Vertiv Group Corp.

The stable outlook reflects our view that demand for Vertiv's products based on customer spending on hyperscale, colocation, edge infrastructure, and 5G buildout, will remain solid and that the company's operational initiatives will allow it to steadily grow profit margins. Profitable bookings from the company's solid backlog, meaningful procurement savings, and gains from channel and digital investments are still opportunities for better performance. Vertiv's financial results will also benefit from the absence or substantial lessening of one-time adjustments that it incurred in previous years to build its business. The outlook also encompasses our view that management will establish and abide by financial policies appropriate for the ratings despite its appetite for growth. Following the company's 2020 debt repayment and refinancing,

...Vertiv's capital structure has improved considerably. We anticipate Vertiv will have posted an adjusted debt to EBITDA ratio of less than 5.0x at Dec. 31, 2020, down from 7.5x at Dec. 31, 2019. The company's IPO--done via a special-purpose acquisition company (SPAC)--along with a $1.2 billion private placement in public equity (PIPE) investment allowed management to reduce its adjusted debt balance by over $1 billion last year. The March 2020 refinancing also reduced interest expense meaningfully, as it was $26 million in the third quarter of 2020 compared to $69 million in the first quarter of last year. The company's warrant redemption announced on Dec. 17, 2020, may boost cash on hand at parent Vertiv Holdings Co. by about $265 million, adding liquidity to the balance sheet. Demand for its products was resilient Despite the dip in sales during the first half of 2020, caused by the COVID-19 pandemic's effect on the global macroeconomic environment, Vertiv benefits from near-term secular...

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