Vertiv Holdings, Llc · NYSE:VRT
Vertiv — Investor Day (November 2024)
57 slides from Vertiv's investor day presentation, Nov 18, 2024
Slide 1: Vertiv Investor Event, November 18, 2024
November 18, 2024 Atlanta, Georgia USA 2:30 – 5 PM
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: 2024 Vertiv Investor Event Agenda
2024 Vertiv Investor Event Agenda TOPIC SPEAKER 2:30 PM VERTIV VISION & ACCELERATING GROWTH OPPORTUNITIES GIORDANO ALBERTAZZI BREAK FINANCIAL STRENGTH & VALUE CREATION DAVID FALLON 4:40 PM Q&A CLOSING REMARKS GIORDANO ALBERTAZZI 5:00 PM RECEPTION ©2024 Vertiv. All Rights Reserved. 3
Slide 4: Watch video
Watch video ©2024 Vertiv. All Rights Reserved. 4
Slide 5: Vertiv Vision & Accelerating Growth Opportunities
VERTIV VISION & ACCELERATING GROWTH OPPORTUNITIES Giordano Albertazzi CHIEF EXECUTIVE OFFICER ©2024 Vertiv. All Rights Reserved. 5
Slide 6: Vertiv enables the critical digital world to continuously accelerate and perform
Vertiv enables the critical digital world to continuously accelerate and perform Technology underpins and enriches almost every aspect of our lives Technology drives the global demand for data across the critical digital infrastructure markets Data Communication Commercial Centers Networks & Industr
Slide 7: Vertiv at-a-glance
Vertiv at-a-glance ~$7.8B 55+ years Geography1 Portfolio1 Market Segment1,2 USD revenue1 in the industry 10% 22% 23% 34% 10% ~30,000 ~4,000 employees globally field service engineers 5% 55% 23% 8% 80% 23 factories, 30% #1 in thermal global footprint & management3 supply chain Americas Power Manageme
Slide 8: Focus and momentum as the critical digital infrastructure leader
Focus and momentum as the critical digital infrastructure leader Unique, Lasting & Valued Competitive Positioned for the Future Advantages 01 Application expertise & customer collaboration Lead the industry with technology enabling AI high- to envision and build future-ready infrastructure. density
Slide 9: Multi-year executional strength and momentum
Multi-year executional strength and momentum $Millions, 2024 data represents midpoint of guidance Top Line Growth Margin Expansion Cash Generation ~16% ~960 bps ~$864M organic sales1 CAGR adj. op. margin expansion adj. free cash flow2 growth ~$1,000 ~$7,805 ~19.0% $778 $6,863 $5,692 15.3% $4,998 9.4
Slide 10: Enduring executional strength is maturing and still more that can be done
Enduring executional strength is maturing and still more that can be done Pleased with Progress & Accelerating In-Flight with Additional Focus Being Applied Clear priorities and rigorous operating Capture full AI market expansion in every region cadence / discipline Vertiv Operating System (VOS) ado
Slide 11: Cohesive leadership team aligned to execute
Cohesive leadership team aligned to execute New to role in last 12-months Leadership Attributes • Execution mindset Regions: Customer collaboration, sales, services, marketing, operations and quality • Bias to velocity • Sense of urgency • Strategic mindset • Innovator posture • Proven track record
Slide 12: Reconfirming our aligned focus along five strategic priorities
Reconfirming our aligned focus along five strategic priorities VERTIV STRATEGIC PRIORITIES HIGH- FINANCIAL CUSTOMER INNOVATION OPERATIONAL PERFORMANCE STRENGTH FOCUS EXCELLENCE CULTURE OWN IT - ACT WITH URGENCY - FOSTER A CUSTOMER-FIRST MINDSET - THINK BIG AND EXECUTE BEHAVIORS LEAD BY EXAMPLE - DRI
Slide 13: Driving accelerated performance
Driving accelerated performance Reaffirming 2024 Full Year Guidance 2025 Preliminary View $Millions; midpoint of guidance range unless otherwise specified Net Sales Adj. Operating Adj. Operating Adj. Free Cash Adjusted EPS Profit Margin Flow Up ~$942M vs. 2023 Up ~$431M vs. 2023 Up ~370 bps vs. 2023
Slide 14: Acceleration projected to continue long-term
Acceleration projected to continue long-term $Billions, 2024 data represents midpoint of guidance Top Line Growth Margin Expansion Cash Generation • Above-market growth • Operational leverage • Improved profitability • Accelerating offering innovation • Vertiv Operating System (VOS) • Disciplined an
Slide 15: Vertiv value creation framework is working and shaping our future
Vertiv value creation framework is working and shaping our future in the critical digital infrastructure industry REVENUE GROWTH 1 2 3 Long-standing customer Enduring leadership Leading innovator with the relationships and in strong and most complete portfolio and key industry player accelerating ma
Slide 16: Secular trends and signals continuing to create attractive markets
1 Secular trends and signals continuing to create attractive markets Key Data Center Market Signals Data Growth ~24% Global Data 2023-2028 CAGR1 Server Growth ~16% Global Server Market Spending 2023-2028 CAGR2 Infrastructure Capex Growth ~8 - 9% Global Total Physical Infrastructure Capex 2023-2028 C
Slide 17: Served opportunity in data center infrastructure continues to be strong
1 Served opportunity in data center infrastructure continues to be strong Vertiv Opportunity $ per MW Last Year’s View Recent Data Center Trends Current View Traditional Compute • Mixing of traditional and AI high-density workloads ~$2.5M - $3M • Redundancy in power and Vertiv Opportunity1 Data Cent
Slide 18: Critical digital infrastructure market segments drivers & aligned strengths
1 Critical digital infrastructure market segments drivers & aligned strengths DATA CENTERS ~$39.5B | ~10-13% COMMUNICATION COMMERCIAL & TOTAL CLOUD & ENTERPRISE & NETWORKS INDUSTRIAL COLOCATION DISTRIBUTED IT Market Size1 ~$52B ~$21.5B ~$18B ~$7.5B ~$5B Growth2 ~9-12% ~15-17% ~4-6% ~2-3% ~3-4% • Spe
Slide 19: Leading innovator expanding efficacy and capacity of innovation
2 Leading innovator expanding efficacy and capacity of innovation Innovation Strength Delivering New-to-Market Offerings $Millions. ER&D Annual Spend Vertiv PowerNexus ~15% • It integrates Power Train elements CAGR • Includes Vertiv Trinergy Large power ~$350 conversion technology $304 $282 • Up to
Slide 20: Data center architecture evolution and enablement covered end-to-end
2 Data center architecture evolution and enablement covered end-to-end Vertiv Portfolio Power Management Thermal Management IT Systems Infrastructure Solutions Services Example Buildin g B lock: 7 MW, 10 0 r acks, ~70kw/rack The most complete critical digital infrastructure portfolio is shaping the
Slide 21: Anticipated increases in extreme and overall industry rack densities
2 Anticipated increases in extreme and overall industry rack densities 2024 2025 2026 2027 2028 2029+ Illustrative NVIDIA Blackwell Blackwell Ultra Rubin Rubin Ultra AI GPU Roadmap 36x to 576x GPUs per rack Anticipated AI GPU ~ 130 – 250 kW ~ 250 – 900 kW ~ 900 – 1000 + kW Peak Rack Density1 Estimat
Slide 22: End-to-end systems and services expertise to solve power and cooling challenges
2 Vertiv end-to-end systems and services expertise well positioned to solve the industry increasingly difficult power and cooling challenges Power Train Thermal Chain FACILITY/OUTDOOR FACILITY/OUTDOOR POWER CONVERSION HEAT REJECTION AND DISTRIBUTION SERVER/CHIP ROOM/ROW ROW/ROOM POWER SWITCHING HEAT
Slide 23: Tackling technology challenges for the future
2 Tackling technology challenges for the future Challenges Possible Future Technology • Growing power demands • High-voltage power conversion and power distribution • GPU load profiles • Liquid and Air-cooling flexibility as loads mix changes over time: AI vs. • Power availablity and permitting non-
Slide 24: Vertiv future ready portfolio and extensive commission capabilities
2 Vertiv future ready portfolio and extensive commission capabilities Featuring Chad Williams, CEO, QTS Realty Trust Watch video “The thing that makes Vertiv so different is they were prepared for what was coming with the AI innovation and growth… whether it is in the IT services business, the power
Slide 25: Services criticality is on the rise as AI deployment rapidly scales
2 Services criticality is on the rise as AI deployment rapidly scales Enabling Deployments Enabling Operations Startup & Commissioning Lifecycle Services - Complexity increases the demand for - Installed base with up to 20-years of useful manufacturer start-up service life - Thorough system Acceptan
Slide 26: Vertiv services provide unmatched critical digital infrastructure support
2 Vertiv services provide unmatched critical digital infrastructure support Uniquely Qualified and Capable to Navigate the Complexities of AI Infrastructure at Scale Truly Global Capabilities Unique Training Capacity Strengthening the Industry Strength in global scale and growth to Technical trainin
Slide 27: Infrastructure solutions for rapid, repeatable deployment
2 Infrastructure solutions for rapid, repeatable deployment Watch video Solving customer time and expertise constraints while expanding Vertiv served market opportunity ©2024 Vertiv. All Rights Reserved. 27
Slide 28: Prefabrication enables the AI infrastructure deployment
2 Prefabrication enables the AI infrastructure deployment A Leading Portfolio of Power Modules, Thermal Modules, IT Modules and full Data Center Prefabricated Solutions to Solve Customer Constraints Now and Enable Rapid Growth Example: Vertiv MegaMod CoolChip with Liquid Cooling • Enabling fully pre
Slide 29: Configure at speed
2 Configure at speed Enabling Enterprise AI Revolutionizing the speed enterprise customers can implement AI solutions • Codeveloped reference architectures with NVIDIA and global leading server manufacturers • Delivering end-to-end designs for our customers ✓ Includes Power, Thermal, IT Systems, Mon
Slide 30: Long-standing relationship and holistic approach keys to value creation
3 Long-standing relationship and holistic approach keys to value creation Deploying Future-Ready Infrastructure with our Customers and Partners TECHNOLOGY CUSTOMER APPLICATION ADVANCEMENTS COLLABORATION EXPERTISE Research & Development Shaping end-to-end digital Addressing unmet needs with Partnersh
Slide 31: Collaboration to truly customize at scale
3 Collaboration to truly customize at scale Featuring Chris Crosby, Compass Data Centers Watch video “Our whole system is designed for scale, and Vertiv has been right there alongside us” – Chris Crosby ©2024 Vertiv. All Rights Reserved. 31
Slide 32: Vertiv CoolPhase Flex combines air and liquid cooling
3 Vertiv CoolPhase Flex combines air and liquid cooling capabilities in one packaged system that delivers future readiness with low installation cost Vertiv CoolPhase Flex First-Of-Its Kind system Integrates liquid cooling with refrigerant-based air-cooling technologies and heat rejection in a singl
Slide 33: Progress on our operational excellence roadmap
4 Progress on our operational excellence roadmap Operations and Procurement Actions are Yielding Desired Results with Further Opportunities Ahead CAPACITY RESILIENCY PRODUCTIVITY • Global presence and ability to scale • Systematic resiliency programs • VOS driving enduring efficiency focus • The rig
Slide 34: Executing at scale through capacity and operating efficiency
Executing at scale through capacity and operating efficiency Operational and service expansion through capacity, resiliency and productivity roadmap actions are enabling the critical digital world to continuously accelerate and perform Note: Capacity expansion and operating efficiency actions from l
Slide 35: Vertiv Operating System (VOS) adoption continues to accelerate
4 Vertiv Operating System (VOS) adoption continues to accelerate Driving Excellence Through Scalable Methods, Common Knowledge, and Culture Manufacturing Example Services Example Tognana, Italy Chillers Production Field Service Optimization Opportunity: Demand increase Opportunity: Value stream mapp
Slide 36: Margin expansion levers
5 Margin expansion levers Margin Growth Trajectory Expansion Levers $Millions. 2024 data represents midpoint of guidance range. +4.0% Operational Leverage ~25% • Deepening VOS adoption, functional optimization, and digitalization including AI utilization 19.0% • Continuing incremental fixed cost ope
Slide 37: Strong free cash flow provides flexibility with capital deployment
6 Strong free cash flow provides flexibility with capital deployment Cash Generation Capital Allocation Agility 2024 data represents midpoint of guidance range. 1. Dividends 114% 95% ~95% - 100% 2. Share Repurchases 3. Additional Capacity at ~1.5x leverage Provides flexibility to focus on: (129%) •
Slide 38: M&A strategy fueled by capital agility and future technology focus
6 M&A strategy fueled by capital agility and future technology focus Continuing our Approach Pipeline Selection Criteria Acquisition Performance Strategic Power Train – E+I Engineering Bolt-on acquisitions to November 2021 • Market leader/specialized firm strengthen critical digital • Differentiated
Slide 39: Confidence in delivering our long-term financial projections
Confidence in delivering our long-term financial projections Prior Investor On Track to New 2029 Horizon Conference Projections Deliver Projections ABOVE MARKET ORGANIC 8% – 11% 12% – 14% REVENUE GROWTH (2023-2028F CAGR) (2024-2029F CAGR) ADJUSTED OPERATING 20%+ ~25% MARGIN (in 2026-2028F) (2029F) A
Slide 40: Financial Strength & Value Creation
FINANCIAL STRENGTH & VALUE CREATION David Fallon CHIEF FINANCIAL OFFICER ©2024 Vertiv. All Rights Reserved. 40
Slide 41: Strong results with upside opportunity for value creation
Strong results with upside opportunity for value creation STRONG EXECUTION DRIVES Strong and consistently improving operational execution over past FINANCIAL PERFORMANCE two years. Still significant upside opportunity. ABOVE MARKET VRT organic growth rate expected to exceed strong market growth ORGA
Slide 42: Organic sales growth expected to exceed market rate
Organic sales growth expected to exceed market rate $Billions Organic Sales Growth Rate 2024 to 2029 Organic Sales Growth ~$14.4 • Organic growth (CAGR) of 12% - 14% expected to be higher than projected 12%-14% market growth CAGR • Market growth (CAGR) estimated at 9% - 12% driven by continued stron
Slide 43: Path to ~25% adjusted operating margin in 2029
Path to ~25% adjusted operating margin in 2029 Operational Leverage • Operational leverage – driven by Vertiv Operating System (VOS) while continuing incremental fixed Adjusted Operating Margin cost opex investment of $150M to $200M per year in growth, technology and capacity +1.0% ~25.0% +1.0% +4.0
Slide 44: Strong cash generation with upside opportunity
Strong cash generation with upside opportunity Trade Working Capital (TWC) Adjusted Free Cash Flow Conversion • Focus on improving inventory turnover, reducing cash collection cycle time, extending supplier terms while continuing to drive advanced customer 114% payments 95% ~95 - 100% Capex • To sup
Slide 45: Target net leverage ratio of ~1.0x to 2.0x
Target net leverage ratio of ~1.0x to 2.0x Current Debt Structure Net Leverage Ratio • Relatively simple and patient debt structure 5.6x • $850M fixed rate bond at 4.125% - matures October 2028 • ~$2,100M term loan – matures March 2027 ➢ $1,100M at variable rate - ~6.7% currently ➢ $1,000M at fixed
Slide 46: Strong free cash flow drives flexible capital deployment
Strong free cash flow drives flexible capital deployment $Billions Dividends • In Nov 2024, increased annual dividend from $0.10 per ~$12.5 ~$12.5 share to $0.15 per share (declared and paid quarterly). Dividends Projected • Expect 2029 annual dividend to be ~2x 2025 annual Additional ~$2.5 Share di
Slide 47: Preliminary guidance for 2025
Preliminary guidance for 2025 2025 ADJUSTED 2025 ORGANIC 2025 ADJUSTED 2025 ADJUSTED EPS SALES GROWTH OPERATING FREE CASH FLOW1 MARGIN CONVERSION ~$3.50 - $3.60 ~16% - 18% ~20.5% - 21.5% ~88% - 92% • ~392M average diluted • Expected organic growth • Exceeding prior 20.0% full • Continue driving trad
Slide 48: Significant opportunity for continued value creation
Significant opportunity for continued value creation 5-Year CAGR ABOVE MARKET Expect organic sales growth above market rate of ORGANIC GROWTH 9% to 12% (CAGR) including impact from AI 12% - 14% (8% – 11% at Nov 2023 Investor Day) 2029 Target ADJUSTED OPERATING Multiple levers to further expand adjus
Slide 49: % vertiv
% vertiv
Slide 50: Vertiv difference creates value through clear strategic intent and execution
Vertiv difference creates value through clear strategic intent and execution REVENUE GROWTH 1 2 3 Long-standing customer Enduring leadership Leading innovator with the relationships and in strong and most complete portfolio and key industry player accelerating markets unique competitive advantages c
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Slide 52: Appendix
APPENDIX ©2024 Vertiv. All Rights Reserved. 52
Slide 53: Non-GAAP financial measures: FY 2021 – FY 2023 results
Non-GAAP financial measures: FY 2021 – FY 2023 results Net Sales (1) ($M) FY21 FY22 FY23 Americas $2,187.4 $2,728.6 $3,844.5 Asia Pacific 1,609.0 1,601.3 1,527.8 Europe, Middle East & Africa 1,201.7 1,361.6 1,490.9 Total $4,998.1 $5,691.5 $6,863.2 Adjusted operating profit (loss)(2) ($M) FY21 FY22 F
Slide 54: Non-GAAP financial measures: FY 2021 – FY 2023 results
Non-GAAP financial measures: FY 2021 – FY 2023 results Reconciliation from operating profit (loss) margin to adjusted operating profit (loss) margin ($M) FY21 FY22 FY23 Net sales $4,998.1 $5,691.5 $6,863.2 Operating profit 259.9 223.4 872.2 Operating margin 5.2% 3.9% 12.7% Amortization of intangible
Slide 55: Non-GAAP financial measures: FY 2021 – FY 2023 results
Non-GAAP financial measures: FY 2021 – FY 2023 results Reconciliation of segment operating profit (loss) to operating profit (loss) and adjusted operating profit (loss) ($M) FY21 FY22 FY23 Americas $266.2 $238.2 $762.4 Asia Pacific 160.0 176.9 147.4 Europe, Middle East & Africa 145.3 156.6 297.7 Tot
Slide 56: Non-GAAP financial measures: FY 2024 guidance
Non-GAAP financial measures: FY 2024 guidance At midpoint of guidance range Reconciliation of diluted EPS to adjusted diluted EPS and operating profit (loss) to adjusted operating profit (loss) Operating profit Interest Change in Income ($M, except EPS | FULL YEAR 2024) (loss) expense, net warrant l
Slide 57: Non-GAAP financial measures: FY 2025 guidance
Non-GAAP financial measures: FY 2025 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 ($M, except EPS | FULL YEAR 2025) (loss) expense, net tax expense Net inc