Item 1. UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS (LOSS)

VERTIV HOLDINGS CO

(Dollars in millions except for per share data)

			Three months ended September 30, 2023						Three months ended September 30, 2022						Nine months ended September 30, 2023						Nine months ended September 30, 2022
Net sales
Net sales - products			$	1,381.3					$	1,135.4					$	3,928.2					$	3,039.8
Net sales - services			361.3						345.7						1,069.6						997.1
Net sales			1,742.6						1,481.1						4,997.8						4,036.9
Costs and expenses
Cost of sales - products			894.2						838.5						2,626.6						2,301.7
Cost of sales - services			220.8						213.3						654.1						630.8
Cost of sales			1,115.0						1,051.8						3,280.7						2,932.5
Operating expenses
Selling, general and administrative expenses			327.2						295.2						963.5						875.0
Amortization of intangibles			45.5						54.2						136.1						167.7
Restructuring costs			1.3						(1.5)						23.5						0.1
Foreign currency (gain) loss, net			2.7						0.2						13.3						1.8
Other operating expense (income)			—						1.2						(6.3)						(1.2)
Operating profit (loss)			250.9						80.0						587.0						61.0
Interest expense, net			43.5						38.8						137.2						101.5
Change in fair value of warrant liabilities			61.6						9.8						103.4						(124.0)
Income (loss) before income taxes			145.8						31.4						346.4						83.5
Income tax expense			51.7						10.2						118.8						33.5
Net income (loss)			$	94.1					$	21.2					$	227.6					$	50.0
Earnings (loss) per share:
Basic			$	0.25					$	0.06					$	0.60					$	0.13
Diluted			$	0.24					$	0.06					$	0.59					$	(0.20)
Weighted-average shares outstanding:
Basic			380,899,419						377,016,981						379,666,002						376,531,805
Diluted			388,240,664						377,444,002						383,832,268						378,038,809

See accompanying Notes to Unaudited Condensed Consolidated Financial Statements

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

VERTIV HOLDINGS CO

(Dollars in millions)

			Three months ended September 30, 2023						Three months ended September 30, 2022						Nine months ended September 30, 2023						Nine months ended September 30, 2022
Net income (loss)			$	94.1					$	21.2					$	227.6					$	50.0
Other comprehensive income (loss), net of tax:
Foreign currency translation			(63.5)						(146.1)						(23.5)						(332.3)
Interest rate swaps			4.1						30.9						0.8						107.1
Pension			(0.2)						0.1						(0.5)						0.2
Other comprehensive income (loss), net of tax			(59.6)						(115.1)						(23.2)						(225.0)
Comprehensive income (loss)			$	34.5					$	(93.9)					$	204.4					$	(175.0)

See accompanying Notes to Unaudited Condensed Consolidated Financial Statements

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

VERTIV HOLDINGS CO

(Dollars in millions)

			September 30, 2023						December 31, 2022
ASSETS
Current assets:
Cash and cash equivalents			$	500.0					$	260.6
Accounts receivable, less allowances of $26.6 and $18.4, respectively			2,020.7						1,888.8
Inventories			921.7						822.0
Other current assets			178.6						187.3
Total current assets			3,621.0						3,158.7
Property, plant and equipment, net			508.6						489.4
Other assets:
Goodwill			1,284.3						1,284.7
Other intangible assets, net			1,674.1						1,816.1
Deferred income taxes			46.7						46.4
Right-of-use assets, net			157.1						166.4
Other			122.5						134.0
Total other assets			3,284.7						3,447.6
Total assets			$	7,414.3					$	7,095.7
LIABILITIES AND EQUITY
Current liabilities:
Current portion of long-term debt			$	21.8					$	21.8
Accounts payable			931.9						984.0
Deferred revenue			543.3						358.7
Accrued expenses and other liabilities			555.4						513.7
Income taxes			49.1						19.7
Total current liabilities			2,101.5						1,897.9
Long-term debt, net			2,923.1						3,169.1
Deferred income taxes			177.8						176.5
Warrant liabilities			140.5						58.7
Long-term lease liabilities			125.9						132.0
Other long-term liabilities			231.6						219.6
Total liabilities			5,700.4						5,653.8
Equity
Preferred stock, $0.0001 par value, 5,000,000 shares authorized, none issued and outstanding			—						—
Common stock, $0.0001 par value, 700,000,000 shares authorized, 381,349,156 and 377,368,837 shares issued and outstanding at September 30, 2023 and December 31, 2022, respectively			—						—
Additional paid-in capital			2,698.3						2,630.7
Accumulated deficit			(915.0)						(1,142.6)
Accumulated other comprehensive income (loss)			(69.4)						(46.2)
Total equity			1,713.9						1,441.9
Total liabilities and equity			$	7,414.3					$	7,095.7

See accompanying Notes to Unaudited Condensed Consolidated Financial Statements

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

VERTIV HOLDINGS CO

(Dollars in millions)

			Nine months ended September 30, 2023						Nine months ended September 30, 2022
Cash flows from operating activities:
Net income (loss)			$	227.6					$	50.0
Adjustments to reconcile net income (loss) to net cash used for operating activities:
Depreciation			54.6						53.3
Amortization			147.5						178.6
Deferred income taxes			(0.7)						(22.0)
Amortization of debt discount and issuance costs			6.3						7.4
Change in fair value of warrant liabilities			103.4						(124.0)
Changes in operating working capital			(17.8)						(448.0)
Stock-based compensation			18.8						20.1
Payment of contingent consideration			—						(8.7)
Other			4.6						(40.2)
Net cash provided by (used for) operating activities			544.3						(333.5)
Cash flows from investing activities:
Capital expenditures			(80.1)						(61.7)
Investments in capitalized software			(3.4)						(8.0)
Acquisition of business, net of cash acquired			—						(5.0)
Proceeds from disposition of property, plant and equipment			12.4						—
Net cash provided by (used for) investing activities			(71.1)						(74.7)
Cash flows from financing activities:
Borrowings from ABL revolving credit facility and short-term borrowings			224.6						578.4
Repayments of ABL revolving credit facility and short-term borrowings			(459.6)						(281.5)
Repayment of long-term debt			(21.8)						(10.9)
Debt issuance costs			—						(0.5)
Payment of tax receivable agreement			—						(25.0)
Payment of contingent consideration			—						(12.8)
Exercise of employee stock options			22.9						1.3
Employee taxes paid from shares withheld			(2.8)						(4.3)
Net cash provided by (used for) financing activities			(236.7)						244.7
Effect of exchange rate changes on cash and cash equivalents			(4.7)						(14.9)
Increase (decrease) in cash, cash equivalents and restricted cash			231.8						(178.4)
Beginning cash, cash equivalents and restricted cash			273.2						447.1
Ending cash, cash equivalents and restricted cash			$	505.0					$	268.7
Changes in operating working capital
Accounts receivable			$	(136.7)					$	(257.0)
Inventories			(101.5)						(202.3)
Other current assets			28.5						(4.2)
Accounts payable			(44.9)						42.2
Deferred revenue			184.6						35.8
Accrued expenses and other liabilities			45.5						(51.5)
Income taxes			6.7						(11.0)
Total changes in operating working capital			$	(17.8)					$	(448.0)

See accompanying Notes to Unaudited Condensed Consolidated Financial Statements

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT)

VERTIV HOLDINGS CO

(Dollars in millions)

						Share Capital
						Shares						Amount						Additional Paid in Capital						Accumulated Deficit						Accumulated Other Comprehensive Income (Loss)						Total
Balance at December 31, 2021						375,801,857						$	—					$	2,597.5					$	(1,215.4)					$	35.6					$	1,417.7
Net income (loss)						—						—						—						8.5						—						8.5
Exercise of employee stock options						89,566						—						1.0						—						—						1.0
Stock-based compensation						—						—						6.6						—						—						6.6
Employee 401K match with Vertiv stock						100,541						—						2.3						—						—						2.3
Other comprehensive income (loss), net of tax						—						—						—						—						18.0						18.0
Balance at March 31, 2022						375,991,964						$	—					$	2,607.4					$	(1,206.9)					$	53.6					$	1,454.1
Net income (loss)						—						$	—					$	—					$	20.3					$	—					$	20.3
Exercise of employee stock options						4,279						—						0.1						—						—						0.1
Stock-based compensation, net of withholding for tax(1)						563,597						—						2.9						—						—						2.9
Employee 401K match with Vertiv stock						161,333						—						2.2						—						—						2.2
Other comprehensive income (loss), net of tax						—						—						—						—						(127.9)						(127.9)
Balance at June 30, 2022						376,721,173						$	—					$	2,612.6					$	(1,186.6)					$	(74.3)					$	1,351.7
Net income (loss)						—						—						$	—					$	21.2					$	—					$	21.2
Exercise of employee stock options						20,649						—						0.2						—						—						0.2
Stock-based compensation						—						—						6.3						—						—						6.3
Employee 401K match with Vertiv stock						316,905						—						2.8						—						—						2.8
Other comprehensive income (loss), net of tax						—						—						—						—						(115.1)						(115.1)
Balance at September 30, 2022						377,058,727						$	—					$	2,621.9					$	(1,165.4)					$	(189.4)					$	1,267.1
Balance at December 31, 2022						377,368,837						$	—					$	2,630.7					$	(1,142.6)					$	(46.2)					$	1,441.9
Net income (loss)						—						—						—						50.3						—						50.3
Exercise of employee stock options						246,653						—						2.2						—						—						2.2
Stock-based compensation, net of withholding for tax(2)						14,730						—						5.4						—						—						5.4
Employee 401K match with Vertiv stock						135,245						—						2.1						—						—						2.1
Exercise of warrants(3)						1,368,194						—						21.6						—						—						21.6
Other comprehensive income (loss), net of tax						—						—						—						—						27.3						27.3
Balance at March 31, 2023						379,133,659						$	—					$	2,662.0					$	(1,092.3)					$	(18.9)					$	1,550.8
Net income (loss)						—						$	—					$	—					$	83.2					$	—					$	83.2
Exercise of employee stock options						649,884						—						7.8						—						—						7.8
Stock-based compensation, net of withholding for tax(4)						365,055						—						4.4						—						—						4.4
Employee 401K match with Vertiv stock						217,041						—						2.8						—						—						2.8
Other comprehensive income (loss), net of tax						—						—						—						—						9.1						9.1
Balance at June 30, 2023						380,365,639						$	—					$	2,677.0					$	(1,009.1)					$	(9.8)					$	1,658.1
Net income (loss)						—						$	—					$	—					$	94.1					$	—					$	94.1
Exercise of employee stock options						892,030						—						12.9						—						—						12.9
Stock-based compensation, net of withholding for tax(5)						6,465						—						6.2						—						—						6.2
Employee 401K match with Vertiv stock						85,022						—						2.2						—						—						2.2
Other comprehensive income (loss), net of tax						—						—						—						—						(59.6)						(59.6)
Balance at September 30, 2023						381,349,156						$	—					$	2,698.3					$	(915.0)					$	(69.4)					$	1,713.9

(1)Net stock compensation activity includes 876,358 vested shares offset by 312,761 shares withheld for taxes valued at $4.3 and stock-based compensation of $7.2.

(2)Net stock compensation activity includes 14,730 shares withheld for taxes valued at $0.1 and stock-based compensation of $5.5.

(3)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.

(4)Net stock compensation activity includes 562,320 vested shares offset by 197,265 shares withheld for taxes valued at $2.4 and stock-based compensation of $6.8.

(5)Net stock compensation activity includes 10,707 vested shares offset by 4,242 shares withheld for taxes valued at $0.3 and stock-based compensation of $6.5.

See accompanying Notes to Unaudited Condensed Consolidated Financial Statements

Vertiv Holdings Co

Notes to Condensed Consolidated Financial Statements (Unaudited)

(Dollars in millions, except per share amounts)

(1) DESCRIPTION OF BUSINESS

Vertiv Holdings Co ("Holdings Co", and together with its majority-owned subsidiaries, “Vertiv”, “we”, “our”, or “the Company”), formerly known as GS Acquisition Holdings Corp, provides mission-critical infrastructure technologies and life cycle services for data centers, communication networks, and commercial and industrial environments. Vertiv’s offerings include AC and DC power management products, thermal management products, integrated rack systems, modular solutions, management systems for monitoring and controlling digital infrastructure, and services. Vertiv manages and reports results of operations for three reportable segments: Americas; Asia Pacific; and Europe, Middle East & Africa.

(2) BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The unaudited condensed consolidated interim financial statements have been prepared in accordance with generally accepted accounting principles (“GAAP”) in the U.S. and the rules and regulations of the Securities and Exchange Commission (“SEC”) and include the accounts of the Company and its subsidiaries in which the Company has a controlling interest. These unaudited condensed consolidated interim financial statements do not include all of the information and footnotes required for complete financial statements. In management’s opinion, these financial statements reflect all adjustments of a normal, recurring nature necessary for a fair presentation of the results for the interim periods presented. The presentation of certain prior period amounts have been reclassed to conform with current year presentation.

The preparation of financial statements in conformity with GAAP requires the Company to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and reported amounts of revenues and expenses during the reporting period. Actual amounts could differ from the estimates. On an ongoing basis, management reviews its estimates based on currently available information. Changes in facts and circumstances may result in revised estimates. Results for these interim periods are not necessarily indicative of results to be expected for the full year due to, among other reasons, the continued uncertainty of general economic conditions that have impacted, and may continue to impact, the Company's sales channels, supply chain, manufacturing operations, workforce, or other key aspects of the Company’s operations.

The notes included herein should be read in conjunction with the Company’s audited consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022, filed with the SEC on February 27, 2023.

Accounting Pronouncements

In March 2020, the Financial Accounting Standards Board ("FASB") issued Accounting Standard Update ("ASU") 2020-04: Reference Rate Reform (Topic 848) Facilitation of the Effects of Reference Rate Reform on Financial Reporting. This ASU provides optional expedients and exceptions to ease the potential burden in accounting for contracts, hedging relationships and other transactions that reference the London Interbank Offered Rate (“LIBOR”) or another reference rate expected to be discontinued as part of reference rate reform. The amendments became effective March 12, 2020 and can generally be applied through December 31, 2024.

On April 18, 2023, the Company transitioned its interest rate swaps from LIBOR to the Secured Overnight Financing Rate ("SOFR") effective July 2, 2023. The Term Loan Credit Agreement, dated as of March 2, 2020 (as amended), by and among (i) Vertiv Group Corporation, as borrower, (ii) Vertiv Intermediate Holding II Corporation, (iii) the administrative agent and (iv) the lenders, relating to a term loan due in 2027 (the “Term Loan Credit Agreement”), was amended on June 22, 2023, to allow for the transition, effective July 1, 2023, from the LIBOR available for borrowings under the Term Loan Credit Agreement and related LIBOR-based mechanics to an interest rate based on the SOFR and related SOFR-based mechanics. The Company adopted ASU 2020-04 and elected to apply the optional expedient to consider the amended swap contracts as a continuation of the existing arrangements. The application of this ASU did not have a material impact on the Condensed Consolidated Financial Statements.

In March 2023, the FASB issued ASU 2023-01: Leases (Topic 842) Common Control Arrangements. This ASU provides amendments that require leasehold improvements associated with common control leases be amortized over the useful life of the leasehold improvements to the common control group as long as the lessee controls the underlying asset through a lease. The amendments are effective in fiscal years beginning after December 15, 2023. The Company does not expect the adoption to have a material impact on its Consolidated Financial Statements.

(3) REVENUE

The Company recognizes 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 the Company expects to be entitled to receive in exchange for those goods or services.

Disaggregation of Revenues

The following table disaggregates revenue by business segment, product and service offering and timing of transfer of control:

			Three months ended September 30, 2023
			Americas						Asia Pacific						Europe, Middle East, & Africa						Total
Sales by Product and Service Offering:
Critical infrastructure & solutions			$	670.8					$	244.3					$	223.2					$	1,138.3
Services & spares			206.2						103.1						84.0						393.3
Integrated rack solutions			126.2						41.2						43.6						211.0
Total			$	1,003.2					$	388.6					$	350.8					$	1,742.6
Timing of revenue recognition:
Products and services transferred at a point in time			$	772.8					$	296.0					$	210.4					$	1,279.2
Products and services transferred over time			230.4						92.6						140.4						463.4
Total			$	1,003.2					$	388.6					$	350.8					$	1,742.6

			Three months ended September 30, 2022
			Americas						Asia Pacific						Europe, Middle East, & Africa						Total
Sales by Product and Service Offering:
Critical infrastructure & solutions			$	417.3					$	265.7					$	224.3					$	907.3
Services & spares			203.6						113.3						71.1						388.0
Integrated rack solutions			91.7						57.1						37.0						185.8
Total			$	712.6					$	436.1					$	332.4					$	1,481.1
Timing of revenue recognition:
Products and services transferred at a point in time			$	492.7					$	343.4					$	231.8					$	1,067.9
Products and services transferred over time			219.9						92.7						100.6						413.2
Total			$	712.6					$	436.1					$	332.4					$	1,481.1

			Nine months ended September 30, 2023
			Americas						Asia Pacific						Europe, Middle East, & Africa						Total
Sales by Product and Service Offering:
Critical infrastructure & solutions			$	1,868.2					$	646.9					$	699.1					$	3,214.2
Services & spares			602.5						317.3						248.3						1,168.1
Integrated rack solutions			354.2						133.2						128.1						615.5
Total			$	2,824.9					$	1,097.4					$	1,075.5					$	4,997.8
Timing of revenue recognition:
Products and services transferred at a point in time			$	2,164.2					$	830.6					$	716.1					$	3,710.9
Products and services transferred over time			660.7						266.8						359.4						1,286.9
Total			$	2,824.9					$	1,097.4					$	1,075.5					$	4,997.8

			Nine months ended September 30, 2022
			Americas						Asia Pacific						Europe, Middle East, & Africa						Total
Sales by Product and Service Offering:
Critical infrastructure & solutions			$	1,080.5					$	692.5					$	642.6					$	2,415.6
Services & spares			555.9						330.8						208.0						1,094.7
Integrated rack solutions			258.5						152.8						115.3						526.6
Total			$	1,894.9					$	1,176.1					$	965.9					$	4,036.9
Timing of revenue recognition:
Products and services transferred at a point in time			$	1,323.3					$	909.5					$	681.9					$	2,914.7
Products and services transferred over time			571.6						266.6						284.0						1,122.2
Total			$	1,894.9					$	1,176.1					$	965.9					$	4,036.9

The opening and closing balances of current and long-term deferred revenue as of September 30, 2023 and December 31, 2022 were as follows:

			Balances at September 30, 2023						Balances at December 31, 2022
Deferred revenue - current			$	543.3					$	358.7
Deferred revenue - noncurrent (1)			55.9						49.5

(1) Noncurrent deferred revenue is recorded within “Other long-term liabilities” on the Unaudited Condensed Consolidated Balance Sheets.

Deferred revenue - noncurrent consists primarily of maintenance, extended warranty and other service contracts. The Company expects to recognize noncurrent deferred revenue of $31.1, $14.4 and $10.4 in the next 13 to 24 months, the next 25 to 36 months, and thereafter, respectively.

(4) RESTRUCTURING COSTS

Restructuring costs include expenses associated with the Company’s efforts to continually improve operational efficiency and reposition its assets to remain competitive on a worldwide basis. Plant closing and other costs include costs of moving fixed assets, employee training, relocation, and facility costs. Severance and benefits, plant closing and other costs are recorded in "Restructuring costs" on the Unaudited Condensed Consolidated Statement of Earnings (Loss). Restructuring costs by business segment were as follows:

			Three months ended September 30, 2023						Three months ended September 30, 2022						Nine months ended September 30, 2023						Nine months ended September 30, 2022
Americas			$	0.6					$	0.4					$	1.8					$	1.4
Asia Pacific			0.6						(1.7)						11.0						(1.7)
Europe, Middle East & Africa			0.3						(0.1)						3.9						0.6
Corporate			(0.2)						(0.1)						6.8						(0.2)
Total			$	1.3					$	(1.5)					$	23.5					$	0.1

The current liability and non-current liability for estimated restructuring costs is recorded in "Accrued expenses and other liabilities” and "Other long-term liabilities", respectively, on the Unaudited Condensed Consolidated Balance Sheets. The change in the current liability for the restructuring costs during the nine months ended September 30, 2023 were as follows:

			December 31, 2022						Expense						Paid/Utilized						September 30, 2023
Severance and benefits			$	15.3					$	22.9					$	(11.9)					$	26.3
Plant closing and other			0.1						0.6						(0.6)						0.1
Total			$	15.4					$	23.5					$	(12.5)					$	26.4

The change in the current liability for the restructuring costs during the nine months ended September 30, 2022 were as follows:

			December 31, 2021						Expense						Paid/Utilized						September 30, 2022
Severance and benefits			$	33.8					$	(1.7)					$	(15.7)					$	16.4
Plant closing and other			0.2						1.8						(1.8)						0.2
Total			$	34.0					$	0.1					$	(17.5)					$	16.6

(5) DEBT

Long-term debt, net, consisted of the following as of September 30, 2023 and December 31, 2022:

			September 30, 2023						December 31, 2022
Term Loan due 2027 at 8.19% and 6.89% at September 30, 2023 and December 31, 2022, respectively			$	2,123.4					$	2,139.8
Senior Secured Notes due 2028 at 4.125% at both September 30, 2023 and December 31, 2022			850.0						850.0
ABL Revolving Credit Facility			—						235.0
Unamortized discount and issuance costs			(28.5)						(33.9)
			2,944.9						3,190.9
Less: Current Portion			(21.8)						(21.8)
Total long-term debt, net of current portion			$	2,923.1					$	3,169.1

Term Loan Amendment

On June 22, 2023, Citibank, N.A., as administrative agent (in such capacity, the “Administrative Agent”) entered into an Amendment no. 2 to Term Loan Credit Agreement (the “Amendment”), which amends that certain Term Loan Credit Agreement. Refer to further information in “Note 2 — Basis of Presentation and Summary of Significant Accounting Policies”.

Pursuant to the Amendment, the interest rate under the Term Loan Credit Agreement transitioned, effective July 1, 2023, from the LIBOR available for borrowings under the credit agreement and related LIBOR-based mechanics to an interest rate based on the SOFR and related SOFR-based mechanics.

ABL Revolving Credit Facility

At September 30, 2023, Vertiv Group Corporation (a wholly-owned subsidiary of the Company), as Borrower, and certain subsidiaries of the Borrower as co-borrowers (the “Co-Borrowers”), had $545.9 of availability under the Asset Based Revolving Credit Facility (the “ABL Revolving Credit Facility”) (subject to customary conditions, and subject to separate sublimits for letters of credit, swingline borrowings and borrowings made to certain non-U.S. Co-Borrowers), net of letters of credit outstanding in the aggregate principal amount of $17.0, and taking into account the borrowing base limitations set forth in the ABL Revolving Credit Facility. At September 30, 2023, there was no outstanding balance on the ABL Revolving Credit Facility. 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%.

(6) INCOME TAXES

The Company’s effective tax rate was 35.5%, 34.3%, 32.5% and 40.1% for the three and nine months ended September 30, 2023 and 2022, respectively. The effective tax rate in the three and nine months ended September 30, 2023 is primarily influenced by the mix of income between the Company’s U.S. and non-U.S. operations, net of changes in valuation allowances and reflect the negative impacts of non-deductible changes in the fair value of the warrant liabilities and changes in our indefinite reinvestment liability. The effective rate for the comparative three and nine months ended September 30, 2022 was primarily influenced by the mix of income between the Company’s U.S. and non-U.S. operations, net of changes in valuation allowances offset by the positive impact of non-deductible or non-taxable changes in fair value of the warrant liabilities.

The Company provided U.S. federal income taxes and foreign withholding taxes on all temporary differences attributed to basis differences in foreign subsidiaries that are not considered indefinitely reinvested. As of September 30, 2023, the Company has certain earnings of certain foreign affiliates that continue to be indefinitely reinvested, but it was not practicable to estimate the associated deferred tax liability, due to interaction with other tax laws and regulations in the year of inclusion.

(7) RELATED PARTY TRANSACTIONS

Transactions with Affiliates of Advisors

On August 8, 2023 (the "Stock Sale Transaction date"), VPE Holdings, LLC, an affiliate of Platinum Equity Advisors, LLC (the "Vertiv Stockholder") completed the sale of 20,000,000 shares of Class A common stock of the Company (the "Stock Sale Transaction"). Subsequent to the Stock Sale Transaction, the Vertiv Stockholder holds less than 5% of the outstanding Class A common stock of the Company and as such is no longer considered a related person of the Company for purposes of Item 404 of Regulation S-K by virtue of its ownership in the Company.

The Company purchased and sold goods in the ordinary course of business with affiliates of the Vertiv Stockholder. Purchases from the start of the current quarter and current year through the Stock Sale Transaction date were $11.6 and $74.1, respectively. For the three and nine months ended September 30, 2022 purchases were $34.4 and $103.6, respectively. Sales from the start of the current quarter and current year through the Stock Sale Transaction date were $6.7 and $89.5, respectively. For the three and nine months ended September 30, 2022 sales were $36.5 and $98.1, respectively. Accounts payable were $3.8 as of December 31, 2022. Accounts receivable were $33.3 as of December 31, 2022.

Tax Receivable Agreement

In 2021, the Company and the Vertiv Stockholder agreed to amend and supplement the tax receivable agreement entered into by the Company and the Vertiv Stockholder on February 7, 2020 (the “Tax Receivable Agreement”), to replace the Company’s remaining payment obligations under the Tax Receivable Agreement with an obligation to pay $100.0 in cash in two equal installments. The first two installment payments were scheduled to be on or before June 15, 2022 and September 15, 2022, respectively. On June 15, 2022, the Company and the Vertiv Stockholder agreed to further amend the payment schedule under the Tax Receivable Agreement into three installment payments, wherein the first installment payment of $12.5 became due and was paid on June 15, 2022, the second installment of $12.5 became due and was paid on September 15, 2022, and the third installment of $75.0 became due and was paid on November 30, 2022. The Tax Receivable Agreement terminated on November 30, 2022 upon receipt of final payment.

(8) OTHER FINANCIAL INFORMATION

			September 30, 2023						December 31, 2022
Reconciliation of cash, cash equivalents, and restricted cash
Cash and cash equivalents			$	500.0					$	260.6
Restricted cash included in other current assets			5.0						12.6
Total cash, cash equivalents, and restricted cash			$	505.0					$	273.2

			September 30, 2023						December 31, 2022
Inventories
Finished products			$	280.3					$	276.5
Raw materials			476.4						377.2
Work in process			165.0						168.3
Total inventories			$	921.7					$	822.0

			September 30, 2023						December 31, 2022
Property, plant and equipment, net
Machinery and equipment			$	441.0					$	405.4
Buildings			332.4						312.4
Land			40.6						41.0
Construction in progress			45.3						41.5
Property, plant and equipment, at cost			859.3						800.3
Less: Accumulated depreciation			(350.7)						(310.9)
Property, plant and equipment, net			$	508.6					$	489.4

			September 30, 2023						December 31, 2022
Accrued expenses and other liabilities
Accrued payroll and other employee compensation			$	143.4					$	132.6
Restructuring (see Note 4)			26.4						15.4
Operating lease liabilities			42.3						45.2
Product warranty			24.0						25.6
Other			319.3						294.9
Total			$	555.4					$	513.7

			Nine months ended September 30, 2023						Nine months ended September 30, 2022
Change in product warranty accrual
Balance at the beginning of the period			$	25.6					$	30.0
Provision charge to expense			15.1						10.8
Paid/utilized			(16.7)						(16.5)
Balance at the end of the period			$	24.0					$	24.3

(9) FINANCIAL INSTRUMENTS AND RISK MANAGEMENT

In accordance with ASC 820, the Company uses a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. Observable inputs are from sources independent of the Company. Unobservable inputs reflect the Company’s assumptions about the factors market participants would use in valuing the asset or liability developed based upon the best information available in the circumstances. These tiers include the following:

Level 1 — inputs include observable unadjusted quoted prices in active markets for identical assets or liabilities

Level 2 — inputs include other than quoted prices in active markets that are either directly or indirectly observable

Level 3 — inputs include unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions

In determining fair value, the Company uses various valuation techniques and prioritizes the use of observable inputs. The availability of observable inputs varies from instrument to instrument and depends on a variety of factors including the type of instrument, whether the instrument is actively traded, and other characteristics particular to the instrument. For many financial instruments, pricing inputs are readily observable in the market, the valuation methodology used is widely accepted by market participants, and the valuation does not require significant management judgment. For other financial instruments, pricing inputs are less observable in the marketplace and may require management judgment.

Recurring fair value measurements

A summary of the Company’s financial instruments recognized at fair value, and the fair value measurements used are as follows:

						As of September 30, 2023
			Balance Sheet Location			Total						Quoted prices in active markets for identical assets (Level 1)						Other observable inputs (Level 2)						Unobservable inputs (Level 3)
Assets:
Interest rate swaps			Other current assets			$	41.6					$	—					$	41.6					$	—
Interest rate swaps			Other noncurrent assets			69.3						—						69.3						—
Total assets						$	110.9					$	—					$	110.9					$	—
Liabilities:
Private warrants			Warrant liabilities			$	140.5					$	—					$	140.5					$	—
Total liabilities						$	140.5					$	—					$	140.5					$	—

						As of December 31, 2022
			Balance Sheet Location			Total						Quoted prices in active markets for identical assets (Level 1)						Other observable inputs (Level 2)						Unobservable inputs (Level 3)
Assets:
Interest rate swaps			Other current assets			$	36.9					$	—					$	36.9					$	—
Interest rate swaps			Other noncurrent assets			73.3						—						73.3						—
Total assets						$	110.2					$	—					$	110.2					$	—
Liabilities:
Private warrants			Warrant liabilities			$	58.7					$	—					$	58.7					$	—
Total liabilities						$	58.7					$	—					$	58.7					$	—

Interest rate swaps — From time to time the Company may enter into derivative financial instruments designed to hedge the variability in interest expense on floating rate debt. Derivatives are recognized as assets or liabilities in the Unaudited Condensed Consolidated Balance Sheets at their fair value. When the derivative instrument qualifies as a cash flow hedge changes in the fair value are deferred through other comprehensive income depending on the effectiveness of the instrument.

The Company uses interest rate swaps to manage the interest rate risk of the Company’s total debt portfolio and related overall cost of borrowing. At September 30, 2023, the interest rate swap agreements designated as cash flow hedges effectively swapped a notional amount of $1,000.0 of SOFR-based floating rate debt for fixed rate debt. At December 31, 2022, interest rate swap agreements designated as cash flow hedges effectively swapped a notional amount of $1,000.0 of LIBOR-based floating rate debt for fixed rate debt. The Company’s interest rate swaps mature in March 2027. During the three and nine months ended September 30, 2023 and 2022, the Company recognized $10.8, $28.4, $(1.6), and $2.7, respectively, within “Interest expense, net” on the Unaudited Condensed Consolidated Statements of Earnings (Loss). At September 30, 2023, the Company expects that approximately $41.6 of pre-tax net gains on cash flow hedges will be reclassified from accumulated other comprehensive income (loss) into earnings during the next twelve months.

The interest rate swaps are valued using the SOFR yield curves at the reporting date. Counterparties to these contracts are highly rated financial institutions. The fair values of the Company’s interest rate swaps are adjusted for nonperformance risk and creditworthiness of the counterparty through the Company’s credit valuation adjustment (“CVA”). The CVA is calculated at the counterparty level utilizing the fair value exposure at each payment date and applying a weighted probability of the appropriate survival and marginal default percentages. On April 18, 2023, the Company transitioned its interest rate swaps from LIBOR to SOFR effective July 2, 2023. As mentioned previously, the Company transitioned its Term Loan due 2027 to SOFR effective July 1, 2023.

Private warrants — The fair value of the private warrants is considered a Level 2 valuation and is determined using the Black-Sholes-Merton valuation model. 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. For the nine months ended September 30, 2023, the Company recognized a gain of $7.7 in "Change in the fair value of warrant liabilities" on the Unaudited Condensed Consolidated Statement of Earnings (Loss) associated with the exercise of these private warrants. The Company recognized a loss of $61.6 and $111.1, respectively, for the three and nine months ended September 30, 2023 in "Change in the fair value of warrant liabilities" on the Unaudited Condensed Consolidated Statement of Earnings (Loss) associated with the mark-to-market adjustment on the remaining 5,266,667 outstanding private warrants. The Company recognized a loss of $9.8 and a gain of $124.0, respectively, for the three and nine months ended September 30, 2022 in "Change in the fair value of warrant liabilities" on the Unaudited Condensed Consolidated Statement of Earnings (Loss) associated with the mark-to-market adjustment on the 10,533,333 then outstanding private warrants.

The significant assumptions which the Company used in the model are:

Warrant valuation inputs						September 30, 2023						December 31, 2022
Stock price						$	37.20					$	13.66
Strike price						$	11.50					$	11.50
Remaining life						1.36						2.10
Volatility						60.0		%				56.0		%
Interest rate (1)						5.31		%				4.39		%
Dividend yield (2)						0.03		%				0.07		%

(1) Interest rate determined from a constant maturity treasury yield.

(2) September 30, 2023 and December 31, 2022 dividend yield assumes $0.01 per share per annum.

Net investment hedge — From time to time the Company designates certain intercompany debt to hedge a portion of its investment in foreign subsidiaries and affiliates. The net impact of translation adjustments from these hedges was $(1.5) and $19.5 for the three and nine months ended September 30, 2023, respectively, and are included in “Foreign currency translation” in the Unaudited Condensed Consolidated Statement of Other Comprehensive Income (Loss). The net impact of translation adjustments from these hedges was $13.6 for both the three and nine months ended September 30, 2022. As of September 30, 2023 and December 31, 2022, $202.6 and $233.6, respectively, of the Company’s intercompany debt was designated to hedge investments in certain foreign subsidiaries and affiliates.

Other fair value measurements

The Company determines the fair value of debt using Level 2 inputs based on quoted market prices. The following table presents the estimated fair value and carrying value of long-term debt, including the current portion of long-term debt as of September 30, 2023 and December 31, 2022.

			September 30, 2023												December 31, 2022
			Fair Value						Par Value (1)						Fair Value						Par Value (1)
Term Loan due 2027			$	2,122.1					$	2,123.4					$	2,062.4					$	2,139.8
Senior Secured Notes due 2028			751.1						850.0						726.1						850.0
ABL Revolving Credit Facility due 2025			—						—						235.0						235.0

(1)See “Note 5 — Debt” for additional information.

(10) ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

Activity in accumulated other comprehensive income (loss) is as follows:

			Three months ended September 30, 2023						Three months ended September 30, 2022						Nine months ended September 30, 2023						Nine months ended September 30, 2022
Foreign currency translation, beginning			$	(117.0)					$	(146.4)					$	(157.0)					$	39.8
Other comprehensive income (loss)			(63.5)						(146.1)						(23.5)						(332.3)
Foreign currency translation, ending			(180.5)						(292.5)						(180.5)						(292.5)
Interest rate swaps, beginning			106.9						84.9						110.2						8.7
Unrealized gain (loss) deferred during the period (1)			4.1						30.9						0.8						107.1
Interest rate swaps, ending			111.0						115.8						111.0						115.8
Pension, beginning			0.3						(12.8)						0.6						(12.9)
Actuarial gain (losses) recognized during the period, net of income taxes			(0.2)						0.1						(0.5)						0.2
Pension, ending			0.1						(12.7)						0.1						(12.7)
Accumulated other comprehensive income (loss)			$	(69.4)					$	(189.4)					$	(69.4)					$	(189.4)

(1)During the three and nine months ended September 30, 2023 and 2022, $10.8, $28.4, $(1.6) and $2.7, respectively, was reclassified into earnings.

(11) SEGMENT INFORMATION

Operating profit (loss) is the primary income measure the Company uses to assess segment performance and make operating decisions. Segment performance is assessed exclusive of Corporate and other costs, foreign currency gain (loss), and amortization of intangibles. Corporate and other costs primarily include stock-based compensation, other incentive compensation, change in fair value of warrant liabilities, asset impairments, and costs that support centralized global functions including Finance, Treasury, Risk Management, Strategy & Marketing, IT, Legal, and global product platform development and offering management.

The Company determines its reportable segments based on how operations are managed internally for the products and services sold to customers, including how the results are reviewed by the chief operating decision maker, which includes determining resource allocation methodologies used for reportable segments.

Summarized information about the Company’s results of operations by reportable segment and product and service offering follows:

Americas includes products and services sold for applications within the data center, communication networks and commercial and industrial markets in North America and Latin America. This segment’s principal product and service offerings include:

• Critical infrastructure & solutions includes AC and DC power management, thermal management, low/medium voltage switchgear, busway, and integrated modular solutions.

• Integrated rack solutions** includes racks, rack power, rack power distribution, rack thermal systems, configurable integrated solutions, and hardware for managing I.T. equipment.

• Services & spares** includes preventative maintenance, acceptance testing, engineering and consulting, performance assessments, remote monitoring, training, spare parts, and critical digital infrastructure software.

Asia Pacific includes products and services sold for applications within the data center, communication networks and commercial and industrial markets throughout Greater China, Australia & New Zealand, South East Asia, and India. Products and services offered are similar to the Americas segment.

Europe, Middle East & Africa includes products and services sold for applications within the data center, communication networks and commercial and industrial markets in Europe, Middle East & Africa. Products and services offered are similar to the Americas segment.

Reportable Segments

Sales			Three months ended September 30, 2023						Three months ended September 30, 2022						Nine months ended September 30, 2023						Nine months ended September 30, 2022
Americas			$	1,014.5					$	722.5					$	2,854.8					$	1,925.8
Asia Pacific			411.3						460.3						1,160.3						1,250.7
Europe, Middle East & Africa			423.3						381.1						1,235.9						1,096.7
			1,849.1						1,563.9						5,251.0						4,273.2
Eliminations			(106.5)						(82.8)						(253.2)						(236.3)
Total			$	1,742.6					$	1,481.1					$	4,997.8					$	4,036.9

Intersegment sales (1)			Three months ended September 30, 2023						Three months ended September 30, 2022						Nine months ended September 30, 2023						Nine months ended September 30, 2022
Americas			$	11.3					$	9.9					$	29.9					$	30.9
Asia Pacific			22.7						24.2						62.9						74.6
Europe, Middle East & Africa			72.5						48.7						160.4						130.8
Total			$	106.5					$	82.8					$	253.2					$	236.3

(1)Intersegment selling prices approximate market prices.

Operating profit (loss)			Three months ended September 30, 2023						Three months ended September 30, 2022						Nine months ended September 30, 2023						Nine months ended September 30, 2022
Americas			$	254.0					$	115.2					$	684.4					$	255.6
Asia Pacific			74.1						83.3						175.8						193.3
Europe, Middle East & Africa			96.9						57.4						262.4						152.4
Total reportable segments			425.0						255.9						1,122.6						601.3
Foreign currency gain (loss)			(2.7)						(0.2)						(13.3)						(1.8)
Corporate and other			(125.9)						(121.5)						(386.2)						(370.8)
Total corporate, other and eliminations			(128.6)						(121.7)						(399.5)						(372.6)
Amortization of intangibles			(45.5)						(54.2)						(136.1)						(167.7)
Operating profit (loss)			$	250.9					$	80.0					$	587.0					$	61.0

(12) EARNINGS (LOSS) PER SHARE

Basic earnings (loss) per share is computed by dividing net income (loss) by the weighted-average number of common shares outstanding during the period. Diluted earnings (loss) per share is computed by dividing net income (loss) adjusted for the gain on fair value of warrant liability, if the warrants are in-the-money and the impact is dilutive, by the weighted-average number of common shares outstanding during the period increased by the number of additional shares that would have been outstanding related to potentially dilutive equity-based compensation and warrants.

The details of the earnings per share calculations for the three and nine months ended September 30, 2023 and 2022 are as follows:

(In millions, except share and per share amounts)			Three months ended September 30, 2023						Three months ended September 30, 2022						Nine months ended September 30, 2023						Nine months ended September 30, 2022
Basic earnings (loss) per share computation:
Net income (loss)			$	94.1					$	21.2					$	227.6					$	50.0
Weighted-average number of shares outstanding - basic			380,899,419						377,016,981						379,666,002						376,531,805
Basic earnings per share			$	0.25					$	0.06					$	0.60					$	0.13
Diluted earnings (loss) per share computation:
Net income (loss)			94.1						$	21.2					$	227.6					$	50.0
Gain on fair value of warrant liabilities(1)			—						—						—						(124.0)
Net income (loss) adjusted for the gain on fair value of warrant liabilities			$	94.1					$	21.2					$	227.6					$	(74.0)
Weighted-average number of shares outstanding - basic			380,899,419						377,016,981						379,666,002						376,531,805
Dilutive effect of private warrants			—						—						—						1,507,004
Dilutive effect of equity-based compensation			7,341,245						427,021						4,166,266						—
Weighted-average number of shares outstanding - diluted			388,240,664						377,444,002						383,832,268						378,038,809
Diluted earnings (loss) per share			$	0.24					$	0.06					$	0.59					$	(0.20)

(1) For the three months ended September 30, 2022, the warrants were out of the money and therefore the net income is not adjusted for the gain on fair value of warrant liabilities to calculate diluted earnings (loss) per share.

The dilutive effect of equity-based compensation awards was 7.3 million and 4.2 million shares, respectively, during the three and nine months ended September 30, 2023. Additional equity-based compensation awards and warrants were also outstanding during the three and nine months ended September 30, 2023, but were not included in the computation of diluted earnings (loss) per share because the effect would be anti-dilutive. Such anti-dilutive equity-based compensation awards and warrants represent 0.3 million and 3.4 million shares for the three months ended September 30, 2023, respectively, and 4.0 million and 2.7 million shares for the nine months ended September 30, 2023, respectively.

The dilutive effect of equity-based compensation awards was 0.4 million shares during the three months ended September 30, 2022. The dilutive effect of private warrants was 1.5 million shares during the nine months ended September 30, 2022. Additional equity-based compensation awards and warrants were also outstanding during the three and nine months ended September 30, 2022, but were not included in the computation of diluted earnings (loss) per share because the effect would be anti-dilutive. Such anti-dilutive equity-based compensation awards represent 20.3 million and 15.0 million shares for the three and nine months ended September 30, 2022, respectively.

(13) COMMITMENTS AND CONTINGENCIES

The Company is a party to a number of pending legal proceedings and claims, including those involving general and product liability and other matters. The Company accrues for such liabilities when it is probable that future costs will be incurred and such costs can be reasonably estimated. Accruals are based on developments to date; management’s estimates of the outcomes of these matters; the Company’s experience in contesting, litigating and settling similar matters; and any related insurance coverage. While the Company believes that a material adverse impact is unlikely, given the inherent uncertainty of litigation, a future development in these matters could have a material adverse impact on the Company. The Company is unable to estimate any additional loss or range of loss that may result from the ultimate resolution of these matters, other than those described below.

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. 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. 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. 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 Unaudited Condensed Consolidated Balance Sheet. The settlement was paid in the third quarter of 2023.

On May 3, 2022, a putative securities class action, In re Vertiv Holdings Co Securities Litigation, 22-cv-3572, was filed against Vertiv, certain of the Company’s officers and directors, and other defendants in the Southern District of New York. Plaintiffs filed an amended complaint on September 16, 2022. The amended complaint alleges that certain of the Company’s public statements were materially false and/or misleading with respect to inflationary and supply chain pressures and pricing issues, and asserts claims under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, as amended, and Sections 11, 12(a)(2), and 15 of the Securities Act of 1933, as amended. These claims are asserted on behalf of a putative class of all persons and entities that (i) purchased Vertiv securities between February 24, 2021 and February 22, 2022; and/or (ii) purchased Vertiv securities in or traceable to the November 4, 2021 secondary public offering by a selling stockholder pursuant to a resale registration statement.

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. 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 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.

Defendants believe they have meritorious defenses against the plaintiffs' claims in these lawsuits, which are at the preliminary stages, but the Company is unable at this time to predict the outcome of these disputes or the amount of any cost associated with their resolution.

At September 30, 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 Unaudited Condensed Consolidated Financial Statements, nor were there any material commitments outside the normal course of business.