Vertiv reports 3Q19 uptick in EBITDA, highlights potential earnings volatility to come

Vertiv reported a 6.7% year-over-year gain in EBITDA in 3Q19, while revenue remained roughly flat, according to two sources familiar with the situation. Management commented on the call that the business could face a few choppy quarters ahead due to a cyclical trough, but that they expect a rebound after that.

The Platinum-owned company also said that it still plans to go public, and is examining options between a direct listing, IPO and sale to a public company, the sources said. In June, Vertiv said it would file an S-1 with the Securities and Exchange Commission before the end of the year, as reported.

EBITDA for the quarter grew to USD 136.1m, from USD 127.6m in 3Q18. Revenue eased slightly to USD 1.070bn, compared to USD 1.077bn in 3Q18, the sources said.

As of 30 September, liquidity totaled USD 400m through USD 149m of cash and USD 251m of revolver availability. Factoring in USD 93m of cash collateral supporting the borrowing base, liquidity totals USD 307m. The company generated adjusted free cash flow of USD 43.6m in the quarter, compared to a cash burn of USD 35m last year, sources added.

Vertiv is 6.6x levered through USD 3.63bn of total debt and USD 550m of LTM EBITDA, or 6.3x net of USD 149m in cash. Factoring in only opco debt, the company has 5.6x gross leverage.

The USD 500m 12% senior unsecured holdco PIK toggle notes due 2022 traded up to 94.25 to yield 15.102% yesterday (20 November) from trades at 85.25 earlier this month before the earnings report, according to MarketAxess.

Vertiv’s USD 750m 9.25% senior unsecured notes due 2024 have been trending higher for the last month on the expectation of favorable earnings. The notes traded as high as 99.5 to yield 9.375% on 18 November from trades at 95.25 to yield 10.503% at the beginning of the month. The notes have settled today at 98 to yield 9.769%.

The USD 2.07bn Libor+ 400bps TL due 2023 was quoted today at 96.33/97.08, up from trades at 94.25/95.25 before the earnings report and from 93.8/94.85 earlier this month, according to Markit.

Vertiv did not respond to an inquiry seeking comment.

2019 Debtwire

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