VRT - Earnings call 3 2023 | Vertiv Holdings Co

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Operator

Good morning. My name is Bruno, and I'll be your conference operator for today. At this time, I would like to welcome everyone to Vertiv's Third Quarter 2023 Earnings Conference Call. [Operator Instructions] Please note, this call is being recorded. I would now like to turn the program over to your host for today's conference call, Lynne Maxeiner, Vice President of Investor Relations. Please go ahead. Great. morning, Call. to good XXXX First and Conference Earnings you, and Vertiv's welcome Quarter Thank

today Vertiv's me David Joining are Fallon. Executive Cote; Officer, Chief Executive Chairman, Dave

Giordano Albertazzi

today's information materially make course point Before as to statements annual you can forward-looking material future those are We forward-looking learn and that result of today update cautionary events assumptions that are from in forward-looking financial to uncertainties made that like more Vertiv. begin, our and future release, to future these call, reports could statements to SEC. Any in risks statements. filings based the reasonable language date. other on results risks included or this operating we during and will and believe I'd regarding to the as of the quarterly cause with subject and refer undertake new of including we make earnings These this we we statements differ out about in be obligation that actual you We performance no a the the these statements forward-looking of events. to

GAAP During will we also present non-GAAP this financial measures. both call, and

the to GAAP over GAAP results turn be the our found to in press Cote. reconciliations Our and Executive Dave release slide found call non-GAAP investors.vertiv.com. With on I'll at that, can deck earnings Chairman, investor in and our website

David Cote

great is to of believe market that continue. Financial quarter, nicely, across we're matters. I we've a and strong operational the one the board. still path Alignment delivered in built Well, significantly the and strengthen our throughout that right, everyone. another in see early most to third outperforming execution translated to on improvement. the morning, organization trend exciting of plan squarely good operating Good performance starting end And fundamentals guidance to continues the quarter. getting part we're we

a continues differentiation strong. foreseeable our times. of proliferate very fully end our still continues benefits hold a future. We're planning seed for to great and taking favorable ] to good position year are to portends technology We finish industry, in in have environment good that the The strengthen. market a bad and and to times be Data [ intending And the realized.

remain as execution runway to is we beyond. markets Operational end great continues of a and still setup XXXX there about Our That resilient. improve, think lot is ahead. a and

So I'll the call Gio. that, with over turn to

Giordano Albertazzi

the sense generation, operational high-performance margin last created Well, we of XX a on including focus thank intense which combined execution, with underpins urgency, In flow cash and you, Dave. a have months, improvement culture.

This quarter the is can more the across progress value there own business board, our demonstrating still shows deliver. exceeding expectations,

highlights. Here are some

lead Third were to quarter up up growth, XX% continues the organically. sales XX%. Americas

few that a We the slides. Very in see More specifically with APAC, XX%, headwinds orders, not continue orders. to FX. on excluding in in up China. surprised We strength by were pleased our in totally

is We certain. have but pipelines built, seen timing never

Operational XX%. focus, performance. believe area was of to We by is another we sign and acceleration. profit, translating are that booking things strong and and of We a the are intense into good an of sharpening quarter, certainly million, operating execution adjusted We this come. Adjusted delivering. had cash margin $XXX encouraged is flow order operating margin

effect by on which guidance gets year-end. close has at September, end this course, the Xx and X.X of nice Of a our us leverage, was to

see unfold, year and $X,XXX enduring. expecting full full continues very we're $X,XXX are that flow midpoint. guidance. year we for and our AOP XX% up momentum now cash million sales and to year free million Again, year-to-date, performance of A million the organically, raising our Given adjusted $XXX we between the be strong to at

overall. we gave colocation market The on they continued are data future. Different signs with is consistent healthy Let's end markets remains strong and There the with center changes slide. strong demand environment a days market and No to picture recognize the the from to for market future demand hyperscale turn accelerating Slide the the Things ago, foreseeable but all cycle, strong, X. cloud encouraging see customers coming. growth. that points enterprise. are are We demand lead overall in at their different XX

We a are macro still Telecom more hearing is weak. but some concerns. outlook, positive balanced against still

soft, telco a is slow to market, a of and after Some strong investment. Regionally, years the APAC there carriers few investments, a Chinese market have remains lull in mainly XG delayed a due partially back stay and Asia. will and rest XXXX. of China sharp expect until don't in offset by that India of in the end signs soft recovery it encouraging We anticipate a

APAC, spot lot continue the is convincing. to while. trend in for a quite is investment Now the and likely quite of A bright India, happening,

also Malaysia, Southeast activity seeing the and in I Asia encouraged continue in general. be are the We to market good Philippines by signals. quite

very formation the the conversations the We a demand book, pipeline, in with good in Slide to are seg over seeing X. world. There's the customers all order in

X, year-on-year in please. were to and up Slide pipeline strong. year Let's XX% throughout XX% activity Orders said have I is sequentially. go that QX the

into translate that orders. seeing are We

but velocity. be increasing. surprised wouldn't I velocity QX QX So QX's, be surprising, anticipate year-on-year. entirely if We encouraging was is growth positive not also orders like will

of are But formulated to AI normal direct -- activity AI? often expansion it Now AI? some applied you it questions if regardless busbars, of or order still them our name CPU binary GPU say Those on many solutions, no get are lot rejection of If high UPS, CDUs cooling, not talk that compute, binary will compute, or Is elements liquid amount high-density our GPU I in a is or as heat systems, of is switchgear, or in chillers, cooling, we power distribution example, the there portfolio, questions book as univocally about technologies questions. millions order tens answer. our is density rack-level dollars. we book. But for Or the are density. of

larger be designed way data So than is AI or that of centers been data supporting centers many tens the multipurpose. to volume millions. Also, AI-proof have future

support infrastructure companies entire well. also chain that the our will of beauty of space IT-wide span of having enterprise majority and but That something of have approaches that And products a the the including now across compute, all portfolio Complexity, the of will us technologies thermal at. powertrain, different many comprehensive suits very few is types the So customization at and edge players, AI. we're truly have. Different AI. all hyperscale, infrastructure, to good colocation scale, critical things

up. AI is We're it we will manner So a overall, XXXX. in and show in pronounced more coming, anticipate

supply Now on to chain.

I'm much than better about talking We a different are not place XX we in just were ago. incrementally different. historically, much than days

last the our in you times. reduced have capacity tangibly see key the been the components we year, substantial Suppliers at and If are you look benefit. this seeing investments, lead progress of over making

additional a supply diversification sharp many qualified chain We with eye geopolitical have and on resilience. suppliers, overall

various strong are base for under We capacity doing in today the scenarios. the sure locks future is for areas supply and key to growth make

We ready. will be

X. move to Let's Slide

Here, indeed additional plants the We we color given that a possible. start different place, be important was scenarios want strong with The strong more in that provide scale growth to point. idea the with world. this some starting around are much believable say need an manufacturing you with future accommodated. built growth around the to capacity, footprint topic would to existing can It's XX

new us in XX% roughly just further And and have support across our organization, of candidly, enjoyed intense buffer scale, opportunities with The unlocking optimize continue tremendously facilities, lever. you've starting. and during Vertiv's deployed invest. Productivity facilities early being periods I the is additional capacity. the facilities growth. And utilization can to course, to are flex running existing to around capacity X productivity vigorously the we plant is more my plentiful. ramp-up And production. capacity a So operating seen today, system plants X expand another we years -- growth the to support facilities our company. across

and my there a has investments near So continue [ and It support to attention. We'll capital dear full general there's to in a make is is heart. growth. to ] my manufacturing

growth, be deliver will cash in this cash but and profile over measured what with ahead, does And free for David. can to not invest for way a business. that prudently We change ready this significantly be strong can of that, you, the We flow is flow. done

David Fallon

Gio. Thanks, Great.

third X. summarizes presentation the to our results. financial in Turning Page quarter This slide

financial board. up and from net see, volume from Organic XX%, X% sales you performance the pricing. strong continues across As X% with can

from than slide by a to core ability provide some a million also the lower volume. quarter. We margin $XX continue concession in in operational a this the million operating margin we and pricing lower that's targets. reached do, of in particularly the year, growth by Americas, million work our third longer-term year's influenced we seen operating Adjusted in contributed mentioned, adjusted third past by XX favorability $XX-plus versus cost a prior inflation, margin commercial quarter. to we favorably XX% commercial Gio have the and concession prior did points guidance. And that basis steel, also XXX see This adjusted was As $XX XX benefit operating past million this on operating as which as note to point progress $XX achieve was execution. Certainly engine, significant benefit metals, should driven but the have quarter as last guidance, profit $X onetime drive notably $XXX higher up to basis than driving results driven confidence more was in third period quarter, profit short $XXX of organically, higher indicator relatively higher-than-anticipated million we than trending price quarter. Adjusted last the some our our great to made have XX% million mainly higher million in

free generating of $XXX slide. the adjusted the on million. We quarter year-over-year Moving strong this a flow, to million cash $XXX had right of in another improvement quarter,

see if slide, X.Xx net higher, cash across declined profitability as shareholder year-end. the right-hand controlling appreciate the end higher notably matter, driving capital, quarter they the if more you approximately which consistency that to little really is to profitability. But mean fully higher general, cash and value. Last long-term trade we X.Xx working bottom Cash this look do are improved flow, drive and the organization. expected management things on and taxes result the to our we predictability sales inevitable be flow, with essential in at working that to continue were of We at and of not much driving translate capital the of absolutely by profitability benefit into corner, leverage is the

correlates XXth And come sheet as certainly to balance cash our flexibility leverage November about on capital with to course, net improvement generation. we Of in capital continues provides think Conference. our deployment Clearly, strengthen, Investor improved which more this deployment.

This XX% volume to from net including turning pricing. its from third XX% XX%, sales segment growth X. trajectory up Page Next, slide continues region results. and strong quarter The Americas our with summarizes organic

cost leverage. APAC in declining We subregion margin the with negatively largely control so up graph, X% China that at improvement margin organic while operating cost a in grow driven operating continue nicely section rest continues despite continues drive XX.X%, China, for third line, basis the last XXX by net year. price testament strong fixed of margin be the to top sales continuing remained to adjusted year-over-year year-over-year From sales double perspective, Adjusted of to is everything Asia, favorable the see from to the digits APAC which enhancements. Americas, a points, in flat in their lower focus of to region year-over-year, cost quarter. up low moving and by center to the substantial really outside on impacted

X,XXX on in double sales we in guidance. to to growth do continues timing, typical in margin, low fourth return we be digits. R&D fixed least year are last XXXX flat with to due improvement third XXXX. that full XX% significant relatively a upper beginning at points for year-over-year activity region million year an by single-digit third in low the quarter, EMEA in as in growth due but foreign to full be an was million in half sales a of higher with fourth driven deliver Flat to the this almost next were quarter not fourth Rather, quarter, anticipate for last $X sharp will seasonality single- in page, we with year-over-year recovery good the are APAC the strong back that EMEA mid- in will we and planning year's third approximately mostly this at versus organic the region this control. And favorable quarter, incremental of until in increase quarter, better we sequential loss. and the quarter, costs quarter compared 'XX. to was than exchange corporate expect adjusted increase basis finally, both slightly the year, was And operating relatively likely by than down of year. The part to which China, muted, expecting China in the price/cost region the cost quarter organically sales driven anticipated $X investment Now

aggregate Our current with half. second costs consistent half corporate assumes first the to guidance in the be

to Next, our fourth guidance. X. Page This turning summarizes quarter slide

the projected to by also operating the sequentially XXX $XX expected about to that we We XX% is of be sales third a higher year's that capital regional environment expect couple the by at working to about was last increase as quarter. versus down Adjusted paying And slower third favorably and mix million basis year million recall fourth macro timing. to points with slides talked a lower the up quarter margin approximately a profit of million, the as in flow on at the sequentially cash strong in and a sequentially. China $XX be role million quarter concession the that larger APAC ago. Adjusted expect in there quarter third the are a is impact adjusted operating from plays free ramp quarter watch the impacted for the $XXX the adjusted with we cash of collections availability. commercial volume. bit item be use the with should driven CapEx midpoint, finish a higher to fourth expected quarter, as And lot customers operating XX.X% about fourth are $XXX margin $XXX cash range than higher million given to

Slide our to XX, guidance. full year moving Next,

We flow million midpoint, $XX basis operating an is finally, million year by $XX than our have page, points culture, increasing process operational guidance higher flow XX%, $X.XX turn fourth and profit and points delivering raise be from million harbinger higher guidance to is year expected a approximately higher to leverage. million and free and improvements across the adjusted billion, than strong XXX contribution are by on variable to third organization. And are come. And our guidance, $X.XX $XXX cash and previous XXX operating billion the the approximately with year. fixed over with projected crucial adjusted margin could beat increasing sales million be points a million back improvement million from and million the basis of last commitment part from full the demonstrates to focus year, to $XX adjusted And this cost this in that I hold I taken than said, with higher the $XXX high-performance over This $XX basis of XXX quarter $XXX cash increase revised from cash $XX margin to of quarter. Full This approximately consistent believe XXXX. over we last at to our free is it Gio. things on a continued that from good

Giordano Albertazzi

XX. go a David. Slide to thank let's Well, Thanks And you, lot.

thoughts we more say XXXX. initial I'm some see headwinds. than tailwinds on So to going

AI The be a in to forming more continues Our data accelerate. market evident will it And that center tailwind a likely is starting is XXXX. point, strong.

of maturity. the a will Our years will level about we supply business capacity, the greater emerge in think the come. beyond. investments demand support to growth for much chain resilience profiles next This that R&D the year that business important the is at Balanced and things may continue. is for of as

on operating implement the will continuous deeply. relentless consistently. our We and will improvement focus support continue increasingly operational This system Vertiv execution

typically our Certainly, as China get Worth dollars for are seasonality year term. more recovery we started means have and Vertiv, in measures to headwinds come. There that but in normal much is the appear doesn't absolute anticipate financial XXXX. noting, stronger progress, We And sequentially returning progresses. more making slow, too. near

XXth go Once we Let's our to have November. Slide everyone first XX. more, the Investor that remind on Conference of

So with spending remote. on we the forward here framework. be preferably a and or cover in to financial of to we'll able topics person, look join market, be day about us, the strategy, plan use day. And the are exciting our I you hope that talking will technology, operations sharing information. We lot you, to

Let's Slide a we say have go XX. from to meaningfully evolved I'd year ago. were we where

all holding of to culture. With I industry our this the early and entire lot ourselves slide. full expectations, can around from You and to across for fun, A you tackling customer been over and challenges are making improvement. far world and the passion that signs that, exceed can want sure the strong high-performing to we quite accountable Over scale hard potential. delivering am day, see the for It quite still Bruno. you, takeaways intense on our quarter. has thank the team our results key the of every see work, a we I every sure operator. helping the

Operator

you. from Research. Instructions] comes question from Davis Thank first Our Melius Scott [Operator

Scott Davis

fit XX, Or is neutral? stop it of Where just -- just Slide of don't at -- of I'm it's a I'll here, looking in headwind? telecom on Or the more I where kind does mean being I telecom lack this there. know, tailwind,

Giordano Albertazzi

Yes. Telecom this something quarter. in picture. soft at this calls. we Honestly speaking, now news X say, least already the that fact No, would telecom last that no the signaled is is for Scott. right That's new neutral I whole is

continuing in that XXXX. see we So

but reach, perimeter sooner the, let's can there surprised the the we the happens. edge technology or and is customer the by later, In opposite. if anything, happen right available if expectations say, having will that, counting be not So But again, the industry, extreme that operations. some that telecom in on

Scott Davis

not when debacle some. of back the get meaningful into hold and -- XXXX? there kind the you has selling a another just you do had your you that supply quick you a a deal how kind contributor get price. to until This value-based chain after figure that more But how to been of out or big some Is -- have needed follow-up, maybe than one an line the had paradigm in way on -- where effectively just new historically Okay. really bit a price of wasn't to because little industry That's your start helpful. past? price hold And giving until perhaps the and as to

Giordano Albertazzi

value Certainly, more is Yes, Scott. element. The big line and becoming industry technology is complex. the a

efficiency, total We density. power We'll need talk for will installed increment and the about ownership, high talk about overall cetera. the net of certainly cost on et

value So complex. matters. technology talked deliver pricing And we terms and in the you technology. But the is Value new is process in there -- Vertiv's translating in about in the in capacity. than terms world initial both of more price in both it's of that the to and of of terms industry the price, in also muscle, that more in true process becoming demand pricing general, ability exercise general, terms project industry the

going is in say that a certainly many to the environment we I'm So price future, respects. in gains. that diminishing favorable see

after to the future lot enjoyed positive But of investor We about have be kind again, inflation. certainly the we a of catching continue respect. the up

Scott Davis

We'll you. all Thank Day. Sounds at encouraging. the Analyst you see

Giordano Albertazzi

forward. Looking

Operator

from question Bank. comes Nicole from Deutsche next Our DeBlase

Nicole DeBlase

we just start could you Maybe XXXX. with the made about that guys comments

an weighted do be it's think that follow-up X because to versus able is, the guess year? to be I halves half comp the totally still of dynamic? that you are organically of Or going since in first to grow just half comps is half to first expect half. back And really in the X the comment I difficult distinction with important the the

Giordano Albertazzi

Nicole, -- elaborate me as on as I mentioned, it. we let

XXXX pent-up year. sense are moved because expect second normal a I of we may almost in let a what the abnormal the is bit shortage first the say, going et is residue a towards we of me we backlog, XXXX half moved little that to backlog mentioned, the had normal first a half. that cetera, components, historically half, As more of

surprised thought it's I early, that Give too that's first thinking I So were something, XX% it's be second would that probably something 'XX if be flat below XXXX. HX half, thought early half. are say, -- the will more makes take certainly surprised, and HX, year. In be and HX to but a probably but would around top moment, this process. again, we XX%, line, that

we be was about way going That's like So the it to through. But don't -- we'd I be think clear all. again, all to the positive seasonality.

Nicole DeBlase

capacity of made helpful. about business. I the multiyear message can from we are gradually And levels? look spend? that does That's picture, grow current guys the you the send of the comments at capacity current CapEx guess, kind then you that to you CapEx Or to really in and expand that the trying you investing think do need if kind levels at of

Giordano Albertazzi

a sure little of CapEx an everything bit we than a as mean, matter some be be overall. growth, probably that. highlight our once the making little capacity meaningfully element change this use there But but as aggressive. have of be will line we we in I a more fact, There we fact couple cash to proportionality, top grows. of a bit not believe will that we Again, just the of I more the the this the we And available. Productivity materially, one, yes, main industry, -- being the flow that of as I many to want that business think if will profile unique make do is can a that conditions, that as more said, make capacity ways we industry trend last serve. think we're have we that, we the believe, created over in sure terms favor years. we that will But we the

Operator

Evercore. question comes from next from Daryanani Amit Our

Amit Daryanani

duration volume helping And be is stretch starting the are talk pricing? can out you that's on driven helpful. volume you set -- going sound nicely, a first maybe your by in pricing customers year-over-year, you this How the orders here. any good duration more on it in really I think much really Maybe Congrats numbers sense I if are about orders think well? positive as had really of uplift forward this up guess was the to do orders versus I as of on was, And also. versus well. versus would one is putting of accelerated XX%

Giordano Albertazzi

Okay.

the So say orders lot of volume is that there in that I would taken. we've a

we we're printing As price I'm are year we saying, -- nice sales. saying, in as our are we this -- are numbers

expect that comes it think how a the trim out bit. orders we will growth good that future say have terms to mixed And And I little to We growth of duration, asking it's the far duration are receiving very volume -- a component. When and a the bit of you're I little would the covering. a bag. in

the shortened in times, one rate great are On more is players, hand, in out terms them occasions look the of that of I see which territory terms of future mentioned few in in always terms coverage. also also or and revenue. we lead colocation run a accelerating there the earlier today, so-called favorable installed base are is big good, business, increasingly -- big for increasingly large service be the them part hyperscalers players of creation the the But also be what

So the it's combination really X. a of good

Amit Daryanani

think Edwards [ love on completely a portfolio? always we set for power expectation focused consumption have do ] What perspective because the management of we out does your the And I Got But into the management this. going these I your years. on get There's about about solutions cooling deployments incremental can play That think need know to imply obviously shift incredibly what I an to you from it XXX of power don't ]. racks? positive. Do the [ I'd XX racks today? how add, if data new then kilowatts does versus we you these XX, does what is of really [indiscernible] side, helpful. next to on density side higher it that XX And side few in that will power is different know, gigawatts Can as which talk XX, it. center power

Giordano Albertazzi

so point of Well, a as portfolio gigawatts more busbars Fundamentally, the it's to that powertrain, have, the needs way the part an power the good and It's voltage very going all grid our the the important to be entire expansion, we because PDUs, a absolutely more to will well the transferred dramatic. be it's not more, that medium to that one from switchgear it's just from acceleration, it's the are as -- to benefit from that mentioning. powertrain that going change you thermal part chip. deployed and

It's will news. in a There be happens fine-tuning what good distribution increase. the volume terms of some it's rack. exactly So net inside power in

for a relatively PDU will a but will be Some expand it's of powertrain small total the that solutions designed lot. density, portion as high

is about the And other to side constraint, for power we power. ways very business the several times for an power positive vocal aspect drives centers. of The data availability about power new is, our is is that overall said that, that as industry operators think that alternative to

dynamic of et cetera. power for cetera, et storage are and keenly are solution, of that are systems, opportunities battery, concepts, into So energy we which cooperating proof microgrids, big we looking future all with the terms players in

us. a opportunity -- future for Something good

Operator

from from Research. comes Nigel Coe question Wolfe next Our

Nigel Coe

just the you thank this geographics. the bit quarter. for on negatives on Day. more want Investor preview And detail the I a EMEA,

or out does [indiscernible] enough not macro? end offset recover see back to of the you the nicely you're that until about to given You XXXX? called growth weakness then bounced Where now, right project in But China, -- It kind in talked And like Philippines, XXXX? especially that is that 'XX. do to expecting et strength in in you of drive Europe it's fourth cetera, back How some in there of looks the delays. quarter. break India,

Giordano Albertazzi

as But China, geographics China. a -- Southeast way APAC. conversations course, not But encouraged various macroeconomics [ again, a and am is encouraged as big hard EMEA. I'm be big a of say Asia. strong know do part local revenue. Well, customers. again, it to very the and of of can look geopolitics on little continue our, phenomenal absolutely to East, I EMEA There -- pipelines. ] big we in player from that the I be no, we, And we it's to position are to Middle exactly what it premature even we India good for pipelines kind To a let's our year. When the not the for And -- market. absolutely. you yes, when us, don't strong mark bit EMEA, in think very tail EMEA question within control, comes by also it's and But in a a the are in a we next see prudent we say, with strong the clearly gets. our are what at posture pipeline. the not encouraged part Absolutely player it of China, a in comes we happen. in will But by have the overall, what in

Nigel Coe

meaningful forwards. quick businesses it's maybe, pricing pricing, XQ XXXX. on X around to of your think in right Are sensitivity if or important We A seeing rollback. that negotiations calculate Great. sort because because you perhaps is price-based into then on opine bet concerns competition this Is extent? price-based any from there any some points-plus or about carry I carry you across like could of the price one price David, And the price forward zone? in

Giordano Albertazzi

wrong. the I'll we a world. me commercially active Nigel, with I mean, market. general in about start the So Don't comments get will live

to different But dynamics different continue standpoint. about overall, price markets commercial are our especially we optimistic geographies, market, types different have a to different from So go-to ability slightly a of have advantage.

David Fallon

certainly reasonable some certainly question last year forward, is But carryover positive. seen impact. be year some going benefit. even even thing can to our that anticipate do a say, probably little anticipate have price/cost on And every year. give we there X% to Nigel, safely this premature to the probably one we going And the like unfortunately, and carryover, specific be your beyond, we've it's not intention forward X% to It numbers Yes. pricing will on pricing

Operator

comes from next America. Obin from of Bank question Andrew Our

Andrew Obin

your of as yes, So AI you look as building more your so your at yes, perspective? you are locations? centers? at -- Or look pipeline, does like we new existing for it What build data more look from it is AI-related retrofit

Giordano Albertazzi

are are quite this very very very be conversations also We but retrofit. build. will see Retrofit moment, exclusively we an flux. in much But In in new there But definitely. much is predominantly Things conversations it's participate -- actively. opportunity, encouraging not both about in flux. things

Andrew Obin

also terms -- plans. year-end And 'XX? when how a asked, U.S. to follow-up. these the say Mexico, utilization include capacity are by today? and how in place have from electrical current standards? as sort you in extra can in regions and And much -- of flexible other how U.S. know pulling you capacity know capacity you different been would of flexible you Where I questions very And be guys can -- be just And I curious the there be but are U.S. into I if but

Giordano Albertazzi

now. And during world. Yes. say true of as the the show plus-XX% applicable are invest. U.S. something the across will we different No, doing well-orchestrated It's would And definitely pretty much business. to the were a go absolutely. we of to very general business also American we accelerate as slide I initiative that it's and that partially certainly lines North applicable something saying, be accentuate ahead. we it's that degrees, continue global already to for will was as signaling and we homogeneously that I the But is leverage definitely in -- for to earlier, explicit make we sure have able But do that different capacity today the and we use

terms other technology. the or of North it's of of depending on codes, that certification about outside that And plant something American American a that's that we type the American right region. have just or versus something it's accelerating, we the are -- In codes having

do something much very and we margin-focused forward. will very that very, going it's and accelerate So we

Operator

Our Andy question from comes Citigroup. from next Kaplowitz

Andrew Kaplowitz

the positive into that 'XX? hasn't quite contribution order as And how longevity of the flames gold to inflection? you know then the duration rush Would you and inflection up about are sort cycle? it long you a of the continue the that to out? Or Do then about last how big could accelerate it really AI about a time? But been the you can you're you're growth see expect you order thinking seeing of unexpected. current order thinking talk said I

Giordano Albertazzi

long-term beginning. many cycle truly -- -- believe AI that is be this multiyear, last cycle, just is sense part pervasive. trend. we second And many this In of a This years we the a believe. The we years is your the a of believe that pretty question, will

Andrew Kaplowitz

you orders they is your economy. of order would the some And Maybe the enterprise Are you customers? orders, Gio, the growth characterize and signs, higher of some of colo how mentioned versus larger hyperscale concerns percentage there. maybe then positive now and in And rates a much enterprise? market? You mix but thinking around the mentioned obviously, are about from How incremental just markets. enterprise trends encouraging

helpful. be would color So

Giordano Albertazzi

are And order of large and mix intake. of growth. colocation definitely, actually part very speed our and Yes, hyperscale our in terms of growing a

there. What very infrastructure to utilization, AI power enterprise compute, going compute More volume data data on is the that centers. on-prem the that even the of edge acceleration covered we -- So proprietary see in distributed compute sometimes and accentuated some also is or equation. require anyway, side by well further is well more of and or

of and constitute the acceleration the we territory are times. referring So Enterprise was our come and helped are But clearly, distributed coming, by we lead the cloud. segment. biggest positive go-to-market from business. Plus, big business it will about Enterprise type I colo to, a and is the the and what And more portion part of hyperscale, of improving optimistic

We are market. part of the that accelerating

Operator

Mark Goldman from Delaney Our question next comes Sachs. from

Mark Delaney

bit the Yes. in what China results. Congratulations of to what on on Vertiv's In put impact more causes some AI a for if you an to topic, restrictions sort aren't on Hoping it's own seeing and Vertiv export China, think effect, any geopolitics related could export a could indirect and of the you controllers? in products weakness. the extent even directly good you're of elaborate

Giordano Albertazzi

a our restrictions, IT to as general want through Well, stuff. cool everyone export that infrastructure. the than flow we situation. data with case. anything in really power China market our only More to no see do we I just Yes. remind thing so The and

market supply our very as is So very local. chain of market strong The the we majority to a not participate And China right player. a is local local supplier, as now. the in clearly,

So we market operate is not as in a Chinese supplier, and we move strong. with that that market. moment this And

Mark Delaney

that and third tailwinds what -- terms Can you been question in what's more pricing it's the year? your quarter. and larger relative better last talk the extent to on And in what you That's pricing? a is no you're assumed There's my quarter. other more seeing helpful, guidance bit to like-for-like just just in strength came for pricing about and in little of pricing in guidance XQ than around driving mix XXXX Gio. the or

Giordano Albertazzi

the orders this we a the price/cost of and and upside. we actions a that pricing there number have the that again, sequence of to standpoint. But execute a in Well, implemented is guiding from contributed degree clearly, on mix, side have being of certain safe all

Mark Delaney

on the it. good again Got results. Congrats

Operator

Our next comes Tusa from from JPMorgan. Steve question

C. Stephen Tusa

delve first in we're last capacity I hearing year into you -- the kind the -- sense this it will the "soft to sound wanted more. best that these understand when orders kind of together about guys to if only kind to about the as on that orders more some real this are i.e., of real And next seeing that things actually are go you concern I juxtaposed I'm kind here me I like that you're early in would curious what quarter. hyperscalers, have of here just would be that a in have going year." a really and to a caution that think want curious -- delivery, little is those put ship, We've guys as next that going So around big half are capacity, think still concrete perhaps in how like fluid in if situation like orders and just of the and viewing year is some they're of the October. of profile, next just been when talking quarter, tangible just you're you're And I been not demand there and yet very you guys weeks. you make in to only confident of seeing way given to early fourth a know, lot produce. I'm is pretty that this. I'm those indications guys but figuring on people where the is early suppliers quarter not on out to the to couple comments as against knowing in have are that proving which visibility from year about just growthy some all that the start for how orders next trying fourth when to don't

Giordano Albertazzi

up what -- the think quarter sharing around slides, QX. the something going we're more fourth be slide when we we probably expect the going just in experienced same less is we -- we No, have to a that or through that

half, would industry. would should that So half. the normal That's else. for not about for been we're the XXXX quite 'XX have optimistic much marred not that the read supply for that. I the us we of the say constraints it in it were nature first everyone too entire first and half, same And second again, of the

of 'XX, is drift backlog the artificial in an in type that so was our that let's halves 'XX of business. 'XX of there to in way X normal first the anything, kind if that, not So half second balanced from, say, of the a half of

into read it. much not would too I So

about market. type are order of are happy the today tomorrow. with pipeline. a We coming those forward-looking And our plans. those We're And from the lot big will of really, Those happy with are and deployments, orders be yes, orders colo that for about hyperscale pace. fairly and project site aligned placed

So normal, I again. it at as to look starting something quite happen

C. Stephen Tusa

in makes hear about strategy And progressing? how going And any updates cooling to -- Right. on I the XXth. about one is liquid any more are on one sense. you last updates how But that we're on it this assume That then there solution? just guys going

Giordano Albertazzi

manufacturers. good to chip And partners of the chain, we're in and see the as as what adding in terms it's yes, pretty biggest a cooling several as we details thermal but Investor see Well, to more piece here, things additive the doing happy our with cetera. We'll chain. occasions, in are we also said -- so this portfolio, at progressing I terms way -- link are about that speak, very partnerships, et the certainly of Day because to feel by have pretty we

Operator

Sprague from Our Research. next question Vertical Jeff comes from

Jeffrey Sprague

prospect And But of rate equipment about near which the where isn't could just is we going. wonder is equipment, talk of little if bit. think the Obviously me. a a all I to couple I the for growing anywhere service mix this some tied system however deployed, about like, Maybe give you or accelerate is revenue talk what us growth service might you perspective per the megawatt frame for per service complexity the here or to there. integration and could kind unit of it?

Giordano Albertazzi

Yes. nature we built the think especially is the on say, compounds you like. and profit duration part services, of the the a very cycle course, sell life territory, to customer terms it of project growth service, the accelerating It which, important Service experience a But a also service. in but I is like instead always of are the life double-digit standpoint, the of the we of over standpoint, growing. in The for is kit. of new installed towards us from life base cycle, that from because it's that very with equipment, time. important latter services

the high further. standpoint start-up want experienced a, further, getting in global we'll complex. service of given accelerate high customer density, definitely, that, be and complexity commissioning that being equipped also footprint is it or on for, high very accompany able uniquely, to is accelerate are component a and and about But retrofit we And the happy we it. to of density for customers our well So power from positioned, uniquely the and experience, density, uniquely cooling We something journey geographically standpoint, an but ready installation are direction. our able

opportunity So I our going more am about forward. excited -- service never been I've

Jeffrey Sprague

But else something the capital we'll Then repurchases is month. might address bit priorities next view appetite more, that hear more on cards? M&A, maybe your the be? in and or maybe share a about your deployment little just up for to whether Maybe maybe digesting you the organization what could

Giordano Albertazzi

I for we month. would And And another details I patient be Investor the to certainly soon the with to on for now. XXth into about with that best question. relatively you for us relevant our -- ask is those is is -- together thing just November. relative there's say will month. And Day Bear of us a a us very certainly go think

Operator

Lance from question Cowen. TD next comes Our from Vitanza

Lance Vitanza

to gaps do direct-to-chip so, My around specifically Are how technologies. positioned to product respect you how cooling and notable question in is portfolio? if address liquid there Vertiv with your expect And is them?

Giordano Albertazzi

what liquid feel cooling about we and Lance, broad cooling, direct-to-chip, portfolio, portfolio. And portfolio portfolio. it's our so we very we good And a a immersion today with Hey, that stretches good feel in it's again... have the

Lance Vitanza

[indiscernible]

Giordano Albertazzi

ahead. go Yes,

Lance Vitanza

No, continue. no, please

Giordano Albertazzi

big... saying that No, a be would was I

Lance Vitanza

was yes. going follow-up My just --

either you technology So into or so or or own chip Is something just specifically, and do by directly worry the their speak, you being worry to that manufacturers hyperscalers disintermediated, about? embedding about bypassing someone else's Vertiv? thus rack potentially into that chip the

Giordano Albertazzi

cooling closely landscape high-density and when also looks of and interest And whole of very manufacturers. we're hyperscalers very promising power in the together again, time. the us. chip And more working are We with to both

Operator

We no questions. further currently have

So closing back to like over hand I would remarks. for Giordano to

Giordano Albertazzi

you right. you much. All Thank Thank very much. very

team strong Vertiv as work, and shaping around focus. certainly XXXX, up thank again, opportunity their We're to the world for me that. an for So the dedication about a Again, happy year. hard

you With to So November that, our have We day. execution. at Conference. stronger seen very we connecting look splendid and a your really much, in forward a definitely the with support. all benefits And we of have appreciate of Investor you thank

Operator

today's you concludes joining. this call. gentlemen, Thank for and Ladies

lines. Thank may your you. now disconnect You

Vertiv (VRT) 25 Oct 232023 Q3 Earnings call transcript