• Adjusted Earnings Per Share (EPS): $0.99, a 77% increase versus prior year.
• Q4 Organic Sales Growth: 27% overall, with over 20% growth in Americas and APAC, and over 30% in EMEA.
• Adjusted Operating Profit: $504 million, with an adjusted operating margin of 21.5%, up 380 basis points from the prior year.
• Adjusted Free Cash Flow: $362 million in Q4 and over $1.1 billion for the full year.
• Net Leverage: Reduced to 1x by year-end.
• Share Repurchase: $600 million deployed in 2024.
• Dividend Increase: 50% increase announced.
• R&D Investment: Increased by $50 million in 2024.
• 2025 Sales Guidance: Approximately $9.2 billion midpoint, $75 million higher than previous guidance.
• Trailing 12-Month Order Growth: 30%, with America's orders up over 50%.
• Backlog: Up 30% year on year, with a backlog to sales ratio of 78%.
• Full Year 2024 Adjusted EPS: $2.85, a 61% increase from prior year.
• Full Year 2024 Organic Sales Growth: 18% across all regions.
• Full Year 2024 Adjusted Operating Margin: 19.4%, up 410 basis points from 2023.
• Full Year 2024 Adjusted Free Cash Flow: Over $1.1 billion, with a conversion of 103%.
• 2025 Adjusted EPS Guidance: $3.55 at the midpoint, 25% higher than 2024.
• 2025 Adjusted Operating Profit Guidance: $1.935 billion, up 25% from 2024.
• 2025 Adjusted Free Cash Flow Guidance: $1.3 billion at the midpoint.

• Warning! GuruFocus has detected 8 Warning Signs with KLPEF.

Release Date: February 12, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Vertiv Holdings Co (NYSE:VRT) significantly exceeded its sales guidance for the fourth quarter, translating into strong EPS and cash flow growth.
• The company reported a 77% increase in adjusted earnings per share, reflecting substantial profitability improvements.
• Organic sales growth was robust across all regions, with a 27% increase in Q4 and strong performance in the Americas, APAC, and EMEA.
• Vertiv Holdings Co (NYSE:VRT) reduced its net leverage to 1x, ending the year with a strong balance sheet, providing flexibility for capital deployment.
• The company increased its R&D investment by $50 million, focusing on technology and new products to maintain a competitive edge.

Negative Points

• There was noted weakness in EMEA orders in Q4, attributed to project timing shifts to 2025, impacting overall order growth.
• Despite strong sales, the company faces foreign exchange headwinds, which are expected to impact financial results in 2025.
• Concerns were raised about the disconnect between Vertiv Holdings Co (NYSE:VRT)'s order growth and the significant CapEx increases reported by its customers.
• The company is facing uncertainties related to potential tariff impacts, which could affect its supply chain and cost structure.
• There is a cautious outlook for China due to broad economic uncertainties, despite recent growth in the region.

Q & A Highlights

Q: Gio, you mentioned the timing of orders in EMEA influenced your Q4 result. Can you give us more color on the European weaknesses? Do you expect to see improved orders in Europe at some point in '25? A: We saw a movement in EMEA that was significant enough to mention. I'm encouraged by the pipelines we see in EMEA, although AI adoption is lagging compared to North America. Despite regulatory challenges, we expect a pickup in orders during 2025, supported by robust pipelines.

Q: How do you see Vertiv's opportunity longer term if inferencing gets pulled in more quickly and custom silicon is deployed in AI clusters? A: We are agnostic to whether it's inference or training. An acceleration of AI adoption can only be beneficial for Vertiv. We have a strong presence in both edge and enterprise markets. Regarding custom silicon, we work well with Nvidia, but we are prepared for high-density and high-power environments regardless of the silicon provider.

Q: Can you explain the revenue timing perspective for Q1, which seems to be down more than normal seasonality? A: We should look at Q1 in absolute terms, not quarter-to-quarter. We have a strong quarter with 19% organic growth, indicating a positive trajectory. The first quarter sales as a percentage of the full year guide are higher than last year, reflecting a step-up in 2025.

Q: There seems to be a disconnect between your revenue growth and customer spending. Can you explain this? A: I don't think there is a disconnect. Our order trajectory last year showed significant growth. Customer CapEx includes silicon, not just data centers. We have good market visibility and are winning in the market, so we don't see a disconnect.

Q: Can you comment on the tariff playbook and your exposure to US manufacturing? A: We don't disclose specific product locations, but we have more plants in the US than in Mexico. We have playbooks to minimize tariff impacts and feel prepared to handle potential changes. It's premature to speculate on exact impacts without more information.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.