Vertiv Holdings, Llc · NYSE:VRT
Vertiv — Q4 2022 Earnings Presentation
34 slides from Vertiv's earnings presentation, Feb 22, 2023
Slide 1: Fourth Quarter and Full Year 2022 Results
Fourth Quarter and Full Year 2022 Results February 22, 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: Fourth quarter 2022 key messages
Fourth quarter 2022 key messages Organic net sales up 22% compared to last year’s fourth quarter with strong growth in Americas and EMEA. Demand remained strong with orders (adjusted for FX) up ~7% from third quarter 2022. Record backlog of $4.8B at year-end. Fourth quarter adjusted operating profit
Slide 4: Market Environment
Market Environment SEGMENT AMERICAS APAC EMEA Oct-22 Feb-23 Oct-22 Feb-23 Oct-22 Feb-23 CLOUD / HYPERSCALE COLOCATION ENTERPRISE / SMALL & MEDIUM BUSINESS COMMUNICATION NETWORKS COMMERCIAL & INDUSTRIAL Underlying market demand remains strong despite some short-term headwinds Confidential. Property o
Slide 5: Customer demand and supply chain update
Customer demand and supply chain update CUSTOMER DEMAND & PRICING UPDATE SUPPLY CHAIN & INFLATION UPDATE • Overall market demand remains strong, but growth rate is • Inflation is moderating but still expecting year over year slowing headwinds – especially in EMEA • Fourth quarter orders (adjusted fo
Slide 6: Fourth quarter 2022 financial results
Fourth quarter 2022 financial results $Millions Net Sales Adj. Operating Profit Adj. Operating Margin Adj. Diluted EPS Adj. Free Cash Flow Up 17% Up $117M Up 600 bps Up $0.24 Up $135M Organic +22% 1,655 12.7% 143 211 $0.28 1,411 94 6.7% $0.04 8 Q4 2021 Q4 2022 Q4 2021 Q4 2022 Q4 2021 Q4 2022 Q4 2021
Slide 7: Fourth quarter 2022 segment results
Fourth quarter 2022 segment results $Millions Americas ➢ Organic growth driven by higher volume (~2/3) and Net sales pricing (~1/3). E&I added ~$16M. FX headwind (~$2M). Up 43% Down (7%) ➢ Adjusted operating margin improved driven primarily by Up 8% Organic +40% Organic +1% Organic +19% favorable pr
Slide 8: 2022 Americas segment performance by quarter
2022 Americas segment performance by quarter $Millions Net Sales Organic Sales Growth from same quarter in 2021 40% 834 713 647 25% 535 7% 3% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Adjusted Operating Profit Adjusted Operating Margin 21% 16% 171 13% 11% 115 83 58 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Delivered strong turnaround
Slide 9: Full year 2022 financial results
Full year 2022 financial results $Millions Net Sales Adj. Operating Profit Adj. Operating Margin Adj. Diluted EPS Adj. Free Cash Flow Up 14% Down (7%) Down 170 bps Down $0.23 Down (396) Organic +13% 136 5,692 (260) 4,998 471 9.4% $0.76 439 7.7% $0.53 FY 2021 FY 2022 FY 2021 FY 2022 FY 2021 FY 2022 F
Slide 10: Net sales and AOP profile consistent with initial guidance
Net sales and AOP profile consistent with initial guidance $Millions; midpoint of guidance range unless otherwise specified Net Sales Adj. Operating Profit 1,700 1,655 300 1,600 1,481 250 1,500 1,399 200 1,400 211 134 1,300 150 1,156 1,200 100 82 1,100 50 1,000 13 0 900 800 -50 Q1 Q2 Q3 Q4 Q1 Q2 Q3
Slide 11: 2023 outlook
2023 outlook cove IV.
Slide 12: 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 ~15% Up ~$336M Up ~430 bps Up $0.69 Up $610M Organic up ~15% ~350 ~$6,525 ~$775 5,692 ~$1.22 ~12.0% (260) 4
Slide 13: First quarter 2023 financial guidance
First 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 ~21% Up ~$112M Up ~780 bps Up ~$0.25 Up $75M Organic up ~25% ~(75) (150) ~$0.17 ~1,400 ~8.9% 1,156 ~125
Slide 14: Well positioned to deliver significant improvement in 2023
Well positioned to deliver significant improvement in 2023 ADJUSTED OPERATING PROFIT ADJUSTED FREE CASH FLOW See Appendix Page 33 • Backlog coverage significantly improved from prior • Adjusted free cash flow of $350M (at mid-point year end with backlog of $4.8B covering ~70% of of guidance) support
Slide 15: Focus areas for 2023
Focus areas for 2023 • We have defined strategic priorities around Customer Focus, Operational Excellence, Innovation and Financial Performance • Started to foster a high-performance culture around delivering on commitments and clear accountability • Implemented rigorous management process, establis
Slide 16: Non-GAAP financial reconciliations
Non-GAAP financial reconciliations
Slide 17: Non-GAAP financial measures – fourth quarter results
Non-GAAP financial measures –fourth quarter results Reconciliation of segment operating profit (loss) to operating profit (loss) and adjusted Reconciliation from operating profit (loss) margin to adjusted operating profit (loss) margin operating profit (loss) ($M | 4th QUARTER) 4Q22 4Q21 D ($M | 4th
Slide 18: Non-GAAP financial measures – fourth quarter results (cont.)
Non-GAAP financial measures – fourth quarter results (cont.) Reconciliation of diluted EPS to adjusted diluted EPS and operating profit (loss) to adjusted operating profit (loss) Loss on Operating profit Interest extinguishment Change in Income tax ($M, except EPS | 4th QUARTER 2022) (loss) expense,
Slide 19: Non-GAAP financial measures – full year results
Non-GAAP financial measures –full year 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) ($M | FULL YEAR) FY22 FY21 D ($M | FULL YEAR)
Slide 20: Non-GAAP financial measures – full year results (cont.)
Non-GAAP financial measures – full year results (cont.) Reconciliation of diluted EPS to adjusted diluted EPS and operating profit (loss) to adjusted operating profit (loss) Loss on Gain on tax Operating Interest extinguishment Change in receivable Income tax Net income ($M, except EPS | FULL YEAR 2
Slide 21: Non-GAAP financial measures – first quarter 2023 guidance
Non-GAAP financial measures – first quarter 2023 guidance At midpoint of guidance range Reconciliation of diluted EPS to adjusted diluted EPS and operating profit (loss) to adjusted operating profit (loss) Operating profit Interest Change in Income tax Net income ($M, except EPS | 1st QUARTER 2023(1
Slide 22: 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 ($M, except EPS | FULL YEAR 2023(1)) (loss) expe
Slide 23: Non-GAAP financial measures: Q1 2021 – Q4 2022 results
Non-GAAP financial measures: Q1 2021 – Q4 2022 results Net Sales(1) ($M) 1Q21 2Q21 3Q21 4Q21 FY21 1Q22 2Q22 3Q22 4Q22 FY22 Americas $501.5 $564.9 $537.2 $583.9 $2,187.4 $535.1 $647.2 $712.6 $833.7 $2,728.6 APAC 357.4 398.0 394.6 458.9 1,609.0 332.8 407.2 436.1 425.2 1,601.3 EMEA 239.5 297.4 297.1 36
Slide 24: Non-GAAP financial measures: Q1 2021 – Q4 2022 results
Non-GAAP financial measures: Q1 2021 – Q4 2022 results Reconciliation from operating profit (loss) margin to adjusted operating profit (loss) margin ($M) 1Q21 2Q21 3Q21 4Q21 FY21 1Q22 2Q22 3Q22 4Q22 FY22 Net sales $1,098.4 $1,260.3 $1,228.9 $1,410.5 $4,998.1 $1,156.4 $1,399.4 $1,481.1 $1,654.6 $5,69
Slide 25: Non-GAAP financial measures: Q1 2021 – Q4 2022 results
Non-GAAP financial measures: Q1 2021 – Q4 2022 results Reconciliation of segment operating profit (loss) to operating profit (loss) and adjusted operating profit (loss) ($M) 1Q21 2Q21 3Q21 4Q21 FY21 1Q22 2Q22 3Q22 Q422 FY22 Americas $126.4 $128.6 $113.4 $72.8 $441.2 $57.9 $82.5 $115.2 $170.5 $426.1
Slide 26: 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 Acquisition Organic (1) The change in acquisition and divestiture sales includes E&I sales for the three months ended March 31, 2022 of $17.1 and $70.4 included in Net Sal
Slide 27: 2022 actuals by quarter
2022 actuals by quarter $Millions; midpoint of guidance range unless otherwise specified Actual – Net Sales Actual – Organic Sales Growth from 2021 Volume (3%) +2% +11% +12% (1%) +12% Pricing +4% +6% +9% +10% +5% +10% 3,136 2,556 545 300 245 1,655 300 1,481 165 1,399 135 1,156 100 5 20 135 105 40 80
Slide 28: 2022 pricing and inflation by quarter
2022 pricing and inflation by quarter $Millions – year-over-year impact excluding E&I Actual ~365 • Fourth quarter pricing of $135M (+10%) ~135 ~305 consistent with prior guidance ~110 ~85 ~80 ~90 • Fourth quarter inflation of $55M ~75 ~55 consistent with prior guidance ~40 Q1 Q2 Q3 Q4 FY October Gu
Slide 29: Full year 2022 adjusted operating profit vs. 2021
Full year 2022 adjusted operating profit vs. 2021 $Millions; FY 2022 at midpoint of guidance • E&I 2022 adjusted operating profit of 100 ~$52M less ~$7M in 2021 45 • Volume benefit of ~$285M higher sales (305) • Material and freight inflation assumes wrap around of Dec 2021 run rate 365 (45) (~$160M
Slide 30: Fourth quarter orders growth from prior year
Fourth quarter orders growth from prior year $Millions unless otherwise specified Fourth quarter orders growth Overall (19%) FX headwind (4%) Total excluding FX (15%) Pricing 8% Volume (22%) Divestiture (1%) Total excluding FX (15%) Confidential. Property of Vertiv. 30
Slide 31: 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 • Volume benefit of ~$600M higher sales • Assumes material and freight 195 (175) 775 inflation of ~$100M and labor inflation of ~$75M (40) 81 • Pricing assumes ~$200M carryover benefit and ~$75M of
Slide 32: Key FX rates and other modeling assumptions
Key FX rates and other modeling assumptions $Millions unless otherwise specified Avg 2022 2023 Plan Sales FX Translation Exposure by Currency CNY / USD 6.70 6.90 CNY 14% USD / EUR $1.05 $1.07 EUR 14% USD / GBP $1.23 $1.21 GBP 6% INR / USD 78.7 82.6 INR 5% Other non-USD 13% Total non-USD 52% 1-mo SOF
Slide 33: Additional 2023 guidance assumptions
Additional 2023 guidance assumptions SEGMENT EXPECTATIONS1 ADJUSTED FREE CASH FLOW FY 2023 FY 2022 B/(W) Adjusted operating profit 775 439 336 E&! D&A 90 87 3 AMERICAS APAC EMEA Adjusted EBITDA 865 526 339 NET SALES $3,100 - $3,300 $1,650 - $1,800 $1,500 - $1,600 Change in working capital (75) (441)
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