Vertiv Holdings, Llc · NYSE:VRT
Vertiv — Q4 2023 Earnings Presentation
32 slides from Vertiv's earnings presentation, Feb 21, 2024
Slide 1: Fourth Quarter and Full Year 2023 Results
Fourth Quarter and Full Year 2023 Results February 21, 2024 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 2023 key messages
Fourth quarter 2023 key messages Organic net sales up 12% compared to fourth quarter 2022 primarily driven by Americas with continued volume growth and price tailwinds. Orders growth continued – up ~23%1 from fourth quarter 2022 and up ~18%1 from third quarter 2023 – as customers plan for 2024 proje
Slide 4: Market environment outlook
Market environment outlook SEGMENT AMERICAS APAC EMEA 2023 2024 2023 2024 2023 2024 Ending Outlook Ending Outlook Ending Outlook CLOUD / HYPERSCALE COLOCATION ENTERPRISE / SMALL & MEDIUM BUSINESS COMMUNICATION NETWORKS COMMERCIAL & INDUSTRIAL Underlying market demand remains strong • Continued accel
Slide 5: Customer demand and supply chain update
Customer demand and supply chain update CUSTOMER DEMAND & PRODUCTION CAPACITY SUPPLY CHAIN & INFLATION UPDATE • Fourth quarter orders exceeded expectations, up ~23%1 from • Supply chains have largely returned to normal lead-times fourth quarter 2022 and up ~18% sequentially from third quarter and co
Slide 6: Fourth quarter 2023 financial results
Fourth quarter 2023 financial results $Millions; deltas to midpoint of guidance range Net Sales Adj. Operating Profit Adj. Operating Margin Adj. Diluted EPS1 Adj. Free Cash Flow Up ~$211M Up ~$120M Up ~500 bps Up ~$0.28 Up ~$162M Organic up ~12% Up ~$13M vs. Nov. guidance Up ~90 bps vs. Nov. guidanc
Slide 7: Fourth quarter 2023 segment results
Fourth quarter 2023 segment results $Millions Americas Organic growth led by Hyperscale and Colocation Net sales markets. Up 22% Up 1% Up 5% Organic +22% Organic +3% Organic +1% Stronger operating margins driven by favorable price-cost 1,020 and fixed cost leverage. 834 APAC 425 430 396 415 Sa
Slide 8: Full year 2023 financial results
Full year 2023 financial results $Millions; deltas to midpoint of guidance range Net Sales Adj. Operating Profit Adj. Operating Margin Adj. Diluted EPS1 Adj. Free Cash Flow Up ~$1.2B Up ~$615M Up ~760 bps Up ~$1.24 Up ~$1.0B Organic up ~21% Up ~$14M vs. Nov. guidance Up ~20 bps vs. Nov. guidance Up
Slide 9: First quarter 2024 financial guidance
First quarter 2024 financial guidance $Millions; midpoint of guidance range unless otherwise specified Net Sales Adj. Operating Profit Adj. Operating Margin Adj. Diluted EPS Up ~$79M Up ~$34M Up ~160 bps Up ~$0.10 Organic up ~5% ~1,600 ~$0.34 ~210 ~13.1% $0.24 176 1,521 11.5% Q1 2023 Q1 2024 Q1 2023
Slide 10: Full year 2024 financial guidance
Full year 2024 financial guidance $Millions; midpoint of guidance range unless otherwise specified Net Sales Adj. Operating Profit Adj. Operating Margin Adj. Diluted EPS1 Adj. Free Cash Flow Up ~$722M Up ~$246M Up ~180 bps Up ~$0.46 Up ~$47M Organic up ~10% ~7,585 ~1,300 ~17.1% ~$2.23 ~825 1,054 778
Slide 11: Vertiv is Uniquely Positioned to Lead the Rapidly Developing Thermal Evolution
AS SHARED AT 2023 INVESTOR CONFERENCE Vertiv is Uniquely Positioned to Lead the Rapidly Developing Thermal Evolution #1 IN DATA CENTER • Broadest thermal chain portfolio with liquid cooling + industry-leading facility/room/outdoor systems THERMAL MANAGEMENT1 • Ability to customize thermal solutions
Slide 12: Liquid Cooling Portfolio Gets a Technology and Capacity Boost
Liquid Cooling Portfolio Gets a Technology and Capacity Boost COOLTERA LTD. ACQUISITION ENHANCES RAPID AND SIGNIFICANT CAPACITY RAMP LIQUID COOLING EXPERTISE • Three-year technology • Promptly enabled production capacity and supply chain partnership solidified with ramp in existing Vertiv plant sinc
Slide 13: Focus areas for 2024
Focus areas for 2024 Leverage our strong customer relationships and our enlarged portfolio to capitalize on market growth Accelerate and scale integration of CoolTera acquisition; ramp-up production at Vertiv facilities, globally Expansion projects underway at existing facilities – thermal, UPS, pow
Slide 14: Key takeaways
Key takeaways Exceeded profitability expectations for fourth quarter and full-year 2023. Fourth quarter 2023 orders up 23% vs. 2022 with book-to-bill ratio ~1.3x. Orders growth supports 2024 growth plans. 17.7% adj. operating margin in fourth quarter 2023 and 15.3% for full-year 2023. Full-year 2024
Slide 15: Non-GAAP financial reconciliations
Non-GAAP financial reconciliations
Slide 16: Non-GAAP financial measures –fourth quarter results
Non-GAAP financial measures –fourth quarter results Reconciliation of segment operating profit (loss) to operating profit (loss) and adjusted Reconciliation from operating profit (loss) margin to adjusted operating profit (loss) margin operating profit (loss) ($M | 4th QUARTER) 4Q23 4Q22 ∆ ($M | 4th
Slide 17: Non-GAAP financial measures – fourth quarter results (cont.)
Non-GAAP financial measures – fourth quarter results (cont.) Reconciliation of diluted EPS to adjusted diluted EPS and operating profit (loss) to adjusted operating profit (loss) Operating Interest Change in Extinguishment Income Net income ($M, except EPS | 4th QUARTER 2023) profit (loss) expense,
Slide 18: 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) ($M | FULL YEAR) FY23 FY22 ∆ ($M | FULL YEAR
Slide 19: 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) Operating Interest Change in Extinguishment Income Net income ($M, except EPS | FULL YEAR 2023) profit (loss) expense, net war
Slide 20: Non-GAAP financial measures – first quarter 2024 guidance
Non-GAAP financial measures – first quarter 2024 guidance Reconciliation of diluted EPS to adjusted diluted EPS and operating profit (loss) to adjusted operating profit (loss) Operating profit Interest Income tax Net income ($M, except EPS | 1st QUARTER 2024(1)) (loss) expense, net expense (loss) Di
Slide 21: Non-GAAP financial measures –FY 2024 guidance
Non-GAAP financial measures –FY 2024 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 Income tax Net income ($M, except EPS | FULL YEAR 2024) (loss) expense, net expe
Slide 22: Non-GAAP financial measures: Q1 2022 – Q4 2023 results
Non-GAAP financial measures: Q1 2022 – Q4 2023 results Net Sales(1) ($M) 1Q22 2Q22 3Q22 4Q22 FY22 1Q23 2Q23 3Q23 4Q23 FY23 Americas $535.1 $647.2 $712.6 $833.7 $2,728.6 $862.3 $959.4 $1,003.2 $1,019.6 $3,844.5 APAC 332.8 407.2 436.1 425.2 1,601.3 313.0 395.8 388.6 430.4 1,527.8 EMEA 288.5 345.0 332.
Slide 23: Non-GAAP financial measures: Q1 2022 – Q4 2023 results
Non-GAAP financial measures: Q1 2022 – Q4 2023 results Reconciliation from operating profit (loss) margin to adjusted operating profit (loss) margin ($M) 1Q22 2Q22 3Q22 4Q22 FY22 1Q23 2Q23 3Q23 4Q23 FY23 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 $1,865.4 $6,86
Slide 24: Non-GAAP financial measures: Q1 2022 – Q4 2023 results
Non-GAAP financial measures: Q1 2022 – Q4 2023 results Reconciliation of segment operating profit (loss) to operating profit (loss) and adjusted operating profit (loss) ($M) 1Q22 2Q22 3Q22 4Q22 FY22 1Q23 2Q23 3Q23 4Q23 FY23 Americas $57.9 $82.5 $115.2 $170.5 $426.1 $190.6 $239.8 $254.0 $274.4 $958.8
Slide 25: Non-GAAP financial measures – organic growth reconciliation
Non-GAAP financial measures – organic growth reconciliation Reconciliation of change in net sales to organic change in net sales Organic Net Sales Δ FX Δ growth Organic Δ % (1) ($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 26: Fourth quarter and full-year orders growth from prior year
Fourth quarter and full-year orders growth from prior year $Millions unless otherwise specified 4Q23 vs. 4Q22 FY23 vs. FY22 Overall 24% 0% FX tailwind (headwind) 1% -1% Total excluding FX 23% 1% Pricing 5% 6% Volume 18% -4% Total excluding FX 23% 1% © 2024 Vertiv. All Rights Reserved 26
Slide 27: Full year 2023 adjusted operating profit vs. 2022
Full year 2023 adjusted operating profit vs. 2022 $Millions (110) 1,054 240 (47) 62 • Volume benefit of ~$745M higher sales • Material and freight inflation of ~$20M and labor inflation of ~$90M 470 • Investments in R&D and 439 capacity support growth in and beyond 2024 • Other includes purchasing s
Slide 28: Additional tax information
Additional tax information $Millions Reversal of valuation allowance for U.S. deferred tax assets Effective Tax Rate (ETR) Reconciliation: • Since 2017, we have been recording valuation allowances against Guidance deferred tax assets in the U.S. to account for potential inability to 4Q23 FY23 1Q24 F
Slide 29: Key FX rates and other modeling assumptions
Key FX rates and other modeling assumptions $Millions unless otherwise specified Avg 2023 2024 Plan FY Sales FX Exposure by Currency EUR 13% CNY / USD 7.07 7.19 CNY 11% USD / EUR $1.08 $1.08 GBP 6% USD / GBP $1.24 $1.26 INR 4% INR / USD 82.58 83.00 Other non-USD 15% Total non-USD 49% 1-mo SOFR 5.32%
Slide 30: Additional 2024 guidance assumptions
Additional 2024 guidance assumptions $Millions SEGMENT EXPECTATIONS1 ADJUSTED FREE CASH FLOW FY 2024 FY 2023 B/(W) Adjusted operating profit $ 1,300 $ 1,054 $ 246 Depreciation & amortization 104 90 15 AMERICAS APAC EMEA Adjusted EBITDA 1,404 1,143 261 NET SALES $4,175 - $4,375 $1,530 - $1,730 $1,580
Slide 31: Changes in external reporting for 2024
Changes in external reporting for 2024 • In 2024 and going forward, we will allocate central engineering, research and development (ER&D) and information technology (IT) costs from Corporate entity to Regions. See Exhibit 99.2 for historical quarterly recasting for all Regions and Corporate from 202
Slide 32: Slide 32