VRT Vertiv 10-Q 2026-09-30 section summaries

Vertiv (VRT) — Q3 and nine months ended September 30, 2026

Consolidated results

Q3 sales grew 61.2%, accelerating from 39.3% growth for 9M. Gross margin increased to 38.1% from 37.8% in Q3 and to 37.9% from 35.3% for 9M; operating margin rose to 22.8% from 19.3% in Q3. Product sales were $3,637.1M versus $2,214.4M, and services sales were $675.7M versus $461.4M in Q3; for 9M, product sales were $8,419.6M versus $6,030.1M and services sales were $1,817.0M versus $1,319.8M.

Regional segments — Q3

Growth was broad-based. Americas sales grew 74.5% in Q3 versus 52.8% for 9M; Asia Pacific grew 49.9% versus 31.8%; EMEA accelerated to 22.8% in Q3 from 2.0% for 9M.

Cash flow, balance sheet and shares

Operating cash flow included a $540.5M working-capital source, versus a $166.7M use in 9M 2025. Deferred revenue and accounts payable provided $2,312.9M and $1,409.0M, while receivables and inventory absorbed $1,276.1M and $1,814.9M. Investing included $278.1M for acquisitions; financing included $2,100.0M of debt issuance and $2,091.4M of repayments.

Equity less goodwill and other intangible assets implies tangible equity of $1,486.3M, up from $12.8M. Total cash, cash equivalents and restricted cash was $3,583.2M. Inventory more than doubled to $3,288.4M from $1,456.5M; net PP&E increased to $1,324.6M from $921.8M. Diluted weighted-average shares were 392.682M in Q3 versus 390.929M, and 392.640M for 9M versus 390.258M.

Drivers, financing and risks

SG&A was $556.9M versus $414.3M in Q3; amortization was $65.3M versus $48.2M. Other operating expense included PurgeRite contingent-consideration remeasurement expense of $33.5M in Q3 and $95.5M for 9M, as earnout targets became more probable. Nine-month restructuring was an $8.6M net benefit versus $33.7M expense in 2025. Net interest expense fell to $6.4M from $22.8M in Q3 and to $19.4M from $69.4M for 9M. Repayment of the term loan ended swaps hedging $1.0B of floating-rate debt; settlement resulted in a $48.5M realized loss in AOCI activity, including $22.9M recognized in interest expense.

In March, Vertiv issued $2.10B aggregate principal of unsecured notes due 2036–2066, using proceeds and cash to repay its term loan and replace the $800M ABL revolver. The new $2.5B revolver had $2.484B available and no borrowings at quarter-end; its net-debt/EBITDA covenant is 4.00x, temporarily expandable to 4.50x after qualifying acquisitions, and Vertiv reported compliance. Three 9M acquisitions cost $331.8M net of cash acquired and added $260.1M preliminary goodwill, including $167.0M not expected to be tax-deductible. PurgeRite accrued contingent earnout was $239.6M. After quarter-end, Vertiv acquired UIG for $1.45B cash, with up to $1.15B of additional earnouts; the business provides power systems, controls and related capabilities for utility and data-center workloads.

Management cites economic uncertainty that could affect sales channels, supply chains, manufacturing and staffing. Outstanding bank guarantees and bonds totaled $415.2M. Securities litigation remains pending; management considers a material adverse impact unlikely but cannot estimate potential additional losses. Potential refunds following the invalidation of IEEPA tariffs remain subject to administrative and legal developments.

Vertiv (VRT) — Q3 and first nine months of 2026

Amounts in millions of dollars unless stated otherwise.

Consolidated results

Q3 net sales increased 61.2%, faster than the 39.3% 9M increase, indicating accelerating growth. Higher volumes drove Q3 sales, including increases of $1,426.2 in product sales and $210.8 in Services & Spares; acquisitions contributed $156.9, including $9.1 of favorable foreign exchange (FX). For 9M, acquisitions contributed $383.0, including $101.8 of favorable FX; product sales increased $2,393.8 and Services & Spares $492.9.

Gross margin expanded to 38.1% from 37.8% in Q3 and to 37.9% from 35.3% for 9M, primarily reflecting operating leverage and better project execution. SG&A increased with compensation and acquisition costs, but declined as a share of sales: to 12.9% from 15.5% in Q3 and to 14.7% from 15.7% for 9M. Operating profit growth also accelerated, rising 90.4% in Q3 versus 65.0% for 9M.

Other operating expenses included Q3 amortization of $65.3 (prior year $48.2), restructuring expense of $0.2 ($30.7), FX loss of $7.1 ($0.9), and other operating expense of $30.1 (prior period had $0.1 of income). For 9M, amortization was $216.6 ($141.1), restructuring was an $8.6 benefit ($33.7 expense), FX loss was $9.4 ($5.8), and other operating expense was $90.8 ($7.2). Higher other operating expense primarily reflected acquisition contingent consideration; 9M other operating expenses overall rose $120.4, including $75.5 more intangible amortization and $83.6 more other operating expense, partly offset by $42.3 lower restructuring costs.

Lower net interest expense reflected increased interest income and, for 9M, $17.6 lower interest expense following term-loan repayment. Q3 other non-operating income included an $18.1 upward fair-value adjustment to non-marketable securities. Tax expense rose with stronger performance; 2026 tax results included discrete benefits from stock compensation and interest-rate-swap settlement, while prior-period taxes also reflected discrete items and a valuation allowance related to 2025 legislative changes.

Q3 regional segments

Americas revenue grew 74.5%, led by higher volume following capacity expansion and large-project execution; margin was 29.4% versus 29.3%. Asia Pacific revenue grew 49.9%, with margin improving to 17.0% from 13.2% on leverage and cost improvements. EMEA revenue increased 22.8% on stronger demand and pipeline conversion; margin rose to 28.0% from 18.8%, reflecting leverage and commercial execution. Corporate and other costs rose mainly due to compensation and acquisition-related contingent consideration, partly offset by lower restructuring costs. For 9M, corporate and other costs were $285.9 versus $195.0, including $96.1 of expense from fair-value changes in contingent consideration.

Cash flow and investment

Operating cash flow increased 139.9%. Net income and $471.8 of net non-cash expense items contributed, alongside a $540.5 trade working-capital inflow, compared with a $166.7 use in 9M 2025. Deferred revenue was a significant source of the working-capital improvement, making the sustainability of that contribution relevant. Cash-flow-statement capital expenditures plus capitalized software totaled approximately $430.3 for 9M 2026. Investing outflow also reflected $90.9 of net short-term investment purchases, down from $539.6; acquisition spending increased $82.4. Full-year 2026 capital expenditures including capitalized software are expected to be $575.0–$600.0 to support capacity and facility expansion.

Liquidity, strategy and risks

At September 30, 2026, Vertiv had $3,512.9 of cash and equivalents and $198.8 of short-term investments. Its $2,500.0 revolver had $2,484.0 available after $16.0 of letters of credit. Outstanding principal included $850.0 of Senior Secured Notes due 2028 and $2,100.0 of Senior Notes due 2036–2066, with stated coupons of 4.850%–5.950%. Management considers liquidity adequate for the next 12 months and planned growth investment, while noting that future financing access and terms depend on ratings, economic conditions and capital-market liquidity.

Management cites robust data-center demand, including AI and high-performance computing, and is expanding global capacity. Product and engineering priorities include higher-density infrastructure, hybrid air/liquid cooling, converged systems, high-voltage direct-current power and prefabricated modular solutions. The company is also investing in supplier qualification, quality and manufacturing capacity. Tariffs, geopolitical uncertainty, supply-chain and input-cost volatility, customer-order variability, backlog conversion, fixed-price contract costs, acquisition integration, cybersecurity, FX, indebtedness and covenant compliance are among the risks identified; responses include diversified and regional sourcing, pricing actions and hedging.

No material changes were reported in Vertiv’s quantitative or qualitative market-risk disclosures compared with its 2025 Form 10-K. The section identifies no new market-risk developments or updated metrics.

Disclosure Controls and Internal Control

As of September 30, 2026, Vertiv’s CEO and CFO concluded that its disclosure controls and procedures were effective. The company identified no quarterly changes in internal control over financial reporting that materially affected, or were reasonably likely to materially affect, those controls.

Vertiv excluded four recently acquired businesses from its internal-control assessment, as permitted during the first year after an acquisition while integration is underway:

• PurgeRite, acquired December 4, 2025
• BMarko Structures, LLC, acquired April 10, 2026
• Strategic Thermal Labs, LLC, acquired April 24, 2026
• ThermoKey S.p.A., acquired June 11, 2026

Debt covenants and default risk

As of September 30, 2026, Vertiv stated that its risk factors had not materially changed from those in its 2025 Form 10-K, except for the risks described in this section.

Vertiv’s debt agreements also restrict, subject to exceptions and thresholds, its ability to incur debt or liens; merge; dispose of assets; pay dividends or make other restricted payments or investments; enter into affiliate transactions or sale-leasebacks; and make changes to junior debt. These constraints could limit operating flexibility and Vertiv’s ability to pursue business opportunities.

Covenant compliance depends in part on factors beyond Vertiv’s control, including economic, financial, market and competitive conditions; product pricing and sales volumes; execution of cost-reduction initiatives; and implementation of its business strategy. A breach could result in defaults or cross-defaults, termination of lending commitments, and acceleration of outstanding principal and accrued interest. Vertiv could lose access to borrowing, be unable to repay or service its debt, or face restrictions on transfers of cash from subsidiaries. Secured noteholders could also enforce claims against collateral. These outcomes could materially adversely affect Vertiv’s financial position, results and cash flows, and could potentially lead to bankruptcy or insolvency.

Item 5A — Trading plans

During the fiscal quarter, two executives adopted Rule 10b5-1 trading plans:

• Paul Ryan, President EMEA, adopted a plan on September 4, 2026 to sell up to 2,137 Class A shares and, following option exercises, sell up to 36,662 shares in same-day transactions. The plan is scheduled to remain in effect through September 3, 2027.
• Anand Sanghi, President AMER, adopted a plan on September 10, 2026 to exercise options and sell up to 250,508 Class A shares in same-day transactions. The plan is scheduled to remain in effect through June 18, 2027.

Each plan may end earlier if the trades and related orders are completed or expire, or if the plan is terminated or modified in accordance with company policy and securities laws. Item 5A otherwise reports no information.