Vertiv Q2 2021 Earnings Report
Key Takeaways
Vertiv reported a strong second quarter with a 25% increase in net sales and a record backlog of $2.3 billion. The company raised its full year guidance for sales, adjusted operating profit, and adjusted diluted earnings per share.
Diluted earnings per share increased $0.20 and adjusted diluted earnings per share increased $0.15 from last year’s second quarter.
Net sales growth of 25% and organic net sales growth of 20% from last year’s second quarter, with double-digit sales growth in all regions.
Record backlog of $2.3 billion at the end of June. Order growth of 24% compared to prior year’s second quarter.
Operating profit increased $32 million, or 45%, and adjusted operating profit increased $31 million, or 30%, from last year’s second quarter. Adjusted operating margin of 10.6%, up 40 basis points.
Vertiv
Vertiv
Vertiv Revenue by Geographic Location
Forward Guidance
End-market demand remains robust, and Vertiv is increasing its full year net sales guidance to 14% growth at the midpoint (12% organic growth). The company is raising the midpoint of its full year adjusted operating profit guidance to $600 million.
Positive Outlook
- Increasing full year net sales guidance to 14% growth at the midpoint (12% organic growth).
- Raising the midpoint of full year adjusted operating profit guidance to $600 million.
- Implemented additional pricing actions to help offset inflation and supply-chain challenges.
- Fixed cost reductions to help offset inflation and supply-chain challenges.
- Expect pricing to ramp-up as we progress through 2021 and to completely offset gross material and freight inflation within the fourth quarter.
Challenges Ahead
- Material inflation continues to be a challenge.
- Supply-chain challenges continue to be a challenge.
- The full year guidance includes the expected negative net impact in the remainder of the year of current commodity and freight costs.
- Price recovery typically lags inflation.
- Net cash provided by operating activities of $59 million in the second quarter was $14 million lower than last year’s second quarter, and free cash flow of $41 million was down $21 million in part due to incremental inventory investment in the second quarter in response to the challenging supply chain environment, the timing of cash tax payments and higher year-over-year investment in growth-related capital expenditures.
Revenue & Expenses
Visualization of income flow from segment revenue to net income