Vertiv Q2 Earnings Call Highlights

Vertiv delivered strong second-quarter results: Sales rose 24% to $3.274 billion, adjusted operating profit increased 51% to $738 million, and adjusted EPS climbed 60% to $1.52, exceeding guidance. The company raised its 2026 outlook to $14 billion in sales, $6.70 in adjusted EPS, $3.325 billion in adjusted operating profit and $2.5 billion in free cash flow, citing continued data-center infrastructure demand. Vertiv reported substantial free-cash-flow growth and a net cash position, while advancing 800V DC power architectures and expanding thermal-management capabilities through its ThermoKey and Strategic Thermal Labs acquisitions. Vertiv raised its full-year 2026 outlook after reporting second-quarter growth in sales, profit and cash flow, supported by demand for data center infrastructure across the Americas and Asia-Pacific. Chief Executive Officer Gio Albertazzi said second-quarter net sales increased 24% from a year earlier to $3.274 billion. Organic sales rose 18%, while acquisitions added 5 percentage points of growth and favorable foreign exchange added 1 percentage point. Adjusted operating profit rose 51% year over year to $738 million, while adjusted operating margin expanded 410 basis points to 22.6%. Adjusted diluted earnings per share increased 60% to $1.52, exceeding the company’s guidance by $0.12, according to Chief Financial Officer Craig Chamberlin. “Strong quarter, EPS, margin, profit, and cash convincingly strong,” Albertazzi said, adding that the company was confident in second-half execution and its backlog. Vertiv generated $925 million in adjusted free cash flow during the quarter, a 234% increase from the prior-year period. Chamberlin attributed the improvement to higher operating profit, working-capital performance, project milestone collections and lower cash interest expense, partly offset by higher cash taxes and capital expenditures. The company ended the quarter with net leverage of negative 0.1 times, or a net cash position. Deferred revenue increased as customers made initial project payments and milestone payments on large infrastructure projects, Chamberlin said. Americas: Net sales increased 29% to $2.071 billion, including 21% organic growth. The region’s adjusted operating margin expanded 360 basis points. Asia-Pacific: Net sales rose 29% to $720 million, including 26% organic growth. Adjusted operating margin increased 270 basis points. EMEA: Net sales increased 2% to $484 million, though organic sales declined 2%. Adjusted operating margin expanded 380 basis points. Albertazzi said EMEA market conditions were strengthening and that the company expects the region to return to organic sales growth in the second half of 2026. Chamberlin said the second-quarter margin comparison also benefited from the prior-year impact of execution challenges in Ireland. Management said second-quarter revenue included minor timing shifts related primarily to the execution of large, multi-phase projects and temporary supply-chain dynamics. The effects were reflected principally in the Americas, and Vertiv expects the associated delays to resolve during the second half. Albertazzi described the issue as a matter of increasing complexity rather than a disruption. Large deployments can involve multiple Vertiv factories, internal supply chains and external suppliers, he said. The company is gaining experience in coordinating these projects and has built prudence into its second-half assumptions. “The complexity doesn’t go