Vertiv(US:VRT)2025-07-30 10:03Second Quarter 2025 Financial Results Financial and Operational Highlights Vertiv's Q2 2025 net sales rose 35% to $2.64 billion, driven by 15% organic order growth and a record $8.5 billion backlog Q2 2025 Key Financial Metrics (vs. Q2 2024) | Metric | Q2 2025 | Q2 2024 | Change | | :--- | :--- | :--- | :--- | | Net Sales | $2.64 billion | $1.95 billion | +35% | | Operating Profit | $442 million | $336 million | +32% | | Adjusted Operating Profit | $489 million | $382 million | +28% | | Diluted EPS | $0.83 | $0.46 | +80% | | Adjusted Diluted EPS | $0.95 | $0.67 | +42% | - Order Growth: Organic orders increased ~15% year-over-year and ~11% sequentially from Q1 2025, indicating sustained market demand25 - Backlog and Book-to-Bill: The order backlog strengthened to $8.5 billion, with a robust book-to-bill ratio of approximately 1.2x for the quarter25 - Margin Headwinds: Adjusted operating margin was impacted by ongoing tariffs, higher-than-expected supply chain and manufacturing transition costs, and operational inefficiencies from rapid growth. The company has action plans to materially resolve these issues by year-end34 - Given the strong performance and positive outlook, the company raised its full-year 2025 guidance for adjusted diluted EPS, net sales, adjusted operating profit, and adjusted free cash flow45 Financial Condition and Liquidity Vertiv's Q2 2025 adjusted free cash flow was $277 million, with strong liquidity of $2.5 billion and a low 0.6x net leverage ratio, supporting strategic growth - Net cash from operating activities was $323 million, and adjusted free cash flow was $277 million. The YoY decrease of ~$59 million was mainly due to working capital investments for growth, partially offset by higher adjusted operating profit6 - The company maintains a strong financial position with $2.5 billion in liquidity and a net leverage of approximately 0.6x at the end of Q2 20257 - Capital expenditures are expected to be in the range of $250 - $300 million for the full year to support strong industry demand7 - The company announced an agreement to acquire Great Lakes Data Racks & Cabinets to strengthen its position in high-density white space solutions7 Business Outlook Vertiv raised its full-year 2025 guidance for sales, profit, and EPS, projecting 24% organic sales growth, while adjusting operating margin guidance to 20.0% due to growth investments Updated 2025 Guidance | Metric | Third Quarter 2025 Guidance | Full Year 2025 Guidance | | :--- | :--- | :--- | | Net Sales | $2.51 billion - $2.59 billion | $9.93 billion - $10.08 billion | | Organic Net Sales Growth | 20% - 24% | 23% - 25% | | Adjusted Operating Profit | $490 million - $530 million | $1.95 billion - $2.03 billion | | Adjusted Operating Margin | 19.75% - 20.25% | 19.7% - 20.3% | | Adjusted Diluted EPS | $0.94 - $1.00 | $3.75 - $3.85 | | Adjusted Free Cash Flow | N/A | $1.38 billion - $1.43 billion | - Guidance Increase: Raised full-year guidance for organic sales growth (from 18% to 24%), adjusted operating profit (from $1.94 billion to $1.99 billion), adjusted diluted EPS (from $3.55 to $3.80), and adjusted free cash flow (from $1.3 billion to $1.4 billion)9 - Margin Adjustment: Lowered full-year adjusted operating margin guidance (from 20.5% to 20.0%) due to accelerated investments in R&D and manufacturing capacity, as well as temporary cost pressures9 - Long-Term Target: The company anticipates meeting its long-term adjusted operating margin target of 25% by 20299 Consolidated Financial Statements (Unaudited) This section presents the unaudited condensed consolidated financial statements as of June 30, 2025, including Statements of Earnings, Balance Sheets, and Cash Flows Condensed Consolidated Statements of Earnings Q2 2025 net sales grew 35.1% to $2.64 billion, with operating profit up 31.7% to $442.4 million and diluted EPS rising to $0.83 Q2 2025 Statement of Earnings Highlights | Metric | Q2 2025 (in millions) | Q2 2024 (in millions) | YTD 2025 (in millions) | YTD 2024 (in millions) | | :--- | :--- | :--- | :--- | :--- | | Net Sales | $2,638.1 | $1,952.8 | $4,674.1 | $3,591.9 | | Operating Profit | $442.4 | $336.0 | $733.1 | $538.6 | | Net Income | $324.2 | $178.1 | $488.7 | $172.2 | | Diluted EPS | $0.83 | $0.46 | $1.25 | $0.44 | Condensed Consolidated Balance Sheets As of June 30, 2025, Vertiv's total assets reached $10.41 billion, up from $9.13 billion in 2024, with total equity rising to $3.13 billion Balance Sheet Highlights | Metric | June 30, 2025 (in millions) | Dec 31, 2024 (in millions) | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $1,640.8 | $1,227.6 | | Accounts receivable, net | $2,831.0 | $2,362.7 | | Inventories | $1,413.3 | $1,244.4 | | Total Assets | $10,406.2 | $9,132.5 | | Liabilities & Equity | | | | Total Liabilities | $7,280.8 | $6,698.2 | | Total Equity | $3,125.4 | $2,434.3 | Condensed Consolidated Statements of Cash Flows For the six months ended June 30, 2025, net cash from operating activities was $626.2 million, up from $519.0 million last year, with $182.8 million used in investing activities Six Months Ended June 30 Cash Flow Summary | Metric | 2025 (in millions) | 2024 (in millions) | | :--- | :--- | :--- | | Net cash provided by operating activities | $626.2 | $519.0 | | Net cash used for investing activities | ($182.8) | ($81.5) | | Net cash used for financing activities | ($32.9) | ($626.7) | Segment and Product Performance This section details Vertiv's Q2 performance by geography and offering, highlighting the Americas region's sales growth and stronger product sales over services Regional Segment Results In Q2 2025, the Americas (AMER) region led with 42.9% net sales growth, followed by APAC at 36.9%, with AMER and EMEA showing strongest adjusted operating margins Q2 2025 Net Sales & Adjusted Operating Profit by Region | Region | Net Sales (in millions) | Net Sales Δ% | Adj. Operating Profit (in millions) | Adj. Operating Profit Δ% | | :--- | :--- | :--- | :--- | :--- | | AMER | $1,602.3 | +42.9% | $384.6 | +34.9% | | APAC | $560.2 | +36.9% | $59.2 | +83.3% | | EMEA | $475.6 | +12.5% | $104.2 | -4.8% | Sales by Product and Service Offering Product sales drove Q2 2025 growth, increasing 39.6% to $2.12 billion, while services & spares grew 19.2% to $519.2 million, a consistent trend across all segments Q2 2025 Sales by Offering | Offering | Q2 2025 Sales (in millions) | YoY Δ% | Organic Growth Δ% | | :--- | :--- | :--- | :--- | | Products | $2,118.9 | +39.6% | +38.5% | | Services & spares | $519.2 | +19.2% | +18.6% | | Total | $2,638.1 | +35.1% | +34.0% | Reconciliation of GAAP to Non-GAAP Measures This section reconciles GAAP to non-GAAP metrics, including adjusted operating profit, adjusted free cash flow, and adjusted diluted EPS, providing a clearer view of underlying business performance Q2 2025 Reconciliation of Operating Profit to Adjusted Operating Profit | Metric | Q2 2025 (in millions) | Q2 2024 (in millions) | | :--- | :--- | :--- | | Operating profit (loss) (GAAP) | $442.4 | $336.0 | | Amortization of intangibles | $46.9 | $45.8 | | Adjusted operating profit (loss) (Non-GAAP) | $489.3 | $381.8 | Q2 2025 Reconciliation to Adjusted Free Cash Flow | Metric | Q2 2025 (in millions) | Q2 2024 (in millions) | | :--- | :--- | :--- | | Net cash provided by operating activities (GAAP) | $322.9 | $381.5 | | Capital expenditures & capitalized software | ($45.9) | ($45.0) | | Adjusted free cash flow (Non-GAAP) | $277.0 | $336.5 | Q2 2025 Reconciliation of Diluted EPS to Adjusted Diluted EPS | Metric | Per Share Amount ($) | | :--- | :--- | | Diluted EPS (GAAP) | $0.83 | | Amortization of intangibles | $0.12 | | Adjusted Diluted EPS (Non-GAAP) | $0.95 | Full Year 2025 Guidance Reconciliation of Diluted EPS to Adjusted Diluted EPS | Metric | Per Share Amount ($) | | :--- | :--- | | Diluted EPS (GAAP) | $3.23 | | Amortization of intangibles | $0.47 | | Non-recurring tax adjustment, net | $0.10 | | Adjusted Diluted EPS (Non-GAAP) | $3.80 |