Summary
Vertiv Holdings Co. reported its second-quarter and first-half 2022 results, showing a notable increase in net sales year-over-year driven by the acquisition of E&I Engineering and continued demand in critical infrastructure solutions. However, the company experienced a significant decrease in gross profit margin due to rising costs of sales, including commodity and logistics expenses, and ongoing supply chain constraints. While net sales grew, operating profit declined substantially for both the quarter and the year-to-date period, largely impacted by increased costs and the change in fair value of warrant liabilities. Despite these challenges, Vertiv is actively managing these pressures through pricing actions and supply chain initiatives. The company's liquidity remains adequate, supported by its cash position and revolving credit facility. Investors should monitor the company's ability to mitigate cost pressures and improve margins while navigating the macroeconomic environment, particularly supply chain disruptions and inflation, which are key factors influencing profitability.
Financial Highlights
50 data points| Revenue | $1.40B |
| Cost of Revenue | $1.03B |
| Gross Profit | $371.50M |
| SG&A Expenses | $287.60M |
| Operating Income | $26.20M |
| Interest Expense | $33.40M |
| Net Income | $20.30M |
| EPS (Basic) | $0.05 |
| EPS (Diluted) | $0.05 |
| Shares Outstanding (Basic) | 376.59M |
| Shares Outstanding (Diluted) | 377.26M |
Key Highlights
- 1Net sales increased by 11.0% to $1,399.4 million for the three months ended June 30, 2022, and by 8.4% to $2,555.8 million for the six months ended June 30, 2022, driven by organic growth and the E&I acquisition.
- 2Gross profit margin decreased to 26.5% for Q2 2022 and 26.4% for H1 2022, down from 32.5% and 32.5% respectively in the prior year periods, due to increased cost of sales related to commodity prices, logistics, and supply chain constraints.
- 3Operating profit (loss) significantly declined, recording $26.2 million for Q2 2022 (down from $102.2 million in Q2 2021) and a loss of $(19.0) million for H1 2022 (compared to a profit of $182.0 million in H1 2021), impacted by higher costs and a significant unfavorable change in the fair value of warrant liabilities.
- 4The company generated negative cash flow from operating activities of $(337.9) million for the first six months of 2022, a substantial decrease from the $120.0 million generated in the same period of 2021, largely due to increased working capital needs.
- 5Vertiv's balance sheet shows a decrease in cash and cash equivalents to $194.4 million as of June 30, 2022, from $439.1 million as of December 31, 2021, reflecting the use of cash in operations and investments.
- 6Long-term debt increased to $3,117.5 million as of June 30, 2022, from $2,950.5 million as of December 31, 2021, with the addition of $175.0 million drawn on the ABL Revolving Credit Facility.
- 7The company is actively managing supply chain constraints and inflationary pressures through pricing actions, expecting continued realization for the remainder of 2022.