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What changed in Vertiv Holdings Co's 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of Vertiv Holdings Co's 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+268 added−287 removedSource: 10-K (2025-02-18) vs 10-K (2024-02-23)

Top changes in Vertiv Holdings Co's 2024 10-K

268 paragraphs added · 287 removed · 216 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

56 edited+15 added−17 removed41 unchanged
Biggest changeOur progress to date includes: • Appointed the following women executives in recent years to lead their respective functions — Sheryl Haislet, Chief Information Officer; Stephanie Gill, Chief Legal Counsel and Corporate Secretary; Cheryl Lim, Chief Human Resources Officer; and Rachel Thompson, VP of Corporate Strategy and Planning • Establishing employee-led, executive leadership team-sponsored, Employee Resource Groups (ERGs) to provide opportunities for personal and professional growth, networking, mentorship, and community outreach for individuals with shared backgrounds or experiences. 11 Table of contents Employee Safety We believe a safe and healthy workplace is essential to flourish as a business.
Biggest changeOne of the best success cases includes establishing employee-led, executive leadership team-sponsored, Employee Resource Groups open to all employees and that are intended to provide opportunities for personal and professional growth, networking, mentorship, and community outreach. 11 Table of contents Employee Safety A safe and healthy workplace is essential to flourish as a business, and accordingly, safety is one of Vertiv’s core principles.
This portion of the industry is growing rapidly with drivers such as adoption of cloud based data services and artificial 7 Table of contents intelligence workloads.
This portion of the industry is growing rapidly with drivers such as adoption of cloud based 7 Table of contents data services and artificial intelligence workloads.
Regular service of critical equipment supports maximum uptime and often reduces total cost of ownership for customers. We provide full support of critical digital infrastructures when and where our customers need us. Vertiv services are used primarily in data centers, communications facilities, government agencies and industrial plants.
Regular service of critical equipment supports maximum uptime and often reduces total cost of ownership for customers. We provide full support of critical digital infrastructures when and where our customers need us. Vertiv services are used primarily in data centers, communications facilities, government agencies, utilities, and industrial plants.
This training, known as VOS Academy, is offered virtually for salaried employees and all hourly employees receive training at our global manufacturing sites Our Strategy We are committed to attracting, hiring and developing the best and brightest talent and focus significant resources on supporting and managing our diverse global employee population.
This training, known as VOS Academy, is offered virtually for salaried employees and all hourly employees receive training at our global manufacturing sites Our Strategy We are committed to attracting, hiring and developing the best and brightest talent and focus significant resources on supporting and managing our global employee population.
Our offerings include: • Finance, Sales, Engineering, and Field Services Leadership Development Rotational Programs for early-career employees based in the Americas, India, or Europe, Middle-East, and Africa reporting units • Specialized partnership programs with local universities in India for high-potential engineers to earn a post-secondary baccalaureate and/or a graduate degree 10 Table of contents • Programs for identified high-potential leaders in early-, mid-, senior-, and leadership-ready positions across multiple functions globally that focus on training in the areas of operational and strategic thinking, offers the opportunity to participate and lead global projects, and obtain global networking & visibility to executive leadership • Specialized training for employees based in our support hubs, located in the Philippines and Romania, around key business skills including customer service, finance fundamentals and customer service mindset • VOS training is delivered globally.
Our offerings include: • Finance, Human Resources, Sales, Engineering, and Field Services Leadership Development Rotational Programs for early-career employees based in the Americas, Asia, India, or Europe, Middle-East, and Africa reporting units • Specialized partnership programs with local universities in India for high-potential engineers to earn a post-secondary baccalaureate and/or a graduate degree • Programs for identified high-potential leaders in early-, mid-, senior-, and leadership-ready positions across multiple functions globally that focus on training in the areas of operational and strategic thinking, offers the opportunity to participate and lead global projects, and obtain global networking & visibility to executive leadership • Specialized training for employees based in our support hubs, located in the Philippines, India, and Romania, around key business skills including customer service, finance fundamentals and customer service mindset 10 Table of contents • VOS training is delivered globally.
Services & spares Global services include both pre-sale and faster-sales services, for example, preventative maintenance, project management, acceptance testing, engineering and consulting, performance assessments, remote monitoring, training, spare parts, and critical digital infrastructure software. We provide consistent service delivery for critical facilities in all regions of the world with service provided by knowledgeable, local specialists.
Services & spares Global services include both pre-sale and after-sales services, for example, preventative maintenance, project management, acceptance testing, engineering and consulting, performance assessments, remote monitoring, training, spare parts, and critical digital infrastructure software. We provide consistent service delivery for critical facilities in all regions of the world with service provided by knowledgeable, local specialists.
The Vertiv Stockholder and certain other RPA Parties, including an entity controlled by our Chairman (the "Cote Sponsor Member") is entitled to make up to two demand registrations in any 12 month period in connection with an underwritten shelf takedown offering, in each case subject to certain offering thresholds, applicable lock-up restrictions and certain other conditions.
The Vertiv Stockholder and certain other RRA Parties, including an entity controlled by our Chairman (the "Cote Sponsor Member") is entitled to make up to two demand registrations in any 12 month period in connection with an underwritten shelf takedown offering, in each case subject to certain offering thresholds, applicable lock-up restrictions and certain other conditions.
Upon the written request of any record holder or beneficial owner of Common Stock entitled to vote at the Annual Meeting, we will, without charge, provide a copy of our Annual Report, including the financial statements and the financial statement schedules, for the fiscal year ended December 31, 2023, as filed with the SEC.
Upon the written request of any record holder or beneficial owner of Common Stock entitled to vote at the Annual Meeting, we will, without charge, provide a copy of our Annual Report, including the financial statements and the financial statement schedules, for the fiscal year ended December 31, 2024, as filed with the SEC.
Our global product leaders manage global product lines and engineering organizations with the goal to remain ahead of market trends by leveraging input from our regions and customers. These global groups are also supported by in-region product and engineering teams which are responsible for understanding and adapting our offerings to local market and customer requirements.
Our global product leaders manage global product lines and engineering organizations with the goal to remain ahead of market trends by leveraging input from our regions, technology partners, and customers. These global groups are also supported by in-region product and engineering teams which are responsible for understanding and adapting our offerings to local market and customer requirements.
The backlog consists of product and services for which a customer purchase order or purchase commitment has been received and which has not yet been delivered. Orders may be subject to cancellation or rescheduling by the customer. The following table shows estimated backlog by business segment at December 31, 2023 and 2022, respectively.
The backlog consists of product and services for which a customer purchase order or purchase commitment has been received and which has not yet been delivered. Orders may be subject to cancellation or rescheduling by the customer. The following table shows estimated backlog by business segment at December 31, 2024 and 2023, respectively.
In addition, the Stockholders Agreement provides that so long as we have either of the Executive Chairman or the Chief Executive Officer as a named executive officer, we shall take certain actions to include such Executive Chairman or the Chief Executive Officer on the slate of nominees recommended by the Board of Directors for election.
The Stockholders Agreement provides that so long as we have either of the Executive Chairman or the Chief Executive Officer as a named executive officer, we shall take certain actions to include such Executive Chairman or the Chief Executive Officer on the slate of nominees recommended by the Board of Directors for election.
Examples of companies in this space include Microsoft Azure, Amazon Web Services, and Google Cloud. • Colocation: These facilities range in size and offer clients a location where they can place their information technology (“IT”) equipment, while the building and critical digital infrastructure is owned by the colocation company. This portion of the industry is on a rapid growth trajectory.
Examples of companies in this space include Microsoft, Amazon Web Services, and Google Cloud. • Colocation: These facilities range in size and offer clients a location where they can place their information technology (“IT”) equipment, while the building and critical digital infrastructure is owned by the colocation company. This portion of the industry is on a significant growth trajectory.
Approximately 31% of our employees are in our manufacturing operations. Our Culture Our high-performance culture creates an environment where employees are empowered to collaborate, learn, and teach others through their experiences.
Approximately 41% of our employees are in our manufacturing operations. Our Culture Our high-performance culture creates an environment where employees are empowered to collaborate, learn, and teach others through their experiences.
We are subject to a broad range of foreign and domestic environmental, health and safety laws, regulations and requirements, including those relating to the discharge of regulated materials into the environment, the generation and handling of hazardous substances and wastes, human health and safety and the content, composition and takeback of our products.
We are subject to a broad range of foreign and domestic environmental, health and safety laws, regulations and requirements, including those relating to the discharge of regulated materials into the environment, the generation and handling of hazardous substances and wastes, human health and safety and the content, composition and take back of our products.
There are a host of different sizes and types of data centers, but primarily they can be broken down into the following classifications: • Cloud/Hyperscale: These facilities are massive in scale and are primarily used to support cloud applications.
There are a host of different sizes and types of data centers, but primarily they can be broken down into the following classifications: • Cloud/Hyperscale: These facilities are massive in scale, can span multiple acres and are primarily used to support cloud applications.
There are five key characteristics that differentiates Vertiv’s customer service and support from competitors: • Expertise: For over 50 years, Vertiv’s long-tenured service personnel have been trusted advisors to industry leaders and companies of all sizes. • Reliability & Safety: We provide around the clock, direct access to more than 3,500 field services engineers and over 200 technical support team members. • Response Time: Vertiv boasts a first-time fix rate of more than 80% during site emergency visits, allowing customers to quickly gain assistance wherever and whenever. • Global Coverage : We provide a standardized support approach across the globe with more than 200 service centers, keeping our customer sites connected. • Broad Capabilities : Vertiv offers customers a complete lifecycle of capabilities such as project launch, remote monitoring, on-site project management, energy consumption management and preventive maintenance.
There are five key characteristics that differentiates Vertiv’s customer service and support from competitors: • Expertise: For over 50 years, Vertiv’s long-tenured service personnel have been trusted advisors to industry leaders and companies of all sizes. • Reliability & Safety: We provide around the clock, direct access to approximately 4,000 field services engineers and approximately 300 technical support team members. • Response Time: Vertiv boasts a first-time fix rate of more than 90% during site emergency visits, allowing customers to quickly gain assistance wherever and whenever. • Global Coverage : We provide a standardized support approach across the globe with more than 300 service centers, keeping our customer sites connected. • Broad Capabilities : Vertiv offers customers a complete lifecycle of capabilities such as project launch, remote monitoring, on-site project management, energy consumption management and preventive maintenance.
This Annual Report contains some of our trademarks, service marks and trade names, including, among others, Vertiv, Liebert, NetSure, Geist, Energy Labs, E&I, Albér, and Avocent.
This Annual Report contains some of our trademarks, service marks and trade names, including, among others, Vertiv, Liebert, NetSure, Geist, Energy Labs, ERS, Albér, and Avocent.
Our Offerings We design, manufacture and service critical digital infrastructure technology primarily for data centers, communication networks and commercial and industrial environments. Our principal offerings include: Critical infrastructure & solutions We identify delivery of products as performance obligations within the critical infrastructure & solutions offering.
Our Offerings We design, manufacture and service critical digital infrastructure technology primarily for data centers, communication networks and commercial and industrial environments. Our principal offerings include: Products We identify delivery of products as performance obligations.
Employee Development We also provide development and training programs for our employees, including new product training for our sales and services organizations, “Managing@Vertiv” for our management level employees, and “MyFirst90Days” for newly hired employees as key human capital measures and objectives.
Employee Development We also provide development and training programs for our employees, including evolved product training for our sales and services organizations, “Leading@Vertiv” for our management level employees, and “MyFirst90Days” for newly hired employees as key human capital measures and objectives.
Expanding lead-times caused by continuing global supply chain challenges, combined with continued strong demand have contributed to an increase in customer orders being placed in advance of our ability to fulfill them, which has added $0.8 billion to our backlog since December 31, 2022.
Expanding lead-times caused by continuing global supply chain challenges, combined with continued strong demand have contributed to an increase in customer orders being placed in advance of our ability to fulfill them, which has added $1.7 billion to our backlog since December 31, 2023.
We are working to shrink the carbon footprint of our operations, and we seek to minimize, and, where possible, eliminate waste through source reduction and recycling. Throughout our global facilities we implement processes, procedures, and policies to track and mitigate environmental impacts.
We continue to work to shrink the carbon footprint of our operations, and we continue to minimize and, where possible, eliminate waste through source reduction and recycling. Throughout our global facilities we continue to implement processes, and to refine, procedures, and policies to track and mitigate environmental impacts.
Outstanding Warrants Simultaneously with the closing of the IPO of GSAH in June 2018 (prior to the Business Combination in 2020), GSAH closed the private placement of an aggregate of 10,533,333 warrants, each exercisable to purchase one share of Class A common stock at an exercise price of $11.50 per share (the “Private Placement Warrants”), initially issued to GS DC Sponsor I LLC, a Delaware limited liability company (the “Sponsor”), at a price of $1.50 per Private Placement Warrant, generating proceeds of $15.8.
Private Placement Warrants Simultaneously with the closing of the initial public offering ("IPO") of GSAH in June 2018 (prior to the Business Combination in 2020), GSAH closed the private placement of an aggregate of 10,533,333 warrants, each exercisable to purchase one share of Class A common stock at an exercise price of $11.50 per share (the “Private Placement Warrants”), initially issued to GS DC Sponsor I LLC, a Delaware limited liability company.
This year we launched "The CEO Award", an employee recognition award given several times throughout the year by CEO Giordano Albertazzi to recognize individuals who unlock value for our customers, who overcome challenges to solve problems, or who create meaningful, lasting results for our business.
"The CEO Award", an employee recognition award given several times throughout the year by CEO Giordano Albertazzi to recognize individuals who unlock value for our customers, who overcome challenges to solve problems, or who create meaningful, lasting results for our business, has recently completed year two.
Across the globe, we operate over 200 service centers and deploy more than 3,500 service engineers. 8 Table of contents Competition The majority of our competitors target a specific offering or a specific geographic location. Competition in our markets is primarily on the basis of reliability, quality, price, service and customer relationships.
Across the globe, we operate over 300 service centers and deploy approximately 4,000 service engineers. 8 Table of contents Competition The majority of our competitors target a specific offering or a specific geographic location. Competition in our markets is primarily on the basis of reliability, quality, price, service and customer relationships.
We believe VOS provides a clear operating model and a systemic way to run the business across the entire organization through rigorous operating cadences, leverages lean or continuous improvement techniques focused on waste & cycle-time reduction, streamlined processes, and promotes the dissemination of best practices. Results of VOS are reflected in enhanced customer satisfaction and greater cost efficiencies.
We believe VOS provides a clear operating model and a systemic way to run the business across the entire organization through rigorous operating cadences, leverages lean or continuous improvement techniques focused on waste and cycle-time reduction, streamlined processes, and promotes the dissemination of best practices.
(Dollars in millions) December 31, 2023 December 31, 2022 Americas $ 3,365.2 $ 3,337.3 Asia Pacific 616.4 480.0 Europe, Middle East & Africa 1,545.1 937.1 Total Backlog $ 5,526.7 $ 4,754.4 The majority of the combined backlog as of December 31, 2023 is considered firm and is expected to be shipped within one year.
(Dollars in millions) December 31, 2024 December 31, 2023 Americas $ 4,672.4 $ 3,365.2 Asia Pacific 911.4 616.4 Europe, Middle East & Africa 1,595.0 1,545.1 Total Backlog $ 7,178.8 $ 5,526.7 The majority of the combined backlog as of December 31, 2024 is considered firm and is expected to be shipped within one year.
Such products include AC and DC power management, thermal management, low/medium voltage switchgear, busway, and integrated modular solutions. Integrated Rack Solutions Performance obligations within integrated rack solutions include the delivery of racks, single phase UPS, rack power distribution, rack thermal systems, configurable integrated solutions, hardware, and software for managing I.T. equipment.
Such products include AC and DC power management, thermal management, low/medium voltage switchgear, busbar, integrated modular solutions, racks, single phase UPS, rack power distribution, rack thermal systems, configurable integrated solutions, energy storage solutions, hardware, and software for managing I.T. equipment.
Research and Development We are committed to outpacing our competitors and being first to market with new product developments and improvements. In 2023, Vertiv spent $303.5 on research and development (“R&D”). We focus our R&D budget on engineering continuous improvement and new product innovation.
Engineering, Research and Development We are committed to outpacing our competitors and being first to market with new product developments and improvements. In 2024, Vertiv spent $352.1 on engineering, research and development (“ER&D”). We focus our ER&D budget on engineering continuous improvement and new product innovation.
This compares with net sales for the year ended December 31, 2022 of $5,691.5, of which 48% was transacted in the Americas, 28% was transacted in Asia Pacific, and 24% in Europe, Middle East & Africa. 6 Table of contents Backlog Vertiv’s estimated combined order backlog was $5,526.7 and $4,754.4 as of December 31, 2023 and 2022, respectively.
This compares with net sales for the year ended December 31, 2023 of $6,863.2, of which 56% was transacted in the Americas, 22% was transacted in Asia Pacific, and 22% in Europe, Middle East & Africa. 6 Table of contents Backlog Vertiv’s estimated combined order backlog was $7,178.8 and $5,526.7 as of December 31, 2024 and 2023, respectively.
These individuals embody our core principals and behaviors and keep us on track to achieve our goals through their commitment to our strategic priorities. They understand their role in helping Vertiv achieve its full potential.
These individuals embody our core principals and behaviors and keep us on track to achieve our goals through their commitment to our strategic priorities. They understand their role in helping Vertiv achieve its full potential. At an enterprise level, Vertiv was recognized in our APAC region in two different forums.
Facilities, Operations, and Supply Chain Our ability to serve our customers on both a global and local level is a key success factor, and we have built our manufacturing and operations footprint with that principle in mind. We have significant manufacturing and operations facilities in the Americas, Asia Pacific and Europe, Middle East & Africa.
Facilities, Operations, and Supply Chain Our ability to serve our customers on both a global and local level is a key success factor, and we have built, and continue to expand, our manufacturing and operations footprint and capacity with that principle in mind.
Vertiv Operating System The Vertiv Operating System (“VOS”) leverages a proven foundational approach to operational excellence and executes it at scale to drive greater efficiency, quality and competitiveness into our operations.
Vertiv Operating System The Vertiv Operating System (“VOS”) leverages a proven foundational approach to operational excellence and executes it at scale to drive greater efficiency, quality, competitive advantage and superior customer experience.
Our Company Vertiv Holdings, LLC (“Vertiv Holdings”), a direct wholly-owned subsidiary of the Company, traces its roots back to 1946 and the beginning of the information age, when Ralph Liebert founded the precursor to the Liebert Corporation, which was established in 1965 as the industry’s first manufacturer of computer room air conditioning.
Our Company Our roots trace back to 1946 and the beginning of the information age, when Ralph Liebert founded the precursor to the Liebert Corporation, which was established in 1965 as the industry’s first manufacturer of computer room air conditioning.
Additionally, logistical issues may delay the receipt of materials and, in some cases, we may not be able to procure critical parts at any price, creating production and delivery challenges pressuring the top and bottom line .
Additionally, logistical issues may delay the receipt of materials and, in some cases, we may not be able to procure critical parts at any price, creating production and delivery challenges pressuring the top and bottom line. We continue to take action to enhance our supply chain, such as qualifying new suppliers, and advancing our pricing plan.
Additionally, our salaried and services employees participate in our comprehensive annual performance review process meant to encourage a direct conversation where candid feedback can be shared to help our employees develop, achieve their career goals, and drive our high-performance culture. Inclusion We believe that innovative solutions are often developed from having diverse viewpoints and perspectives at the table.
Additionally, our salaried and services employees participate in our comprehensive annual performance review process meant to encourage a direct conversation where candid feedback can be shared to help our employees develop, achieve their career goals, and drive our high-performance culture.
Following a sale of Class A common stock on August 8, 2023, the Vertiv Stockholder' holdings of our outstanding Class A common stock dropped to less than 5%. Corporate Information Our principal executive offices are located at 505 N. Cleveland Ave., Westerville, Ohio, 43082, and our telephone number is (614) 888-0246. Our website is www.vertiv.com.
Following a sale of Class A common stock on February 27, 2024, the Vertiv Stockholder holds none of our outstanding Class A common stock. 13 Table of contents Corporate Information Our principal executive offices are located at 505 N. Cleveland Ave., Westerville, Ohio, 43082, and our telephone number is (614) 888-0246. Our website is www.vertiv.com.
Employee Engagement Fully engaged employees are a key driver of employee productivity and job satisfaction. We engage our employees across the organization through our quarterly enterprise-wide town halls, employee recognition programs, and company-sponsored volunteer events.
We engage our employees across the organization through our quarterly enterprise-wide town halls, employee recognition programs, and company-sponsored volunteer events.
On February 24, 2023, GS Sponsor LLC elected to exercise 5,266,666 warrants on a cashless basis pursuant to the agreement governing the warrants, in exchange for which the Company issued 1,368,194 shares of Class A common stock. As of December 31, 2023, there are 5,266,667 Private Placement Warrants outstanding.
On February 24, 2023, 5,266,666 warrants were exercised on a cashless basis pursuant to the agreement governing the warrants, in exchange for which the Company issued 1,368,194 shares of Class A common stock.
We seek people with high integrity who put a premium on learning through experience and those who embrace our core principles, and we expect our employees to emulate and display our core behaviors.
We seek people with high integrity who put a premium on learning through experience and those who embrace our core principles, which include safety, integrity and respect, and we expect our employees to emulate and display our core behaviors, which include fostering a customer-first mindset, leading by example and driving continuous improvement.
We believe that we offer our employees competitive pay packages and a broad range of company-paid benefits and recognize that our success is based in large part on the talents and dedication of those we employ.
We believe that we offer our employees competitive pay packages and a broad range of company-paid benefits, and recognize that our success is based in large part on the talents and dedication of those we employ. Vertiv Career Framework was launched in 2023. This framework is intended to highlight a simple and consistent way to organize, reward, and develop careers.
We offer leadership development programs for employees at the early career levels in finance, sales, services and engineering. We also offer customized programs for target populations to further develop their skills, and specialized partnership programs with local universities that lead to obtaining bachelors and/or masters degrees in technology.
We also offer customized programs for target populations to further develop their professional skills, and specialized partnership programs with local universities that lead to obtaining bachelor's and/or master's degrees in technology.
The Vertiv Stockholder sold shares of our Class A common stock in the following secondary offerings: (i) 26.0 million shares in August 2020; (ii) 18.0 million shares in November 2020; (iii) 23.1 million shares in November 2021; and (iv) 20.0 million shares in August 2023. 13 Table of contents Stockholders Agreement On the closing date of the Business Combination, the Company, the Cote Sponsor Member, the Vertiv Stockholder, and certain other members entered into a Stockholders Agreement (the “Stockholders Agreement”).
The Vertiv Stockholder sold shares of our Class A common stock in the following secondary offerings: (i) 26.0 million shares in August 2020; (ii) 18.0 million shares in November 2020; (iii) 23.1 million shares in November 2021; and (iv) 20.0 million shares in August 2023.
These comprehensive offerings are integral to the technologies used for services, such as e-commerce, online banking, file sharing, video on-demand, energy storage, wireless communications, Internet of Things and online gaming. In addition, through our global services network, we provide lifecycle management services, predictive analytics and professional services for deploying, maintaining and optimizing these products and their related systems.
These comprehensive offerings are integral to the reliable operation of the technologies used for services, such as e-commerce, online banking, file sharing, video on-demand, energy storage, wireless communications, Internet of Things and online gaming.
From time to time, we have experienced critical part shortages and supply chain constraints in addition to logistical issues which have significantly delayed receipt of materials, as well as increased the costs of certain raw materials. We continue to address these challenges associated with our sources, supplies and costs of raw materials.
Raw Materials We obtain raw materials and supplies from a variety of sources and generally from more than one supplier. From time to time, we have experienced part shortages, supply chain constraints, and import or export restrictions or tariffs, in addition to logistical issues which have delayed receipt of materials, as well as increased the costs of certain raw materials.
In addition to providing high quality service to our customers, we follow a diversification strategy to avoid over concentration or a significant dependence on a particular supplier or region. We continue to take action to enhance our supply chain, such as qualifying new suppliers, and advancing our pricing plan.
We have historically experienced some supply chain constraints as well as material, freight and labor cost increases. In addition to providing high quality service to our customers, we follow a diversification strategy to avoid over concentration or a significant dependence on a particular supplier or region.
Vertiv prioritizes the health and safety of our global workforce and anyone who enters our facilities or interacts with our products. We believe we have an effective employee, health and safety strategy, as evidenced by our strong safety record, including our total recordable injury rate of 0.27 and our lost time incident rate of 0.16 relative to certain peers.
We believe we have an effective employee health and safety strategy, as evidenced by our strong safety record relative to certain peers, including our total recordable injury rate of 0.37 and our lost time injury rate of 0.19 for the twelve months ended December 31, 2024.
For the year ended December 31, 2023, Vertiv’s net sales was $6,863.2, of which 56% was transacted in the Americas; 22% was transacted in Asia Pacific; and 22% was transacted in Europe, Middle East & Africa.
We manage our business across three reportable segments based on our main geographic regions—the Americas, Asia Pacific and Europe, Middle East & Africa. For the year ended December 31, 2024, Vertiv’s net sales was $8,011.8, of which 56% was transacted in the Americas; 22% was transacted in Asia Pacific; and 22% was transacted in Europe, Middle East & Africa.
Our global footprint comprises engineering, manufacturing, operations, sales and service locations in more than 40 countries across the Americas, Asia Pacific and Europe, Middle East & Africa. We provide the hardware, software and services to facilitate an increasingly interconnected marketplace of digital systems where large amounts of indispensable data need to be transmitted, analyzed, processed and stored.
We provide the hardware, software and services to facilitate an increasingly interconnected marketplace of digital systems where large amounts of indispensable data need to be transmitted, analyzed, processed and stored.
We expect our supply chain to continue to normalize in 2024, but we may still experience critical part shortages which may drive the need for additional spot buys at increased costs, and increased costs associated with premium freight to meet customer commitments.
Despite this strategy, it is possible that we may from time to time experience critical part shortages which may drive the need for additional spot buys at increased costs, as well as increased costs associated with premium freight to meet customer commitments.
We create intellectual property (“IP”) in our operations globally, and we actively work to protect and enforce our IP rights. We consider our trademarks to be valuable assets, including well-known marks within the industry such as Vertiv, Geist, Liebert, Energy Labs, NetSure, E&I, Powerbar, Albér, and Avocent.
We consider our trademarks to be valuable assets, including well-known marks within the industry such as Vertiv, Liebert, NetSure, Geist, Energy Labs, ERS, Albér, and Avocent. In addition, we integrate licensed third-party technology and IP into certain aspects of our products.
This well-diversified global network of facilities allows for improved service level cost, and working capital optimization.
We have significant manufacturing and operations facilities in the Americas, Asia Pacific and Europe, Middle East & Africa. This well-diversified global network of facilities allows for improved service level cost, capacity to meet demand, and working capital optimization.
In addition, we integrate licensed third party technology and IP into certain aspects of our products. Although certain third party proprietary IP rights are important to our success, we do not believe that we are materially dependent on any particular third party IP rights.
Although certain third-party proprietary IP rights are important to our success, we do not believe that we are materially dependent on any particular third-party IP rights. As of December 31, 2024 Vertiv had approximately 3,000 registered patents and approximately 1,200 pending, published or allowed patent applications, and approximately 1,800 registered trademarks and approximately 300 pending trademark applications.
Refer to the "Facilities, Operations, and Supply Chain" discussion above.
We continue to address these challenges associated with our sources, supplies and costs of raw materials. Refer to the "Facilities, Operations, and Supply Chain" discussion above.
Safety is of fundamental importance to Vertiv. We aim to provide the tools, training, and other resources needed to achieve our goal of reducing and controlling workplace risks and creating an injury-free workplace. We believe that creating a safe work environment is essential to our business.
In connection with our commitment to safety, we aim to provide the tools, training, and other resources needed to achieve our goal of reducing and controlling workplace risks. For example, we recently launched an effective safety engagement campaign called “We Lead with Safety”.
We intend to further integrate VOS, end-to-end, across the organization to pursue efficiencies and process optimizations in areas such as service & sales, new product development, and cross-functional processes including opportunity to cash, procure to pay, and sales, inventory, and operational planning. Human Capital Resources As of December 31, 2023, we employed approximately 27,000 full-time and part-time employees.
As a consequence, for each of our seven main interconnected processes (opportunity-to-order, order-to-cash, procure-to-pay, sales inventory and operations planning, order-to-fulfillment, new product development and introduction, and multiple service processes), we have assigned clear business ownership at the global and regional level. Human Capital Resources As of December 31, 2024, we employed approximately 31,000 full-time and part-time employees.
As a result of the Business Combination, Vertiv directly owns all of the equity interests of Vertiv Holdings and indirectly owns the equity interests of its subsidiaries . Our Business Vertiv offers critical digital infrastructure technologies and rapidly deployable customized solutions to meet the specific business requirements and needs of a diverse group of customers.
Our Business Vertiv designs, manufactures, sells, installs, maintains, and services critical digital infrastructure technologies and rapidly deployable customized solutions to meet the specific business requirements and needs of a diverse group of customers. Our global footprint comprises engineering, manufacturing, operations, sales and service locations in more than 40 countries across the Americas, Asia Pacific and Europe, Middle East & Africa.
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Our most prominent brands include Vertiv, Liebert, NetSure, Geist, Energy Labs, E&I, Albér, and Avocent. We manage our business across three reportable segments based on our main geographic regions—the Americas, Asia Pacific and Europe, Middle East & Africa.
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In addition, through our global services network, we provide lifecycle management services, predictive analytics and professional services for deploying, maintaining and optimizing these products and their related systems. Our most prominent brands include Vertiv, Liebert, NetSure, Geist, Energy Labs, ERS, Albér, and Avocent.
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We have experienced some supply chain constraints over the past several years, and despite strong market demand, we have experienced significant material, freight and labor cost increases.
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Our enterprise approach is articulated in four main pillars: the deployment of the operating system based on pervasive lean techniques propagation; the development of an accountable and lean organization aligned to Vertiv strategic objectives; the creation and maintenance of a simple yet robust global operating model; the empowerment of the organization run day-by-day continuous improvement and complex business process transformation.
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Historically, VOS was concentrated mainly within our manufacturing operations, and similar methods were used to improve performance across corporate functions and new product development.
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While continuous improvement relies heavily on each Vertiv employee adopting a “lean” mindset, dissemination of best practices and especially global process convergence require ownership and sponsorship to happen.
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Our Core Principles and Behaviors Core Principles Core Behaviors ■ Safety ■ Own it ■ Integrity ■ Act with urgency ■ Respect ■ Foster a customer-first mindset ■ Teamwork ■ Think big and execute ■ Diversity and inclusion ■ Lead by example ■ Drive continuous improvement ■ Learn and seek out development Investing in our People Our associates are critical to achieving our business objectives and investing in them is a key component to success.
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Investing in our People Our employees are critical to achieving our business objectives and investing in them is a key component to success. We offer leadership development programs for employees at the early career levels in finance, human resources, sales, services and engineering.
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Our talent acquisition and retention practices include college and university recruiting programs, job fairs, compensation benchmarking, employee engagement and communication through email, social media, and other communication platforms. We have a vested interest in attracting, developing, and retaining top talent, and we continue to research, develop, and enhance our programs to do so with an emphasis on early career hiring.
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Based on global principles with local application, we have created career tracks aligned to market competitive pay practices. Full implementation is intended to occur over the next several years and will highlight a pragmatic pay for performance approach that supports our high-performance culture.
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Through documented procedures, local management engagement, and a culture of open communication, our employees are encouraged to recommend safety improvements and report any safety hazards they see. Intellectual Property Our ability to create, obtain and protect intellectual property is important to the success of our business and our ability to compete.
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To best facilitate our retention strategy, we have made significant investments in Total Rewards and Talent Acquisition (or "TA"). TA will continue to be a differentiator for Vertiv's high growth aspirations. Building on the renewed foundation from 2023, our TA team has successfully hired over 3,000 new salaried employees in 2024, with a special emphasis on Engineering, Services, and Operations.
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As of December 31, 2023 Vertiv had approximately 2,800 registered patents and approximately 800 pending, published or allowed patent applications, and approximately 1,700 registered trademarks and approximately 200 pending trademark applications. Raw Materials We obtain raw materials and supplies from a variety of sources and generally from more than one supplier.
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To better facilitate speed and simplicity, we are automating the hiring process through Oracle systems, resulting in reduced job requisition creation time and overall time to fill. Attracting employees is only half our mission.
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E&I Transaction On November 1, 2021, Vertiv, through its wholly-owned subsidiaries Vertiv Holdings Ireland DAC, a private company limited by shares incorporated in Ireland and Vertiv International Holding Corporation, an Ohio corporation, acquired the shares of E&I Engineering Ireland Limited, a private company limited by shares incorporated in Ireland, and its affiliate Powerbar Gulf LLC (“E&I”) .
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For those new employees, once onboarded, and those employees with many years of dedicated service, the human resource team is focused on delivering a robust talent management system with pillars centered on engagement, development, and inclusion. Employee Engagement Fully engaged employees are a key driver of employee productivity and job satisfaction.
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Total consideration was $1,770.4, net of $10.3 of cash acquired, payable in a mix of cash and stock. E&I is a leading provider of switchgear, busway and modular power units serving data center and commercial and industrial customers in Europe, Middle East, and America.
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Greater China earned "2024 Best Employer Selection" by Forbes China, and Philippines was awarded as a "Great Place to Work" by UKG.
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The combination broadened our power infrastructure portfolio, expanded our services opportunities by providing additional upfront project start-up and ongoing maintenance services, and now enables us to offer complete integrated power and modular solutions.
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That performance management cycle has been simplified and fully automated to Oracle systems, linking objective setting to employee feedback, annual performance ratings and compensation awards. A true pillar to drive a high-performance culture. Inclusion We believe that innovative solutions are often developed from having diverse viewpoints and perspectives at the table.
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Additionally, this acquisition strengthens our participation with large customers as well as gain new customers, including Hyperscale cloud providers, as we have an expanded portfolio of products and services to offer customers more flexible and scalable power deployment options. We continued to integrate E&I into our business during 2023.
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Vertiv prioritizes the health and safety of our global workforce and anyone who enters our facilities or interacts with our products.
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The Private Placement Warrants are exercisable on a cashless basis, at the holder’s option, and are non-redeemable so long as they are held by the initial purchasers or their permitted transferees.
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The campaign is centered on further strengthening our interdependent culture, where everyone will speak up regarding safety, for themselves and others, whether at work or elsewhere. Reinforcing “why” we are committed to safety, documenting our procedures and engaging the appropriate local safety teams has positioned us well relative to our safety performance.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeOur ability to realize the expected synergies and benefits of the Acquisition include, among other things, our ability to complete the timely integration of operations and systems, organizations, standards, controls, procedures, policies and technologies, as well as the harmonization of differences in the business cultures of us and E&I, our ability to minimize the diversion of management attention from ongoing business concerns during the integration process, our ability to retain the service of key management and other key personnel, our ability to maintain customer, supplier and other important relationships and resolve potential conflicts that may arise, the risk that certain customers and suppliers will opt to discontinue business with the combined business or exercise their right to terminate their agreements, the risk that E&I may have liabilities that we failed to or were unable to discover or were unable to quantify in the course of performing due diligence and we may not be indemnified for any of these liabilities, difficulties in achieving anticipated cost savings, synergies, business opportunities and growth prospects from the combination; and difficulties in managing the expanded operations of a significantly larger and more complex combined business.
Biggest changeOur ability to realize the expected synergies and benefits of an acquisition include, among other things, our ability to complete the timely integration of operations and systems, organizations, standards, controls, procedures, policies and technologies, difficulties in achieving anticipated cost savings, synergies, business opportunities and growth prospects from the combination; and difficulties in managing the expanded operations of a significantly larger and more complex combined business.
If customers terminate, reduce or defer firm orders, the revenue we expect to generate from our backlog or, if realized, may not be fully realized.
If customers terminate, reduce or defer firm orders, the revenue we expect to generate from our backlog may not be fully realized.
Problems, disruptions, delays or other issues in the design and implementation of these systems or enhancements have in the past and could in the future adversely impact our forecasting and planning abilities, and our ability to process customer orders, ship products, provide service and support to our customers, bill and collect in a timely manner from our customers, fulfill contractual obligations, accurately record 19 Table of contents and transfer information, recognize revenue, file securities, governance and compliance reports in a timely manner or otherwise run our business.
Problems, disruptions, delays or other issues in the design and implementation of these systems or enhancements have in the past and could in the future adversely impact our forecasting and planning abilities, and our ability to process customer orders, ship products, provide service and support 19 Table of contents to our customers, bill and collect in a timely manner from our customers, fulfill contractual obligations, accurately record and transfer information, recognize revenue, file securities, governance and compliance reports in a timely manner or otherwise run our business.
In addition, the credit agreements governing the Senior Secured Credit Facilities and the indenture governing the Notes do not prevent us from incurring obligations that do not constitute indebtedness under those agreements. Restrictive covenants in the credit agreements governing the Senior Secured Credit Facilities and the indenture governing the Notes, and any future debt agreements, could restrict our operating flexibility.
In addition, the credit agreements governing the Senior Secured Credit Facilities and the indenture governing the Notes do not prevent us from incurring obligations that do not constitute indebtedness under those agreements. Restrictive covenants in the credit agreements governing the Senior Secured Credit Facilities, the indenture governing the Notes, and any future debt agreements, could restrict our operating flexibility.
In particular, we expect to continue incurring significant expenses and to devote substantial management effort toward ensuring compliance with the requirements of the Sarbanes-Oxley Act. Successfully implementing our business plan and complying with the Sarbanes-Oxley Act and other regulations described above requires us to be able to prepare timely and accurate Consolidated Financial Statements.
In particular, we expect to continue incurring expenses and to devote substantial management effort toward ensuring compliance with the requirements of the Sarbanes-Oxley Act. Successfully implementing our business plan and complying with the Sarbanes-Oxley Act and other regulations described above requires us to be able to prepare timely and accurate Consolidated Financial Statements.
Consolidation among such large customers could further increase their buying power and ability to require onerous terms. In addition, these customers may impose substantial penalties for any product or service failures caused by us or the failure by us to timely deliver products ordered by those customers.
Consolidation among such large customers could further increase their buying power and ability to require more onerous terms. In addition, these customers may impose substantial penalties for any product or service failures caused by us or the failure by us to timely deliver products ordered by those customers.
The long sales cycles for certain of our products and solutions offerings, as well as unpredictable placing or canceling of customer orders, particularly large orders, may cause our revenues and operating results to vary significantly from quarter-to-quarter, which could make our future operational results less predictable.
The long sales cycles for certain Vertiv products and solutions offerings, as well as unpredictable placing or canceling of customer orders, particularly large orders, may cause our revenues and operating results to vary significantly from quarter-to-quarter, which could make our future operational results less predictable.
We also have the ability to draw upon the uncommitted accordion provided under the Term Loan Facility (subject to the receipt of commitments and satisfaction of certain other conditions), which, as of the date of closing of the Term Loan Facility, permitted incremental term loans thereunder or certain equivalent debt outside of the Term Loan Facility documentation of up to (i) the greater of $325.0 and 60% of “Consolidated EBITDA” (as defined in the Term Loan Facility), plus (ii) the sum 27 Table of contents of all voluntary prepayments, repurchases and redemptions of the Term Loan Facility and certain permitted indebtedness that is secured on a pari passu basis with the Term Loan Facility, in each case, to the extent not financed with the incurrence of certain additional long-term indebtedness, plus (iii) an unlimited amount so long as, on a pro forma basis (x) with respect to indebtedness secured on a pari passu basis with the Term Loan Facility, the “Consolidated First Lien Net Leverage Ratio” (as defined in the Term Loan Facility) of Vertiv Group (as defined herein) and its restricted subsidiaries would not exceed 3.75:1.00 and (y) with respect to indebtedness incurred outside of the Term Loan Facility documentation and secured on a junior basis with the Term Loan Facility or unsecured, the “C onsolidated Total Net Leverage Ratio” (as defined in the Term Loan Facility) of Vertiv Group (as defined herein) and its restricted subsidiaries would not exceed, subject to certain exceptions, 5.25:1.00.
We also have the ability to draw upon the uncommitted accordion provided under the Term Loan Facility (subject to the receipt of commitments and satisfaction of certain other conditions), which, as of the date of closing of the Term Loan Facility, permitted incremental term loans thereunder or certain equivalent debt outside of the Term Loan Facility documentation of up to (i) the greater of $325.0 and 60% of “Consolidated EBITDA” (as defined in the Term Loan Facility), plus (ii) the sum of all voluntary prepayments, repurchases and redemptions of the Term Loan Facility and certain permitted indebtedness that is secured on a pari passu basis with the Term Loan Facility, in each case, to the extent not financed with the incurrence of certain additional long-term indebtedness, plus (iii) an unlimited amount so long as, on a pro forma basis (x) with respect to indebtedness secured on a pari passu basis with the Term Loan Facility, the “Consolidated First Lien Net Leverage Ratio” (as defined in the Term Loan Facility) of Vertiv Group (as defined herein) and its restricted subsidiaries would not exceed 3.75:1.00 and (y) with respect to indebtedness incurred outside of the Term Loan Facility documentation and secured on a junior basis with the Term Loan Facility or unsecured, the “C onsolidated Total Net Leverage Ratio” (as defined in the Term Loan Facility) of Vertiv Group (as defined herein) and its restricted subsidiaries would not exceed, subject to certain exceptions, 5.25:1.00.
Violations may result in penalties, including fines, debarments from export and import privileges, and loss of authorizations needed to conduct aspects of our international business, and may harm our ability to enter into contracts with our customers who have contracts with the U.S. government.
Violations may result in penalties, including fines, debarments from export and import privileges, and loss of authorizations needed to conduct aspects of our international business, and may harm our ability to enter into contracts with our customers and suppliers who have contracts with the U.S. government.
Our Certificate of Incorporation includes a forum selection clause, which provides that, unless we consent in writing to the selection of an alternative forum, the Court of Chancery in the State of Delaware shall be the sole and exclusive forum for any stockholder (including a beneficial owner) to bring: (a) any derivative action or proceeding brought on behalf of the Company; (b) any action asserting a claim of breach of fiduciary duty owed by any of our directors, officers or other employees of the Company to the Company or our stockholders; (c) any action asserting a claim arising pursuant to any provision of the DGCL or our certificate of incorporation or bylaws; or (d) any action asserting a claims governed by the internal affairs doctrine, except for, as to each of (a) through (d) above, any claim (i) as to which the Court of Chancery determines that there is an indispensable party not subject to the jurisdiction of the Court of Chancery (and the indispensable party does not consent to the personal jurisdiction of the Court of Chancery within ten days following such determination), (ii) which is vested in the exclusive jurisdiction of a court or forum other than the Court of Chancery, (iii) for which the Court of Chancery does not have subject matter jurisdiction or (iv) arising under the federal securities laws, including the Securities Act, as to which the Court of Chancery and the federal district court for the District of Delaware shall concurrently be the sole and exclusive forums.
Our Certificate of Incorporation includes a forum selection clause, which provides that, unless we consent in writing to the selection of an alternative forum, the Court of Chancery in the State of Delaware shall be the sole and exclusive forum for any stockholder (including a beneficial owner) to bring: (a) any derivative action or proceeding brought on behalf of the 29 Table of contents Company; (b) any action asserting a claim of breach of fiduciary duty owed by any of our directors, officers or other employees of the Company to the Company or our stockholders; (c) any action asserting a claim arising pursuant to any provision of the DGCL or our certificate of incorporation or bylaws; or (d) any action asserting a claims governed by the internal affairs doctrine, except for, as to each of (a) through (d) above, any claim (i) as to which the Court of Chancery determines that there is an indispensable party not subject to the jurisdiction of the Court of Chancery (and the indispensable party does not consent to the personal jurisdiction of the Court of Chancery within ten days following such determination), (ii) which is vested in the exclusive jurisdiction of a court or forum other than the Court of Chancery, (iii) for which the Court of Chancery does not have subject matter jurisdiction or (iv) arising under the federal securities laws, including the Securities Act, as to which the Court of Chancery and the federal district court for the District of Delaware shall concurrently be the sole and exclusive forums.
The majority of our combined backlog is considered firm and expected to be delivered within one year. Our customers have the right in some circumstances, usually with penalties or termination consequences, to reduce or defer firm orders in backlog.
The majority of our combined backlog is considered firm and expected to be delivered within one year. Our customers have the right in some circumstances, usually with penalties or other termination consequences, to reduce or defer firm orders in backlog.
Moreover, if we communicate to the market certain initiatives and goals regarding ESG matters, we could fail, or be perceived to fail, in our achievement of such initiatives and goals, or we could be criticized for the scope of such initiatives or goals.
If we communicate to the market certain initiatives and goals regarding ESG matters, we could fail, or be perceived to fail, in our achievement of such initiatives and goals, or we could be criticized for the scope of such initiatives or goals.
As restrictions on resale end and registration statements remain available for use, the sale or possibility of sale of shares by the Vertiv Stockholder, the former owners of E&I, and other investors could have the effect of increasing the volatility in our share price or the market price of our securities could decline if the holders of currently restricted shares sell them or are perceived by the market as intending to sell them.
As restrictions on resale end and registration statements remain available for use, the sale or possibility of sale of shares by the former owners of E&I and other investors could have the effect of increasing the volatility in our share price or the market price of our securities could decline if the holders of currently restricted shares sell them or are perceived by the market as intending to sell them.
Our competitors, any of which could introduce new technologies or business models that disrupt significant portions of our markets and cause our customers to move a material portion of their business away from us to such competitors, primarily include: • Large-scale, global competitors with broad, sometimes larger, product portfolios and service offerings.
Our competitors, any of which could introduce new technologies or business models that disrupt significant portions of our markets and cause our customers to move a material portion of their business away from us to such competitors, primarily include: • Large-scale, global competitors with broad product portfolios and service offerings.
Future legislation could impose additional costs on our business, disrupt our customers’ markets or require us to make changes in our operations which could adversely affect our operations. Any failure to comply with evolving data privacy and data protection laws and regulations or to otherwise protect personal data, may adversely impact our business and financial results.
Future legislation and regulation could impose additional costs on our business, disrupt our customers’ markets or require us to make changes in our operations which could adversely affect our operations and performance. Any failure to comply with evolving data privacy and data protection laws and regulations or to otherwise protect personal data, may adversely impact our business and financial results.
As of December 31, 2023 management has concluded that the Company’s internal control over financial reporting was effective. Notwithstanding this conclusion, we have had material weaknesses in the past, and we cannot assure you that we will not additional material weaknesses in our internal control over financial reporting in the future.
As of December 31, 2024 management has concluded that the Company’s internal control over financial reporting was effective. Notwithstanding this conclusion, we have had material weaknesses in the past, and we cannot assure you that we will not have additional material weaknesses in our internal control over financial reporting in the future.
Disruptions to the various information security systems upon which our operations rely, especially cyber-security incidents, including data security breaches, ransomware or computer viruses, could harm our business, reduce our revenue, increase our expenses, damage our reputation and adversely impact our performance.
Disruptions to the various information security systems upon which our operations and our products and our services rely, especially cyber-security incidents, including data security breaches, ransomware or computer viruses, could harm our business, reduce our revenue, increase our expenses, damage our reputation and adversely impact our performance.
Certain organizations that provide corporate governance and other corporate risk information to investors and stakeholders have developed, and others may in the future develop, scores and ratings to evaluate companies based in whole or part on ESG or sustainability metrics.
Certain organizations that provide corporate governance and other corporate risk information to investors and stakeholders have developed, and others may in the future develop, scores and ratings to evaluate companies based in whole or part on various ESG metrics.
In that case, the applicable borrowers may be unable to borrow under the Senior Secured Credit Facilities, the Notes, or any future debt, may not be able to repay the amounts due under the Senior Secured Credit Facilities, the Notes, or any future debt, may not be able to make interest payments on the Senior Secured Credit Facilities of the Notes and may not be able make cash available to us, by dividend, debt repayment or otherwise, to enable us to make payments on any future debt, meet other corporate needs or pay dividends.
In that case, the applicable borrowers may be unable to borrow under the Senior Secured 28 Table of contents Credit Facilities, the Notes, or any future debt, may not be able to repay the amounts due under the Senior Secured Credit Facilities, the Notes, or any future debt, may not be able to make interest payments on the Senior Secured Credit Facilities of the Notes and may not be able make cash available to us, by dividend, debt repayment or otherwise, to enable us to make payments on any future debt, meet other corporate needs or pay dividends.
The global scope of our operations, especially in emerging markets, poses specific risks and challenges with respect to operations, compliance with laws and enforcement of consistent company-wide standards and procedures. As of December 31, 2023, we employed approximately 27,000 people globally and had manufacturing facilities in the Americas, Asia Pacific and Europe, Middle East & Africa.
The global scope of our operations, especially in emerging markets, poses specific risks and challenges with respect to operations, compliance with laws and enforcement of consistent company-wide standards and procedures. As of December 31, 2024, we employed approximately 31,000 people globally and had manufacturing facilities in the Americas, Asia Pacific and Europe, Middle East & Africa.
Operations in emerging markets can also present risks that are not encountered in countries with well-established economic and political systems, including: • changes or instability in a region’s economic or political conditions, including actual or anticipated military or political conflicts, could make it difficult for us to anticipate future business conditions, cause operational delays, complicate permitting and other regulatory matters and make our customers less willing to make cross-border investments; • unpredictable or more frequent foreign currency exchange rate fluctuations; • inadequate infrastructure, including lack of adequate power and water supplies, transportation, raw materials and parts; • foreign state takeovers of our facilities, trade protectionism, state-initiated industry consolidation or other similar government actions or control; • changes in and compliance with international, national or local regulatory and legal environments, including laws and policies affecting trade, economic sanctions, foreign investment, labor relations, foreign anti-bribery and anti-corruption; • the difficulty of enforcing agreements and collecting receivables through certain foreign legal systems; • longer collection cycles and financial instability among customers; • trade regulations, tariffs, boycotts and embargoes, which could impair our ability to obtain materials necessary to fulfill contracts, pursue business or establish operations in such countries; • difficulty of obtaining adequate financing and/or insurance coverage; • fluctuations in freight costs, limitations on shipping and receiving capacity, and other disruptions in the transportation and shipping infrastructure; • political or social instability that may hinder our ability to send personnel abroad or cause us to move our operations to facilities in countries with higher costs and less efficiencies; • difficulties associated with repatriating earnings generated or held abroad in a tax-efficient manner, changes in tax laws, or tax inefficiencies; and • exposure to wage, price and capital controls, local labor conditions and regulations, including local labor disruptions and rising labor costs which we may be unable to recover in our pricing to customers. 21 Table of contents Consequently, our exposure to these conditions which may exist in or otherwise impact the emerging markets that we enter may have an adverse effect on our business, results of operations and financial condition.
Operations in emerging markets can also present risks that are not encountered in countries with well-established economic and political systems, including: • changes or instability in a region’s economic or political conditions, including actual or anticipated military or political conflicts, could make it difficult for us to anticipate future business conditions, cause operational delays, complicate permitting and other regulatory matters and make our customers less willing to make cross-border investments; • unpredictable or more frequent foreign currency exchange rate fluctuations; • inadequate infrastructure, including lack of adequate power and water supplies, transportation, raw materials and parts; • foreign state takeovers of our facilities, trade protectionism, state-initiated industry consolidation or other similar government actions or control; 21 Table of contents • changes in and compliance with international, national or local regulatory and legal environments, including laws and policies affecting trade, economic sanctions, foreign investment, labor relations, foreign anti-bribery and anti-corruption; • the difficulty of enforcing agreements and collecting receivables through certain foreign legal systems; • longer collection cycles and financial instability among customers; • trade regulations, tariffs, boycotts and embargoes, which could impair our ability to obtain materials necessary to fulfill contracts, pursue business or establish operations in such countries; • difficulty of obtaining adequate financing and/or insurance coverage; • fluctuations in freight costs, limitations on shipping and receiving capacity, and other disruptions in the transportation and shipping infrastructure; • political or social instability that may hinder our ability to send personnel abroad or cause us to move our operations to facilities in countries with higher costs and less efficiencies; • difficulties associated with repatriating earnings generated or held abroad in a tax-efficient manner, changes in tax laws, or tax inefficiencies; and • exposure to wage, price and capital controls, local labor conditions and regulations, including local labor disruptions and rising labor costs which we may be unable to recover in our pricing to customers.
Our level of indebtedness could have important consequences, including making it more difficult for us to satisfy our obligations; increasing our vulnerability to adverse economic and industry conditions; limiting our ability to obtain additional financing for future working capital, capital expenditures, raw materials, strategic acquisitions and other general corporate requirements; exposing us to interest rate fluctuations because the interest on the debt under the Senior Secured Credit Facilities is imposed, and debt under any future debt agreements may be imposed, at variable rates, which may affect the yield requirements of investors who invest in our shares, adversely impacting the price of our shares and our ability to issue equity or incur additional debt; requiring us to dedicate a portion of our cash flow from operations to payments on our debt (including interest and scheduled repayments on the outstanding term loan borrowings under the Term Loan Facility, interest payments on the Notes or any future debt agreements with similar requirements), thereby reducing the availability of our cash flow for operations and other purposes; making it more difficult for us to satisfy our obligations to our lenders, resulting in possible defaults on and acceleration of such indebtedness; limiting our ability to refinance indebtedness or increasing the associated costs; requiring us to sell assets to reduce debt or influencing our decision about whether to do so; limiting our flexibility in planning for, or reacting to, changes in our business and the industry in which we operate or preventing us from carrying out capital spending that is necessary or important to our growth strategy and efforts to improve operating margins of our business; and placing us at a competitive disadvantage compared to any competitors that have less debt or comparable debt at more favorable terms and that, as a result, may be better positioned to withstand economic downturns.
Our level of indebtedness could have important consequences, including making it more difficult for us to satisfy our obligations; increasing our vulnerability to adverse economic and industry conditions; limiting our ability to obtain additional financing for future working capital, capital expenditures, raw materials, strategic acquisitions and other general corporate requirements; exposing us to interest rate fluctuations because the interest on the debt under the Senior Secured Credit Facilities is imposed, and debt under any future debt agreements may be imposed, at variable rates, which may affect the yield requirements of investors who invest in our shares, adversely impacting the price of our shares and our ability to issue equity or incur additional debt; requiring us to dedicate a portion of our cash flow from operations to payments on our debt (including interest and scheduled repayments on the outstanding term loan borrowings under the Term Loan Facility, interest payments on the Notes or any future debt agreements with similar requirements), thereby reducing the availability of our cash flow for operations and other purposes; making it more difficult for us to satisfy our obligations to our lenders, resulting in possible defaults on and acceleration of such indebtedness; limiting our ability to refinance indebtedness or increasing the associated costs; requiring us to sell assets to reduce debt or influencing our decision about whether to do so; limiting our flexibility in planning for, or reacting to, changes in our business and the industry in which we operate or preventing us from carrying out capital spending that is necessary or important to our growth strategy and efforts to improve operating margins of our business; and placing us at a competitive disadvantage compared to any competitors that have less debt or comparable debt at more favorable terms and that, as a result, may be better positioned to withstand economic downturns. 27 Table of contents Despite our current levels of indebtedness, we have the ability to incur more indebtedness, which could further intensify the risks described above.
As a result of our global operations, our business, results of operations and financial condition may be adversely affected by fluctuations in currency exchange rates, most notably the strengthening of the U.S. dollar against the primary foreign currencies, which could adversely impact our revenue growth in future periods.
As a result of our global operations, our business, results of operations and financial condition may be adversely affected by fluctuations in currency exchange rates, most notably if the U.S. dollar strengthens against the primary foreign currencies, which could adversely impact our revenue growth in future periods.
The existence of many patents in our fields, the secrecy of some pending patent applications, and the rapid rate of issuance of 24 Table of contents new patents makes it economically impractical to make conclusive advance determinations of whether a product or any of its components infringes the patent rights of others.
The existence of many patents in our fields, the secrecy of some pending patent applications, and the rapid rate of issuance of new patents makes it economically impractical to make conclusive advance determinations of whether a product or any of its components infringes the patent rights of others.
Legal and Regulatory Risks Future legislation and regulation governing Internet-related services, other related communications services and information technologies could disrupt our customers’ markets resulting in declines in sales volume and prices of our products and otherwise have an adverse effect on our business operations.
Legal and Regulatory Risks Future legislation and regulation governing Internet-related services, other related communications services information technologies, and critical infrastructure could disrupt our customers’ markets resulting in declines in sales volume and prices of our products and otherwise have an adverse effect on our business operations and performance.
Our legal compliance and ethics programs and policies, including our code of business conduct, existing policies on anti-bribery, export controls, environmental and other legal compliance, and periodic training on these matters, mandate compliance with anti-corruption laws and are designed to reduce the likelihood of a compliance 23 Table of contents violation.
Our legal compliance and ethics programs and policies, including our code of business conduct, existing policies on anti-bribery, export controls, environmental and other legal compliance, and periodic training on these matters, mandate compliance with anti-corruption laws and are designed to reduce the likelihood of a compliance violation.
We are subject to a broad range of foreign and domestic environmental, health and safety laws, regulations and requirements, including those relating to the discharge of regulated materials into the environment, the generation and handling of hazardous substances and wastes, human health and safety, and the content, composition and takeback of our products.
We are subject to a broad range of foreign and domestic environmental, health and safety laws, regulations and requirements, including those relating to the discharge of regulated materials into the environment, the generation and handling of hazardous substances and wastes, human health and safety, and the content, composition and take back of our products.
Our Organizational Documents contain provisions that may discourage unsolicited takeover proposals that stockholders may consider to be in their best interests. We are also subject to anti-takeover provisions under Delaware law, which could delay or prevent a change of control.
Anti-takeover provisions contained in our Organizational Documents could impair a takeover attempt. Our Organizational Documents contain provisions that may discourage unsolicited takeover proposals that stockholders may consider to be in their best interests. We are also subject to anti-takeover provisions under Delaware law, which could delay or prevent a change of control.
The laws relating to government contracts may differ from other commercial contracting laws and our government contracts may contain pricing and other terms and conditions that are less favorable to the Company than those in commercial contracts . We have, and we intend to continue pursuing, long-term, fixed-price contracts (including long-term, turnkey projects).
The laws relating to government contracts may differ from other commercial contracting laws and our government contracts may contain pricing and other terms and conditions that are less favorable to the Company than those in commercial contracts . We have long-term, fixed-price contracts (including long-term, turnkey projects).
Businesses including ours are facing increasing scrutiny in ESG-related areas, including renewable resources, environmental stewardship, supply chain management, climate change, safety, diversity, equity and inclusion (DEI), workplace conduct, human rights, philanthropy and support for local communities.
Businesses including ours are facing increasing scrutiny in ESG-related areas, which may include renewable resources, environmental stewardship, supply chain management, climate change, safety, diversity, equity and inclusion ("DEI"), workplace conduct, human rights, philanthropy and support for local communities.
We operate in several less-developed regions that are recognized as having a greater risk of potentially corrupt business environments and, in certain circumstances, strict compliance with anti-corruption laws may conflict with local customs and practices.
We operate in several less-developed regions that are recognized as having a greater risk of potentially corrupt 23 Table of contents business environments and, in certain circumstances, strict compliance with anti-corruption laws may conflict with local customs and practices.
At sites which we own, lease or operate, or have 25 Table of contents previously owned, leased or operated, or where we have disposed or arranged for the disposal of hazardous materials, we may have current liability exposure for contamination, and could in the future be liable for additional contamination.
At sites which we own, lease or operate, or have previously owned, leased or operated, or where we have disposed or arranged for the disposal of hazardous materials, we may have current liability exposure for contamination, and could in the future be liable for additional contamination.
We have the ability to draw upon the undrawn portion of our $570.0 ABL Revolving Credit Facility (subject to customary borrowing base and other conditions, and subject to separate sublimits for letters of credit, swingline borrowings and borrowings made to certain non-U.S. subsidiaries) and the ability to increase the aggregate availability thereunder by up to $30.0 (subject to receipt of commitments and satisfaction of certain other conditions).
We have the ability to draw upon the undrawn portion of our $800.0 ABL Revolving Credit Facility (subject to customary borrowing base and other conditions, and subject to separate sublimits for letters of credit, swingline borrowings and borrowings made to certain non-U.S. subsidiaries) and the ability to increase the aggregate availability thereunder by up to $200.0 (subject to receipt of commitments and satisfaction of certain other conditions).
Any decline in the ratings of our corporate credit or any indications from the rating agencies that their ratings on our 28 Table of contents corporate credit are under surveillance or review with possible negative implications could adversely impact our ability to access capital.
Any decline in the ratings of our corporate credit or any indications from the rating agencies that their ratings on our corporate credit are under surveillance or review with possible negative implications could adversely impact our ability to access capital.
We are subject to environmental, health and safety matters, laws and regulations, including regulations related to the composition and takeback of our products and our ownership, lease or operation of our facilities which could subject us to significant costs or liabilities.
We are subject to environmental, health and safety matters, laws and regulations, including regulations related to the composition and take back of our products and our ownership, lease or operation of our facilities which could subject us to significant costs or liabilities.
Defects could expose us to product warranty claims, including substantial expense for the recall and repair or replacement of a product or component, and product liability claims, including liability for personal injury or property 20 Table of contents damage.
Defects could expose us to product warranty claims, including substantial expense for the recall and repair or replacement of a product or component, and product liability claims, including liability for personal injury or property damage.
Tariffs implemented on our products (or on materials, parts or components we use to manufacture our products) have in the past increased the cost of our products manufactured in the U.S. and imported into the U.S.
Tariffs implemented on our products (or on materials, parts or components we use to manufacture our products or to provide service for our products) have in the past increased the cost of our products manufactured in the U.S. and imported into the U.S.
Further, changes in tax laws and rates or other regulatory actions may significantly impact the positions taken with regard to tax contingencies and we may be subject to audit and review by tax authorities, which may result in future taxes, interest and penalties. We are regularly subject to audits by tax authorities.
Changes in tax laws and rates or other regulatory actions may significantly impact the positions taken with regard to tax contingencies and we may be subject to audit and review by tax authorities, which may result in future taxes, interest and penalties.
As of December 31, 2023, we had approximately $2,118.1 of senior secured indebtedness outstanding under the Term Loan Facility, $850.0 of Senior Secured Notes due 2028 (the “Notes”) outstanding and $554.0 of undrawn commitments (which undrawn commitments are available subject to customary borrowing base and other conditions), and subject to separate sublimits for letters of credit, swingline borrowings and borrowings made to certain non-U.S. subsidiaries) under the ABL Revolving Credit Facility (as defined herein) (net of letters of credit outstanding in the aggregate principal amount of $16.0, and taking into account the borrowing base limitations set forth in the ABL Revolving Credit Facility), which, if drawn would constitute senior secured indebtedness.
As of December 31, 2024, we had approximately $2,097.0 of senior secured indebtedness outstanding under the Term Loan Facility, $850.0 of Senior Secured Notes due 2028 (the “Notes”) outstanding and $784.9 of undrawn commitments (which undrawn commitments are available subject to customary borrowing base and other conditions), and subject to separate sublimits for letters of credit, swingline borrowings and borrowings made to certain non-U.S. subsidiaries) under the ABL Revolving Credit Facility (as defined herein) (net of letters of credit outstanding in the aggregate principal amount of $15.1, and taking into account the borrowing base limitations set forth in the ABL Revolving Credit Facility), which, if drawn would constitute senior secured indebtedness.
The increased focus on environmental sustainability may result in new regulations and customer requirements, or changes in current regulations and customer requirements, which could materially adversely impact our business, results of operations and financial condition.
The increased global focus on environmental sustainability may result 25 Table of contents in new regulations and customer requirements, or changes in current regulations and customer requirements, which could materially adversely impact our business, results of operations and financial condition.
Large companies, such as communication network and cloud/hyperscale and colocation data center providers, comprise a material portion of our customer base and generally have greater purchasing power than smaller entities. Accordingly, these customers often require more favorable terms and conditions in their contracts with us.
Large companies, such as communication network and cloud/hyperscale and colocation data center providers, comprise a material portion of our customer base and generally have greater purchasing power than smaller entities. Accordingly, these customers often have enhanced leverage that allow them to require more favorable terms and conditions in their contracts with us.
Risks Related to Our Financial Position, Investments and Indebtedness Our results of operations may be adversely affected if we fail to realize the full value of our goodwill and intangible assets. As of December 31, 2023, we had total goodwill and net intangible assets of $3,003.2 which constituted approximately 38% of our total assets in the aggregate.
Risks Related to Our Financial Position, Investments and Indebtedness Our results of operations may be adversely affected if we fail to realize the full value of our goodwill and intangible assets. As of December 31, 2024, we had total goodwill and net intangible assets of $2,808.2 which constituted approximately 31% of our total assets in the aggregate.
If we fail to meet applicable standards or expectations with respect to these issues across all of our services and in all of our operations and activities, including the expectations we set for ourselves, our reputation and brand image could be damaged, and our business, financial condition and results of operations could be adversely impacted.
If we fail to meet applicable standards or expectations with respect to these issues across all of our services and in all of our operations and activities, including any metrics and goals that we set for ourselves and disclose publicly or we fail to disclose publicly, our reputation and brand image could be damaged, and our business, financial condition and results of operations could be adversely impacted.
Attracting and retaining key employees in a competitive marketplace requires us to provide a competitive compensation package, which often includes cash- and equity-based compensation.
Attracting and retaining key employees in a competitive marketplace requires us to provide a competitive 30 Table of contents compensation package, which often includes cash- and equity-based compensation.
Our backlog consists of the value of product and service orders for which we have received a customer purchase order or purchase commitment and which have not yet been delivered. As of December 31, 2023 and 2022, Vertiv’s estimated combined order backlog was $5,526.7 and $4,754.4, respectively.
Our backlog consists of the value of product and service orders for which we have received a customer purchase order or purchase commitment and which have not yet been delivered. As of December 31, 2024 and 2023, Vertiv’s estimated combined order backlog was $7.2 billion and $5.5 billion, respectively.
Item 1B. Unresolved Staff Comments None. 32 Table of contents
Item 1B. Unresolved Staff Comments None. 31 Table of contents
Sales of our Class A common stock may make it more difficult for us to sell equity securities in the future at a time and at a price that we deem appropriate.
Sales of our Class A common stock may make it more difficult for us to sell equity securities in the future at a time and at a price that we deem appropriate. These sales also could cause our stock price to fall and make it more difficult for holders to sell shares of our Class A common stock.
Our level of indebtedness could adversely affect our financial condition and prevent us from making payments on the Senior Secured Credit Facilities (as defined herein), our Notes (as defined herein) and our other debt obligations (if any). We have debt, including existing outstanding indebtedness under the Term Loan Facility (as defined herein).
Our level of indebtedness could adversely affect our financial condition and prevent us from making payments on our debt obligations. We have debt, including existing outstanding indebtedness under the Term Loan Facility (as defined herein).
Various laws and governmental regulations, both in the U.S. and abroad, governing Internet related services, related communications services and information technologies remain largely unsettled, even in areas where there has been some legislative action.
Various laws and governmental regulations, both in the U.S. and abroad, governing Internet-related services, related communications services, information technologies, and the construction and location of data centers and other critical infrastructure remain largely unsettled, even in areas where there has been some legislative action.
For example, a former U.S. administration previously called for substantial changes to U.S. foreign trade policy with respect to China and other countries, including the possibility of imposing greater restrictions on international trade and significant increases in tariffs on goods imported into the U.S.
For example, the new U.S. administration has instituted substantial changes to U.S. foreign trade policy with respect to China and other countries, including a significant increase in tariffs on goods imported into the U.S. and the possibility of imposing further restrictions on international trade.
While it is difficult to anticipate the duration and extent of the ongoing military conflict, or the impact the continuing conflict and commensurate sanctions and penalties may have on our operations, any further sanctions imposed or actions taken by the U.S. or other countries, and any retaliatory measures by Russia in response, such as additional restrictions on energy supplies from Russia to countries in the region, could increase our costs, reduce our sales and earnings or otherwise have an adverse effect on our operations.
While it is difficult to anticipate the duration and extent of any conflict, or the impact of any prolonged conflict and commensurate sanctions and penalties may have on our operations, any sanctions imposed or actions taken by the U.S. or other countries, and any retaliatory measures could increase our costs, reduce our sales and earnings or otherwise have an adverse effect on our operations.
Although the duration and extent of the ongoing military conflict is highly unpredictable, and the magnitude of the potential economic impact is currently unknown, Russian military actions and resulting sanctions could have a negative effect on our financial condition and operating results.
Although the duration and extent of military and other conflict is highly unpredictable, and the magnitude of the potential economic impact may not readily be quantified military and other hostile actions and resulting sanctions could have a negative effect on our financial condition and operating results.
In addition, for U.S. dollar-denominated sales, an increase in the value of the U.S. dollar would increase the real cost to customers of our products in markets outside the U.S., which could result in price concessions in certain markets, impact our competitive position or have an adverse effect on demand for our products and consequently on our business, results of operations and financial condition. 26 Table of contents In the future, if we identify new material weaknesses that are not remediated, it could result in material misstatements in our financial statements.
In addition, for U.S. dollar-denominated sales, an increase in the value of the U.S. dollar would increase the real cost to customers of our products in markets outside the U.S., which could result in price concessions in certain markets, impact our competitive position or have an adverse effect on demand for our products and consequently on our business, results of operations and financial condition.
Our financial performance may suffer if we cannot continue to develop, commercialize or enforce the intellectual property rights on which our businesses depend, or if we are unable to gain and maintain access to relevant intellectual property rights of third parties through license and other agreements, or are subjected to successful third-party claims of infringement.
The unfavorable resolution of one or more of these matters could have an adverse effect on our business, results of operations and financial condition. 24 Table of contents Our financial performance may suffer if we cannot continue to develop, commercialize or enforce the intellectual property rights on which our businesses depend, or if we are unable to gain and maintain access to relevant intellectual property rights of third parties through license and other agreements, or are subjected to successful third-party claims of infringement.
If additional tariffs or trade restrictions are implemented on our products (or on materials, parts or components we use to manufacture our products) by the U.S. or other countries, the cost of our products manufactured in countries such as China and Mexico and imported into the U.S. or other countries in which we operate could increase further.
The imposition of additional tariffs on our products (or on materials, parts or components we use to manufacture our products or to provide service for our products) by the U.S. or other countries, the cost of our products manufactured in other countries subject to additional tariffs and imported into the U.S. or other countries in which we operate would increase as a result of new tariffs that are implemented, and could increase further to the extent that retaliatory tariffs or similar additional trade restrictions are implemented.
Changes in import and export control or trade sanctions laws may restrict our business practices, including cessation of business activities in sanctioned countries or with sanctioned entities, and may result in claims for breach of existing contracts and modifications to existing compliance programs and training schedules.
Changes in import and export control or trade sanctions laws, the imposition of tariffs on certain U.S. trading partners, the potential for retaliatory tariffs, or the imposition of additional tariffs or other trade restrictions, will increase our costs, and may restrict our business practices, including cessation of business activities in sanctioned countries or with sanctioned entities, and may result in claims for breach of existing contracts and modifications to existing compliance programs and training schedules.
Further, the conflict between Russia and Ukraine could lead to future additional disruption, instability and volatility in global markets and industries that could negatively impact our operations. The U.S. government and other governments in jurisdictions in which we operate have imposed severe sanctions and export controls against Russia and Russian interests and threaten additional sanctions and controls.
Further, war and conflicts could lead to instability and volatility in global markets and industries that could negatively impact our operations. The U.S. government and other governments in jurisdictions in which we operate may impose severe sanctions and export controls.
Additionally, if our customers, suppliers or financial institutions are unable to access the capital markets to meet their commitments to us, our business could be adversely impacted. Risks Related to the Ownership of our Securities The Vertiv Stockholder has significant influence over us.
Additionally, if our customers, suppliers or financial institutions are unable to access the capital markets to meet their commitments to us, our business could be adversely impacted. Risks Related to the Ownership of our Securities Resales of our securities may cause the market price of our securities to drop significantly, even if our business is doing well.
For example, the ability of our subsidiaries to make distributions, loans and other payments to us for the purposes described above and for any other purpose may be limited by the terms of the agreements governing the Senior Secured Credit Facilities, the Notes, and any of our other outstanding indebtedness. 30 Table of contents The exercise of Warrants for our Class A common stock would increase the number of shares eligible for future resale in the public market and result in dilution to our stockholders .
For example, the ability of our subsidiaries to make distributions, loans and other payments to us for the purposes described above and for any other purpose may be limited by the terms of the agreements governing the Senior Secured Credit Facilities, the Notes, and any of our other outstanding indebtedness.
Changes in our executive management team, including our executive chairman, may also cause disruptions in, and harm to, our business and failure to have an effective succession plan in place for our key executive officers could significantly delay or prevent us from achieving our business and/or development objectives and could materially harm our business. 31 Table of contents We may elect not to purchase insurance for certain business risks and expenses and, for the insurance coverage we have in place, such coverage may not address all of our potential exposures or, in the case of substantial losses, may be inadequate.
Changes in our executive management team, including our executive chairman, may also cause disruptions in, and harm to, our business and failure to have an effective succession plan in place for our key executive officers could significantly delay or prevent us from achieving our business and/or development objectives and could materially harm our business.
Our manufacturing facilities and operations could be disrupted by a natural disaster, labor strike, shortages in suppliers, components and parts, war, political unrest, terrorist activity, economic upheaval, changes in governmental regulations, government mandated shutdowns or shelter in place orders, or public health concerns. Some of these conditions are more likely in certain geographic regions in which we operate.
Our manufacturing facilities and operations could be disrupted by a natural disaster, labor strike, shortages in suppliers, components and parts, war, political unrest, terrorist activity, economic upheaval, changes in governmental regulations, 22 Table of contents including but not limited to regulations regarding taxes, tariffs, custom duties, restricted and/or sanctioned parties, government mandated shutdowns or shelter in place orders, or public health concerns.
If we are not able to realize the value of the goodwill and net intangible assets, this could adversely affect our results of operations and financial condition, and also result in an impairment of those assets.
If we are not able to realize the value of the goodwill and net intangible assets, this could adversely affect our results of operations and financial condition, and also result in an impairment of those assets. 26 Table of contents We are exposed to fluctuations in foreign currency exchange rates, and our hedging activities may not protect us against the consequences of such fluctuations on our earnings and cash flows.
There are anticipated regulations forthcoming in the U.S. in the areas of cybersecurity, data privacy and data security, any of which could impact us and our customers. Similarly, cybersecurity, data privacy and data security regulations outside of the U.S. continue to evolve.
There are anticipated regulations forthcoming in the U.S. and other countries where our customers operate in the areas of cybersecurity, data privacy and data security, artificial intelligence, and critical infrastructure construction, permitting and energy consumption any of which could impact us and our customers.
Additionally, actions brought by such foreign taxing authorities could impact our licenses, permits, or certifications in that jurisdiction, which could affect our ability to operate in that jurisdiction. If we lost our ability to operate in jurisdictions, especially those where we have manufacturing facilities, our results of operations and financial performance could be materially impacted.
Additionally, actions brought by such foreign taxing authorities could impact our licenses, permits, or certifications in that jurisdiction, which could affect our ability to operate in that jurisdiction.
Worldwide economic conditions generally impact demand for our product offerings. Macroeconomic weakness and uncertainty in global, regional or local areas may result in decreased orders, revenue, gross margin and earnings. Our business has been impacted from time to time in the past by macroeconomic weakness in the U.S. and various regions outside of the U.S.
General Risk Factors Global macroeconomic conditions, including economic weakness and uncertainty in the areas in which we operate, could adversely impact our business, results of operations and financial condition. Worldwide economic conditions generally impact demand for our product offerings. Macroeconomic weakness and uncertainty in global, regional or local areas may result in decreased orders, revenue, gross margin and earnings.
Other administrations could take a different approach to U.S. foreign trade policy, so there remains uncertainty as to whether, trade between the U.S and other countries, including countries in which we operate, may be impacted by these policy shifts. Changes in policy or continued uncertainty could depress economic activity and restrict our access to suppliers or customers.
This new administration has taken a different approach to U.S. foreign trade policy than their predecessors, so there remains uncertainty as to whether, and to what degree, trade between the U.S and other countries, including countries in which we operate, will be impacted by these policy shifts.
The invasion of Ukraine by Russia in February 2022 and resulting sanctions have had a broad range of adverse impacts on global business and financial markets, some of which have had and may continue to have adverse impacts on our business. These include increased inflation, significant market disruptions and increased volatility in commodity prices.
War and conflict, such as the current conflict in the middle east and the invasion of Ukraine by Russia in February 2022, and any resulting sanctions by the U.S., European Union, and other countries may have a broad range of adverse impacts on global business and financial markets, some of which may have adverse impacts on our business.
Any failure by us to identify, manage, integrate and complete acquisitions, divestitures and other significant transactions successfully could harm our financial results, business and prospects.
Consequently, our exposure to these conditions which may exist in or otherwise impact the emerging markets that we enter may have an adverse effect on our business, results of operations and financial condition. Any failure by us to identify, manage, integrate and complete acquisitions, divestitures and other significant transactions successfully could harm our financial results, business and prospects.
Any failure of our product offerings could subject us to substantial liability, including product liability claims, which could damage our reputation or the reputation of one or more of our brands.
If we lost our ability to operate in jurisdictions, especially those where we have manufacturing facilities, our results of operations and financial performance could be materially impacted. 20 Table of contents Any failure of our product offerings could subject us to substantial liability, including product liability claims, which could damage our reputation or the reputation of one or more of our brands.
We are subject to risks related to legal claims and proceedings filed by or against us, and adverse outcomes in these matters may materially harm our business. We are subject to various claims, disputes, investigations, demands, arbitration, litigation, or other legal proceedings.
In the event we are unable to pass the increased costs resulting from any tariffs along to our customers, it could have a material adverse effect on our business, profitability, and our earnings. We are subject to risks related to legal claims and proceedings filed by or against us, and adverse outcomes in these matters may materially harm our business.
Any such disruption could cause delays in the manufacture and/or shipments of products, performance of services, and the loss of sales and customers, and insurance proceeds may not adequately compensate for losses. 22 Table of contents The invasion of Ukraine by Russia and resulting sanctions by the U.S., European Union and other countries have contributed to inflation, market disruptions and increased volatility in commodity prices more acutely in the U.S. and Europe and a slowdown in global economic growth.
Wars, conflicts and other types of geopolitical tensions, and any resulting sanctions by the U.S., European Union and other countries may contribute to inflation, market disruptions and increased volatility in commodity prices more acutely in the U.S. and Europe and a slowdown in global economic growth.
We are subject to risks related to increasing visibility and emphasis placed on various environmental, social and governance (ESG)-related metrics and goals, as well as any failure to achieve ESG-related goals that we establish.
We are subject to risks related to various environmental, social and governance ("ESG")-related matters, metrics, and goals, which may impact our business and reputation.
Removed
As it relates to our acquisition of E&I Engineering and its affiliate Powerbar Gulf (collectively, “ E&I ”) in November of 2021 (“Acquisition”), our ability to realize the anticipated benefits of the Acquisition will also depend, to a large extent, on our ability to integrate the two businesses.
Added
Additionally, final laws enacting the Organization for Economic Co-operation and Development's global minimum tax framework ("Pillar Two Laws") are effective beginning in 2024 in the European Union and other countries where we do business. The Company faces uncertainty related to the potential implementation of Pillar Two Laws in other countries where we operate.
Removed
If we cannot successfully integrate and manage the two businesses within a reasonable time following the Acquisition, we may not be able to realize the potential and anticipated benefits of the Acquisition, which could have a material adverse effect on our business, financial condition and operating results.
Added
We are continuing to monitor the legislative process and evaluate the potential impact of implementation of Pillar Two Laws by other countries. We are regularly subject to audits by tax authorities.
Removed
For example, in the U.S. regulations governing aspects of fixed broadband networks and wireless networks may change as a result of proposals regarding net neutrality and government regulation of the Internet, which could impact our communication networks customers.
Added
Manufacturers in countries that have lower production costs, such as China and India, may become competitors in key emerging markets and could offer their products in established markets. These actions may have a negative effect on our pricing, market share and operating results in these markets.
Removed
Although President Biden issued an executive order in July 2021 encouraging the FCC to restore net neutrality rules undone by the previous administration, the effects and ultimate outcome of government regulation of the Internet and related services pertaining to net neutrality are unclear.
Added
In addition, foreign governments may decide to implement tax and other policies that favor their domestic manufacturers at the expense of international manufacturers.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

12 edited+2 added−0 removed24 unchanged
Biggest changeRisk Assessment: The Company generally evaluates risks, including cybersecurity risks, based on probability, impact and proximity. As part of its program, the Company conducts formal cybersecurity risk assessment exercises at least bi-annually. The Company has documented processes and protocols in order to delineate unacceptable levels of risk and assess such risks based on a number of factors.
Biggest changeEach risk in the risk register is monitored by one of our cybersecurity members and updates are reported to the CROC as needed. Risk Assessment: The Company generally evaluates risks, including cybersecurity risks, based on probability, impact and proximity. As part of its program, the Company conducts formal cybersecurity risk assessment exercises on an annual basis.
This IRP describes the procedures for handling a variety of cybersecurity incidents; categorizes the types of potential cybersecurity incidents and the timeframe for reporting each; establishes cybersecurity incident 33 Table of contents response levels; provides for the conducting of legally privileged investigations to enable us to meet applicable legal obligations, including possible notification requirements; and outlines the roles and responsibilities for various personnel in the event of a cybersecurity incident, including but not limited to, the process to escalate risks to our Board, Audit Committee and our executive management, as necessary.
This IRP describes the procedures for handling a variety of cybersecurity incidents; categorizes the 32 Table of contents types of potential cybersecurity incidents and the timeframe for reporting each; establishes cybersecurity incident response levels; provides for the conducting of legally privileged investigations to enable us to meet applicable legal obligations, including possible notification requirements; and outlines the roles and responsibilities for various personnel in the event of a cybersecurity incident, including but not limited to, the process to escalate risks to our Board, Audit Committee and our executive management, as necessary.
Our cybersecurity framework is aligned with the National Institute of Standards and Technology’s special publication 800-53 and is comprised of the following four main pillars: Risk Governance: The Company’s cybersecurity program utilizes a cross-functional approach to addressing cybersecurity risks and engages in discussions with the Board (or a committee thereof) and our executive officers accordingly on an as-needed basis.
Our cybersecurity framework is aligned with the National Institute of Standards and Technology’s special publication 800-53 and ISO 27001 and is comprised of the following four main pillars: Risk Governance: The Company’s cybersecurity program utilizes a cross-functional approach to addressing cybersecurity risks and engages in discussions with the Board (or a committee thereof) and our executive officers accordingly on an as-needed basis.
Once the severity level and appropriate management protocol for responding to the cybersecurity incident have been determined in accordance with our Cybersecurity Plan and IRP, the CIO, or the CIO's delegee, may elevate the incident to the CEO, Chief Legal Counsel, Board, and Audit Committee as needed (depending on the nature and severity of the incident) for further investigation and response, including for an assessment of materiality.
Once the severity level and appropriate management protocol for responding to the cybersecurity incident have been determined in accordance with our Cybersecurity Plan and IRP, the CIO, or the CIO's delegee, may elevate the incident to the CEO, Chief Legal Counsel, Board, and Audit Committee as needed (depending on the nature and severity of the incident) for further investigation and 33 Table of contents response, including for an assessment of materiality.
Depending on the nature of the incident, the CIO or Chief Legal 34 Table of contents Counsel will coordinate a notification and communications plan and event analysis across the appropriate teams, which may involve updates to our cybersecurity management team, the Board, the Audit Committee, the ERC and the CROC.
Depending on the nature of the incident, the CIO or Chief Legal Counsel will coordinate a notification and communications plan and event analysis across the appropriate teams, which may involve updates to our cybersecurity management team, the Board, the Audit Committee, the ERC and the CROC.
Our management cybersecurity team consists of all of the direct reports to our CEO, including our CIO, as well as dedicated cybersecurity personnel – including without limitation, our CISO, multiple cybersecurity engineers and other business level stakeholders.
Our management cybersecurity team consists of a majority of the direct reports to our CEO, including our CIO, as well as dedicated cybersecurity personnel – including without limitation, our CISO, multiple cybersecurity engineers and other business level stakeholders.
Currently, the CROC is comprised of representatives of our IT department as well as senior leadership, including all direct reports to our CEO.
Currently, the CROC is comprised of representatives of our IT department as well as senior leadership, including a majority of the direct reports to our Chief Executive Officer ("CEO").
Our CIO has more than 30 years of information technology and cybersecurity experience at various levels. She holds an executive MBA from the Quantic School of Business and Technology, a Graduate Certificate in SAP from Central Michigan University, a Masters in computer information systems from Grand Valley State University and a BA from the University of Michigan.
She holds an executive MBA from the Quantic School of Business and Technology, a Graduate Certificate in SAP from Central Michigan University, a Masters in computer information systems from Grand Valley State University and a BA from the University of Michigan.
In addition, the Board, the Audit Committee, and the ERC receive regular presentations and reports on cybersecurity matters that address the full range of cybersecurity topics discussed herein. Further, on a periodic basis, the Board and/or Audit Committee and the ERC also discuss our cybersecurity programs and processes with our Chief Information Officer (CIO) and Chief Information Security Officer (CISO).
Further, on a periodic basis, the Board and/or Audit Committee and the ERC also discuss our cybersecurity programs and processes with our CEO, Chief Information Officer ("CIO"), and Chief Information Security Officer ("CISO").
To facilitate this program, the Company has created a risk register to assess and monitor potential risks. As discussed below, the Company uses certain third-party tools to identify and manage cybersecurity vulnerabilities. Each risk in the risk register is monitored by one of our cybersecurity members and updates are reported to the CROC as needed.
To facilitate this program, the Company has created cyber risk and incident management procedures and a related risk register to document and monitor potential risks. As discussed below, the Company uses certain third-party tools to identify and manage cybersecurity vulnerabilities.
Relevant Expertise of Management: Our CISO has more than 20 years of intelligence, information technology and cybersecurity experience, and holds a Masters degree in the area of Cybersecurity and Information Sciences from The Pennsylvania State University. His prior roles include senior level positions in Defense, Financial Services and High Technology industries.
Relevant Expertise of Management: Our CISO has more than 20 years of intelligence, information technology and cybersecurity experience, and holds a Masters degree in the area of Cybersecurity and Information Sciences from The Pennsylvania State University as well as a Graduate Certificate from The Pennsylvania State University in Information Systems Cybersecurity and a current Certified Information Security Manager certification from ISACA.
Risk Response: We have developed various playbooks that comprise a comprehensive written incident response plan (collectively, our IRP).
The Company has documented processes and protocols in order to delineate unacceptable levels of risk and assess such risks based on a number of factors. Risk Response: We have developed various playbooks that comprise a comprehensive written incident response plan (collectively, our IRP).
Added
In addition, the Board, the Audit Committee, and the ERC receive regular presentations and reports on cybersecurity matters that address the full range of cybersecurity topics discussed herein.
Added
His prior roles include senior level positions in Defense, Financial Services and High Technology industries. Our CIO has more than 30 years of information technology and cybersecurity experience at various levels.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

12 edited+3 added−8 removed5 unchanged
Biggest changeWe believe we have meritorious defenses against the allegations made in the aforementioned lawsuits, which are at the preliminary stages. However, we are unable at this time to predict the outcome of these matters or the amount of any cost associated with their resolution.
Biggest changeHowever, we are unable at this time to predict the outcome of these matters or the amount of any cost associated with their resolution. In November 2023, following the filing of the putative securities class action and the Sullivan Action described above, the Company received a subpoena from the U.S.
As of December 31, 2023, other than as described above, there were no known contingent liabilities (including guarantees, taxes and other claims) that management believes were or will be material in relation to the Company’s Consolidated Financial Statements, nor were there any material commitments outside the normal course of business. Item 4.
As of December 31, 2024, other than as described above, there were no known contingent liabilities (including guarantees, taxes and other claims) that management believes were or will be material in relation to the Company’s Consolidated Financial Statements, nor were there any material commitments outside the normal course of business. Item 4.
Item 3. Legal Proceedings With the exception of the below, we are not a party to any material, pending legal proceedings or claims at December 31, 2023. From time-to-time, we may be a party to, or otherwise involved in, legal proceedings arising in the normal course of business.
Item 3. Legal Proceedings With the exception of the below, we are not a party to any material, pending legal proceedings or claims at December 31, 2024. From time-to-time, we may be a party to, or otherwise involved in, legal proceedings arising in the normal course of business.
Mine Safety Disclosures Not applicable. 36 Table of contents PART II.
Mine Safety Disclosures Not applicable. 35 Table of contents PART II.
No. 2023-0608, against Vertiv (as nominal defendant only) and certain of the Company’s directors and officers in Delaware Court of Chancery for breach of fiduciary duty.
(the " Hanna Action"), against Vertiv (as nominal defendant only) and certain of Company’s directors and officers in Delaware Court of Chancery for breach of fiduciary duty.
In February of 2024 $5.2 was paid to SAT in connection with the accepted proposal. We are unable at this time to predict the outcome of these matters, including whether any proceedings may be instituted in connection with the government inquiries, or the amount of any cost associated with their resolution.
We are unable at this time to predict the outcome of these matters, including whether any proceedings may be instituted in connection with the government inquiries, or the amount of any cost associated with their resolution.
The complaint alleges that certain of the named directors and officers caused the Company to issue materially false and/or misleading public statements with respect to inflationary and supply chain pressures and pricing issues, and that the Company suffered damages as a result. This action has been stayed since August 10, 2023, pending the securities class action.
The complaints allege that certain of the named directors and officers caused the Company to issue materially false and/or misleading public statements with respect to inflationary and supply chain pressures and pricing issues, and that the Company suffered damages as a result.
The Company is actively responding to these matters. In January 2024, the Mexican tax administration service, the Servicio de Administracion Tributaria (the "SAT"), initiated a process to suspend the importer registration of one of the Company's wholly owned Mexico subsidiaries, Tecnología del Pacífico S.A. de C.V.
In January 2024, the Mexican tax administration service, the Servicio de Administracion Tributaria (the "SAT"), initiated a process to suspend the importer registration of one of the Company's wholly owned Mexico subsidiaries, Tecnología del Pacífico S.A. de C.V. (“TDP”), in connection with a contested customs tax audit for the period April 2016 to February 2018.
The Company intends to seek reimbursement of this amount as an undue payment in the near future from SAT, for which the outcome is currently unknown and no receivable has been established. Furthermore, the Company remains subject to other customs tax audits concerning other facilities located within Mexico.
The Company intends to seek reimbursement of this amount as an undue payment from SAT, for which the outcome is currently unknown and no receivable has been established.
The motion to dismiss the claims under Sections 10(b) and 20(a) of the Exchange Act remains pending. 35 Table of contents On June 9, 2023, two Vertiv shareholders, Matthew Sullivan and Jose Karlo Ocampo Avenido, brought a derivative lawsuit, Sullivan v. Johnson, et al., C.A.
On January 31, 2024, the Court issued an order dismissing the claims under Sections 11, 12(a)(2), and 15 of the Securities Act. The motion to dismiss the claims under Sections 10(b) and 20(a) of the Exchange Act remains pending. On June 9, 2023, two Vertiv shareholders, Matthew Sullivan and Jose Karlo Ocampo Avenido, brought a derivative lawsuit, Sullivan v.
In November 2023, following the filing of the actions described above, the Company received a subpoena from the U.S. Securities and Exchange Commission (the “SEC”) and a parallel request for documents from the U.S. Attorney’s Office for the Southern District of New York, which relate to the allegations made in the class action complaint and derivative action.
Securities and Exchange Commission (the “SEC”) and a parallel request for documents from the U.S. Attorney’s Office for the Southern District of New York, which relate to the allegations made in those actions. The Company is actively responding to these matters.
TDP has accepted a proposal from SAT to close the audit by making payments and fees totaling approximately $10.1 which has been recorded in “Accrued expenses and other liabilities” on the Consolidated Balance Sheets as of December 31, 2023.
After further investigation and discussion with SAT, TDP agreed to make payments and fees totaling approximately $10.1 which were recorded in “Accrued expenses and other liabilities” on the Consolidated Balance Sheets as of December 31, 2023 and subsequently paid in the first quarter of 2024.
Removed
On August 3, 2021, an American Arbitration Association arbitration hearing commenced with respect to a 2018 claim filed by Vertiv against SVO Building One, LLC (“SVO”) alleging damages of approximately $12.0 with respect to (i) unremitted payment for work and materials in connection with the design, engineering, procurement, installation, construction, and commissioning of a data center located in Sacramento, California and (ii) damages and injunctive relief relating to SVO’s unauthorized use of Vertiv’s intellectual property and work product.
Added
Johnson, et al., C.A. No. 2023-0608 (the " Sullivan Action"), against Vertiv (as no minal defendant only) and certain of the Company’s directors and officers in Delaware Court of Chancery for breach of fiduciary duty. Further, on November 19, 2024, another Vertiv shareholder, Laura Hanna, brought a derivative lawsuit, Hanna v. Johnson, et al.
Removed
SVO filed a counterclaim in 2018 alleging damages of approximately $18.0 relating to (i) allegations that Vertiv was not a duly licensed contractor at all times during the project in violation of California’s contractor license regulations, (ii) breach of warranty, and (iii) gross negligence.
Added
The Sullivan Action has been stayed since August 10, 2023 pending the outcome of the motion to dismiss in the securities class action. On February 13, 2025, the Delaware Court of Chancery entered an order that (i) consolidated the Sullivan Action and Hanna Action into a single consolidated derivative lawsuit, In re Vertiv Holdings Co Stockholder Derivative Litigation, Consolidated C.A.
Removed
On September 3, 2021, the arbitrator issued an interim phase one ruling finding (1) that Vertiv was in violation of California contractor license regulations and was barred from recovery of approximately $9.0 for work performed and equipment delivered in connection with the project, as well as requiring disgorgement plus interest of $10.0, (2) SVO was not in violation of California’s contractor license regulations, and (3) Vertiv and SVO agreed to a traditional baseball arbitration provision under the terms and conditions for the project, wherein each party is required to submit a proposed final award to the arbitrator for consideration, and the arbitrator is required to select one of the proposed awards submitted by the parties as the final award in the arbitration and is prohibited from issuing an alternative award.
Added
No. 2023-0608-NAC (the “Consolidated Derivative Action”), (ii) designated the complaint in the Hanna Action as the operative complaint in the Consolidated Derivative Action, and (iii) stayed the Consolidated Derivative Action on terms identical to those of the existing stay of the Sullivan Action. 34 Table of contents We believe we have meritorious defenses against the allegations made in the aforementioned lawsuits, which are at the preliminary stages.
Removed
On December 31, 2021, the parties entered into a settlement agreement on ordinary and customary terms, settling all of the disputes between them. As of December 31, 2022 the settlement was recorded in “Accrued expenses and other liabilities” on the Consolidated Balance Sheet. The settlement was paid in the third quarter of 2023.
Removed
On January 31, 2024, the Court issued an order dismissing the claims under Sections 11, 12(a)(2), and 15 of the Securities Act.
Removed
(“TDP”), in connection with a contested customs tax audit for the period April 2016 to February 2018. SAT claimed its basis for the suspension was a failure by TDP to provide sufficient e vidence of the export of goods temporarily imported at required levels under Mexico's Manufacturing, Maquila and Export Services Industries Program ("IMMEX Program").
Removed
The Company and TDP has disputed SAT’s position throughout the customs tax audit, through the filing of various petitions and appeals with appropriate documentation evidencing the complete and timely export of the goods temporarily imported during the audit period.
Removed
While we cannot predict with certainty the outcome of other assessments, based on currently known information, we believe a risk of loss, if any, is not currently estimable. Accordingly, no further reserve for loss contingency has been recorded in the Company's financial statements as of December 31, 2023 related to these other matters.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

7 edited+2 added−0 removed5 unchanged
Biggest changeCompany / Index 12/31/2018 12/31/2019 12/31/2020 12/31/2021 12/31/2022 12/31/2023 Vertiv Holdings Co. 100.0 112.6 190.6 255.0 139.6 491.2 S&P MidCap 400 Index 100.0 126.2 143.4 179.0 155.6 181.2 Russell 1000 Index 100.0 131.4 159.0 201.0 162.6 205.7 Item 6. [Reserved] 38 Table of contents
Biggest changeCompany / Index 12/31/2019 12/31/2020 12/31/2021 12/31/2022 12/31/2023 12/31/2024 Vertiv Holdings Co. 100.0 169.4 226.6 124.1 436.4 1033.5 S&P MidCap 400 Index 100.0 113.7 141.8 123.3 143.5 163.5 Russell 1000 Index 100.0 121.0 153.0 123.7 156.5 194.9 S&P 500 100.0 118.4 152.4 124.8 157.6 197.0 Item 6. [Reserved] 37 Table of contents
The graph assumes that $100 was invested on December 31, 2018 in our Class A common stock and that any dividends were reinvested. The graph is not, and is not intended to be, indicative of future performance of our common stock.
The graph assumes that $100 was invested on December 31, 2019 in our Class A common stock and that any dividends were reinvested. The graph is not, and is not intended to be, indicative of future performance of our common stock.
We are a holding company without any direct operations and have no significant assets other than our ownership interest in Vertiv Holdings. Accordingly, our ability to pay dividends depends upon the financial condition, liquidity and results of operations of, and our receipt of dividends, loans or other funds from, our subsidiaries.
However, we are a holding company without any direct operations and have no significant assets other than our ownership interest in our subsidiaries. Accordingly, our ability to pay dividends depends upon the financial condition, liquidity and results of operations of, and our receipt of dividends, loans or other funds from, our subsidiaries.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market Information Our Class A common stock currently trades on the NYSE under the symbol “VRT”. Holders of Common Stock As of February 16, 2024, there wer e 19 holders of record of the Company's common shares.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market Information Our Class A common stock currently trades on the NYSE under the symbol “VRT”. Holders of Common Stock As of February 10, 2025, there wer e 13 holders of record of the Company's common shares.
The Company did not repurchase any shares of Class A common stock during the fourth quarter of 2023 . 37 Table of contents Stock Performance Graph The following graph provides a comparison of the cumulative total stockholder return on our common stock from December 31, 2018 through December 31, 2023 to the returns of the S&P MidCap 400 and Russell 1000.
The Company did not repurchase any shares of Class A common stock during the fourth quarter of 2024. 36 Table of contents Stock Performance Graph The following graph provides a comparison of the cumulative total stockholder return on our common stock from December 31, 2019 through December 31, 2024 to the returns of the S&P MidCap 400, Russell 1000, and S&P 500.
The stock repurchase program does not obligate the Company to repurchase any specific dollar amount or number of shares of Class A common stock and the Board's authorization of the program may be modified, suspended or discontinued at any time.
The stock repurchase program does not obligate the Company to repurchase any specific dollar amount or number of shares of Class A common stock and the Board's authorization of the program may be modified, suspended or discontinued at any time. During the first quarter of 2024, Vertiv purchased 9,076,444 shares of its common stock, par value $0.0001 per share.
Such number does not include DTC participants or beneficial owners holding shares through nominee names. Cash Dividends On November 29, 2023, we declared a dividend of $0.025 per share, paid on December 27, 2023 to our shareholders of record, as of December 11, 2023.
Such number does not include DTC participants or beneficial owners holding shares through nominee names. Cash Dividends On November 29, 2023, we increased the quarterly cash dividend that we pay by declaring a dividend of $0.025 per share.
Added
We further increased our quarterly cash dividend to $0.0375 per share on November 18, 2024, which was paid on December 19, 2024 to shareholders of record as of December 3, 2024, and we currently expect to continue to pay a quarterly dividend.
Added
During the second quarter of 2024, all shares repurchased were retired. As of December 31, 2024, $2.4 billion remain for additional share repurchases. Excess share repurchase price over par value is allocated between additional paid-in capital, which is limited to amounts initially recorded for the same issue, and retained earnings.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

49 edited+15 added−19 removed29 unchanged
Biggest changeThis acquisition further strengthens advanced cooling technology, deep domain expertise, control systems, and testing for AI and other high density compute cooling requirements to our existing thermal management portfolio. 39 Table of contents RESULTS OF OPERATIONS Year ended December 31, 2023 compared to year ended December 31, 2022 (Dollars in millions) 2023 2022 $ Change % Change Net sales $ 6,863.2 $ 5,691.5 $ 1,171.7 20.6 % Cost of sales 4,462.7 4,075.4 387.3 9.5 % Gross profit 2,400.5 1,616.1 784.4 48.5 % Selling, general and administrative expenses 1,312.3 1,178.3 134.0 11.4 % Amortization of intangibles 181.3 215.8 (34.5) (16.0) % Restructuring costs 28.6 0.7 27.9 3,985.7 % Foreign currency (gain) loss, net 16.0 3.7 12.3 332.4 % Other operating expense (income) (9.9) (5.8) (4.1) 70.7 % Operating profit (loss) 872.2 223.4 648.8 290.4 % Interest expense, net 180.1 147.3 32.8 22.3 % Loss on extinguishment of debt 0.5 — 0.5 100.0 % Change in fair value of warrant liabilities 157.9 (90.9) 248.8 (273.7) % Income tax expense 73.5 90.4 (16.9) (18.7) % Net income (loss) $ 460.2 $ 76.6 $ 383.6 500.8 % Net Sales Net sales were $6,863.2 in 2023, an increase of $1,171.7, or 20.6%, compared with $5,691.5 in 2022.
Biggest changeFurther, we are focused on the continued growth and expansion of our portfolio geographically, as we leverage our best-in-class regional products and expand such offerings into other regions and globally. 38 Table of contents RESULTS OF OPERATIONS Year ended December 31, 2024 compared to year ended December 31, 2023 (Dollars in millions) 2024 2023 $ Change % Change Net sales $ 8,011.8 $ 6,863.2 $ 1,148.6 16.7 % Cost of sales 5,077.6 4,462.7 614.9 13.8 % Gross profit 2,934.2 2,400.5 533.7 22.2 % Selling, general and administrative expenses 1,374.0 1,312.3 61.7 4.7 % Amortization of intangibles 184.2 181.3 2.9 1.6 % Restructuring costs 5.3 28.6 (23.3) (81.5) % Foreign currency (gain) loss, net 9.3 16.0 (6.7) (41.9) % Other operating expense (income) (6.0) (9.9) 3.9 (39.4) % Operating profit (loss) 1,367.4 872.2 495.2 56.8 % Interest expense, net 150.4 180.1 (29.7) (16.5) % Loss on extinguishment of debt 2.4 0.5 1.9 380.0 % Change in fair value of warrant liabilities 449.2 157.9 291.3 184.5 % Income tax expense 269.6 73.5 196.1 266.8 % Net income (loss) $ 495.8 $ 460.2 $ 35.6 7.7 % Net Sales Net sales were $8,011.8 in 2024, an increase of $1,148.6, or 16.7%, compared with $6,863.2 in 2023.
We believe our current cash and cash equivalent levels, augmented by the ABL Revolving Credit Facility, will provide adequate near-term liquidity for the next 12 months of independent operations, as well as the resources necessary to invest for growth in existing businesses and manage our capital structure on a short- and long-term basis.
We believe our current cash and cash equivalent levels, augmented by availability under the ABL Revolving Credit Facility, will provide adequate near-term liquidity for the next 12 months of independent operations, as well as the resources necessary to invest for growth in existing businesses and manage our capital structure on a short- and long-term basis.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operation Unless the context otherwise indicates or requires, references to (1) “the Company,” “Vertiv,” “we,” “us” and “our” refer to Vertiv Holdings Co, a Delaware corporation, and its consolidated subsidiaries; and (2) “GSAH” refers to GS Acquisition Holdings Corp prior to the Business Combination.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operation Unless the context otherwise indicates or requires, references to “the Company,” “Vertiv,” “we,” “us” and “our” refer to Vertiv Holdings Co, a Delaware corporation, and its consolidated subsidiaries; and “GSAH” refers to GS Acquisition Holdings Corp prior to the Business Combination.
In 2022, income tax expense was primarily influenced by the mix of income between our U.S. and non-U.S. operations, net of changes in valuation allowances and uncertain tax positions, and reflects the impact of non-deductible changes in fair value of warrant liabilities, as well as discrete tax adjustments related to legislation changes enacted in the period.
In 2023, income tax expense was primarily influenced by the mix of income between our U.S. and non-U.S. operations, net of changes in valuation allowances and uncertain tax positions, and reflects the impact of non-deductible changes in fair value of warrant liabilities, as well as discrete tax adjustments related to legislation changes enacted in the period.
Based on the results of our qualitative impairment assessment, we concluded that it is more likely than not that the fair value of each reporting unit exceeded their carrying value and, therefore, our goodwill was not impaired, and no impairment charges were reported for the year ended December 31, 2023.
Based on the results of our qualitative impairment assessment, we concluded that it is more likely than not that the fair value of each reporting unit exceeded their carrying value and, therefore, our goodwill was not impaired, and no impairment charges were reported for the year ended December 31, 2024.
The valuation methods used by us to estimate the fair value of each reporting unit include the discounted cash flow approach, the comparable public company approach and the comparable acquisition approach using a weighting of 40%, 40% and 20%, respectively.
The valuation methods used by us to estimate the fair value of each reporting unit include the discounted cash flow approach, the comparable public company approach and the comparable acquisition approach using a weighted approach of 40%, 40% and 20%, respectively.
Segment profitability is defined as operating profit (loss). Segment margin represents segment operating profit (loss) expressed as a percentage of segment net sales. For reconciliations of segment net sales and earnings to our consolidated results, see “Note 14 — Segment Information”, of our Consolidated Financial Statements. Segment net sales are presented excluding intercompany sales.
Segment margin represents segment operating profit (loss) expressed as a percentage of segment net sales. For reconciliations of segment net sales and earnings to our consolidated results, see “Note 14 — Segment Information”, of our Consolidated Financial Statements. Segment net sales are presented excluding intercompany sales.
Unbilled revenue is recorded when performance obligations have been satisfied, but we do not have present right to payment. 45 Table of contents For agreements with multiple performance obligations, the Company is required to determine whether performance obligations specified in these agreements are distinct and should be accounted for as separate revenue transactions for recognition purposes.
Unbilled revenue is recorded when performance obligations have been satisfied, but we do not have present right to payment. For agreements with multiple performance obligations, the Company is required to determine whether performance obligations specified in these agreements are distinct and should be accounted for as separate revenue transactions for recognition purposes.
We have omitted the discussion on our results of operations for the year ended December 31, 2021 which discussion was previously included in Item 7 of our 2022 Annual Report on Form 10-K, filed with the SEC on February 27, 2023.
We have omitted the discussion on our results of operations for the year ended December 31, 2022, which discussion was previously included in Item 7 of our 2023 Annual Report on Form 10-K, filed with the SEC on February 23, 2024.
The change in fair value of these warrants was the result of changes in market prices of our common stock and other observable inputs deriving the value of the financial instruments and the exercise of 5,266,666 of the Private Placement Warrants in February 2023.
The change in fair value of these warrants was the result of changes in market prices of our common stock, and other observable inputs deriving the value of the financial instruments, and the exercise of 5,266,667 and 5,266,666 of the Private Placement Warrants in December 2024 and February 2023, respectively.
Deferred taxes are not provided on the unremitted earnings of subsidiaries outside of the United States when it is expected that these earnings are indefinitely reinvested.
Deferred taxes are not provided on the unremitted earnings of subsidiaries outside of the United States when it is expected that these earnings are 44 Table of contents indefinitely reinvested.
See “Note 6 — Debt” of the consolidated financial statements for more detailed discussion of the material terms of the Notes and the Senior Secured Credit Facilities. At December 31, 2023, we had $780.4 in cash and cash equivalents, which includes amounts held outside of the U.S., primarily in Europe and Asia.
See “Note 6 — Debt” of the consolidated financial statements for more detailed discussion of the material terms of the Notes and the Senior Secured Credit Facilities. At December 31, 2024, we had $1,227.6 in cash and cash equivalents, which includes amounts held outside of the U.S., primarily in Europe and Asia.
We anticipate continuing to invest in having capacity in place globally with the geographic presence that our customers need, the ability to rapidly scale and to ensure resiliency. • Artificial Intelligence ("AI"): Increased maturity and adoption of AI and high-performance compute is currently impacting the data center industry driving technology innovation and could lead to increased demand.
We anticipate continuing to invest in capacity globally to provide the geographic presence that our customers need, and the ability to rapidly scale and to ensure resiliency. • Artificial Intelligence ("AI"): Increased maturity and adoption of AI and high-performance compute is currently impacting the data center industry and driving technology innovation, which has led to increased demand.
Vertiv Corporate and Other Corporate and other costs include costs associated with our headquarters located in Westerville, Ohio, as well as centralized global functions including Finance, Treasury, Risk Management, Strategy & Marketing, IT, Legal, and global product platform development and offering management. Corporate and other costs were $533.8 and $495.9 in 2023 and 2022, respectively.
Vertiv Corporate and Other Corporate and other costs include costs associated with our headquarters located in Westerville, Ohio, as well as centralized global functions including Finance, Treasury, Risk Management, Strategy & Marketing, IT, Legal, and global product platform development and offering management. Corporate and other costs were $160.8 and $154.0 in 2024 and 2023, respectively.
At December 31, 2023, Vertiv had $554.0 of availability (subject to customary borrowing base and other conditions) under the ABL Revolving Credit Facility, net of letters of credit outstanding in the aggregate principal amount of $16.0, and taking into account the borrowing base limitations set forth in the ABL Revolving Credit Facility.
At December 31, 2024, Vertiv had $784.9 of availability (subject to customary borrowing base and other conditions) under the ABL Revolving Credit Facility, net of letters of credit outstanding in the aggregate principal amount of $15.1, and taking into account the borrowing base limitations set forth in the ABL Revolving Credit Facility.
We, through our subsidiaries, are party to certain indebtedness arrangements, including the Senior Secured Notes, due 2028, with an outstanding principal amount of $850.0 as of December 31, 2023 (the “Notes”), the Term Loan, due 2027, with an outstanding principal amount of $2,118.1 as of December 31, 2023 (the “Term Loan”), and the ABL Revolving Credit Facility, due 2025, providing up to $570.0 of revolving borrowings, with separate sublimits for letters of credit and swingline borrowings and an uncommitted accordion of up to $30.0, for which none was outstanding as of December 31, 2023 (the “ABL Revolving Credit Facility” and collectively with the Term Loan, the “Senior Secured Credit Facilities”).
We, through our subsidiaries, are party to certain indebtedness arrangements, including the Senior Secured Notes, due 2028, with an outstanding principal amount of $850.0 as of December 31, 2024 (the “Notes”), the Term Loan, due 2027, with an outstanding principal amount of $2,097.0 as of December 31, 2024 (the “Term Loan”), and the ABL Revolving Credit Facility, due 2029, with a maturity date extended through an amendment in 2024, providing up to $800.0 of revolving borrowings, with separate sublimits for letters of credit and swingline borrowings and an uncommitted accordion of up to $200.0, for which none was outstanding as of December 31, 2024 (the “ABL Revolving Credit Facility” and collectively with the Term Loan, the “Senior Secured Credit Facilities”).
Selling, General and Administrative Expenses Selling, general and administrative expenses (or “SG&A”) were $1,312.3 in 2023, an increase of $134.0 compared to 2022. SG&A as a percentage of sales were 19.1% in 2023 compared with 20.7% in 2022.
Selling, General and Administrative Expenses Selling, general and administrative expenses (or “SG&A”) were $1,374.0 in 2024, an increase of $61.7 compared to 2023. SG&A as a percentage of sales were 17.1% in 2024 compared with 19.1% in 2023.
The change in fair value of the outstanding Private Placement Warrants during 2023 and 2022 resulted in a loss of $157.9 and a gain of $90.9, respectively.
The change in fair value of the then outstanding Private Placement Warrants during 2024 and 2023 resulted in a loss of $449.2 and $157.9, respectively.
Net Cash provided by (used for) Financing Activities Net cash used by financing activities was $247.5 in 2023 compared to $100.2 of net cash provided by financing activities in 2022.
Net Cash provided by (used for) Financing Activities Net cash used by financing activities was $652.1 in 2024 compared to $247.5 of net cash used by financing activities in 2023.
There can be no assurance that we will continue to have access to the capital and financing markets on acceptable terms. 43 Table of contents Summary Statement of Cash Flows Year ended December 31, 2023 compared to year ended December 31, 2022 (Dollars in millions) 2023 2022 $ Change % Change Net cash provided by (used for) operating activities $ 900.5 $ (152.8) $ 1,053.3 (689.3) % Net cash provided by (used for) investing activities (139.1) (112.1) (27.0) 24.1 Net cash provided by (used for) financing activities (247.5) 100.2 (347.7) (347.0) Capital expenditures (127.9) (100.0) (27.9) 27.9 Investments in capitalized software (6.7) (11.0) 4.3 (39.1) Net Cash provided by (used for) Operating Activities Net cash provided by operating activities was $900.5 in 2023, a $1,053.3 increase in cash generation compared to 2022.
There can be no assurance that we will continue to have access to the capital and financing markets on acceptable terms Summary Statement of Cash Flows Year ended December 31, 2024 compared to year ended December 31, 2023 (Dollars in millions) 2024 2023 $ Change % Change Net cash provided by (used for) operating activities $ 1,319.3 $ 900.5 $ 418.8 46.5 % Net cash provided by (used for) investing activities (201.7) (139.1) (62.6) 45.0 Net cash provided by (used for) financing activities (652.1) (247.5) (404.6) 163.5 Capital expenditures (167.0) (127.9) (39.1) 30.6 Investments in capitalized software (17.1) (6.7) (10.4) 155.2 Net Cash provided by (used for) Operating Activities Net cash provided by operating activities was $1,319.3 in 2024, a $418.8 increase in cash generation compared to 2023.
Capital Expenditures: Our capital expenditures are primarily related to the maintenance of our long-term assets, as well as the investment in projects that support growth and innovation to further our enterprise strategy. Our capital expenditures (including capitalized software) were approximately $134.6 in 2023. We expect to have capital expenditures (including capitalized software) of $175 to $200 in 2024.
Capital Expenditures: Our capital expenditures are primarily related to the maintenance of our long-term assets, as well as the investment in projects, such as capacity and facility expansion, that support growth and innovation to further our enterprise strategy. Our capital expenditures (including capitalized software) were approximately $184.1 in 2024.
We attach the most weight to historical earnings as they are more objectively verifiable compared to forecasts. In evaluating the objective evidence that historical results provide, we generally consider three years of cumulative income or loss at the jurisdictional taxpayer level as an important factor.
In evaluating the objective evidence that historical results provide, we generally consider three years of cumulative income or loss at the jurisdictional taxpayer level as an important factor.
For example, since acquiring E&I in late 2021, we have approximately doubled our manufacturing capacity for switchgear, busbar and integrated modular solutions by opening new facilities and adding production to existing facilities.
For example, since acquiring E&I in late 2021, we have approximately doubled our manufacturing capacity for switchgear, busbar and integrated solutions by opening new facilities and adding production to existing facilities. Additionally, in order to support our thermal management activity, we opened a new manufacturing facility in Pune, India in 2024.
The increase was primarily due to a $27.9 increase in restructuring costs, and a $12.3 increase in foreign currency loss, offset by decreased amortization of intangibles of $34.5. 40 Table of contents Change in Fair Value of Warrant Liabilities Change in fair value of warrant liabilities represents the mark-to-market fair value adjustments to the outstanding Private Placement Warrants.
The decrease was primarily due to a $23.3 decrease in restructuring costs and a $6.7 decrease in foreign currency loss, partially offset by increased amortization of intangibles of $2.9. 39 Table of contents Change in Fair Value of Warrant Liabilities Change in fair value of warrant liabilities represents the mark-to-market fair value adjustments to the then outstanding Private Placement Warrants.
The higher use of cash over the comparable period was primarily driven by the acquisition of business for $28.8, increased capital expenditures of $27.9, partially offset by increased proceeds from the disposition of property, plant, and equipment of $12.4, and proceeds from the sale of business of $11.9.
The increased use of cash over the comparable period was primarily driven by increased capital expenditures of $39.1, decreased proceeds from disposition of property, plant and equipment of $12.4, decreased proceeds from sale of business of $11.9, and an increased investment in capitalized software of $10.4, offset by the decrease in acquisition of business of $11.2.
The Company has invested in developing new product, services, and solutions to serve this industry trend, is increasing capacity to support additional demand for AI infrastructure as necessary and we will continue to invest to support additional growth driven by AI. • Thermal Management Portfolio Expansion - Liquid Cooling: In December of 2023, we acquired CoolTera Ltd., an existing technology partner and provider of coolant distribution infrastructure for data center cooling technology.
The Company has invested in developing new product, services, and solutions to serve this growing industry, is increasing capacity to support additional demand for AI infrastructure as necessary and we will continue to invest to support additional growth driven by AI. • Thermal Management Portfolio Expansion: We continue to invest in expansion of our thermal management portfolio and product capabilities to meet customer demands.
In addition, we have uncertain tax positions that are further discussed in “Note 9 — Income Taxes” of the consolidated financial statements. We do not have any guarantees or other off-balance sheet financing arrangements, including variable interest entities, which could materially impact our financial condition or liquidity.
We do not have any guarantees or other off-balance sheet financing arrangements, including variable interest entities, which could materially impact our financial condition or liquidity.
Although we believe the assumptions and estimates we have made are reasonable, they are based in part on historical experience, market conditions and information obtained from management of the acquired companies, and are inherently uncertain. 44 Table of contents The following are critical estimates in valuing intangible assets we have acquired or may acquire in the future and include but are not limited to: • forecasted earnings before interest, taxes, and amortization; • forecasted net sales; • customer attrition rates; • royalty rates; and • discount rates.
The following are critical estimates in valuing intangible assets we have acquired or may acquire in the future and include but are not limited to: • forecasted earnings before interest, taxes, and amortization; • forecasted net sales; • customer attrition rates; • royalty rates; and • discount rates.
As of December 31, 2023 and 2022, there were 5,266,667 and 10,533,333 Private Placement Warrants outstanding, respectively. Interest expense Interest expense, net, was $180.1 in 2023 compared to $147.3 in 2022.
As of December 31, 2024, there were no Private Placement Warrants outstanding. Interest expense Interest expense, net, was $150.4 in 2024 compared to $180.1 in 2023.
The change was primarily driven by the improvement in trade working capital from prior year by $515.9 due to our trade working capital initiative, an increase in net income from operations of $383.6, and the non-cash impact of the change in fair value of warrant liabilities of $248.8.
The change was primarily driven by the improvement in trade working capital from prior year by $47.4 due to our trade working capital initiative, an increase in net income from operations of $35.6, and the non-cash impact of the change in fair value of warrant liabilities of $291.3. 42 Table of contents Net Cash provided by (used for) Investing Activities Net cash used for investing activities was $201.7 in 2024 compared to net cash used for investing activities of $139.1 in 2023.
Outlook and Trends Below is a summary of trends and events that are currently affecting, or may in the future affect, our business, operations and short-term outlook: • Capacity Expansion: We have invested in capacity expansion to meet current and anticipated additional customer demand.
Outlook and Trends Below is a summary of trends and events that are currently affecting, or may in the future affect, our business, operations and short-term outlook: • Increased Tariffs: The global trade environment continues to evolve rapidly.
To the extent that interest rates continue to increase, our interest expense will increase as well, although the effect will be mitigated by our interest rate swaps. Income Taxes Income tax expense was $73.5 in 2023 compared to $90.4 in 2022.
To the extent interest rates continue to fluctuate our interest expense will change, although we expect these changes to be partially mitigated by our interest rate swaps and interest income. Income Taxes Income tax expense was $269.6 in 2024 compared to $73.5 in 2023.
Corporate and other costs increased $37.9 compared to 2022 primarily due to higher compensation costs due to bonus and long-term incentive costs of $23.2 and increased foreign currency loss of $12.3. 42 Table of contents Capital Resources and Liquidity Our primary future cash needs relate to working capital, operating activities, capital spending, strategic investments and debt service.
Corp orate and other costs increased $6.8 compared to 2023 primarily due to a decrease in foreign currency loss of $6.7. 41 Table of contents Capital Resources and Liquidity Our primary future cash needs relate to working capital, operating activities, capital spending, strategic investments and debt service.
Americas (Dollars in millions) December 31, 2023 December 31, 2022 $ Change % Change Net sales $ 3,844.5 $ 2,728.6 $ 1,115.9 40.9 % Operating profit (loss) 958.8 426.1 532.7 125.0 % Margin 24.9 % 15.6 % Americas net sales of $3,844.5 in 2023 increased $1,115.9, or 40.9% from 2022.
Americas (Dollars in millions) December 31, 2024 December 31, 2023 $ Change % Change Net sales $ 4,500.6 $ 3,844.5 $ 656.1 17.1 % Operating profit (loss) 1,097.8 762.4 335.4 44.0 % Margin 24.4 % 19.8 % Americas net sales of $4,500.6 in 2024 increased $656.1, or 17.1%, from 2023.
We record amounts billed to customers for shipping and handling in a sales transaction as revenue. Shipping and handling costs are treated as fulfillment costs and are included in costs of sales. Private Placement Warrants As of December 31, 2023, 5,266,667 Private Placement Warrants remain outstanding.
We record amounts billed to customers for shipping and handling in a sales transaction as revenue. Shipping and handling costs are treated as fulfillment costs and are included in costs of sales. Income Taxes We are subject to income taxes in the United States and numerous foreign jurisdictions.
We have additional obligations as part of our ordinary course of business, beyond those committed for capital expenditures, which consist of debt obligations, lease obligations and other financial instruments. Refer to “Note 6 — Debt”, “Note 7 — Leases”, and “Note 17 — Commitments and Contingencies” of the accompanying consolidated financial statements for more information.
We expect to have capital expenditures (including capitalized software) of $250 to $300 in 2025. We have additional obligations as part of our ordinary course of business, beyond those committed for capital expenditures, which consist of debt obligations, lease obligations, bank guarantees, bonds and other financial instruments.
For segment reporting Greater China, India and Asia are aggregated into one reportable business segment, refer to “Note 14 — Segment Reporting” of the accompanying consolidated financial statements for more information.
For segment reporting Greater China, India and Asia are aggregated into one reportable business segment, refer to “Note 14 — Segment Reporting” of the accompanying consolidated financial statements for more information. 43 Table of contents We may assess our goodwill for impairment initially using a qualitative approach to determine whether it is more likely than not that the fair value of the reporting unit is greater than it’s carrying value.
The tax expense in 2023 was $16.9 lower than 2022 primarily due to the change in mix of income, non-U.S. tax elections and changes in valuation allowances in the U.S. and a discrete tax adjustment related to legislative changes enacted in the period. Business Segments The following are business segment results for the years ended December 31, 2023 and 2022.
Income tax expense in 2024 was $196.1 higher than 2023 primarily due to the increased financial performance, changes in non-U.S tax holidays and incentives and the change in valuation allowance. Business Segments The following are business segment results for the years ended December 31, 2024 and 2023. Segment profitability is defined as operating profit (loss).
Europe, Middle East & Africa (Dollars in millions) December 31, 2023 December 31, 2022 $ Change % Change Net sales $ 1,490.9 $ 1,361.6 $ 129.3 9.5 % Operating profit (loss) 380.0 234.6 145.4 62.0 % Margin 25.5 % 17.2 % Europe, Middle East & Africa net sales of $1,490.9 in 2023 increased $129.3, or 9.5% from 2022.
Margin increased primarily due to higher sales volumes and manufacturing and procurement productivity. 40 Table of contents Europe, Middle East & Africa (Dollars in millions) December 31, 2024 December 31, 2023 $ Change % Change Net sales $ 1,793.4 $ 1,490.9 $ 302.5 20.3 % Operating profit (loss) 439.4 297.7 141.7 47.6 % Margin 24.5 % 20.0 % Europe, Middle East & Africa net sales of $1,793.4 in 2024 increased $302.5, or 20.3%, from 2023.
Additionally, the positions taken with regard to tax contingencies may be subject to audit and review by tax authorities, which may result in future taxes, interest and penalties. 46 Table of contents In determining the recoverability of deferred tax assets, we give consideration to all available positive and negative evidence including reversals of deferred tax liabilities, projected future income, tax planning strategies and recent trends in financial results.
Additionally, the positions taken with regard to tax contingencies may be subject to audit and review by tax authorities, which may result in future taxes, interest and penalties.
Movements in net sales by segment and offering are each detailed in the Business Segments section below. Cost of Sales Cost of sales were $4,462.7 in 2023, an increase of $387.3, or 9.5% compared to 2022. The increase in cost of sales was primarily driven by the impact of higher volumes and increased commodity and logistics costs.
Excluding intercompany sales, net sales were $4,500.6 in the Americas, $1,717.8 in Asia Pacific and $1,793.4 in Europe, Middle East & Africa. Movements in net sales by segment and offering are each detailed in the Business Segments section below. Cost of Sales Cost of sales were $5,077.6 in 2024, an increase of $614.9, or 13.8% compared to 2023.
Gross profit was $2,400.5 in 2023, or 35.0% of sales, compared to $1,616.1, or 28.4% of sales in 2022. Margin increased primarily due to higher sales volume, pricing actions more than offsetting higher commodity and logistics costs, and improved leverage of fixed costs.
The increase in cost of sales was primarily driven by the impact of higher volumes. Gross profit was $2,934.2 in 2024, or 36.6% of sales, compared to $2,400.5, or 35.0% of sales in 2023. Margin increased primarily due to higher sales volume and improved price realization.
The effective rate in 2023 was primarily influenced by the mix of income between our U.S. and non-U.S. operations, net of changes in valuation allowances and uncertain tax positions, and reflects the impact of non-deductible changes in fair value of the warrant liabilities, as well as a discrete tax adjustment related to legislative changes enacted in the period.
The effective rate in 2024 was primarily influenced the changes in tax incentives, offset by net changes in valuation allowance and the tax impact of non-deductible changes in fair value of the warrant liabilities.
We may assess our goodwill for impairment initially using a qualitative approach to determine whether it is more likely than not that the fair value of the reporting unit is greater than it’s carrying value. When performing a qualitative test, we assess various factors including industry and market conditions, macroeconomic conditions and performance of our businesses.
When performing a qualitative test, we assess various factors including industry and market conditions, macroeconomic conditions and performance of our businesses.
The increase in sales is primarily due to higher sales volumes and price realization of $470 compared to the prior year , and partially offset by the negative impacts from foreign currency of $43.7. By product offering, critical infrastructure & solutions sales increased $973.8, which included negative impacts from foreign currency of $22.5.
The increase in sales is primarily driven by higher sales volumes, partially offset by the negative impacts from foreign currency of $53.6. Product sales increased $974.0, which included negative impacts from foreign currency of $41.7. Services & spares sales increased $174.6, including the negative impacts from foreign currency of $11.9.
Other Operating Expenses The remaining other operating expenses include amortization of intangibles, restructuring costs, foreign currency (gain) loss, asset impairments and other operating expense (income). These remaining other expenses were $216.0 for 2023, which was a $1.6 increase from 2022.
The increase in SG&A was primarily driven by $45.8 of higher compensation costs, professional service fees of $18.1 inclusive of a one-time supplier expense, and increased IT and research and development expense. Other Operating Expenses The remaining other operating expenses include amortization of intangibles, restructuring costs, foreign currency (gain) loss, and other operating expense (income).
Americas net sales were positively impacted from foreign currency of approximately $8.1. Operating profit (loss) in 2023 was $958.8, an increase of $532.7 compared with 2022.
The increase in sales was primarily driven by higher sales volumes due to products increasing by $557.9 and service & spares increasing by $98.2. Americas net sales were negatively impacted by foreign currency of approximately $28.2. Operating profit (loss) in 2024 was $1,097.8, increase of $335.4 compared with 2023.
Margin increased primarily due to higher sales volumes and pricing actions in addition to leveraging our fixed costs. 41 Table of contents Asia Pacific (Dollars in millions) December 31, 2023 December 31, 2022 $ Change % Change Net sales $ 1,527.8 $ 1,601.3 $ (73.5) (4.6) % Operating profit (loss) 248.5 274.4 (25.9) (9.4) % Margin 16.3 % 17.1 % Asia Pacific net sales of $1,527.8 in 2023 decreased $73.5, or 4.6% from 2022.
Asia Pacific (Dollars in millions) December 31, 2024 December 31, 2023 $ Change % Change Net sales $ 1,717.8 $ 1,527.8 $ 190.0 12.4 % Operating profit (loss) 175.2 147.4 27.8 18.9 % Margin 10.2 % 9.6 % Asia Pacific net sales of $1,717.8 in 2024 increased $190.0, or 12.4%, from 2023.
By product offering, net sales decreased in critical infrastructure & solutions by $37.9, integrated rack solutions decreased by $23.6, and service & spares decreased by $12.0. Operating profit (loss) in 2023 was $248.5, a decrease of $25.9 compared with 2022 mainly driven by decreased volume and the negative impact of foreign currency.
The increase in sales was primarily driven by growth throughout the region, partially offset by the negative impact of foreign currency of approximately $18.1. Net sales of products improved by $150.4, and service & spares improved by $39.6. Operating profit (loss) in 2024 was $175.2, an increase of $27.8 compared with 2023 mainly driven by sales from product mix.
Removed
Key Developments Below is a summary of selected key developments affecting our business in 2023: • Stock Repurchase Program: As discussed in Item 5, on November 29, 2023, the Company announced authorization of a stock repurchase program of up to $3.0 billion through December 31, 2027.
Added
In response to escalating pressures and geopolitical uncertainties surrounding global supply chains, we continue to pursue a supply chain strategy of geographic resilience. This includes adding regional sourcing and manufacturing options to complement our existing global supply chain.
Removed
Repurchases of shares of the Company’s Class A common stock under the program may be made from time to time through open market purchases, privately negotiated transactions, Rule 10b5-1 plans, accelerated stock repurchases, block trades, derivative contracts or otherwise, including in compliance with Rule 10b-18.
Added
For example, in 2024, we expanded and strengthened our supply base and manufacturing footprint in the US as part of our overall capacity strategy to grow with customer demand in the US.
Removed
The specific timing of any repurchases will be determined in management's discretion and will depend on a number of factors, including available liquidity, the Company's stock price, the Company's financial outlook, and alternative investment options.
Added
The imposition of new U.S. tariffs, as well as the possibility of retaliatory tariffs or the imposition of similar tariffs in jurisdictions where we have manufacturing facilities or our clients operate would increase our cost of doing business.
Removed
The stock repurchase program does not obligate the Company to repurchase any specific dollar amount or number of shares of Class A common stock and the Board's authorization of the program may be modified, suspended or discontinued at any time.
Added
We continue to analyze measures to minimize the potential impacts of the new and proposed tariffs on our business operations, including but not limited to continued expansion of domestic manufacturing and our ability to incorporate tariff impacts into pricing decisions. • Capacity Expansion: We have invested in capacity expansion to meet current and anticipated additional customer demand.
Removed
Services & spares sales increased $111.4, including the negative impacts from foreign currency of $15.1. Integrated rack solutions sales increased $86.5, including the negative impacts from foreign currency of $6.1. Excluding intercompany sales, net sales were $3,844.5 in the Americas, $1,527.8 in Asia Pacific and $1,490.9 in Europe, Middle East & Africa.
Added
We also recently opened a new facility in Pelzer, South Carolina to support the production of modular solutions, modular power systems and other infrastructure systems.
Removed
The increase in SG&A was primarily driven by $60.1 of higher commissions in the Americas reportable segment as a result of increased order volume and $41.2 of higher compensation costs due to increased bonus and long-term incentives.
Added
The complexity of hybrid air and liquid cooling created by AI workloads presents significant opportunities for innovation within, and expansion of, the entire thermal chain to better optimize performance, power utilization, control, and heat re-use.
Removed
The $32.8 increase reflects a $72.0 increase due to the Term Loan due 2027, partially offset by a $36.5 decrease due to net settlement payments on our interest rate swaps as described in “Note 12 — Financial Instruments and Risk Management” to the Consolidated Financial Statements.
Added
Our investment and expansion efforts are directed at capturing new technologies across the entire thermal chain from chip to heat rejection and re-use and more to meet growing demands.
Removed
The increase in sales was primarily driven by higher sales volumes and price realization compared to prior year. By product offering, net sales increased in critical infrastructure & solutions by $952.1, integrated rack solutions increased by $95.1, and service & spares increased by $68.7 due to improved customer site availability.
Added
These remaining other expenses were $192.8 for 2024, which was a $23.2 decrease from 2023.
Removed
Sales decreases were primarily driven by slower than expected economic recovery in China and the negative impact of foreign currency of approximately $66.2, which were partially offset by the impact of stronger sales throughout the rest of Asia Pacific.
Added
The $29.7 decrease is primarily driven by a $16.4 increase of interest income, a $12.2 reduction to interest expense as a result of our Term Loan amendments, and a $7.9 decrease in interest due to lower ABL Revolving Credit Facility borrowings during the period.
Removed
Sales increases were evenly driven by higher selling prices and increased volume. Europe, Middle East & Africa net sales were positively impacted by foreign currency of approximately $14.4. By product offering, net sales increased in critical infrastructure & solutions by $59.6, service & spares increased by $54.7, and integrated rack solutions increased by $15.0.
Added
Margin increased primarily due to higher sales volumes, manufacturing and procurement productivity, and improved price realization.
Removed
Operating profit (loss) in 2023 was $380.0, an increase of $145.4 compared with 2022. Margin increased primarily due to price realization in addition to leveraging our fixed costs which more than offset inflationary pressures.
Added
Sales increases were driven by increased volumes due to products increasing by $265.7, and service & spares increasing by $36.8, and were negatively impacted by foreign currency of approximately $7.3. Operating profit (loss) in 2024 was $439.4, an increase of $141.7 compared with 2023. Margin increased primarily due to higher sales volumes and procurement driven productivity improvement.
Removed
Net Cash provided by (used for) Investing Activities Net cash used for investing activities was $139.1 in 2023 compared to $112.1 in 2022.
Added
Refer to “Note 6 — Debt”, “Note 7 — Leases”, and “Note 17 — Commitments and Contingencies” of the accompanying consolidated financial statements for more information. In addition, we have uncertain tax positions that are further discussed in “Note 9 — Income Taxes” of the consolidated financial statements.
Removed
The change was primarily the result of the year-over-year repayments of $470.0 on the ABL Revolving Credit Facility, $10.7 increase of repayments on the Term Loan in 2023, partially offset by the $100.0 payment under the Tax Receivable Agreement (as defined in “Note 1 — Description of Business and Summary of Significant Accounting Policies” of the accompanying consolidated financial statements) in 2022 which did not repeat in 2023, and a $25.3 increase in net cash received associated with equity-based compensation activity.
Added
The increased use of cash over the comparable period was primarily the result of $599.9 of share repurchases of common stock, $32.7 increase in dividend payments, an d a $13.0 d ecrease in net cash received associated with equity-based compensation activity, offset by a decrease in year-over-year repayments of $235.0 on the ABL Revolving Credit Facility.
Removed
The Private Placement Warrants are exercisable on a cashless basis, at the holder’s option, and are non-redeemable so long as they are held by the initial purchasers or their permitted transferees.
Added
Although we believe the assumptions and estimates we have made are reasonable, they are based in part on historical experience, market conditions and information obtained from management of the acquired companies, and are inherently uncertain.
Removed
If the Private Placement Warrants are held by someone other than the initial purchasers or their permitted transferees, the Private Placement Warrants will be redeemable by us and exercisable by such holders.
Added
In determining the recoverability of deferred tax assets, we give consideration to all available positive and negative evidence including reversals of deferred tax liabilities, projected future income, tax planning strategies and recent trends in financial results. We attach the most weight to historical earnings as they are more objectively verifiable compared to forecasts.
Removed
We evaluated the Private Placement Warrants under ASC 815-40, Derivatives and Hedging—Contracts in Entity’s Own Equity, and concluded that they do not meet the criteria to be classified in stockholders’ equity.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

8 edited+0 added−0 removed7 unchanged
Biggest changeAdditional information relating to market risks is presented in “Note 12 - Financial Instruments and Risk Management” in the Notes to Consolidated Financial Statements and is incorporated by reference into Part II of this Annual Report. Our Consolidated Financial Statements and the accompanying Notes to Consolidated Financial Statements are filed as part of this Annual Report under “Item 15.
Biggest changeTo partially mitigate this exposure, we enter into economic hedges for copper and aluminum. Additional information relating to market risks is presented in “Note 12 - Financial Instruments and Risk Management” in the Notes to Consolidated Financial Statements and is incorporated by reference into Part II of this Annual Report.
To mitigate the volatility in our earnings and cash flows, we manage certain of our exposures through the use of various financial instruments, including derivatives, to help us hedge our foreign currency exchange risk and interest rate risk. We do not enter into such transactions for trading or speculative purposes.
To mitigate the volatility in our earnings and cash flows, we manage certain of our exposures through the use of various financial instruments, including derivatives, to help us hedge our foreign currency exchange risk, interest rate risk, and commodity risk. We do not enter into such transactions for trading or spe culative purposes.
We have translation exposure resulting from translating the financial statements of foreign subsidiaries into United States Dollars. During 2023, we hedged portions of the net investment in foreign subsidiaries against fluctuations in the European Euro and Chinese Yuan through derivative financial instruments.
We have translation exposure resulting from translating the financial statements of foreign subsidiaries into United States Dollars. During 2024, we hedged portions of the net investment in foreign subsidiaries against fluctuations in th e European Euro and Chinese Yuan through derivative financial instruments.
Based on the outstanding balances of floating rate debt, net of interest rate swap agreements, our annual net interest expense would increase (decrease) in variable interest rates at December 31, 2023 and 2022 by approximatel y: Basis point change scenario December 31, 2023 December 31, 2022 +100 $ 11.2 $ 12.0 +200 22.4 23.0 Commodity Risk We are subject to commodity risk from fluctuating prices of certain raw materials, steel, copper and aluminum and electronic components.
Based on the outstanding balances of floating rate debt, net of interest rate swap agreements, our annual net interest expense would increase (decrease) in variable interest rates at December 31, 2024 and 2023 by approximatel y: Basis point change scenario December 31, 2024 December 31, 2023 +100 $ 11.0 $ 11.2 +200 21.9 22.4 45 Table of contents Commodity Risk We are subject to commodity risk from fluctuating prices of certain raw materials, steel, copper and aluminum and electronic components.
At December 31, 2023, there were no borrowings outstanding under the ABL Revolving Credit Facility and there was an outstanding principal amount of $2,118.1 on the Term Loan, due 2027 with a borrowing rate of 7.97%.
At December 31, 2023, were no borrowings outstanding under the ABL Revolving Credit Facility, and there was an outstanding principal amount of $2,118.1 on the Term Loan, due 2027 with a borrowing rate of 7.97%. Cash and cash equivalents were $1,227.6 and $780.4 at December 31, 2024 and 2023, respectively.
We enter into one-month foreign exchange forwards in order to mitigate exposures such as European Euro, Chinese Yuan, and Great British Pound on the carrying amount of foreign currency-denominated assets, liabilities, commitments and, when applicable, anticipated foreign currency transactions. As of December 31, 2023 we had an insignificant amount of outstanding currency hedges.
We enter into one-month foreign exchange forwards to mitigate exposures of fluctuations in currencies such as European Euro, Chinese Yuan, and Great British Pound on the carrying amount of foreign currency-denominated assets, liabilities, commitments and, when applicable, we enter into foreign currency exchange forwards for generally less than one year to mitigate the exposure to certain anticipated foreign currency transactions.
Exhibits, Financial Statement Schedules” and are set forth immediately following the signature pages of this Annual Report. 47 Table of contents Item 8.
Our Consolidated Financial Statements and the accompanying Notes to Consolidated Financial Statements are filed as part of this Annual Report under “Item 15. Exhibits, Financial Statement Schedules” and are set forth immediately following the signature pages of this Annual Report. Item 8.
At December 31, 2022, there was a $235.0 balance on the ABL Revolving Credit Facility with a weighted-average borrowing rate of 5.85%, and there was an outstanding principal amount of $2,139.8 on the Term Loan, due 2027 with a borrowing rate of 6.89%. Cash and cash equivalents were $780.4 and $260.6 at December 31, 2023 and 2022, respectively.
At December 31, 2024, there were no borrowings outstanding under the ABL Revolving Credit Facility and there was an outstanding principal amount of $2,097.0 on the Term Loan, due 2027 with a borrowing rate of 6.19%.

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