Core Viewpoint - Vertiv (VRT) is positioned as a strong buy due to its role in the growing data center industry, driven by the demand from AI programs [1] Company Overview - Vertiv Holdings Co provides digital infrastructure and continuity solutions, including hardware, software, analytics, and ongoing services, and is headquartered in Columbus, Ohio [2] Earnings Performance - The company has a solid earnings history, consistently beating the Zacks Consensus in the last four quarters [11] - The average positive earnings surprise over the last four quarters is 12.9% [4] - Recent earnings estimates for the current quarter have increased from 65 cents to 70 cents [6] - The full year 2024 earnings estimate has risen from $2.42 to $2.58 [7] - Next year's earnings estimate has moved up from $3.13 to $3.31 [13] - The company reported $1.953 billion in revenue, beating sales estimates by $9 million, representing a year-over-year growth of 12.6% and a quarter-over-quarter growth of 19.14% [14] Growth Projections - For 2024, the company is expected to show growth of 11.86%, accelerating to 12.97% in 2025 [8] Valuation Metrics - The forward PE ratio is 29x, aligning with expectations for a growth stock, while the price-to-book ratio is 20x, which is considered high [9] - The price-to-sales ratio is at 4x, deemed reasonable given the company's growth [9] Recent Guidance - Despite a recent earnings report that led to a nearly 16% stock drop due to lower growth expectations in one segment (10-15% growth instead of 60%), the company is still expected to show revenue growth this year and acceleration next year [10] - Operating margins have improved from 9.97% to 10.91%, and are projected to reach 11.75% over the last three quarters, indicating that growing sales and higher margins will lead to increased earnings per share [17]

Financial Performance - Net sales for Q2 2024 were $1,952.8 million, a 12.6% increase from $1,734.1 million in Q2 2023[214] - Net income for Q2 2024 was $178.1 million, a 114.1% increase from $83.2 million in Q2 2023[214] - Comprehensive income for Q2 2024 was $151.8 million, a 64.5% increase from $92.3 million in Q2 2023[215] - Operating profit for Q2 2024 was $336.0 million, a 63.3% increase from $205.8 million in Q2 2023[214] - The company's diluted earnings per share for Q2 2024 were $0.46, a 109.1% increase from $0.22 in Q2 2023[214] - Net income for the six months ended June 30, 2024 was $172.2 million, compared to $133.5 million for the same period in 2023[217] - Operating profit for the Americas segment increased to $285.1 million for the three months ended June 30, 2024, from $191.7 million for the same period in 2023[243] - Total reportable segments' operating profit increased to $426.9 million for the three months ended June 30, 2024, from $309.8 million for the same period in 2023[243] - Net sales for the three months ended June 30, 2024, were $1,121.1 million, a 16.9% increase compared to $959.4 million in the same period in 2023[251] - Operating profit for the three months ended June 30, 2024, was $285.1 million, a 48.7% increase compared to $191.7 million in the same period in 2023[251] - Operating margin increased to 25.4% in Q2 2024, up from 20.0% in Q2 2023, driven by fixed cost leverage, procurement productivity improvements, and price realization[251][252] - Operating profit for the first six months of 2024 was $62.7 million, a $7.9 million increase compared to the same period in 2023, driven by higher sales volumes, improved price realization, and fixed cost leverage[255] Costs and Expenses - Vertiv's cost of sales for Q2 2024 was $1,211.6 million, a 6.3% increase from $1,140.1 million in Q2 2023[214] - The company's selling, general and administrative expenses for Q2 2024 were $363.8 million, an 11.1% increase from $327.6 million in Q2 2023[214] - SG&A expenses for the first six months of 2024 were $677.8 million, an increase of $41.5 million compared to the same period in 2023, primarily due to higher compensation costs, IT and R&D expenses, and professional service fees[253] - Income tax expense for the first six months of 2024 was $79.5 million, a $12.4 million increase compared to $67.1 million in the same period in 2023, driven by improved business results and changes in warrant liabilities[254] Cash Flow and Capital Expenditures - Net cash provided by operating activities was $515.9 million for the six months ended June 30, 2024, up from $295.6 million for the same period in 2023[217] - Capital expenditures were $69.9 million for the six months ended June 30, 2024, compared to $53.6 million for the same period in 2023[217] - Capital expenditures for the first six months of 2024 were $81.5 million, with full-year 2024 expectations set between $175 million and $200 million[256] Share Repurchases and Stock Performance - Vertiv repurchased 9,076,444 shares of its common stock in Q1 2024, with $2.4 billion remaining for additional share repurchases as of June 30, 2024[96] - Vertiv's Board of Directors approved a stock repurchase program of up to $3.0 billion through December 31, 2027[95] - The company repurchased $599.9 million worth of common stock during the six months ended June 30, 2024[217] - The company's stock price increased to $86.57 as of June 30, 2024, from $48.03 as of December 31, 2023[237] - The Vertiv Stockholder sold 20,000,000 shares of Class A common stock on August 8, 2023, reducing its ownership to less than 5% of the outstanding shares[261] Assets and Liabilities - Total current assets increased to $4,191.4 million as of June 30, 2024, up from $4,001.5 million at the end of 2023[216] - Accounts receivable increased to $2,218.8 million as of June 30, 2024, compared to $2,118.1 million at the end of 2023[216] - Inventories rose to $1,103.7 million as of June 30, 2024, up from $884.3 million at the end of 2023[216] - Total liabilities increased to $6,570.8 million as of June 30, 2024, compared to $5,983.6 million at the end of 2023[216] - Total cash, cash equivalents, and restricted cash decreased to $587.7 million as of June 30, 2024, from $788.6 million as of December 31, 2023[229] - Total inventories increased to $1,103.7 million as of June 30, 2024, from $884.3 million as of December 31, 2023[229] - Property, plant and equipment, net increased to $571.1 million as of June 30, 2024, from $560.1 million as of December 31, 2023[229] - The company's long-term debt fair value was $2,118.1 million as of June 30, 2024, compared to $2,107.5 million as of December 31, 2023[238] - Accumulated other comprehensive income (loss) was $(9.8) million as of June 30, 2024, compared to $(65.1) million for the six months ended June 30, 2024[239] Tax and Legal Matters - The company recorded a $10.1 million payment to the Mexican tax administration service (SAT) in Q1 2024, which it intends to seek reimbursement for[192] Revenue by Region - Total revenue for the six months ended June 30, 2024 was $3,255.2 million, with $1,821.7 million from the Americas, $708.8 million from Asia Pacific, and $724.7 million from Europe, Middle East & Africa[222] Hedging and Derivatives - The company has derivative instruments hedging foreign currency exchange rates with a notional amount of $81.0 million, resulting in a realized gain of $0.6 million for the three and six months ended June 30, 2024[234] - The company recognized mark-to-market losses of $0.3 million and $1.0 million for the three and six months ended June 30, 2024, respectively, related to economic hedges for aluminum and copper purchases[235] Credit Facility - The ABL Revolving Credit Facility was amended to increase the revolving loan commitments by $30.0 million, bringing the total loan commitment to $600.0 million[258]

Financial Data and Key Metrics Changes - The company reported a strong financial performance with Q2 organic sales up 14%, driven by the Americas and EMEA regions [22][63] - Adjusted operating profit reached $382 million, an increase of $131 million year-over-year, with adjusted operating margins expanding by 510 basis points to 19.6% [23][33] - Adjusted diluted EPS was $0.67, up $0.21 from the previous year, primarily due to higher adjusted operating profit [64] - Adjusted free cash flow for Q2 was $333 million, over $100 million better than last year, with net leverage at 1.8x, within the targeted range of 1 to 2x [9][34] Business Line Data and Key Metrics Changes - Strong order growth was noted across the portfolio, with power management and thermal management orders growing at similar rates in Q2 [12] - Service represented 23% of total sales last year, with expanding margins, highlighting its importance as a differentiator in the market [29][90] - The Americas saw organic sales growth of 17%, while EMEA organic sales increased by 14%, driven by modular solutions [36][65] Market Data and Key Metrics Changes - The market environment is encouraging, particularly for data centers, which account for 75% of the company's end market exposure [10] - The company noted a healthy commercial and industrial market, with significant infrastructure spending in the Americas and APAC regions [10] - The company expects low double-digit order growth in Q3 year-over-year, despite a sequential decline from a high Q2 [27] Company Strategy and Development Direction - The company is focused on strengthening its market leadership through increased R&D and capacity expansions, particularly in liquid cooling technologies [20][11] - The strategy includes investing in operational resilience and multi-sourcing strategies to navigate geopolitical complexities [28] - The company aims to achieve an adjusted operating margin of 18.7% for the full year, moving closer to a long-term target of over 20% [39] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the market trajectory, highlighting strong order growth and a positive outlook for 2025 and beyond [58][72] - The company is aware of the challenges ahead but remains confident in its ability to maintain a positive price-cost dynamic [82][109] - Management emphasized the importance of service as a competitive advantage, particularly in the context of increasing complexity in data center operations [60][90] Other Important Information - The company raised its full-year guidance across all financial metrics, expecting organic growth of 13% and adjusted free cash flow of $875 million [9][37] - A planned investor event is scheduled for November 18th, coinciding with Supercompute24 [72] Q&A Session Summary Question: Order trajectory expected in September quarter - Management indicated that the deceleration in orders is expected due to timing and the nature of large project orders, with a positive long-term outlook [75][80] Question: Pricing competitiveness in new programs - Management affirmed that the market remains favorable, and they have strong pricing power due to competitive advantages [82][109] Question: Key performance indicators for service - The service business is seen as a differentiator, contributing significantly to margins and overall market share [87][90] Question: Supply and demand imbalance in the data center market - Management acknowledged the favorable environment but noted that large players are savvy in their buying dynamics [93] Question: Measuring market share and growth - Management indicated that order growth signals a positive trajectory for market share, with expectations of continued growth in the AI space [95][118] Question: Margins in APAC and future expectations - Management expects APAC margins to improve in the second half of the year, despite current challenges [66][138] Question: Backlog visibility and permitting constraints - Management clarified that the backlog reflects customer requested delivery dates, accounting for industry-wide permitting and resource constraints [127][129]

Vertiv Reports 57% Organic Orders Growth, 13% Net Sales Growth and 63% Operating Profit Growth in Second Quarter; Raises Full Year 2024 Outlook COLUMBUS, Ohio July 24, 2024 – Vertiv Holdings Co (NYSE: VRT), a global provider of critical digital infrastructure and continuity solutions, today reported financial results for its second quarter ended June 30, 2024. Vertiv reported second quarter 2024 net sales of $1,953 million, an increase of $219 million, or 13%, compared to last year's second quarter. Organic ...

Data by YCharts Data canter operators are evaluating liquid cooling Andreind and China Comments of Chilisanthow Andrew Porton Porton Provinsian Provinsia Andrew Ben Charcon Provinsion C In this context, liquid cooling forms part of DCPI or Data Center Physical Infrastructure where in addition to Vertiv, there are also large players like Eaton Corporation (ETN) and Europe's Schneider Electric S.E (OTCPK:SBGSY), two companies large enough to develop solutions organically through large research budgets or acqu ...

The Thesis Vertiv Holdings is a global provider of critical digital infrastructure and continuity solutions that together with its subsidiaries, is involved in designing, manufacturing, and servicing a wide range of infrastructure and related technologies for data centers, communication networks, and commercial and industrial environments. The company provides its services across the Americas, Asia Pacific, Europe, the Middle East, and Africa. The company's portfolio includes products for power management, ...

In the first quarter of 2024, orders jumped 60% year over year, while backlog surged roughly 33% to $6.3 billion. The trend is expected to have continued in the going-to-be-reported quarter. Zacks Investment Research Image Source: However, Vertiv stock is not so cheap as the Value Style Score of C suggests a stretched valuation at this moment. Vertiv is expanding capacity across liquid cooling, thermal, UPS, switchgear, busbar and modular solutions to accommodate AI-driven demand growth. It currently has 22 ...

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Heading into today, shares of the company had lost 14.22% over the past month, lagging the Computer and Technology sector's loss of 3.17% and the S&P 500's gain of 2.14% in that time. Regarding the entire year, the Zacks Consensus Estimates forecast earnings of $2.44 per share and revenue of $7.73 billion, indicating changes of +37.85% and +12.57%, respectively, compared to the previous year. Based on our research, we believe these estimate revisions are directly related to near-team stock moves. To utilize ...

Wall Street expects a year-over-year increase in earnings on higher revenues when Vertiv Holdings Co. (VRT) reports results for the quarter ended June 2024. While this widely-known consensus outlook is important in gauging the company's earnings picture, a powerful factor that could impact its near-term stock price is how the actual results compare to these estimates. The earnings report, which is expected to be released on July 24, 2024, might help the stock move higher if these key numbers are better than ...