Vertiv Posts Strong Earnings in ‘AI-Driven Market.’ The Stock Falls Anyway.

Vertiv Holdings reported better-than-expected earnings in its third quarter and raised its full-year outlook. (Business Wire)

Key Points

• Vertiv Holdings’ adjusted earnings of $1.24 a share exceed analysts’ expectations of 98 cents.
• Net sales for Vertiv Holdings increase by 29% to $2.68 billion, surpassing the estimated $2.58 billion.
• Vertiv Holdings raises its full-year adjusted earnings guidance to $4.07 to $4.13 a share, up from prior guidance of $3.75 to $3.85.

Vertiv Holdings posted strong third-quarter earnings and hiked its guidance, but shares of the were falling on Wednesday as investors homed in on a few blemishes on an otherwise solid print.

The data-center infrastructure company reported adjusted earnings of $1.24 a share, handily beating the 98 cents analysts were expecting, according to FactSet. Net sales rose 29% to $2.68 billion, surpassing calls for $2.58 billion.

Vertiv said the quarter’s higher sales were driven largely by growth in the Americas. Orders accelerated roughly 60% year over year and 20% sequentially.

In a statement, Executive Chairman Dave Cote said the company had taken steps to build and leverage its “durable foundation” to unlock value in a “fast-growing, [artificial-intelligence]-driven market.”

The company raised its full-year guidance, citing its “strong backlog and pipelines.” Vertiv now expects adjusted earnings in the range of $4.07 to $4.13 a share, up from a prior range of $3.75 to $3.85. The company also boosted its outlook for adjusted operating profit and free cash flow.

Shares climbed in premarket trading before paring those gains and falling 3%. The benchmark S&P 500 was down 0.8%.

Some negative commentary on the earnings call could be to blame. CEO Giordano Albertazzi noted that sales across EMEA—a geographical region encompassing Europe, the Middle East, and Africa—continue to be “muted,” mainly due to power availability and regulatory challenges.

The company is implementing restructuring programs to get ahead of improving market conditions in those regions, “though acceleration may not come until the second half of 2026,” Albertazzi said.

Executive Chairman Dave Cote noted that the quarter’s adjusted operating margin of 22.3% was “significantly below the prior year.”

He attributed the drop-off to Vertiv’s efforts to reduce total financial leverage on lower sales and higher fixed costs, “as we continue to invest in regional capacity to ensure readiness for the anticipated market recovery.”

The global restructuring program began in the third quarter and cost roughly $30 million, Cote said, adding that Vertiv expects to see an annualized benefit of around $20 million starting in 2026.

Tariffs were another downside. CEO Albertazzi conceded that the situation remains fluid, saying Vertiv plans to address it through “comprehensive mitigation efforts.” The company should be able to materially offset current tariff impacts as it exits the first quarter of 2026, he added.

Vertiv was named a Barron’s stock pick in late 2024, on the heels of a strong second-quarter earnings report. Since an article recommending the stock was published on Aug. 28 of last year, the stock has gained more than 110%.

Write to Mackenzie Tatananni at mackenzie.tatananni@barrons.com