Vertiv(VRT) - 2025 Q2 - Quarterly Report

Part I - Financial Information Item 1. Financial Statements (Unaudited) This section presents Vertiv's unaudited condensed consolidated financial statements for the periods ended June 30, 2025, including detailed statements of earnings, comprehensive income, balance sheets, cash flows, and accompanying notes Condensed Consolidated Statements of Earnings (Loss) The company reported significant growth in net sales and net income for both Q2 and H1 2025, with Q2 2025 net sales rising to $2,638.1 million and net income to $324.2 million Q2 and H1 2025 vs 2024 Earnings Performance | Metric | Q2 2025 | Q2 2024 | YoY Change | H1 2025 | H1 2024 | YoY Change | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Net Sales | $2,638.1M | $1,952.8M | +35.1% | $4,674.1M | $3,591.9M | +30.1% | | Operating Profit | $442.4M | $336.0M | +31.7% | $733.1M | $538.6M | +36.1% | | Net Income | $324.2M | $178.1M | +82.0% | $488.7M | $172.2M | +183.8% | | Diluted EPS | $0.83 | $0.46 | +80.4% | $1.25 | $0.44 | +184.1% | Condensed Consolidated Statements of Comprehensive Income (Loss) Comprehensive income for Q2 2025 significantly increased to $444.6 million, driven by higher net income and a substantial positive foreign currency translation adjustment Comprehensive Income Comparison (in millions) | Item | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | | :--- | :--- | :--- | :--- | :--- | | Net Income | $324.2 | $178.1 | $488.7 | $172.2 | | Other Comprehensive Income (Loss) | $120.4 | $(26.3) | $194.0 | $(60.6) | | Comprehensive Income | $444.6 | $151.8 | $682.7 | $111.6 | Condensed Consolidated Balance Sheets As of June 30, 2025, total assets increased to $10,406.2 million from $9,132.5 million at year-end 2024, with total equity also rising significantly to $3,125.4 million Balance Sheet Summary (in millions) | Account | June 30, 2025 | Dec 31, 2024 | | :--- | :--- | :--- | | Total Current Assets | $6,302.0 | $5,101.8 | | Total Assets | $10,406.2 | $9,132.5 | | Total Current Liabilities | $3,614.5 | $3,097.0 | | Total Liabilities | $7,280.8 | $6,698.2 | | Total Equity | $3,125.4 | $2,434.3 | - Cash and cash equivalents increased to $1,640.8 million from $1,227.6 million at the end of 2024[15] - Retained earnings became positive at $222.0 million, a significant improvement from a deficit of $(238.3) million at year-end 2024[15] Condensed Consolidated Statements of Cash Flows Net cash provided by operating activities for H1 2025 was strong at $626.2 million, while financing activities used a modest $32.9 million due to the absence of large stock repurchases Cash Flow Summary - Six Months Ended June 30 (in millions) | Cash Flow Activity | 2025 | 2024 | | :--- | :--- | :--- | | Operating Activities | $626.2 | $519.0 | | Investing Activities | $(182.8) | $(81.5) | | Financing Activities | $(32.9) | $(626.7) | | Increase (Decrease) in Cash | $423.8 | $(200.9) | - The significant decrease in cash used for financing activities in H1 2025 is primarily because there were no common stock repurchases, compared to $599.9 million in repurchases in H1 2024[17] Notes to Condensed Consolidated Financial Statements (Unaudited) This section provides detailed explanations of the company's accounting policies and financial results, covering revenue disaggregation, debt structure, segment performance, legal contingencies, and a subsequent acquisition event - Vertiv provides mission-critical digital infrastructure technologies and services for data centers, communication networks, and commercial/industrial environments across three segments: Americas; Asia Pacific; and Europe, Middle East & Africa[25] - The company adopted ASU 2023-07 for segment reporting, which required expanded disclosure of segment information on an interim basis[29] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses Q2 and H1 2025 financial results, highlighting a 35.1% increase in Q2 net sales driven by strong volume growth, capacity expansion, and a strong liquidity position to fund operations and a planned acquisition - Key business trends include ongoing capacity expansion, investments in AI-related products and solutions, and expansion of the thermal management portfolio to meet growing demand[101] - The company is actively managing risks from trade uncertainty and tariffs by pursuing a supply chain strategy of supplier and geographic resilience, including adding regional sourcing and manufacturing capabilities[98][99] Q2 2025 vs Q2 2024 Performance Summary | Metric | Q2 2025 | Q2 2024 | Change | | :--- | :--- | :--- | :--- | | Net Sales | $2,638.1M | $1,952.8M | +35.1% | | Gross Profit | $896.6M | $741.2M | +21.0% | | Operating Profit | $442.4M | $336.0M | +31.7% | | Net Income | $324.2M | $178.1M | +82.0% | Results of Operations Vertiv's Q2 2025 net sales increased 35.1% year-over-year to $2,638.1 million, driven by higher sales volumes, while gross margin declined to 34.0% due to product/service mix and tariffs - Q2 2025 net sales growth of 35.1% was primarily driven by higher sales volumes, with product sales increasing by $601.6 million and Services & Spares sales by $83.7 million[103] - Gross margin for Q2 2025 decreased to 34.0% from 38.0% in Q2 2024, primarily due to the mix of product and service sales and the impact of tariffs[105] - Interest expense for Q2 2025 decreased by 52.5% to $21.3 million, mainly due to reduced interest rates from Term Loan amendments and higher interest income[109] - For the six months ended June 30, 2025, net income increased by 183.8% to $488.7 million compared to the same period in 2024[119] Business Segments In Q2 2025, all segments reported strong sales growth, with the Americas leading with a 42.9% increase in net sales to $1,602.3 million, despite a slight operating margin decrease Q2 2025 Segment Performance | Segment | Net Sales | YoY Change | Operating Profit | Margin | | :--- | :--- | :--- | :--- | :--- | | Americas | $1,602.3M | +42.9% | $384.6M | 24.0% | | Asia Pacific | $560.2M | +36.9% | $59.2M | 10.6% | | EMEA | $475.6M | +12.5% | $104.2M | 21.9% | Capital Resources and Liquidity The company's liquidity position remains strong with $1,640.8 million in cash and equivalents and $783.0 million available under its ABL Revolving Credit Facility, sufficient to fund operations and planned acquisitions - As of June 30, 2025, the company had $1,640.8 million in cash and cash equivalents and $783.0 million of availability under its ABL Revolving Credit Facility[140] - Net cash provided by operating activities for the first six months of 2025 was $626.2 million, an increase of 20.7% from the prior year[143][144] - The company expects full-year 2025 capital expenditures (including capitalized software) to be between $250.0 million and $300.0 million[137] Item 3. Quantitative and Qualitative Disclosures About Market Risk The company states that there have been no material changes in its quantitative and qualitative market risk disclosures from those described in its 2024 Form 10-K - There have been no material changes in market risk disclosures since the 2024 Form 10-K[148] Item 4. Controls and Procedures Management concluded that the company's disclosure controls and procedures were effective as of June 30, 2025, with no material changes to internal control over financial reporting during the quarter - The CEO and CFO concluded that as of June 30, 2025, the company's disclosure controls and procedures were effective[150][151] - No material changes to internal control over financial reporting occurred during the quarter ended June 30, 2025[152] Part II - Other Information Item 1. Legal Proceedings Vertiv is involved in a putative securities class action lawsuit and related shareholder derivative lawsuits, and has received subpoenas from the SEC and U.S. Attorney's Office concerning these allegations - A putative securities class action (In re Vertiv Holdings Co Securities Litigation, 22-cv-3572) is pending, alleging false statements between February 2021 and February 2022[155] - In November 2023, the company received a subpoena from the SEC and a parallel request from the U.S. Attorney's Office for the Southern District of New York related to the allegations in the class action lawsuit[158] - Consolidated shareholder derivative lawsuits (In re Vertiv Holdings Co Stockholder Derivative Litigation) are stayed pending the outcome of the motion to dismiss in the securities class action[156] Item 1A. Risk Factors The company reports that its risk factors have not materially changed from those disclosed in its Form 10-K for the fiscal year ended December 31, 2024 - There have been no material changes to the company's risk factors since the filing of the 2024 Form 10-K[162] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds The company reported no unregistered sales of equity securities or share repurchases during 2025, with $2.4 billion remaining available for repurchase under the current authorization - The company made no share repurchases during 2025[166] - As of June 30, 2025, $2.4 billion was available for repurchase under the company's stock repurchase program, which is authorized through December 31, 2027[165][166] Item 5. Other Information The company reports that no director or officer adopted or terminated any Rule 10b5-1 trading arrangement during the second quarter of 2025 - No director or officer adopted or terminated a Rule 10b5-1 trading plan during the second quarter[170] Item 6. Exhibits This section lists the exhibits filed with the Form 10-Q, including a Transition and Consulting Agreement, CEO and CFO certifications, and financial data in Inline XBRL format - Exhibits filed include CEO and CFO certifications pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act[173]