Vertiv Holdings Co ((VRT)) has held its Q3 earnings call. Read on for the main highlights of the call.
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Vertiv Holdings Co’s recent earnings call painted a picture of robust financial health, marked by impressive growth in sales and profitability. The company reported significant achievements in its financial metrics, with a positive outlook for future growth. However, challenges in the EMEA region and the impact of tariffs were noted as areas of concern.
Record Q3 Performance
Vertiv Holdings Co achieved a record performance in the third quarter, with an adjusted diluted EPS of $1.24, marking a 63% increase year-over-year. This impressive growth was driven by a 43% increase in adjusted operating profit. Organic sales saw a substantial rise of 28%, with the Americas leading at 43% and APAC at 21%. The adjusted operating profit reached $596 million, up 43% from the previous year.
Strong Order Momentum
The company demonstrated strong order momentum with a trailing twelve-month organic orders growth of approximately 21%. In the third quarter alone, orders were up 60% year-over-year and 20% sequentially. The book-to-bill ratio stood at 1.4 times, highlighting Vertiv’s competitive advantages in the market.
Raised Full-Year Guidance
Vertiv raised its full-year guidance for adjusted EPS, net sales, adjusted operating profit, and adjusted free cash flow. The adjusted operating profit is expected to reach $2.602 billion, representing a 33% increase from the previous year, indicating confidence in sustained growth.
Robust Free Cash Flow
The company generated $462 million in adjusted free cash flow, up 38% from last year. This translates into an impressive 95% free cash flow conversion, showcasing Vertiv’s strong cash generation capabilities.
Strategic Capacity Investments
Vertiv is accelerating investments in its supply chain and services capabilities, particularly in the Americas, to meet growing demand. These strategic investments are aimed at enhancing the company’s operational efficiency and market responsiveness.
Technology and R&D Expansion
The company plans to increase its engineering and R&D spending by over 20% in 2026. This expansion is intended to maintain Vertiv’s technology leadership and expand its capabilities, ensuring continued innovation and competitiveness.
EMEA Sales Decline
Sales in the EMEA region declined by 4% due to power availability and regulatory challenges. A reacceleration in this region is not expected until the second half of 2026, posing a challenge for Vertiv’s growth in this market.
Tariff and Supply Chain Challenges
Tariffs remain a dynamic challenge for Vertiv, but the company is actively addressing these issues with mitigation actions. Operational inefficiencies driven by supply chain actions are also being tackled to improve overall efficiency.
EMEA Margin Pressure
The EMEA region experienced significant margin pressure, with adjusted operating margins falling below the prior year. This was driven by deleverage on lower sales and higher fixed costs, highlighting the need for strategic adjustments in this region.
Forward-Looking Guidance
Looking ahead, Vertiv is well-positioned for continued growth, as evidenced by its raised full-year guidance. The company has a solid backlog of $9.5 billion, which supports its optimistic outlook. Key forecasts include increased adjusted EPS, net sales, adjusted operating profit, and adjusted free cash flow, reflecting confidence in sustained financial performance.
In summary, Vertiv Holdings Co’s earnings call conveyed a strong overall sentiment of growth and profitability, with strategic investments paving the way for future success. While challenges in the EMEA region and tariff impacts pose hurdles, the company’s robust financial performance and raised guidance underscore its resilience and potential for continued expansion.