Vertiv Reports Strong Third Quarter 2024 Results and Raises Full Year Guidance.
Vertiv Holdings Co (NYSE: VRT), a global provider of critical digital infrastructure and continuity solutions, today reported financial results for its third quarter ended September 30, 2024. Vertiv reported third quarter 2024 net sales of $2,074 million, an increase of $331 million, or 19%, compared to last year’s third quarter. Organic orders (excluding foreign exchange) for the TTM period ended September 2024 were up ~37% compared to the September 2023 TTM period, consistent with ~37% TTM order growth at the end of second quarter 2024, driven by strength in the hyperscale and colocation data center market. Third quarter organic orders (excluding foreign exchange) increased ~17% compared to last year’s third quarter. Pipeline increased sequentially from second to third quarter 2024 across all three regions, with continued strength in AI-related activity, including liquid cooling technologies.
Third quarter 2024 operating profit of $372 million increased $121 million, or 48%, and adjusted operating profit of $417 million increased $121 million, or 41%, compared to third quarter 2023. Adjusted operating margin expanded 310 basis points to 20.1% in the third quarter 2024 compared to third quarter 2023, driven by benefits from increased volume and favorable commercial execution partially offset by investments in R&D, launch costs of a new manufacturing facility and fixed costs associated with capacity expansions to support growth.
Giordano Albertazzi, Vertiv’s Chief Executive Officer:
Vertiv’s strong performance in the third quarter was driven by robust underlying demand for our critical digital infrastructure products and services.
“our continued and unrelenting focus on strong operational execution and Vertiv’s unique market position in enabling artificial intelligence and other critical applications for the data center,”
“We are very encouraged by the acceleration of liquid cooling revenue, which is a visible contributor to our third quarter results, despite a yet immature market. Pipelines continue to grow. There are clear indications of an acceleration in AI development that is truly encouraging, and which is driving demand across our entire AI-enabling portfolio of power, thermal, IT systems, infrastructure solutions and services.”
Dave Cote, Vertiv’s Executive Chairman, added:
Gio and the Vertiv team continue to deliver outstanding results, bolstered by a laser focus on continuously improving operational excellence and building a high-performance culture.
“Those efforts are clearly paying off, with Vertiv’s adjusted operating margin surpassing 20% in the quarter. With even more room for operational improvement and the AI phase of the digital age just beginning, Vertiv has a long runway to accelerate growth and create even greater shareholder value.”
Adjusted Free Cash Flow(1) and Liquidity
Net cash generated by operating activities in the third quarter was $375 million, an increase of $126 million from third quarter 2023, and adjusted free cash flowwas $336 million, an increase of $115 million from third quarter 2023. Third quarter 2024 adjusted free cash flow performance was driven by higher adjusted operating profit and improvement in working capital management which were partially offset by an increase in cash taxes driven by increased profitability and a $12 million increase in capital expenditures to support strong demand signals from our customers. The 2024 forecast for capital expenditures remains $175 million to $200 million. We continue to increase capacity globally across our portfolio, as demonstrated by the recent expansion of our modular infrastructure capabilities with a new manufacturing facility in Pelzer, South Carolina, which has already started production shipments. We believe the framework for capital expenditures in the range of 2.5% to 3.0% of sales revenue supports the growth trajectory we see ahead. Additionally, we see capacity increases driven by Vertiv Operating System (VOS) deployment, which has resulted in productivity gains including freeing up square footage in our global manufacturing footprint.
Liquidity remained strong at $1.5 billion and net leverage was 1.4x at the end of third quarter 2024. Borrowings under our ABL credit facility remained at zero at the end of third quarter 2024.
Updated Full Year and Fourth Quarter 2024 Guidance
Sequential pipeline growth every quarter in 2024, including substantial increases in AI-related pipeline, is reflective of the robust data center market. Our strong orders, record high backlog and strong operational execution support increasing our fourth quarter and full year 2024 outlook, as updated below:
Fourth Quarter 2024 Guidance | |
Net sales | $2,115M – $2,165M |
Organic net sales growth(2) | 11% – 15% |
Adjusted operating profit(1) | $427M – $447M |
Adjusted operating margin(2) | 20.2% – 20.6% |
Adjusted diluted EPS(1) | $0.80 – $0.84 |
Full Year 2024 Guidance | |
Net sales | $7,780M – $7,830M |
Organic net sales growth(2) | 13% – 15% |
Adjusted operating profit(1) | $1,475M – $1,495M |
Adjusted operating margin(2) | 18.9% – 19.1% |
Adjusted diluted EPS(1) | $2.66 – $2.70 |
Adjusted free cash flow(2) | $975M – $1,025M |
(1) | This release contains certain non-GAAP metrics. For reconciliations to the relevant GAAP measures and an explanation of the non-GAAP measures and reasons for their use, please refer to sections of this release entitled “Non-GAAP Financial Measures” and “Reconciliation of GAAP and non-GAAP Financial Measures.” |
(2) | This is a forward-looking non-GAAP financial measure that cannot be reconciled for those reasons set forth under “Non-GAAP Financial Measures” of this release. |
Third Quarter 2024 Earnings Conference Call
Vertiv’s management team will discuss the Company’s results during a conference call on Wednesday, October 23, starting at 11 a.m. Eastern Time. The call will contain forward-looking statements and other material information regarding Vertiv’s financial and operating results. A webcast of the live conference call will be available for interested parties to listen to by going to the Investor Relations section of the Company’s website at investors.vertiv.com. A slide presentation will be available before the call and will be posted to the website, also at investors.vertiv.com. A replay of the conference call will also be available for 30 days following the webcast.
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Vertiv Reports Strong Third Quarter 2024 Results and Raises Full Year Guidance. source