Vertiv Holdings Co (VRT) 2023 Q2 法說會逐字稿

Good morning. My name is Lauren, and I will be your conference operator today. At this time, I would like to welcome everyone to Vertiv's Second Quarter 2023 Earnings Conference Call. (Operator Instructions) Please note that this call is being recorded.

早上好。我叫勞倫，今天我將擔任你們的會議操作員。此時此刻，我謹歡迎大家參加 Vertiv 2023 年第二季度收益電話會議。 （操作員說明）請注意，此通話正在錄音。

I would now like to turn the program over to your host for today's conference call, Lynne Maxeiner, Vice President of Investor Relations.

現在我想將會議議程交給今天電話會議的主持人、投資者關係副總裁林恩·馬克塞納 (Lynne Maxeiner)。

Great. Thank you, Lauren. Good morning, and welcome to Vertiv's Second Quarter 2023 Earnings Conference Call. Joining me today are Vertiv's Executive Chairman, Dave Cote; Chief Executive Officer; Giordano Albertazzi; and Chief Financial Officer, David Fallon.

偉大的。謝謝你，勞倫。早上好，歡迎參加 Vertiv 2023 年第二季度收益電話會議。今天與我一起出席的有維諦技術 (Vertiv) 執行主席戴夫·科特 (Dave Cote)；首席執行官;佐丹奴·阿爾貝塔齊；和首席財務官大衛·法倫。

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. 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. 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.

在開始之前，我想指出，在本次電話會議期間，我們將對未來事件做出前瞻性陳述，包括 Vertiv 未來的財務和運營業績。這些前瞻性陳述存在重大風險和不確定性，可能導致實際結果與前瞻性陳述中的結果存在重大差異。我們建議您參考今天的收益發布中包含的警示性語言，您可以在我們的年度和季度報告以及向 SEC 提交的其他文件中了解有關這些風險的更多信息。

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.

我們今天做出的任何前瞻性陳述均基於我們認為截至目前合理的假設。我們不承擔因新信息或未來事件而更新這些聲明的義務。

During this call, we will also present rapid 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.

在本次電話會議中，我們還將介紹快速的非公認會計準則財務指標。我們的 GAAP 業績以及 GAAP 與非 GAAP 調節表可在我們的收益新聞稿以及我們網站 Investors.vertiv.com 上的投資者幻燈片中找到。

With that, I'll turn the call over to Executive Chairman, Dave Cote.

接下來，我會將電話轉給執行主席戴夫·科特 (Dave Cote)。

Well, these last few quarters have been a lot more enjoyable to report. We had another strong quarter of performance in Vertiv, which positions us very well to achieve our significantly increased 2023 outlook. Adjusted free cash flow, adjusted operating profit, sales and margins all performed very well and operational execution continues to improve. We've raised our full year guidance because of our strong first half performance. We also have the very pleasant effect of a strengthening balance sheet. The data center end market continues to look very healthy, and there is an incremental tailwind from AI coming. And that tailwind should provide additional opportunities over many years for Vertiv because our technology will matter. A great market position, a great industry where we can differentiate with technology, these attributes are what attracted me to Vertiv over 4 years ago, and they are truer today than ever.

嗯，過去幾個季度的報告要愉快得多。維諦技術 (Vertiv) 又一個季度表現強勁，這使我們能夠很好地實現 2023 年大幅增長的前景。調整後的自由現金流、調整後的營業利潤、銷售額和利潤率均表現良好，運營執行力持續改善。由於上半年表現強勁，我們上調了全年指引。我們還獲得了資產負債表強化的非常令人愉快的效果。數據中心終端市場看起來仍然非常健康，人工智能帶來的增量推動力即將到來。這一順風車應該會在未來很多年為維諦技術 (Vertiv) 提供更多機會，因為我們的技術至關重要。卓越的市場地位、卓越的行業，我們可以通過技術實現差異化，這些特質是 4 年前吸引我加入維諦技術 (Vertiv) 的原因，而如今這些特質比以往任何時候都更加真實。

We're obviously pleased with the results, but there is so much more to come. There's a lot of upside, not just in the market and our technology, but also just continuing to fix legacy process issues and building a high-performance culture which didn't exist. Gio and his team are off to a great start, and there is a lot of work left to be done, but it is also (inaudible) supports more consistent execution over the long term.

我們顯然對結果感到滿意，但還有更多的事情要做。有很多好處，不僅在市場和我們的技術方面，而且還繼續解決遺留流程問題並建立一種不存在的高績效文化。 Gio 和他的團隊有了一個良好的開端，還有很多工作要做，但它也（聽不清）支持長期更一致的執行。

So with that, I'll turn the call over to Gio.

因此，我會將電話轉給 Gio。

Well, thank you very much, Dave. We saw the positive momentum continuing into second quarter across all key financial metrics. Second quarter sales were up 25% organically, led again by a 48% increase in Americas. We continue to see supply chain improvements and increased resiliency. We saw healthy market demand, which supported the shipment of substantial volume in the Americas region. Orders excluding FX, were down just 3% from last year's second quarter better than anticipated, and book-to-bill remained at 1. Despite ongoing order normalization as well as difficult comparison, the market remains healthy. We have also seen an encouraging AI-related activity, and I'll elaborate on this when we cover Slide 6.

嗯，非常感謝你，戴夫。我們看到所有關鍵財務指標的積極勢頭持續到第二季度。第二季度銷售額有機增長 25%，其中美洲地區銷售額增長 48%。我們繼續看到供應鏈的改善和彈性的增強。我們看到了健康的市場需求，這支持了美洲地區的大量出貨。不包括外彙在內的訂單僅比去年第二季度下降 3%，好於預期，訂單出貨比仍保持在 1。儘管訂單正在正常化且比較困難，但市場仍然健康。我們還看到了令人鼓舞的人工智能相關活動，我將在介紹幻燈片 6 時詳細說明這一點。

Our adjusted operating profit was $251 million, and we saw benefits from our increased volume as well as price cost. Our adjusted operating profit margin improved 860 basis points to 14.5% as we continue to strengthen operational execution. I am particularly pleased to report the strong adjusted free cash flow of $227 million in second quarter. We also continue to see the leverage profile of the business to improve at 3.1x at the end of Q2 as the balance sheet continues to strengthen. These are early successes and still much more opportunity ahead. We are raising fairly significantly our full year guidance. And are now expecting sales for the full year to be up 20% organically, AOP at $950 million at the midpoint and adjusted free cash flow of $550 million at the midpoint. We are executing our plan to deliver the full year 1 quarter at a time, and our transformation continues.

我們調整後的營業利潤為 2.51 億美元，我們看到了產量增加和價格成本帶來的好處。隨著我們繼續加強運營執行力，調整後的運營利潤率提高了 860 個基點，達到 14.5%。我特別高興地報告第二季度調整後自由現金流強勁，達到 2.27 億美元。隨著資產負債表繼續增強，我們還繼續看到該業務的槓桿狀況在第二季度末改善至 3.1 倍。這些都是早期的成功，未來還有更多的機會。我們大幅提高了全年指導。目前預計全年銷售額有機增長 20%，AOP 中點為 9.5 億美元，調整後自由現金流中點為 5.5 億美元。我們正在執行我們的計劃，一次交付一個季度的全年業績，並且我們的轉型仍在繼續。

We are making meaningful steps forward in our operational execution. We are demonstrating clear traction and there is tremendous value creation ahead. We're not relenting our focus on operational execution, that is what we intend to continue to demonstrate each and every quarter.

我們在運營執行方面正在邁出有意義的一步。我們正在展現出明顯的吸引力，並且未來將創造巨大的價值。我們不會放鬆對運營執行的關注，這就是我們打算在每個季度繼續展示的內容。

So let's now turn to Page 4. A few changes on the market environment slide. First, we moved cloud hyperscale to green in EMEA. Globally, we have seen an acceleration in the cloud hyperscale and colocation market segment in the last 90 days, substantiated by the large amount of incremental capacity that is being planned as well as by the amount of leasing capacity that was signed in the -- in this past quarter gigawatts of new capacity.

現在讓我們翻到第四頁。幻燈片介紹了市場環境的一些變化。首先，我們在歐洲、中東和非洲地區將超大規模雲轉變為綠色。在全球範圍內，我們看到過去 90 天內超大規模雲和主機託管市場加速增長，規劃中的大量增量容量以及簽署的租賃容量量都證實了這一點。上個季度新增容量為千兆瓦。

Our pipelines have clearly strengthened. It is hard to delineate what is AI and what is not. But we know the industry is certainly getting ready for AI, and we have orders in our books and opportunities in our pipeline that are unequivocally for AI infrastructure.

我們的管道明顯加強了。很難界定什麼是人工智能，什麼不是。但我們知道，這個行業肯定已經為人工智能做好了準備，我們的賬簿上有訂單，管道中有機會，這些都明確適用於人工智能基礎設施。

Conversations with cloud and colo players are now around making sure there is available capacity to support a healthy outlook, and we are in discussions with several large and relevant customers on what this commercial arrangement can look like, very encouraging.

現在與雲和託管服務提供商的對話圍繞著確保有可用容量來支持健康的前景，我們正在與幾個大型相關客戶討論這種商業安排的樣子，非常令人鼓舞。

As we move to telecom, this area has further weakened in the last 90 days, with some further carving of spent by the major telco carriers. We anticipate the telecom markets remain quiet for the balance of 2023, not particularly worrisome. These patterns are not atypical for this market. We have left the APAC market yellow across the segments. The China market specifically, experienced a slower-than-expected start to the year, not just for us but for most companies. In our current view, we are not anticipating much recovery in China market in 2023, but there are some encouraging signs as we see orders turned positive in Q2 and pipelines are healthy. No changes in view on enterprise SMB or commercial and industrial. Overall, I'm more encouraged today than 90 days ago, given clear demand signals from the cloud hyperscale colocation markets that support our view for second half '23 and shape our thinking around 2024.

隨著我們轉向電信領域，這一領域在過去 90 天內進一步減弱，主要電信運營商進一步削減支出。我們預計 2023 年剩餘時間電信市場將保持平靜，不會特別令人擔憂。這些模式對於這個市場來說並不罕見。我們將亞太市場的各個細分市場設為黃色。特別是中國市場，今年的開局比預期慢，不僅對我們而言，對大多數公司而言也是如此。我們目前認為，我們預計 2023 年中國市場不會出現太大復蘇，但也出現了一些令人鼓舞的跡象，因為我們看到第二季度訂單轉正且管道狀況良好。對中小企業或工商業的看法沒有變化。總體而言，鑑於來自云超大規模託管市場的明確需求信號，我今天比 90 天前更受鼓舞，這些信號支持我們對 23 年下半年的看法，並塑造了我們對 2024 年左右的思考。

Let's move to Slide 5. Orders performed better than anticipated, although down 3%, they are coming together stronger than expected, and they were 13% sequentially up from Q1. Book-to-bill ratio of 1 preserves a healthy backlog. We anticipate orders flat more or less in Q3 and turning positive in Q4.

讓我們轉到幻燈片 5。訂單表現好於預期，儘管下降了 3%，但總體強於預期，比第一季度環比增長 13%。訂單出貨比為 1，保持了健康的積壓狀態。我們預計第三季度訂單或多或少持平，第四季度訂單轉正。

I know everyone is interested in what AI orders looks -- looked like in the quarter. And candidly, that would be almost impossible to answer with precision. We have seen AI-related orders, I would say, in the tens of millions of dollars. Our customers are focused on AI retrofit rate infrastructure, and we see evidence of this in our pipelines. Many of our products today can be used for either regular density or high-density applications, and we won't be able to report out a discrete AI number. For example, most AI viewed today are still being air cooled, perfectly served by the traditional vertical portfolio. Over time, a part of these loads will transition to liquid. And here too, we are uniquely positioned, liquid to remove heat from the server and the rack, but removal of the heat doesn't stop outside the rack. You need to remove the heat from the data hole, and we have a portfolio of solutions to do just that.

我知道每個人都對本季度人工智能訂單的情況感興趣。坦白說，這幾乎不可能準確回答。我想說，我們已經看到了與人工智能相關的訂單數千萬美元。我們的客戶專注於人工智能改造率基礎設施，我們在我們的管道中看到了這一點的證據。如今，我們的許多產品可用於常規密度或高密度應用，但我們無法報告離散的 AI 數字。例如，今天看到的大多數人工智能仍然是風冷的，由傳統的垂直產品組合完美服務。隨著時間的推移，這些負載的一部分將轉變為液體。在這裡，我們也處於獨特的地位，液體可以消除服務器和機架上的熱量，但熱量的消除並不會停止在機架之外。您需要消除數據孔中的熱量，我們擁有一系列解決方案來實現這一目標。

As I say, we are seeing clear demand acceleration signals from the market, and we are having conversations with very relevant market players, around securing capacity and not just over the next few quarters, but well in '24 and beyond.

正如我所說，我們看到市場發出明確的需求加速信號，我們正在與非常相關的市場參與者進行對話，圍繞確保產能的問題，不僅是在接下來的幾個季度，而且在24 年及以後。

Let us transition to supply chain. We see improving the environment but there are 2 parts to this story. First, supply chain continues to incrementally improve. No doubt, lead times are gradually reducing, and there is more certainty supply. The second part is the self-health part. We have been vocal about our multi-sourcing programs. One of the most important architects of this ongoing supply chain resilience program, Paul Ryan, is now our leader of global procurement. He is not new to me or Vertiv. He has been with us over a decade and has more than 25 years of experience and a strong track record operational execution combined with very clear strategic vision. Supply chain resilience is key considering the demand waves that may be ahead.

讓我們過渡到供應鏈。我們看到環境有所改善，但這個故事分為兩部分。一是供應鏈持續完善。毫無疑問，交貨時間正在逐漸縮短，供應也更加確定。第二部分是自我保健部分。我們一直對我們的多源計劃直言不諱。 Paul Ryan 是這一持續供應鏈彈性計劃最重要的架構師之一，他現在是我們的全球採購負責人。他對我或 Vertiv 來說並不陌生。他已在我們工作了十多年，擁有超過 25 年的經驗、良好的運營執行記錄以及非常清晰的戰略願景。考慮到未來可能出現的需求浪潮，供應鏈的彈性是關鍵。

Let's now talk capacity. We have been investing in capacity for a few years in a balanced approach across the globe. (inaudible) The focus is on utilizing and coordinating capacity globally. We have recently announced a new role in the organization, Executive Vice President, Manufacturing, Logistics and Operational Excellence with Andrew's -- [Anders Carberry] leading the effort. Over the last 5 years, [Anders] led Vertiv's operations in Asia, then EMEA and finally, Americas. In the Americas operations over the past year, specifically, we have seen significant improvements. He's the right person to take the organization to the next level on process and operations improvement as well as company-wide deployment of Vertiv operating system. Our ability to navigate strong periods of growth in a complex environment continues to improve.

現在我們來談談容量。幾年來，我們一直在全球範圍內以平衡的方式進行產能投資。 （聽不清）重點是利用和協調全球能力。我們最近在組織中宣布了一個新職位，即負責製造、物流和卓越運營的執行副總裁，由 Andrew's [Anders Carberry] 領導這項工作。在過去 5 年裡，[Anders] 領導了 Vertiv 在亞洲的業務，然後是歐洲、中東和非洲地區，最後是美洲。特別是在過去的一年裡，我們在美洲的業務取得了顯著的進步。他是帶領該組織在流程和運營改進以及 Vertiv 操作系統在全公司範圍內部署方面更上一層樓的合適人選。我們在復雜環境中度過強勁增長期的能力不斷提高。

Let's talk about inflation. While inflation is trending a bit more favorably than anticipated, a couple of dynamics influence the second half of 2023. First, metal prices were at lower levels in Q3 and Q4 over the last year. So as we lap that comparison, we're experiencing year-on-year inflation, a bitter higher, a bit higher in the second half. We also anticipate when the Chinese economy accelerates, that increased demand could cause additional inflationary pressure on commodities. We have seen a favorable tailwind from price cost with good processes in place that better prepare us for volatility related to our input costs.

我們來談談通貨膨脹。雖然通脹趨勢略好於預期，但有一些動態會影響 2023 年下半年。首先，金屬價格在去年第三季度和第四季度處於較低水平。因此，當我們進行比較時，我們正在經歷同比通脹，下半年通脹率更高，略高。我們還預計，當中國經濟加速時，需求增加可能會給大宗商品帶來額外的通脹壓力。我們看到了價格成本帶來的有利推動力，良好的流程使我們更好地應對與投入成本相關的波動。

Let's go to Slide 6. We believe AI will increase our overall TAM. AI is a reinforcement of demand trend and AI workloads are incremental to new applications. They aren't in general, replacing other applications in our digital economy. We expect growth in both high-density and general compute. This benefits all Vertiv technologies. We believe liquid cooling is not a displacement risk and, in fact, is additive to growth for Vertiv. Before liquid cooling, we would take the heat from it outside the rack to outside the data center building. With liquid cooling, it's additive. We reach out into the rack and get one step closer to the heat generation point while still controlling all parts of the heat rejection.

讓我們看幻燈片 6。我們相信人工智能將提高我們的整體 TAM。人工智能是需求趨勢的強化，人工智能工作負載對新應用程序來說是增量的。一般來說，它們不會取代我們數字經濟中的其他應用程序。我們預計高密度和通用計算都會增長。這對所有 Vertiv 技術都有好處。我們認為液體冷卻不是替代風險，事實上，它有助於 Vertiv 的增長。在液體冷卻之前，我們會將機架外的熱量帶到數據中心大樓外。對於液體冷卻，它是附加的。我們將手伸進機架，離發熱點更近了一步，同時仍然控制散熱的所有部分。

The infrastructure transition to AI, high-density environment will be complicated and likely involve hybrid approaches to technology deployment. It is very likely a data center will need both liquid and air cooling orchestrated tightly together to optimize the data center environment. We do very well with that approach with the widest portfolio of thermal technology available, deepest domain expertise on how to orchestrate these technologies using our advanced control systems.

基礎設施向人工智能、高密度環境的過渡將很複雜，並且可能涉及混合技術部署方法。數據中心很可能需要緊密配合液體冷卻和空氣冷卻來優化數據中心環境。我們在這種方法上做得很好，擁有最廣泛的可用熱技術組合，以及關於如何使用我們的先進控制系統協調這些技術的最深入的領域專業知識。

Hence over 3,500 field service engineers across the world to support the deployment and maintenance of the infrastructure. We have the scale and the ability to increase capacity. And I hope -- and I believe you can sense my excitement. Much more to come on high-density AI at our Investor conference in November, but feel very well positioned for this opportunity.

因此，全球有超過 3,500 名現場服務工程師來支持基礎設施的部署和維護。我們有規模、有能力增加產能。我希望——而且我相信你能感受到我的興奮。在 11 月份的投資者會議上，我們還會有更多關於高密度人工智能的內容，但我感覺自己已經做好了抓住這個機會的準備。

With that, over to Dave.

接下來，交給戴夫。

Perfect. Thanks, Gio. Turning to Page 7. This slide summarizes our second quarter financial results. As you can see, strong financial performance across the board, starting with our (inaudible) from last year. 9% of that was from pricing and 16% from volume, with most of that volume benefit in the Americas, highlighting the continued supply chain and operational improvements in that region, which has been a pillar of our turnaround over the last 18 months or so. Adjusted operating profit of (inaudible) quarter and adjusted operating margin of 14.5% improved 860 basis points, of which 610 was from higher variable contribution margin and 250 basis points was from fixed cost leverage.

完美的。謝謝，吉奧。翻到第 7 頁。這張幻燈片總結了我們第二季度的財務業績。正如您所看到的，從去年我們的（聽不清）開始，全面的財務業績強勁。其中 9% 來自定價，16% 來自銷量，其中大部分銷量受益於美洲，凸顯了該地區持續的供應鍊和運營改進，這是我們在過去 18 個月左右扭虧為盈的支柱。 （聽不清）季度調整後營業利潤和 14.5% 的調整後營業利潤率提高了 860 個基點，其中 610 個基點來自較高的可變邊際貢獻，250 個基點來自固定成本槓桿。

Adjusted operating profit was $61 million higher than our prior guidance, $45 million from higher pricing, $25 million from incremental volume and $15 million from lower-than-expected inflation with these tailwinds, partially offset by headwinds from foreign exchange and investment in fixed costs, primarily from restructuring and incentive compensation. Higher-than-expected pricing was driven by higher volume, favorable regional mix and some conservatism for potential pricing headwinds that did not materialize. Inflation was not as bad as we expected as commodity costs, including metals, declined from the end of the first quarter, likely influenced by a slower-than-expected rebound in the Chinese economy.

調整後的營業利潤比我們之前的指導高出6100 萬美元，其中4500 萬美元來自更高的定價，2500 萬美元來自增量，1500 萬美元來自低於預期的通脹，這些有利因素部分被外彙和固定成本投資的不利因素所抵消，主要來自重組和激勵薪酬。高於預期的定價是由銷量增加、有利的區域組合以及對未出現的潛在定價阻力的一些保守態度推動的。通脹沒有我們預期的那麼嚴重，因為包括金屬在內的大宗商品成本從第一季度末開始下降，這可能是受到中國經濟反彈慢於預期的影響。

Next, on this slide, and very proudly, we generated $227 million of adjusted free cash flow in the quarter, an impressive $460 million higher than last year's second quarter. While there's still a lot of work to do to optimize working capital, our second quarter is reflective of our focus on cash and indicative of the cash generation potential of this business when we do control working capital, which increased just $5 million in the second quarter despite a $213 million increase in sales from the first quarter.

接下來，在這張幻燈片上，我們非常自豪地在本季度產生了 2.27 億美元的調整後自由現金流，比去年第二季度高出 4.6 億美元，令人印象深刻。雖然在優化營運資本方面還有很多工作要做，但我們第二季度反映了我們對現金的關注，並表明了當我們控制營運資本時該業務的現金生成潛力，第二季度僅增加了500 萬美元儘管銷售額比第一季度增加了 2.13 億美元。

Now the second quarter number was aided by some favorable timing tailwinds, and we should not expect free cash flow to be 130% of adjusted net income each quarter, but it shows we have made significant strides towards unlocking the cash generation potential of this business while funding organic growth.

現在，第二季度的數字得益於一些有利的時機因素，我們不應期望每個季度的自由現金流達到調整後淨利潤的130%，但這表明我們在釋放該業務的現金生成潛力方面取得了重大進展，同時為有機增長提供資金。

Last on this slide, net leverage declined to 3.1x at the end of the quarter and is expected to be approximately 2.3x by year-end, well within our previously communicated target leverage range of 2 to 3x. It was only a few months ago that we were being labeled by some and likely discounted from a multiple perspective as highly levered. We argued at the time that it was pursuant to a mechanical calculation and just a matter of timing. Well, I think we were proven correct as our year-to-date performance has now driven that mechanical calculation towards what we believe to be the practical reality.

在這張幻燈片的最後，淨槓桿率在本季度末下降至 3.1 倍，預計到年底將約為 2.3 倍，完全在我們之前溝通的 2 至 3 倍目標槓桿範圍內。就在幾個月前，我們還被一些人貼上高槓桿的標籤，並可能從多個角度打折扣。我們當時認為這是機械計算，只是時間問題。嗯，我認為我們被證明是正確的，因為我們今年迄今為止的表現已經推動機械計算走向我們認為的實際現實。

Turning to Page 8. This slide summarizes our second quarter segment results. The Americas region continues to show strong year-over-year performance with organic net sales growth of $0.48 including 35% from volume and 13% from pricing. Adjusted operating margin improved 12.3 percentage points on the strength of price cost, fixed cost leverage and notably improved operating results from E&I.

翻到第 8 頁。這張幻燈片總結了我們第二季度的部門業績。美洲地區繼續表現出強勁的同比業績，有機淨銷售額增長 0.48 美元，其中銷量增長 35%，定價增長 13%。由於價格成本、固定成本槓桿以及 E&I 運營業績的顯著改善，調整後的運營利潤率提高了 12.3 個百分點。

APAC top line continues to be influenced by slower-than-expected recovery in China. Volume was relatively flat, so our organic growth was driven by incremental pricing. Adjusted operating margin declined about 100 basis points from last year, and that was primarily driven by approximately $6 million of restructuring costs in the quarter. We do anticipate sequential quarterly sales growth in APAC in the third quarter but we have reduced our full year projection from our prior guidance, now expecting full year low single-digit growth.

亞太地區的營收繼續受到中國復甦速度慢於預期的影響。銷量相對平穩，因此我們的有機增長是由增量定價推動的。調整後營業利潤率較去年下降約 100 個基點，這主要是由於本季度約 600 萬美元的重組成本造成的。我們確實預計第三季度亞太地區的季度銷售額將連續增長，但我們已經從之前的指導中降低了全年預測，現在預計全年將出現低個位數增長。

EMEA grew organically 9% in the second quarter almost entirely driven by pricing. We expect third quarter sale EMEA to be down slightly from the second quarter, with a significant increase in the fourth quarter and full year growth expected to be in the upper single digits. EMEA continues to impress from an adjusted operating margin perspective, posting 26.6% for the second quarter, 870 basis points higher than last year, with this increase primarily driven by price cost and fixed cost leverage.

歐洲、中東和非洲地區第二季度有機增長 9%，幾乎完全由定價推動。我們預計第三季度歐洲、中東和非洲地區銷售額將較第二季度略有下降，第四季度將大幅增長，全年增長預計將在個位數以上。從調整後的營業利潤率來看，歐洲、中東和非洲地區繼續表現出色，第二季度營業利潤率為26.6%，比去年高出870 個基點，這一增長主要是由價格成本和固定成本槓桿推動的。

Finally, on this page, corporate costs were $21 million higher than last year, driven by higher restructuring and incentive compensation costs and an incremental $5 million loss on foreign exchange. Based on the current guidance, we anticipate these incremental costs at our corporate entity to flow through for the full year, and we expect second half corporate cost to be consistent with the first half.

最後，在本頁中，由於重組和激勵補償成本增加以及外匯損失增加 500 萬美元，企業成本比去年增加了 2100 萬美元。根據目前的指導，我們預計我們公司實體的這些增量成本將在全年流動，並且我們預計下半年的公司成本將與上半年保持一致。

Next, turning to Page 9. This slide summarizes our third quarter guidance. As a reminder, we have anticipated a more stable quarterly sequential sales cadence as we proceed through 2023. For this reason, our third quarter guidance looks largely consistent with our second quarter in absolute terms. We have included provision for sequential increases in both pricing and inflation in the third quarter and sequential headwinds from foreign exchange, including $15 million on sales and $5 million on adjusted operating profit.

接下來，翻到第 9 頁。這張幻燈片總結了我們第三季度的指導。提醒一下，我們預計，隨著 2023 年的到來，季度連續銷售節奏將更加穩定。因此，我們第三季度的指導在絕對值上看起來與第二季度基本一致。我們已計入第三季度定價和通脹連續上漲以及外匯連續不利因素的撥備，其中包括 1500 萬美元的銷售額和 500 萬美元的調整後營業利潤。

Moving to Slide 10, our full year guidance. We are raising our projected top line by $285 million, primarily driven by higher expected sales in the Americas, partially offset by lower expected sales in APAC with EMEA consistent with prior guidance. We are raising our 2023 adjusted operating profit guidance by $150 million, $60 million from the second quarter beat and $90 million in the second half. This increase translates into a 170 basis point increase in our expected adjusted operating margin to 14%. And while we have not explicitly provided fourth quarter guidance, math suggests we exit the year at 15%, edging closer to our intermediate-term target of 16%, which should provide good momentum transitioning into 2024.

轉到幻燈片 10，這是我們的全年指導。我們將預計收入提高了 2.85 億美元，這主要是由於美洲的預期銷售額增加，部分被亞太地區和歐洲、中東和非洲地區的預期銷售額下降所抵消，與之前的指導一致。我們將 2023 年調整後營業利潤指導上調 1.5 億美元，比第二季度提高 6,000 萬美元，比下半年提高 9,000 萬美元。這一增長意味著我們預期的調整後營業利潤率提高了 170 個基點，達到 14%。雖然我們沒有明確提供第四季度的指導，但數學表明我們今年的增長率為 15%，接近我們 16% 的中期目標，這應該為過渡到 2024 年提供良好的動力。

And finally, on this page, we are increasing our full year adjusted free cash flow guidance by $200 million at the midpoint to $550 million. This is an $810 million improvement over last year and demonstrates momentum not only with our drive for profitability but also with our management of working capital.

最後，在本頁中，我們將全年調整後自由現金流指引中值增加 2 億美元，達到 5.5 億美元。這比去年增加了 8.1 億美元，這不僅體現了我們對盈利能力的追求，也體現了我們對營運資本的管理。

Before I hand it back over to Gio, let me front run some potential questions on our adjusted free cash flow guidance, which implies approximately $300 million of free cash flow in the second half, which is $150 million lower than our second quarter number multiplied by 2. The primary driver of this variance is timing, timing for both CapEx and cash taxes, which are normally back half loaded, and this year is no exception. These 2 items explain approximately $130 million of the $150 million variance. The remainder is driven by higher use of cash from trade working capital as we prepare for strong anticipated demand in 2024, and that being partially offset by higher projected EBITDA and lower cash interest.

在我把它交還給Gio 之前，讓我先討論一些關於我們調整後的自由現金流指導的潛在問題，這意味著下半年的自由現金流約為3 億美元，比我們第二季度的數字乘以1.5 億美元低了1.5 億美元2. 這種差異的主要驅動因素是時間安排，資本支出和現金稅的時間安排，通常是半負荷的，今年也不例外。這兩項解釋了 1.5 億美元差異中的約 1.3 億美元。其餘部分是由於我們為 2024 年強勁的預期需求做準備而增加了貿易營運資金現金的使用，而預計 EBITDA 較高和現金利息較低則部分抵消了這一影響。

So with that said, I turn it back over to Gio.

話雖如此，我把它轉回給吉奧。

Well, thanks a lot. As Dave said earlier, great quarter. There's still a lot to do. In February -- in our February call, I went through the focus areas for 2023, creating a high-performance culture where ownership is clear, and we hold ourselves accountable for the results, constant focus on things that matter, and executing relentless focus on execution. At the halfway mark of 2023, we have made progress.

嗯，非常感謝。正如戴夫之前所說，這是一個很棒的季度。還有很多事情要做。今年 2 月，在我們 2 月份的電話會議中，我回顧了 2023 年的重點領域，創建了一種所有權清晰的高績效文化，我們對結果負責，持續關注重要的事情，並不懈地關注執行。 2023 年已經過半，我們已經取得了進展。

Innovation and technology continue to be a key differentiator for Vertiv. And with our ongoing investment in this area, I'm very encouraged by our road maps for R&D and technology development. I believe you will see this momentum building and differentiation further distinguish Vertiv as the partner of choice in critical infrastructure. I continue to travel around the globe visiting customers in Vertiv locations, and key industry players are more excited today than I have been in the last 25 years with this great organization. I can feel the energy, the momentum building in our business, in our industry. It is tangible. This traction is not easy to translate in words, but you are starting to see the transformation taking hold, deepening and becoming Vertiv's DNA.

創新和技術仍然是 Vertiv 的關鍵差異化因素。隨著我們在這一領域的持續投資，我對我們的研發和技術開發路線圖感到非常鼓舞。我相信您會看到這種勢頭的增強和差異化進一步使 Vertiv 成為關鍵基礎設施領域的首選合作夥伴。我繼續環遊世界，拜訪維諦技術 (Vertiv) 各地的客戶，今天，主要行業參與者比我過去 25 年來在這個偉大的組織中感到更加興奮。我能感覺到我們的業務、我們的行業正在積聚能量和動力。它是有形的。這種吸引力不容易用語言來表達，但您開始看到這種轉變正在生根發芽、深化並成為維諦技術 (Vertiv) 的 DNA。

So the takeaways. Strong first half, supported by continued improvements in operational execution, a healthy market, momentum continuing, in fact, increasing with AI tailwinds. We are raising our guidance across all financial metrics and especially pleased to be raising our adjusted operating profit guidance to $950 million at the midpoint. This indicates a healthy second half and a great foundation for 2024.

所以外賣。上半年表現強勁，得益於運營執行力的持續改善、健康的市場、持續的勢頭，事實上，隨著人工智能的推動，勢頭不斷增強。我們正在提高所有財務指標的指導，特別高興的是將調整後的營業利潤指導中值提高至 9.5 億美元。這預示著下半年的健康發展，並為 2024 年奠定了良好的基礎。

An important reminder, Vertiv's Investors Conference on November 29th at the New York Stock Exchange. So I truly hope you can join us and make sure you mark that in your calendars.

重要提醒是，Vertiv 將於 11 月 29 日在紐約證券交易所舉行的投資者大會。因此，我真誠地希望您能夠加入我們，並確保在您的日曆中標記這一點。

With that, over to the operator.

這樣，就交給操作員了。

(Operator Instructions) Our first question comes from Nigel Coe from Wolfe Research.

（操作員說明）我們的第一個問題來自 Wolfe Research 的 Nigel Coe。

So November conference is in the calendar. No problem with that. Great. So obviously, a lot to go through. One thing you mentioned, Gio, was the AI, so GPU retrofit opportunity. And we don't often think of retrofit activity in the data centers. So maybe just run through sort of what you're seeing today and sort of how impactful do you think this could be for Vertiv? And maybe just talk about how important your service organization can be if we do start seeing material retrofits?

因此，11 月的會議已列入日程。沒問題。偉大的。顯然，還有很多事情要做。 Gio，你提到的一件事是人工智能和 GPU 改造機會。我們通常不會想到數據中心的改造活動。那麼，也許只是回顧一下您今天所看到的情況，以及您認為這對維諦技術 (Vertiv) 有何影響？也許只是談談如果我們確實開始看到材料改造，您的服務組織會有多重要？

Yes, 2 aspects to this, Nigel. Thank you for the question. There is certainly a kind of a non-retrofit new market, new data center, and it's a place, this one, where our service organization becomes absolutely critical in our ability to partner with customers everywhere in the world. Not all the players in specifically the liquid part of the thermal spectrum have this ability to reach out everywhere as we are. And we have demonstrated that, and our numbers prove that. As I was saying, 3,500 service engineers globally.

是的，有兩個方面，奈傑爾。感謝你的提問。當然存在一種不可改造的新市場、新數據中心，在這個地方，我們的服務組織對於我們與世界各地的客戶合作的能力至關重要。並不是所有熱譜液體部分的參與者都像我們一樣有能力到達任何地方。我們已經證明了這一點，我們的數據也證明了這一點。正如我所說，全球有 3,500 名服務工程師。

But the other is we see it today and we talk with our customers today, and they say, not only do we have to think about liquid cooling. But the thing that we have to think about is a hybrid environment probably in an initial build that has more traditional server cooling. So there needs to be an ability to retrofit over time because the sites will hybridize and we enable that. And then being there with our customers to execute on that retrofit is again fundamental. And that retrofit is not just the rack itself or the row, but it's the ability to interconnect and balance it with the rest of the existing thermal system.

但另一個是我們今天看到的，我們今天與客戶交談，他們說，我們不僅要考慮液體冷卻。但我們必須考慮的是混合環境可能在初始構建中具有更傳統的服務器冷卻。因此，需要具備隨著時間的推移進行改造的能力，因為這些站點將會混合，而我們可以實現這一點。然後與我們的客戶一起執行改造也是至關重要的。這種改造不僅僅是機架本身或行，而是將其與現有熱系統的其餘部分互連和平衡的能力。

But think about the stock of data center that exists in the industry today. It's really hard to believe that, that part will not be hybrid in and of itself. And that's what we hear. That's what we hear today. Today, we hear people saying, hey, we are already today sometimes having AI-enabling high-density racks, and we air cool them. But that sounds easier said than done, then you have to balance, of course, the cooling in the hole. But at the same time, that very same retrofit can be a liquid retrofit eventually. And again, the same problem exists. Even more complicated, if you will, than with an infrastructure that was thought for future retrofit. Hope I answered. It could be very long. I will avoid.

但想想當今行業中存在的數據中心存量。真的很難相信，該部分本身不會是混合的。這就是我們所聽到的。這就是我們今天聽到的。今天，我們聽到人們說，嘿，我們現在有時已經擁有支持人工智能的高密度機架，並且我們對它們進行空氣冷卻。但這聽起來說起來容易做起來難，那麼你當然必須平衡孔中的冷卻。但與此同時，同樣的改造最終可能是液體改造。同樣的問題再次存在。如果你願意的話，甚至比未來改造的基礎設施還要復雜。希望我回答了。它可能會很長。我會避免。

Yes. Yes, there's a lot there. I mean, it sounds like it could be quite a material opportunity.

是的。是的，那裡有很多東西。我的意思是，聽起來這可能是一個相當重要的機會。

We don't have exactly a figure on that.

我們沒有確切的數字。

Okay. No, no. We'll come back to that. On the pricing, so I think it's 9% in the quarter. I think, 7% in the third quarter. Maybe, David, what's in your fourth quarter for pricing? And then what would be a reasonable outlook for pricing in 2024? I'm assuming we're going to be down to a more sort of normal range. But I'm just curious if you're still continuing to push price real time.

好的。不，不。我們稍後會回來討論這一點。就定價而言，我認為本季度的漲幅為 9%。我認為，第三季度為 7%。大衛，也許你第四季度的定價是多少？那麼 2024 年合理的定價前景是怎樣的呢？我假設我們會下降到更正常的範圍。但我只是好奇你們是否仍在繼續實時推高價格。

Yes. From a quarterly cadence perspective, pricing, 9% first quarter, 9% second quarter, 7% in the third quarter, and 5% in the fourth. So full year, $420 million, it's up about $120 million from our prior guidance, and it's probably too early at this point to comment on 2024 pricing. But we should have a nice tailwind heading into next year.

是的。從季度節奏來看，定價，第一季度9%，第二季度9%，第三季度7%，第四季度5%。全年為 4.2 億美元，比我們之前的指導增加了約 1.2 億美元，現在評論 2024 年的定價可能還為時過早。但進入明年我們應該會迎來良好的順風。

Our next question comes from Andy Kaplowitz with from Citigroup.

我們的下一個問題來自花旗集團的安迪·卡普洛維茨（Andy Kaplowitz）。

Gio, you said it's difficult to discern AI versus not AI in your markets. But as you said, your pipeline of opportunities seems to have increased in the last 90 days, and you turned EMEA's cloud hyperscale to green. So is there a way to quantify how much bigger your pipeline is that is feeding into the expectation of flat bookings in Q3 and up modestly in Q4? And then just stepping back, would you say AI contribution in orders is coming earlier than you expected in 2023?

Gio，您說過很難在您的市場中辨別人工智能與非人工智能。但正如您所說，您的機會渠道在過去 90 天內似乎有所增加，並且您將 EMEA 的雲超大規模轉變為綠色。那麼，有沒有一種方法可以量化您的渠道有多大，這會影響第三季度的公寓預訂預期以及第四季度的小幅上升？退一步來說，您是否認為 2023 年人工智能對訂單的貢獻比您預期的要早？

Well, the acceleration of pipeline that I referred to in my -- when we were going through the slide is specific to industry -- sorry, to region and customer, really. So it varies, but acceleration it is. How big? It is, again, part of a wave of demand, as I explained. This is additional demand, and it is additional demand that will probably drive also the more traditional type of loads and compute further up. Specifically, the comment about EMEA is that we start to see this effect hit EMEA as well. And anyway, we wanted to send the message that we see acceleration on colo cloud across the board because of AI. How big, exactly? Again, it's premature to say. The market is moving. I would say it's hard to distinguish what is AI and what is not, but we know that some technologies, specifically for high-density, specifically for GPU. And that is a little bit earlier to track. But we know that there are a lot of traditional technologies, a lot of traditional technologies that are there to enable AI as well. And that's true for the power part of our portfolio and for the thermal part of our portfolio.

嗯，我在幻燈片中提到的管道加速是特定於行業的，抱歉，真的是針對地區和客戶。所以它會有所不同，但加速度是。多大？正如我所解釋的，這又是需求浪潮的一部分。這是額外的需求，而正是額外的需求可能會進一步推動更傳統類型的負載和計算。具體來說，關於歐洲、中東和非洲地區的評論是，我們開始看到這種效應也襲擊了歐洲、中東和非洲地區。不管怎樣，我們想傳達這樣一個信息：由於人工智能，我們看到託管雲全面加速。到底有多大？再說一遍，現在說還為時過早。市場正在發生變化。我想說很難區分什麼是人工智能，什麼不是，但我們知道有些技術，專門針對高密度，專門針對GPU。追踪這個時間還早一點。但我們知道有很多傳統技術，很多傳統技術也可以支持人工智能。對於我們產品組合的電力部分和我們產品組合的熱力部分來說也是如此。

Our next question comes from Amit Daryanani from Evercore.

我們的下一個問題來自 Evercore 的 Amit Daryanani。

Congrats on a nice print. Gio, I was hoping you could just talk a little bit more about when it comes to cooling AI clusters, liquid cooling clearly becomes a more important thing, especially in higher densities. But there seems to be multiple ways that you can use liquid cooling. Direct-to-chip is something you folks do, but I think there's immersion and other forms of it. So from your perspective, do you think Vertiv's strategy would be to have a broader liquid cooling solution across different formats? Or would you want to focus more on direct-to-chip? And then as it comes -- as it relates to these AI clusters, can you just touch on what do you think your economics look like versus the corporate average?

恭喜打印出漂亮的作品。 Gio，我希望你能多談談冷卻人工智能集群時的情況，液體冷卻顯然變得更加重要，尤其是在更高密度的情況下。但似乎有多種方法可以使用液體冷卻。直接芯片是你們所做的事情，但我認為還有沉浸式和其他形式的。那麼，從您的角度來看，您認為 Vertiv 的戰略是否是跨不同格式提供更廣泛的液體冷卻解決方案？或者您想更多地關注直接芯片？然後，當它與這些人工智能集群相關時，你能談談你認為你的經濟狀況與企業平均水平相比如何嗎？

So I want to reiterate the message that I had when I was going through the slides is that when we talk about liquid cooling here, we really talk about how we extract heat from the heat generation point, i.e., the chip to outside the server outside the rack and into the data hole, this is the novelty. This is the new part. As I was saying, actually, there are 3 ways to make that extraction. A, continue to do it through air. And we have seen air-cooled racks going all the way to north of 40 kilowatts per rack density. But clearly, at a certain stage, as one of our slides was explaining, at a certain stage, liquid kicks in. Liquid kicks in, in form of immersion or direct-to-chip. We have both in our portfolio. And also, we're partnering with people that handle both. But the fact is we think -- we believe that the main technology going forward when it comes to liquid is really direct-to-chip. But again, it is certainly a portfolio approach that we're taking.

因此，我想重申我在瀏覽幻燈片時得到的信息是，當我們在這裡談論液體冷卻時，我們實際上談論的是如何從發熱點（即芯片到服務器外部）提取熱量機架並插入數據孔，這就是新奇之處。這是新的部分。正如我所說，實際上有 3 種方法可以進行提取。 A、繼續通過空氣進行。我們已經看到風冷機架的密度已達到 40 千瓦以上。但顯然，在某個階段，正如我們的一張幻燈片所解釋的那樣，在某個階段，液體開始發揮作用。液體以浸沒或直接到芯片的形式開始發揮作用。我們的產品組合中都有這兩種產品。而且，我們正在與處理這兩件事的人合作。但事實是，我們認為，我們相信，在液體方面，未來的主要技術實際上是直接芯片技術。但同樣，我們正在採取的肯定是一種投資組合方法。

Got it. And then, I guess, how do you think about the economics with these clusters versus corporate average? I imagine it's more complex with higher ASPs. But I would love to know if you think that, A, that's fair, and then how does it flow out for operating margins and so on as well?

知道了。然後，我想，您如何看待這些集群與企業平均水平的經濟效益？我認為 ASP 越高，情況就越複雜。但我很想知道你是否認為這是公平的，那麼它是如何流出營業利潤率等的呢？

Well, it's a bit a lot of detail and also, premature for those details. But I go back to the point I made at the beginning, we see this as additive. So it is another technology. We did not participate in the heat sink or extraction of the heat from the server. Now we started to participate also in that part of the equation. So a bit premature, but I want to make sure we understand that is something, an addition for us. But that absolutely dovetails in what you're asking for.

嗯，細節有點多，而且現在討論這些細節還為時過早。但我回到我一開始提出的觀點，我們認為這是附加的。所以這是另一種技術。我們沒有參與散熱器或從服務器中提取熱量。現在我們也開始參與方程式的這一部分。雖然有點為時過早，但我想確保我們明白這對我們來說是一個補充。但這絕對符合您的要求。

Our next question comes from Lance Vitanza with TD Cowen.

我們的下一個問題來自 Lance Vitanza 和 TD Cowen。

My question is with leverage down to around 2x at the end of the year, you're about a year ahead of where we thought you'd be. And it seems to me that 2x is low enough and that free cash flow in 2024 should be directed back to shareholders. Can you discuss your thoughts on that idea? And would you favor increasing the recurring dividend or a share buyback or perhaps other vehicles? How are you thinking about the return of capital?

我的問題是，隨著年底槓桿率降至 2 倍左右，您的水平比我們預期的水平提前了大約一年。在我看來，2 倍已經足夠低了，2024 年的自由現金流應該直接返還給股東。你能談談你對這個想法的看法嗎？您是否贊成增加經常性股息或股票回購或其他方式？您如何看待資本回報？

Yes. First, let me say, it's very nice to have this conversation because we couldn't have asked this a year ago. So at this point, we're going to get through this year. And we will share in our investor conference our further thoughts on capital allocation. We certainly are participating in an industry where there should be plenty of growth, and there's probably plenty of opportunity to continue to reinvest in the business. But we do recognize that we will have to make some strategic decisions with what to do with some excess cash. I think as we said previously, we do believe there are some accretive strategic acquisitions out there. That is probably something we would look at first, but we'll be able to give a lot more detail in November.

是的。首先，我想說，進行這次對話非常高興，因為一年前我們不可能問這個問題。所以現在，我們將度過今年。我們將在投資者大會上分享我們對資本配置的進一步想法。當然，我們正在參與一個應該有大量增長的行業，並且可能有很多機會繼續對該業務進行再投資。但我們確實認識到，我們必須就如何處理一些多餘的現金做出一些戰略決策。我認為正如我們之前所說，我們確實相信存在一些增值性戰略收購。這可能是我們首先會考慮的事情，但我們將在 11 月份提供更多細節。

Our next question comes from Jeff Sprague from Vertical Research.

我們的下一個問題來自垂直研究的傑夫·斯普拉格。

Nice quarter. Good to see. I wanted to pick up on sort of the exit rate there on the margin. And David, thanks for doing that math for us. We had done it, but I'm glad you pointed it out. And really, the -- I guess, the question is if we go back to that original algorithm before kind of the missteps to 18.5 months ago -- 18 months ago or so, we were thinking about operational improvement, being better on price execution, the internal execution and the like. I just wonder if you could update us on all of those levers really, particularly kind of the internal operational opportunities that you see. And I would suspect we're in a strong enough demand environment that you would expect to be able to remain price cost positive for the foreseeable future, but I wonder if you would agree with that. Or how are you thinking about kind of the price cost lever inside the margin trajectory from here?

不錯的季度。很高興看到。我想了解一下邊緣的退出率。大衛，謝謝你為我們做了數學計算。我們已經做到了，但我很高興你指出了這一點。事實上，我想，問題是我們是否回到 18.5 個月前的失誤之前的原始算法，大約 18 個月前，我們正在考慮運營改進，更好的價格執行，內部執行等。我只是想知道您是否可以向我們介紹所有這些槓桿的最新情況，特別是您看到的內部運營機會。我懷疑我們處於一個足夠強勁的需求環境中，您希望在可預見的未來能夠保持價格成本正值，但我想知道您是否同意這一點。或者您如何考慮利潤軌跡內的價格成本槓桿？

Maybe I can start with a little bit of the 3 points you were talking and were asking about: price, cost and execution. I mean this is something we've been absolutely vocal about in the last 3 calls, as a matter of fact, this included. There's certainly a lot of price efforts and successful execution, as David explained also, our outlook. But what is most important is our price cost. When we were talking about price, I was vocal about the fact that we have now a muscle that we did not have before, and that has helped a lot to rebalance back to the position, let's say, pretty big inflation position. .

也許我可以從您所談論和詢問的三點開始：價格、成本和執行。我的意思是，這是我們在過去 3 次電話會議中絕對直言不諱的事情，事實上，這也包括在內。正如大衛也解釋的那樣，我們的前景肯定有很多價格方面的努力和成功的執行。但最重要的是我們的價格成本。當我們談論價格時，我直言不諱地說，我們現在擁有以前沒有的實力，這對重新平衡回到相當大的通脹頭寸有很大幫助。 。

When it comes to the cost side of the equation, we have a lot of focus on efficiency, be that in manufacturing execution, be that in procurement. And there is still potential -- there's still potential in general. Execution, in particular, is true across the organization. But I can point particularly to the execution that we have started to drive in the procurement and manufacturing and ability to ship. That has certainly characterized and accelerated our ability to deliver on a strong backlog we enter 2023 with.

當談到成本方面時，我們非常關注效率，無論是在製造執行中，還是在採購中。而且仍然有潛力——總體來說仍然有潛力。執行力尤其適用於整個組織。但我可以特別指出我們在採購、製造和運輸能力方面已開始推動的執行力。這無疑體現並加速了我們交付 2023 年大量積壓訂單的能力。

So we will have time in November to go to more details of exactly what are the axis of this acceleration. But I was vocal about our internal promotion of Paul and [Anders] as a further step in the direction that is testament to the fact that we are not done yet. And that's very good news. I don't know if you...

因此，我們將在 11 月份有時間詳細了解該加速度的軸到底是什麼。但我直言不諱地表示我們對保羅和[安德斯]的內部晉升是朝著這個方向邁出的又一步，這證明了我們還沒有完成的事實。這是一個非常好的消息。我不知道你是否...

Yes. No, it is. I wonder if you could maybe give us some perspective on incremental margins, so trying to kind of pull all that together. So we kind of say we're not done in '23, but we've kind of pulled out of the big hole and/or something maybe approaching normal, not quite there. But as we look into 2024 and beyond, what would be kind of a reasonable kind of incremental margin construct for us to have in our head?

是的。不，是的。我想知道您是否可以給我們一些關於增量利潤的看法，因此嘗試將所有這些整合在一起。所以我們可以說我們在 23 年還沒有完成，但我們已經擺脫了大坑和/或可能接近正常，但還沒有完全實現。但當我們展望 2024 年及以後時，我們頭腦中合理的增量利潤結構是什麼樣的？

Yes. I think the easy answer is higher. But if you look at where we were last year -- and we've disclosed this in the past. We were probably in the low 30s from a variable contribution margin perspective. We're in the upper 30s at this point in time. Let's call it the mid- to upper 30s. So if you look at the projected 600-plus basis point increase in operating margin this year versus last year, about 400 of that is related to the variable contribution margin and 200 is related to fixed cost leverage. And I definitely don't want to discount the power of the fixed cost constant methodology and culture. That should continue to provide upward momentum on the operating profit. So as we've consistently said, 16% has been our intermediate-term goal. We have high confidence of getting there for sure, but we're not celebrating. Our long-term goal is 20% and higher. But to get to that level, Jeff, to your question, we're going to have to continue to improve with the contribution margin while also incorporating that fixed cost leverage philosophy.

是的。我認為簡單的答案更高。但如果你看看我們去年的情況——我們過去已經披露過這一點。從可變邊際貢獻率的角度來看，我們可能處於 30 歲以下。我們現在正處於 30 多歲的階段。我們稱之為 30 歲以上。因此，如果你看看今年營業利潤率預計將比去年增加 600 多個基點，其中大約 400 個基點與可變邊際貢獻相關，200 個基點與固定成本槓桿相關。我絕對不想低估固定成本不變方法和文化的力量。這應該會繼續為營業利潤提供上升動力。正如我們一直所說，16% 是我們的中期目標。我們對實現這一目標充滿信心，但我們並不慶祝。我們的長期目標是 20% 或更高。但為了達到這個水平，傑夫，對於你的問題，我們必須繼續改進邊際貢獻，同時融入固定成本槓桿理念。

Our next question comes from Nicole DeBlase from Deutsche Bank.

我們的下一個問題來自德意志銀行的 Nicole DeBlase。

Can we just start with enterprise demand? I know you didn't change the bubbles in the market outlook, but what are you seeing on that front? I know this has been kind of like a watched item year-to-date.

能不能從企業需求入手？我知道你沒有改變市場前景中的泡沫，但你在這方面看到了什麼？我知道這有點像今年迄今為止的觀看項目。

Nicole, not much really to add to what we were saying. We continue to see that demand fairly, fairly stable. The technology continues to be evolving for everyone in the industry, and that's not just colo hyperscale. But again, not a lot to elaborate upon here. We see -- we've seen some stability in that space.

妮可，對於我們所說的內容，其實沒什麼可補充的。我們仍然看到需求相當穩定。該技術為行業中的每個人不斷發展，而不僅僅是託管超大規模。但同樣，這裡沒有太多可詳細說明的。我們看到——我們已經看到該領域的一些穩定性。

Okay. And then the EMEA margins, obviously, pretty big step-up this quarter. How are you guys thinking about the sustainability of that level of margins into the second half of the year?

好的。顯然，歐洲、中東和非洲地區的利潤率在本季度出現了相當大的提升。你們如何看待下半年這一利潤水平的可持續性？

I would say that we have done a very, very good job operationally in terms of positioning ourselves in the market with our technology and with our total cost of ownership story. So we are strongly positioned in EMEA altogether.

我想說，我們在運營方面做得非常非常好，憑藉我們的技術和總體擁有成本故事在市場中定位自己。因此，我們在歐洲、中東和非洲地區處於強勢地位。

Our next question comes from Steve Tusa from JPMorgan.

我們的下一個問題來自摩根大通的史蒂夫·圖薩。

Congrats on the free cash flow. Why -- just a nitpicky one, then I have a follow-up. But why do you guys have the inflation, the material freight and labor inflation, ticking up quarter-to-quarter from 2Q to 3Q? Is that something to do with the comp from last year or something?

恭喜你獲得自由現金流。為什麼——只是一個挑剔的問題，然後我有一個後續行動。但為什麼通脹、材料運費和勞動力通脹從第二季度到第三季度逐季上升？這和去年的比賽有關係嗎？

Yes. So there's 3 components to the inflation story. You have the material inflation, which is a $110 million headwind for the full year. Yes, you have actually a benefit in freight of about $40 million and labor is about $100 million. The benefit from freight is definitely front-end loaded. So of that $40 million, probably $30 million of it is in the first half, which provides an actual tailwind as you look at the second half versus the first half. In addition, we do see an uptick in labor inflation, partly because of the timing of pay raises, but also related to a foreign exchange dynamic in Mexico where we have some of our labor. So I would say those are probably the 2 most significant dynamics. It's pretty much just front half, back half dynamics in both freight and then also labor.

是的。因此，通貨膨脹的故事由三個部分組成。你會遇到物質通貨膨脹，這對全年來說是 1.1 億美元的逆風。是的，實際上您在貨運方面獲得的收益約為 4000 萬美元，勞動力方面的收益約為 1 億美元。貨運的好處肯定是前端加載。因此，在這 4000 萬美元中，可能有 3000 萬美元是在上半年，當你對比下半年和上半年時，這提供了真正的推動力。此外，我們確實看到勞動力通脹上升，部分原因是加薪的時機，但也與我們擁有部分勞動力的墨西哥的外匯動態有關。所以我想說，這可能是兩個最重要的動態。這幾乎只是貨運和勞動力的前半部分、後半部分的動態。

And then can you just help reconcile it? It just seems like the other guys, the other peers you compete against, their orders are trending better than you guys on a year-over-year basis. I know there's some difference in portfolio, there's some lumpiness. Or do you guys feel like you're being selective? Or you're kind of holding your own in these bids for now?

然後你能幫忙協調一下嗎？看起來其他人，你與之競爭的其他同行，他們的訂單趨勢逐年比你們更好。我知道投資組合存在一些差異，存在一些混亂。還是說你們覺得你們有選擇性？或者您現在在這些出價中保持自己的立場？

So there are 2 elements here. One is the normalization that we've been vocal about in the last 2 calls and this will continue. So that's a very normal, very healthy situation we're in. We certainly have very strong comparisons. This is certainly true. And we see pipelines growing. So I am positive about the trajectory we're on. I can't speak for other players.

所以這裡有兩個元素。一是我們在過去兩次電話會議中一直在大聲疾呼的正常化，這種情況將繼續下去。所以這是我們所處的一個非常正常、非常健康的情況。我們當然有非常強烈的比較。這當然是真的。我們看到管道不斷增長。所以我對我們目前的發展軌跡持積極態度。我不能代表其他球員說話。

Base period of comparison.

比較基期。

There is an element, exactly. Exactly. So if we go back to the beginning of the year, we were saying, hey, we are at $4.8 billion backlog, and we are likely going to shrink that, and we're going to probably consume this backlog. So here we are halfway through the year, that has not been the case. So we're positively surprised by that. We have a book-to-bill, 1. But only if we look at our book-to-bill on the 12 trailing months, then we are at 1.1. So there are multiple ways to look at this. And I recommend we don't just take things at their face value, but we double-click on what's really behind.

確實有一個元素。確切地。因此，如果我們回到今年年初，我們會說，嘿，我們的積壓訂單量為 48 億美元，我們可能會縮小這一規模，並且我們可能會消耗掉這些積壓訂單。現在已經過半了，但情況並非如此。所以我們對此感到非常驚訝。我們的訂單出貨比為 1。但只有當我們查看過去 12 個月的訂單出貨比時，我們才會得到 1.1。所以有多種方法可以看待這個問題。我建議我們不要只看表面的東西，而要雙擊真正背後的東西。

Yes, great. And then just one last one. On this new technology around cooling and just the proliferation of these AI-related data centers. Do you feel like you're going to need to, at some point, go and do invest more, whether it's through acquisitions or through technology at some stage to kind of bring more in-house? Or it's more steady as she goes as far as partnerships and developing internally? Is there a certain degree -- is there some sort of acquisition that you feel like you'll end up doing when you get better visibility on what the format is?

對，很好。然後只有最後一張。關於這項圍繞冷卻的新技術以及這些與人工智能相關的數據中心的擴散。您是否覺得您需要在某個時候進行更多投資，無論是通過收購還是在某個階段通過技術來引入更多內部資金？或者說，隨著她在合作夥伴關係和內部發展方面的發展，情況會變得更加穩定？是否存在某種程度——當您更好地了解格式是什麼時，您覺得您最終會進行某種類型的獲取？

This technology is still at a very early stage. And as every technology at an early stage, you're looking at the opportunities through multiple lenses. One is the organic lenses, and we're certainly investing a lot, but we have partnerships as well. So there are multiple opportunities out there. We'll really see and be -- with a stronger balance sheet as well, we'll be focused on understanding exactly what's the best path going forward as the market matures.

這項技術仍處於非常早期的階段。與處於早期階段的每項技術一樣，您需要通過多個視角來尋找機會。一是有機鏡片，我們確實投入了大量資金，但我們也有合作夥伴關係。所以那裡有很多機會。我們將真正看到並成為 - 憑藉更強大的資產負債表，我們將專注於準確了解隨著市場成熟，前進的最佳路徑是什麼。

Our next question comes from Andrew Obin from Bank of America.

我們的下一個問題來自美國銀行的安德魯·奧賓。

Just a question. What are typical lead times for thermal management products at this point, i.e., if data center owners are planning to buy these GPU chips, what lead times are you quoting for the related thermal products?

就一個問題。目前熱管理產品的典型交貨時間是多少？即，如果數據中心所有者計劃購買這些 GPU 芯片，您對相關熱產品的報價是多少交貨時間？

Well, that really depends on the customer request, of course. But in this moment, we have changed a lot from the situation in which we were in 2022, as we explained during the last earnings call, where we were out of the 50, 60 weeks lead time to much lower levels to the 30, 40 weeks and down from there further. So really, what requested lead times we get depends on the strategy of the various players. And do not think necessarily, if I may suggest, that it's an exact concatenation of when do I get the chip or the GPU and when I need the infrastructure because the 2 things go in parallel. And very often, the infrastructure comes first. So you will see probably some earlier infrastructure demand and when the bulk of the chips will be available for AI. But it's customer specific. For what we are concerned, we have moved down the path of shortening our lead times. And now we're able to serve the market with much shorter lead times than we did a year ago and indeed 3 months ago. That's [exact cadence].

嗯，當然，這實際上取決於客戶的要求。但此時此刻，我們與2022 年的情況相比發生了很大變化，正如我們在上次財報電話會議中所解釋的那樣，我們的交付週期已從50、60 週降至更低的水平，降至30、40 週幾週甚至更遠。所以實際上，我們所要求的交貨時間取決於不同參與者的策略。如果我可以建議的話，不要認為這一定是我何時獲得芯片或 GPU 以及何時需要基礎設施的精確串聯，因為這兩件事是並行進行的。通常，基礎設施是第一位的。因此，您可能會看到一些早期的基礎設施需求，以及大部分芯片何時可用於人工智能。但這是針對特定客戶的。就我們而言，我們已經走上了縮短交貨時間的道路。現在，我們能夠以比一年前甚至三個月前更短的交貨時間為市場提供服務。這就是[精確的節奏]。

And maybe just a follow-up, and I'll echo Steve's comment on cash. Could you give us some update, just more color on internal changes that you're making to improve cash? Changes on how you bill, payment terms, down payments? Just any color about sort of nuts and bolts of moving the needle there.

也許只是一個後續行動，我會回應史蒂夫對現金的評論。您能否給我們提供一些最新情況，以及您為增加現金而進行的內部變革的更多信息？您的賬單方式、付款條件、預付款有變化嗎？只是任何關於將針移動到那裡的螺母和螺栓的顏色。

Yes. I think your words, nuts and bolts, probably is a pretty good description. We are similar to what we did from an operational perspective, notably in the Americas, is we are really getting into the basics and focusing on day-to-day execution. And we have a lot stronger visibility, transparency with where we are with particular payment terms with every customer. We get daily updates as it relates to inventory. And probably most importantly, we have a plan that we are executing against. So I would say there's been some early successes, but there still is a ton of opportunity out there. And this is -- was a focus as we exited last year, probably started in force mid last year, but it's also a huge cultural aspect. So when we talk about drumbeat and when we talk about financial metrics, we generally start with cash at this point in time. So we're encouraged with where we are but not satisfied. There's still a lot of work to do.

是的。我認為你的話，具體細節，可能是一個很好的描述。我們與從運營角度所做的類似，尤其是在美洲，我們真正深入基礎知識並專注於日常執行。我們對每個客戶的具體付款條件都有更強的可見性和透明度。我們每天都會收到與庫存相關的更新。也許最重要的是，我們有一個正在執行的計劃。所以我想說，已經取得了一些早期的成功，但仍然存在大量的機會。這是我們去年退出時的一個焦點，可能是去年年中開始生效的，但這也是一個巨大的文化方面。因此，當我們談論鼓點和財務指標時，我們通常會在此時從現金開始。因此，我們對自己的現狀感到鼓舞，但並不滿足。還有很多工作要做。

Our final question comes from Mark Delaney from Goldman Sachs.

我們的最後一個問題來自高盛的馬克·德萊尼。

Congratulations on the strong results. The company had been expecting backlog to get worked down a bit this year as lead times normalize. But book-to-bill, as you mentioned, has come in at 1.0, approximately for both 1Q and 2Q. So given the upside in orders you've seen in the first half of the year, can you share your latest views on how you expect backlog to trend? Do you still think that comes down a bit this year? And then on a related topic, given the better-than-expected demand, do you think you need to put any more manufacturing capacity in place to support that?

祝賀取得了優異的成績。該公司一直預計，隨著交貨時間正常化，今年積壓訂單將有所減少。但正如您所提到的，訂單出貨比為 1.0，大約是第一季度和第二季度的水平。鑑於您在今年上半年看到的訂單量上升，您能否分享一下您對積壓趨勢的最新看法？您仍然認為今年的情況有所下降嗎？然後在一個相關的話題上，考慮到需求好於預期，您認為您是否需要投入更多的製造能力來支持這一需求？

Yes. Well, thanks a lot for the question. So when it comes to the backlog, we have it planned for orders that sees our orders in Q3 and Q4 sequentially increase. And we'll see what the backlog does exactly. We still are in an unusually big backlog situation, given our historical trends and the historical trends in the industry. We were north of 70% coverage. We believe that anything above 50% is a good place to be. But yes, let's see how things unfold in that respect. Certainly, the pipeline strength is something that is encouraging in that respect.

是的。嗯，非常感謝你的提問。因此，在積壓訂單方面，我們對訂單進行了規劃，預計第三季度和第四季度的訂單將依次增加。我們將看看積壓的具體情況。考慮到我們的歷史趨勢和行業的歷史趨勢，我們仍然處於異常大的積壓情況。我們的覆蓋率超出了 70%。我們相信任何高於 50% 的值都是一個好地方。但是，是的，讓我們看看這方面的情況如何發展。當然，在這方面，管道的實力是令人鼓舞的。

And just operationally, in order to support the backlog, do you need to put any more capacity or you've got the [exact] facilities you need?

就操作而言，為了支持積壓，您是否需要投入更多產能，或者您已經擁有所需的[確切]設施？

Well, we do have capacity. As I explained, we have increased investing in capacity in the last 12, 18 months. We are certainly extracting more capacity from what we have. We've been vocal many times about our Vertiv operating system, and that certainly is a big enabler for more capacity out of our current footprint. But we are very focused and very keen on building scenarios as to what exactly will happen. So we will move early if needed when we see that there is an imbalance between the potential demand and our available capacity.

嗯，我們確實有能力。正如我所解釋的，過去 12、18 個月我們增加了產能投資。我們當然正在從我們擁有的資源中提取更多的能力。我們已經多次宣傳我們的 Vertiv 操作系統，這無疑是我們當前足跡中增加容量的重要推動因素。但我們非常專注並且非常熱衷於構建關於到底會發生什麼的場景。因此，當我們發現潛在需求與我們的可用能力之間存在不平衡時，如果需要，我們會儘早採取行動。

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

謝謝。我們的問答環節到此結束。我想將會議轉回給佐丹奴·阿爾貝塔齊 (Giordano Albertazzi) 致閉幕詞。

Well, thanks a lot. Again, a good first half and looking forward to our second half, and looking forward to meeting you all in November.

嗯，非常感謝。再次祝您上半年順利，期待下半年，並期待在 11 月與大家見面。

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

會議現已結束。感謝您參加今天的演講。您現在可以斷開連接。