- Strong net sales growth of 20.5% and organic net sales growth
of 20.1%(1) compared with third quarter 2021
- Third quarter orders up 15% (excluding foreign exchange)
compared to third quarter 2021
- Year-over-year pricing of $110 million. Price-cost was a
tailwind of $35 million in third quarter.
- Reaffirms fourth quarter 2022 operating profit guidance of $170
million to $190 million and adjusted operating profit of $220
million to $240 million communicated earlier in October
- Reaffirms 2023 operating profit guidance of $530 million to
$550 million and adjusted operating profit guidance of $730 million
to $750 million
Vertiv Holdings Co (NYSE: VRT), a global provider of critical
digital infrastructure and continuity solutions, today reported
financial results for its third quarter ended September 30, 2022.
Vertiv reported third quarter net sales of $1,481 million, an
increase of $252 million, or 20.5%, compared with last year’s third
quarter and a 20.1% organic net sales increase excluding the impact
of foreign currency, acquisitions and divestitures. Foreign
currency negatively impacted third quarter sales by approximately
$86 million. Orders remain at very high levels but the comparison
to prior year periods will continue to be difficult over the next
several quarters (order growth was +51% in fourth quarter 2021 and
+34% in first quarter 2022). Market demand remains strong, as
demonstrated by the absolute value of orders booked, and we
anticipate this trend continuing. Backlog at the end of September
2022 was $4.7 billion, an increase of 46%, from the end of
2021.
Third quarter operating profit of $80 million decreased $2
million and adjusted operating profit of $134 million increased $3
million from the third quarter 2021. Benefits from pricing, volume
and the E&I acquisition were primarily offset by material and
freight inflation, foreign exchange, and higher fixed costs this
year including capacity expansion and R&D investments, as well
as one-time fixed cost benefits realized in third quarter 2021.
Pricing of $110 million was consistent with our August guidance,
and our full year pricing plan has been increased $5 million to
$365 million, of which $230 million has already been recognized in
the first three quarters of 2022. We have increased our estimate
for inflation by $15 million for the full year, with $5 million
recognized in the third quarter and $10 million projected in the
fourth quarter, primarily related to regional sales mix shifts
toward more inflationary regions and higher inflation in EMEA.
While supply chain is beginning to see some improvements, there are
still challenges related to electronic components that we continue
to navigate.
“Our third quarter results, which are consistent with our
recently reaffirmed operating profit and adjusted operating profit
guidance and updated forecast from earlier this month, reflect an
environment of continued strong market demand for our products,
improved navigation of supply chain constraints and further
progress in meeting our pricing plan,” said Rob Johnson, Vertiv’s
Chief Executive Officer. “As I prepare to retire at year-end and
hand over the reins to incoming CEO Giordano Albertazzi, Vertiv is
on solid footing and well positioned for a strong performance in
2023 under Giordano’s capable leadership.”
Dave Cote, Vertiv’s Executive Chairman, added: “We continue to
execute on the framework we laid out in February for strengthening
our supply chain, addressing cost challenges especially in the
Americas, and advancing our aggressive pricing plan to drive margin
improvement and improved profitability. As we anticipated, we saw a
more challenging first half and significant improvement in the
third quarter, notwithstanding currency headwinds, putting us on
track for what we anticipate to be our best quarter ever in the
fourth quarter. Giordano has played a pivotal role in EMEA, the
Americas and now globally in making Vertiv a high-performing
organization, and he is the right person to lead Vertiv into the
future. Data continues to proliferate rapidly which drives
underlying demand in our end markets. While the global
macroeconomic environment is uncertain, the profitability levers we
are implementing help provide us with greater flexibility and
capability to help sustain margin improvement throughout economic
cycles. I am more confident than ever in Vertiv’s ability to
deliver improved performance, profitability and value in 2023 and
beyond.”
Free Cash Flow and
Liquidity
Net cash generated by operating activities in the third quarter
was $4 million and free cash flow(1) was a use of cash of $20
million, a sequential improvement from second quarter 2022 of $210
million and $212 million, respectively. We expect a quarterly
record high free cash flow generation in the fourth quarter of $250
million to $300 million and free cash flow for the full year 2022
to be a use of cash of $100 million to $150 million. While supply
chain challenges persist, which have resulted in increased
inventory levels, we continue to anticipate a record sales level in
the fourth quarter and the associated cash benefit from those sales
which would primarily be realized in 2023. In addition, working
capital optimization programs are underway which we anticipate will
provide additional benefits to cash generation in 2023. Liquidity
at the end of the third quarter was $531 million, a sequential
improvement of $74 million from second quarter 2022, driven by an
increase to our borrowing capacity under our ABL credit facility of
$115 million that was completed in the third quarter.
Fourth Quarter and Full Year 2022
Guidance and Full Year 2023 Adjusted Operating Profit
Guidance
We reaffirm our 2022 full year operating profit guidance of $230
million to $250 million and adjusted operating profit range
previously provided in early October of $450 million to $470
million. Our pricing expectation for full year 2022 has been
increased to $365 million. Supply chain challenges, notably for
electronic components, continued in the third quarter and we expect
pressure continuing at least into the first half of 2023. There has
been significant progress in qualifying alternative suppliers,
including a newly qualified fan supplier, and our Monterrey, Mexico
facility continues to ramp up production supporting our fourth
quarter volume plan. We have delivered sequentially improving
financial performance each quarter in 2022 and expect that to
continue with quarterly record high sales and adjusted operating
profit in the fourth quarter. We reaffirm our expectation of
operating profit of $530 million to $550 million and adjusted
operating profit of $730 million to $750 million for 2023.
Fourth Quarter 2022 Guidance
Net sales
$1,640M - $1,700M
Organic net sales growth(2)
23% - 28%
Adjusted operating profit
$220M – $240M
Adjusted operating margin(2)
13.4% - 14.1%
Adjusted diluted EPS(1)
$0.29 - $0.35
Full Year 2022 Guidance
Net sales
$5,675M - $5,735M
Organic net sales growth(2)
13.5% - 14.5%
Adjusted operating profit
$450M - $470M
Adjusted operating margin(2)
7.9% - 8.2%
Adjusted diluted EPS(1)
$0.53 - $0.59
Free Cash Flow(2)
($150M) - ($100M)
(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.
Third Quarter 2022 Earnings Conference
Call
Vertiv’s management team will discuss the Company’s results
during a conference call on Wednesday, October 26, 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 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 and 2023, as well as expected impacts from our pricing
actions, and our guidance for fourth quarter and full year 2022 and
full year 2023. These statements constitute projections, forecasts
and forward-looking statements, and are not guarantees of
performance. Vertiv cautions that forward-looking statements are
subject to numerous assumptions, risks and uncertainties, which
change over time. Such statements can be identified by the fact
that they do not relate strictly to historical or current facts.
When used in this news release, words such as “anticipate,”
“believe,” “continue,” “could,” “estimate,” “expect,” “intend,”
“may,” “might,” “plan,” “possible,” “potential,” “predict,”
“project,” “should,” “strive,” “would” and similar expressions may
identify forward-looking statements, but the absence of these words
does not mean that a statement is not forward-looking.
The forward-looking statements contained in this release are
based on current expectations and beliefs concerning future
developments and their potential effects on Vertiv. There can be no
assurance that future developments affecting Vertiv will be those
that Vertiv has anticipated. Vertiv undertakes no obligation to
update or revise any forward-looking statements, whether as a
result of new information, future events or otherwise, except as
may be required under applicable securities laws. These
forward-looking statements involve a number of risks, uncertainties
(some of which are beyond Vertiv’s control) or other assumptions
that may cause actual results or performance to be materially
different from those expressed or implied by these forward-looking
statements. Should one or more of these risks or uncertainties
materialize, or should any of the assumptions prove incorrect,
actual results may vary in material respects from those projected
in these forward-looking statements. Vertiv has previously
disclosed risk factors in its Securities and Exchange Commission
(“SEC”) reports, including those set forth in the Vertiv 2021
Annual Report on Form 10-K filed with the SEC on March 1, 2022.
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
and manage the succession of its key employees; factors relating to
the business, operations and financial performance of Vertiv and
its subsidiaries, including: global economic weakness and
uncertainty; Vertiv’s ability to attract, train and retain key
members of its leadership team and other qualified personnel; the
adequacy of Vertiv’s insurance coverage; a failure to benefit from
future 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 September 30,
2022
Three months ended September 30,
2021
Nine months ended September 30,
2022
Nine months ended September 30,
2021
Net sales(1)
Net sales - products
$
1,135.4
$
894.8
$
3,039.8
$
2,625.1
Net sales - services
345.7
334.1
997.1
962.5
Net sales
1,481.1
1,228.9
4,036.9
3,587.6
Costs and expenses(1)
Cost of sales - products
838.5
653.4
2,301.7
1,870.4
Cost of sales - services
213.3
193.8
630.8
568.2
Cost of sales
1,051.8
847.2
2,932.5
2,438.6
Operating expenses
Selling, general and administrative
expenses
295.2
257.8
875.0
779.6
Amortization of intangibles
54.2
31.6
167.7
95.3
Restructuring costs
(1.5
)
(3.8
)
0.1
(0.7
)
Foreign currency (gain) loss, net
0.2
4.9
1.8
2.1
Asset impairments
—
8.7
—
8.7
Other operating expense (income)
1.2
0.7
(1.2
)
0.2
Operating profit (loss)
80.0
81.8
61.0
263.8
Interest expense, net
38.8
22.4
101.5
66.5
Loss on extinguishment of debt
—
—
—
0.4
Change in fair value of warrant
liabilities
9.8
(32.5
)
(124.0
)
52.3
Income (loss) before income
taxes
31.4
91.9
83.5
144.6
Income tax expense
10.2
35.7
33.5
47.0
Net income (loss)
$
21.2
$
56.2
$
50.0
$
97.6
Earnings (loss) per share:
Basic
$
0.06
$
0.16
$
0.13
$
0.28
Diluted
$
0.06
$
0.15
$
(0.20
)
$
0.27
Weighted-average shares outstanding:
Basic
377,016,981
352,482,900
376,531,805
351,439,095
Diluted
377,444,002
363,198,701
378,038,809
355,974,628
(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)
September 30, 2022
December 31, 2021
ASSETS
Current assets:
Cash and cash equivalents
$
258.0
$
439.1
Accounts receivable, less allowances of
$15.9 and $14.1, respectively
1,743.8
1,536.4
Inventories
804.3
616.3
Other current assets
167.7
106.8
Total current assets
2,973.8
2,698.6
Property, plant and equipment,
net
466.0
489.3
Other assets:
Goodwill
1,247.3
1,330.1
Other intangible assets, net
1,801.6
2,138.2
Deferred income taxes
43.3
47.9
Other
295.0
235.5
Total other assets
3,387.2
3,751.7
Total assets
$
6,827.0
$
6,939.6
LIABILITIES AND
EQUITY
Current liabilities:
Current portion of long-term debt
$
21.8
$
21.8
Accounts payable
882.9
858.5
Accrued expenses and other liabilities
900.3
953.4
Income taxes
33.4
21.1
Total current liabilities
1,838.4
1,854.8
Long-term debt, net
3,223.8
2,950.5
Deferred income taxes
152.1
198.8
Warrant liabilities
25.6
149.6
Other long-term liabilities
320.0
368.2
Total liabilities
5,559.9
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, 377,058,727 and 375,801,857 shares
issued and outstanding at September 30, 2022 and December 31, 2021,
respectively
—
—
Additional paid-in capital
2,621.9
2,597.5
Accumulated deficit
(1,165.4
)
(1,215.4
)
Accumulated other comprehensive (loss)
income
(189.4
)
35.6
Total equity
1,267.1
1,417.7
Total liabilities and equity
$
6,827.0
$
6,939.6
UNAUDITED CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
Vertiv Holdings Co
(Dollars in millions)
Three months ended September 30,
2022
Three months ended September 30,
2021
Nine months ended September 30,
2022
Nine months ended September 30,
2021
Cash flows from operating
activities:
Net income (loss)
$
21.2
$
56.2
$
50.0
$
97.6
Adjustments to reconcile net loss to net
cash used for operating activities:
Depreciation
17.8
16.4
53.3
51.6
Amortization
57.9
35.0
178.6
105.5
Deferred income taxes
(12.8
)
—
(22.0
)
(22.3
)
Amortization of debt discount and issuance
costs
2.6
1.3
7.4
4.6
Loss on extinguishment of debt
—
—
—
0.4
Change in fair value of warrant
liabilities
9.8
(32.5
)
(124.0
)
52.3
Asset impairment
—
8.7
—
8.7
Changes in operating working capital
(70.2
)
(33.9
)
(448.0
)
(160.0
)
Stock based compensation
6.3
5.7
20.1
17.5
Payment of contingent consideration
—
—
(8.7
)
—
Changes in tax receivable agreement
—
1.7
—
3.3
Other
(28.2
)
(4.2
)
(40.2
)
15.2
Net cash provided by (used for)
operating activities
4.4
54.4
(333.5
)
174.4
Cash flows from investing
activities:
Capital expenditures
(23.5
)
(12.9
)
(61.7
)
(43.3
)
Investments in capitalized software
(1.3
)
(4.1
)
(8.0
)
(9.5
)
Acquisition of Business, net of cash
acquired
—
—
(5.0
)
—
Proceeds from disposition of property,
plant and equipment
—
6.1
—
6.1
Net cash used for investing
activities
(24.8
)
(10.9
)
(74.7
)
(46.7
)
Cash flows from financing
activities:
Borrowings from ABL revolving credit
facility and short-term borrowings
130.8
—
578.4
—
Repayments of ABL revolving credit
facility and short-term borrowings
(26.8
)
—
(281.5
)
—
Repayment of long-term debt
—
(5.5
)
(10.9
)
(16.4
)
Debt issuance costs
(0.5
)
—
(0.5
)
—
Proceeds from the exercise of warrants
—
—
—
107.5
Payment of tax receivable agreement
(12.5
)
—
(25.0
)
—
Payment of contingent consideration
—
—
(12.8
)
—
Exercise of employee stock options
0.2
0.5
1.3
2.6
Employee taxes paid from shares
withheld
—
(0.2
)
(4.3
)
(7.2
)
Net cash provided by (used for)
financing activities
91.2
(5.2
)
244.7
86.5
Effect of exchange rate changes on cash
and cash equivalents
(7.4
)
(3.5
)
(14.9
)
(5.2
)
Increase (decrease) in cash, cash
equivalents and restricted cash
63.4
34.8
(178.4
)
209.0
Beginning cash, cash equivalents and
restricted cash
205.3
716.8
447.1
542.6
Ending cash, cash equivalents and
restricted cash
$
268.7
$
751.6
$
268.7
$
751.6
Changes in operating working
capital
Accounts receivable
$
(87.2
)
$
(39.4
)
$
(257.0
)
$
(67.8
)
Inventories
(15.2
)
(40.4
)
(202.3
)
(147.7
)
Other current assets
5.8
10.5
(4.2
)
2.4
Accounts payable
21.6
12.2
42.2
63.1
Accrued expenses and other liabilities
(1.1
)
21.7
(15.7
)
5.7
Income taxes
5.9
1.5
(11.0
)
(15.7
)
Total changes in operating working
capital
$
(70.2
)
$
(33.9
)
$
(448.0
)
$
(160.0
)
Reconciliation of GAAP and non-GAAP Financial
Measures
To supplement this news release, we have included certain
non-GAAP financial measures in the format of performance metrics.
Management believes these non-GAAP financial measures provide
investors with additional meaningful financial information that
should be considered when assessing our underlying business
performance and trends. Further, management believes these non-GAAP
financial measures also enhance investors' ability to compare
period-to-period financial results. Non-GAAP financial measures
should be viewed in addition to, and not as an alternative for, the
company's reported results prepared in accordance with GAAP. Our
non-GAAP financial measures do not represent a comprehensive basis
of accounting. Therefore, our non-GAAP financial measures may not
be comparable to similarly titled measures reported by other
companies. Reconciliations of each of these non-GAAP financial
measures to GAAP information are also included. Management uses
these non-GAAP financial measures in making financial, operating,
compensation and planning decisions and in evaluating the company's
performance. Disclosing these non-GAAP financial measures allows
investors and management to view our operating results excluding
the impact of items that are not reflective of the underlying
operating performance.
Vertiv’s non-GAAP financial measures include:
- Adjusted operating profit (loss), which represents operating
profit (loss), adjusted to exclude amortization of intangibles and
certain mergers and acquisition costs;
- 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, certain
merger and acquisition costs, and change in warranty
liability.
Regional Segment Results
Three months ended September
30,
Nine months ended September
30,
2022
2021
Δ
Δ%
Organic Δ%(2)
2022
2021
Δ
Δ%
Organic Δ%(2)
Net sales
(1)
Americas
$
712.6
$
537.2
$
175.4
32.7
%
25.3
%
$
1,894.9
$
1,603.6
$
291.3
18.2
%
11.8
%
APAC
436.1
394.6
41.5
10.5
%
17.4
%
1,176.1
1,149.9
26.2
2.3
%
5.9
%
EMEA
332.4
297.1
35.3
11.9
%
14.3
%
965.9
834.1
131.8
15.8
%
11.3
%
Total
$
1,481.1
$
1,228.9
$
252.2
20.5
%
20.1
%
$
4,036.9
$
3,587.6
$
449.3
12.5
%
9.8
%
Adjusted
operating profit (loss)
Americas
$
115.2
$
113.4
$
1.8
1.6
%
$
255.6
$
368.4
$
(112.8
)
(30.6
)%
APAC
83.3
69.4
13.9
20.0
%
193.3
185.3
8.0
4.3
%
EMEA
57.4
59.0
(1.6
)
(2.7
)%
152.4
154.8
(2.4
)
(1.6
)%
Corporate (3)
(121.7
)
(110.4
)
(11.3
)
10.2
%
(372.6
)
(331.4
)
(41.2
)
12.4
%
Total
$
134.2
$
131.4
$
2.8
2.1
%
$
228.7
$
377.1
$
(148.4
)
(39.4
)%
Adjusted
operating margins (4)
Americas
16.2
%
21.1
%
(4.9
)%
13.5
%
23.0
%
(9.5
)%
APAC
19.1
%
17.6
%
1.5
%
16.4
%
16.1
%
0.3
%
EMEA
17.3
%
19.9
%
(2.6
)%
15.8
%
18.6
%
(2.8
)%
Vertiv
9.1
%
10.7
%
(1.6
)%
5.7
%
10.5
%
(4.8
)%
(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 September
30,
2022
2021
Δ
Δ %
Americas:
Critical infrastructure &
solutions
$
417.3
$
291.9
$
125.4
43.0
%
Services & spares
203.6
180.2
23.4
13.0
%
Integrated rack solutions
91.7
65.1
26.6
40.9
%
$
712.6
$
537.2
$
175.4
32.7
%
Asia Pacific:
Critical infrastructure &
solutions
$
265.7
$
234.0
$
31.7
13.5
%
Services & spares
113.3
104.4
8.9
8.5
%
Integrated rack solutions
57.1
56.2
0.9
1.6
%
$
436.1
$
394.6
$
41.5
10.5
%
EMEA:
Critical infrastructure &
solutions
$
224.3
$
180.4
$
43.9
24.3
%
Services & spares
71.1
80.8
(9.7
)
(12.0
)%
Integrated rack solutions
37.0
35.9
1.1
3.1
%
$
332.4
$
297.1
$
35.3
11.9
%
Total:
Critical infrastructure &
solutions
$
907.3
$
706.3
$
201.0
28.5
%
Services & spares
388.0
365.4
22.6
6.2
%
Integrated rack solutions
185.8
157.2
28.6
18.2
%
$
1,481.1
$
1,228.9
$
252.2
20.5
%
Nine months ended September
30,
2022
2021
Δ
Δ %
Americas:
Critical infrastructure &
solutions
$
1,080.5
$
877.2
$
203.3
23.2
%
Services & spares
555.9
513.4
42.5
8.3
%
Integrated rack solutions
258.5
213.0
45.5
21.4
%
$
1,894.9
$
1,603.6
$
291.3
18.2
%
Asia Pacific:
Critical infrastructure &
solutions
$
692.5
$
690.0
$
2.5
0.4
%
Services & spares
330.8
305.8
25.0
8.2
%
Integrated rack solutions
152.8
154.1
(1.3
)
(0.8
)%
$
1,176.1
$
1,149.9
$
26.2
2.3
%
EMEA:
Critical infrastructure &
solutions
$
642.6
$
494.1
$
148.5
30.1
%
Services & spares
208.0
229.9
(21.9
)
(9.5
)%
Integrated rack solutions
115.3
110.1
5.2
4.7
%
$
965.9
$
834.1
$
131.8
15.8
%
Total:
Critical infrastructure &
solutions
$
2,415.6
$
2,061.3
$
354.3
17.2
%
Services & spares
1,094.7
1,049.1
45.6
4.3
%
Integrated rack solutions
526.6
477.2
49.4
10.4
%
$
4,036.9
$
3,587.6
$
449.3
12.5
%
Organic growth by Product and Service Offering
Three months ended September 30,
2022
Net Sales Δ
FX Δ
Acquisition/Divestiture Δ(1)
Organic growth
Organic Δ %(2)
Americas:
Critical infrastructure &
solutions
$
125.4
$
1.5
$
(41.9
)
$
85.0
29.1
%
Services & spares
23.4
0.7
—
24.1
13.4
%
Integrated rack solutions
26.6
0.3
—
26.9
41.3
%
$
175.4
$
2.5
$
(41.9
)
$
136.0
25.3
%
Asia Pacific:
Critical infrastructure &
solutions
$
31.7
$
16.4
$
—
$
48.1
20.6
%
Services & spares
8.9
7.2
—
16.1
15.4
%
Integrated rack solutions
0.9
3.6
—
4.5
8.0
%
$
41.5
$
27.2
$
—
$
68.7
17.4
%
EMEA:
Critical infrastructure &
solutions
$
43.9
$
35.9
$
(53.4
)
$
26.4
14.6
%
Services & spares
(9.7
)
13.6
4.8
8.7
10.8
%
Integrated rack solutions
1.1
6.4
—
7.5
20.9
%
$
35.3
$
55.9
$
(48.6
)
$
42.6
14.3
%
Total:
Critical infrastructure &
solutions
$
201.0
$
53.8
$
(95.3
)
$
159.5
22.6
%
Services & spares
22.6
21.5
4.8
48.9
13.4
%
Integrated rack solutions
28.6
10.3
—
38.9
24.7
%
$
252.2
$
85.6
$
(90.5
)
$
247.3
20.1
%
(1)
The change in acquisition and divestiture
sales includes E&I sales for the three months ended September
30, 2022 of $41.9 and $73.3 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 September 30, 2021 of $24.7
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 September 30, 2021.
Nine months ended September 30,
2022
Net Sales Δ
FX Δ
Acquisition/Divestiture Δ(1)
Organic growth
Organic Δ %(2)
Americas:
Critical infrastructure &
solutions
$
203.3
$
3.4
$
(105.9
)
$
100.8
11.5
%
Services & spares
42.5
0.7
—
43.2
8.4
%
Integrated rack solutions
45.5
0.2
—
45.7
21.5
%
$
291.3
$
4.3
$
(105.9
)
$
189.7
11.8
%
Asia Pacific:
Critical infrastructure &
solutions
$
2.5
$
25.0
$
—
$
27.5
4.0
%
Services & spares
25.0
11.7
—
36.7
12.0
%
Integrated rack solutions
(1.3
)
5.1
—
3.8
2.5
%
$
26.2
$
41.8
$
—
$
68.0
5.9
%
EMEA:
Critical infrastructure &
solutions
$
148.5
$
72.8
$
(166.3
)
$
55.0
11.1
%
Services & spares
(21.9
)
28.9
12.5
19.5
8.5
%
Integrated rack solutions
5.2
14.4
—
19.6
17.8
%
$
131.8
$
116.1
$
(153.8
)
$
94.1
11.3
%
Total:
Critical infrastructure &
solutions
$
354.3
$
101.2
$
(272.2
)
$
183.3
8.9
%
Services & spares
45.6
41.3
12.5
99.4
9.5
%
Integrated rack solutions
49.4
19.7
—
69.1
14.5
%
$
449.3
$
162.2
$
(259.7
)
$
351.8
9.8
%
(1)
The change in acquisition and divestiture
sales includes E&I sales for the nine months ended September
30, 2022 of $105.9 and $211.0 included in Americas; and Europe,
Middle East & Africa reportable segments, respectively,
partially offset by the divested heavy industrial UPS business
sales for the nine months ended September 30, 2021 of $57.2
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 nine
months ended September 30, 2021.
Segment information
Operating profit
(loss)
Three months ended September 30,
2022
Three months ended September 30,
2021
Nine months ended September 30,
2022
Nine months ended September 30,
2021
Americas
$
115.2
$
113.4
$
255.6
$
368.4
Asia Pacific
83.3
69.4
193.3
185.3
Europe, Middle East & Africa
57.4
59.0
152.4
154.8
Total reportable segments
255.9
241.8
601.3
708.5
Foreign currency gain (loss)
(0.2
)
(4.9
)
(1.8
)
(2.1
)
Corporate and other
(121.5
)
(123.5
)
(370.8
)
(347.3
)
Total corporate, other and
eliminations
(121.7
)
(128.4
)
(372.6
)
(349.4
)
Amortization of intangibles
(54.2
)
(31.6
)
(167.7
)
(95.3
)
Operating profit (loss)
$
80.0
$
81.8
$
61.0
$
263.8
Reconciliation of net cash provided by (used for) operating
activities to free cash flow
Three months ended September 30,
2022
Three months ended September 30,
2021
Nine months ended September 30,
2022
Nine months ended September 30,
2021
Net cash provided by (used for) operating
activities
$
4.4
$
54.4
$
(333.5
)
$
174.4
Capital expenditures
(23.5
)
(12.9
)
(61.7
)
(43.3
)
Investments in capitalized software
(1.3
)
(4.1
)
(8.0
)
(9.5
)
Proceeds from disposition of PP&E
—
6.1
—
6.1
Free cash flow
$
(20.4
)
$
43.5
$
(403.2
)
$
127.7
Reconciliation from operating profit (loss) to adjusted
operating profit (loss)
Three months ended September 30,
2022
Three months ended September 30,
2021
Nine months ended September 30,
2022
Nine months ended September 30,
2021
Operating profit (loss)
$
80.0
$
81.8
$
61.0
$
263.8
Amortization of intangibles
54.2
31.6
167.7
95.3
Mergers and acquisition costs
—
18.0
—
18.0
Adjusted operating profit
(loss)
$
134.2
$
131.4
$
228.7
$
377.1
Reconciliation from operating margin to adjusted operating
margin
Three months ended September 30,
2022
Three months ended September 30,
2021
Δ
Nine months ended September 30,
2022
Nine months ended September 30,
2021
Δ
Vertiv net sales
$
1,481.1
$
1,228.9
$
252.2
$
4,036.9
$
3,587.6
$
449.3
Vertiv operating profit (loss)
80.0
81.8
(1.8
)
61.0
263.8
(202.8
)
Vertiv operating margin
5.4
%
6.7
%
(1.3
)%
1.5
%
7.4
%
(5.9
)%
Amortization of intangibles
$
54.2
$
31.6
$
22.6
$
167.7
$
95.3
$
72.4
Mergers and acquisition costs
—
18.0
(18.0
)
—
18.0
(18.0
)
Vertiv adjusted operating profit
(loss)
134.2
131.4
2.8
228.7
377.1
(148.4
)
Vertiv adjusted operating
margin
9.1
%
10.7
%
(1.6
)%
5.7
%
10.5
%
(4.8
)%
Reconciliation of Diluted EPS to Adjusted Diluted EPS
Three months
ended September 30, 2022
Operating profit
(loss)
Interest expense, net
Change in Warrant
Liability
Income tax expense
Net income (loss)
Diluted EPS (1)
GAAP
$
80.0
$
38.8
$
9.8
$
10.2
$
21.2
$
0.06
Amortization of intangibles
54.2
—
—
—
54.2
0.14
Change in warrant liability
—
—
(9.8
)
—
9.8
0.03
Non-GAAP Adjusted
$
134.2
$
38.8
$
—
$
10.2
$
85.2
$
0.23
(1)
Diluted EPS and adjusted diluted EPS based
on 377.4 million shares (includes 377.0 million basic shares and
0.4 million dilutive stock options and restricted stock units). We
believe that this presentation is more representative of operating
results by removing the impact of warrant liability accounting and
the associated impact on diluted share count.
Three months
ended September 30, 2021
Operating profit
(loss)
Interest expense, net
Change in Warrant
Liability
Income tax expense
Net income (loss)
Diluted EPS (1)
GAAP
$
81.8
$
22.4
$
(32.5
)
$
35.7
$
56.2
$
0.15
Amortization of intangibles
31.6
—
—
—
31.6
0.09
Change in warrant liability
—
—
32.5
—
(32.5
)
(0.09
)
Merger and acquisition costs(2)
18.0
—
—
—
18.0
0.05
Pro-forma share count
—
—
—
—
—
—
Non-GAAP Adjusted
$
131.4
$
22.4
$
—
$
35.7
$
73.3
$
0.20
(1)
Diluted EPS and adjusted diluted EPS based
on 363.2 million shares (includes 352.5 million basic shares and
4.7 million potential dilutive stock options and restricted stock
units and 6.0 million dilutive warrants). 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.
(2)
Includes $9.3 million of expenses
primarily related to the E&I acquisition and $8.7 million asset
impairment related to the Heavy Industrial UPS business.
Nine months ended
September 30, 2022
Operating profit
(loss)
Interest expense, net
Change in Warrant
Liability
Income tax expense
Net income (loss)
Diluted EPS (1)
GAAP
$
61.0
$
101.5
$
(124.0
)
$
33.5
$
50.0
$
(0.20
)
Amortization of intangibles
167.7
—
—
—
167.7
0.44
Change in warrant liability
—
—
124.0
—
(124.0
)
—
Non-GAAP Adjusted
$
228.7
$
101.5
$
—
$
33.5
$
93.7
$
0.25
(1)
Diluted EPS and adjusted diluted EPS based
on 378.0 million shares (includes 376.5 million basic shares and
1.5 million dilutive warrants). Diluted EPS and adjusted diluted
EPS includes an adjustment to exclude $124.0 million from net
income which is attributable to the warrants as they were dilutive
in the period. We believe that this presentation is more
representative of operating results by removing the impact of
warrant liability accounting and the associated impact on diluted
share count.
Nine months ended
September 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
$
263.8
$
66.5
$
0.4
$
52.3
$
47.0
$
97.6
$
0.27
Amortization of intangibles
95.3
—
—
—
—
95.3
0.27
Change in warrant liability
—
—
—
(52.3
)
—
52.3
0.15
Merger and acquisition costs(2)
18.0
—
—
—
—
18.0
0.05
Pro-forma share count
—
—
—
—
—
—
(0.01
)
Non-GAAP Adjusted
$
377.1
$
66.5
$
0.4
$
—
$
47.0
$
263.2
$
0.73
(1)
Diluted EPS based on 356.0 million shares
(includes 351.4 million basic shares and 4.5 million potential
dilutive stock options and restricted stock units). Non-GAAP
Adjusted diluted EPS based on pro-forma share count 361.7 million
shares (includes 351.4 million basic shares and 10.3 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.
(2)
Includes $9.3 million of expenses
primarily related to the E&I acquisition and $8.7 million asset
impairment related to the Heavy Industrial UPS business.
Vertiv Holdings Co
2022 Adjusted Guidance
Reconciliation of Diluted EPS
to Adjusted Diluted EPS (1)
Fourth Quarter
2022
Operating profit
(loss)
Interest expense, net
Income tax expense
Net income (loss)
Diluted EPS (2)
GAAP
$
182.3
$
43.8
$
66.4
$
72.1
$
0.19
Amortization of intangibles
47.7
—
—
47.7
0.13
Non-GAAP Adjusted
$
230.0
$
43.8
$
66.4
$
119.8
$
0.32
Full Year
2022
Operating profit
(loss)
Interest expense, net
Change in Warrant
Liability
Income tax expense
Net income (loss)
Diluted EPS (3)
GAAP
$
243.0
$
145.3
$
(124.0
)
$
100.0
$
121.7
0.32
Change in warrant liability
—
—
124.0
—
(124.0
)
(0.33
)
Amortization of intangibles
215.4
—
—
—
215.4
0.57
Non-GAAP Adjusted
$
458.4
$
145.3
$
—
$
100.0
$
213.1
$
0.56
(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 378.0 million shares (includes 377.4 million basic shares and a
weighted average 0.6 million potential dilutive stock options and
restricted stock units).
(3)
Diluted EPS and adjusted diluted EPS based
on 377.9 million shares (includes 376.7 million basic shares and a
weighted average 1.2 million potential dilutive stock options and
restricted stock units).
Vertiv Holdings Co
2023 Adjusted Guidance
Reconciliation of Operating
Profit (Loss) to Adjusted Operating Profit (Loss)
Full year 2023
Operating profit (loss)
$
540.0
Amortization of intangibles
200.0
Adjusted operating profit
(loss)
$
740.0
View source
version on businesswire.com: https://www.businesswire.com/news/home/20221025005994/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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