VRT - Earnings call transcript Q2 2024

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Operator

Good morning. My name is Brika, and I will be your conference operator today. At this time, I would like to welcome everyone to the Vertiv's Second Quarter 2024 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.

begin. may You

Lynne Maxeiner

Brika. Quarter you, and to welcome Great. Earnings Good Conference Second XXXX Call. Vertiv's Thank morning,

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

would like this in to These those in from forward-looking materially and differ events, and to forward-looking of results and filings of will the including these included actual Before we refer quarterly future We language you we that about other to risks begin, annual to out made today's the you and in and more the cause call, statements. release, regarding that statements our forward-looking subject Vertiv. with risks reports financial statements can material the point uncertainties, cautionary make the learn are earnings SEC. course during future could performance I operating

we these based to We Any today update to be forward-looking a future information events. as or assumptions believe undertake of reasonable make statements this date. result of statements that obligation we new that are as no on

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

Our press non-GAAP investors.vertiv.com. the and be reconciliations slide GAAP website investor release our found deck on in in our and results at GAAP found to earnings can

to With Cote. I'll Executive the that, call turn over Dave Chairman,

David Cote

Good everyone. morning,

While financial I trend performance. continuing am strong quite pleased of very with our

his done excellent unlock drive I to returns shareholders. to business moving have have a great Has industry. a this value to As in turned I industry. think about an and and Gio of into the in what was do a a Unfortunately, increase to it good starting potential. consistently a get great I position in direction work job Vertiv great [indiscernible] a say to to team position lot

and interesting the our rapidly evolving position the We're gaining in time, our we're capacity Initial for resilience significantly flow. positioned strengthening products an and the well industry and result leader. a further up signs as and of very The better year, leadership of of for market improved foundation both to sets at to industry increased better substantially XXXX as unique organization. an are in in Significant market Vertiv profit strengthen and sales new a the future expanding underway large. shaping results. A operating cash both. our It's in same sustained a time, our delivers financial deliver metrics, is R&D to industry growing rapidly changes years company and [indiscernible] its be operations. evident strong and is world expansions distinguish a At and is to share creation. increasing strong value with great industry progress

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

Giordano Albertazzi

Dave, we sales of first thank Americas up led go Organic Well, by very well. you. XX%, and you, XXXX. X. to a in half strong had strong with growth We Thank as Slide were EMEA

point see orders QX and discussion this on as growth, strong level year-on-year Slide XX% in Book-to-bill high high We to at sequentially from well continue very follow to very up a very with More QX. X.Xx. remains X. up on XX%

adjusted lot has increase, basis to large operating for profit The are a in Customers seeing we orders Hence, backlog XXX velocity $XXX dynamics points by longer margins Pipeline same Adjusted past. orders. acceleration are in was require creating the in operating shared April continuing you 'XX beyond. continued and delivery than XX.X%. the to in and and of the expanded with are large we dates orders. million,

better delivered results. companies operating better mentioned, Dave As

good cash $XXX free flow Our second the in is story, million adjusted generating quarter. another

We are cash converting performance. our profitability to flow good very

profit We X growth year within metrics guidance flow our free of all guidance. from expanding of $XX raised million, to end up adjusted with adjusted range targeted expect $X.XXX was leverage and Xx. cash organic to billion financial across and of net operating $XXX QX, XX.X% full Our previous the again well of X.Xx million margin our at of so XX%,

Let's go X to Slide now.

You indication of in healthy out By market we may market. seeing once Asia the we markets. the recognize Americas, and this We positive signs in market and chips with infrastructure the and acceleration Cloud crude what slide. directional for Colocation but High EMEA the AI colo and reality, also happening give again in the a accelerates to and for China large, infrastructure. are density use starting a the well. hyperscale We this of continued and remains are liquid wanted it see quite this in demand in see built and as to some

Telecom Enterprise spending AI has see is remains industrial Commercial spending over is enterprise in impact and stable are yet, remains starting yet Americas. subdued healthy infrastructure happening the rebound. CapEx to and there fully positively of regions. to a we as and the markets time, APAC as Americas lot this expect in

market especially end our data represent which encouraging, for So XX% the environment overall, centers, is exposure. market of

heard data these unique have We center are place believe standpoint, is tangible further being and But becoming reinforced. from competitive a true. [indiscernible] investors more we from the market this we competitive have quite feedback a that about days advantages

As becomes data I centers believe become critical, even more more distinguished. Vertiv

the or small We only X selling are not chain. part say, only thermal X product point of

inverted. rare customers' think XX position don't is as and years center. good the born we With of experience. complete and replicated, service industry, data power critical orders provide data of tissue the infrastructure a in connective centers, facilities and selling act We of We solutions. data in between a is a over easily our We are this and the are entire through our cool It IT trust center. representation

liquid and market focus understandably intense at on moment. portion the is this so of there the cooling Certainly,

clear. are advantages Our

in door portfolio heat chain in technologies a differentiates thermal comprehensive these cooling technologies, have to We integrate rear [ ], know key of into and direct the this ship immersion liquid rates exchanges, ], we [ how solution, entire Vertiv. ross

technology service our deployment. is before local our It is prevailing very Surrounding as a are almost We complete have customers to to technology solutions of talk service chip portfolio to in support. way to we organization have and and X,XXX this direct get hours see service a to customer important continue with choice, site. We global of field engineers. minutes to a customers

we our products a reasonable. is with very would profile in with liquid see emerging the different So to participants we I part point an bigger data aspire indeed even thermal they liquid but cooling, market player And a we cooling, center, of ambition small a to believe good say and emergence for far in reasons overall than have be Vertiv. solution have

to let's Slide So move X now.

QX to in see increased, Americas. strong. the correlation continue orders management Power order power convincingly especially continue to a our growth, strength grew and and in and time. portfolio. we management at AI velocity sales both scaling, between Another quarter of orders strong extremely The of thermal across There in pipeline cooling, and and over we our very of strong balance similar is that portfolio would rates expect is

a This metric. quarter, we trailing introduced XX-month orders have

As activity, quarter-to-quarter be we quarter. large Trailing a variation timing highlighted, order previously good of natural push is to some of the to orders assess XX and the a metric smoothing can pulls. there have month in any

third metric still from an the to have second increasingly be in tough basis, we we year-on-year a see can extremely quarter. XX-month we our and quarter trailing but expect This in healthy stay the we comparisons range, very trend, know indicating on the growth where we in high orders order guidance. as strong supportive helpful expect also XXs order of is a low believe a and sequential double-digit orders We ahead, decline financial

scale customer mentioned, colo in to manage dates orderly as increase. manner. the request As large We and elongated in projects to technology the an for deployments this and as view industry this of hyper continue in growth the general space transition wanting

in a we orders feel of what seeing. we the Pipeline, how all years. And X are backlog, As XXXX lot are is consequence, the same direction, and a are future orders, good like about shaping. for we positive

Let's now Slide the of right look at X. side

environment, and here governance building as key stay in to few strategies, risk Inflation, We positive. have continue price increasingly plans we a and and price a on stay, place mind resilience. we to geopolitical resilience good believe mentioned an this mitigation to to multi-sourcing focus in cost identification is are it with complicated chain supply to process times, navigate

We technologies. and the capacity we management thermal the plans Americas including the in across capacity, expand expansion besides modular other to you adding more already continue shared with

capacity production cooling liquid our increase plans XXXX. in with of it finish is to end at This compared technology are globally the XXXX ramp-up continues, to encouraging. quite baseline XXx X in capacity we on track The of and today, of is and

capacity time continues to So the growth to are Operating driver same to trajectory. are as accommodate time, liberate a key be investing our -- the investing footprint System Vertiv at we same we at

our scenarios. million cover $XXX constrain ourselves not at the faster, of diligent expenditure capital market we between the forecast demand will scenarios we grows will meet believe look $XXX and different as we to demand If trajectory. and needed are We the million

now Let's Slide to X. go

center as the XX% to has demonstrates sales heard nature been It a have we strong super the it this like would of uniquely Service application. expect, mentioned strong have margin proportional of for Service that part year. you You is and has decades. last differentiator additionally, a the for is us easily including Vertiv. represents business And characteristics business We our powers. been total one and not Service industry service is financial one in expanding. of critical service replicated. data lot, the profile of opportunity the our

we increasing, each The stakes world, be In even criticality is millions essential. or The AI matters and Systems can dollars. service services in higher. more and Thermal to rack Management are complex, Power predictive of unforgiven. becoming an value nature the is believe and minutes high-density the significantly in experts of The Management ability sites have as on Telemetry, of are more loads more. and the

Global complexity. our customers to choice proactively our Service navigate help a of this training are to We partner be Engineers

embedded In to data Compass full-time center Compass case on centers have management is much fact, on provide chosen their in for Vertiv the you where is some predictive that, exciting sites. We service The center I'm David. data becoming absolutely to scale Vertiv dedicated becoming deployment site-based use of Vertiv. With to to larger trust Compass over thank of and compelling. personnel absolutely maintenance share service value full-time data do an crews thrilled site

David Fallon

everyone. and Great. Thanks, Gio, good morning,

quarter Turning to our results. X. Slide slide This second summarizes financial

above XX% end driven primarily the XX%, sales from increased once the in high Our sales slightly were of prior net performance where by, organic guidance, our again, Americas approximately strong year. organic up

from the been than midpoint of which profit within a primary our guidance VOS catalyzed driver short higher XX.X% This year-over-year million adjusted by principles $XXX productivity, our our improved higher benefited plants significant million year operating basis was the and the by increase of improved XXX which variable driven and just gains. million XX procurement in versus price both implementation productivity also has continued Adjusted of and $XXX margin, the contribution notably target. the last and for the cost basis point was to functions beat driver long-term points for margin $XX primary in of operating volume and

execution the operational business. is do. of still the We on an of more there's lot across focus benefits all that are to parts thing seeing intense exciting the a And

tuned. stay please So

Moving right. to the

last due Our than primarily quarter We capital, $XXX higher primarily cash improved second of flow of adjusted adjusted last quarter operating generated profit. adjusted million by quarter, declined second better year, diluted which the to annualized higher million and EPS in sales. XX.X% over driven higher working $XXX profitability $X.XX, free $X.XX was to than year,

margin, capital improvement lot trade working and of and more second with which to cash payments, third timing, with advanced into cash Some the fourth flow from working shifted due still Nonetheless, but progress the good capital, quarter including was effectively favorable like a this do. to just quarters.

X.Xx page, billion. on to Finally, stated of within strengthened to at net quarter of leverage X target and leverage Xx range end the this liquidity was our the $X.X

strong is should capital our cash on and upon deployment flexibility sheet focus strong we to remain expectations flow based opportunities. for balance Our evaluate free as

Turning to Page X. quarter results. segment our This second slide summarizes

to China organically, increased XXXX. offset More markets. was XX% second growth growth year. from down, top Adjusted XX.X% up the XX% XXXX, by points challenging the to Primarily this and in operating margin on where XXX APAC with strong from the from in than strong line significant last continued increase productivity. saw we the rest up comparison in with price/cost Americas, impressively, mentioned, Hyperscale driven by a momentum top sales sales in India Asia. of were favorable quarter growth Colocation Americas the but slightly and X% basis more mid-teen and of expanded As

in optimistic $X we that improving decreased second in We points second the this China million expense part as year-over-year operating in still visibility margin to XXX But due pipeline, last upon year, China are commence a from characterize discrete into year's basis growth stable. will adjusted half. based quarter. an sales APAC

APAC this However, on second points higher year, to operating correlated basis, expect are year-to-date onetime increase the the last basis margins margins with in back and a the expense, still in than XXX operating volume. we half half year despite expected increase of

increased part modular organic the growth. EMEA sales second solutions in in XX% driven strong by quarter,

We margin. customers adjusted solutions business XXX XX.X% and Americas to operating compete are as margin of to this part EMEA EMEA regional use capacity. center continue the certainly encouraged highest with operating modular as of in the accelerate increasingly to increased expansion data adjusted basis points momentum for

we'll So how but EMEA plays won the year-to-date, the and quarter, see of Americas year the is rest out. ahead the

third summarizes slide This quarter Moving guidance. to X. Slide our

largely sales headwind. a million previous expected quarter consistent of foreign the low which growth sales second in regional APAC and to XX%, The implies approximately We different as grow looks regions referenced are on with with all slightly China, growth offset quarter a I notably in sequential by that organic the profile is acceleration exchange expecting X slide. including third $XX teens

the price quarter profit We of operational last costs basis third productivity expected $XXX of leverage, from margin continued XX.X%, midpoint XXX operating third and and adjusted operating with million up benefits gains. at year's expect points quarter, adjusted from

partially year Including incremental million half, in strong midpoint growth the organically, of sales Next, turning by Americas guidance. foreign increasing Higher we primarily guidance $XX $XX by After XX, to million. are exchange organic offset our million of and our Slide headwinds. a APAC. the $XX is full first

by the We in midpoint variable increasing in also margin profit due manufacturing. also driven adjusted second procurement million the by part higher volume, are in both of upon operating billion $XX productivity, higher our but half, to guide to contribution based $X.XXX continued and expected

guidance are margin points points higher initial basis basis full result, our higher from than to than November adjusted and a we conference. increasing XX.X% our at operating previous As XXX midpoint, investor guidance the expectations year XXX

inquire first challenging contribution variable last incrementals in were X in half margin half XXXX. likely year-over-year for the will the stay second in XX% as year are initiatives in back analysts above as half. some our why more comparisons projected of And quarters the they Now year-over-year short, to in not productivity the the accelerated are

is closer to a continue back level, investment our range, fixed us The we adjusted the prioritize exit expect technology. long-term year's In near full target in of sets that ramp-up capacity costs quarter XX% propels foundation plus. anticipate this a XXXX. addition, Certainly, and this which of fourth year XX.X% for long-term and in within operating half target we guidance to as we to margin good

taxes do adjusted primarily $X.XX projected like income appendix. midpoint, higher the Our XXXX on higher than count quarter, and share diluted at is adjusted XXXX, than of more the XX% driven by operating EPS profit, in additional we information last provide

flow income to partially $XXX primarily by adjusted on guidance by this working additional and taxes trade we $XX Finally, in free operating investment by offset higher million, adjusted capital. driven cash profit higher increased me for and slide, million

generation adjusted of $XXX year relatively full second approximately in to quarters. which guidance uniform the cash Our million in free the we flow third implies expect fourth and half, be cash

And said, it back over I turn with Gio. to that

Giordano Albertazzi

And Thank Slide much, David. here we you. you as go thank XX. to Well, a quick very summary

again The raise and Vertiv global portfolio critical, flow. The financial translating customers. performance. humble to executional becoming gives continues that and services, we cash Including to to half first and on for evolving continues these strengths our more year. and XXXX we guidance performance. Vertiv's profitability well. improve, see strong view our focused. plays with to scale, It us very pleased growth, our very When free and I'm So that strength depth breadth confidence sales our of matter strengthen attributes into Technology, and is next market stay and into the

intend call, to we reinforce work day, we Every I competitive fully advantages. the to last on that hard said keep winning. our

a good place completed better. is do no absolutely There room are [ can we We always in full now, ].

the progress, excited making is is team potential Vertiv keeps but growing. our much are bigger and And entire We substantial this. about very full

An 'XX. on have we Investor conjunction on with slide, important XX event November point plan Supercompute to an in this the

follow, details is your calendars and I on on but that to screens. will make this more this want So sure radar

the much. Brika, you very you over With that, to and Thank Q&A. for

Operator

[Operator We Instructions] have with first on phone the the Amit Evercore question line ISI. Daryanani from

Amit Daryanani

XX%, first over the high if just understand Thanks to that trajectory these a do the being I'm just rule. what's September lot, wondering time frame how converting XX% you good then one help Will you question driving to you be helpful us to And help XX% well. orders morning, versus really frame and us speak the the everyone. in I'll as expected It to September maybe deceleration quarter. crucially, we in company? the in the for order XX% to would saw half. see revenues could

Giordano Albertazzi

Thank very you, to you. good Amit, and day

pipelines think the at are market view our the script, happy we the And overall positive. for with course, continues be I that trajectory the see. of positive end a in to reflecting pipelines, and the those of are we I market stated

orders, view back April, go big you the in but bias there this lot a ] QX orders had [ and certainly more a are of individual prudent to If we market. of

question it's or quarter. quarter just sometimes, a whether another And they timing in a when can another of or question -- be happen one --

very, not one also So kind so trajectory of We're do of metric the element the that orders that we fact XX we to here, the introduced be the took all market happy a orders our of talk are aware have we positive. of the timing an broader about make view in continues timing. now. very it can want trailing the a very positive, but overall, we be month very but to we bit like quarter, just why sure little that That's far, about

-- of about last part meaning question When the upper already, of for it second that comes much order larger second half time we and what market, what doses market, timing the your It's Colocation. to the larger Cloud pretty and said the we of part of the in revenue. part the translation the

XX, in last [indiscernible] have average, XX We an think about can now of elongation already But are on terms dynamics. individual described we that different the thinking months on average, in different we leaders QX, what or strange majority QX sit observed and But considering beyond. before hence, XXXX than nothing And and of years, particularly [indiscernible]. again, will that so around. we future time

Operator

We have you. now Thank with Steve Tusa JPMorgan.

You may proceed.

C. Stephen Tusa

working where XX% what XX% trailing these or here year-over-year? Is once? to You in the like and you be like a going something actually order? on forward on at point things as do how any are it campus And mentioned buildings ground. the to a At -- months. that or you trend that. data to centers all or pipeline into positive on just trending of on follow-up you given phased XX think for the do to then may Or goes you of all booked order comments how that do in certain you X as orders, a any book all shovel Thanks that. may the good about is a campuses X color Is lastly, how contracted that book be as

Giordano Albertazzi

question. your for you Thank

can call that trajectory. a And XX% strong term. trailing growth we a our one XX, certainly, long sustain So XX%,

fact no it's talking lot reflects first campuses, But range vocal a been actually is range a a the development And legally a that to book is important very, We campus your an expanded that there's Vertiv. only get or be about and we [indiscernible]. we strength To how PO. truly PO, way. we for we a as capacity the in I've a certainly that other time. order PO-by-PO, gets very is market built way we the do part called about of in the over So like what

customers really what it's actually about order -- from really So us.

Operator

Bank. you. now with have Thank Deutsche DeBlase We Nicole

proceed, Nicole. You may

Nicole DeBlase

Thank you.

the investor So to is of this and more orders what today. I kind concern time want I market just a some on big spend because in reflected think

are that, that the a guys project making few XX% I XX% Are perspective. trying then kind pipeline founded from growth quarter get the large in from large year-on-year. an to sense XX% we is could a that positive you the So of XX% in a that many you strong may growth guess in? you've here actually orders now what conservative you to order And diminish continue. Like assumption because orders implies seeing months And start sitting a get so you like hey, we've sequentially. of if that XX% X be how assumption third step and to booked come not Just quarters like had to of [indiscernible] down to just another orders? really to with large

Giordano Albertazzi

are for that the Nicole. hear quarters year-on-year. But X to little thank concern you I Certainly a after paradoxical the bit Well, think concerned orders you. XX% question, is almost of

strong. and said, just dynamics pipeline pipeline commercially very that the to market in we market understand have strong the be market. again, of continues the and the I visibility to a we are reflects As testament the reflects pipeline And a way the the

different top the more gave, of is good it's orders. that quarter ago. again, that quarter with that second message than good news in actual message not But news is will, the on It's strength as if you message just that the we the a

trajectory So market I our also the the rest of world. very shaping be continue way are the to We the like pipelines. is the in And optimistic of and position about evolving like way market. we very, pipelines up in the the our

very Of that's in know very, Americas. the strong we course,

day the or first the dynamics around. an AI are the can of kind quarter sometimes of quarter playing So swing last things day said, a the manner. favorable receiving again, order, That in of

it important. not individual the let's is about again, So obsessed be quarter, too

the we very quarter, are we make trajectory sure printed We long-term the long-term trajectory proud and eye an what trajectory second the on strong. that is let's about in very and keep on

Operator

Goldman with have on line. Delaney Thank Mark Sachs you. We now the

Mark Delaney

seeing than this Can you on Vertiv more million environment question pricing. speak a you for pricing is on for net evolved? taking parts positivity you of increased that so Yes. expecting is for have of been industry? term? bid, given that of in bit any competitive the much programs which limiting become potentially And cost pricing more qualitatively the price competition my And degree price how positivity year. cost over are so, has the $XX that Thank the new come in up certain if [indiscernible] longer

Giordano Albertazzi

Absolutely.

continue market demand is to a We operate balance favorable from a supply standpoint. that and in

We have very strong competitive advantages in the market.

So feel about built the doing. muscles what we about pricing the and good we feel that we're muscle We and last very years. pricing over X good strength have X,

So continue encouraging things in that to be respect.

operate we a is course, mature as an that in Of market. environment

players. sophisticated Our are customers

in capacity So adamant position in price positive we we fact terms terms terms be our of our and technology, customers. equation access service in the in market the deliver level, the ability continue the to of will we and good that feel future, continue to price to cost that value our be about our in about to to of

Operator

Your next question is from Andy with Citigroup. Kaplowitz

Andrew Kaplowitz

more everyone. productivity. morning, about lot you Good about a a talked -- talked David lot David,

pricing liquid bit could Gio in any the And you such cooling? improving. of as could is about of productivity lot a as And you maybe ramp then is or that so you if to you see there lose continue those still there risk opportunities there. side, a areas improvements productivity David, talk Is on little the room any more

have a 'XX? you higher double-digit way target You for XX% end up margin than that Could revenue. leveraging keep you with

Giordano Albertazzi

would that say a certainly I XX% We been XX% plus that, has always is silly. this not necessarily premature. know

far able cooling been cetera, the liquid in being when to play is the current ramping forever comments in is here, about our favor as top heading elements are in on all et be cetera. to certainly the the in for way, look volume, we full achieving now. that guidance, effective up we're about trajectory But example, of potential. et We leveraging that But more efficiency, happy and very reflected way introductory vocal right -- line us and the the we've [indiscernible], at from

are not So of an I'd our ], terms the a what soul And but of the in see forever we business the that big again, better. can mantra we but do. see that in our say realized more are no be. in matter element can trajectory, that so is that equation, much productivity we one. will direction. strong operating is value we improvements There gains and important certainly course, And happening company also internally, being encouraging how But [ much the be we

Andrew Kaplowitz

it. Appreciate

Operator

We Research. Scott with Davis now have Melius

Scott Davis

morning. Good

slide You a devoted whole service. you -- devoted slide all to

I site, obviously, lot know kind just guess big what and of key field customer, I guess, can on just explicitly, clear to it kind of kind here. question service of a it's [indiscernible] guaranteed I price guys you a but wasn't here? me around my I is to think of -- uptime? So the price labor. KPI off of you there's that kind you mean potential Is is it more it topic slide. guys what of XXX% is to overall, just you can the value having the Is the

all and to can think slide mean, devote clearly, you pretty, it by you the material it, -- also just then potential, I pretty become assume if I XXXX. But would

want, know a there's I anyway, on. what lot just there, So pass and answer you I'll it

Giordano Albertazzi

Yes.

deserve I metrics to I'll key conversation. think here. certainly, are that to a what try question a we market-positive the go

that dimensions to to for base. being are One important is able us, aspect base installed to there recurrent an two attach that. I revenue is large having and a installed think clearly,

track and a obsessively delivery we that operate So from very and a well of we that sure all commercial measure make we things kind we standpoint. but also

and us equation differentiator. our solutions a attach there current a is -- that clearly, us of valuable for quite terms with let's sorry, market project And in Product business very element valuable advantages. quite the of service mature margins quite very That share. market a -- -- in plays for is service profitability. our call role I help mature that being mature a share, and that But in delivers it's of So with of terms productivity revenue say, important another competitive rates, sense. quite makes in difference in set revenue the

is in very, very it So respect. that important

we are when proud very, the is the and at time mentioned, example I is I very, high liquid constraints a say, with The a slides, we customers, very going enormous were As system. for of that through our cooling slide been were through when that. the importance the to going obviously, made let's support given service level, we the industry able

And innerture a is an by here, kept rack is we second. on you a that, if will, alive, in have that So is really secondary there that cooled $X liquid circuit. million so-called

So differently something a you would in helping goes system. from the past, room entire an have when thermal wrong if

Here, X-- your and million you racks. or multiple have [indiscernible] $X your

have you you to when something able be before And to they be in second. able things see to So intervene happen. see

is impactful technologies the There an another commissioning, as as resilience of is the they value element customers' more our enabling of et importance. especially important. project everything cetera, an infrastructure. well become enormously increasingly utilization and is it is the So really as is that as is deployment. And element are, complex

Operator

comes Your with from Michael next question Elias Cowen. TD

Michael Elias

Then pricing, to of that which expanding take at XXX a basis the meaningfully about it's I year-over-year, year-over-year demand and mean, that And up unlevered the the to data cost drill I market, down of are yield I tune over I seeing into when imbalanced. they're underlying data and look When center when me at cost build generating, faster their are years. operators I spot few are center expansion I to last yields says than their their points market look to XX% the returns supply see see XXX that capital. data center that

for market have should cost operators. to would that, that in price no spot question about you to sense is, customer through with your price center and to underlying the kind price how increase actually Vertiv, linearly of the So get impact strength when data their price relationship I increase my pricing want just returns. think on center dynamic we of for a center given underlying the to think to the data grow between end ability better the data price

Giordano Albertazzi

have may by by technology supply of customer I different balances. it's technology, really let's a profile technology Well, say, customer think and and demand different specific

is into price. where like rule with to value to in that especially proposition translate here. translate player what a and into can that a see So value strong market define our hard Certainly, and general customers it's vendors environment we Vertiv

the Now especially that but course, buying further players all operate reflect in their, that. with and go But very that say savvy, let's on say, through all dynamics. your and hyperscalers favorable I'd large certainly are to colos aspects is question of of continue an environment we'll, that in we

Operator

Research Your Jeff from next with comes question Sprague Vertical Partners.

Jeffrey Sprague

maybe put just share how I about if wondering of there's point finer we lot a measuring it. and concerns was on Obviously, you're a could competition.

the you're you're You've look mention it to there's you heard But when the But appear before order gaining believe on at doesn't we share issue. and growth like, did you rate hearing your call. a share. me

terms of to So question this relative some about tell that? little market you wonder your metric? if I business you to get us comfortable is set. per the the could a help do performing how answer more And thinking just fast how or How in growing? other dollars with the you just us think measuring megawatt you're is competitive Are

Giordano Albertazzi

the of share. the adding our access trajectory you mature quite our in -- the as first And markets point Certainly, of well market the thank gives of all. are parts question, well, There the new view of view to terms signals order from it the all the Jeff, terms market point of from that that there are -- market relatively that are of of us -- is are information. certainly, the that encouraging parts in for your of

our about the answer the of November to technology. But in Cloud/Colocation gave growth in always on positive orders terms XX%, the the are of we XX%, suggests we be are general, in specific what again, trajectory outlook that is think encouraging. bit but Market post share course, of is So a certainly ex the if in the measured that that in something respect. is little we should

all say, per or dollars stage, what about shared in megawatt, right now different very let's asking the were past. we not thoughts of this at vision well You with you as from

think, for the to non [indiscernible] space. per I AI So of and million the [ Vertiv megawatt TAM ] XXX again, X.XX in AI

market. still is valid, for older say, let's So us that

Operator

hand now to it back closing I like Thank you. Albertazzi, remarks. for would Giordano some to

Lynne Maxeiner

those. for time we questions. have couple a ahead in take think operator, Go Yes, a and There's queue. I more more few

Operator

now have Absolutely, We Wolfe apologize. with Coe Nigel Research. I

Nigel Coe

that drowning. Thanks I for okay. saving Yes. was Wow,

a to, of would of I thought kind capability your is look, like So to Jeff's line take I tend I that a network view think, differently. service Obviously, little big bit with agree advantage. the front-end

are sort more is with on around to do to of a Maybe right server about et coin a got cooling rate [indiscernible], talk ability Asian that. the server OEMs liquid the of maybe just now? their bit seeing and win bunch cetera. sort CDUs, you've integrate of trying what they're you there side maybe And of just other so The

Giordano Albertazzi

controls back, about go having, It's the ability when thank having strong question Nigel. having having of Having you are equation. I'll very were we And CDU a that to direct-to for ability services. the all, we the and the the widget. slides, chip not very right Again, about technology going part liquid then strong your of just as as and mentioned but first scale through important -- do, manufacturing Yes, especially an processes, it's

route well. other competitors system evaluate you competitors. them when integrators a players always be necessarily can we Clearly, our Very about the as at look But think they as in seriously. market not should space, very they and we role, often, or to pay that hybrid a necessarily very,

glance. a are first at little things appear then nuanced they So may more bit the

the particular, say it's Very, the CDU go the not orders with but stage. that happy when very with not but win portfolio, comes I [indiscernible] details of have the very across rates space. in this cooling So rates, stage. and important backlog happy. I we to go that trajectory But in to in we are very, this win it at at will very, of think liquid Yes, the space that will the into

Operator

comes Instructions] question [Operator Noah from with [indiscernible]. Your you. Oppenheimer Kaye Thank next

Noah Kaye

enterprise more bit a with little into perhaps getting the cloud, on-prem of to workloads So migration here. of a equilibrium new

extent an up versus Day. that the you the Investor to Could mentioned that in of for To X% seeing X% potentially be at in what Enterprise outlook currently? in contemplated something that Americas. we outlook was uptick pick pipeline rate the you're November sort gave starting You in and seeing to that is the growth the

David Cote

about by just point the becomes on the for X% when and question. readable that, we be Good that implications AI -- augmented in sense that card AI more the and expanded may talked matures thanks as of to Well, and that will she not cola. X%, we're saying

stage be we early exactly I it's start the color X, we a our that may of gave had on for a November part reason And was. say different that I'd in model. but better market than So that think things is pipeline it Slide indicate enterprise in the it to

bit we little certainly we of the model, enterprise a yet the but so of continue expected. -- originally it's positivity see but we do aspect faster we But them something growth think To direction the and in yes, constantly, but premature. pipeline it's in that and -- in a

Operator

Thank Tusa you. with Steve now have We JPMorgan.

C. Stephen Tusa

I this the in call the up want it. there's or not contract of guys you revenue, from nicely that? -- kind the Just that are guys Are Seasonally, year? usually a you second there that the deferred third the flat timing with on and however Is on know timing fourth. some then -- question cash. around to expecting you why you in involved payments down some to

David Fallon

Yes.

I timing. think there's

deferred advanced surprising the based balance can QX orders and look that quantum on up of our in was QX. the at line look we payments, you revenue sheet, million had in the not you $XXX the and If in at

effectively, So flow a cash that's going the would that impact forward. prepayment and timing

I is would But of of these $XXX element timing XXX about the with lumpiness comfortable uniform. advanced and year, -- similar expect think for with that But there mentioned pretty I of the be XXX an So think QX, I million especially the some rest payments. we're we for and QX. should to orders,

Operator

you. Thank

Nigel comes Research. next Coe Your question from Wolfe with

Nigel Coe

this wanted to EMEA talk It's the about Americas in the just to I good having see mainly. and margins APAC competition.

to Just competition. going is in wondering APAC get when this involved

expect So the should APAC as next what couple kind over of go through, income we inflection coming see years? we as in we of margin the

David Fallon

Yes.

the an be probably the some I you market you're notably in think China. expand they're work principles And high, VOS think year to versus if were differences basis, year-to-date there, not do variance than going and you year-over-year if participant at and year-to-date APAC, will with of a EMEA. that XXX basis that down they the prior Americas even were there's by still QX though expense. the look driven second half. points in active onetime on a and APAC, regional look like and But some basis, higher We just But on year. in they in in they last

doing the are rest the in as same in we APAC we doing the So in things are world.

basis, of for relative below and though and expansion rest year forward. even the And in margins a from APAC step we a maybe America, operating APAC expect also the going of

Operator

with from comes Linzey final question Our Mizuho. Brett

Brett Linzey

Good Thanks. everyone. day,

of a timing availability. versus bit ground break year. how the the for next that guess, trying I more Just managing a little be construction in much ready data slides backlog noted and portion the sense you might uncertain? get way dimension to constraints a to in there is around power the to visibility the So permitted, current is resource, better

Giordano Albertazzi

talk in well, permitting question. a about about we thanks talk as the -- constraints, industry general, When Just power your whole. we for and

little believe It happened for and adjusting our years. requested So X industry exactly is it's in bit given not the to what could We we our be we're that something when nothing has necessarily for those that kind is than a a unusual ready, different nothing already in of backlog. site but what backlog dates have accounts customers' delivery reflecting applicable aspects. all

say, the said in some our already to market strong double-digit hey, in if industry how again, the were for I yes, Day, and of levels of that CAGR. to are and we infrastructure general, exuberance this XX% in very, what say, said the that are let's are, can the very in reducing to growth back there we going saying we say, that and market that, back Investor we've aspects XX%, a really, growth, Cloud Colocation is XX%, go So expectations November in growth influencing factors

respectable very many in respects. very, many, are that rates growth So

-- But our with have my backlog. no, do not to was comment did

PO needs. your addressing that depending it and and Our backlog on on get is question could customers, that be minimal delivery adjustment we the we dates receive concern. the Hopefully, based from a requested our the on

Operator

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

Giordano Albertazzi

very you, Vertiv the A thank of I'd strong questions. for and today. us for big team for to you Thanks, thank another joining foremost, first everyone, Well, And like your good and performance. Brika. I'd thank quarter

rest a have appreciate your everyone's support and really great of So day today.

Operator

Thank for attending presentation. you. call you the conference has The concluded. Thank now

now disconnect from the call. may You

Vertiv (VRT) 24 Jul 242024 Q2 Earnings call transcript