Vertiv Holdings, Llc · NYSE:VRT
Vertiv — FY2019 Earnings Presentation
22 slides from Vertiv's earnings presentation, Mar 9, 2020
Slide 1: Earnings Conference Call Fourth Quarter & Full Year 2019 Results
Earnings Conference Call Fourth Quarter & Full Year 2019 Results March 9, 2020 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, may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act, with respect to Company’s future financial or bu
Slide 3: Message from David Cote
Message from David Cote WELL POSITIONED UPSIDE POTENTIAL COMPELLING RISK REWARD Significant potential upside Great position in a good industry Multiple potential levers to create value in growth and margins • Data growth and Edge development are • Solid organic growth outlook • Well-structured trans
Slide 4: Key messages
Key messages Excited to launch as publicly traded company (NYSE: VRT) leveraging David Cote’s leadership Exceeded expectations for 2019 organic sales growth of +5.6% and adjusted EBITDA of $542M Orders slightly down for full year from 2018, but record quarterly high of $1,172M in fourth quarter Co
Slide 5: Recent events
Recent events Vertiv became David Cote, Reduced net Credit ratings Capital structure NYSE bell ringing NYSE listed former Chairman & leverage from 6.2x improved three refinanced resulting ceremony held on company on CEO of Honeywell, to 3.7x proforma levels to B1 at in reduced interest February 28,
Slide 6: Full year 2019 financial results
Full year 2019 financial results $Millions Net Sales Adjusted EBITDA Adjusted EBITDA Margin Free Cash Flow Up 3.4% Up 7.8% Up 50 bp Up $302M Organic +5.6% (8) 4,431 542 (310) 4,286 12.2% 502 11.7% FY 2018 FY 2019 FY 2018 FY 2019 FY 2018 FY 2019 FY 2018 FY 2019 + Strong organic growth in all regions
Slide 7: Full year 2019 segment results
Full year 2019 segment results $Millions Americas Net Sales + Solid sales growth in hyperscale and colocation + Margin expansion driven by pricing, volume Up 3.9% Up 2.7% Up 3.2% Organic +4.3% Organic +6.0% Organic +8.2% leverage, net productivity and fixed cost control 2,146 2,229 − Full year order
Slide 8: Fourth quarter 2019 financial results
Fourth quarter 2019 financial results $Millions Net Sales Adjusted EBITDA Adjusted EBITDA Margin Free Cash Flow Flat Down 5.3% Down 70 bp Up $74M Organic +1.0% 13.4% 1,172 1,172 12.7% 89 157 149 15 4Q 2018 4Q 2019 4Q 2018 4Q 2019 4Q 2018 4Q 2019 4Q 2018 4Q 2019 + Two year stacked organic net sales +
Slide 9: Fourth quarter 2019 segment results
Fourth quarter 2019 segment results $Millions Americas Net Sales + Adjusted EBITDA improvement driven by pricing, productivity, and fixed cost control Down 0.4% Up 7.9% Down 9.3% Organic +0.1% Organic +8.8% Organic (7.1%) − IT&EI product sales down due to non-recurrence 556 554 of project sales from
Slide 10: Full year 2019 free cash flow bridge from 2018
Full year 2019 free cash flow bridge from 2018 $Millions • Free cash flow calculated as: • net cash provided by operating activities 18 (8) • less: capital expenditures • less: investments in capitalized software 74 • plus: proceeds from disposition of PP&E Up $302M • $133M full year 2019 EBITDA adj
Slide 11: Long-term value creation
Long-term value creation LEVERAGE DAVID COTE LEADERSHIP GROWTH MINDSET MARGIN EXPANSION • Proven Honeywell operating philosophies • Increase R&D with focus on innovation • Currently 500 bp behind peers • Procurement, pricing and G&A opportunities • Cultural change already commenced • Opportunity to
Slide 12: Vertiv end-market outlook
Vertiv end-market outlook NEAR-TERM DYNAMICS LONG-TERM TRENDS • 5.6% organic sales growth in full year 2019 • Long-term data growth trends continue to be strong • Fourth quarter 2019 orders record quarterly high. Jan & • Fragmentation offers market share penetration opportunity Feb orders up 8% from
Slide 13: Coronavirus impact on Vertiv
Coronavirus impact on Vertiv • The health and safety of our employees are our top priorities HEALTH and SAFETY • Following all government safety protocols (masks, # of workers per room, etc.) • Potential first quarter revenue impact of $70M – $90M and adj. EBITDA of $28M – $36M CURRENT EXPECTATION •
Slide 14: Balance sheet restructuring
Balance sheet restructuring $Millions Actual SPAC Pro-Forma Debt Pro-Forma • Moody’s credit rating upgraded 12/31/2019 Proceeds for SPAC Refinance for Refinance three levels to B1. S&P Global upgraded one level to B+. Prior term loan (L+4.0%) 2,070 (1,317) 753 (753) - 9.25% notes 750 (1) 750 (750) -
Slide 15: 2020 financial guidance
2020 financial guidance Guidance What We Expect in 2020 • Organic growth of ~1.5x market from share capture and new market penetration Sales Adjusted EBITDA • Adjusted EBITDA margins improve ~70 bps from 2019 to ~12.9% $4,585M - $4,610M $595M Up 4.5% – 5.0% organic 10% EBITDA growth • 2020 EBITDA ad
Slide 16: Annual run rate free cash flow
Annual run rate free cash flow $Millions 285 84 (32) 53 (20) 40 (21) (15) 140 21 90 93 (8) FY 2019 EBITDA Cash Adjusted Cash taxes Working One time Other FY 2020 One time One time Run rate FY 2020 adjustments interest EBITDA capital transaction (incl. guidance transaction EBITDA interest run rate co
Slide 17: Key messages
Key messages Excited to launch as publicly traded company (NYSE: VRT) leveraging David Cote’s leadership Exceeded expectations for 2019 organic sales growth of 5.6% and adjusted EBITDA of $542M Orders slightly down for full year from 2018, but record quarterly high of $1,172M in fourth quarter Con
Slide 18: Appendix
Appendix
Slide 19: Non-GAAP Financial Measures
Non-GAAP Financial Measures Reconciliation from Net loss to EBITDA and adjusted EBITDA ($M | FYE 12/31) 4Q19 4Q18 FY19 FY18 COMMENTARY Net loss $(33.9) $(39.7) $(140.8) $(314.0) a) Cost to achieve operational initiatives encompass both transformation efforts and restructuring, as a result of major a
Slide 20: Non-GAAP Financial Measures (Cont.)
Non-GAAP Financial Measures (Cont.) Reconciliation of segment EBIT to adjusted EBITDA by region (A) Earnings From Continuing Operations Before Interest and Taxes (C) EBITDA Adjustments ($M | FYE 12/31) 4Q19 4Q18 FY19 FY18 ($M | FYE 12/31) 4Q19 4Q18 FY19 FY18 Americas $83.7 $78.8 $354.3 $301.0 Americ
Slide 21: Non-GAAP Financial Measures (Cont.)
Non-GAAP Financial Measures (Cont.) Reconciliation of Organic Net Sales and Free Cash Flow Reconciliation of Net Sales to Organic Net Sales ($M | FYE 12/31) 4Q19 4Q18 % Organic % FY19 FY18 % Organic % Americas $553.7 $555.8 (0.4) 0.1 $2,229.1 $2,145.7 3.9 4.3 APAC 371.9 344.6 7.9 8.8 1,278.0 1,244.2
Slide 22: Full Year 2020 guidance
Full Year 2020 guidance Reconciliation of Projected GAAP Financial Performance to Non-GAAP Adjusted Non-GAAP Operating Other Interest Net earnings Adjusted ($M, except EPS | FYE 12/31) Net Sales profit deductions, net expense, net Income tax expense (loss) Diluted EPS(1) EBITDA(2) GAAP $4,595.0 $446