Why is Vertiv restating its financial statements?

Vertiv is restating its financial statements because the Audit Committee, in response to recent SEC guidance, concluded that warrants issued in connection with the merger with GS Acquisition Holdings Corp were improperly classified as equity. These warrants should be classified as a liability due to a provision allowing for cash settlement under certain conditions outside of the company's control.

What is the financial impact of this restatement?

The company expects to recognize an incremental non-operating expense of approximately $140 million to $160 million for the year ended December 31, 2020, due to the reclassification of warrants. However, there is no expected impact on cash and cash equivalents or cash flows from operating, investing, or financing activities.

When will investors see the restated financial statements?

Vertiv intends to promptly file restated financial statements for the year ended December 31, 2020, on a Form 10-K/A. The relevant unaudited interim financial information for the quarters during 2020 will also be restated within this filing.

Does this restatement indicate any operational issues or impact future performance?

The restatement is primarily an accounting classification issue related to warrants and is not indicative of issues with Vertiv's core operations or future performance. Management has stated there will be no impact on cash balances or cash flows. The company is, however, expanding its internal control remediation efforts to improve processes for classifying financial instruments.

VRT 8-K: Earnings & Results, Financial Events & More

Summary

Vertiv Holdings Co (VRT) has filed an 8-K report on April 22, 2021, announcing that its previously issued financial statements for the year ended December 31, 2020, and interim periods in 2020, should no longer be relied upon. This non-reliance stems from a reassessment of the accounting treatment for warrants originally issued in connection with the merger with GS Acquisition Holdings Corp. The company concluded, following recent SEC guidance, that these warrants should be classified as a liability rather than equity due to a provision that allows for cash settlement under certain circumstances outside of the company's control. This change in accounting classification is expected to result in an incremental non-operating expense of approximately $140 million to $160 million for the year ended December 31, 2020. The company anticipates filing restated financial statements on Form 10-K/A promptly. Importantly, management states that this restatement is not expected to impact cash and cash equivalents or cash flows from operating, investing, or financing activities. The company is also expanding its remediation plan for previously disclosed material weaknesses to address the controls around financial instrument classification.

Key Highlights

1Vertiv is restating its previously issued financial statements for the year ended December 31, 2020, and interim 2020 periods due to a change in accounting for warrants.
2The company concluded that warrants issued in connection with the merger with GS Acquisition Holdings Corp should be classified as a liability, not equity, based on recent SEC guidance.
3This reclassification is driven by a provision that allows for cash settlement under certain circumstances outside of Vertiv's control.
4The restatement is expected to result in an incremental non-operating expense of $140 million to $160 million for the year ended December 31, 2020.
5No impact is anticipated on historically reported cash and cash equivalents or cash flows from operating, investing, or financing activities.
6Vertiv plans to file restated financial statements on Form 10-K/A and is expanding remediation for material weaknesses in financial reporting controls.

Vertiv Holdings Co 8-K Report, Financial Results (Apr 23, 2021)

Summary

Key Highlights

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