Vertiv Holdings Co Q2 FY2021 Earnings Call

· Earnings call transcript and AI-powered summary

Key Takeaways

  • Vertiv delivered another strong quarter with significant year-over-year growth driven by robust demand across cloud, colocation, and enterprise markets.
  • Q2 sales grew 25% versus Q2 2020, following 22% growth in Q1. Orders grew over 24%, marking the second consecutive quarter of 20%+ momentum.
  • Backlog reached a record $2.3 billion, reflecting strong pipeline activity and customer demand.
  • Adjusted operating profit rose 30% year-over-year to $134 million, supported by volume leverage and price actions.
  • Free cash flow year-to-date reached $84 million, up over $225 million from the first half of 2020.
  • Global supply chain constraints and inflation continue to pressure costs, with material, freight, and spot-buy inflation totaling more than $110 million in 2021.
  • Management raised 2021 guidance by $100 million in sales and $5 million in adjusted operating profit.

Financial Performance

  • Sales: Up 25% vs Q2 2020 (20% organic excluding FX).
  • Orders: Up 24%, reflecting strong demand across all regions.
  • Adjusted operating profit: $134 million (up $31 million YoY).
  • Margins: Adjusted operating margin expanded 40 basis points.
  • Free cash flow: Q2 FCF of $41 million; YTD $84 million (+$225 million YoY).
  • Liquidity: Record $1.1 billion; net leverage reduced to 2.2× (from 4× at SPAC close).

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Operator: Good morning. My name is Betsy, and I will be your conference operator today. At this time, I would like to welcome everyone to Vertiv's Second Quarter 2021 Earnings Conference Call. [Operator Instructions] Please note, this event is being recorded. I'll now turn the program over to your host for today's conference, Lynne Maxeiner, Vice President of Investor Relations. Lynne Maxeiner: Great. Thank you, Betsy. Good morning, and welcome to Vertiv's Second Quarter 2021 Earnings Conference Call. Joining me today are Vertiv's Executive Chairman, Dave Cote; Chief Executive Officer, Rob Johnson; Chief Financial Officer, David Fallon; and Chief Strategy and Development Officer, Gary Niederpruem. Before we begin, I point out that during the course of the call, we will make forward-looking statements regarding future events, including the future financial and operating performance of Vertiv. These forward-looking statements are subject to material risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements. We refer you to the cautionary language included in today's earnings release, and you can learn more about these risks in our registration statement, our proxy statement and other filings with the SEC. Any forward-looking statements that we make today are based on assumptions that we believe to be reasonable as of this date. We undertake no obligation to update these statements as a result of new information

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