Vertiv Holdings, Llc · NYSE:VRT
Vertiv — Q3 2022 Earnings Presentation
29 slides from Vertiv's earnings presentation, Oct 26, 2022
Slide 1: Third Quarter 2022 Results
Third Quarter 2022 Results October 26, 2022 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 2022 key messages
Third quarter 2022 key messages Organic net sales up 20% compared to last year’s third quarter with strong growth across all geographic regions. Third quarter orders up 15% from prior year adjusted for the impact of foreign exchange. Third quarter adjusted operating profit of $134M within guidance r
Slide 4: Market Environment
Market Environment SEGMENT AMERICAS APAC EMEA August-22 October-22 August-22 October-22 August-22 October-22 CLOUD / HYPERSCALE COLOCATION + + ENTERPRISE / SMALL & MEDIUM BUSINESS COMMUNICATION NETWORKS COMMERCIAL & INDUSTRIAL Market demand remains strong notwithstanding continued aggressive pricing
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 robust. Third quarter • Supply chain challenges – notably for electronic orders up ~15% (adjusted for FX) compared to components – continued in third quarter. Expe
Slide 6: Third quarter 2022 financial results
Third quarter 2022 financial results $Millions Net Sales Adj. Operating Profit Adj. Operating Margin Adj. Diluted EPS Free Cash Flow Up 21% Up $3M Down 160 bps Up $0.03 Down $64M Organic up 20% 1,481 44 1,229 134 10.7% 131 9.1% $0.23 $0.20 (20) Q3 2021 Q3 2022 Q3 2021 Q3 2022 Q3 2021 Q3 2022 Q3 2021
Slide 7: Third quarter 2022 segment results
Third quarter 2022 segment results $Millions Americas Organic growth driven roughly equally by higher volume and pricing. E&I added ~$42M. FX headwind (~$3M). Net sales Operating margins lower due to higher fixed costs Up 32.7% Up 10.5% Up 11.9% (including capacity investments) and other cost Or
Slide 8: Fourth quarter 2022 financial guidance
Fourth quarter 2022 financial guidance $Millions; midpoint of guidance range unless otherwise specified Net Sales Adj. Operating Profit Adj. Operating Margin Adj. Diluted EPS Free Cash Flow Up ~18% Up ~$126M - $146M Up ~710 bps Up ~$0.28 Up $242M - $292M Organic up ~26% ~250 ~1,670 ~$0.32 - ~300 220
Slide 9: Full year 2022 financial guidance
Full year 2022 financial guidance $Millions; midpoint of guidance range unless otherwise specified Net Sales Adj. Operating Profit Adj. Operating Margin Adj. Diluted EPS Free Cash Flow Up 14% Down (4%) to ~Flat Down 140 bps Down $0.20 Down (286) – (236) Organic +14% 136 ~5,705 4,998 ~450 (150) 471 9
Slide 10: Sequential Q3 to Q4 bridge
Sequential Q3 to Q4 bridge $Millions; midpoint of guidance range unless otherwise specified Net Sales AOP • Strengthening of the US dollar throughout Q3 drives Q3 Actual $ 1,481 $ 134 a sequential FX translation headwind • Volume increase driven by improved supply and ramp FX translation ~(40) ~(10)
Slide 11: Net sales and AOP profile consistent with initial guidance
Net sales and AOP profile consistent with initial guidance $Millions; midpoint of guidance range unless otherwise specified Net Sales Adj. Operating Profit 1,670 1,700 300 230 1,600 1,481 250 1,500 1,399 200 1,400 134 1,300 150 1,156 1,200 100 82 1,100 50 1,000 13 0 900 800 -50 Q1 Q2 Q3 Q4 Q1 Q2 Q3
Slide 12: Introduction to Giordano Albertazzi
Introduction to Giordano Albertazzi BIOGRAPHY AMERICAS TRANSFORMATION • Named Chief Operating Officer, October 2022 • Adjusted operating margin improved from ~11% in Q1 to ~16% in Q3 with further improvements expected in • President of Vertiv in the Americas, March 2022 Q4 • Joined Vertiv/Emerson Ne
Slide 13: Initial focus areas for 2023
Initial focus areas for 2023 • Establishing an immediate sense of urgency – especially with intense focus on operational execution • Focus is on profitable growth with continuous margin enhancement • Drive immediate actions to enhance free cash flow generation. Reduce working capital. • Institute a
Slide 14: Early thoughts on 2023
Early thoughts on 2023 TAILWINDS HEADWINDS • Expected year-end backlog up ~50% from last year • Supply challenges expected to persist through 2023 in certain categories • End markets remain historically strong • Energy inflation and availability (especially in EMEA) • Taking orders with strong embed
Slide 15: Non-GAAP financial reconciliations
Non-GAAP financial reconciliations
Slide 16: Non-GAAP financial measures –third quarter results
Non-GAAP financial measures –third quarter results Reconciliation of segment operating profit (loss) to operating profit (loss) and adjusted Reconciliation from operating profit (loss) margin to adjusted operating profit (loss) margin operating profit (loss) ($M | 3rd QUARTER) 3Q22 3Q21 ∆ ($M | 3rd
Slide 17: Non-GAAP financial measures – third quarter results (cont.)
Non-GAAP financial measures – third quarter results (cont.) Reconciliation of diluted EPS to adjusted diluted EPS and operating profit (loss) to adjusted operating profit (loss) Loss on Operating profit Interest extinguishment Change in Income tax ($M, except EPS | 3rd QUARTER 2022) (loss) expense,
Slide 18: Non-GAAP financial measures – 2022 guidance
Non-GAAP financial measures – 2022 guidance At approximate 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 ($M, except EPS | 4th QUARTER 2022(1)) (loss) exp
Slide 19: Non-GAAP financial measures – 2H 2022 and FY 2023 guidance
Non-GAAP financial measures – 2H 2022 and FY 2023 guidance At midpoint of guidance range Reconciliation of diluted EPS to adjusted diluted EPS and operating profit (loss) to adjusted operating profit (loss) Operating profit Interest Change in Income tax Net income ($M, except EPS | 2nd HALF 2022(1))
Slide 20: Non-GAAP financial measures: Q1 2021 – Q3 2022 results
Non-GAAP financial measures: Q1 2021 – Q3 2022 results Net Sales(1) ($M) 1Q21 2Q21 3Q21 4Q21 FY21 1Q22 2Q22 3Q22 Americas $501.5 $564.9 $537.2 $583.9 $2,187.4 $535.1 $647.2 $712.6 APAC 357.4 398.0 394.6 458.9 1,609.0 332.8 407.2 436.1 EMEA 239.5 297.4 297.1 367.7 1,201.7 288.5 345.0 332.4 Total $1,0
Slide 21: Non-GAAP financial measures: Q1 2021 – Q3 2022 results
Non-GAAP financial measures: Q1 2021 – Q3 2022 results Reconciliation from operating profit (loss) margin to adjusted operating profit (loss) margin ($M) 1Q21 2Q21 3Q21 4Q21 FY21 1Q22 2Q22 3Q22 Net sales $1,098.4 $1,260.3 $1,228.9 $1,410.5 $4,998.1 $1,156.4 $1,399.4 $1,481.1 Operating profit 79.8 10
Slide 22: Non-GAAP financial measures: Q1 2021 – Q3 2022 results
Non-GAAP financial measures: Q1 2021 – Q3 2022 results Reconciliation of segment operating profit (loss) to operating profit (loss) and adjusted operating profit (loss) ($M) 1Q21 2Q21 3Q21 4Q21 FY21 1Q22 2Q22 3Q22 Americas $126.4 $128.6 $113.4 $72.8 $441.2 $57.9 $82.5 $115.2 Asia Pacific 53.1 62.8 6
Slide 23: Non-GAAP financial measures – 4th quarter 2021
Non-GAAP financial measures – 4th quarter 2021 Reconciliation of GAAP diluted EPS to Non-GAAP adjusted diluted EPS and operating profit (loss) to adjusted operating profit (loss) Gain on tax Operating profit Interest receivable Change in Income tax ($M, except EPS | 4th QUARTER 2021) (loss) expense,
Slide 24: 2022 financial guidance by quarter
2022 financial guidance by quarter $Millions; midpoint of guidance range unless otherwise specified Updated Guidance – Net Sales Updated Guidance – Organic Sales Growth from 2021 Volume (3%) +2% +11% +16% (1%) +13% Pricing +4% +6% +9% +10% +5% +10% ~3,150 2,556 345 590 245 ~1,670 210 345 1,399 1,481
Slide 25: 2022 pricing and inflation guidance by quarter
2022 pricing and inflation guidance by quarter $Millions – year-over-year impact excluding E&I Updated Guidance ~365 • Third quarter pricing of $110M (+9%) was ~135 ~305 consistent with prior guidance ~110 ~85 ~80 ~90 • Second half pricing slightly higher driven ~75 ~55 largely by regional sales mix
Slide 26: Full year 2022 adjusted operating profit vs. 2021
Full year 2022 adjusted operating profit vs. 2021 $Millions; FY 2022 at midpoint of guidance • Pricing includes ~$230M actual, ~$105M in backlog and ~$30M in expected book and ship orders in the fourth quarter 115 • E&I 2022 adjusted operating profit of ~$67M less ~$7M in 2021 60 (305) • Volume bene
Slide 27: Key FX rates and other modeling assumptions
Key FX rates and other modeling assumptions $Millions unless otherwise specified Q4 Assumptions Sales FX Translation Exposure by Currency USD / CNY $0.1383 CNY 15% USD / EUR $0.9966 EUR 12% USD / GBP $1.1471 GBP 8% USD / INR $0.0121 INR 6% Other non-USD 15% Total non-USD 56% 1-mo LIBOR (Q4) 3.6% USD
Slide 28: Third quarter orders growth from prior year
Third quarter orders growth from prior year $Millions unless otherwise specified Third quarter orders growth Overall 9% FX headwind (6%) Total excluding FX 15% Pricing 14% Volume 2% Divestiture (1%) Total excluding FX 15% Confidential. Property of Vertiv. 28
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