Financial Data and Key Metrics Changes - Adjusted diluted EPS for Q3 reached $1.24, up approximately 63% year-over-year, driven by higher adjusted operating profit [8][14] - Q3 organic sales grew 28%, with the Americas up 43% and APAC up 21%, while EMEA declined 4% [8][14] - Adjusted operating profit was $596 million, up 43% year-on-year, with an adjusted operating margin of 22.3% [9][14] - Adjusted free cash flow of $462 million was up 38%, translating to approximately 95% free cash flow conversion [9][16] - The total backlog now stands at $9.5 billion, up about 30% year-on-year and 12% sequentially [10] Business Line Data and Key Metrics Changes - The Americas segment delivered strong organic growth of 43%, driven by accelerated AI demand across product lines [16] - APAC saw 21% organic growth, supported by AI infrastructure demand [16] - EMEA experienced a 4% decline in organic sales, but expectations for recovery are set for the second half of 2026 [17][21] Market Data and Key Metrics Changes - The overall market growth is accelerating, particularly in the colo cloud segment, which is the fastest-growing area [8] - The company reported a trailing 12-month organic orders growth of about 21%, with Q3 orders up 60% year-over-year [8][9] Company Strategy and Development Direction - The company is focused on maintaining technology leadership through R&D investments and operational excellence [4][6] - A restructuring program is being implemented in EMEA to prepare for future growth, with an expected annualized benefit of approximately $20 million starting in 2026 [17] - The company plans to accelerate investments in supply chain and services capabilities to meet evolving customer needs [22][24] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in a multi-year period of significant growth and value creation, driven by digital transformation and AI demand [6][22] - The company anticipates continued significant organic sales growth in 2026, supported by a substantial backlog and a healthy pipeline [22][24] - Management acknowledged the dynamic nature of tariffs but is optimistic about mitigating their impacts by Q1 2026 [22][23] Other Important Information - The company is committed to maintaining a robust free cash flow, providing strategic flexibility for future investments [23] - The engineering and R&D spending is expected to grow by over 20% in 2026 to stay ahead of industry demands [24] Q&A Session Summary Question: What is driving the order uptake and when will big announcements translate into orders? - Management indicated that strong market conditions, technology evolution, and reliable execution are driving order growth, but the timing of large customer announcements translating into orders can vary [29][31] Question: Can you provide more color on the services opportunity and its margin structure? - Management highlighted that the service business is a unique competitive advantage and is expected to catch up with product growth, generating recurring revenue [37][39] Question: What is the outlook for margins and the impact of tariffs? - Management confirmed that the long-term margin target of 25% by 2029 remains intact, with expectations for incremental margins in the 30%-35% range [46][50] Question: How is the company preparing for growth in EMEA? - Management expressed confidence in a sales acceleration in EMEA and noted that operational inefficiencies are being addressed to improve margins [94][95] Question: What is the competitive environment and how is the company responding to innovations? - Management emphasized the importance of innovation and maintaining a competitive edge through continuous investment in technology [110][111]

Financial Data and Key Metrics Changes - Adjusted diluted EPS for Q3 was $1.24, up approximately 63% year over year, driven by higher adjusted operating profit [8][14] - Q3 organic sales grew 28%, with the Americas up 43% and APAC up 21%, while EMEA declined 4% [8][14] - Adjusted operating profit reached $596 million, up 43% year on year, with a margin of 22.3% [9][14] - Adjusted free cash flow was $462 million, up 38%, translating to approximately 95% free cash flow conversion [16] Business Line Data and Key Metrics Changes - The Americas segment delivered strong organic growth of 43%, driven by accelerated AI demand [16][17] - APAC saw 21% organic growth, supported by AI infrastructure demand [16] - EMEA experienced a 4% decline in organic sales, but there are expectations for recovery in the second half of 2026 [17][18] Market Data and Key Metrics Changes - The overall market growth is accelerating, particularly in the colo cloud segment, which is the fastest-growing area [8] - The total backlog now stands at $9.5 billion, up about 30% year on year and 12% sequentially, indicating strong visibility into 2026 [10][21] Company Strategy and Development Direction - The company is focused on maintaining technology leadership through R&D investments and operational excellence [4][6] - A restructuring program is being implemented in EMEA to prepare for future growth, although acceleration may not occur until the second half of 2026 [10][17] - The company plans to accelerate investments in supply chain and services capabilities to meet evolving customer needs [22][24] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in a multi-year period of significant growth and value creation, driven by digital transformation and AI demand [6][22] - The company anticipates continued significant organic sales growth in 2026, supported by a substantial backlog and market indicators [22][24] - Tariffs are viewed as a dynamic input cost, with mitigation strategies in place to offset their impacts [11][22] Other Important Information - The company is raising full-year guidance for adjusted EPS, net sales, adjusted operating profit, and adjusted free cash flow [20][21] - The engineering and R&D spending is expected to grow by over 20% in 2026 to maintain competitive advantage [24] Q&A Session Summary Question: What is driving the order uptake and when will big announcements flow into orders for Vertiv? - Management indicated that strong market conditions, technology evolution, and reliable execution are driving order growth, but the timing of large customer announcements translating into orders can vary [29][31] Question: Can you provide more color on the services opportunity and its margin structure? - Management emphasized that the service business is a unique competitive advantage and is expected to catch up as product systems grow, with a strong focus on technology and customer experience [37][39] Question: What is the outlook for EMEA margins and the path back to mid-20s? - Management stated that a combination of sales acceleration and restructuring efforts will facilitate improved margins in EMEA, with expectations for significant improvement in Q4 [91][92] Question: How does the company view the competitive environment and recent innovations? - Management expressed confidence in their innovation capabilities and the importance of staying ahead in the market, viewing recent innovations as opportunities rather than threats [108]

Financial Data and Key Metrics Changes - Adjusted diluted EPS for Q3 2025 was $1.24, up approximately 63% year over year, driven by higher adjusted operating profit [7][13] - Q3 organic sales grew 28%, with the Americas up 43% and APAC up 21%, while EMEA declined 4% [7][13] - Adjusted operating profit reached $596 million, up 43% year on year, with a margin of 22.3% [9][13] - Adjusted free cash flow was $462 million, up 38%, reflecting strong operating performance [9][16] - Total backlog increased to $9.5 billion, up about 30% year on year and 12% sequentially [10][13] Business Line Data and Key Metrics Changes - The Americas segment delivered strong organic growth of 43%, driven by accelerated AI demand across product lines [16] - APAC saw 21% organic growth, supported by AI infrastructure demand [16] - EMEA experienced a 4% decline in organic sales, but expectations for recovery are set for the second half of 2026 [17][19] Market Data and Key Metrics Changes - The overall market growth is accelerating, particularly in the colo cloud segment, which is the fastest-growing area [8] - The company reported a trailing 12-month organic orders growth of about 21%, with Q3 orders up 60% year over year [7][9] Company Strategy and Development Direction - The company is focused on maintaining technology leadership through consistent R&D investments and operational excellence [4][5] - A restructuring program is being implemented in EMEA to prepare for future growth, with an expected annualized benefit of approximately $20 million starting in 2026 [17] - The company plans to accelerate investments in supply chain and services capabilities to meet evolving customer needs [21][24] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in a multi-year period of significant growth and value creation, driven by digital transformation and AI demand [5][21] - The company anticipates continued organic sales growth in 2026, supported by a substantial backlog and a healthy pipeline [21][24] - Tariffs are viewed as a dynamic input cost, with mitigation strategies in place to offset their impacts [11][22] Other Important Information - The company is raising its full-year guidance for adjusted EPS, net sales, adjusted operating profit, and adjusted free cash flow [19][20] - The adjusted operating margin target for 2029 remains at 25%, with expectations for incremental margins in the 30% to 35% range [19][63] Q&A Session Summary Question: What is driving the order uptake and when will big announcements flow into orders for Vertiv? - Management indicated that order growth is driven by a strong market and technology evolution, with large players expanding their backlogs [28][30] Question: Can you provide more color on the services opportunity and its margin structure? - Management emphasized the service business as a unique competitive advantage, generating recurring revenue, and expected to accelerate as product systems grow [34][36] Question: What is the outlook for EMEA margins and the path back to mid-20s? - Management stated that a combination of sales acceleration and restructuring efforts would facilitate improved operating leverage and margins in EMEA [66] Question: How does the competitive environment affect Vertiv's market position? - Management expressed confidence in their innovation-driven approach, stating that they are at the forefront of industry advancements and maintain strong competitive advantages [82][84]

Financial Data and Key Metrics Changes - Adjusted diluted EPS for Q3 was $1.24, up approximately 63% year over year, driven by higher adjusted operating profit [9][21] - Q3 organic sales grew 28%, with the Americas up 43% and APAC up 21%, while EMEA declined 4% [10][21] - Adjusted operating profit reached $596 million, up 43% year on year, with a margin of 22.3% [12][22] - Adjusted free cash flow was $462 million, up 38%, translating to approximately 95% free cash flow conversion [12][23] - The company raised full-year guidance for adjusted EPS, net sales, adjusted operating profit, and adjusted free cash flow [12][28] Business Line Data and Key Metrics Changes - The Americas delivered strong organic growth of 43%, driven by accelerated AI demand across product lines [24] - APAC saw 21% organic growth, benefiting from AI infrastructure [24] - EMEA experienced a 4% decline in organic sales, but sales were higher than expectations, indicating potential for future growth [25] Market Data and Key Metrics Changes - The overall market growth is accelerating, particularly in the ColoCloud segment, which is the fastest-growing segment [11] - The trailing twelve-month organic orders growth was about 21%, with Q3 orders up 60% year over year and 20% sequentially [11][13] - Total backlog now stands at $9.5 billion, up about 30% year on year and 12% sequentially, providing strong visibility into 2026 [14] Company Strategy and Development Direction - The company is focused on maintaining technology leadership through disciplined investment, operational excellence, and R&D expansion [6][7] - Plans to accelerate investments in supply chain and services capabilities to meet evolving customer needs [30][31] - The company is committed to its November 2024 Investor Day margin targets, with a robust free cash flow providing strategic flexibility [30] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in a multiyear period of significant growth and value creation, driven by digital transformation and increasing data demands [8][30] - The company is addressing operational and supply chain challenges experienced in Q2 and is optimistic about future performance [16][22] - Management noted that tariffs are being viewed as an input cost, with comprehensive mitigation actions in place [15][30] Other Important Information - The company is implementing regional restructuring programs in EMEA to prepare for future growth, although acceleration may not occur until the second half of 2026 [15][25] - The company is scaling service capacity in parallel with manufacturing to meet demand [19][87] Q&A Session Summary Question: What is driving the order uptick and the timeframe for big announcements to flow into orders? - Management indicated that the order growth is driven by a combination of a strong market and technology evolution, with large players expanding their backlogs [41][42] Question: Can you provide more color on the services opportunity and its margin structure? - Management emphasized the service business as a unique competitive advantage, noting that while it typically lags behind product growth, it is expected to accelerate [50][52] Question: What is the outlook for margins and the impact of tariffs? - Management confirmed that the path to the long-term margin target remains intact, with expectations for incrementals in the 30% to 35% range [62][64] Question: What is the confidence in the EMEA market recovery? - Management expressed cautious optimism about EMEA, citing a need for capacity and encouraging signs of pipeline growth [75][77] Question: How is the company scaling up its support function to keep up with top-line growth? - Management reported an increase in headcount for field engineers, with a focus on aligning service capacity with product demand [85][87] Question: How does the company view the competitive environment and recent innovations? - Management welcomed the innovation intensity in the industry, asserting that it drives their competitive advantage and reinforces their market position [130][132]

Q3 2025 Performance Highlights - Adjusted diluted earnings per share (EPS) for Q3 2025 increased by approximately 63% compared to Q3 2024, primarily driven by higher adjusted operating profit resulting from a 28% increase in organic net sales and benefits from lower income taxes[6] - Organic net sales in Q3 2025 increased by 28% compared to Q3 2024, driven by strong performance in the Americas (up 43%) and APAC (up 21%), while EMEA experienced a 4% decline[6] - The book-to-bill ratio for Q3 2025 was approximately 1.4x, with trailing twelve-month (TTM) organic orders growth of approximately 21%[7] - Adjusted operating margin for Q3 2025 reached 22.3%, exceeding both guidance and the prior year's figures, contributing to an adjusted operating profit of $596 million, a 43% increase from the previous year's quarter[7] Full Year 2025 Guidance - The company raised its full-year adjusted free cash flow guidance to $1,500 million[8] - The company raised its full-year adjusted diluted EPS guidance to $4.10, a 44% increase from 2024, and adjusted operating profit guidance to $2,060 million, a 33% increase from 2024, primarily driven by a $2.2 billion increase in projected net sales, a 27% increase from 2024[9] - The company expects full-year 2025 adjusted operating margin to be approximately 20.2%, about 80 bps higher than full-year 2024[9] Orders and Backlog - Strong backlog at the end of the third quarter of $9.5 billion, up approximately $2.2 billion or approximately 30% versus the same prior year period and up 12% versus the end of the second quarter 2025[15] - Third quarter orders up approximately 60% from third quarter 2024 and up approximately 20% sequentially[15] Regional Performance - Americas net sales increased by 42.9% to $1,712.4 million in Q3 2025 from $1,198.6 million in Q3 2024, with organic growth of 43%[46] - APAC net sales increased by 20.2% to $519.8 million in Q3 2025 from $432.4 million in Q3 2024, with organic growth of 21.3%[46] - EMEA net sales increased by 0.2% to $443.6 million in Q3 2025 from $442.5 million in Q3 2024, but experienced a 4% decline in organic net sales[46]

Core Insights - The discussion centers around the significant investments in technology and infrastructure, particularly in the context of demand outpacing supply, with a focus on companies that are positioned to benefit from this trend [2][6]. Investment Strategy - The investment strategy suggests focusing on companies with a market cap of $500 billion or less, as they are expected to have substantial growth potential [3][4]. - Specific companies highlighted include Celestica (CLS) and Verdiff (VRT), which are involved in hardware manufacturing and data center operations, respectively [4][5]. Market Valuation and Trends - Current market valuations have increased significantly, driven by excitement around AI, but high valuations do not necessarily indicate an impending market sell-off [8][9]. - The expectation for slower returns in the remainder of the year is noted, with a target for the S&P 500 set at 6,700, indicating limited upside potential [11][12]. Economic Factors - The importance of both the AI narrative and Federal Reserve policies is emphasized, with the AI trade being viewed as more critical for market direction [12][13]. - Concerns are raised about the Fed's potential interest rate cuts in an environment of persistent core inflation above 3%, which is atypical and could pose risks [14].

Core Insights - The AI revolution is driving significant demand for semiconductor technologies, but the long-term winners may be companies providing essential infrastructure solutions, such as cooling systems for data centers [1][3] - Johnson Controls International (JCI) is strategically positioned to capitalize on this trend by focusing on the data center market and addressing the challenges of energy consumption and heat management [3][4] Company Strategy - Johnson Controls has undergone a corporate transformation, selling its Residential and Light Commercial HVAC business for approximately $5.0 billion to focus on complex commercial building solutions [4] - The company plans to use the proceeds from the sale for a $5.0 billion accelerated share repurchase program, part of a broader capital return strategy with about $9.8 billion available for repurchase as of June 30, 2025 [5][6] Financial Performance - Johnson Controls reported a record backlog of $14.6 billion in its third quarter 2025 earnings report, indicating strong demand and revenue visibility [9] - The company exceeded analyst estimates with an adjusted EPS of $1.05 and raised its full-year guidance for adjusted EPS to a range of $3.65-$3.68, reflecting a year-over-year increase of 14-15% [11] Technological Advancements - JCI launched the Silent-Aire Coolant Distribution Unit (CDU) platform for scalable liquid cooling, addressing the heat loads of AI racks [10] - The company made a multi-million dollar investment in Accelsius, focusing on two-phase, direct-to-chip cooling technology essential for future AI processors [10] Leadership Impact - The appointment of CEO Joakim Weidemanis has led to a new business system focused on operational efficiency, aiming to cut manufacturing lead times for key data center products [7][8] - This operational improvement is expected to provide a competitive advantage in a rapidly growing market [8] Market Position - Johnson Controls offers a more grounded investment opportunity compared to AI chipmakers, with a forward P/E ratio under 30, reflecting strong fundamentals [12] - The company's strategic focus on infrastructure solutions positions it as a critical enabler of the AI revolution, appealing to investors seeking stability in the sector [13]

Core Insights - The AI infrastructure sector is experiencing significant growth, driven by high demand for productivity and efficiency gains from AI technology [1] - Major players like Nvidia and Palantir have seen substantial stock price increases, with Nvidia up 62% and Palantir's stock doubling in the past six months [2] - Vertiv Holdings has outperformed these larger companies with a remarkable 152% stock price increase in the same timeframe, indicating strong market interest [3] Company Performance - Vertiv specializes in power management systems, thermal management systems, and data center solutions, which are in high demand due to the increasing complexity and power requirements of AI workloads [4] - The company has formed partnerships, such as with CoreWeave, to enhance its offerings and capitalize on the growing AI data center market [5] - Vertiv's revenue for the first half of 2025 rose by 30% year-over-year to $4.67 billion, with a projected organic sales growth of 24% for the year [7] Strategic Moves - Vertiv's acquisition of Great Lakes for $200 million aims to strengthen its position in the AI data center market, addressing the rapid increase in order demand [8] - The company's book-to-bill ratio of 1.2 in Q2 indicates strong order growth, with over $3 billion in orders received, prompting an optimistic full-year outlook [9] Market Trends - AI-driven power demand in data centers is expected to surge by 165% by 2030, creating a significant market opportunity for Vertiv's products [10] - Data center capacity could increase fourfold by 2030, leading to a potential shortfall in meeting AI-related demand, further boosting the need for Vertiv's solutions [11] Valuation Metrics - Despite a significant stock price increase, Vertiv is trading at 34 times forward earnings, which is lower than the average for the U.S. technology sector [14] - The company's price/earnings-to-growth (PEG) ratio stands at 0.91, indicating that the stock is undervalued relative to its earnings growth potential [15]

Core Insights - The company has developed a Data Center Building Block Solution (DCBPSBS) that significantly reduces the time required to build data centers, potentially cutting the time by 30% to 50% compared to traditional methods [2][9] - The solution not only accelerates the construction process but also lowers costs and power consumption, optimizing overall performance for customers [2][6] - The company is expanding its manufacturing capacity in the U.S. to meet increasing customer demand, indicating that current capacity is nearly fully booked [5][6] Product Offerings - The company provides a comprehensive range of products for data centers, including GPU racks, liquid cooling systems, and all necessary plumbing and electrical systems, allowing for a more integrated and efficient build process [4][9] - The building block solution is designed to be plug-and-play, enabling customers to quickly set up their data centers with minimal hassle [9] Customer Engagement - The company is currently working with major clients, including Google, Microsoft, and Oracle, to implement its building block solutions [10][15] - There is a strong focus on collaboration with customers to ensure that the solutions meet their specific needs and can be deployed rapidly [9][14] Market Trends - The demand for data centers is expected to continue growing, driven by advancements in AI and the increasing need for efficient computing solutions [17] - Recent large-scale deals in the tech industry, particularly related to AI, highlight the growing importance of robust data center infrastructure [11][12]

Core Insights - Flex has launched the industry's first globally manufactured, fully integrated platform for gigawatt data centers, specifically designed to support AI and HPC, enabling operators to deploy infrastructure up to 30% faster [1][5]. Group 1: Platform Features - The new platform integrates power, cooling, compute, and services into pre-engineered, modular designs, addressing the challenges of rising power, heat, and scale in data centers [2][4]. - Flex's platform allows for faster deployment, reducing time-to-market and accelerating revenue recognition [6]. - The architecture is flexible and open, allowing for adaptability to customer-preferred OEMs, which enhances deployment predictability [6]. Group 2: Product Innovations - Key innovations include high-density, liquid-cooled IT racks designed to support +/-400V and facilitate the transition to 800VDC power architectures [6]. - The Capacitive Energy Storage System is the first UL 1973-certified system aimed at reducing electrical disturbances from AI workloads [6]. - Modular rack-level coolant distribution units (CDUs) provide scalable capacity of up to 1.8 MW, supporting evolving AI, HPC, and hyperscale workloads [6]. Group 3: Operational Efficiency - The platform leverages Flex's global manufacturing and supply chain network, ensuring unmatched scalability, resilience, and deployment speed [5]. - Prefabricated power pods and skids simplify installation and reduce onsite labor, cutting construction time from over 12 months to just 6-12 months [6]. - The integrated hardware and end-to-end support enhance reliability, sustainability, and speed to scale for customers [7].