Vertiv at Oppenheimer Conference: Strategic Growth Insights

On Monday, 05 May 2025, Vertiv Holdings Co (NYSE:VRT) participated in the Oppenheimer 20th Annual Industrial Growth Conference, presenting a confident outlook on its future growth in the digital infrastructure sector. The company underscored its strategic initiatives to tackle supply chain challenges and leverage the increasing demand for AI infrastructure. Despite concerns about market slowdowns, Vertiv remains optimistic about sustained growth, emphasizing its robust pipeline and strategic investments.

Key Takeaways

• Vertiv reported a 13% increase in Q1 orders year-over-year, following a 60% rise the previous year.
• The company maintains a strong book-to-bill ratio, indicating healthy demand.
• Vertiv aims for a 9-12% CAGR in critical digital infrastructure through 2029.
• The company is expanding its CapEx to maintain a 25-30% capacity headroom versus demand.
• Vertiv is focused on innovation, particularly in chillers and liquid cooling solutions.

Financial Results

• Orders: Q1 orders rose by 13% year-over-year, building on a 60% increase from the prior year.
• Book-to-Bill Ratio: A strong ratio reflects healthy demand compared to revenue.
• Growth Outlook: The company anticipates a 9-12% CAGR through 2029 for critical digital infrastructure.
• Colo and Cloud Growth: Mid-teens growth is expected, potentially reaching 17%.

Operational Updates

• Pipeline: The pipeline is growing sequentially, including commercially engaged projects and specific quotes.
• Training vs. Inference: Infrastructure supports both training and inference, with inference expected to grow faster.
• Resource Allocation: Hyperscalers are reallocating resources to address scarcity in water, fiber, power, and land.
• Tariffs: The company expects to achieve tariff neutrality by year-end, with no material impact on demand.
• Lead Times: Competitive lead times range between 9-15 months.
• Supply Chain: Resilience is built through strategies like China plus one, near shoring, and region for region production.
• Capacity: Vertiv maintains a 25-30% capacity headroom, optimizing output through lean methodologies.
• Liquid Cooling: Capacity increased 43 times on an annualized basis, becoming a standard offering.

Future Outlook

• Demand: Long-term demand is strong, driven by AI and cloud growth across sectors.
• CapEx: A substantial increase in CapEx is planned to support growth, influenced by geopolitical and trade factors.
• Portfolio: Expansion in thermal management, focusing on chillers and liquid cooling solutions, is a priority.
• Strategy: Continued progress in R&D and expansion of liquid cooling capacity are key focuses.

Q&A Highlights

• Growth Drivers: AI-related demand and infrastructure needs were primary growth drivers discussed.
• Competitive Advantages: Agility, lead times, and an innovative portfolio were highlighted as competitive strengths.
• Risk Management: Credit risk and commercial contract management, especially with new entrants, were addressed.

In conclusion, Vertiv’s presentation at the Oppenheimer Conference showcased its strategic focus on growth and resilience in the digital infrastructure market. For a detailed understanding, readers are encouraged to refer to the full transcript below.

Full transcript - Oppenheimer 20th Annual Industrial Growth Conference:

Noah Kaye, Managing Director, Oppenheimer Research: Well, good morning, everyone, and welcome to Oppenheimer’s twentieth annual industrial growth conference. Noah Kaye, managing director, at Oppenheimer Research. And we are very pleased to welcome in the management team of Vertiv, CEO, Gio Albertas, CFO, David Fallon. Lynn Maxaino, thank you very much for being here today.

Gio Albertas, CEO, Vertiv: Well, thank you for having us.

Noah Kaye, Managing Director, Oppenheimer Research: So we’re going to, as a sort of point of procedure, go through a number of questions that, we prepared. For those listening on the webcast, you can submit questions via the q and a function, or you can email me at noah.k@opco.com. We’ve got a lot to get through. So let’s start, I think, with a 10,000 foot view of the industry. I think back to November’s investor event, and the company had referenced a nine to 12 CAGR through 2029 for critical digital infrastructure, with mid teens growth in cloud and colo.

You reiterated that during one q earnings. And as we’ve talked with investors, I think a fundamental question they’re grappling with is when you consider the AI training breakthroughs, the proliferation of models, why do the growth assumptions from Investor Day still hold, and how might the nature of demand be shifting versus what we previously thought?

Gio Albertas, CEO, Vertiv: You know, the the question is can be interpreted in two ways. Is that given all the investment, given all the shift to inference enhanced to the the real reason for the existence of AI, the existence of AI ought to have kind of a a self referential models, but is to have a stock that can be sold and market. That is happening. That is happening fast. So it’s strange times in which people say, hey.

Your your growth model to ’29 is too optimistic or is too pessimistic. Both ways. You can see it both ways after, you know, the the the the the the nervousness of the swings in early part of this year or even or even July. For us, it’s it’s clear that demand is there. The demand is is strong.

This is a secular trend. And many people have compared this to electricity or the steam engine or whatever else. It’s gonna continue. It’s gonna be strong. We we always say that it could theoretically be even stronger than this, waiting not for some moderating factors like permitting and power availability all being addressed, of course, but all already factored in in our in our demand plan that we’ve shared with all of you.

And by the way, that that nine twelve range really becomes if we focused on the colo and cloud that more of risk at this stage part of the demand would be at 17%. So if anything, as we look out, one could be more optimistic than that. But, you know, we have always been measured in our view of things. The the the various inputs, the various analysis, the various opinions in the market, certainly corroborated also by by our pipeline, pointed the direction of the model we shared with you is is very sound. It’s gonna be better.

We will all be happy, and, certainly, we have the capacity, the means, and and the innovation to be a winner in in an even stronger scenario. One thing I want to reflect second, you know, we came out of a February and March period where everyone was nervous in the market about the ban, etcetera. We were very early in the earnings cycle this time around. And we came out saying, hey, guys. The demand is there.

You know, it’s going in the direction we told you it it would be going. The market is good. Stay calm. We’re focused on the on the long term. We are here to deliver our long term promise as we explained that in in November.

And one after the others, the hyperscalers, the competitors, etcetera, confirmed confirmed that. So look at Vertiv with confidence when we tell you where the market is going.

Noah Kaye, Managing Director, Oppenheimer Research: Well, I guess to put some meat on the bone here, I’m not sure everyone realizes. I mean, you just had effectively a record quarter for orders, or close to it at least, and you still had sequential growth in the pipeline. Maybe you can start by reminding us how you build up your pipeline, how you define it, and what you’re seeing on conversion times from pipeline into revenue.

Gio Albertas, CEO, Vertiv: So sure. I will I will start saying that, as we always say, orders in in this industry are lumpy, so let’s keep that in mind. So one should not read the the long term trajectory from just one quarter. Have you said that? Of course, q 13% up year on year on 60% up last year, so it’s very difficult comp.

Something that we are very happy and very proud of just just like the the strong book to bill. Pipeline. For us, pipeline is everything where we are commercially engaged factory. Not just a hey. We have, I don’t know, a capacity agreement that goes out into into future year long term.

That typically we do not call pipeline. Pipeline would be in in my example of a of a given capacity agreement would be, okay, the next two, three projects that we have visibility for, that we know are being built, that we are quoting specifically or working out from an engineering standpoint specific, that would be pipeline. But more generically, pipeline is everything from the identification of an opportunity from a commercial standpoint to the moment we close. So it’s a pipeline that’s been growing, as we said, and sequentially growing as well. And where we see conversion rates that are encouraging, that that we see a good stability there.

So the pipeline is is, we believe, as it has been historically for us, including the the last quarter, a very strong leading indicators of future performance.

Noah Kaye, Managing Director, Oppenheimer Research: You mentioned, Gio, that there’s the shift happening right from from training to inference. Maybe you can help us try to understand how to think about the share of demand you’re seeing from training versus inference. And I don’t know if that might involve smaller, more distributed projects in the pipeline, or perhaps you can push back against that? Maybe use something that you saw in your order patterns. Just help us understand the mix today and how you see it trending.

Gio Albertas, CEO, Vertiv: Two things. One, I think we we we should not be too binary in a in a definition what is training and what inference from from an infrastructure standpoint. Very often, you know, you we we are here talking about people building infrastructure, a data center that has to last about fifteen, twenty, twenty five years. So defining today what type of loads you will have in the tenth year or even in fifth year. So what we see is more and more people are thinking a dual use type of infrastructure so that, you know, the mix will be what it is.

There will be period in which it is model training. It it will be kind of a specific application training. It will be it will be inference. We see inference, of course, growing faster as as time goes by because that’s where the use case is. That’s where the monetization is, and and that’s where AI becomes you know, it’s AI at work, not AI training.

So but when it comes to the mix of type of data center, we continue to see large data centers being built, designed, or, you know, planned. So that has not abated. Size matters for for a dataset. But also we see a number of more distributed, more edge data centers data center ideas. When we when we were talking about you know, iGenius, the the the project that we shared publicly, that’s typically a combination of of this southern and and edge application in in many respects.

So it’s it’s a combination. We see in the medium and but also long term, really a combination of very large and edge. The other side, the other aspect that is interesting that, you know, we always talk about enterprise enterprise in and of itself on prem is a smaller data center data center model. So it will not be one way or another. It is a large industry and growing, and that will have multiple ways about about itself.

Noah Kaye, Managing Director, Oppenheimer Research: Yes. I mean, Gio, as you alluded to earlier, I mean, I think that there was some concern from investors, you know, in months past around, these headlines of specific hyperscalers maybe pulling back in areas on lease negotiations. And, you know, I think when we listen to industry experts, for example, at a data center world, I mean, you know, they were characterizing this more as really a reallocation of demand to account for scarcity of resources, water and fiber and power, right, and land. So I I think the question for us is, are there areas of any significance where you are seeing some pause around long term planning for some of the larger AI factories right now? You know?

And if so, how much of that speaks to these resource challenges? Are the implications for the company?

Gio Albertas, CEO, Vertiv: Well, you know, we we do not see anything meaningful long term change of of market dynamics in terms of there is a long term need for data center capacity, be it for cloud or AI or or or proprietary application in the enterprise, government, and whatnot. So that is that is not changing. Now as you as you say, there could be different short term movements, adjustments of, you know, decision on what

Noah Kaye, Managing Director, Oppenheimer Research: to

Gio Albertas, CEO, Vertiv: prioritize in terms of investment, but that’s the normal course of running a business, whether the business is a cloud business or if it is an enterprise business or a or a a or a government business. So that’s more about the mix than the the long term trajectory. We are very optimistic about the long term trajectory, and the optimism is grounded on the things that we see happening in our pipeline, but also in the industry more broadly speaking longer term. Mhmm.

Noah Kaye, Managing Director, Oppenheimer Research: And you mentioned, some of the new entrants, sovereign and and neo cloud, and even some growth in enterprise, new colos. Maybe talk a little bit about how you approach those new entrants versus, you know, perhaps more established, blue chip, if you will, hyperscaler customers. How how do you see kind of counterparty credit risk? How far out would you be willing to book orders for customers like that?

Gio Albertas, CEO, Vertiv: Well, I would say, certainly, the the the industry is expanding. But it’s not so much the IT infrastructure or pre digital critical infrastructure. That has been always extremely broad. That has been extremely broad for the last twenty, thirty years. And and if you think about pre AI, go let’s go back four years.

I mean, AI has been there for for quite some time. But prior let’s say, before chat GPT November when was it? November 2022, the industry was very broad from government, sovereign, AI, etcetera, etcetera. Sorry. Sovereign, AT, enterprise.

So always very Indeed. Yeah. We were very strong in terms of our go to market and reach the the also the spot. But then overlap on that, the AI acceleration. And certainly, the AI acceleration at the beginning has been and still is strongly and kind of a large a large cloud player activity.

But now we see that that is broadening. And it’s broadening because the market is very attractive because there is space for, for example, new clouds. But then it’s almost an inevitable that other IT players, the enterprise and, again, historic, that to step up their game to AI. And this is really what is happening. So this expansion of the market should not be viewed as, oh, it’s an expansion of the of the risk phase.

No. Because those actors have always been in the in in play. Maybe not the new clouds, but the other actors have always been in play then now upping their game to to AI. But when it comes to the credit risk, of course, we we’re very thorough. We’re very thorough.

We make sure that not only do the all the all the checks necessary, But, also, you know, more often than not, we we we work with advanced payments. So make sure that there’s little to no fluff in the in the type of commercial contracts that we engage ourselves in. The the last part of your question, if I’m correctly, was, you know, far out into the picture are we committing from a from a backlog standpoint. Not differently than than what happened a year ago, say, time or historically. So we do not see kind of a runaway people that just talk the big talk and transform orders into, you know, 20 whatever, which is very rigorous.

You know? It’s credit worthy? Yes. Is this a real project? Yes.

Do we have a purchase order against which there is a construction site that is alive and and there? So I think that the I’m pretty sure. Actually, I am sure the risk profile of our business has not has not changed much.

Noah Kaye, Managing Director, Oppenheimer Research: In a bit, and I’m looking forward to it, I wanna take it into the area of technology differentiation and portfolio evolution, which is, quite exciting. We would, of course, be remiss not to address tariffs. You know, perhaps you could talk to the impact, if any, that you see tariffs having on the demand environment. Has there been or could there be any pull forward in demand to address reciprocal tariffs, any change in pipeline or order conversion you’ve seen thus far in The Americas versus EMEA and APAC?

Gio Albertas, CEO, Vertiv: When when it comes to the impact on general demand, we have not we have not seen it in any material material fashion. Again, the demand the demand is there. The demand is there for our customers. The the opportunity is there, so nothing material to to report in that in that respect. When it comes to the aspect of demand pull ins, it’s really not possible in our in our space.

A, because, you know, what we build is majority of case, always, but the majority of cases is is destined to a it’s destined to a location. So people are not just ordering and having stuff delivered ahead of certain set of tariff rates coming into into interplay. Nor, you know, from a from an order standpoint, we we see big big movements there tariff tariff related. So I would say, no. No real no no real meaningful material impact.

Noah Kaye, Managing Director, Oppenheimer Research: So Can I just follow-up on that and ask conceptually why that’s the case? As I think we had, for example, one hyperscaler, increase their CapEx estimate for the year and really say this this was because of tariffs. Of course, they go ahead with their plan, but, you know, for for critical digital infrastructure, you know, how should we think, or should we think differently about elasticity of demand if we have tariffs increasing the cost to build? And I recognize that, you know, you are a relatively small percentage of that build versus the actual IT, the chips that will ultimately go in, particularly to these large IT factories. But, help us understand why that’s the case.

Gio Albertas, CEO, Vertiv: Well, I wouldn’t have kind of a an exact answer, if you will. But what we heard also from the from many of the hyperscalers in their recent earning releases and calls is they have a lot of demand for AI. And more often than not, they have insufficient capacity to to satisfy that demand. And they believe that this is gonna continue over the the years. Now you’re right.

The of the total cost of the data center, the the let’s say, long term CapEx as someone has characterized that, one of the hyperscalers has characterized that is a is a relatively small portion. But make no mistake, these hyperscalers are very savvy from a from a commercial and and cost management standpoint. So the fact that there is there isn’t a stock price elasticity such that an increase that is driven by inflation or is driven by tariffs directly impacts demand is that the demand, their demand, not the demand for us, their demand is stronger is stronger than that, and the and the equation still works very well. But, again, I should be truly in their shoes to give you the the answer, but I think this is probably very close to to to to what’s in their head.

Noah Kaye, Managing Director, Oppenheimer Research: Yeah. That that that makes sense. Thank you, Gio. And then, you know, you’ve commented in the past that your lead times are very competitive, perhaps even running ahead of some peers in terms of your own ability to deliver. What could that mean, if anything, in terms of opportunistic share gains?

Is it sounds like there has been no pull forward of demand, but perhaps your agility to provide amidst all this tariff uncertainty is helping you win business that you wouldn’t have, previously gotten.

Gio Albertas, CEO, Vertiv: Yeah. I would decouple the tariff uncertainty from from lead time. Tariff uncertainty, if you will, is a is a very temporary situation. Then everything, the equilibria, you know, rebalance in under the new trade booms. So I wouldn’t look at it as as something that answer or explains dynamics.

We believe that short lead times are are a competitive advantage. Now, clearly, not everyone will need a a short lead time. Very often, we’ve we’ve been vocal about that that very often, the requested lead time for our customers is between 09:15 months, sometimes eighteen months. So we’re talking about lead times well below below that. But there are areas in the market, typically the enterprise or sometimes, you know, we talked about the rapid shift of priority for some of the big players.

That shift of priority may require a course correction also in, you know, what you build and what you not don’t build. And maybe you have a construction site that is that has initiated and you accelerate. So the short lead time is more than opportunistic than, say, everything else. So it’s additional market share while the bulk continues to stay in that nine, fifteen months, if it makes sense. No.

Noah Kaye, Managing Director, Oppenheimer Research: It does. It does. I appreciate that. You know, I think just on managing the cost side, of this picture, with tariffs, you know, you you you led the company geo out of a, you know, very challenging supply chain environment, as CEO. I’m sure, and perhaps you can comment on it, you’ve you’ve adjusted your approach and taken some lessons during this new period of uncertainty.

But I think more concretely, you know, the company quantified net tariff cost impacts for the year, state expectations to exit the year at tariff neutrality, roughly fifty fifty, I think, between price and supply chain mitigating that. Maybe just help us get a little more clarity on how much of the backlog actually has contractual repricing or protection for tariffs versus more ad hoc discussions and how you’re kind of framing, any incremental pricing here. Is it is it truly incremental price, or is it more of a surcharge for for tariffs?

Gio Albertas, CEO, Vertiv: K. Let’s say, clearly, very different conditions than three years ago and then very different in my respect, also different company, Vertiv, but certainly very different in terms of execution capabilities that have been the obsessive center of focus on for for everyone, and it continues to be continues to be forever. So certainly, a level of supply chain resilience. And as I said, you have built the resilience for China plus one for near near shoring and region for region, but you build tools, muscle, competencies, ability to to work for people, and supply a network that that can adjust relatively quickly to a changed perimeter that is that is or partially changed perimeter. We’ll see what the longer term will be with with tariffs that that we’re facing now.

Hence, you know, the the the the company’s fit, the company can react and is reacting quickly to to this change in environment. The other is, you know, the the we built a price muscle that we do not did not have before and we demonstrated. When it comes to what is the structure of our contracts, we do not go with those details. But certainly, we are in a much stronger position than we were three years ago in terms of an ability to to act on inflation increase, tariff tariff increases. But we’ll not go into the details whether it is a price increase for for inflation, if it is pricing clear increase for tariff on a case by case basis.

I think that is one thing that I wanna be sure I send strong message about is we do this cooperatively with our customers on a customer by customer basis. And so there’s no way that we would just harness a a a contractual agreement and just go and steamroll because in the end, it is about our reputation with the customer. It’s about our partnership with customers, about designing the common future with the customer. And this is a a short term temporary thing. As we as the entire industry reconfigures, it’s the long term that that that matters.

When it comes to, you know, a price increase that is more general, not backlog related, then it’s it’s more. Yeah. You can have a price increase if the conditions if the conditions change. If there is an inflationary, let’s say, inflationary dynamics in in the market regardless of what causing that inflationary demand. As we said already in our call, we have taken price actions in in that respect.

Noah Kaye, Managing Director, Oppenheimer Research: You know, I think just to, put a last piece of this, together for for listeners, you know, I think at the beginning of the year, you guided to a substantial increase in CapEx, which, you know, we know that you typically try to maintain 25, 30 percent capacity headroom versus demand. We took that as a very clear signal of your expectations for demand growth. Maybe you can help us understand your primary uses of CapEx. And I will ask on a related point, in any way the tariffs that were announced perhaps change your view on CapEx, where you were going to spend it, did it impact your strategy?

Gio Albertas, CEO, Vertiv: Well, let let’s start from from the end. It’s it’s clear that we operate we operate, let’s say, in in the geopolitical and environment at hand and what we believe the future is gonna be. There is you know, only a fool would not do that, if you will. So clearly, the the the the current situation has implications on how we allocate CapEx. Then I say, this is not too surprising.

So we’ve we’ve been moving in in certain directions as I said, kind of region for region that for for quite some time already. So if anything, what we see happen incorporates a certain direction. But by all means, in general, you know, we operate in the in the market environment or in the trade environment in which we are finding ourselves now and believe we will be in the future. So the answer is yes, but there has no there has been no kind of a dramatic shift because I believe the direction in which we are heading is simply supporting the the the situation. Now CapEx increase.

It’s correctly, so you you you read into that optimism in in growth as we said as we said explicitly, if you will. This connects also the CapEx dot with the narrative, the the the higher level narrative and model that were shared with with you. That 25, 30 percent wiggle room is something that we like to retain at all times. In general, it cannot be always for all part of lines, etcetera, because, again, we know that no matter how well we know the future, the future will surprise us. So we wanna make sure that we are there to capture all opportunities.

So, yeah, growth in CapEx is not a growth that is dramatically different in terms of CapEx to to revenue ratio, but certainly is headed in the right direction. And again, it’s not just CapEx that defines our capacity. We do a lot of lean optimization. Our output per square foot is constantly increasing and will continue to increase. We talk often about operational leverage.

This is an element. There’s an important element. So CapEx is one of the, let’s say, levers for capacity expansion of the soul.

Noah Kaye, Managing Director, Oppenheimer Research: I wanna shift to the portfolio. You know, there was a the company had a blitz of new product announcements the week of GTC, new chillers, modular solutions, rack UPS software. I’d like to understand how those connect to, you know, the growth in the market share opportunities you’re you’re trying to unlock.

Gio Albertas, CEO, Vertiv: Think there are two aspects. One is oops. Screen went blank for a second there.

Noah Kaye, Managing Director, Oppenheimer Research: We’re still we’re still hearing you.

Gio Albertas, CEO, Vertiv: Good. Good. Good. So you mentioned chiller. That’s a very important one.

So in a sense that it’s a space that we that we participate probably not let’s say, we’re punching below our weight in in that space, and that is clearly something that we are strongly intentioned to change. But in general, clearly, we use innovation and new product launches to not only create market share, but to bring to market things that the others are not bringing. And we do that cooperating with our customers and other partners with the silicon providers. And and we do that very, very intentionally. You know, you you talked about the slew of GTC GTC announcements.

Mhmm. If we go back to ’24, there are two. One product that I that I like extremely is our smart run to to accelerate dramatically accelerate the white space build out build out times, and it’s a space that is new for us. It’s new for everyone simply because we are creating opportunities and creating solutions. So, yes, this is so central to to what we do.

We believe that, you know, knowing this space is so well, we have an opportunity just to have the product that suits the need today, but also to see what the future needs are and how we can innovate in ways that you may check challenge the the way things are done in our own very industry. So very pleased with with the progress, and rest assured that we we continue to progress in that grow growth of r and d spend and our top line top line growth.

Noah Kaye, Managing Director, Oppenheimer Research: Well, Gio, I think I’ll ask one more before we have to close here, and it’s related to this. You know, you already have a leading share in thermal management in in the industry. But with an expanded portfolio of chillers and now liquid cooling, how should we think about your growth opportunity? And maybe within that, you can also update us on the ramp for the liquid cooling business.

Gio Albertas, CEO, Vertiv: Okay. But, again, you know, certainly, have a a good market share in in cooling thermal management. We can have a better market share in cooling and thermal and thermal management quite quite honestly. So it’s not that we say, hey. You know?

Whatever the number, you know, two more two more points, and we are happy. There’s no such thing as as being happy at Berkeley. We’re not happy. I mean, we are nice bunch of people, but truly, we’re never satisfied. So that that applies that applies absolutely to the the cooling market share.

Just like the same is true for thermal, for everything. For power, that’s true for everything we do. We are particularly happy with the acceleration that we see in everything liquid cooling. At the beginning of the year, last year, we said 43 times the initial capacity by the time we are out of the year on an annualized phase, and that’s exactly where we landed at the end of twenty twenty four. So we certainly enter 2025 with a lot of liquid cooling capacity.

We’ll continue and I’ll continue to to expand capacity because what we hear is that everything is is going liquid. Now that liquid air makes seventy twenty, 70 30, or sometimes seventy fifty. It’s not because I can’t do the math, but because there is provisioning. That will continue, but but liquid is becoming ubiquitous. So we’ll continue to expand that capacity.

Probably not that the breakneck speed that we had last year, but that was kind of a totally new technology for us for the market, and we needed a lot of a lot of capacity to command the market share that I think we’re entitled to.

Noah Kaye, Managing Director, Oppenheimer Research: Alright. Well, we continue to look forward to your journey down that path, and we thank you all for the time and the discussion. Geo, David, Lynn, hoping everyone has a great day at the conference. And with that, we will, speak with you all soon.

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