01—Abstract
Summary
Summary of the 10-K filed February 18, 2025. Cited figures are marked; the original filing is the authoritative source.
Vertiv (VRT) closed 2024 with net sales of $8,011.8 milliona, up 16.7% from $6,863.2 million in 2023, driven mainly by higher volumes in products and services and improved price realization.
Gross margin expanded to 36.6% from 35.0%, and operating profit rose 56.8% to $1,367.4 millionb. Net income was $495.8 million, up 7.7%, but the increase was much smaller than operating profit growth because of a $449.2 million non-cash loss from the change in fair value of warrant liabilities, which was largely a mark-to-market result tied to the stock price and the December 2024 cashless exercise of the remaining private placement warrants. Income tax expense rose to $269.6 million, with an effective tax rate of 35.2%, reflecting a $633.4 million valuation allowance charge, partly offset by a $682.1 million benefit from non-U.S. tax holidays and incentives.
Backlog reached $7.18 billionc at year-end, up 30% from $5.53 billion, with management noting that customers are placing orders ahead of Vertiv's ability to fulfill them because of extended lead times. Operating cash flow improved to $1,319.3 million from $900.5 million, and year-end cash was $1.23 billion. Vertiv returned capital through $599.9 million of share repurchases and a dividend increase to $0.0375 per quarter.
Debt was $2.9 billiond, consisting of a $2,097.0 million term loan due 2027 and $850.0 million of 4.125% senior secured notes due 2028, with $784.9 million of undrawn ABL capacity. Investors should weigh the strong operating momentum against several risks: tariff exposure, supply chain cost pressure, concentration of large hyperscale customers with negotiating leverage, a securities class action and related derivative suits and SEC/DOJ inquiries, and a company that has disclosed material weaknesses in the past, although management concluded internal controls were effective as of December 31, 2024.
02—Key points
Key Highlights
- Net sales grew 16.7% to $8,011.8M, with the Americas at $4,500.6M (+17.1%), Asia Pacific at $1,717.8M (+12.4%), and EMEA at $1,793.4M (+20.3%).
- Operating profit rose 56.8% to $1,367.4M, and gross margin expanded 130 basis points to 36.6%, driven by volume and price realization.
- Net income increased only 7.7% to $495.8M because of a $449.2M non-cash loss from the change in fair value of warrant liabilities, and the effective tax rate was 35.2% after a $633.4M valuation allowance charge.
- Backlog increased 30% to $7,178.8M from $5,526.7M, though management notes some orders were placed ahead of fulfillment capacity, and backlog is subject to customer cancellation or deferral.
- Operating cash flow improved to $1,319.3M, and year-end cash rose to $1,227.6M, while capital expenditures were $167.0M and 2025 capex guidance is $250M to $300M.
- Capital returns included $599.9M of share repurchases in 2024 with $2.4B remaining under the $3.0B authorization, plus a quarterly dividend increased to $0.0375 per share.
- Ongoing legal and regulatory exposure includes a securities class action, consolidated derivative litigation, and an SEC subpoena and U.S. Attorney's Office document request, with outcomes not predictable at this time.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2024, Vertiv Holdings kept $0.06.
- Revenue$8.01B100.0%
- Cost of revenue−$5.08B63.4%
- Gross profit$2.93B36.6%
- Operating costs−$1.57B19.6%
- Operating income$1.37B17.1%
- Interest, other & tax−$871.6M10.9%
- Net income$495.8M6.2%
04—Financials
Financial Highlights
Figures from 10-KFY2024filed February 18, 2025Financial Statements
FY2024 against FY2023
| Line item | FY2024FY2023 | Change |
|---|---|---|
| Revenue | $8.01B$6.86B | +16.7% |
| Cost of Revenue | $5.08B$4.46B | +13.8% |
| Gross Profit | $2.93B$2.40B | +22.2% |
| R&D Expenses | $367.60M$303.50M | +21.1% |
| SG&A Expenses | $1.37B$1.31B | +4.7% |
| Operating Income | $1.37B$872.20M | +56.8% |
| Interest Expense | $150.40M$180.10M | −16.5% |
| Net Income | $495.80M$460.20M | +7.7% |
| EPS (Basic) | $1.32$1.21 | +9.1% |
| EPS (Diluted) | $1.28$1.19 | +7.6% |
| Shares Outstanding (Basic) | 376.42M380.14M | −1.0% |
| Shares Outstanding (Diluted) | 386.33M386.23M | 0.0% |
05—Questions
Frequently Asked Questions
What drove the strong revenue and margin growth in 2024?
Revenue growth of 16.7% was driven primarily by higher sales volumes across all three regions, partially offset by a $53.6M negative foreign currency impact. Gross margin rose to 36.6% from 35.0%, which management attributed to higher volumes, improved price realization, and manufacturing and procurement productivity. SG&A grew more slowly than sales, falling to 17.1% of sales from 19.1%.
Why did net income grow much less than operating profit?
Operating profit increased by $495.2M, but net income increased by only $35.6M. The main reason is a $449.2M loss from the change in fair value of warrant liabilities, which is a non-cash, mark-to-market item tied largely to the stock price and the December 2024 exercise of the remaining private placement warrants. Income tax expense also rose to $269.6M from $73.5M, partly due to a $633.4M valuation allowance change offset by large non-U.S. tax incentives.
How strong is the balance sheet and liquidity position?
At year-end, Vertiv had $1,227.6M of cash and $784.9M of available ABL revolver capacity. Total debt was about $2.95B in principal, including a $2,097.0M term loan due 2027 at a 6.19% rate and $850.0M of 4.125% notes due 2028. Net debt was roughly $1.7B, and the company stated that current liquidity is adequate for the next 12 months. Interest rate swaps cover $1.0B of the term loan.
What are the main risks investors should monitor?
Key risks include tariffs and trade policy, which could raise costs and affect competitiveness; supply chain constraints and commodity price volatility for steel, copper, and aluminum; concentration among large hyperscale customers that have significant negotiating leverage; the potential for competitors such as Schneider Electric and Eaton to pressure pricing; securities and derivative litigation with an SEC inquiry; and past material weaknesses in internal controls. Customers can also reduce or defer backlog orders, so backlog may not convert fully into revenue.
06—Continue