What changed in Vertiv Holdings's 10-K for the fiscal year ended December 31, 2025

No corresponding language in the FY2024 10-K.

No corresponding language in the FY2024 10-K.

No corresponding language in the FY2024 10-K.

No corresponding language in the FY2024 10-K.

No corresponding language in the FY2024 10-K.

No corresponding language in the FY2024 10-K.

No corresponding language in the FY2024 10-K.

No corresponding language in the FY2024 10-K.

[removed] 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.

[removed] The credit agreements governing the Senior Secured Credit Facilities and the indenture governing the Notes contain covenants that limit certain of our subsidiaries' ability to take certain actions. These restrictions may limit our ability to operate our businesses, and may prohibit or limit our ability to enhance our operations or take advantage of potential business opportunities as they arise.

[removed] We may be able to incur additional debt in the future and the terms of the credit agreements governing the Senior Secured Credit Facilities and the indenture governing the Notes will not prohibit us from doing so subject to certain limitations. 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). 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 "Consolidated 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. If new debt is added to our current debt levels, the related risks that we now face could intensify and we may not be able to meet all our respective debt obligations. 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.

We may be able to incur additional debt in the future and the terms of the credit agreements governing the Senior Secured Credit Facilities and the indenture governing the Notes will not prohibit us from doing so subject to certain limitations. 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). [removed] 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 "Consolidated 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. If new debt is added to our current debt levels, the related risks that we now face could intensify and we may not be able to meet all our respective debt obligations. 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.

We may be able to incur additional debt in the future and the terms of the credit agreements governing the Senior Secured Credit Facilities and the indenture governing the Notes will not prohibit us from doing so subject to certain limitations. 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). 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 "Consolidated 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. If new debt is added to our current debt levels, the related risks that we now face could intensify and we may not be able to meet all our respective debt obligations. [removed] 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.

A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of our annual consolidated financial statements will not be prevented or detected on a timely basis.

Our backlog consists of the value of product and service orders for which [removed] we have received a customer purchase order or purchase commitment [removed] and which have not yet been delivered. As of December 31, [removed] 2024 and 2023, Vertiv's estimated combined order backlog was [removed] $7.2 billion and [removed] $5.5 billion, respectively. The majority of our combined backlog is considered firm and expected to be delivered within [removed] 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. If customers terminate, reduce or defer firm orders, the revenue we expect to generate from our backlog may not be fully realized. [removed] Additionally, because of our significant backlog, there may be significant delays between the time that we alter the prices we charge customers for our offerings and new orders and the time such price changes are reflected in our financial results.

We have debt, including existing outstanding indebtedness [removed] under the Term Loan Facility (as defined herein). As of December 31, [removed] 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.

We, through our subsidiaries, are party to certain indebtedness arrangements, including the Senior Secured [removed] Notes, due 2028, with an outstanding principal amount of $850.0 as of December 31, [removed] 2024 (the "Notes"), the Term [removed] Loan, due 2027, with an outstanding principal amount of [removed] $2,097.0 as of December 31, [removed] 2024 (the "Term Loan"), and the ABL Revolving Credit [removed] Facility, due 2029, [removed] 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, [removed] 2024 (the "ABL Revolving Credit Facility" and collectively with the Term Loan, the "Senior Secured Credit Facilities"). 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.

[removed] 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 [removed] approximately $184.1 in 2024. We expect to have capital expenditures (including capitalized software) of [removed] $250 to $300 in 2025.

The imposition of [removed] new U.S. tariffs, as well as the possibility of retaliatory tariffs or the imposition of [removed] similar tariffs in jurisdictions where we have manufacturing facilities or [removed] our clients operate would increase our cost of doing [removed] business. 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.

Operating profit (loss) in [removed] 2024 was $439.4, an increase of $141.7 compared with [removed] 2023. Margin increased primarily due to [removed] higher sales volumes and procurement driven productivity improvement.

Net cash used for investing activities was [removed] $201.7 in 2024 compared to [removed] net cash used for investing activities of $139.1 in 2023. The increased use of cash over the comparable period was primarily driven by [removed] 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.

Change in fair value of warrant liabilities represents the mark-to-market fair value adjustments to the then outstanding [removed] Private Placement Warrants. The change in fair value of the then outstanding [removed] Private Placement Warrants during 2024 [removed] and 2023 resulted in a loss of [removed] $449.2 and $157.9, respectively. 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. As of December 31, 2024, there were no [removed] Private Placement Warrants outstanding.

We are subject to income taxes in the United States and numerous foreign jurisdictions. Judgment in the forecasting of taxable income using historical and projected future operating results is required in determining our provision for income taxes and the related assets and liabilities. The provision for income taxes includes income taxes paid, currently payable or receivable, and deferred taxes. Under U.S. GAAP, deferred tax assets and liabilities are determined based on differences between financial reporting and tax basis of assets and liabilities and are measured using enacted tax rates and laws that are expected to be in effect when the differences reverse. Deferred tax assets are also recognized for the estimated future effects of tax loss and credit carryforwards. The effect on deferred taxes of changes in tax rates is recognized in the period in which the enactment date occurs. Valuation allowances are established when necessary on a jurisdictional basis to reduce deferred tax assets to the amounts expected to be realized. Deferred taxes are not provided on the unremitted earnings of subsidiaries outside of the [removed] United States when it is expected that these earnings are indefinitely reinvested. In the event that the actual outcome of future tax consequences differs from our estimates and assumptions due to changes or future events such as tax legislation, geographic mix of earnings, completion of tax audits or earnings repatriation plans, the resulting change to the provision for income taxes could have a material effect on the Consolidated Statements of Earnings (Loss) and Consolidated Balance Sheets.

At December 31, [removed] 2024, we had [removed] $1,227.6 in cash and cash [removed] equivalents, which includes amounts held outside of the U.S., primarily in Europe and Asia. Non-U.S. cash is generally available for repatriation without legal restrictions, subject to certain taxes, mainly withholding taxes. We are not asserting indefinite reinvestment of cash or outside basis for our non-U.S. subsidiaries due to the outstanding debt obligations in instances where alternative repatriation options, other than dividends, are not available. At December 31, [removed] 2024, Vertiv had [removed] $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 [removed] $15.1, and taking into account the borrowing base limitations set forth in the ABL Revolving Credit Facility.

The remaining other operating expenses include amortization of intangibles, restructuring costs, foreign currency (gain) loss, and other operating expense (income). These remaining [removed] other expenses were [removed] $192.8 for 2024, which was a [removed] $23.2 decrease from 2023. The decrease was primarily due to a [removed] $23.3 decrease in restructuring [removed] costs and a $6.7 decrease in [removed] foreign currency loss, partially offset by increased amortization of intangibles of $2.9.

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 [removed] $160.8 and $154.0 in 2024 and 2023, respectively. Corporate and other costs increased [removed] $6.8 compared to [removed] 2023 primarily due to [removed] a decrease in foreign currency loss of $6.7.

We are subject to income taxes in the United States and numerous foreign jurisdictions. Judgment in the forecasting of taxable income using historical and projected future operating results is required in determining our provision for income taxes and the related assets and liabilities. The provision for income taxes includes income taxes paid, currently payable or receivable, and deferred taxes. Under U.S. GAAP, deferred tax assets and liabilities are determined based on differences between financial reporting and tax basis of assets and liabilities and are measured using enacted tax rates and laws that are expected to be in effect when the differences reverse. Deferred tax assets are also recognized for the estimated future effects of tax loss and credit carryforwards. The effect on deferred taxes of changes in tax rates is recognized in the period in which the enactment date occurs. Valuation allowances are established when necessary on a jurisdictional basis to reduce deferred tax assets to the amounts expected to be realized. Deferred taxes are not provided on the unremitted earnings of subsidiaries outside of the United States when it is expected that these earnings are [removed] indefinitely reinvested. In the event that the actual outcome of future tax consequences differs from our estimates and assumptions due to changes or future events such as tax legislation, geographic mix of earnings, completion of tax audits or earnings repatriation plans, the resulting change to the provision for income taxes could have a material effect on the Consolidated Statements of Earnings (Loss) and Consolidated Balance Sheets.

• Capacity Expansion: We have invested in [removed] capacity expansion to meet current and anticipated [removed] additional customer demand. For example, since acquiring E&I in late 2021, [removed] we have approximately doubled our manufacturing capacity for switchgear, busbar and integrated [removed] solutions by opening new facilities and [removed] adding production to existing facilities. Additionally, in order to support our [removed] thermal management activity, we opened a new manufacturing facility in Pune, India in 2024. We also recently opened a new facility in Pelzer, South Carolina to support the production of modular solutions, modular power systems and other [removed] infrastructure systems. 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.

• [removed] Increased Tariffs: The global trade environment continues to evolve [removed] rapidly. In response to escalating pressures and [removed] geopolitical uncertainties surrounding global supply [removed] chains, we continue to pursue [removed] a supply chain strategy of geographic resilience. This [removed] includes adding regional sourcing and manufacturing [removed] options to complement our existing global supply chain. [removed] For example, in 2024, we expanded and strengthened our supply base and manufacturing footprint in the [removed] US as part of our overall capacity strategy to grow with customer demand in the [removed] US.

Net cash provided by operating activities was [removed] $1,319.3 in 2024, a $418.8 increase in cash generation compared to [removed] 2023. 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.

Operating profit (loss) in [removed] 2024 was $1,097.8, increase of [removed] $335.4 compared with [removed] 2023. Margin increased primarily due to [removed] higher sales volumes, manufacturing and procurement productivity, and improved price realization.

The recoverability of deferred tax assets and the recognition and measurement of uncertain tax positions are subject to our various assumptions and judgment. If actual results differ from our estimates made in establishing or maintaining valuation allowances against deferred tax assets, the resulting change in the valuation allowance would generally impact[removed] earnings. 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.

Net cash used by financing activities was [removed] $652.1 in 2024 compared to [removed] $247.5 of net cash used by financing activities in [removed] 2023. The increased use of cash over the comparable period was primarily the result of [removed] $599.9 of share repurchases of common [removed] stock, $32.7 increase in dividend payments, and a [removed] $13.0 decrease in [removed] net cash received associated with equity-based compensation activity, offset by a [removed] decrease in year-over-year repayments of $235.0 on the ABL Revolving Credit Facility.

Operating profit (loss) in [removed] 2024 was $175.2, an increase of [removed] $27.8 compared with [removed] 2023 mainly driven by sales from product mix. Margin increased primarily [removed] due to higher sales volumes and manufacturing and procurement productivity.

Income tax expense was [removed] $269.6 in 2024 compared to [removed] $73.5 in 2023. The effective rate in [removed] 2024 was primarily influenced [removed] the changes in tax incentives, offset by net changes in valuation allowance [removed] and the tax impact of non-deductible changes in fair value of the warrant liabilities. 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.

Interest expense, net, was [removed] $150.4 in 2024 compared to [removed] $180.1 in 2023. The $29.7 decrease is primarily driven by a [removed] $16.4 increase of interest [removed] income, a $12.2 reduction to interest expense as a result of our Term Loan [removed] amendments, and a $7.9 decrease in interest due to lower ABL Revolving Credit Facility borrowings during the period. 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.

Cost of sales were [removed] $5,077.6 in 2024, an increase of [removed] $614.9, or 13.8% compared to [removed] 2023. The increase in cost of sales was primarily driven by the impact of higher volumes. Gross profit was [removed] $2,934.2 in 2024, or 36.6% of sales, compared to [removed] $2,400.5, or 35.0% of sales in [removed] 2023. Margin increased primarily due to higher sales volume and improved price [removed] realization.

• forecasted earnings before interest, taxes, and amortization;

Net sales were [removed] $8,011.8 in 2024, an increase of [removed] $1,148.6, or 16.7%, compared with [removed] $6,863.2 in 2023. The increase in sales [removed] is primarily driven by higher sales [removed] volumes, partially offset by the negative impacts from foreign currency of [removed] $53.6. Product sales increased [removed] $974.0, which included [removed] negative impacts from foreign currency of [removed] $41.7. Services & spares sales increased [removed] $174.6, including the [removed] negative impacts from foreign currency of [removed] $11.9.

Selling, general and administrative expenses (or "SG&A") were [removed] $1,374.0 in 2024, an increase of [removed] $61.7 compared to 2023. SG&A as a percentage of sales were 17.1% in 2024 compared with 19.1% in 2023. The increase in SG&A was primarily driven by [removed] $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.

Europe, Middle East & Africa net sales of [removed] $1,793.4 in 2024 increased $302.5, or 20.3%, from 2023. Sales increases were [removed] driven by increased volumes due to products increasing by [removed] $265.7, and service & spares increasing by [removed] $36.8, and were negatively impacted by foreign currency of approximately $7.3.

Americas net sales of [removed] $4,500.6 in 2024 increased $656.1, or 17.1%, from 2023. The increase in sales was primarily driven by higher sales volumes due to products increasing by [removed] $557.9 and service & spares increasing by [removed] $98.2. Americas net sales were negatively impacted by foreign currency of approximately [removed] $28.2.

We recognize revenue from the sale of manufactured products and services when control of promised goods or services are transferred to customers in an amount that reflects the consideration that we expect to be entitled to in exchange for those goods or services. Control is transferred when the customer has the ability to direct the use of and obtain benefits from the goods or services. The majority of our sales agreements contain performance obligations satisfied at a point in time when control is transferred to the customer. Sales for service contracts, including installation, inventory with no alternative use and an enforceable right of payment upon customer termination and other discrete services, generally are recognized over time as the services are provided. Payments received in advance for service arrangements are recorded as deferred revenue and recognized in net sales when the revenue recognition criteria are met. Unbilled revenue is recorded when performance obligations have been satisfied, but we do not have present right to payment.