Vertiv (NYSE:VRT) FY Conference Summary Company Overview - **Company**: Vertiv - **Date**: September 10, 2025 - **Key Speakers**: CEO Giordano Albertazzi, CFO David Fallon Industry Insights - **Market Demand**: Strong demand in the data center market with a reported **35% organic growth** last quarter and a **$1.2 book-to-bill ratio** [3][25] - **Pipeline Strength**: The strength of the pipeline is a critical indicator of future performance, defined as active commercial opportunities with quotes [5][6] - **Liquid Cooling**: The industry is shifting towards liquid cooling, which is expected to represent about **one-third of the total Total Addressable Market (TAM)** for data center cooling [9][10] - **CapEx Structure**: The growth in IT spending is increasing, but the physical infrastructure segment remains strong, indicating a healthy TAM for Vertiv [11][12] Key Company Strategies - **Focus on White Space**: Vertiv is increasing its presence in the white space of data centers, which is becoming a fertile ground for growth due to rising complexity in power and cooling distribution [12][14] - **Future-Proofing Infrastructure**: The company is collaborating with key players like NVIDIA to design future-proof data center infrastructures [16][19] - **Prefabrication Solutions**: Introduction of prefabricated solutions to significantly reduce fit-out time in data centers, enhancing time to revenue for customers [13][14] Growth Constraints and Capacity - **Growth Moderating Factors**: Power availability is a limiting factor in some regions, but there is no expectation of a cliff in demand. The construction nature of the data center industry also limits speed [25][26] - **Capacity Management**: Vertiv is expanding manufacturing capacity and ensuring service capacity grows in line with manufacturing to maintain operational leverage [27][29] Financial Performance - **Margins**: Gross margins faced pressure due to tariffs and operational challenges, but a recovery is projected with operating margins expected to reach **20% in Q3** and **over 23% in Q4** [33][34] - **Pricing Strategy**: The company is actively managing pricing to offset tariff impacts and is confident in maintaining a price-cost positive position moving forward [35][36] Regional Market Insights - **North America**: Strong growth with a **40% increase** in physical shipments [40] - **Europe**: Slow growth attributed to regulatory challenges, but strong pipelines and low vacancy rates in data centers suggest potential for future growth [42][43] - **Asia-Pacific**: Generally positive outlook, with specific mentions of growth opportunities in India and China [43] Conclusion - Vertiv is well-positioned in the data center market with strong growth indicators, a focus on innovative solutions, and strategic partnerships. The company is navigating challenges related to tariffs and capacity while maintaining a positive outlook for future performance.