10-QPeriod: Q1 FY2021

Vertiv Holdings Co Quarterly Report for Q1 Ended Mar 31, 2021

Filed May 3, 2021For Securities:VRT

Summary

Vertiv Holdings Co. reported strong top-line growth in the first quarter of 2021, with net sales increasing by 22.4% year-over-year to $1,098.4 million. This growth was driven by a broad recovery across its segments, particularly in the Asia Pacific region, and strong demand for its critical infrastructure and solutions. The company successfully returned to profitability, reporting a net income of $31.7 million, a significant improvement from the net loss of $208.3 million in the prior year's comparable quarter. The company also demonstrated effective cost management, with Selling, General, and Administrative (SG&A) expenses decreasing as a percentage of sales. This operational efficiency, combined with increased gross profit margins, contributed to a substantial increase in operating profit. Vertiv continues to focus on managing its debt, with a notable reduction in interest expense due to refinancing activities and lower outstanding borrowings.

Financial Highlights

49 data points
Beta

Revenue

$1.10B

32.6% Gross Margin

Net Income

$31.70M

2.9% Net Margin

EPS (Diluted)

$0.09

Total Assets

$5.16B

Cash & Equivalents

$677.20M

Free Cash Flow

$43.90M

Financial Statements
Beta
Revenue$1.10B
Cost of Revenue$740.40M
Gross Profit$358.00M
SG&A Expenses$250.10M
Operating Income$79.80M
Interest Expense$24.10M
Net Income$31.70M
EPS (Basic)$0.09
EPS (Diluted)$0.09
Shares Outstanding (Basic)349.60M
Shares Outstanding (Diluted)353.45M

Key Highlights

  • 1Net sales surged by 22.4% to $1,098.4 million in Q1 2021 compared to Q1 2020, indicating a strong recovery and demand.
  • 2The company achieved profitability with a net income of $31.7 million, a significant turnaround from a net loss of $208.3 million in the prior year.
  • 3Operating profit improved dramatically to $79.8 million from a loss of $12.2 million, driven by higher sales and improved margins.
  • 4Gross profit margin increased to 32.6% in Q1 2021 from 32.0% in Q1 2020.
  • 5Selling, General, and Administrative (SG&A) expenses as a percentage of sales decreased to 22.8% from 29.5%, showcasing improved operational efficiency.
  • 6The Asia Pacific segment experienced exceptional growth, with net sales increasing by 59.6%, driven by post-COVID-19 recovery and demand in data centers and 5G projects.
  • 7The company successfully exercised its public warrants by January 2021, generating significant cash proceeds.

Frequently Asked Questions

Vertiv's revenue growth of 22.4% in Q1 2021 was primarily driven by a broad recovery across its business segments, particularly in the Asia Pacific region, and strong demand for its critical infrastructure and solutions. The company also benefited from foreign currency tailwinds.

Vertiv demonstrated a significant turnaround in profitability. The company reported a net income of $31.7 million in Q1 2021, a substantial improvement from the net loss of $208.3 million reported in the same period of 2020. This was supported by increased sales, improved gross margins, and better control over operating expenses.

Vertiv has been actively managing its debt. In March 2021, the company amended its Term Loan Credit Agreement to reduce the interest rate margin. In Q1 2020, significant refinancing activities occurred, including the closing of a new term loan and the repayment of prior indebtedness. Interest expense decreased significantly year-over-year due to these efforts.

Yes, management identified material weaknesses in internal control over financial reporting related to information technology controls (user access and program change management) and the aggregation of open control deficiencies. The company has outlined remediation plans to address these weaknesses, including implementing new IT systems and improving control processes.