VRT - Earnings call 4 2023 | Vertiv Holdings Co

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Operator

Good morning. My name is Brika, and I will be your conference operator for today. At this time, I would like to welcome everyone to the Vertiv's Fourth Quarter and Full Year 2023 Earnings Conference Call. [Operator Instructions] Please note that 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.

Lynne Maxeiner

Great. good Year welcome XXXX and Quarter Vertiv's Brika, Full and Earnings you, morning, to and Fourth Thank Conference Call.

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

Before those and during course to we Vertiv. in operating make statements and risks performance forward-looking uncertainties of could that including events forward-looking differ will the regarding material we of materially begin, future you to to call, results from earnings the release. refer out like forward-looking language I'd point subject this future These are We statements cautionary included the today's cause statements. that the actual to in financial

with risks our to events. statements about statements can forward-looking date. as a quarterly are the that or to more we You of no make made information as these on reasonable annual We believe SEC. in future we learn undertake assumptions that obligation new today Any reports these this and of based be filings and result other update

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

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

David Cote

was a value. shareowners. our tremendous XXXX Well, created great year and for We Vertiv

well the is the additional and putting XXXX, capital November for in believe performer shareowners of a this well to great and fully beyond. strong, good benefits very conference us ahead XXX, exceptionally of the We returns the year to expect we well far XXX% to up cash-generating provide nice structured in the all again finished this we quite our at announced allocation increased where from to us and is very of price flexible our is stock and S&P and reflection year. we in so strong, continue and of were. We provide shareowners Our investor to fact, in company, a promising it's change strategy #X set very XXXX well the capability up

to So start, still a very Gio have were team to work we do. and but off good

talk to and long this but all focus for year capital XXXX upside. hear working to accomplish and relationships, way areas Gio organization still the good demonstrated customer in plan resiliency, our year to XXXX, capital investors. It's we deliver that's what his our potential about have another technology, You'll important thing and a deployment. We've BOS, getting we run, for

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

Giordano Albertazzi

Dave. Well, lot. a thanks, Thanks

stock we if As Vertiv believe we was have year. candidate is XXX good And Dave the mentioned, our meet as and up would S&P in were we XXX, performing top stock. said, the S&P a inclusion. XXX% for criteria, been last believe We the we they

Let's go Orders all We sequentially, were X. to sales year up Operational Americas. XX% XX% XX% finished the to to regions. QX be Growth good strong. led Slide by the improve. and execution across organically. year-on-year continues grew continues

us confidence gives Additionally, what for be strong environment that X.Xx, a in market beyond. demand very book-to-bill and at believe demonstration strong of we a was strength will 'XX

operating a clearly and our and XX.X%, improvement margin a of million function operational demonstration sharpened operating Adjusted profit adjusted step of execution. of $XXX

more was at flow in cash free billion resulting adjusted $X million, for than Our $XXX year full year-on-year. million $XXX a improvement

end X.Xx. of the year at leverage the net Our was

upgraded Moody's of were in range our and target Xx and Xx, to by within S&P we December. So both

and leadership we in further strengthens the More high-density our on acquisition a in CoolTera slides. technology In December, of that to cooling. liquid come that few announced

foundation. I'm the strong pleased with

year our and for demand, market the feel As trajectory about we we enter XXXX, coupled with beyond. strong good

while. Cloud we build deployment to Slide X. what with have it's the to and for pretty strong AI the continues market at look environment And here, plans. hyperscale consistent and a lead very with of We let's move tangible a been growth take signs seeing

enterprise encouraging with to tight way, see lot here. Vertiv. on-prem Telecom, news signs AI mainly it's develop to either and continue cloud. customers good We not on business, plans starting for or a Either in retrofit. be CapEx of for it is focused the

a a saw remains Asia. soft, in standpoint, some terms be but signs China the positive market small From continues rest but The regional of of We continues think APAC orders. and we to don't China be to story the at customers leading of recovery colocation In we Cloud but certainly India, investing. rest if the but are the Asia, significant the is slow market also see investments enterprise is are including market. of all. getting pack, across weaker, paced, happening weak,

and accelerating. segment. The commercial strong investment Overall, pipeline are are green exciting, quite APAC, driven infrastructure is really well moved industrial The India good hyperscale in positioned. in our to particularly we India. colo in We is formation and and the market by

QX, 'XX the entered We XH Let's demand and to we a large XX% go also in I pleased sequentially. next with X. influenced driven strength XX% slide, saw am the AI. 'XX from strong booking, year-on-year order reflecting by Slide projects, by

record QX, 'XX was beyond. and about visibility the $X.X good post up from backlog for to continue We billion which end of

normal first QX orders in We anticipate be pattern. on quarter will down across QX. This basis a 'XX strong to from year-on-year expect high a in just to We up business continue they the is the be teens sequentially the portfolio.

in customers We foreseeable strong capacity plant the thermal collaboration a likely inaugurated are environment management demand the suppliers new our the and have to make sure to We future. place for with in India. close support working in we

cooling. of the thermal We have including, capacity course, underway expansion significant busbars for and switchgear liquid across portfolio,

never our rate to basis, disciplined, as that acceleration traction that in what AI and for uplift order bit As November. I robustly. chains and is we matches that explained, growth i.e. a on What a make clear decisions. a investment weekly focused post-pandemic believe perhaps the X% the and AI consistent look timely exact of given is AI not is with expected is from I largely in rigorous to the to position the market, overall but overall scenarios Slide AI on believe related The what of to of have is supply application, as fungible demand Continuing an thermal we or X, a normal caution differentiator. mentioned way right science, book we a matters is the returned in the a strong in market to for I at growth mentioned a to X% continues backlog ahead, uplift thermal certain say extent. to evolving grow Investor side to we continue I'd normal, world. is orders at Day, The

focused constantly can across quite increasing chain throw supply that to is sure weather what We resiliency us. the on a at making are complicated world

a So lot focus of here.

be relatively year-on-year, very inflation, at things are change Looking but we David. that, pricing materials we material can mindful you, stable to to And rapidly. that expect over with

David Fallon

Thanks, Gio.

the This summarizes We financial quarter quite finished year X. slide Page fourth results. our to Turning strong.

X% the net from growth in which sales increased price. engine, X% the organic up Our quarter. from Americas continues XX% to XX%, volume, be was And America

and favorable We modeled our midpoint $XXX by operating based million driven Our guidance inflation in some from beat sales which price guidance assumptions. within project last quarter adjusted of fourth higher fourth but commercial material implied cost the a quarter up mainly below upon profit was $XXX China profit was was that our operating to and execution performance range, delays mainly was million, and the volume. weaker good slightly EMEA. Adjusted midpoint attributable year's and below

clearly Our that the relentless XXX-basis-point year. showed operational compared last and that a on execution, in driven adjusted by improvement XX.X% continued margin results. was certainly operating in focus to the quarter, was And our

release Page otherwise, we XX the $XXX adjusted a of in As that removed our valuation EPS we detail related driven nonrecurring a increase by diluted allowance higher fourth the benefit And and EPS EPS. year-over-year move the the But on to additional GAAP includes operating to million allowance, diluted adjusted we was right, have diluted in tax valuation on from adjusted provide appendix. quarter that profit. release

but for right, is the doubling as To important strong capital year. with generated far the for in of an adjusted opportunity continued to plenty improvement. the this result, $XXX we profitability million working quarter more very higher quarter, cash also free Certainly, story of than contributed last another part flow

range our end supports gives Xx the XXXX. investor optionality leverage to conference the capital X.Xx of level flexibility and down at deployment framework from and net within us at X As long-term X.Xx and Gio leverage leverage to This cash. mentioned our excess declined target significant deploy of provided to

increased This growth quarterly X% APAC sales of engine fixed primarily below flat XXX in X. with sales down slide to be region, net adjusted year-over-year, favorable the price and but our Page driven increase last relatively continues, sales organic points cost to quarter. in The Americas and cost mix guidance. China, the up operating the cost with by fixed to XXX leverage. APAC Turning XX.X%, operating included improvement the where as expectations contributory the results. by basis year XX% margin timing quarter from mentioned, segment continues in in up with I Americas declined points The our unfavorable margin fuel to summarizes were organically, factors. continues but adjusted weighed fourth

primarily larger the EMEA delays than on lower projects. due grew quarter, in to which organically X% several anticipated was fourth

XXXX. been growth to However, million double-digit orders fourth gain, for regions margin. a EMEA same strong our the delivered EMEA quarter, provides quarter, to emphatically for for And adjusted as that of sale us, we Americas each although is year's push from third adjusted in did an margin $X growth, Americas of have benefit strong EMEA in gain from quarter an full did which which those the and quarter, operating the an other from both year-over-year reminded us they operating basis increase and the increase adjusted X XX% margin would XX.X% the year from fourth XXX has see sales President, EMEA nonrecurring fourth low regional without continue encouraging as Anand last experienced points highest for quarter. the asset sequential operating organic confidence approximately in project Sanghi,

of a It's slide Page very case the safely are metrics orange it a all to XXXX results. was when performance financial is Next, This of and financial say through the significant focus significantly higher a improvement year. XXXX function not -- on than is always step good financial for directly that bars is change a a in clearly very year. this reads produced turning summary on gray XXXX. result for full operational I relentless in to thing year period. from can the past this a bars often which X, strong execution, a seen XX-month our that

we which sales last to of in strong provides a certainly XXX XXX to foundation of operating year adjusted end basis midpoint. about XX%, expect up our year, strong market. at reflects basis position an from a operating XX.X%, Adjusted margin points margin to midterm target full great XX%, organic of in with Our do improvement XXXX, a the spare points surpass

improvement of were $XXX flow million improved drove an about and well free improved converting We conversion flow to sales estimate by customer that payments, in from primarily adjusted billion me year, continuing from cash this profitability an improved the XXX%, with did support that, benefiting improvement of the XX% conversion adjusted capital while over percentage with year-over-year. in while cash $XXX increased over invest XX $X repeat points conversion. in XX%, this cash let higher we an which significant to to million free deferred contributed growth. Adjusted increase billion And improvement or which revenue in cash a management CapEx advanced free with up profitability the working driven flow year-over-year, in $X to

expect the which should and low in XXXX, we free expect is at to we many guiding dynamics similar cash not in conversion of in flow to primary the year growth for market XXXX. full continued While revenue, there reasons are we are play, mid-XXs one deferred growth adjusted

Slide opportunity deliver and a introduced but Conference. Pivoting guidance. can we quarter do, X. our of for demonstrates continued the XXXX first helps improvement, moving execute to and is work Investor XXXX targets upon certainly and that long-term our and much have This confidence strategy financial our We plenty to at to potential look build and we at credibility our there's

from XX.X%, first continued driven basis EMEA expecting We $XXX are and price/cost sales approximately last digits by $XXX up million flat. profit XXX points to digits, operating with relatively up investments. partially of Americas Adjusted margin year's productivity operating and programs, up high offset first between and X% million that tailwinds quarter be single And organically APAC's adjusted and is quarter. growth by up mid-single

As and likely deck, in you slide XXXX. provided noted split not we have the our have for between cost/inflation detailed price

inflation labor operating ambition plus. our Conference, Investor XX% inflation, price cost with positive lever all our adjusted for cover to an at our is us long-term emphasized margin target we to attain is and As including of price being important

the we the positive in year fully will see forward. next we that price/cost expect be to be you XXXX, on expect As slide, to each and going case

We products the with will our to we price provide increasing customers. commensurate our continue value

However, are but forward, profit for the specific core not a actions long-term are we commercial commercial assured, execute to continue believe program, excellence our rest to disclosing are in we and and our that continued quantified market reasons, favorable figure we going competitive plans. to pricing well tenet positioned a upon improvement

November. to up sales higher the all November expected growth we is the from view Organic across to our turning be our Investor from Next, Slide presented guidance, to X% shared metrics year in net XX, full X% XX% XX%, to Conference. at

$X.X operating at of XX%. established reminder, will target adjusted XX% all necessary our we midpoint We on And our a plus, margin target. next for long-term above billion to as and are target increasing XX.X%, towards with the well billion path steps 'XX profit previously from take margin $X.XX believe in operating we that midterm the is adjusted the

than of EPS drives higher taxes employee XX% diluted at share count midpoint approximately accounting operating adjusted profit driven price higher by adjusted and partially the higher as the primarily $X.XX by higher for more XXXX, XXXX projected offset Our a dilution stock options. share and is

but not and balanced the specifics several variables. estimates share upon this we but full count share We estimated at share either is XXX for estimate have diluted to we but count, believe price to and included in million for share diluted our certainly 'XX some subject a for point shares reasonable repurchases share year are prepared change based guidance,

right this the to on Moving slide.

midpoint. adjusted projecting flow million, free $XXX are the between adjusted conversion representing free at XX% We cash cash million flow and $XXX

will on conversion CapEx. revenue due with our in And Conference, mentioned, in align turn As couple investment release. back of these Investor to higher than to as XXXX with changes earnings historical and these deferred have in for lower this summarized primarily to changes finally, there with we is at a the provided changes XXXX a assumptions Exhibit of business. We Slide I Gio. that back the it reporting and external XX.X going run introduced And in XX we our how we appendix, be over recasting to XXXX said,

Giordano Albertazzi

Thank And you. go Thanks Well, thank we David. a lot, XX. to Slide you.

You at Investor our this slide saw Conference.

in We management thermal are market leader data for centers. the

We industry We customizing most In of position. This have liquid slide portfolio. also technology it's strong now a we and complete a here solutions, liquid in transition fully very both owned the portfolio and thermal GPU at management owned. was cooling including cooling to do partnership-based, this as our accelerate. shows the high-density lead scale, to November, can believe the

acquisition go technology. Xth liquid of which can Slide closed of we cooling We to has industry-leading XX. The the December, CoolTera,

We secured have now ownership. with technology that full

We partners years. of close for CoolTera have been

customer the key chip at approved plans. certified and Now technology our Vertiv's AI with scale manufacturers, aggressive take will customers' relationships, pace you by reach along that support that deployment and premier can technology, combine CoolTera's a with established

in We started have capacity to to plants, quadrupled QX. already by have of Vertiv CDUs the end we manufacture and one of CoolTera's the expect

sure are cooling a by year. We solutions want we is chain growth global our supply what We to GPU more to manufacturing means cover to scaling end executing make aggressive times activating That capacity the technology, liquid XX our truly the than most footprint. on and production Vertiv scale the this by of plan scenarios. of have

another underways. and where to customer deep the focus leveraging about is the their It now starts the relationships innovation have the very the to spoke and portfolio, obsessively to year. We technology, the far-reaching with continue go expansion Slide capacity deliver good our We plan and XX. we customers. Let's This demand. to meet capacity

We us will given the foundational to us. organization, support matters have and Vertical Global allocated investments helping productivity across additional in and to our us speed. scale is CapEx improvements to realize a continue general customers. System Operating to differentiate

We to on progress work trade there do. capital, have but more started make working to is

have optimized. and are my We It full improving. attention, we are to continues not

capital provides Our good driven deployment generation. much by flexibility flow cash framework

in So on short well is to to fully lot And continue do all XXXX. the execute work these focus a to areas. underway

foreseeable XXXX strong were demand Orders the XX. certainly and at for strong by to a started year of QX, the Now of very at future AI. to strong. the We positions. End in in backlog Slide end very continue driven signal the backlog QX, were year in end Orders markets increasing strong. the

them. expect to of will to support continue. is support growth to the R&D that have our We to capacity commitment the customers, in the Investments and our business capacity

Our foundation than today before. ever stronger is

progress, will cornerstone the Our strengthen the increasingly to to resiliency of a I an we to with area but we to Vertiv globally. I System your world. increase now. more. I to a Operating continue more CEO operating navigate, is even pleased did and is deployed robust, forward see when that that, our There VOS, I organization stepped and on for resilient the much progress, forward look again, focus role, you updating do, foundation questions than look complicated work the system and into am opportunity

much. operator. the thank to over you So very And

Operator

have Instructions] America. Bank Andrew first question of [Operator from Obin of We the

Andrew Obin

basis, about reasons, for you're what have we've just on a you a going slowdown morning versus kind know of the -- guys pricing And not this lot questions to that you the also pricing. we question pace disclosed on XXXX. year of for it on a competitive next got talk are but just XXXX. material And of big Just forecasting it's I got, savings net question is for

any in address could fourth in fairly looks quarter, conservative, a plug right? basis, particularly the of On sort you achieved if you given for of that. net 'XX the million what sort even we if pricing $XX So reasonable

Giordano Albertazzi

we're Thank if to about our we inflationary balance while operate in obvious to vocal built environment, been the price And about favor a operate that a price we demand -- you, the pretty want been believe over Andrew. last chip part start. that muscle it's continues continue mean, will reasons the that pricing over biggest we just for gains in. the in It's have I'll of a environment operates strength marginal you [indiscernible] and different diminish fact I business supply favorable -- David, the the but our a something environment. from in. But months. vocal of just we've simply, XX-plus

to that So price. again, but continue continue The And be to we we're on know you gains count to want diminish, will, pace I will if of price add confident David. price positive. it something, don't

David Fallon

we avoidance it certainly which price a number. labor for out, contribute when we $XX $XXX inflation just have we certainly some expect look is No, at cost, that cost include both million range, disclosed year. in And and that's to and freight that inflation we or the next price in material previously, million number, inflation price

into So including you got dynamic at price. to at price/cost looking take looking when consideration you're that that

Andrew Obin

a just question And you. America. North Got follow-up on

You quarter? only America fourth revenue growth North 'XX. the the orders place there single is first XX% to in quarter, first digits dynamic going in quarter XX% quarter? of Why the digits Is the you in specific strength single up high high think the in are be the America guiding given fourth any in but North up taking up fourth quarter,

Giordano Albertazzi

have encouraging. very we believe America that believe in and business strong -- very, a Well, pipeline is to we we continue North

remind the QX year to America, but Americas, North sorry, was Just in particularly that in -- strong. last particularly want

of, say, we of a You were out XXXX, me pent-up coming remember, lot backlog. where we let had

So -- our we good feel business reason. in America. very also But about America that's our

Operator

have TD now Vitanza Cowen. Lance of We

Lance Vitanza

the like accelerated. Congrats book-to-bill but the on looks It only in quarter, improved not fourth performance.

in thinking absolute XXXX, organic terrific a sense than guide about an I'm growth achieved So which sales for is in obviously you XXXX. lot lower the certainly what

to and I'm course, of permitting to potential customers' of wondering chain 'XX on extent the with and and power IGBTs And source does to standpoint forth? utility the your breakers reflect fans So from so also, guidance and supply what perhaps then the one your hand. both ability for own bottlenecks, respect

Giordano Albertazzi

you, Thank Lance.

you of as noticed, are very happy about book-to-bill our our we So backlog. course, the -- and

in the a dynamics the of if And never orders the call will, half it. the certainly our way have can see constraining at We that if that but We we in mean, our factor, our infinite, sense supply chain second shape do reflects not and you it's general. end. were good. bottleneck backlog 'XX in I strong

talking our is have So the from large and lead projects relatively we there's -- that requested long simply we're fact customers. large times project

sites, we'll whole vocal power be would say So We natural in were to of and months the it's availability, confront XX, et cetera. really But itself a with cetera. industry in XX needs et I that is that vocal past to natural continue the the cycle. the build-outs pace permitting, and

our So we request now. deliver customers' pretty much on what right

Operator

Coe Nigel Wolfe have now Research. We of

Nigel Coe

I'll to question. X keep it

address more But David, us call orders in of or doing fund the you're maybe two? And maybe it this of quarter, So maybe give what cetera, third you can the log the hyperscale, that right, if opportunities you up then the from in some coming where quarter just America I'm you just but it looks I'm going to like on acceleration. to et $X.X about the very next quarter. math funnel, sequential see up want specifically. talk say the of front log just in drove context the billion billion importantly, guessing $X.X is

grow You continue from said expand Does to 'XX. indicate continues will that in here. deferred revenues to backlog that

Giordano Albertazzi

X your to one. start, questions in I'll answer Nigel,

true. earnings we Investor we velocity vocal That acceleration. pipeline. remember, clearly, What at the acceleration in in positively in strength you about and in at the the like October noticed the increased is an the So the And continues to pipeline, call were of the have like -- We Day. be orders. November we both

of will believe we stay with rate pipeline So that the capacity that's us. a

of grow, certainly many through much true to is Asia. that the globally, final that's pretty continues parts So and for the and EMEA Americas,

about we're that. So positive

the comment part of So other you there. we Do to see want question? the out other on opportunity

David Fallon

Yes. Yes.

revenue, revenue you this, grow can I as So One, deferred is, may as and deferred reasons. for it mentioned, grows. X but to oversimplify backlog relates

and with other hope we The And see penetrating just continued in is advanced frankly, pretty we'll payments. improved good feel execution customer growth both. advanced customers those But for further those would that payments. we

Operator

Daryanani from question comes next Evercore. Your of Amit

Amit Daryanani

your get your activity would you Gio, sort in with of you talk you about -- to was better engage and I orders and I described them just you technology line, you center you way slightly realize as broadly love than of it. they are AI had route not hoping immersion? customers talk you AI-driven if build chip I how to do or go Just with -- backlog as it's easy maybe cloud data full forward? you these to preferring today? And for looking not much your think are or said you customers, about of their sort that's talked the of clever you see Can think what the about more expected, be precise, but direct-to

Giordano Albertazzi

day to you, good and a you. Thank

said hard As for going not. and sure said to or goes be I deciding think occasions, applications the not an -- AI as exact. signs truly not for where in I of I very It's exactly couple what the us, we're goes to through what exact of being in slides, through it's everyone or

our power too to distribution. But details don't so high-density go are side majority will the that that also see of or want from built vast trajectory As or one cooling change the may some are centers product fungible, in both AI detail, today and much a the that I say, be of today is lines said, will their as the univocally But any designed said, really actually high-density of the backlog sort we portfolio sure vast in we pipeline. of sense nature elements to is some configurations is of in that lot I GPU you not with destined are competitive rack liquid let's that much happy hybrid to say, of majority like, of the GPU univocally what a there But over the cooling, too very very trajectory CPU to and time. other. It data make -- traditional, about host to the the because standpoint. and of and they needs also we

loads largest design the changes. The So hyperscalers and colors less biunivocally flexibility the center way challenge you industry, can for is that in why in how it of a the operate with the data that very same you you we're can it's that's in why industry here very about to So black credible there? in very strongly the mix way? because to the intrinsic build invite me to do for would that entire don't the you very, and white this transition we I think your a answer can. that's said way all question. And difficult be I happy [ ] trajectory. and Having on that, How

job room the there We [ predominantly ]? is AI-driven for discussions we sorry what that, was than direct a but more very is players the out hopefully. is anything today It answer, fun see just activity. our the But long across bit -- really and the AI, but destined the of what trajectory just we mean of else. pull-through [ of with what now or part That's ]? that we lot that of we that's again, figure interesting part a emotion hear. or the of no -- long like, about but In believe, highly also is with pipeline. Direct univocally about our all. looks the medium, term in and is that the are happy very to that world a No, Does cooperative emotion it we spades, what design have future a the see big

Operator

with Davis Scott have Melius now Research. We

Scott Davis

the a of question. you Congratulations vision, to it, a it of think, on guys be but liquid years? and sense get the of little percentage couple the either but be view in one, size I'm hard what have is year. Is a mix This would or a just of cooling answer, might I do materiality a to -- trying

Giordano Albertazzi

very deviate from saying not at it's we what Scott, honestly. do very much Day Investor quite much we were --

let's thought up. into thermal if as go XX% go that I back overall see, of over process, to time, XX% those builds part a we would let's say, to So say, the

But still Okay. a really it's again, bit early.

Scott Davis

of And before sense quarters of of growth know us in by lack couple And 'XX perhaps or did to down trying here maybe online? but of I'm your your Okay. your give slow is get got the growth in much new region? at how at capacity capacity 'XX can your again, the even impact real I utilization question comes SKUs, of lot kind capacity different first you a a you've

Giordano Albertazzi

is I would say and After tools. many utilization, the were more India improving more that it's investing with adding in -- Capacity big and gradual and times, adding the lines improving Monterrey. open assembly lines, output, steps talked expansion, also a of opening, capacitization chefs, ongoing. that,

a in do So moment, mentioned, -- we decisions see of capacity we as capacity very limiting sure our factor have customers with on dynamic beyond, fashion. Clearly, a a a or any to almost be do a of right never to make experienced as basis general, in And there process is and want weekly extent. robust have this the to we for of not I XXXX see not we this we because capacity that course, kind to material make capacity. in not market I kind provide

Operator

question We the Vertical from Jeff now of Sprague Research. have

Jeffrey Sprague

the Slide XX, Maybe just Gio. coming back to

don't of off Obviously, very, million, a increasing go get us revenue was AI, AI sure. I telling what was It's XX. direct very in XXX of Investor the it had a us there low telling category said if really this we know $XXX us back think was you Day, base. billion, maybe to around to $XXX But you're chart. you by $X.X capacity exactly million million another that $XXX here? multiplying going you pretty is by you're exposure. didn't help fungible what for And our dramatic Just head here kind you that which are that means. But but obviously

Giordano Albertazzi

of the our liquid we the that that direct-to grow and saying our The will were here, in liquid cooling, our cooling. That to talking talking the Investor low demand at it's sure doesn't the to about industry do we months, months the limit million we are of of were that have needs backlog the liquid chip we -- not make quarters. What their $XXX was base is space customers from ability sure needs a XX Day -- we making a by -- that about mean course. plan we relatively necessary to cover of cooling over start when way. indeed is we that all direct-to-chip means That spread and the

realized at the of it's peak not year. -- the So a in necessarily point beginning

low base. a be to chain. The and and we is and plants the supply that believe start rapidity all X needs We a the capacity with across with reach able plus, our fact done we'll a continents that and bring industry vertical from activating of that's broad

of lot going of for see we in is, the And message and the have -- lot obvious a technology exactly will the moment. we capacity. without in So numbers we and our that's forming we and in message why is have this have conversation pipeline reasons, -- but capacity, a the

Operator

We have of next Nicole question Bank. DeBlase Deutsche the from

Nicole DeBlase

Just maybe EMEA. on

took in quarterly can to I of in bit guys that, digits about And the delays quarter. get all you cadence of talk growth recoup fourth low double that that talk about little if quarter. some You about shipment the the a place for impact first talk to guess, kind can XXXX. quantify of And maybe to alluded you the

Giordano Albertazzi

that noisy. The line very was believe very, your -- we I understood have question. believe we

site readiness of When little customer probably premature. -- a a bit for question comparison it the not going EMEA will was in it into EMEA, internal us quarters comes side so certainly the customer QX so XXXX challenging to more for receiving. We more but of sequence capacity, have So an predominantly readiness, a was much was and QX.

QX. the are this refer [indiscernible] that said, acceleration very the order our we we example you happy are So I are specifically QX. as this to -- happen in with intake and and we we But pipeline, necessarily shared about in happy about and

opportunistic are it. about we So quite

noise you Brika, still there. Some there?

Operator

We will move Goldman next question the Mark Sachs. of Delaney to on of

Mark Delaney

a higher that at $X.X as how in target order billion. much sales much above the reach long-term And next even how that the record provided revenue would end grew XX% is Can about is or talk you does strength, the at for backlog be of revenue Backlog backlog to high the where few think CAGR in Investor XXXX? XX% years, X% maybe XXXX? Yes. you of to of And supporting about the imply Day? this the

Giordano Albertazzi

saw long-term, certainly direction. XX%, Our Investor that distribution the Backlog -- When much I it years, happy good what future something in obviously -- a ago future makes we stays in difference year not course, year that belt. or what than is say, do stays same comes Day. And and is we our the that heading let's vis-a-vis see vision condition. we right to say a a very with year the next us would and with years this shared that QX at you under of anyway

pretty Absolutely, next let's the -- say, is year. absolutely. let's split, this So pretty I and say Yes, Is good? natural regular say, the encouraging? backlog would year backlog,

You saw -- you know our long-term view.

-- yes. plan. have our You And XXXX your

Operator

of We Citi. now Manocha have Sahil

Sahil Manocha

the since impact CoolTera clarify 'XX on the impact the pre-acquisition. guide Analyst what CoolTera Andy been Kaplowitz. X This please vigorous 'XX acceleration that CoolTera will is possible, and guide? integration through has and for Manocha of It's on the on acquisition the acquisition of could you extent mentioned the To is since and was had More asset Sahil now specifically, XXXX. revenue months transaction, the production Day cost the you the continue roughly

Giordano Albertazzi

Xth We December. closed CoolTera acquisition on the of

cooling I was aware and acceleration It that AI. we and things gives may So on months not in on may Investor that that to of an plan the our already yet. acquisition liquid you speed evolved the The execute But of probably in would November. But part think ability yes, the difference our X confidence plan. Day one the and that more, kind have yes, and of direction say, XXth important of future that us, let's again, certainly is would our vision with included tell it's the portfolio. that

because -- but revolutionary, dramatically likely have is something nothing different So not nothing we absolutely. that are we sure? secured position in Yes, was a better

Sahil Manocha

more. color I on Communications tight. CapEx And just that what bit unchanged, see end was views that segment your you a the remains more please Could you mentioned for and one provide market still in How 'XX. outlook be customers? Any the your seeing end you would for further there you're in elevated much rate of color market the telecom-related seeing appreciated. environment terms impact are

Giordano Albertazzi

certain future, could, the with there a a technology, on where our we We shrinking. In down. Yes. The that that's acceleration, the of new presence be not type be with waves. this with an for cycles and certainly think edge typically not We created business years go-to-market, there and technology, slowed have we we're qcourse, and very very impact, with depending positive telecom a acceleration that and it ago flows cycle in is, and do the new the imminent vision any say, be ebbs that again, then our see the market XG, would of do at area And believe to is. the a technology the slow. few distributed guide hence, space. will will with But stage, future, capacity. the continue prudent let's that, are pretty

Operator

Steve have of now JPMorgan. Tusa You

C. Stephen Tusa

that then grow said a I that than I XXXX? orders this just saw you would expect The slower on to be think XX% year? do And have deferred -- but growing mean just guys I you balance, the you grow outlook. follow-up. in the you'd orders a question it And

Giordano Albertazzi

will QX -- up, We as overall started, up the that show. of up. orders explained year-on-year believe will during up course, not But be believe sequentially we teens, sorry, it in we high slide year year-on-year will Yes, that grow. the mentioning sequentially be will that be

C. Stephen Tusa

then deferred I follow-up a have the And that. And to balance?

David Fallon

sales correlated other. that being for proxy much the or orders, to with the one We Yes. deferred be would generally very expect balance the of growth

would with expect orders growth in what commensurate in So see the that being sales. we growth both account we and

C. Stephen Tusa

And talking relatively in were appreciate like sensitive more then you guys about I remains a But little it. supply/demand of you that a Got pricing bit pretty way. favorable. clear

for planning the offering are in guys greater orders roughly this price sequential you guys You on increases getting just year? any value Are customer.

Giordano Albertazzi

believe orders. in Otherwise, That positive, I as forward cost up. with We are same environment is be translates the in would for environment explained. an a in true price remains equation talking necessarily which price statement. that about going we an short-lived And being

C. Stephen Tusa

But is orders I expect year price year-over-year? this time any declines there would that you in guess

Giordano Albertazzi

We do not that. expect

Operator

follow-up, Nigel We the question Research. Wolfe next Coe, of from a have

Nigel Coe

Thanks here. for cherry the second the part of

current the revenue of CoolTera increase of question here your is partially any but my the So read $X capabilities for suggest kind in CDUs, plus on planning actually by mean addressed billion kind you're yes, would Jeff XXx of conservative line XXXX. in capacity

complete shift a in base. more second meaningful big me that capacity, your if increase would your just broadly, wondering on adding to that capabilities. Just But be seems capacity it

across what just your seeing So curious what you're along footprint. and doing overall you're partnerships

Giordano Albertazzi

Sure.

utilization me it's second first or you of sure shifts adding adding adding well But shift I'm not when capacity, capacity, part say to more a the more Let they're of the general, I fully heard start. never question. when I on in the it I comes -- very other asset.

up. up feet, investment productivity that net-net, is is CapEx capacity and utilize VOS, Operating So projections big October you utilization, not Investor already Vertiv the shared seen think year-on-year. And our an more there capacity available, in a is going more square of about more from given plays exactly square combination our indeed more a instance, And as certainly any and and meters, increase we go have System Day. what have this to different at role, ability at there we

So ask that you real Can quick very as and are couldn't again? flexibility in first is so I at we're time. flexibility capture there respect using. part, the we But well,

Nigel Coe

just point plus on is XX, capacity like you'll Slide billion but if what detail here, XXx of more the look, increase. It Yes, any wondering that. there's seems to $X

Giordano Albertazzi

sure direct-to- capacity we in cover growth and think I we are that reading provide so much like able growth we make want the that. that whatever too chip. needs, So be has rate to rate industry that industry read a the that, to into over it We will above

Operator

session. question-and-answer our like closing back conclude I does conference This would turn to any you. for Albertazzi Thank over to Giordano the remarks.

Giordano Albertazzi

I overnight, days. next few looking in high-performance but few certainly towards culture work do. we everyone, globally, shifting a gradually, -- more and the interaction We the times a happening the want happen hard in to very and to thank continues more Vertiv well. as thanks, much, to at in for do, your Well, recent have mentioned doesn't thank you. past you we questions. lot executed Vertiv are culture. It our forward to XXXX, Thank we team and And

can are We of heading started see that. We develop sense in you urgency across right right the and the to organization, the direction.

As pleased, never satisfied. to but I'm I XXXX. like year say, Good absolutely

in joining year us, XXXX. excited. stronger forward speak lot Thanks, very yet, A soon. we'll for for a Looking and everyone, of potential,

Operator

you attending today's The you. Thank for all again has presentation. concluded. Thank now conference

disconnect. now may You

Vertiv (VRT) 21 Feb 242023 Q4 Earnings call transcript