Core Insights - Vertiv Holdings Co, a leader in critical digital infrastructure, is participating in two investor conferences in September 2025 [1][2] - The CEO Giordano Albertazzi and CFO David Fallon will engage in fireside chats at both conferences [1][2] Group 1: Upcoming Events - The first event is the Goldman Sachs Communacopia + Technology Conference on September 9, 2025, at 8:10 a.m. Pacific time [1] - The second event is Morgan Stanley's 13th Annual Laguna Conference on September 10, 2025, at 9:15 a.m. Pacific time [2] - Live webcasts and related presentation materials will be available on Vertiv's Investor Relations website [2] Group 2: Company Overview - Vertiv integrates hardware, software, analytics, and services to support critical applications for data centers and communication networks [3] - The company operates in over 130 countries, providing solutions for power, cooling, and IT infrastructure [3] - Vertiv's offerings are designed to address challenges in data centers and commercial facilities, enhancing operational performance [3]

Core Insights - Vertiv Holdings Co has successfully completed the acquisition of Great Lakes Data Racks & Cabinets for approximately $200 million, enhancing its leadership in high-density integrated infrastructure solutions for data centers and critical digital environments [1][2]. Group 1: Acquisition Details - The acquisition expands Vertiv's portfolio in rack, cabinet, and integration solutions specifically for white space applications [1][2]. - Great Lakes, established in 1985 and headquartered in Edinboro, PA, operates manufacturing and assembly facilities in the U.S. and Europe, offering a range of products including standard and custom racks, integrated cabinets, and enhanced cable management options [3]. Group 2: Strategic Benefits - The integration of Great Lakes' expertise is expected to streamline infrastructure sourcing, enable faster deployment through pre-engineered solutions, and enhance operational efficiency with factory integration of Vertiv's power and cooling solutions [2]. - The acquisition will improve scalability for AI and edge computing applications and provide comprehensive support through Vertiv's global service network [2]. Group 3: Company Overview - Vertiv provides critical digital infrastructure solutions, combining hardware, software, analytics, and ongoing services to support vital applications across data centers, communication networks, and commercial facilities [5]. - The company operates in over 130 countries, addressing challenges in power, cooling, and IT infrastructure from the cloud to the edge of the network [5].

Core Viewpoint - The increasing demand for artificial intelligence is driving significant investment in data centers, benefiting companies like Vertiv, which has seen its stock rise by 84% since March [1]. Group 1: Company Performance - Vertiv's sales guidance for 2025 has shown a consistent upward trend, with an increase from $9.125 million in February to $9.925 million in July, representing an 8.7% increase [4]. - The adjusted operating profit guidance has also increased, but at a slower rate, from $1.910 million in February to $2.030 million in July, reflecting a 2.8% increase [4]. - Free cash flow guidance has improved from $1.275 million in February to $1.375 million in July, marking a 7.7% increase [4]. Group 2: Market Dynamics - The growth in the data center market is primarily driven by the rising demand for artificial intelligence applications, indicating a multi-year expansion in data center spending [6]. - Vertiv is positioned to benefit from this trend, particularly through its collaboration with Nvidia in developing power systems for next-generation data centers [6]. Group 3: Future Outlook - Provided that the tariff environment remains stable, future orders and revenue increases for Vertiv are expected to lead to significant profit and cash flow growth [5]. - The company is in the early stages of capitalizing on the expanding data center market, suggesting that it is not too late for investment opportunities [7].

Core Insights - Investors are encouraged to focus on companies that generate strong returns after covering all expenses, emphasizing the importance of profitability over loss-making firms [1] - NVIDIA, Vertiv, and Mastercard are highlighted as top investment picks for the year due to their high net income ratios [2] Profitability Metrics - The net income ratio is a key indicator of a company's profitability, representing the percentage of net income relative to total sales revenues, with a higher ratio indicating better revenue generation and expense management [3] - Additional screening parameters include Zacks Rank, trailing 12-month sales and net income growth, and a strong buy percentage rating, which help identify potential winning stocks [4][5] Company Profiles - **NVIDIA**: Engages in graphics, computing, and networking solutions globally, with a 12-month net profit margin of 51.7% and a Zacks Rank of 3 (Hold) [5] - **Vertiv**: Provides infrastructure technologies for data centers, achieving a 12-month net profit margin of 8.9% and a Zacks Rank of 2 (Buy) [6] - **Mastercard**: Offers global payment processing services, with a 12-month net profit margin of 44.9% and a Zacks Rank of 2 [7]

Core Industry Insights - Applied Digital (APLD) and Vertiv Holdings (VRT) are central to the digital infrastructure expansion, driven by increasing demand for data center capacity due to AI, cloud computing, and high-performance computing workloads [2][3] - Global data center capital expenditures are projected to grow at a 21% CAGR through 2029, reaching approximately $1.2 trillion, benefiting both APLD and VRT [3] Company Performance: Applied Digital (APLD) - APLD has shifted from cryptocurrency mining to becoming a dedicated AI infrastructure provider, capitalizing on the growth of AI and machine learning workloads [5] - In Q4 fiscal 2025, APLD reported revenues of $38 million, a 41% increase year over year, and achieved positive adjusted EBITDA of $1 million [6] - APLD's partnership with CoreWeave is expected to generate around $7 billion in contracted revenue over 15 years for 250 megawatts of critical IT load [7] - The company has improved construction efficiency, reducing deployment timelines from 24 months to 12-14 months [7] - APLD's North Dakota locations provide low-cost energy and innovative cooling systems, enhancing its competitive position in the market [8] Company Performance: Vertiv Holdings (VRT) - VRT is a leading provider of thermal and power management solutions for high-density data centers, with a broad product portfolio addressing critical infrastructure needs [9] - In Q2 2025, VRT's net sales rose 35% year over year to $2.64 billion, with quarterly orders surpassing $3 billion for the first time [10][11] - VRT's strategic partnerships and acquisitions, including the $200 million acquisition of Great Lakes, enhance its capabilities in AI data center offerings [12] Stock Performance and Valuation - Year-to-date, APLD shares have increased by 95.9%, while VRT shares have appreciated by 26.5% [13] - Both companies are currently considered overvalued, with APLD trading at a forward Price/Sales ratio of 12.98X compared to VRT's 5.07X [16] - Earnings estimates show APLD's first quarter fiscal 2026 loss is expected to be 6 cents per share, improving by 33.33% over the past 30 days [19] - VRT's third-quarter 2025 earnings estimate is pegged at 98 cents per share, reflecting a 28.95% year-over-year increase [20] Conclusion - Both APLD and VRT are well-positioned to benefit from the AI-driven expansion in data center infrastructure, with APLD showing a more accelerated growth path [21][22] - VRT maintains strong growth visibility through its product portfolio and industry partnerships, but its expansion is less aggressive compared to APLD [22]

Core Insights - Vertiv has launched Vertiv™ OneCore, a scalable prefabricated solution designed to simplify and accelerate high-density data center deployments globally [1][2][3] Product Features - Vertiv OneCore integrates power, thermal, and IT infrastructure technologies into a single factory-assembled system, reducing on-site complexity and compressing project timelines [1][2] - The solution supports scalable power capacity ranging from 5 to 50 MW, catering to the growing energy demands for AI and high-density deployments [5] - It offers high rack density flexibility, configurable for 96 to 944 racks, accommodating low to extreme densities based on IT requirements [5] - Integrated thermal and power systems provide energy-efficient cooling and power infrastructure, utilizing advanced heat rejection systems and scalable UPS systems [5] - The design allows for concurrent maintainability, ensuring system resilience during maintenance or upgrades [5] - Vertiv OneCore operates efficiently in diverse global climates, with temperature support ranging from -20°C to 55°C (-4°F to 131°F) [5] - The solution includes advanced redundancy options for both fluid networks and electrical systems, enhancing reliability [5] - It is compatible with a broad range of voltage inputs, meeting various regional standards [5] Sustainability and Support - Vertiv OneCore supports sustainability strategies through increased efficiency and reduced power requirements, with a flexible design that adapts to evolving technology standards [6] - Comprehensive post-deployment service and support are provided, including expert-led commissioning and proactive maintenance programs [5][6]

Core Insights - Vertiv Holdings Co reported better-than-expected second-quarter results, with earnings of 95 cents per share, surpassing the analyst consensus estimate of 83 cents per share, and quarterly sales of $2.64 billion, exceeding the estimate of $2.35 billion [1][2]. Financial Performance - The company raised its FY2025 adjusted EPS guidance from a range of $3.45-$3.65 to $3.75-$3.85 and increased its sales guidance from $9.325 billion-$9.575 billion to $9.925 billion-$10.075 billion [2]. - Vertiv experienced a 35% sales growth, indicating strong market demand and robust order momentum [3]. Strategic Positioning - The CEO highlighted the company's strategic investments in capacity expansion and innovation to meet the growing infrastructure needs, particularly in AI-enabled data centers [3]. - Following the earnings announcement, analysts adjusted their price targets for Vertiv, with Oppenheimer raising it from $140 to $151 and RBC Capital from $143 to $162, both maintaining an Outperform rating [4][9].

Core Insights - Vertiv Holdings Co. (VRT) reported second-quarter 2025 adjusted earnings of $0.95 per share, exceeding the Zacks Consensus Estimate of $0.83, and up from $0.67 per share a year ago [1][8] - The company achieved quarterly revenues of $2.64 billion, surpassing the Zacks Consensus Estimate by 11.86%, compared to $1.95 billion in the same quarter last year [1][8] Company Overview - Vertiv is a leading global provider of critical digital infrastructure and services for data centers, communication networks, and commercial and industrial environments, focusing on power, cooling, and IT infrastructure solutions, particularly AI-enabled infrastructure [2] Performance and Growth - The company experienced a 35% sales growth, driven by strong market demand and expanded capabilities to meet complex infrastructure needs [3] - VRT's stock price has increased by 29.4% year to date and 58.8% over the past three months, reflecting the resurgence of AI-infrastructure providers amid significant spending by data center hyperscalers [5] Strategic Partnerships - Vertiv's partnership with NVIDIA Corp. is a key catalyst for growth, aiming to stay one GPU generation ahead to provide efficient power solutions for next-gen AI data centers [3][4] - The company has a diverse partner base, including Ballard Power Systems, Compass Datacenters, Intel Corp., ZincFive, and Tecogen, enhancing its market position [4] Future Guidance - For the third quarter, VRT forecasts adjusted earnings of $0.97 per share and total revenues of $2.55 billion, slightly above current consensus estimates [6][9] - For 2025, VRT projects adjusted earnings per share between $3.75 and $3.85, with total revenues expected to range from $9.93 billion to $10.08 billion, both exceeding current consensus estimates [10] Long-Term Prospects - The AI infrastructure market is projected to see a significant increase in capital expenditure, with four major companies planning to invest $325 billion in 2025, marking a 46% year-over-year increase [12] - VRT's long-term EPS growth rate is estimated at 28.3%, significantly higher than the S&P 500's long-term growth rate of 12.6%, indicating strong future potential [13]

Financial Data and Key Metrics Changes - Adjusted diluted earnings per share (EPS) was $0.95, up approximately 42% year-on-year, primarily driven by higher adjusted operating profit [12][29] - Organic sales grew 34% year-on-year, with strong performance in the Americas (up mid-40s) and APAC (up mid-30s), while EMEA delivered high single-digit growth [13][30] - Adjusted operating profit was $489 million, up 28% year-on-year, with an adjusted operating margin of 18.5%, approximately 110 basis points lower than the prior year due to tariffs [15][30] - Free cash flow for Q2 was $277 million, down year-on-year, but adjusted free cash flow for the first half was $542 million, a robust growth of 24% year-on-year [16][32] - Full-year adjusted free cash flow guidance raised to $1.4 billion, with net sales guidance increased by $550 million to $10 billion [17][37] Business Line Data and Key Metrics Changes - Americas organic sales increased by 43%, driven by strength in colocation and hyperscale markets, with an adjusted operating margin of 24% [32] - APAC saw a 37% organic sales increase, with margin expansion to 10.6% [32] - EMEA's organic sales grew 7%, but the region is expected to be flat for the full year due to operational execution challenges and investments in fixed costs [34][35] Market Data and Key Metrics Changes - The backlog stands strong at $8.5 billion, up 21% year-on-year and 7% sequentially from Q1, supporting increased guidance for the year [18] - The regulatory environment is becoming more conducive to AI infrastructure investment, positively impacting customer discussions and pipeline [19][110] Company Strategy and Development Direction - The company maintains a strategy of driving growth through organic expansion and strategic acquisitions, with a robust M&A pipeline [10] - Recent acquisition of Great Lakes is expected to enhance the company's capabilities in high-end rack solutions and AI infrastructure [26] - Ongoing investments in R&D and capacity expansion are aimed at staying ahead of market demand and delivering innovative solutions [11][21] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's performance and future trajectory, highlighting the digital revolution and the fundamental role of data centers [10] - The company anticipates that operational inefficiencies and execution challenges will be resolved by year-end, leading to improved margins in 2026 [31][102] - The management is optimistic about the growth trajectory and market share gains, particularly in the context of AI infrastructure [40][130] Other Important Information - The company plans to change how it communicates orders, providing projected full-year orders rather than quarterly orders to better align with business operations [19] - The tariff situation remains dynamic, with ongoing countermeasures being executed to mitigate impacts [20][21] Q&A Session Summary Question: Margin expectations for 2026 - Management believes that 2026 could be a more normal year for margins, with a positive long-term trajectory expected [48] Question: Strength in backlog and order duration - Backlog duration remains similar to historical trends, with some customers seeking earlier deliveries, indicating a healthy demand [52][53] Question: Impact of tariffs and inflation on pricing - Management indicated that they have the commercial leverage to recover tariffs, despite delays in converting orders to sales [57] Question: Win rates and procurement changes among hyperscalers - Win rates remain stable, with no significant changes in procurement methods among hyperscalers [66][68] Question: Operational inefficiencies - Inefficiencies are attributed to tariff transitions and the need for new sources, compounded by significant growth [75][78] Question: Growth rates for thermal service contracts - Management expects strong growth in thermal service contracts, particularly related to liquid cooling systems [88] Question: Evolution of product offerings for data centers - The company is evolving its product footprint to accommodate higher voltage power distribution and increasing rack density [92][94] Question: Gross margin expectations - Management expects gross margins to improve in Q4 due to operational leverage and resolution of inefficiencies [102][121] Question: Capital allocation priorities post-acquisition - M&A will remain a key part of the capital allocation strategy, with a strong process and active pipeline in place [136]

Financial Data and Key Metrics Changes - Adjusted diluted earnings per share (EPS) was $0.95, up approximately 42% from Q2 2024, primarily driven by higher adjusted operating profit [9][27] - Organic sales grew 34% year-on-year, with strong performance in The Americas (up mid-40s) and APAC (up mid-30s), while EMEA delivered high single-digit growth [10][28] - Adjusted operating profit was $489 million, up 28% year-on-year, with an adjusted operating margin of 18.5%, approximately 110 basis points lower than the prior year due to tariffs [12][28] - Free cash flow for Q2 was $277 million, lower year-on-year, but adjusted free cash flow for the first half was $542 million, a robust growth of 24% year-on-year [13][30] - Full-year adjusted free cash flow guidance raised to $1.4 billion, with net sales guidance increased by $550 million to $10 billion [14][36] Business Line Data and Key Metrics Changes - Americas organic sales increased by 43%, driven by strength in colocation and hyperscale markets, with an adjusted operating margin of 24% [30] - APAC saw a 37% organic sales increase, with margin expansion to 10.6% [30] - EMEA's organic sales grew 7%, but are expected to be flat for the full year due to operational execution challenges and investments in fixed costs [31][32] Market Data and Key Metrics Changes - Q2 orders were up approximately 15% from Q2 2024 and up 11% sequentially from Q1 2025, with a trailing twelve-month organic orders growth of 11% [11][15] - Backlog stood at $8.5 billion, up 21% year-on-year and 7% sequentially from Q1, supporting increased guidance for the year [15][36] Company Strategy and Development Direction - The company continues to focus on organic expansion and strategic acquisitions to extend market leadership, with the recent acquisition of Great Lakes showcasing this approach [7][24] - Investments in R&D and capacity expansion are aimed at staying ahead of market demand and delivering innovative solutions [8][18] - The company is adapting to a changing regulatory environment that is becoming more conducive to AI infrastructure investment [16][104] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to capitalize on long-term opportunities in the digital revolution and data center market [6][8] - The operational challenges faced in Q2 are expected to be resolved by year-end, with a projected adjusted operating margin improvement in Q4 [29][96] - The company anticipates continued strong growth in 2025, raising guidance for adjusted diluted EPS and net sales [14][35] Other Important Information - The company plans to communicate projected full-year orders rather than quarterly orders starting from Q4 2025 to better align with business operations [16] - The tariff situation remains dynamic, with ongoing countermeasures being executed to mitigate impacts [17][18] Q&A Session Summary Question: Margin expectations for 2026 - Management believes that 2026 could be a more normal year for margins, with a positive long-term trajectory expected [44][45] Question: Strength in backlog and order duration - Backlog duration remains similar to historical trends, with some customers seeking earlier deliveries, indicating a healthy demand [48][50] Question: Tariffs and inflation recovery - The company has commercial leverage to recover tariffs, and relationships with hyperscalers are strong, allowing for co-engineering opportunities [54][56] Question: Win rates and procurement changes - Win rates remain stable, with no significant changes in how hyperscalers procure equipment [62][66] Question: Operational inefficiencies - Inefficiencies are attributed to tariff transitions and the need for increased capacity to meet growth demands, with expectations for normalization [74][78] Question: Growth rates for thermal service contracts - Liquid cooling is expected to drive growth in thermal service contracts, as the complexity of systems increases [83][85] Question: Current product footprint evolution - The company is evolving its product offerings to accommodate higher voltage power distribution and increasing rack density [88][90] Question: Free cash flow allocation - Free cash flow will be prioritized for strategic acquisitions, with a strong process in place for capital allocation [129][131] Question: Modular and prefab solutions trend - There is an acceleration in modular business, with prefabrication of technology being a key focus for the company [134][135]