Vertiv Holdings, Llc · NYSE:VRT
Vertiv — Q3 2023 Earnings Presentation
26 slides from Vertiv's earnings presentation, Oct 25, 2023
Slide 1: Third Quarter 2023 Results
Third Quarter 2023 Results October 25, 2023 Architects of Continuity™
Slide 2: Cautionary Statement Regarding Forward-Looking Statements
Cautionary Statement Regarding Forward-Looking Statements This presentation, and other statements that Vertiv Holdings Co. (“Company”) 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 V
Slide 3: Third quarter 2023 key messages
Third quarter 2023 key messages Organic net sales up 17% compared to last year’s third quarter driven by continued strong growth in Americas, partially offset by headwinds in APAC. Orders were higher than expected, up ~11%1 from last year’s third quarter and up ~16%1 from second quarter 2023. Book-t
Slide 4: Market Environment
Market Environment SEGMENT AMERICAS APAC EMEA Aug-23 Oct-23 Aug-23 Oct-23 Aug-23 Oct-23 CLOUD / HYPERSCALE COLOCATION ENTERPRISE / SMALL & MEDIUM BUSINESS COMMUNICATION NETWORKS COMMERCIAL & INDUSTRIAL Underlying market demand remains strong • Continued acceleration in Cloud & Colocation Confidentia
Slide 5: Customer demand and supply chain update
Customer demand and supply chain update CUSTOMER DEMAND & PRODUCTION CAPACITY SUPPLY CHAIN & INFLATION UPDATE • Third quarter orders exceeded expectations, up ~11%1 from • Supply chains continue to stabilize as availability and prior year and up ~16% sequentially from second quarter 2023. supplier d
Slide 6: Ready Capacity for 2024+
Ready Capacity for 2024+ • Global footprint in place today ➢ 22 manufacturing facilities globally - dedicated to critical infrastructure • Demonstrated ability to scale manufacturing footprint ➢ New Thermal Management plants online and operational in Mexico and India ➢ Expansions currently underway
Slide 7: Third quarter 2023 financial results
Third quarter 2023 financial results $Millions; deltas to midpoint of guidance range Net Sales Adj. Operating Profit Adj. Operating Margin Adj. Diluted EPS Adj. Free Cash Flow Up ~18% Up $162M Up ~790 bps Up $0.29 Up ~$241M Organic up ~17% Up $43M vs. prior guidance Up ~260 bps vs. prior guidance Up
Slide 8: Third quarter 2023 segment results
Third quarter 2023 segment results $Millions Americas ➢ Organic growth driven by both volume and strong year- over-year price increases. High growth across product Net sales Up 41% Down 11% Up 6% portfolio. Organic +40% Organic -7.1% Organic +0.3% ➢ Stronger operating margins driven by favorable pri
Slide 9: Fourth quarter 2023 financial guidance
Fourth quarter 2023 financial guidance $Millions; midpoint of guidance range unless otherwise specified Net Sales Adj. Operating Profit Adj. Operating Margin Adj. Diluted EPS Adj. Free Cash Flow Up ~$185M Up ~$85M - $95M Up ~360 bps Up ~$0.22 Up ~$9M Organic up ~11% Up ~$25M - $35M vs. prior guidanc
Slide 10: Full year 2023 financial guidance
Full year 2023 financial guidance $Millions; midpoint of guidance range unless otherwise specified Net Sales Adj. Operating Profit Adj. Operating Margin Adj. Diluted EPS Adj. Free Cash Flow Up ~$1.1B Up ~$581M - $591M Up ~730 bps Up ~$1.17 Up ~$885M Organic up ~21% Up ~$70M - $80M vs. prior guidance
Slide 11: Early thoughts on 2024
Early thoughts on 2024 TAILWINDS HEADWINDS • End markets remain historically strong; data center • Slower-than-expected economic recovery in China segment continues to accelerate • 2023 order timing drives sales weighted to back half of • Incremental AI-driven demand gains traction 2024; returning t
Slide 12: 2023 Investor Conference topics of discussion
2023 Investor Conference topics of discussion Vertiv’s vision and corporate strategy outlook Accelerating growth opportunities to support AI-driven demand Vertiv Operating System (VOS): how we execute at scale Financial overview, including multi-year outlook Capital allocation priorities & framework
Slide 13: Key takeaways
Key takeaways Exceeded profitability expectations for 3Q 2023. Strong performance expected to continue through end of year. Third quarter 2023 orders up 11% vs. 2022 with book-to-bill ratio ~1.1x. Orders growth supports 2024 growth plans. 17.0% adj. operating margin in third quarter 2023 and expecti
Slide 14: Non-GAAP financial reconciliations
Non-GAAP financial reconciliations
Slide 15: Non-GAAP financial measures – third quarter results
Non-GAAP financial measures –third quarter results Reconciliation of segment operating profit (loss) to operating profit (loss) and adjusted Reconciliation from operating profit (loss) margin to adjusted operating profit (loss) margin operating profit (loss) ($M | 3rdQUARTER) 3Q23 3Q22 D ($M | 3rd Q
Slide 16: Non-GAAP financial measures – third quarter results (cont.)
Non-GAAP financial measures – third quarter results (cont.) Reconciliation of diluted EPS to adjusted diluted EPS and operating profit (loss) to adjusted operating profit (loss) Operating profit Interest Change in Income ($M, except EPS | 3rd QUARTER 2023) (loss) expense, net warrant liability tax e
Slide 17: Non-GAAP financial measures – fourth quarter 2023 guidance
Non-GAAP financial measures – fourth quarter 2023 guidance At midpoint of guidance range Reconciliation of diluted EPS to adjusted diluted EPS and operating profit (loss) to adjusted operating profit (loss) Operating profit Interest Change in Income tax Net income ($M, except EPS | 4th QUARTER 2023(
Slide 18: Non-GAAP financial measures – FY 2023 guidance
Non-GAAP financial measures –FY 2023 guidance At midpoint of guidance range Reconciliation of diluted EPS to adjusted diluted EPS and operating profit (loss) to adjusted operating profit (loss) Operating profit Interest Change in Income tax Net income ($M, except EPS | FULL YEAR 2023(1)) (loss) expe
Slide 19: Non-GAAP financial measures: Q1 2022 – Q3 2023 results
Non-GAAP financial measures: Q1 2022 – Q3 2023 results Net Sales(1) ($M) 1Q22 2Q22 3Q22 4Q22 FY22 1Q23 2Q23 3Q23 Americas $535.1 $647.2 $712.6 $833.7 $2,728.6 $862.3 $959.4 $1,003.2 APAC 332.8 407.2 436.1 425.2 1,601.3 313.0 395.8 388.6 EMEA 288.5 345.0 332.4 395.7 1,361.6 345.8 378.9 350.8 Total $1
Slide 20: Non-GAAP financial measures: Q1 2022 – Q3 2023 results
Non-GAAP financial measures: Q1 2022 – Q3 2023 results Reconciliation from operating profit (loss) margin to adjusted operating profit (loss) margin ($M) 1Q22 2Q22 3Q22 4Q22 FY22 1Q23 2Q23 3Q23 Net sales $1,156.4 $1,399.4 $1,481.1 $1,654.6 $5,691.5 $1,521.1 $1,734.1 $1,742.6 Operating profit (45.2)
Slide 21: Non-GAAP financial measures: Q1 2022 – Q3 2023 results
Non-GAAP financial measures: Q1 2022 – Q3 2023 results Reconciliation of segment operating profit (loss) to operating profit (loss) and adjusted operating profit (loss) ($M) 1Q22 2Q22 3Q22 4Q22 FY22 1Q23 2Q23 3Q23 Americas $57.9 $82.5 $115.2 $170.5 $426.1 $190.6 $239.8 $254.0 Asia Pacific 41.5 68.5
Slide 22: Non-GAAP financial measures – organic growth reconciliation
Non-GAAP financial measures – organic growth reconciliation Reconciliation of change in net sales to organic change in net sales Organic Net Sales Δ FX Δ growth Organic Δ % (1) ($M | 1st QUARTER) Americas: $327.2 $1.3 $328.5 61.4% Asia Pacific: (19.8) 22.6 2.8 0.8% EMEA: 57.3 18.8 76.1 26.4% Total:
Slide 23: Third quarter orders growth from prior year
Third quarter orders growth from prior year $Millions unless otherwise specified Third quarter orders growth Overall 12% FX headwind 1% Total excluding FX 11% Pricing 6% Volume 5% Total excluding FX 11% Confidential. Property of Vertiv. 23
Slide 24: Full year 2023 projected adjusted operating profit vs. 2022
Full year 2023 projected adjusted operating profit vs. 2022 $Millions; FY 2023 at midpoint of guidance (130) 1,023 235 • Volume benefit of ~$740M (44) 63 higher sales • Assumes material and freight inflation of ~$40M and labor inflation of ~$90M 460 • Investments in R&D and 439 capacity support grow
Slide 25: Key FX rates and other modeling assumptions
Key FX rates and other modeling assumptions $Millions unless otherwise specified 4Q FY Sales FX Exposure by Currency Assumption EUR 12% CNY / USD 7.29 CNY 12% USD / EUR $1.06 GBP 7% USD / GBP $1.22 INR 5% INR / USD 83.19 Other non-USD 15% Total non-USD 50% 1-mo SOFR 5.39% USD 50% FX translation impa
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