Summary
Vertiv Holdings Co. reported a solid third quarter for 2021, demonstrating revenue growth and a significant improvement in net income compared to the prior year period. Net sales increased by 5.8% to $1.23 billion, driven by strong performance across all segments, particularly in Europe, Middle East & Africa (EMEA), which saw an impressive 18.7% rise in net sales. This growth was achieved despite ongoing supply chain challenges and increased commodity and logistics costs, which did impact gross profit margin. The company also achieved profitability, with net income of $56.2 million, a substantial improvement from a net loss of $103.5 million in the same quarter last year. This turnaround is partly attributable to a significant decrease in restructuring costs and a favorable change in the fair value of warrant liabilities. Vertiv's strategic focus on critical infrastructure solutions and services appears to be paying off, with positive contributions from all product and service offerings. The company also successfully closed a significant acquisition of E+I Engineering shortly after the quarter ended, funded in part by an $850 million debt offering, positioning it for future growth. While the company navigates persistent supply chain issues expected to continue into early 2022, the overall financial results indicate a positive operational trend. Investors should monitor the company's ability to manage rising costs and supply chain disruptions while integrating the newly acquired business. The improvement in operating profit across all segments, especially the significant turnaround in EMEA, is a key positive takeaway from this filing.
Financial Highlights
50 data points| Revenue | $1.23B |
| Cost of Revenue | $847.20M |
| Gross Profit | $381.70M |
| SG&A Expenses | $257.80M |
| Operating Income | $81.80M |
| Interest Expense | $22.40M |
| Net Income | $56.20M |
| EPS (Basic) | $0.16 |
| EPS (Diluted) | $0.15 |
| Shares Outstanding (Basic) | 352.48M |
| Shares Outstanding (Diluted) | 363.20M |
Key Highlights
- 1Net sales increased by 5.8% to $1.23 billion for the third quarter of 2021, compared to $1.16 billion in Q3 2020.
- 2The company achieved a net income of $56.2 million in Q3 2021, a significant improvement from a net loss of $103.5 million in Q3 2020.
- 3Gross profit margin decreased to 31.1% from 35.5% year-over-year, primarily due to increased commodity and logistics costs.
- 4The EMEA segment showed strong performance with an 18.7% increase in net sales and a substantial improvement in operating profit, turning from a near break-even to a profitable margin.
- 5The company completed the acquisition of E+I Engineering for approximately $1.8 billion, with the transaction closing on November 1, 2021, funded by cash and Vertiv stock.
- 6Despite supply chain challenges and increased costs, the company generated positive operating cash flow of $174.4 million for the nine months ended September 30, 2021.
- 7Vertiv reported material weaknesses in internal controls over financial reporting related to IT general controls and the aggregation of open control deficiencies.