP financial results.
(2)
Diluted EPS and adjusted diluted EPS based
on 377.4 million shares (includes 377.2 million basic shares and a
weighted average 0.2 million potential dilutive stock options and
restricted stock units).
(3)
Diluted EPS and adjusted diluted EPS based
on 381.2 million shares (includes 377.6 million basic shares and a
weighted average 3.6 million potential dilutive stock options and
restricted stock units).
(4)
Diluted EPS and adjusted diluted EPS based
on 378.3 million shares (includes 376.8 million basic shares and a
weighted average 1.5 million potential dilutive stock options and
restricted stock units).
View source
version on businesswire.com: https://www.businesswire.com/news/home/20220802006119/en/
For investor inquiries, please contact: Lynne Maxeiner
Vice President, Global Treasury & Investor Relations Vertiv T
+1 614-841-6776 E: lynne.maxeiner@vertiv.com
For media inquiries, please contact: Peter Poulos
FleishmanHillard for Vertiv T +1 646-284-4991 E:
peter.poulos@fleishman.com
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