Operator: Good morning. My name is Lucas Penner, and I will be your conference operator today. At this time, I would like to welcome everyone to Vertiv's Second Quarter 26 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. 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 Investor Relations.

Lynne Maxeiner: Great. Thank you, Lucas. Good morning, and welcome to Vertiv's Second Quarter 26 Earnings Conference Call. Joining me today are Vertiv's Executive Chairman, David Cote Chief Executive Officer, Giordano Albertazzi and Chief Financial Officer, Craig Chamberlin. We have 1 hour for the call today, During the Q and A portion of the call, please be mindful of others in the queue and limit yourself to 1 And if you have a follow-up question, please rejoin the queue. Before we begin, I would like to point out that during the course of this call, we will make forward-looking statements regarding future events including the future financial and operating performance of Vertiv. Forward looking statements are subject to material risks and uncertainties, that could cause actual results to differ materially from those in the forward-looking statements. We refer you to the cautionary language included in today's earnings release and you can learn more about these risks in our annual and quarterly reports and other filings made with the SEC. Any forward-looking statements that we make today are based on a assumptions that we believe to be reasonable as of this date. Undertake no obligation to update these statements as a result of new information or future events. During this call, we will also present both GAAP and non GAAP financial measures, Our GAAP results and GAAP to non GAAP reconciliations can be found in our earnings press release and in the investor slide deck found on our website at investors.vertiv.com. With that, I will turn the call over to Executive Chairman, David Cote.

David Cote: I am incredibly pleased by our second quarter performance and outlook for the rest of the year and beyond. We have a great position in a good industry and continue to execute very well. Gio and his team stay at the forefront of technology with organic investments and acquisitions. The industry outlook is incredibly good because the digital age has decades to go. Our outlook is incredibly good and deservedly so. As we provide the picks and shovels for the digital age. The seed planning Giordano and his team have been doing continues to pay off and will do so even more in the future as the benefits from our technology investments unfold over time. And with all that goodness, we still have opportunity to further improve. As Gio likes to say, we are still far from our full potential. The future is so bright we have to wear shades. I love it. With that, I now turn it over to Giordano Albertazzi.

Giordano Albertazzi: Well, thank you, David, and, welcome, everyone. Let us go to slide 3. A strong quarter EPS, margin, profit and cash convincingly strong. Continuing on a trajectory of strong sales growth even with some timing elements. Pleased with what we see in July and full confidence in h 2 execution and backlog. As a result, we have raised our full year outlook Net sales were up 24% versus Q2 25 driven by continued strength in The Americas which grew 29%, and APAC also up 29%. Importantly, EMEA returned to positive net sales growth with a 2% year-on-year increase, On an organic basis, net sales grew 18% with additional 5% from acquisitions and 1% from favorable currency. Adjusted operating margin came in at 22.6%, exceeding our guidance and growing 410 basis points year-on-year. The strong margin performance translated into adjusted operating profit of $738 million up 51% from a year ago. Adjusted diluted EPS were $1.52 or 60% up from second quarter 25 driven primarily by high volume and continued operational productivity. Adjusted free cash flow came in at 925 million a very strong 234% year on year growth. Driven by higher operating profit and working capital efficiency. Free cash flow conversion exceeded 150% in the quarter. We are raising our full year guidance across all key metrics. Net sales raised to $14 billion, a $250 million increase from previous guidance, up 37% year-on-year. Adjusted diluted EPS now at $6.70. A 60% increase from 2025. AOP now expected almost 60% up year-on-year. And adjusted free cash flow expected at $2.5 billion and we achieved a net cash position at the end of Q2. Let's now move to slide 4. And let's start with the market environment. On the left. Our global pipeline momentum remains very strong. And we expect another year of robust orders growth. Demand signals are clear and broad based. Regionally, let's start with The Americas where market continues to be strong. Pipeline is actually accelerating. Corroborating the long term growth trajectory of our business. EMEA's momentum is further strengthening. This reinforces our confidence in the acceleration for the second half of the year. APAC showed broad based strength pipeline expansion and favorable market conditions. This supports continued growth across the region. Pricing continues to be favorable We expect positive price cost in 2026, including the current impact of tariffs and countermeasures. Now to the right side of this slide, Q2 revenue showed strong growth year-on-year, quarter-to-quarter. We are executing on further acceleration in Q3 and Q4, on strong backlog. Additional capacity is online globally. Examples are Johor in Malaysia, 5 large plants expansions in The Americas, chiller capacity increases in EMEA, and then more. During investor day, you saw that this expansion is rapid and broad based. At speed but always in a very disciplined fashion. We are delivering data center infrastructure solution at an increasing scale and level of complexity, that is exactly where we want to be. We experienced some minor timing shifts in Q2 revenue, primarily driven by multiphase project execution and temporary supply chain dynamics. But the demand is there and the trajectory is strong. Keep in mind, there are increasingly large projects underway, Think Smartron and think even bigger with 1 core. These come with significant interdependencies, a lot of coordination, a lot of rapid learning, I like the pace of our progress. And we get stronger every day. On capital expenditures, we now expect to be at the high end of our range 4% of 2026 sales, As we further expand the global capabilities and capacity going into 2027. We continue to invest for the long term, in a disciplined manner in future power architecture, advanced thermal systems, services, converged infrastructure. These are the building blocks that enable the next-generation AI data centers and factories and we intend to continue to lead the industry. Let's now go to slide 5. I am sure many of you will recall our CTO Scott Armul's power architecture presentation at our Investor Day in May. I want to reiterate and build on what, we shared there. Multiple partner architectures will coexist in the future. Virtu supports each 1 of them through a complete orchestrated powertrain. On the left side of the slide, you see the different architectures. Our AC foundation with as an example, Vertiv Trinergy and energy Core battery storage system and the rest of the Vertiv powertrain, of course. This architecture is broadly deployed, growing, and will continue to be used by many categories of customers. The next architecture serving even higher density has a medium voltage AC source that feeds low voltage AC to deliver 800V DC at rack and port level. Here you see new VERTIV technologies like medium voltage pass UPS, and Vertiv 800 volt DC sidecars. This is under customer validation in 2026 with deployment planned in 2027. Then the 800V DC architecture at data hall level. Here, Vertiv solutions will include MV DC UPS and solid state transformer. To cover the multiple ways to address the end to end powertrain. Where active in the development with plan 2027 customer validation supporting 2028 deployment. As stated, rather than transitioning to a single architecture, the market is expected to leverage both AC and DC solutions as power requirements continue to evolve for years to come. Now the right side of the slide. This is an example of deploying multiple power architectures at sites, sites evolve and expand. I am thrilled to highlight our collaboration with NVIDIA and VisionBay AI. Foxconn's business unit focused on AI supercomputing. At their site in Kaohsiang, Taiwan. For the initial phase, of this site, VisionBay AI awarded the power thermal and services business to Vertiv for what is Taiwan's first AI data center featuring NVIDIA GB 300. On top of this, we are collaborating for the world's first AI data center adopting 800V DC, well, DC architectures at the rack and pod level featuring NVIDIA 'Vera Rubin'. This is an example of early customer validation of our roadmap and supports the broad power architecture evolution. This is real. This has happened. In a nutshell, as a number of viable power architectures expand and AC and DC coexist to deliver on the 800V DC, Vertiv's content opportunity per megawatt expands. And we are leading this transition. Let us now go to page 6. And let's continue on the topic of technology. I want to spend a moment talking about Vertiv's data center cooling architectures and our unique fluid management services. When the 2 are coupled and combined, we ensure our customers to use nearly zero water. As they scale, many customers have been and are adopting closed loop cooling architectures. As they optimize power and water use. A closed loop cooling architecture is just that. Closed or sealed with water recirculating. Typically, it does not require additional water after the fill at start up. Vertiv's end to end thermal chain technologies for both the primary and secondary cooling loops Examples are Vertiv Liebert Trim Cooler, Vertiv Liebert CoolChip CDUs, to name a few, fully enable this approach. This architecture enables a data center to run on no water consumption. Now let's take the focus on water use a step further. Let's also address the initial system fill. And this is where PurgeRite's near-zero comes into the equation. As part of our unique fluid management technology and services, our PerchRite near zero utilizes a closed loop recirculation system to capture, treat, and reuse water during start up. This reduces the water normally used in the process by up to 90% during the startup of a data center. For our customers, this means a faster and more cost effective deployment and commissioning of liquid cooling system and chilled water circuits. This means a significantly less waste and less disruption on-site. More broadly, this expands vertex differentiation thermal management services, and we are managing fluid performance from the start and throughout decades of operational life. PurgeRite near-zero is scaling through our existing service network a capability we believe no 1 else can replicate at our scale. And with that, over to you, Craig Chamberlin.

Craig Chamberlin: Thanks, Giordano. Turn to slide 7. Let's walk through our second quarter financial results in more detail. On adjusted diluted EPS, we delivered $1.52 that is up $0.57 or 60% versus prior year. And $0.12 above guidance. The year over year improvement was driven by $0.58 from higher adjusted after tax adjusted operating profit which was driven primarily from higher sales volume and increased profitability. Looking at net sales, we delivered $3.274 billion in the quarter, that is up $636 million or 24% versus prior year. Organic sales growth was 18%, with 5% additional growth contribution from acquisitions and an additional 1% growth contribution from favorable foreign exchange. By regions, Americas grew 21% organically APAC grew 26% organically, and EMEA was down 2% organically. Moving to adjusted operating profit. We delivered $738 million that is up $249 million or 51% versus prior year, and $28 million above the midpoint of our guidance. Adjusted operating margin of 22.6% expanded 410 basis points year-over-year and came in 140 basis points above guidance. The margin expansion was driven by strong operational execution, continued productivity gains, and favorable price cost execution, partially offset by tariff impacts. We are also continuing to invest in capacity and engineering R&D to support future business growth. To round out the quarter, adjusted free cash flow momentum was outstanding. With the quarter ending at $925 million $648 million or 234% from prior year. The improvement was driven by higher adjusted operating profit, strong working capital performance, including project milestone collections, is inclusive of initial advanced payments, and lower cash interest. These items were partially offset by higher cash taxes and higher spending on CapEx investments. At our quarter end, our net leverage is at negative 0.1x, providing even more flexibility. Just a quick note on our deferred revenue. You will see an increase in the quarter, and that is driven by project advanced payments and ongoing milestone collection. We are very happy with our execution on project milestone development, and what you are seeing in deferred revenue is a combination of payments at project initiation, order placement, and ongoing project milestone execution. Moving to slide 8, let's look at segment performance. In Americas, net sales were $2.071 billion up 29% with organic growth of 21%. Organic sales growth remained strong in the quarter. As Gio mentioned earlier, some minor timing shifts in Q2 revenue. These shifts were reflected in The Americas revenue numbers and were primarily driven by multiphase project execution and temporary supply chain congestion. However, we expect the associated timing delay to resolve in the second half of 2026. Adjusted operating profit was $571 million driving 360 basis points in adjusted operating margin percentage. The margin expansion was delivered by ongoing commercial excellence and strong operational execution. Moving to APAC, the region had strong results. With net sales of $720 million up 29% with organic growth of 26%. We continue to see strong end market demand and the commercial execution across the team gives us confidence going forward. Adjusted operating margin percentage grew 270 basis points in the quarter, due to strong operating leverage realized in the region. In EMEA, net sales were $484 million up 2%, with organic sales down 2%. We continue to see a strengthening market, which supports our position for the region to return to organic sales growth in the second half of 2026. EMEA also saw strong growth in adjusted operating margin percent, up 380 basis points year-on-year. The team continues to drive improved operational execution, which came through in this strong margin performance. Turning to slide 9. Let's walk through our third-quarter 2026 guidance. For 3Q, we are projecting adjusted diluted EPS of $1.80 at the midpoint that represents 45% growth versus prior year. That year over year improvement is driven by continued volume growth and ongoing margin expansion. On net sales, we expect $3.75 billion at the midpoint that is up $1.074 billion or 40% versus prior year. Organic sales growth is expected to be up approximately 35% with an additional 5% from acquisitions. By region, we expect Americas organic growth in the high 30s APAC in the high 30s, and EMEA in the mid- to high teens. Adjusted operating profit is expected to be $918 million at the midpoint, that is up $322 million or 54% versus prior year. Adjusted operating margin is expected to be 24.5% at the midpoint, that is up 220 basis points year-over-year and is driven by strong organic sales growth continued operational leverage, and ongoing productivity realization. Let's turn to slide 10. For our updated full-year 2026 guidance. We are raising our outlook across all key metrics. Starting with adjusted diluted EPS, we now expect $6.70 at the midpoint, that is up $2.50 or 60% versus 2025. The updated range is now at $6.65 to $6.75. This is an increase of $0.35 at the midpoint versus prior guidance. The year over year improvement is driven by continued volume growth and ongoing margin expansion. For net sales, we now expect $14 billion at the midpoint. that is up $3.77 billion or 37% versus 2025. This represents an increase of $250 million versus our prior guidance. Organic sales growth is expected to be at 31%, with 5% growth from acquisitions and 1% growth from favorable currency. By region, we expect Americas organic growth in the high thirties, APAC in the low 30s, and EMEA in the low single digits. Moving to adjusted operating profit, we now expect $3.325 billion at the midpoint, that is up approximately $1.235 billion or 59% versus 2025. This is an increase of $125 million versus our prior guidance. Adjusted operating margin is expected to be 23.8% at the midpoint, expanding approximately 340 basis points from 2025 and up 50 basis points versus our prior guidance. The margin expansion is driven by continued operational leverage and positive price cost execution which is offsetting some tariff headwinds. Finally, adjusted free cash flow is expected to be $2.5 billion at the midpoint. that is up $1.613 billion or 182% versus 2025. The year over year improvement is driven by higher adjusted operating profit and lower cash interest, partially offset by higher cash taxes and higher investments in CapEx. Capital expenditures. We are delivering strong results. Raising our outlooks, and executing with discipline. Based on our performance and momentum, we are very confident in our ability to continue driving results throughout the balance of the With that, I will send it back to you, Giordano Albertazzi.

Giordano Albertazzi: Well, thank you. Thank you, thank you, Craig, let's go to slide 11. To wrap up. Strong Q2 performance. We are delivering and the team continues to raise the bar on what is possible. We raised our full year 2026 guidance across all key metrics. The momentum is strong. it is broad based and it is accelerating. We continue to invest with discipline. Not just for the 45% growth we are expecting in the second half, but for the years beyond. Capacity innovation services. On m and a, we closed the Thermo King acquisition strengthening our heat-rejection capabilities. We closed the acquisition of Thermal-Lube in April, we are adding server-side liquid cooling and cold plate expertise for high density thermal management. Together, these 2 are positions expand what we offer across the full thermal spectrum. From heat rejection to direct-to-chip cooling. Allow me 2 additional spotlights. At the naval Postgraduate School in partnership with NVIDIA, we delivered a fully engineered packaged rack, power, and cooling system into an existing on prem facility. This includes liquid cooling integration, commissioning, and deployment and deployment support. This is a repeatable at scale reference architecture for NVIDIA GB 300, we call this Vertiv smart IT solution. The project establish an advanced locally operated AI environment for education, research, engineering, modeling, and simulation. This also shows how an existing facility can rapidly be transformed to support next-generation accelerated computing. Easy for enterprise and sovereign customers to adopt. In EMEA, Germany, our collaboration with Dataforce is a great example of the momentum we are seeing in that region. Vertiv delivers a complete powertrain, including switchgear, UPS, and battery systems, etcetera, and a thermal chain like chilled-water units, free cooling chillers, and our industry leading services it all will enable Dataforce's new Frankfurt site. Is exactly the kind of optimized end to end system deployment where Vertiv excels. To conclude, I am more confident in our trajectory today than I have ever been. We are executing, we are investing ahead of the curve, and increasingly, our customers are asking us to help them architect their most complex infrastructures. that is the role we have earned. And it is the role we intend to further strengthen. With that, let's go to the Q&A.

Operator: We will now begin the question and answer session. In order to ask a question, press star, then the number 1 on your telephone keypad. In the interest of time, please limit yourself to 1 question. And if you have a follow-up question, please rejoin the queue. We will pause for just a moment to compile the Q&A. The first question comes from the line of Scott Davis from Melius Research. Scott, please go ahead. A reminder to unmute locally.

Scott Davis: Oh, yes. Thanks for the reminder, operator. I have not figured out my phone yet. it is anyway, sorry, guys, and good morning. Still good morning. Look. I just wanna address a little bit of the issue that may be hurting you a little bit today with the timing shifts in Q2 revenues, the supply chain congestion comment. What can you give us a little bit more detail on that? And more explicitly, is this something I mean, complexity is something that I would imagine is gonna just do nothing but increase over the next 5 years and perhaps forever. Is this potentially gonna be an ongoing issue not just a 1-off? And if so,, how do you how do you mitigate or kinda manage through it so that it really does not disrupt quarters the way that perhaps it can?

Giordano Albertazzi: Well, thanks, Scott, for the question and you are right. Complexity is increasing Some of the projects are not only bigger but multidimensional. There could be a lot of supply chain interdependencies. And this supply chain is necessarily an external supply chain. It can be very often an internal, within-Vertiv supply chain. Now clearly, like everything, and like we have done so far, there is a learning curve. I am pleased with the speed at which we are progressing in this learning curve. And this learning curve is a learning curve of the execution. On this complexity. So I am pretty I am pretty confident about, our direction of travel. And, and, again, these are the first very large projects with this level of, of complexity. And, and we are, more and more equipped for this, just from a technology standpoint, but from a logistics and operations in general. When it comes to the part of your question, so what could be the, there an ongoing impact on the future? Well, certainly, as I said, there is a learning curve that we are progressing on, at speed. But there is also the fact that we are prudent. Anyway in our, second half guidance. This is true in general also for the for the future. So, if you think about our h 2 guidance, we are not assuming all stars align. We have a wiggle room for, this progress on the learning curve not to be perfect. Though of course, speed and perfection is, is our goal.

Scott Davis: Okay. Fair point. And then just a quick 1. Would is there a price where you would start buying back stock a little bit more aggressively just given the pullback we are seeing in the entire complex right now?

Craig Chamberlin: I mean, I think we always look at it opportunistically, Scott, and that is the thing that we have talked about even at Investor Day. Again, you know, given today, it is a good time to look at it, but I think it is always something that we evaluate and take a you know, what do we consider our capital deployment, and it is 1 of the areas we look at.

Scott Davis: So Fair enough. Wish you all the best, guys. Good luck, and I will pass it on.

Operator: The next question comes from the line of Jeffrey Sprague. With Vertical Research. Jeffrey, please go ahead.

Jeffrey Sprague: Hey. Thanks. Good morning. Hey, Giordano. Just on the comment that the pipeline is actually accelerating, I assume that is sort of all hyperscale, but can you give a little bit more context on sort of the nature of the acceleration? Is it is it is it scope to burden? Is it kind of additional customers? Is it existing customers? Looking to do more quickly? And it seems to support the comment you are making about robust orders for the year, but just love a little bit more color there if you could.

Giordano Albertazzi: And, let's start from the end. Yes. Let's start from, from the end. Yes. Of course, it is this is support certainly supporting our comments about the about orders. When I talk about pipeline, always like to talk about magnitude of the pipeline, if you will, and the speed of the pipeline. If I talk about the speed of the pipeline, we talk about acceleration. It means that the sales cycle within the within the pipeline can be faster or slower. So we noticed an acceleration. So it is becoming faster sales cycle. But at the same time, just to be extremely clear, the strength is also in sheer size of the pipeline in terms of a quarter to quarter, year-on-year, year-on-year growth, and this is broad-based. it is pretty much across the world, but also it is broad based across the various customer categories. So certainly, the whole range of hyperscalers. It is true for enterprise. it is certainly true for colo, neocloud. So pretty, pretty broad based.

Craig Chamberlin: And just to add on to that, Jeffrey, I would also just say, again, as hyperscalers and colos hyperscalers are sometimes deploying through colos. So to look at it that way, you might get a little bit of a mix there. So just to ensure going back to what Giordano said, we are seeing it, it, again, across regions, across products, and that is the way we really look at it, but that is the way we would view our pipeline. And see it, accelerating in all those spaces.

Jeffrey Sprague: And just a quick 1 if I could. Do you have a solid state transformer solution at scale at this point? Where do you stand on that product's evolution?

Giordano Albertazzi: Just like, 1 of the slides was describing, the solid state is currently a matter of project development for us. it is in project development phase. Thank you. Yep. Thanks.

Operator: Your next question comes from Amit Daryanani with Evercore. Amit, please go ahead.

Amit Daryanani: Yep. Good afternoon, everyone. Thanks for taking my question. I guess, Giordano, if you just go back to the supply chain issues delays, can you just talk about how much revenues actually pushed out due to these challenges you had in the quarter? I think you missed the Street numbers by $100 million but I am actually wondering if the supply issues were perhaps much larger than that from a dollar perspective. And maybe just on the same lines, can you just talk about, you know, was it a Vertiv specific issue or something at the customer side that led to this impact? And then how do you see this flowing back into the model into the back half? Thank you.

Giordano Albertazzi: So good afternoon. First of all, is it is it customer, or is it is it veritiv? On the customer side, pretty much we see the same dynamics that we have seen historically. So no big, no big differences. When it comes to the Vertiv side and the exact amount, well, that will not be too specific. But the majority of what we are seeing is really coming from, those dynamics that I have described, during, while I was going through my opening remarks, but also the conversation with Scott. That is pretty much the dynamics that we see Is it on the supply chain? You know, the supply chain is, is always a matter of, of working the sequence of things. Is nothing different than what we have experienced, historically. And we are pleased with how we are strengthening our the resilience of our business in general.

Craig Chamberlin: And, Amit, I would just add that just to clarify, we are talking about the large project deployments and the learning curve around that, which has confounding effects from both the external supply chain, and our own internal supply chain. So there are some, I would say, gray areas in there when, you know, we typically can recover from a late part and our and our smaller supply chains. When it becomes a larger supply chain, it becomes more confounding. So, again, not to define that specifically, but that is the areas where we are seeing it, and they are large project deployments. And we are learning and understanding what that takes to go forward and how to iron those out. And then also, again, as we talked about thinking of not always that being perfect in the second half as we look into guidance.

Operator: The next question comes from the line of Deane Dray with RBC Capital Markets. Deane, please go ahead.

Deane Dray: Thank you. Good morning, everyone. I will keep it to 1 question. Really good performance on free cash flow conversion this quarter. But for Craig, I would be interested in hearing was there any contribution from customer deposits on orders I know that is something you all have been looking at. And Dave Cote knows from his aerospace and defense days that is pretty standard. To require deposits on larger orders. So any contribution there?

Craig Chamberlin: Yeah, Deane. And, again, I wanna congratulate you; I know you are retiring in September. So congratulations. A great career. Fantastic career. But to your question, yeah, if you look at the face of the balance sheet, and the face of the balance sheet, you will see that our deferred revenue did go up. And our deferred revenue is a read through in terms of those advanced deposits on orders, but it is also ongoing deposits as we go through the milestones of delivering those larger projects. So it is a combination of both. But that is driving the working capital and the great cash performance when you look at it across the entire balance sheet. So definitely an indicator of strong commercial performance on both sides.

Deane Dray: Great. Thank you for those kind words, and I appreciate all the support from the team and wish you all continued success. Thanks. Thank you.

Operator: The next question comes from Nigel Coe with Wolfe Research. Nigel, please go ahead.

Nigel Coe: Thanks. Good morning, everyone. Just wanna pick up on that topic. I think this is the first time maybe I am wrong, but the first time I have heard progress collections you know, kind of staged payments. Maybe just touch on that. I know your assortment is changing with, you know, OneCore and Smartron. So maybe just talk about that. You know, what kind of percentage of revenues that we are talking about now that actually have progress collections? And then just it is not a second question, by the way. it is more of a kind of add-on to the first 1. The balance sheet numbers moved quite a lot this quarter. So, I mean, the Thermo Key acquisition seemed quite small, but did it come with quite a big balance sheet? Thanks.

Operator: Thermo King did not come with a large balance sheet, so I will answer that 1 first, and then we can go a little bit I will double click on as we go further into the your question, Nigel.

Craig Chamberlin: But in terms of the actual progress collections, yeah, there is a portion that we get up front, and there is a portion as we deliver milestones. And a lot of that is related to delivering products to the end project. And so that is how you would start phasing it in. And sometimes you get those a couple, like a month before you deliver projects. Sometimes you get those at the end of design. So they are all phased in different ways. So we would get a portion upfront. We would get a portion at the delivery milestones that we set forth. Always, in our view, staying ahead of the curve in terms of a cash position in that project. So some of it is going to be related to deliveries where you would see revenue incurred Some of it might be delivered on terms of a design point, which should be a secondary milestone before revenue occurs. And, again, they are all a little different in how we look through them, all the goal being staying ahead of the cash curve and being cash positive on that. On the other phases of the balance sheet, you mentioned lots of movement. We do have a significant ramp in the second half, so you would see some inventory come on. And as that comes on, you will see AP come on as well. And we did have a good quarter in terms of sales. So that is where our AR is going up as well. So all of this is a reflection of the volume you are seeing. ThermoKey had little impact to that. Alright. Thank you.

Operator: The next question comes from Andrew Kaplowitz with Citigroup. Andrew, please go ahead.

Andrew Kaplowitz: Morning, everyone. Good day to you, Andrew. Good morning So, Gio, you updated us again regarding the evolution toward 800V DC potentially in the start. To impact Vertiv in 2027. And I know you commented on an SST and product development to Jeffrey. But when you step back, how confident are you that Vertiv's content per megawatt could go up as 800 VDC technologies adopted, as I think you reiterated today? And would you surmise that Vertiv's 800-volt DC offering could be toward the higher end of that 3.25 million to 3.75 million per megawatt range you gave us at the Analyst Day.

Giordano Albertazzi: Yeah. We are pretty convinced about that. And we are also when we look at all the elements of the powertrain, in the various architectures, And, and when we think what happens inside the white space, in the gray space, we see value there for Vertiv and an expansion of revenue per TAM per megawatt. So not differently from our conversations or what we shared at Investor Day. it is 2 months ago. We continue to go through that math, and that math is corroborated by, of course, all the progress that we are doing on the on the product development, but also on the on the activity that we are we are conducting with customers. So we would need to go element by element in that in that chain. But, again, think about the entire, powertrain, all the elements, vis a vis what we have today, and see that with that, density, with that complexity, our content is impacted favorably. You too.

Operator: The next question comes from Andrew Obin with Bank of America. Andrew, please go ahead.

Andrew Obin: Yes. Good morning. Good morning, Andrew. Just maybe another question on this deferred revenue So, you know, we have been getting lots of questions on this topic. it is a large number, but I guess what folks are trying to figure out, and I know of some people have been asking a similar question: Has the structure of your deferred revenue sort of change materially from what it was like. I am not asking I know that it fluctuates quarter to quarter. I totally get that. But has the structure of what goes into deferred revenue changed materially or still, if we look at deferred revenue over the past several quarters, it is apples to apples.

Craig Chamberlin: it is apples-to-apples, Andrew. No. What you might be feeling a little bit differently is, as we talked about back in fourth quarter, we had a large order influx on the Infer Solutions business where I would say a lot of these milestones are set up in the project based world as opposed to the point, you know, product based world. So the project based world might have more milestones before delivery of revenue, So you would get 1 at the input of the order and then 1 along the way as a design and 1 that you potentially as you start to deliver products. So you have different levels of milestones on those projects versus a point product. And we know that the project basis that we have talked about a lot,, those larger ones, OneCore Smartron, runs, We had a large order intake in the fourth quarter of last year that we spoke to. And that would be some of the stuff that you might be seeing in the deferred revenue as it comes through throughout the year. And then, again, it is tied to our regular down payments as well. But no structural change in the way that we would recognize deferred revenue. Thank you.

Operator: The next question comes from Christopher Snyder with Morgan Stanley. Christopher, go ahead.

Christopher Snyder: Thank you. I wanted to follow up on the conversation around the production disruption and some of the supply chain impact. I guess, you guys are obviously guiding to a pretty significant organic ramp here into the back half relative to what we saw in the first half. So I guess, anything that you could provide around confidence that you are seeing that these disruptions are getting better getting better? Like, I would imagine that as the quarter went on, the monthlies got better. I think you said July was off to a start that presumably supports this ramp. So I guess has it gotten better? Any just kind of color on that monthly cadence? To give us more confidence in the back half? Thank you.

Giordano Albertazzi: Thank you. I would not use the word disruption. Yeah. I think we have to I want to be clear about when we talk about complexity into the interdependencies. As I said, very, very often, in these large projects, you will see multiple Vertiv factories feeding others, besides, of course, external suppliers feeding those factories. Well. So it is really a complexity. So there is an operational aspect to your question, that is, we are getting stronger in the operational execution of that complexity. So the complexity does not go away, but the our ability to handle that complexity is accelerating very, very strongly, and that is what enhanced my comments. But, again, I would not I would not talk in terms of disruption.

Craig Chamberlin: Agree. I think on your second point of why do we feel comfortable about the second half, as Giordano said, know, it is a learning curve when you have these large projects, and you do have congestion in your supply chain, which, again, some of that stuff's normal on point products, which is easier to iron out as you have a learning project for larger project. it takes a little bit more time to get smoothed out and understand. We are seeing good signs of it being able to ratchet up on that learning curve. And as we think about the second half, we have also assumed some of that congestion continues as we normally would. But on these projects, it might be a little bit further of congestion that we would have assumed than normal. So all in all, exactly. So all in all, we believe that we are prudent in our second half and very well supported by the platform. Thank you.

Operator: The next question comes from Nicole DeBlaseBlase with Deutsche Bank. Nicole, please go ahead.

Nicole DeBlase: Yeah. Thanks, and good morning, guys. I am sorry to beat a dead horse, but I am going to. With respect to the second half ramp, there is still, you know, a lot of questions about what is specifically is embedded and what is not. Maybe a way to frame it I will try this. Like, how much of the second half ramp is based upon this improvement in learning curve and maybe unlocking some of the revenue that was pushed out of 2Q versus just the overall capacity ramp that you guys are doing at the same time just so that we can try to get more comfortable with the step up in revenues that are embedded in the second half and how much visibility you have into that.

Giordano Albertazzi: Yeah. Thank you. Thank you, Nicole. When we talk about unlocking revenue, let's just be clear that you know, the revenues that were let's say, little bit locked in some elements on the second quarter are being delivered, deployed in the second half. And we feel extremely well about that. When it comes to some elements of congestion, elements of congestion, as Craig mentioned, we are prudent in our guidance, though we believe that there will be and we see, we are seeing a strong acceleration and improvement from an operational standpoint. We are still remain prudent in our guidance. There is capacity that is being released, and that is a big element, of course, of, also the backlog conversion. So look at it as 3 levels. The operational acceleration in the complex projects, the capacity coming available. That has been coming available in the in the second quarter, but even more so in the second half, a very strong backlog coverage. And over and above that, wrap it up with, anyway, a guidance that is not an all-stars-aligned type of guidance.

Operator: The next question comes from Amit Mehrotra with UBS. Amit, please go ahead.

Amit Mehrotra: Thanks, operator. Jio, I just I would be curious to compare and contrast some of the challenges you are having today to the challenges you had really at this time last year, And you know, you got back on track. Pretty quickly from an operational. But at that time, it was not a revenue issue. It was more of a margin issue and an operational issue. And I know at heart, you are an operational guy. So just maybe compare and contrast that and are there multiple points of just wanna maybe explain the complexity within the complexity. What I mean by that is that are there multiple points of challenges, or is there a sort of 1 main challenge that is sort of cascading across the supply chain That little bit of color there would be helpful.

Giordano Albertazzi: Yeah. Thank you. Thank you, Amit. And I really appreciate that you draw that parallel to exactly a year ago. It was a different nature. At that stage, it was Ireland and some executional challenges on the on the busbar switchgear that we have amply recouped as you were saying. But I think this highlights the fact that in a business that is moving at this speed, that is growing at this speed with the number, let's say, of technology, with the technology speed sorry. The speed of technology evolution, that we are experiencing and indeed driving, there is a lot of complexity. To you know, to manage. And so in many respect, the parallel is similar. You were talking about well, that was a margin; this is a revenue. Anyway, it is operational execution. that we are concentrating on right now. So it may be different in the type of product line, if you will, it is not different in terms of the type of focus and the type of, let's say, recipe that we applied. And, again, it is a matter of, really continuing to mature operationally as the market's portfolio, the scope of what we do continues to evolve. So I feel very good about that.

Amit Mehrotra: As I did. But, Giordano, are you failing are you-- it is not failing, but are you reducing the on-time delivery of the customer? Because 1 of the USPs has been Vertiv has been 1 of the few companies that can deliver on time in full. Are you disappointing customers with this development? That opens up market share opportunities for other companies? Or no?

Giordano Albertazzi: Well, look. Our, our overall performance is, if anything, in improving. So I would say that the answer is no. it is not something that changes our perception in the market, we believe.

Operator: The next question comes from Mark Delaney. With Goldman Sachs. Mark, please go ahead.

Mark Delaney: Yes. Thank you for taking my question. 1 of the topics at the Investor Day that we have not discussed yet on the call this morning is around M and A. I think you talked about something in the order of $24 billion that could be deployed. And light of some of the pullback in financial market valuations. as well as all the opportunities you see on the technology front, including areas like 800 volt, curious if you could give us your latest thoughts on the M and A opportunity and if the pipeline there is active, and that might be something that could be executed upon relatively soon. Thanks.

Craig Chamberlin: I mean, I would say our outlook does not change in terms of the M and A world. We still look at it in the same way we looked at it back during Investor Day, but it is active. And we do see an active market, and we are participating in that after active market looking at, know, several targets. But, again, it has to fit us, and it has to be the right I would say, value play for us in terms of fit in our portfolio and what we believe we can grow and what we can return to investors in terms of what we are going to pay. Again, I have always talked about we invest in ourselves first, and that is capacity, and that is R&D, and that is development, and that is the things we are always going to look at. And then we will look at the spots where we believe we can get true value out of an acquisition and an add on whether it be regional reach or a product that we believe could get us to the market faster or a technology we do not currently have. So, yes, we are active, and we continue to look at it in terms of that framework.

Operator: The next question comes from Noah Kaye. With Oppenheimer. Noah, please go ahead.

Noah Kaye: Thanks for taking the question. You know, talking about some of these learning curve developments around what seems to be more of a focus on infrastructure solutions. You know, the components of these as we understand them, the building blocks they are already part of the Vertiv portfolio largely. But I am just curious, as you come up this learning curve, to what extent are you increasing your vertical integration across those building blocks and supply chain Is that a process that you are undertaking now? Is it something that needs to happen on a go forward basis to mitigate and manage some of those challenges in architecting these solutions?

Giordano Albertazzi: Well, there is clearly always an analysis of make or buy vertical integration in anything we do. Be it at a point product level, and at, let's say, large infrastructure solution level, When you when you talk about the vertical integration for solutions, for us is really we are very, very integrated in the sense that we are putting into our infrastructure solutions, products that are Vertiv products. So then clearly, we are in good control of the of the supply chain in that respect. And so we feel good in this moment We do not think there are any major gaps in vertical integration for what we are doing, but that does not mean that we will not adjust over time the mix of, make or buy in whichever dimension. That could be depending on, depending on the type of business, depending on where we manufacture and auto manufacturing locations are the same in terms of access to a nearby let's say, critical mass. So it is it is always there now, but we do not perceive in this moment that there are any major gaps. But for example, if you think about an acquisition that we shared with you last quarter, B. Mark, that was that was moved to vertically integrate on our frame construction for our infrastructure solutions. So that is, I think, a testament to the dynamic approach that we have when it comes to make-or-buy. Yep. Thank you, Jeffrey.

Operator: The next question comes from Anand Baruah with Loop Capital. Anand, please go ahead.

Analyst: Yeah. Thanks, Scott, for taking the question. Really appreciate it. I would love to get your guys' view. This is an 800-volt, 450-volt question. For 800-volt, how broadly throughout the marketplace are you expecting in the next couple of years the, the technology to be adopted And really, the genesis for the question is there is that, as you guys may know, there is of been speculation last few months that 1 of the larger AI infrastructure companies could see a push out that would use 800-volt as far as far as 2029, how if there were a major customer push out, how broad is the tech-- are you guys anticipating the tech to be throughout the industry? And then we have heard really good things on 450-volt potential over the next 24 months. You know, what is the right way to think about the impact that could have and could that fill in any white space? You know, if there were, like, a meaningful you know, sort of AI infrastructure 800V customer push out? Thanks. Just any context would be helpful. Thanks.

Giordano Albertazzi: Well, thanks. A multidimensional, multilayer question here. So I would not comment on rumors in the market. As we shared with investors in May, but also but also earlier today, we believe that the adoption of 800-volt will be gradual would be convincing. We are certainly very invested in that part of the in that part of the of the portfolio. Whether that happens at the speed that is currently in our roadmaps and that you saw or something slower than that, you know, we will be flexible and certainly, we are extremely resilient with that because it means that other parts of the architectures that we provide to our customers will certainly be take the share of the market in terms of architecture. So whichever way no matter the speed of acceleration, we think that we are in a good in a good place because we have the architectures, we have the technologies, the roadmaps as we shared, but there is a 400-volt DC question, and that 400-volt DC volt question is an important 1. We see that some players are thinking in terms both of 800 and 400. The underlying technology is not dramatically different. And quite honestly, we are involved in both. that is really helpful. Thanks so much. Really appreciate it. Sure.

Operator: The next question comes from Luke Junk with Baird. Luke, please go ahead.

Analyst: Yeah. Thanks for sneaking me in here. Giordano, hoping just to get some texture around your ongoing increase in confidence around the EMEA market specifically, and we saw a step up in margins. Sequentially this quarter. How do you think about the sustainability there or maybe in the potential for some further improvement in the back half of the year? Thank you.

Giordano Albertazzi: Yeah. Well, thanks for the EMEA question. The we are we are pretty bullish about EMEA as you saw Certainly, we believe in a strong, second half, and back to growth. You see EMEA faring better than we expected anyway in the second quarter. So very confident in the second half. I was vocal about the fact that we were very happy with orders in EMEA in the first quarter. I would say that we like what we see in the second quarter. And there is a backlog formation that is certainly convincing. And we see that the improvement translates in top line and bottom line improvement has demonstrated. So the market continues to accelerate. And we certainly have a very important position in that market.

Craig Chamberlin: Luke, I will just hit on the fact that we do and as we have talked about through even back as early as last year, we do see a second half increase in growth for EMEA in terms of where we expect their organic growth to go from a revenue perspective. In terms of the I would say, the gain that you saw in margin, was a favorable comp too, as you had mentioned, the Ireland portion did come through Q2 last year, which was in EMEA. So a little bit of a favorable comp in there, but we do still expect margins to be pretty good. Got it. Leaving it there. Thank you. Thank you.

Operator: This concludes our question and answer session. I would like to turn the conference back to Giordano Albertazzi, for any closing remarks.

Giordano Albertazzi: Well, thank you. And thank you very much, everyone. Thank you for the questions, and thank you for your time today. I am very pleased with what we delivered this quarter. And how we are positioned for the second half. The team is executing at a high level. Scaling capacity, deepening customer partnerships, and advancing our technology portfolio. All simultaneously. it is not easy. But this invigorates us Pipelines are strong, our operational discipline is sharp, and our customers trust us to deliver at scale. Just to be clear, I am very encouraged by our trajectory. I am pleased, but certainly never satisfied. With that, thank you all, and I wish you all a great rest of the day.

Operator: The conference has now concluded. Thank you for attending today's presentation. May now disconnect.