Vertiv Holdings, Llc · NYSE:VRT
Vertiv — SPAC Merger (December 2019)
55 slides from Vertiv's SPAC merger presentation, December 2019
Slide 1: Investor Presentation
Investor Presentation December 2019
Slide 2: Disclaimer
Disclaimer INVESTOR ROADSHOW This investor presentation (the “presentation”) is for informational purposes only and does not constitute an offer to sell, a solicitation of an offer to buy, or a recommendation to purchase any equity, debt or other financial instruments of GS Acquisition Holdings Corp
Slide 3: Disclaimer (Cont'd)
Disclaimer (Cont’d) Use of Projections This presentation contains financial forecasts. Neither GSAH’s nor Vertiv’s independent auditors have studied, reviewed, compiled or performed any procedures with respect to the projections for the purpose of their inclusion in this presentation, and accordingl
Slide 4: Today's Presenters
Today’s Presenters David Cote Rob Johnson David Fallon Gary Niederpruem Chief Executive Officer of GS Chief Executive Officer of Vertiv Chief Financial Officer of Vertiv Chief Strategy / Development Officer Acquisition Holdings Corp • Will become Executive Chairman of • Joined Vertiv in December 201
Slide 5: Vertiv Will be Supported by Best-In-Class Sponsorship
Vertiv Will be Supported by Best-In-Class Sponsorship Investments Align Interests SHAREHOLDERS WELL ALIGNED TO DELIVER SUCECSS + DAVID COTE + GOLDMAN SACHS + PLATINUM EQUITY Management Investing $20mm PIPE Investment $100mm PIPE Investment $1.3bn of Equity Rollover4 Great position in a good Reno
Slide 6: Why We Believe Vertiv is a Good Investment
Why We Believe Vertiv is a Good Investment WELL POSITIONED UPSIDE POTENTIAL COMPELLING RISK REWARD Significant potential upside in growth and Great position in a good industry margins Multiple potential levers to create value • Vertiv is where Honeywell was after David • Solid organic growth outlook
Slide 7: Transaction Overview
Transaction Overview SUMMARY OF PROPOSED TERMS OF TRANSACTION AND TIMING • GS Acquisition Holdings Corp (“GSAH”) proposes to enter into a business combination with Vertiv Holdings, LLC through a reverse subsidiary merger Transaction • Following the merger, GSAH will be renamed Vertiv Holdings Co Str
Slide 8: Company Overview
Company Overview 7 Vertiv Privileged and Confidential 7
Slide 9: Vertiv at a Glance
Vertiv at a Glance Pure-Play Full Service Provider of Digital Critical Infrastructure Solutions SALES EMPLOYEES CUSTOMERS MANUFACTURING SERVICE CENTERS REACH $4.3B ~19,700 25+ year relationships; Top SITES 270+ globally 130+ countries 50 customers represent 19 ~35% of revenue PORTFOLIO SEGMENT MARKE
Slide 10: Vertiv Offerings in the Data Center
Vertiv Offerings in the Data Center Comprehensive Product Portfolio Thermal Management: Air Handlers & Chillers Thermal Management: Condensers Power Management: UPS Systems Thermal Management Power Management: Power Distribution IT & Edge Infrastructure: Racks & Access Control Hardware Project Servi
Slide 11: Well Positioned: #1 in Most End-Markets Served
Well Positioned: #1 in Most End-Markets Served Focus is a Competitive Advantage IT AND EDGE INFRASTRUCTURE AND SERVICES & SOFTWARE POWER MANAGEMENT THERMAL MANAGEMENT SOLUTIONS (& IT MANAGEMENT) SOLUTIONS VERTIV VERTIV VERTIV VERTIV 16% 11% 12% 32% Schneider Schneider Other Schneider 11% 8% 48% 24%
Slide 12: Strategic Initiatives Positioned Vertiv for Growth
Strategic Initiatives Positioned Vertiv for Growth Transformation Efforts Yielding Results Former Ownership (Prior 2016) Management Actions Today • Key account executives hired • Strategic account management 1 Market Focus • Enterprise customer • Established strategic account program • Key account (
Slide 13: Multiple Levers of Value Creation
Multiple Levers of Value Creation WELL POSITIONED UPSIDE POTENTIAL COMPELLING RISK Great position in a good Significant upside in REWARD industry growth and margins Multiple levers to create value Strong underlying growth trends within key Recurring service and product sales with a Above market grow
Slide 14: Data Boom: Key Driver of End-Market Growth
1 Data Boom: Key Driver of End-Market Growth Increased Digitization, Multiple Device Connection Adoption, and IoT ESTIMATED DATA CENTER IP TRAFFIC APPLICATIONS SECULAR TRENDS GROWTH DATA EXPLOSION Video Streaming 90% 175 ZB Created within last Expected to be created by two years 2025, up from 33 ZB
Slide 15: Served Markets are Large and Growing
1 Served Markets are Large and Growing Secular Trends are Supportive MARKET SIZE & TRENDS Market Growth % Vertiv Size Segment Trends Rate¹ Sales² ($bn, 2018) Data Center Segments • Cloud/hyperscale benefiting from hybrid model and data boom Cloud / Hyperscale / Colocation ~$ 6.5 8 – 12% • Shift to m
Slide 16: Leading Global Player
2 Leading Global Player Focus is a Competitive Advantage • Comprehensive portfolio offering with strong product capabilities that serve each submarket. • Competitors have consistently earned margins that are ~500bps higher than Vertiv. This transaction positions Vertiv to enhance margins over time.
Slide 17: Highly Recurring and Visible Revenues
3 Highly Recurring and Visible Revenues Growing Installed Base Flow & Recurring Based Revenue Project Based Revenue REPLACEMENT & EXPANSION LARGE SCALE DEPLOYMENT • IT & Edge Infrastructure and smaller • Initial large power, thermal and solutions scale power and thermal replacement build-out project
Slide 18: Entrenched, Long-Standing Customer Relationships
4 Entrenched, Long-Standing Customer Relationships Average Tenure and Breadth of Relationships Evidence Vertiv’s Leading Position OVERVIEW LONG STANDING RELATIONSHIPS WITH OUR CUSTOMERS • Highly diversified customer base with the top 50 customers representing ~35% of total sales in 2018 Data Center
Slide 19: Upside Potential: Improving Growth
5 Upside Potential: Improving Growth TOP LINE GROWTH INORGANIC VALUE CREATION Organic Growth Inorganic Growth • Pricing focus has just begun • Fragmented industry with opportunities for bolt-on M&A • Increasing focus on new product development • Product extensions / adjacencies • Service growth – ex
Slide 20: Upside Potential: Inorganic Growth Strategy
5 Upside Potential: Inorganic Growth Strategy Successful M&A Actions to Date and Well-Planned Go-Forward Approach M&A ACTIONS TO DATE M&A PIPELINE & STRATEGY SALES GROWTH¹ STRATEGIC FOCUS AREA PIPELINE ATTRIBUTES $ 124 $ 85 + • Manufacturer of custom air handling systems for data centers and commerc
Slide 21: Upside Potential: Improving Margins
5 Upside Potential: Improving Margins STRONG FREE CASH FLOW MARGIN EXPANSION CONVERSION Margin Rate Free Cash Flow¹ • Continued expansion into higher margin product categories • Comfortable debt / cash flow at close • Implement Vertiv operating system • Low capital expenditure needs • Core / non-cor
Slide 22: Management Team with the Ability to Execute
6 Management Team with the Ability to Execute David Cote will Support the Existing Team’s Work RESPONSIBILITY FOR HOLISTIC, GLOBAL VIEW OF CUSTOMER SEGMENT NEEDS Jason Forcier Andrew Cole Colin Flannery Chief Operations Chief Organizational Worldwide Officer and Development & HR General Counsel Exec
Slide 23: Financial Overview
Financial Overview 7 Vertiv Privileged and Confidential 22
Slide 24: Summary Projected Financials
7 Summary Projected Financials Attractive Growth Profile HISTORICAL & PROJECTED ADJ. REVENUE ($M) & % GROWTH1 HISTORICAL & PROJECTED ADJ. EBITDA ($M) & % MARGIN¹ $640 $4,767 $595 $4,411 $4,575 $540 $4,290 $500 $502 $3,865 $3,911 $472 2016A 2017A 2018A 2019E 2020E 2021E 2016A 2017A 2018A 2019E 2020E
Slide 25: Financial Summary – Free Cash Flow
7 Financial Summary – Free Cash Flow Illustrative Levered Free Cash Flow Build¹ Free Cash Flow Drivers Illustrative Illustrative 1• Low capital expenditure needs Run-Rate 2020E Run-Rate 2021E Adj. EBITDA $ 595 $ 640 2• Digital transformation and restructuring spend are coming to an end 1 (-) Net Cap
Slide 26: We Believe Valuation is Attractive…
8 We Believe Valuation is Attractive… Discount to Peers 2019 EV/EBITDA Median: 15.0 x 17.7 x 17.6 x 16.1 x 15.2 x 15.0 x Attractive entry point with a deal 12.9 x 12.6 x 11.8 x 11.6 x 9.8 x valuation comparatively at discount to peers Vertiv APH ABBN GNRC LFUS LR SU HUBB TEL ETN • Large and growing
Slide 27: Supported by Superior EBITDA Growth Potential
8 …Supported by Superior EBITDA Growth Potential 2016-18 REVENUE CAGR 2018-20E REVENUE CAGR 27.6 % Median: 12.9 % Median: 1.1 % Key organic initiatives 7.6 % and targeted M&A 18.4 % 3.3 % 14.2 % 13.1 % 12.9 % 11.0 % 5.9 % 3.1 % 2.9 % 4.6 % 1.6 % 1.1 % 1.0 % activity is expected to 5.4 % continue to
Slide 28: Appropriate Capital Structure at Close
9 Appropriate Capital Structure at Close Increased Flexibility with Opportunities for Further Improvement ILLUSTRATIVE PRO-FORMA CAPITALIZATION¹ NET LEVERAGE BASED ON 2019E ADJUSTED EBITDA Actual Pro-Forma US$ in Millions (30-Sept-2019) (31-Dec-2019E) Cash $ 149 $ 151 6.3 x Interest Rates Debt² Asse
Slide 29: Why We Believe Vertiv is a Good Investment
Why We Believe Vertiv is a Good Investment Great position in a good industry Same position Honeywell was in after first 2-3 years Sales and margin growth upside Good capital structure and free cash flow Priced right 28
Slide 30: Appendix
Appendix 7 Vertiv Privileged and Confidential 29
Slide 31: Transaction Overview
TRANSACTION OVERVIEW 30
Slide 32: Proposed Transaction Terms
Proposed Transaction Terms (USD in Millions, Except per Share Data) TRANSACTION SOURCES & USES SOURCES USES SPAC IPO Cash $ 690 Debt Paydown $ 1,464 PIPE Proceeds 1,239 Cash to Vertiv Shareholders 415 Total Sources $ 1,929 Estimated Transaction Costs 50 Total Uses $ 1,929 IMPLIED PRO-FORMA FIRM VALU
Slide 33: Illustrative Transaction Timeline
Illustrative Transaction Timeline Ownership Event • Transaction Agreement Executed December 2019 • Transaction Announced • Schedule 14A and Preliminary Proxy Materials Filed with the SEC • Mail Final Proxy Materials to Shareholders First Quarter of 2020 • Record Date for Shareholder Vote First Quart
Slide 34: David Cote's Track Record
DAVID COTE’S TRACK RECORD 33
Slide 35: David Cote's Career Built on a Track Record of Success
David Cote’s Career Built on a Track Record of Success Select Experience and Awards Unparalleled Experience Across the Industrials Space Select Other Accomplishments and Positions • Renowned diversified industrial executive • 40+ years of operating experience across a wide range of industrial sector
Slide 36: David Cote's Track Record of Creating Value
David Cote’s Track Record of Creating Value Honeywell Public Market Performance During Cote’s Tenure Honeywell Total Shareholder Return5 (“TSR”) During Cote’s Tenure Overview 1,200% TSR Summary • Focus on delivering shareholder value HON S&P500 797% • Total shareholder return of 797%2,5 321% 1,000%
Slide 37: Through Transformational Leadership and Execution
…Through Transformational Leadership and Execution Honeywell Financial Results During Cote’s Tenure1 Revenue ($bn)1 Honeywell Operating System (HOS) $50 $40.5 • Implemented high-performing operating model (HOS) generating growth and INCREASED margin improvements across the portfolio $22.1 SALES $25
Slide 38: Additional Financial Information
ADDITIONAL FINANCIAL INFORMATION 37
Slide 39: EBITDA Adjustments
EBITDA Adjustments Adjustments are Ramping Down BREAKDOWN OF EBITDA ADJUSTMENTS COMMENTARY ($M | FYE 12/31) 2017A 2018A 2019E 2020E • Add-backs are forecasted to decline from $125 mm in 2019 to $55 mm in 2020. Cost for operational initiatives $83 $100 $65 $15 Cost for Digital Project 7 76 41 17 • Th
Slide 40: EBITDA Reconciliation
EBITDA Reconciliation EBITDA RECONCILIATION COMMENTARY ($M | FYE 12/31) 2016 2017 2018 a) Cost to achieve operational initiatives include transformation efforts and restructuring. Restructuring Loss from continuing operations $(109) $(387) $(321) costs include plant shutdown costs, severance, start-
Slide 41: Revenue and Operating Profit Reconciliation
Revenue and Operating Profit Reconciliation REVENUE RECONCILIATION COMMENTARY ($M | FYE 12/31) 2016 2017 2018 a) Cost to achieve operational initiatives include transformation efforts and restructuring. Restructuring costs GAAP Net Revenue $3,858 $3,879 $4,286 include plant shutdown costs, severance
Slide 42: Quarterly Trends By Region
Quarterly Trends By Region Adjusted Net Revenue COMMENTARY 3Q19 • Adjusted net revenue ($M | FYE 12/31) 1Q17 2Q17 3Q17 4Q17 FY17 1Q18 2Q18 3Q18 4Q18 FY18 1Q19 2Q19 3Q19 YTD calculated as GAAP net revenue plus impact of Americas $495 $483 $442 $488 $1,909 $507 $546 $564 $562 $2,180 $564 $581 $551 $1,
Slide 43: Organic Trade Sales Growth By Region
Organic Trade Sales Growth By Region Organic Trade Sales y/y growth COMMENTARY • Organic trade sales adjusted ($M | FYE 12/31) 1Q18 2Q18 3Q18 4Q18 FY18 1Q19 2Q19 3Q19 for incremental sales from acquisitions, negative impact Americas (4)% 2% 15% 10% 6%) 12% 7% (1)% from changes in foreign currency ex
Slide 44: Adjusted Net Revenue Reconciliation
Adjusted Net Revenue Reconciliation GAAP Net Revenue ($M | FYE 12/31) 1Q17 2Q17 3Q17 4Q17 FY17 1Q18 2Q18 3Q18 4Q18 FY18 1Q19 2Q19 3Q19 3Q19 YTD Americas $485 $477 $439 $487 $1,887 $506 $545 $563 $561 $2,176 $564 $580 $551 $1,695 APAC 300 289 289 362 1,240 278 348 349 372 1,347 281 352 353 986 EMEA 2
Slide 45: Adjusted EBITDA Reconciliation
Adjusted EBITDA Reconciliation Earnings From Continuing Operations Before Income Taxes ($M | FYE 12/31) 1Q17 2Q17 3Q17 4Q17 FY17 1Q18 2Q18 3Q18 4Q18 FY18 1Q19 2Q19 3Q19 3Q19 YTD Americas $37 $55 $76 $74 $242 $61 $91 $70 $79 $301 $87 $101 $82 $271 APAC (9) 12 33 29 64 17 37 39 44 137 20 46 50 117 EME
Slide 46: Adjusted EBITDA Reconciliation (Cont.)
Adjusted EBITDA Reconciliation (Cont.) EBITDA Adjustments ($M | FYE 12/31) 1Q17 2Q17 3Q17 4Q17 FY17 1Q18 2Q18 3Q18 4Q18 FY18 1Q19 2Q19 3Q19 3Q19 YTD Americas $6 $22 $6 $25 $59 $14 $13 $24 $13 $64 $7 $4 $8 $19 APAC 2 14 5 9 30 6 2 2 7 17 5 (1) (2) 2 EMEA 11 12 16 1 39 10 2 7 24 44 6 6 5 16 Global Bus
Slide 47: Additional Company Background
ADDITIONAL COMPANY BACKGROUND 46
Slide 48: Vertiv Offering Capabilities
Vertiv Offering Capabilities Project, Maintenance & Performance Services for Data Center, Communication & Industrial Markets SERVICES AND SOFTWARE: IT EDGE INFRASTRUCTURE AND SOLUTIONS (& IT MANAGEMENT): HIGH PREVENTIVE PERFORMANCE PROJECT SOFTWARE & DESKTOP SECURE RACK RACK PDU RACK UPS PERFORMANCE
Slide 49: Well Positioned: #1 in Most End-Markets Served
Well Positioned: #1 in Most End-Markets Served Targeted Portfolio of Products & Services CRITICAL INFRASTRUCTURE & SOLUTIONS IT & EDGE INFRASTRUCTURE SERVICES VERTIV SALES AC POWER (20%) DC POWER (10%) THERMAL (20%) IT MGMT (7%) (13)% (30)% Description • Medium & Large Uninterruptible • 12V to 400V
Slide 50: Vertiv Timeline
Vertiv Timeline Combining the Entrepreneurial Spirit Of a Startup With the Resources and Reach of an Established Leader 1965 1987 2000 2001 Liebert Corporation was formed Emerson acquires Liebert® Emerson forms Network Power ENP increases presence in Asia – as industry’s first manufacturer Corporati
Slide 51: Go-to-Market Approach - In-Region For-Region
Leading Full-Service Provider of Critical Infrastructure Solutions Go-to-Market Approach - “In-Region For-Region” Americas • Strategically positioned to grow alongside global customers 8 ~130 140+ 6 Service centers • Always being present locally to provide on-the-ground 24/7 support Manufacturing Sa
Slide 52: Data Center Customers Are Migrating to More Agile Architectures
Data Center Customers Are Migrating to More Agile Architectures CUSTOMER NEEDS VERTIV PRINCIPLES VERTIV SOLUTIONS FLEXIBILITY EXPERTISE Walk-In Enclosures MODULARITY ECOSYSTEMS SPEED Power Skids AGILITY BUILD CAPACITY TO MATCH DEMAND COLLABORATION Modular Enclosures Vertiv’s value propositio
Slide 53: Communications (Telecom) End Market Applications
Communications (Telecom) End Market Applications TELECOM CORE TELECOM ACCESS 1 AC Power 7 Paralleling Switchgear 1 Infrastructure Management & Monitoring 4 Power Transfer Switch / Load Centre 2 Power Distribution Units 8 Surge Protection 2 Surge Protection 5 DC Power 3 Racks & Integrated Cabinets 9
Slide 54: What is Edge?
What is Edge? Applications That Require Moving Processing and Storage Closer to the Customer USE CASES ARCHITECTURE 1 Traditional 2 Local 3 Edge Data Intensive Human-Latency Sensitive - Cloud / Data center - Aggregation sites - Rooms / Building • Restricted Connectivity • Web Site Optimization - Met
Slide 55: Commercial and Industrial End Market Applications
Commercial and Industrial End Market Applications OVERVIEW Illustrative layout: Vital applications across Commercial & Industrial Reasons we serve this market: markets with the following characteristics: Utilizes existing power and thermal offerings • Part of a connected network Utilizes skill s