Vertiv Raises Outlook as Profit Growth Outpaces Sales
Adjusted operating margin reached 22.6%, topping the company’s previous guidance.
Vertiv Holdings (VRT), a data-center infrastructure supplier, raised its full-year outlook after second-quarter adjusted operating profit grew 51% to $738 million, exceeding the company’s guidance range.
The quarter extended Vertiv’s profit expansion even as its sales trajectory moderated. Revenue grew 24% year over year, down from 30% in the first quarter, while organic growth slowed to 18% from 23%. Acquisition contribution increased to 5%, cushioning slower underlying growth and a smaller currency benefit.
Net sales rose to $3.274 billion from $2.650 billion in the first quarter, an increase of $624 million. Diluted earnings rose 53% to $1.27 a share, while adjusted earnings increased 60% to $1.52 a share. Both measures grew more slowly than in the first quarter, though adjusted earnings still exceeded the prior guidance high of $1.43 a share.
Margins continued to widen. Adjusted operating profit increased sequentially from $551 million, and adjusted operating margin expanded 180 basis points from the first quarter. Operating cash flow climbed to $1.100 billion, while adjusted free cash flow reached $925 million, with year-over-year growth accelerating to 241% and 234%, respectively.
Growth varied by region. Americas sales rose 29.2% and Asia-Pacific sales increased 28.5%, while Europe, the Middle East and Africa grew 1.7% and declined 2.4% organically. All three regions expanded adjusted operating margins, led by the Americas at 27.6%. Services and spares outpaced products, rising 28.6% to $667.9 million, with Americas services and spares up 43.8%.
Vertiv now expects full-year sales of $13.8 billion to $14.2 billion, raising the midpoint by $250 million to $14.0 billion. It projects organic sales growth of 30% to 32%, one percentage point higher at both ends, and adjusted diluted earnings of $6.65 to $6.75 a share, up $0.35 across the range.
Temporary supply-chain congestion and increasingly large, complex multi-phase projects caused minor revenue-timing shifts during the quarter. Even with those constraints, Vertiv moved from net leverage of about 0.2 times at the end of the first quarter to a net cash position, while liquidity increased to $5.6 billion.
Vertiv also expanded its thermal-management business by acquiring Strategic Thermal Labs for chip-level and server-side liquid-cooling expertise and ThermoKey for heat-rejection technology and additional manufacturing capacity in Europe. Those deals broadened the company’s cooling portfolio as larger project deployments placed greater demands on execution.