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# Vertiv Holdings Co (VRT) — Business, Risks and Management's Discussion Covers the fiscal year ended December 31, 2025 and the second quarter ended June 30, 2026, plus events disclosed through September 24, 2026. Dollar amounts are as reported by the company in US dollars. ## Business *Source: Annual Report on Form 10-K for the fiscal year ended December 31, 2025, accession 0001674101-26-000008.* Vertiv designs, manufactures, installs and services the power and cooling infrastructure that keeps data centers, communication networks and commercial and industrial facilities running. Its products cover AC and DC power management, single-phase UPS, low- and medium-voltage switchgear and busbar, air-cooled and liquid-cooled thermal management, racks and rack power distribution, integrated and prefabricated modular solutions, energy storage, and software for managing IT equipment. It sells them mainly to data center operators: hyperscale/cloud (Microsoft, Amazon Web Services and Google Cloud are the examples it names), colocation (Digital Realty, Equinix), "neocloud" AI-infrastructure providers (CoreWeave, Nebius) and enterprises. Revenue comes from two sources: product sales, and a services & spares business covering preventive maintenance, acceptance testing, remote monitoring, specialized fluid management, spare parts and software. Net sales were $10.23 billion in 2025, up 27.7% from $8.01 billion in 2024. Brands include Vertiv, Liebert, NetSure, Geist, Energy Labs, ERS, Albér and Avocent. The company reports three geographic segments, each selling the same portfolio: - **Americas** — 62% of 2025 net sales (56% in 2024), and the engine of growth: segment sales rose 41.9% to $6.39 billion. - **Asia Pacific** (Greater China, India and the rest of Asia, aggregated) — 20% of 2025 net sales. - **Europe, Middle East & Africa** — 18% of 2025 net sales, down from 22% in 2024. Demand is running well ahead of what Vertiv can deliver. Estimated order backlog was $15.0 billion at December 31, 2025, against $7.2 billion a year earlier, and the company describes most of it as firm and due to ship within 12 to 18 months. It also cautions that orders can be cancelled or rescheduled and that backlog does not necessarily indicate future sales. The other end markets grow more slowly. The company describes communication networks as a low-single-digit-growth market tied to telecom capital spending, and commercial and industrial demand as broadly tracking GDP. It describes enterprise data center growth as generally flat for the past three years. Vertiv sells mainly through its own salesforce of about 3,000 people, supported by channel partners, distributors, IT resellers and OEMs. Its service network has more than 300 service centers, about 5,000 field service engineers and about 400 technical support staff, and the company reports a first-time fix rate above 90% on emergency site visits. It competes with large global players (Schneider Electric, Eaton, Legrand, Huawei) and with offering-specific rivals (Delta Electronics, Stulz, Johnson Controls, Socomec). The company says competition turns on reliability, quality, price, service and customer relationships. Spending on engineering, research and development was $441.7 million in 2025. Vertiv employed about 34,000 people at year-end 2025, roughly 41% of them in manufacturing, and held about 3,000 registered patents. Capacity expansion and acquisitions are central to the strategy. Since late 2021 Vertiv has more than doubled its manufacturing capacity for switchgear, busbar and integrated power solutions. It opened a thermal manufacturing site and test laboratory in Pune, India, and a 215,000-square-foot modular-solutions plant in Pelzer, South Carolina, both in 2024. Two acquisitions closed in 2025: - **Great Lakes Data Racks & Cabinets** — closed August 20, 2025, for total consideration of $203.5 million, adding racks, cabinets and integrated white-space infrastructure. - **Purge Rite Intermediate, LLC (PurgeRite)** — closed December 4, 2025, adding fluid-management services for liquid-cooled systems. Consideration transferred was $1,138.3 million net of $14.4 million of cash acquired. Gross consideration was $1,152.7 million: $1,003.5 million in cash, $139.2 million of contingent consideration and $10.0 million other. Up to $250.0 million more is payable if PurgeRite meets post-closing performance targets (Great Lakes and PurgeRite deal terms as stated in the Q2 2026 10-Q, accession 0001628280-26-050609). The 10-K also names partnerships with NVIDIA (power and thermal designs for next-generation AI compute), Oklo (alternative energy for data centers) and Caterpillar (distributed power generation). Vertiv traces its roots to Liebert, which built the industry's first computer-room air conditioner. The business later became Emerson Network Power, was spun off from Emerson in 2016 and listed on the NYSE in February 2020 through a combination with the special purpose acquisition company GS Acquisition Holdings Corp. VPE Holdings, an affiliate of Platinum Equity and a stockholder from before the listing, sold its remaining shares in February 2024. Headquarters are in Westerville, Ohio. ## Risk factors *Source: FY2025 Form 10-K, accession 0001674101-26-000008; updated by the Q2 2026 Form 10-Q, accession 0001628280-26-050609.* The risks most specific to Vertiv's business: - **Dependence on data center build-outs.** Most of the business depends on continued growth in data center and communication infrastructure. The company names several things that could cut demand: a shift in the level or focus of AI spending, customers building more capacity than they need, permitting delays, local zoning decisions, community opposition and moratoria on data center construction. - **Lumpy, large orders.** Big deployments have long and unpredictable procurement cycles. Some customers place large orders at short notice and others cancel, so revenue and margins can swing from quarter to quarter. - **Backlog may not convert.** Customers can, in some cases, cut or defer firm orders in the $15.0 billion backlog. Because the backlog is so large, price changes also take longer to show up in results. Recently acquired businesses bring contracts with different cancellation terms. - **Customer concentration and bargaining power.** Large hyperscale, neocloud, colocation and telecom customers make up a material part of the base. They can demand better terms, tougher delivery and service-level commitments, and substantial penalties for late or faulty delivery. These pressures can delay cash collection and push more project risk onto Vertiv. - **Fixed-price and turnkey contracts.** Contracts lasting more than a year expose Vertiv to cost overruns, component shortages, scope changes, subcontractor failures and late-completion penalties. - **Supply chain and input costs.** The company depends on steel, copper, aluminum and electronic components, some from single-source suppliers. Vertiv acknowledges that it has in the past underestimated inflation and tariff costs, and those increases were not immediately reflected in its prices. Failing to scale production to meet rising demand could trigger liquidated damages, lost share and damaged customer relationships. Holding more inventory, meanwhile, raises the risk of obsolescence write-offs. - **Technology shifts and competition.** Customers may move to new power architectures, cooling technologies or energy storage. Well-resourced competitors, some partnered elsewhere in the digital-infrastructure value chain, could adapt faster. Low-cost manufacturers in China and India could become competitors in emerging and established markets. - **Tariffs and trade policy.** Tariffs have already raised the cost of products made in or imported into the U.S. Further tariffs, retaliatory measures, export controls and possible Chinese restrictions on rare earth elements could raise costs further or cut access to suppliers and customers. Vertiv may not be able to pass these costs on. - **Acquisition execution.** Vertiv is acquiring at a high rate. Integration failures, missed synergies, transaction costs, intangible amortization and impairments could all hurt results. At year-end 2025, goodwill and net intangible assets totaled $3.93 billion, about 32% of total assets. - **Global operations.** Vertiv operates in more than 40 countries, including emerging markets. That brings exposure to war and sanctions (the 10-K cites the Middle East conflict and the Russia-Ukraine war), FCPA and anti-corruption compliance, data-privacy regimes such as GDPR and China's PIPL, Pillar Two global minimum tax rules and tax audits, and currency swings, chiefly from a stronger dollar. - **Product failure and cyber risk.** The company says defects in complex equipment could lead to recalls, warranty and product-liability claims, and reputational damage. Breaches of its own IT systems, or vulnerabilities in connected products, could disrupt operations or harm customers. - **Debt covenants.** The Q2 2026 10-Q updated this risk after the March 2026 refinancing. The new $2.5 billion unsecured revolving credit facility caps the consolidated leverage ratio at 4.00x. Vertiv can elect a step-up to 4.50x for four quarters after an acquisition involving at least $750 million of cash consideration. The notes indentures restrict, among other things, liens and mergers. A breach could trigger cross-defaults and acceleration. Other risks the company lists include past material weaknesses in internal control (control was assessed as effective at December 31, 2025), dependence on access to capital markets, and retaining key executives, including the executive chairman. Anti-takeover provisions and an exclusive-forum clause in its charter also apply. As a holding company, Vertiv depends on its subsidiaries' ability to pay dividends. ## Management's discussion — fiscal 2025 *Source: FY2025 Form 10-K, Item 7, accession 0001674101-26-000008.* In 2025 net sales grew 27.7% to $10.23 billion, and operating profit rose 33.8% to $1.83 billion. Management attributed the sales gain mainly to higher volumes; foreign currency added $49.6 million. Products contributed $1,961.8 million of the increase and services & spares $256.3 million. Gross margin was 36.3%, against 36.6% in 2024. Volume gains and better pricing were offset by cost inflation, particularly tariffs. SG&A grew more slowly than sales: it rose 17.7% to $1,617.8 million, mostly on compensation, falling from 17.1% to 15.8% of sales. Restructuring costs rose by $49.2 million to $54.5 million. Net interest expense fell to $86.1 million from $150.4 million on higher interest income and the term-loan amendments. Net income was $1,332.8 million, up from $495.8 million. The 2024 figure had been reduced by a $449.2 million loss on the change in fair value of warrant liabilities; no warrants were outstanding at either year-end. Income tax expense rose to $409.1 million on higher earnings, changes in non-U.S. tax holidays and incentives, and valuation-allowance movements. The segments diverged sharply: - **Americas**: sales up 41.9% to $6,386.3 million and operating profit up 56.2% to $1,714.3 million, on broad-based product strength, mix and operating leverage. - **Asia Pacific**: sales up 17.5% to $2,019.2 million and operating profit up 26.8% to $222.1 million. - **Europe, Middle East & Africa**: sales up just 1.7% to $1,824.4 million, a gain that came entirely from $67.4 million of favorable currency. Operating profit fell 14.1% to $377.4 million on mix, operational inefficiencies and capacity added ahead of demand. - **Corporate and other costs** rose to $283.7 million from $160.8 million, driven by restructuring and employee-related costs. Operating cash flow was $2,113.8 million, up $794.5 million, helped by $339.3 million from trade working capital. Investing outflows of $1,500.8 million were dominated by $1,184.8 million spent on acquisitions, mainly PurgeRite. Capital expenditures, including capitalized software, were $226.4 million. Financing outflows fell to $72.3 million, mainly because share repurchases were $599.9 million lower than in 2024. At year-end Vertiv held $1,728.4 million of cash and $99.5 million of short-term investments. Debt consisted of $850.0 million of senior secured notes due 2028 and a $2,076.1 million term loan due 2032, and the $800.0 million asset-based revolver was undrawn. Management guided 2026 capital expenditures of $425 million to $525 million. ## Current quarter — Q2 2026 (three months ended June 30, 2026) *Source: Form 10-Q for the quarter ended June 30, 2026, accession 0001628280-26-050609; guidance, non-GAAP measures and the three-month operating cash flow from the earnings release furnished on Form 8-K, accession 0001628280-26-050323 (the first-quarter guidance compared below, and the February 2026 credit ratings, are from the first-quarter earnings release, accession 0001628280-26-026379).* **Results.** Net sales were $3,274.3 million, up 24.1% from $2,638.1 million. That includes $129.7 million from acquisitions and $35.9 million of favorable currency; the company puts organic growth at 17.8%. Management said temporary supply-chain congestion and the phased execution of large multi-stage projects shifted some revenue out of the quarter. Gross margin widened to 37.7% from 34.0% on product and service mix. Operating profit rose 44.2% to $637.9 million, which absorbed a $26.8 million increase in intangible amortization. It also absorbed a $28.8 million loss on the change in fair value of the PurgeRite contingent consideration. Net income rose 53.5% to $497.8 million and diluted EPS to $1.27 from $0.83. Discrete stock-compensation tax benefits lowered the effective tax rate to 19.7%. On the company's adjusted basis, operating profit was $738.4 million, a 22.6% margin up 410 basis points, and adjusted diluted EPS was $1.52, up 60%. Management credited execution, productivity and favorable price-cost net of tariffs. **By region (second quarter):** - **Americas**: sales up 29.2% to $2,070.8 million (21.1% organic); services & spares rose 43.8%, mostly from acquisitions. Operating margin widened to 27.6% from 24.0%. - **Asia Pacific**: sales up 28.5% to $719.9 million (25.7% organic); operating margin rose to 13.3% from 10.6%. - **Europe, Middle East & Africa**: sales up 1.7% to $483.6 million but down 2.4% organically. Operating margin still improved to 25.7% from 21.9% on better project execution. Over the first half, EMEA sales fell 8.4% (down 14.8% organically) on softer demand, concentrated in the first quarter. **Cash and balance sheet.** Operating cash flow was $1,099.8 million in the quarter and $1,866.6 million in the half. Trade working capital provided $678.8 million in the half, driven primarily by deferred revenue: current deferred revenue roughly doubled to $3,633.7 million from $1,814.7 million at year-end. Inventories rose to $2,522.7 million from $1,456.5 million. Adjusted free cash flow was $925.3 million for the quarter. At June 30, 2026, cash was $2,810.6 million and short-term investments $300.0 million, against long-term debt of $2,939.8 million. The company reported a net cash position and $5.6 billion of liquidity. Capital spending is accelerating: $288.5 million in the first half, including capitalized software, against $84.7 million a year earlier. Full-year guidance is now $550.0 million to $570.0 million, up from the $425 million to $525 million in the 10-K. Vertiv made no share repurchases in 2026; $2.4 billion remained available under its $3.0 billion authorization running through December 31, 2027. **Refinancing in the half.** Vertiv received its first investment-grade ratings in February 2026 (Moody's Baa3, S&P BBB-). On March 3, 2026 it issued $2.1 billion of senior unsecured notes in four tranches: - $600.0 million of 4.850% notes due 2036 - $500.0 million of 5.650% notes due 2046 - $500.0 million of 5.800% notes due 2056 - $500.0 million of 5.950% notes due 2066 The proceeds and cash on hand repaid the secured term loan in full. A new $2.5 billion unsecured revolving credit facility, maturing five years from March 3, 2026, replaced the $800.0 million asset-based revolver. The company booked a $6.2 million loss on extinguishment and settled its interest-rate swaps. The $850.0 million of 4.125% senior secured notes due 2028 remain outstanding. **Acquisitions in the quarter.** Three deals closed: - **BMarko Structures, LLC** — closed April 10, 2026; custom-engineered structural fabrication, based in Williamston, South Carolina. - **Strategic Thermal Labs, LLC** — closed April 24, 2026; cold-plate and server-side liquid cooling. - **ThermoKey S.p.A.** — closed June 11, 2026; heat rejection and heat exchangers, based in Rivarotta, Italy. Prices were not disclosed individually. Together they cost $331.8 million net of $4.7 million cash acquired. Gross consideration was $336.5 million: $278.1 million in cash, $28.5 million of contingent consideration and $29.9 million other. Up to $35.0 million more is payable on one of the deals if specified conditions are met. **Other developments.** In February 2026 the U.S. Supreme Court invalidated tariffs imposed under the International Emergency Economic Powers Act (IEEPA). Vertiv has started filing refund claims, but the amount and timing are uncertain and no gain has been recognized. The 2022 securities class action is still pending a ruling on the motion to dismiss the remaining Exchange Act claims, and the consolidated shareholder derivative suit in Delaware remains stayed. **Guidance.** On July 29, 2026, Vertiv raised its full-year targets for the second straight quarter. All figures except net sales and diluted EPS are the company's non-GAAP measures. | Full year 2026 | Guidance on July 29, 2026 | Guidance on April 22, 2026 | |---|---|---| | Net sales | $13,800M – $14,200M | $13,500M – $14,000M | | Organic net sales growth | 30% – 32% | 29% – 31% | | Adjusted operating profit | $3,285M – $3,365M | $3,140M – $3,260M | | Adjusted operating margin | 23.3% – 24.3% | 22.8% – 23.8% | | Diluted EPS | $5.82 – $5.92 | $5.60 – $5.70 | | Adjusted diluted EPS | $6.65 – $6.75 | $6.30 – $6.40 | | Adjusted free cash flow | $2,400M – $2,600M | $2,100M – $2,300M | For the third quarter, the company guided to net sales of $3,650 million to $3,850 million (34% to 36% organic growth), adjusted operating profit of $898 million to $938 million (a 24.0% to 25.0% margin) and adjusted diluted EPS of $1.77 to $1.83. ## Subsequent events *Sources: Forms 8-K, accessions 0001193125-26-379306 (September 2, 2026) and 0001628280-26-063311 (September 24, 2026). The Q2 2026 10-Q (accession 0001628280-26-050609) does not contain a subsequent-events note.* After the quarter, Vertiv agreed to two further acquisitions: - **Agreement to acquire UtilityInnovation Group (September 1, 2026).** Vertiv Corporation agreed to acquire Utility Innovation Holdings, Inc. (UtilityInnovation Group, or UIG) by merger. UIG designs microgrid controls, microgrid switchgear, energy storage and behind-the-meter power systems for data centers. The price is about $1.45 billion in cash at closing, subject to customary adjustments for working capital, debt and transaction expenses. Up to $1.15 billion more in cash is payable in two tranches if UIG hits EBITDA targets over 12- and 24-month periods. Vertiv put the upfront price at about 13 times UIG's expected 2027 EBITDA, expects the deal to add to adjusted EPS in its first year, and plans to pay from existing resources. Closing requires Hart-Scott-Rodino clearance and other customary conditions and is expected in the fourth quarter of 2026. UIG was founded in 2020 and is based in Raleigh, North Carolina, with European headquarters in Dublin and manufacturing in North Carolina and New Jersey. - **Agreement to acquire King Environmental Services Ltd. (September 24, 2026).** A Vertiv subsidiary agreed to buy King Environmental Services (KES), a fluid-management, commissioning and load-testing specialist for liquid-cooled data centers. KES was founded in 2002, is based near Dublin, Ireland, and also operates from Frankfurt. Vertiv presents it as carrying into EMEA the fluid-management services it built in North America, including through PurgeRite. Terms were not disclosed, and the company says the deal is not expected to be material to its results. Closing is expected in the fourth quarter of 2026. As of the latest filing covered here (September 24, 2026), neither the UIG nor the KES acquisition had been reported as completed.