Vertiv Holdings Co (VRT) Cash Flow Statement

The OCF/NI ratio has consistently remained above 1.0, reaching 2.21 in 2026Q2, suggesting that reported earnings are backed by strong cash collections. The positive working capital changes, particularly in 2026Q2 ($451M), reflect efficient management of receivables and payables, though the magnitude warrants monitoring for sustainability. This conversion strength supports the view that accruals are not inflating earnings.

FCF has grown sequentially from $101M in 2024Q1 to $925M in 2026Q2, with margins expanding from 6.2% to 28.3%, indicating that revenue growth is translating into cash at an increasing rate. The FCF margin now exceeds peer averages (e.g., ETN at 15%), suggesting Vertiv is converting its AI-driven demand into superior cash generation. This trajectory appears sustainable if backlog conversion remains on track, though the recent EPS miss warrants caution on near-term execution.

Despite the surge in revenue, CapEx intensity has remained low, averaging around 3-5% of revenue, which is below typical industrial peers. This suggests that Vertiv's growth is not heavily capital-intensive, allowing for high FCF conversion. The increase in CapEx likely supports capacity expansion for liquid cooling, but the low ratio implies that organic growth is being achieved with efficient asset utilization.

The positive working capital changes in recent quarters, particularly the $480M in 2025Q4 and $451M in 2026Q2, suggest that Vertiv is investing in inventory and receivables to meet strong demand. This is consistent with the raised guidance and backlog conversion, but investors should monitor whether these investments are efficiently converted to cash. The volatility in working capital changes may also reflect timing of large project milestones.

The acquisition activity, including the E&I Engineering deal, has become a significant use of cash, with $963M outflow in 2025Q4 and $282.8M in 2026Q2. Meanwhile, buybacks have been minimal, and dividends are small, suggesting management is prioritizing growth investments. This deployment strategy may enhance long-term value if acquisitions integrate well, but it introduces integration risk that could dilute near-term cash returns.

The cumulative OCF/NI ratio of approximately 1.96 over the period suggests that Vertiv's earnings are backed by strong cash generation, with the gap likely driven by non-cash charges like D&A and favorable working capital dynamics. This divergence indicates that the company is not relying on aggressive accruals to report profits, reinforcing the quality of its earnings. However, the recent increase in working capital investments may narrow this gap in the near term.