Good morning. My name is Nadia, and I will be your conference operator today. At this time, I would like to welcome everyone to Vertiv Holdings Co's Fourth Quarter and Full Year 2025 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 call, Lynne M. Maxeiner, Vice President of Investor Relations.

Great. Thank you, Nadia. Good morning, and welcome to Vertiv Holdings Co's Fourth Quarter and Full Year 2025 Earnings Conference Call. Joining me today are Vertiv's Executive Chairman, David M. Cote, Chief Executive Officer, Giordano Albertazzi, and Chief Financial Officer, Craig Chamberlain. We have one hour for the call today. During the Q&A portion of the call, please be mindful of others in the queue and limit yourself to one question. 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 Holdings Co. These 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. I 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 assumptions that we believe to be reasonable as of this date. We 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 M. Cote.

Well, I am extremely pleased with how we executed in the fourth quarter and for the full year of 2025. We delivered strong results across key metrics, and we have tremendous momentum heading into 2026 and beyond. What you are seeing is the payoff from years of strategic investments and disciplined execution. Our focus on engineering innovation, capacity expansion, and deep customer partnerships is translating directly into results. Giordano and his team are doing an outstanding job executing our strategy, and I am impressed with how they are navigating both opportunities and challenges. AI-driven infrastructure build-out is accelerating, and data centers are at the center of it all. We are still in the early innings of this secular growth trend. Vertiv Holdings Co's position in this market keeps getting stronger. Our technology leadership and global scale, along with our service and operational capabilities, are not easily replicated. And we keep widening that gap. We have established a strong record. We commit to ambitious goals, and we deliver. Now, here is what excites me the most. Vertiv Holdings Co is not choosing between today and tomorrow. We are winning now and winning later, positioning us to create value both now and well into the future. Said more simply, we are not done yet. With that, I will turn it over to Giordano Albertazzi, our leader and architect of this most excellent day.

Well, thank you. Thank you very much, David. And welcome, everyone. We go to slide three. And certainly quite pleased with how we closed 2025. Another very strong quarter and a very strong year. Organically, fourth quarter orders were up 152% year over year and up 117% sequentially. Very strong, all regions, all markets. Trailing twelve-month organic orders growth was 81% and would be even higher if we included our recent acquisitions. Our book-to-bill ratio was 2.9 times. Our backlog stands at $15 billion, more than double last year's. Q4 organic net sales were up 19%, primarily driven by remarkable strength in The Americas, which grew 46% organically. APAC was down 9% and EMEA down 14%. Q4 adjusted operating margin was 23.2%, up 170 basis points from Q4 2024. Adjusted operating profit was $668 million and was up 33% from the prior year. Our fourth quarter adjusted diluted EPS was $1.36, up 37% from Q4 2024. Adjusted free cash flow for the full year was circa $1.9 billion, with an adjusted free cash flow conversion of 115%. For 2026, we are projecting adjusted diluted EPS of $6.02 on organic sales growth of 28% with an adjusted operating margin of 22.5%. But let me give you some color on what we see regionally, and for that, we go to slide four. Let's start with The Americas. The Americas continues to be the primary engine of our growth. Sales in 2025 were strong and broad-based, across products and customer segments. The market is accelerating. Even after the large Q4 order intake, our pipeline continues to grow. Our guidance assumes a sales growth in the high thirties. The Americas led acceleration, and that momentum continues. If we go to EMEA, well, we can say that the coiled spring is uncoiling. The market sentiment has significantly improved. Pipeline growth has accelerated. We saw strong orders in Q4, and we expect that to continue in 2026. We expect to return to sales growth in the second half of the year. When it comes to APAC, well, that is accelerating. Despite China remaining muted, we saw strong Q4 order growth, and we expect China's soft growth rate to persist in 2026, but India and the rest of Asia are robustly accelerating. And we are well-positioned to capture that growth. Now let's go to slide five. Where I want to start with customer demand on the left of the slide and just say, Vertiv Holdings Co's momentum is quite remarkable. Trailing twelve-month organic orders grew 81%, fourth quarter orders were up more than 250%. Book-to-bill almost three times a strong performance, and we did see some large orders coming in during the quarter. These large orders reflect our customers' increasing trust in Vertiv Holdings Co's ability to deliver at scale and their confidence in their market. Our $15 billion backlog is more than double last year's and up 57% sequentially. Strong. Worth noting, the shape of our backlog is not very different from what we saw a year ago, yet it is more elongated into the twelve to eighteen-month window. This is very consistent with a very strong Q4 order intake. We are seeing robust pipeline growth across all regions and all product technologies. This is a testament to the health of demand and of our visibility of the market. We have confidence in capturing a significant portion of this pipeline. Orders are getting bigger. Over time, we have been vocal about the lumpy nature of orders. This lumpiness can generate unnecessary volatility. The dynamics of the market also make orders very difficult to predict. Consistent with what we said during 2025, we have been reflecting on our orders of disclosure. We believe that currently, the best approach is to no longer report actual orders, orders forecast, or backlog with quarterly earnings. It just seems to lead to excessive volatility that is not representative of the sustained performance of the company and is not beneficial to our investors. We will continue to provide our full-year historical disclosure regarding sales and backlog in our form 10-K. We will provide a view of the market in our quarterly earnings call. We feel very good about the strength of our pipelines, our ability to win, and our prospects for growth and to lead the industry. We had an extremely strong year in orders, and we do believe we will grow further in 2026. Pricing continues to be favorable. 2025 pricing exceeded inflation, and we expect the same in 2026. The right side of the slide now to talk about how we are managing the current environment and positioning for growth. We are mitigating material inflation pressure through our pricing mechanism and focus cooperation with our suppliers. On capital, we are stepping up to 3-4% of sales in 2026, from our historical 2-3%. We continue to adopt a very disciplined and forward-looking approach enabling our growth trajectory. Our suppliers are extensions of our operations, and we are working hand in hand to ensure they are scaling with us. This combination positions us very well to capture the growth ahead. While protecting our margins, which you see embedded in our guidance. And let's now go to slide six. You know how passionate we are about driving rapid evolution. This is where Vertiv Holdings Co's strengths really come into play. Our traditional expertise in gray space is seamlessly being augmented by and interwoven with white space infrastructure expertise. With hundreds of kilowatts per rack, mechanical, the electrical infrastructure, and the IT stack are so intimately connected that they need to be thought of as one system. Here are two of our converged prefabricated solutions that perfectly align to this vision. Let's start with OneCore, an end-to-end full data center solution that dramatically simplifies and accelerates the customer journey, significantly reducing time to token. Vertiv OneCore can scale to gigawatts in 12.5 megawatt building blocks. OneCore is a complete converged entire data center infrastructure. It's engineered and scaled to deliver for the industry with speed, simplicity, and repeatability. It's engineered and scaled by an industry leader with a complete portfolio. Our collaboration with Hut 8 demonstrates this path. Let's now continue with the Vertiv SmartRun. A converged and prefabricated white space infrastructure solution that massively accelerates data whole fit out and readiness. Also here, it delivers simplicity and time to token for our customers. SmartRun is flexible and scalable across multiple generations of silicon. It is being deployed across several large customers at scale, and now work with Compass data centers perfectly shows those capabilities. Vertiv SmartRun can be standalone or part of OneCore. We continue to actively define the market with solutions like OneCore and SmartRun. Let's go now to slide seven. Our service portfolio is a critical competitive advantage and a robust source of recurring revenue. Our life cycle services orders growth was north of 25% year on year. I am very pleased to see that. I am not satisfied as you may imagine. The increasing complexity and technical challenges that characterize the market are an opportunity to demonstrate our unique service capabilities and to deepen our customer relationships. Our service business is designed to deliver customer value across every phase of the infrastructure journey. The PerchRight acquisition fits exactly within Vertiv Holdings Co's service paradigm. It significantly strengthens our fluid management capabilities end to end both the primary and the secondary fluid networks. These are very critical systems in chilled water and liquid-cooled AI data centers. Fluid management is one of the most technically demanding and financially consequential aspects of running a modern data center and AI factory. With PerchRight, Vertiv Holdings Co now offers one of the most comprehensive fluid management capabilities in the industry. From initial design to commissioning and then throughout decades of operational life. Of the data center. We optimize flow at stop top and maintain balance, ultra cleanliness, fluid performance, across the life cycle of the site. Every rack gets exactly the cooling it needs, with the highest levels of reliability and resilience as the environment evolves. For customers, this means fewer thermal throttles, higher compute throughput, efficiency improvement, and a dramatically reduced downtime risk on hardware worth millions of dollars per rack. We expect PerchRight's specialized expertise to scale globally through our existing services network. Creating the differentiated capability that addresses a growing critical customer need. With that, over to you, Craig. But first, I am very glad to introduce our new CFO, Craig Chamberlain, to the earnings audience. Craig, calling you new sounds quite strange, actually. And I am extremely pleased with the speed at which you are getting a strong handle on the business. We work really well together. And it feels like we have been working together way more than hardly three months or so. I am very thrilled. So now truly over to you.

Thanks, Giordano. And just to start, I would like to say I am very excited to be here as Vertiv Holdings Co's new CFO. In my two-plus decades in the industrial industry, I worked with many great companies. However, what is happening here at Vertiv Holdings Co really stands out to me. The strength of our market position, the quality of our technology, and the caliber of this team makes me very excited about where we are headed. What Vertiv Holdings Co has built, the competitive advantage, customer relationships, and operational capabilities is a result of disciplined execution and strategic vision. I am honored to join at this inflection point. And I look forward to working with all of you as we continue to drive shareholder value. Now let's walk through our financial results. Turning to slide eight. We can walk through our strong first-quarter performance. Starting with adjusted diluted EPS of $1.36, up 37% year over year, $0.10 above our prior guidance. The primary driver is strong operational performance, particularly in The Americas where we saw exceptional volume growth. Organic net sales were up 19% with strong momentum continuing in The Americas, up 46%, offset by APAC down 9% and EMEA down 14%. Our adjusted operating profit of $668 million was up 33% versus the prior quarter and $29 million higher than prior guidance. Adjusted operating margin of 23.2% grew by 170 basis points versus last year. This margin expansion was driven by strong operational leverage on higher volumes, productivity gains, and favorable price-cost execution. As well, we saw our incremental margins year over year continue on a positive trend, as they came in at 31% for the quarter. To wrap up the fourth quarter discussion, let's hit on cash. We delivered $910 million of adjusted free cash flow, up 151% from the prior year fourth quarter driven by higher operating profit and working capital efficiency. Which was partially offset by an increase in higher cash tax. The larger orders in the quarter came with corresponding larger advance payments which benefited our Q4 cash flow. We exited the quarter with net leverage of 0.5 times, giving us significant strategic flexibility. Moving on to slide nine. Let's take a look at segment performance, which further highlights some of the dynamics Giordano mentioned earlier in the pitch. In The Americas, the team delivered another strong performance. Sales were up 50% with 46% organic growth. This growth was driven by broad-based strength across products and customer segments, strong end-market demand combined with our ability to deliver. Adjusted operating profit was $568 million, up 77%, and margin rate expanded by 450 basis points. The results were the outcome of strong operational leverage, positive price-cost, and continued productivity. Moving to the right, APAC sales were down 10%, 9% organically, primarily due to macroeconomic conditions in China. However, the rest of Asia remains strong. Adjusted operating profit of $49 million resulted in an adjusted operating margin of 9.9%. Which was down 270 basis points versus the prior year. Pressured primarily by volume deleverage. In EMEA, sales were down 8%, 14% organically due to continued softness in the market. However, as Giordano highlighted, we are seeing signs of recovery from strong fourth-quarter orders performance. We continue to expect EMEA to return to sales growth in 2026. Fourth-quarter adjusted operating profit of $111 million with an adjusted operating margin of 22.1%. This is a decline from the prior year's 26.6% which was expected given the 14% organic sales decline. The margin pressure reflects lower operating leverage, and we expect this margin trend to continue into 1Q. Flipping to slide 10. Here, we are highlighting our full-year 2025 results in which the team delivered another outstanding performance. We saw improvements across all key financial metrics. Adjusted diluted EPS of $4.20 was up 47% and exceeded guidance by $0.10. Net sales of $10.2 billion delivered 26% organic growth and exceeded guidance by $30 million. We saw strong growth in The Americas, up 41% and APAC, up 18%. With the partial offset of EMEA being down 2%. Adjusted operating profit of $2.1 billion was up 35%, and $30 million above guidance. Operating margin expanded 100 basis points to 20.4%. The full-year margin expansion was driven primarily by productivity and positive price-cost. To close out the margin discussion, I would like to highlight that we are delivering margin expansion while investing in growth and managing inflationary headwinds. Adjusted free cash flow was another strong performance. We generated approximately $1.9 billion in adjusted free cash flow, up 66% mainly driven by higher operating profit and positive working capital. Including increased advanced payments from the significant order delivery in the quarter. Our cash performance gives us flexibility to invest in growth, pursue strategic M&A, and return capital to shareholders. These results demonstrate both our excellent execution and industry leadership. Now let's turn to page 11 and go through our full-year 2026 guidance. We believe this outlook underscores our confidence in the market growth, and our ability to continue to drive excellent performance. We are projecting adjusted diluted EPS of $6.20 representing 43% growth at the midpoint. This improvement continues to show strong profit growth from the prior year. As we move to net sales guidance, we are projecting $13.5 billion at the midpoint which represents 28% organic growth with projected sales growth to be driven by continued strength in The Americas, at high 30% growth. With APAC at mid 20% growth and EMEA flat to down mid-single digits. On EMEA, as we mentioned earlier in the presentation, we expect a reacceleration in the market in 2026. Moving on, we expect adjusted operating profit of $3.04 billion and a 22.5% margin at the midpoint. Which translates to 210 basis points of expansion. This margin expansion is expected to be largely driven by continued operating leverage and positive price-cost, while we also expect to continue to invest in capacity and technology advancement. Finally, for the year, adjusted free cash flow is expected to be $2.2 billion representing 17% growth reflecting anticipated strong profit growth and working capital improvements offset by higher tax, and increased CapEx to support growth. As you can see from the metrics on the page, we are confident in our ability to deliver another strong year in 2026. Flipping to slide 12, we can round out with a look at 1Q 2026. For 1Q 2026, we are projecting adjusted diluted EPS of $0.98 which represents 53% growth at the midpoint. For net sales, we expect to deliver $2.6 billion or 22% organic growth at the midpoint. This guide anticipates growth in The Americas of high 30s percent and growth in APAC of low 20% with anticipated offset of EMEA being down in the mid-20% range. We expected adjusted operating profit of $495 million up 47% at the midpoint, and margin rate of 19% translates to 250 basis points of expansion at the midpoint. Just as a note on tariffs, we expect on an exit rate basis to have materially offset unfavorable margin impact from tariffs as of the first quarter of this year. As you can see from the metrics, we are expecting to deliver a strong start in 2026. With that, I will send it back to you, Giordano.

Well, thanks, Craig, and let's wrap up. And for then, we go to slide 13. Again, Q4 and full-year 2025 exceeded guidance across all metrics. Orders backlog, very robust, evidenced by impressive book-to-bill circa three times. The momentum is certainly very strong. We continue to strengthen our position as an industry thought leader and this is highlighted by our product technology offering full system approach, and our services strength. At this and all this is strengthened by our acquisitions, of which PerchRight is a great example. Our 2026 guidance shows a step up in all key metrics. I have never been more excited about Vertiv Holdings Co's future. We are leading the industry in orders. We are scaling. We are very well positioned to expand our market leadership and drive the industry forward. Very much looking forward to seeing as many of you as possible at our investor conference in May. And with that, back to you, Nadia, and let's start the Q&A.

Thank you. We will now begin the question and answer session. And if you have a follow-up question, please rejoin the queue. We will pause just a moment to compile the Q&A. The first question goes to Charles Stephen Tusa of JPMorgan. Please go ahead.

Morning, Steve. Morning. Your ERP must have been busy this quarter. Probably requires a few more data centers just to handle that. So just on the dollar value of the orders, is there, you know, you guys have talked about the $3 to $3.5 per megawatt. There is obviously a lot of, like, megawatts coming on and being ordered. But is there any, you know, creep in that content to the upside that's bolstering these orders, or should we still think about that as the right framework for the dollar per megawatt TAM?

I would say that, currently, you can just use that as a framework. Clearly, we have been vocal on other occasions, certainly, as all the more recent true as the technology evolves that the complexity of the technology and the technology trajectory if anything, is good from a TAM per megawatt standpoint. So it would be a little premature at this stage. We like what we see. I think the best is, you know, three months from now, we will be together, and, certainly, this will be an important theme.

And then just quickly following up on the CapEx number. How should we think about for every like $100 million of incremental CapEx, you know, from what we have seen, whether it is, you know, Eaton or some of your other peers, it is a pretty high multiple of sales growth on, you know, on that CapEx. Like, what a $100 million can what the output of that could mean? Is there some sort of multiple, like, I do not know, 15, 20 times on that extra $100 million that we can think about as being able to support a, you know, a revenue run rate for the future? Was trying to understand how you can deliver on this, you know, and what it will take to execute on this backlog.

I will give it a go and Craig if you want to chip in. But I would say that think the best way of looking at it is to look at 2-3% CapEx percent of sales moving to 3-4, call it 3.5. That is you can certainly correlate that to our growth and our trajectory. And, yeah, going back to how we make it happen, as I mentioned a few minutes ago, it is about being gradual. It is about being ahead. But, again, CapEx expansion, capacity expansion does not happen in big steps, at least not the way we do it. We like many steps that are meaningful but, again, I think the correlation between growth and our percent CapEx is an interesting and important element. Yeah. Excellent. Thanks, guys.

Thanks. The next question goes to Scott Reed Davis of Melius Research. Scott, please go ahead.

Hey. Good morning, guys. And Good morning, Scott. Orlando and welcome, Craig. Congrats on an unbelievable year. Guys, I am just kind of curious as back you know, the I am just trying to picture these orders coming in April or just massive, and I know that was the crux of Steve's question as well. But is there any you know, you talked about lumpiness, were there any particularly large projects or anything unusual in the quarter? Was there any is there any incentive perhaps for folks to make an order before the end of the year in 2025 or price or otherwise or getting ahead in the queue I am just trying to get my arms around these. These numbers are just absolutely massive.

Well, the answer in terms of something that is unusual, let's say, from the normal course of business in terms of, price and whatever else, the answer is no. Very, very, very simply. I would say that certainly is a reflection of the demand that we see in the market. Certainly, as I said, it is a reflection of the belief and demonstrated ability to scale combined with our awesome technology. Yeah. But the fact is yes, there were quite a few large orders. But again, quite a few. The big should not look at this as something dramatically strange. This is something that has been happening in the market, all are becoming larger and larger and larger. So this is really orders with customers know that they need our kit, our systems, our solutions, and they know where and when. So it is not kind of a no big anomalies here. But orders can be lumpy. And sometimes they happen all in one quarter. More in one quarter and the other, etcetera. So the sequencing is something that is you know, lumpy, and that is what we have been saying for quite some time, and that is why, you know, the decisions that we have made on, on orders, guidance, and actuals But, no. Nothing unnatural.

And I would think it continues to underscore what we have talked about before, which is the system level thinking. And I think the system level thinking is starting to play out on a larger scale. Scott, which is making these orders bigger than what they have been in the past.

Fair enough.

Best of luck, guys. I appreciate the color. Thank you.

Pass it on. Thanks, Scott.

The next question goes to Amit Jawaharlal Daryanani of Evercore. Amit, please go ahead.

Thanks a lot and congrats on my side as well from some very impressive orders over here. You know, if I look at the order and the back number that you folks have, you clearly set up for some very strong performance I imagine not just in 2026, but even in 2027 and beyond. So I am wondering, Giordano, if you can just kind of walk through know, what are the key operational steps, the key bottlenecks you think you have to solve for to convert this backlog into, you know, revenues and EPS over time You know, just maybe help us understand, like, what are you focused on? What needs to go right convert these orders into sales and EPS in 2026 and 2027? Thank you.

Yeah. We are well, thank you. Thank you, Amit. We are really working, and we have been working. So it is not like something new. We have been working, and we continue to work. We are accelerating our capacity expansion. Capacity expansion always happens in two ways. One is, CapEx, so call it footprint. Generally speaking, not only. There is also an increase of productivity, but the other is really obtaining more output from the existing footprint. So the two-pronged approach that we talked about several times is what continues to happen. But as we speak, you know, we are factories being expanded. We have a couple of new locations coming live. And, you know, we are working very, very actively with our supply chain. So, it is really diligently and, in a very focused manner, execute on, on this, on this backlog. Think we are in a good shape. We have been diligent about making capacity available, gradually but rapidly. For, for the last couple of years, and, you know, we are accelerating. As our numbers are saying, both on CapEx and the top line.

And Amit, I think you could look at just the fourth quarter, the acceleration in CapEx is in the financial numbers, and you will also see that in the guide that the acceleration in CapEx is there as well, which underscores what we are doing. Most of that is in flight. Meaning that we are already doing the build-outs, and we understand what we need to go do to deliver the capacity for the guide that we put out there for sales.

Got it. Thank you.

The next question goes to Jeffrey Todd Sprague of Vertical Research. Jeff, please go ahead.

Hey, thank you. Good morning. Congrats on the shock and awe numbers here. Maybe we could just sit on Europe and Asia briefly from my standpoint. First on Europe, you know, have things really changed on the ground in terms of the permitting bottlenecks and the like? Obviously, you said the orders are a bit better, but it is close to 30 to the year. And I am also just curious on China specifically, if you could address that. Clearly, you know, weak economically and industrially, but I would not think China would want to fall behind in the AI race. I just wonder if the weakness there is maybe some indication that Western players are not being invited to play to the same degree as they were historically. It is just a competitive state of things on the ground in China. I will leave it there. Thanks.

Yep. Well, thanks, Jeff. But it sounds with EMEA. Let's start with EMEA in general. Think it is certainly a combination of an acceleration of investment, basically. So it is not that somebody will do magic wand and everything kind of a permit wise became easy. In EMEA. That would be too simplistic. But I think the focus and the realization that a lot more infrastructure is needed is now palpable. And, pipelines that have been there for quite a while, you remember I have been vocal about that, have been and are expanding and the sales cycle of the various elements in the pipelines are accelerating. And then we have areas that are specifically moving well. So you take the Nordics as an example, not solely, but that is an example where that is happening. You have heard me probably talk about a couple of times about the fact that with all that is happening in North America, some of the decision-makers were still concentrated in North America while still are concentrated in North America. Now I think the realization that things need to happen beyond North America is and that is I think, or at least what we see happening as a matter of fact. So, quite, quite optimistic there. So you are kind of a ferbacement in the market that I have not seen for quite some time. When it comes to Asia, I would not attribute that to kind of a Western players type of dynamics. The market demand is not very strong. In, in this, in this moment. So, clearly, there is, you know, it is an important AI market with, with its own characteristics. But, again, what we see is more attributable to a general market situation than, at a particular kind of a player. I mean, we are a Chinese player in China. We are silicon agnostic. So yeah, again, very happy. With everything outside of China, but also very, very proud of what we are doing in China as a team.

Great. Thank you.

The next question goes to Christopher M. Snyder of Morgan Stanley. Chris, please go ahead.

Thank you. Giordano, you talked about the company's deep relationship with the data center industry leaders. So I guess, you know, my question is how much visibility do these relationships afford Vertiv Holdings Co into the future workflow or architecture of these data centers? Because, you know, I have to imagine that you guys need to have the solutions developed, you know, before the customers are ready for it. So also interested in, you know, how far in advance does the company start the R&D or engineering process to be, to bring some of these future solutions to market? Thank you.

Sure. Well, thank you, Chris. I think a couple of dimensions to that. We have been always vocal about the strength of our relationship with customers, but also the other players in the ecosystem. Ecosystem. Super important. Super important because exactly as you were saying, our technology needs to land ahead of well ahead of, of the most advanced, silicon. But to that to be the case, of course, with the with the NVIDIA or other silicon let's say, technology providers, then it is about looking out two, three years sometimes in terms of or beyond. At a higher level of, let let's say, more R&D. But being two, three years out, in the way we work together. So our roadmaps certainly extend, but the role that an aspect that I am very proud of, and it is very important for, for our and especially for our customer success. So from for the our end of customers success is the work that we do with many of them really kind of a technology partnership, looking out, one, two, sometimes three years and say, hey. With all that is happening from a technology standpoint, given your business model, customer, what is really the technology the best suits your strategy. And you know, it is not it is not being told. But it is architecting together and giving them an understanding of the possibilities that they have from a technology standpoint. I think we have a uniquely stronger role in the industry. In this respect. So it is working out quite well.

It seems like it. Thank you.

Thank you.

The next question goes to Nigel Edward Coe of Wolfe Research. Nigel, please go ahead.

Thanks. Good morning, everyone. I guess we are not seeing too much impact yet from, Disney space. So that is good news. So want to go back to the backlog. And Okay. You know, Oh, got it. Sorry. I could not hear you. There was a little bit of a blip. In the line. Okay. Go ahead, Nigel. Yeah. Sorry. Let me go let let yeah. Can you can you hear me now?

Yep.

Great. So I want to go back to the backlog. And I think, Craig, you mentioned more system level orders. So obviously, you have highlighting the SmartRun product. Maybe just talk about where you are seeing that success and the sort of the word share you are gaining with the data centers. And maybe, Giordano, could you just maybe touch on the backlog agent? It seems to the guidance implies roughly fifteen months of conversion to backlog. Typically, you do nine months. So maybe just talk about, are we seeing longer duration orders in that backlog? Thanks.

Well, so let's start with the agent so that we can address that. We are we have been already vocal quite a lot already that our customers requested lead time pretty much ranges from twelve to eighteen months, especially when we talk about, the bigger orders. It is never an exact science. It always ranges but I would say that twelve to eighteen is a good, is a good approximation of where the large orders demand the deliveries to be in. Typically, not even just one bulk if it is really a large order. But having said that, if you think about the structure of our order, you take this year, sorry, last year, 2025, with a very, very strong, second half, relative anyway to a very strong year altogether, but particularly strong in the second half and particularly, particularly strong that in the last, in the last, quarter, then they see that the twelve to eighteen months, there is a push of things, into 2027 while we have we are very happy with, how 2026 is covered. So, again, as I said in the as I said in my, comments earlier, the shape of the backlog is not something different. It is just a consequence of the phasing of the orders when we when we receive that. So no big differences in the way the market asks and demands or expects our deliveries. When it comes to the system question, we clearly see an acceleration. When we talk about OneCore or we talk about SmartRun, you know, we talk about systems and solutions that start to be quite, broadly adopted. And, certainly, that helps, the dynamic of our order intake of and our backlog. But when we talk system, we do not just talk about integration. System for us is having the entire powertrain, the entire thermal chain, certainly when we deliver a prefabricated solution, or a converged solution, considering all the pieces that really designed to work to work together. But, again, if we go back to the previous question, my answer was, it is about sitting together with a customer and having the entire portfolio and having a good and just a very profound understanding of, a system level and all data center level, technology and being able to talk systems our customers.

Okay. Thank you, Giordano. Thank you. The next question goes to Andrew Burris Obin of Bank of America.

Yes, good morning. Morning. Good morning. Giordano, Craig, Lynne. Thank you. So the question I have is on services. You know, it seems that the feedback we are getting is that the big differentiator for Vertiv Holdings Co is your ability not only to deliver the product, but to actually service it in the field and wrap all the sort of additional value-added stuff around that. Last quarter, you shared with us, you know, the increase in service headcount. Would you update us on what the headcount looks like as you increase in backlog? Rapidly and maybe preview where the service organization is going I am sure you are going to talk about your analyst day, but just give us a preview of what is happening there. Thank you.

Well, thank you, Andrew. One of my favorite subjects. So, and, I have many, but this is certainly one of my favorite subjects. So, and I agree. It is a big differentiation. And as you see, a big differentiator that we continue to fuel. So absolutely not static in our view. Well, we talked about, headcount. I think we are approaching it very, very rapidly, the 5,000, field people right now and really think in terms of our field capacity following very similar to, the delivery capacity. Now of course, is a function of the install base, but the installed base is growing. Our services are growing. Certainly, the commissioning, the start-up are very important events in the life cycle of a data center, and we will make sure we are there with the capacity locally to serve our customers. Also evolving our technology, not only in the of PerchRight, to me, a great example of also the all the digitization that we are injecting into our services. Business.

I mean, I would add on that I am just as excited as Giordano is on our services portfolio coming from, you know, heavy industrial companies that lived and died on services. I think this is a superpower that we are going to continue to build out, and especially when we are when you are starting to look at what we can do with the installed bases out there.

Thank you very much.

Thank you.

The next question goes to Nicole Sheree DeBlase of Deutsche Bank. Nicole, please go ahead.

Yes, thanks for the question. Good morning, everyone, and congrats on a great quarter. To start with the backlog, I guess, obviously, a really nice step up in backlog sequentially and year on year in the fourth quarter. Giordano, when you kind of look out over the next twelve months and with what you see in the pipeline, do you expect that we will see another year on year increase in backlog in 2026? And then just a small follow-up on CapEx. Are we going to kind of be in this 3% to 4% CapEx to sales zone for the foreseeable future given how fast the industry is growing? Thank you.

Well, you know, I would not go all the way to guiding orders, which I would do if I were to answer in with many details. But, obviously, if you go back we if we go back to what we shared already, if you think about our directional indication that, we believe our orders will be will be up. You probably have done the math, but our orders in 2025 right now, we have sales. So probably the answer is straightforward. We believe we will continue to build a backlog directionally. So that is, that is certainly the case.

And I think on your question, Nicole, on the CapEx, I think, again, we always want to look at a normalization around the 2-3% as we add as you had mentioned before, prudently. So we think this year might be a little bit higher than normal, but we would always want to continue to be right around that 2-3% on a normalized basis. So I think that would be our answer right now. We would not really put a number out there for 2027 yet until we see what the market is going to look like from an orders perspective. But the guide this year is to continue to look at that as we go forward.

And, again, we really hope to see you at our Investor Day, and, certainly, that will be an opportunity to further elaborate on that. And the long-term trajectory of the business.

I would not miss it. Thanks, guys. Pass it on.

Thank you.

The next question goes to Julian Mitchell of Barclays. Julian, please go ahead.

Hi, good morning. I just wanted to look at the orders and the sort of composition of the backlog maybe from the standpoint of cash. Because I suppose it was interesting that you had a large working capital cash inflow in 2025, whereas I think we have heard from some other companies that the high growth is one reason for bad cash flow conversion, but for you, it is the opposite. A lot of that is because of your deferred revenue inflows in the fourth quarter. So related to that, I wanted to understand is it the type of orders you got in Q4 that generated some disproportionate amount of deferred revenue inflow? And also, when we look at Slide 11, you are guiding for working capital and other to be a small use of cash. In 2026. But if orders are growing and all the rest of it, is it not more like we would see another deferred revenue inflow helping working capital be a source of cash in 2026?

And yes, Julian, let me clarify the slide first off, and then we will get into a little bit more. But the slide says $80 million down year over year. And I believe it is down year over year, still be a working capital. It should be a working capital outcome that will be positive. So it would be just less positive than it would be year over year.

Got it. Thank you. And is that and these deferred revenue balances, are they swelling because of specific very large orders? Or we should think about them being proportionate to just the aggregate kind of volume of orders that you are getting? Just trying to understand it because traditionally in low and medium voltage electrical equipment, you do not have these large prepayments.

Yeah. And I would say it depends on the type of order and the mix of order. Again, I think that we do always try to push to get some down payments and progress payments in there. But the mix would impact that a little bit, and it could be an influence in what drove up fourth quarter third quarter. I would not say it is marginally different than what we have seen historically.

Thank you.

The next question goes to Mark Trevor Delaney of Goldman Sachs. Mark, please go ahead.

Yes, good morning. Thank you very much for taking my question. Congratulations on the strong results and strong orders. I was hoping to get Vertiv Holdings Co's view on how its cooling product mix and business opportunity may evolve. And I ask because post-CES, there was some discussion that Reuben raised racks may not need chillers and conversely, post-supercompute last fall, there was a proposal from a competitor about stainless steel chillers maybe displacing CDUs. So some moving parts there, and we would love to get your opinion on how Vertiv Holdings Co sees its business opportunity evolving and what this might all mean for your content per megawatt and market share. Thanks.

Let's start from the thank you, Mark. Let's start from the bottom. So I go back to what we are saying. We believe the technology evolution is certainly central to that statement, is, is, favorable. From a content standpoint. It is no exception. So clearly, there is an opportunity to run some GPUs at a higher temperature than historically done. But this is pretty much what has been true for many of the more recent chips of NVIDIA. Advantages, helpful. Let's all remember that that does not rule out heat rejection. Heat rejection will continue to exist. Continue to be there. Let's not forget that there are loads that can be cooled at higher temperatures. There are loads with the same data centers that require lower temperatures. So if anything, whereas the overall efficiency of the system indeed improves, we are thinking more and more about a hybrid, cooling and thermal chain infrastructure. Now, clearly, the ability to reduce the number of chillers, but not the number net number of, heat rejection technologies, depends on the climate-specific climate situation, depends on the type of loads. Depends on the resiliency to various types of, non-GPU or different GPU loads that the data center is designed for. You know, when we look at this space, we are very, very encouraged by what we see in terms of a product that is now cataloged, and that is very, very important for us. That what we call trim cooler. So a chiller that is really optimized to operate at high temperatures, but also with the flexibility for lower temperatures that, again, coexist in systems. It is a solution that maximizes free cooling, and it is certainly very, very central to the future of the industry. So, all in all, we see that design continues to be mixed. If anything, this complicates the thermal chain and this complexity is something that we like. As someone who has got the entire portfolio, we certainly are perfectly positioned to support our customers. And, again, going back to what we are saying, enable the right choice for our customers. Cooling, chips directly in other ways than through a CDU in this moment is not something that we see, simply because you know, it would in most of the cases, it will be niche applications probably, but in most of the cases, that would be too dangerous. Blast radius is, a little bit too big at. So we are pretty sure that CDUs in various shapes and forms are a long-term element of the thermal chain.

Thanks, Giordano. Appreciate it.

Sure.

The next question goes to Andrew Alec Kaplowitz of Citigroup. Andy, please go ahead.

Morning. Good morning. Giordano, Craig, good morning. If I look at core incrementals that you are I think you have got pretty close to 30% dialed in. It is kind of the low end of your long-term range for Q1 and 2026, but I would guess the scale of some of these contracts could be your friend because they should maximize the ability to leverage your sales. So is it possible to generate higher incrementals given potential operating leverage? Or do we need to be a bit more conservative regarding supply chain? And or do you just need a higher level of growth investment to fund all of your revenue growth?

Andy, I will start off by saying you are exactly right there. There is a higher level of investment. We are still guiding at that lower end of the 30% to 35% that we have said in the past. I think as we get through the year and the investment that we are putting into place, we can continue to see those go up in our longer-term guidance and we will reiterate that in the Investor Day of what we see as that goes forward. But I think you are exactly spot on. Some of the investments that we are doing and the, I would say, the ramp-up of those has a little bit of pressure on us as we drive those incremental margins.

Yeah. I would say that, like, the long-term trajectory is absolutely unchanged. Yep. So I feel good about it.

Alright. Thanks, guys.

Thank you.

The next question goes to Michael Elias of TD Cowen. Michael, please go ahead.

Great. Thanks for squeezing me in here, and congrats on the order quarter. Great to see you guys capturing the, the market share out there. You know, Giordano, question for you. I am sure you came out of PTC with a similar sense that demand is rocking and rolling. You know, as we think about going forward, yeah, could you just give us an update on the utilization of your existing production capacity? And maybe as part of that, the evolution that you are seeing on the product lead time front for things like switchgear and how they may have evolved over the last three months given the demand strength?

Eric, thanks. Yeah. Certainly. Certainly, demand is there and, in, in very rude health. As one would say, and we are very happy, we capture that. Again, utilization of capacity clearly, we are pretty satisfied. In general, I always talked about having a wiggle room in the way we load our capacity in our factories. This is still true. So we are using this wiggle room to if needed sometimes to accelerate growth. But again, we like to continue to design our capacity with that wiggle room that is 20-25%. So the same way of looking at the long-term capacity. Applies, here. And that is how we decide on capacity increments. As reflected in our CapEx numbers. When it comes to lead times, yes, there has been some expansion a little bit in some product lines. But, again, pretty much, on customer and market, end market lead time in general across the majority of products. So again, quite happy quite happy with our evolution in this respect. We like the growth. We like the capacity utilization. Alright. I think we have time for one more.

The last question goes to Amit Singh Mehrotra of UBS. Amit, please go ahead.

Thanks. Maybe just batting cleanup here a little bit. So wanted to ask about the pipeline because, obviously, pipeline leads orders. Would imagine if you are more than doubling your orders sequentially from 3Q to 4Q, pipeline is depleted. It does not seem that is the case based on how you talk about the pipeline. So just talk about that. And then the last, just a clarification. Just remind us what has to happen, what hurdles you have to pass, for an order to make it into your backlog? From a deposits or delivery certainty visibility perspective? If you can just remind us on that, that would be great.

Okay. So the pipeline the pipeline has not depleted. If anything, you know, despite certainly the very strong order intake in the last quarter, we are seeing the pipeline to grow quarter to quarter. So again, very satisfied about that. It is not just the market. It is the visibility of the market. So just want to reiterate it. It has not depleted. When it comes to what makes an opportunity backlog, it is a binding purchase order. Everything backlog at is a binding purchase order. Majority of but very often, with advanced payment, but, it is the nature of the PO. Binding legally binding. Purchase order.

Got it. Okay. Thank you. Appreciate it.

Thank you.

Thank you. This concludes our question and answer session. I would now like to turn the conference back over to Giordano Albertazzi for any closing remarks.

Well, thank you very much. Thank you all for the questions, and thank you for your time today. Of course, I am very pleased with what we delivered in 2025. And very pleased with how we positioned entering 2026. Certainly very proud of our job that the entire Vertiv Holdings Co team has done and I am super grateful for the collaboration with our customers and partners. We are pleased with our progress, you know me by now. We are certainly never satisfied. I am certainly never satisfied. We continue and we will continue to invest ahead of the curve, maintain our technology leadership, execute with speed and precision. I am more confident today than I absolutely ever been about Vertiv Holdings Co's trajectory. Very encouraged. And, I want to thank you all and wish you all a great rest of your day.

Thank you. The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.