Vertiv Holdings Co ((VRT)) has held its Q4 earnings call. Read on for the main highlights of the call.
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The recent earnings call for Vertiv Holdings Co showcased a robust financial performance in 2024, marked by substantial increases in EPS, sales growth across multiple regions, and impressive free cash flow. The company has fortified its balance sheet and is poised for a promising 2025, despite some concerns regarding order volatility and potential tariff impacts. Overall, the sentiment was optimistic, with confidence in future growth despite some challenges.
Significant Increase in Adjusted EPS
Vertiv Holdings Co reported a notable increase in adjusted earnings per share (EPS) for the fourth quarter, reaching $0.99, which represents a 77% increase compared to the previous year. For the full year 2024, the adjusted EPS was $2.85, marking a 61% increase from the prior year. This significant rise underscores the company’s strong profitability and operational efficiency.
Strong Organic Sales Growth
The company achieved a 27% organic sales growth in the fourth quarter, with the Americas and APAC regions experiencing over 20% growth, and EMEA exceeding 30%. For the entire year of 2024, organic sales grew by 18% across all regions, highlighting the company’s successful market strategies and demand for its solutions.
Robust Free Cash Flow
Vertiv reported adjusted free cash flow of $362 million in the fourth quarter, with over $1.1 billion generated throughout the year, achieving a conversion rate of 103%. This robust cash flow generation reinforces Vertiv’s financial health and its ability to invest in future growth opportunities.
Strong Balance Sheet and Capital Deployment
By year-end, Vertiv reduced its net leverage to 1x, reflecting prudent financial management. The company also completed $600 million in share repurchases in 2024 and increased its dividends by 50%. Additionally, Vertiv boosted its R&D investment by $50 million, underscoring its commitment to innovation.
Positive Market Outlook for 2025
Looking ahead, Vertiv projects an adjusted EPS for 2025 between $3.5 and $3.6, with anticipated sales of approximately $9.2 billion, despite facing foreign exchange headwinds. This optimistic outlook is driven by a strong backlog and continued market demand, particularly in the Americas.
Record Operating Margin Expansion
The company’s adjusted operating margin expanded by 380 basis points in the fourth quarter to 21.5%, and by 410 basis points for the full year to 19.4%. This record expansion indicates improved operational efficiency and cost management.
Orders Decline in EMEA
There was a noticeable decline in orders in the EMEA region during the fourth quarter due to shifting project activities to 2025. This resulted in a reduced growth outlook from high teens to high single digits for 2025.
Concerns Over Order Volatility
Despite strong order growth in the Americas, overall order growth was flat in the fourth quarter, raising concerns about volatility and alignment with customer capital expenditure trends. This highlights the need for strategic adjustments to manage order flow effectively.
Potential Tariff Impacts
The company is facing uncertainty regarding the impact of potential tariffs. Vertiv is actively engaged in strategic actions to mitigate these risks, ensuring minimal disruption to its operations and supply chain.
Guidance for 2025
In its forward-looking guidance, Vertiv Holdings Co anticipates robust performance in 2025, with projected sales of around $9.2 billion and adjusted EPS in the range of $3.5 to $3.6. The company is buoyed by a strong backlog, up 30% year on year, and anticipates continued strong market demand, particularly in the Americas where organic orders have grown by 50% over the trailing twelve months.
In conclusion, Vertiv Holdings Co’s earnings call highlighted a strong year in 2024 with substantial growth across key financial metrics. While there are concerns regarding order volatility and tariff impacts, the company remains optimistic about its future, supported by a solid balance sheet and strategic initiatives aimed at sustaining growth.
