Vertiv NYSE: VRT reported a strong start to fiscal 2026 and raised its full-year outlook following first-quarter results that featured double-digit organic sales growth, significant margin expansion, and higher free cash flow. Executives pointed to continued momentum tied to data center build-outs—particularly AI-related infrastructure—while also highlighting capacity expansion efforts and steps to mitigate tariff impacts.
Q1 results topped guidance as Americas drove growth
Chief Executive Officer Gio Albertazzi said first-quarter organic sales rose 23% year-over-year, while reported growth was 30% including M&A and foreign exchange. Regionally, the Americas posted 44% organic growth, APAC grew 12% organically, and EMEA declined 29% organically.
Vertiv’s adjusted operating margin was 20.8%, up 430 basis points from the prior year and 180 basis points above guidance, Albertazzi said. Adjusted operating profit increased 64% year-over-year to $551 million, while adjusted diluted EPS was $1.17, up 83% from the prior-year quarter and $0.19 above the company’s guidance.
CFO Craig Chamberlin said sales totaled $2.65 billion, with acquisitions adding 4% and favorable FX adding 3%. Chamberlin attributed margin performance to “strong operational leverage on higher volumes, productivity gains, and favorable price cost execution,” partially offset by “ongoing tariff headwinds.”
Vertiv reported adjusted free cash flow of $653 million, up 147% year-over-year, driven by higher operating profit and working capital efficiency, Chamberlin said. The company ended the quarter with net leverage of 0.2x.
Regional performance: EMEA pressure, but signs of a second-half recovery
In the Americas, Chamberlin said net sales rose 53% to $1.81 billion, with adjusted operating profit of $490 million. APAC net sales were $514 million, up 15% (12% organically), with growth coming in below guidance “primarily due to timing,” according to Chamberlin.
EMEA net sales were $321 million, down 29% organically. Chamberlin said the decline reflected “softer orders that we saw in Q2 and Q3 of 2025,” but added the company is seeing accelerating opportunity generation and expects a return to year-over-year sales growth in the back half of 2026—an assumption embedded in Vertiv’s guidance.
Albertazzi also said EMEA “bookings” in Q1 were strong, even as the company does not disclose orders. He described the region’s dynamics as a “coiled spring,” citing a “significant shortage of data center capacity, and even more profound shortage of AI-capable data centers in EMEA and in Europe in particular.”
Capacity expansion, services scaling, and acquisitions
Management repeatedly emphasized the need to expand capacity to meet demand. Albertazzi said Vertiv is “making significant investments in capacity expansion across both manufacturing and services,” and is accelerating strategic capacity investments while also “unlocking latent capacity with VOS-driven productivity gains.”
He said capital spending in Q1 was higher than a year ago as the company expands manufacturing capacity across multiple sites globally—particularly in the Americas—across power management, thermal management, infrastructure solutions, and IT systems.
On services, Albertazzi said Vertiv is scaling service capacity “vigorously” across technologies and regions, including building local field presence while also deploying dedicated teams for large data center deployments. He also pointed to the company’s training capabilities and tools available to service engineers, adding that the growing installed base supports lifecycle services capture over time.
Chamberlin noted that, on a reported basis, products and services growth were equal in the quarter, while organic comparisons were influenced by the acquisition of PurgeRite. Albertazzi said PurgeRite strengthens Vertiv’s fluid management and liquid cooling capabilities and enhances “system-level services” for data centers.
Albertazzi also highlighted two additional acquisitions announced by the company:
- ThermoKey, expected to close “in a few months,” which he said will expand Vertiv’s thermal management portfolio with heat exchange know-how and a range of dry coolers, starting in EMEA.
- BMarko Structures, which he said brings custom-engineered structural fabrication capabilities intended to support manufactured and converged infrastructure solutions delivered at scale.
During Q&A, Chamberlin said Vertiv did not disclose the sizes of those acquisitions and indicated they were not material enough to require such disclosure. Albertazzi said the company has “no fixed limits” on deal size and will pursue M&A when it sees strategic value, citing the company’s strong balance sheet.
Tariffs, pricing, and supply chain actions
Albertazzi said Vertiv expects “positive price cost in 2026, including the impact of tariffs and tariff countermeasures,” and described tariffs, supply chain complexity, and labor constraints as “manageable.” He said Vertiv is working to mitigate tariff exposure, including actions related to “recent changes under Section 122 and 232.”
Chamberlin said the company expects to “materially offset” unfavorable margin impacts from tariffs and said it was “already there at the end of the Q1,” while continuing countermeasures as conditions change.
Guidance raised for 2026; Q2 outlook calls for continued growth
Vertiv raised its full-year 2026 guidance. Albertazzi said the company now expects adjusted diluted EPS of $6.35, supported by an adjusted operating profit outlook of $3.2 billion and an adjusted operating margin of 23.3%.
Chamberlin detailed the updated full-year guidance at the midpoint:
- Adjusted EPS: $6.35 (up $0.33 from prior guidance), representing 51% growth versus 2025
- Net sales: $13.75 billion, representing 34% growth versus the prior year
- Organic growth by region: high 30s% in the Americas, mid-20s% in APAC, and flat in EMEA
- Adjusted operating profit: $3.2 billion (up $160 million from prior guidance)
- Adjusted operating margin: 23.3%, up 290 basis points from 2025
- Adjusted free cash flow: $2.2 billion (maintained), up 17% year-over-year
For the second quarter, Chamberlin guided to adjusted EPS of $1.40 at the midpoint, net sales of $3.35 billion, and adjusted operating profit of $710 million. Adjusted operating margin is expected to be 21.2% at the midpoint.
Asked about the implied acceleration in organic growth in the back half of 2026, Albertazzi cited two primary drivers: incremental capacity coming online and backlog from fourth-quarter orders. Chamberlin added that the company expects faster growth in APAC and EMEA in the second half relative to the first half.
In other Q&A topics, Albertazzi discussed the growing adoption of prefabrication and converged systems such as OneCore and SmartRun, describing customer demand for speed and system-level optimization. He also addressed “bring your own power” and behind-the-meter energy as a lasting trend, pointing to microgrids and battery energy storage integration as part of the broader system design. On 800-volt architecture, Albertazzi said Vertiv’s programs are on track, with launches in the second half of the year and shipping “a little bit further away,” characterizing it as “a 2027 thing.”
Albertazzi also invited investors to Vertiv’s May 19–20 investor conference in Greenville, South Carolina, which will include strategy and technology sessions as well as a facility tour.
About Vertiv NYSE: VRT
Vertiv is a global provider of critical digital infrastructure and continuity solutions for data centers, communication networks and commercial and industrial environments. Headquartered in Columbus, Ohio, the company designs, manufactures and services equipment and software that support power availability, thermal management and IT infrastructure management for a broad set of end markets, including hyperscale and enterprise data centers, colocation providers, telecom operators and industrial customers.
The company's product portfolio includes uninterruptible power supplies (UPS), power distribution units (PDUs), battery and DC power systems, precision cooling and thermal management equipment, racks and enclosures, and integrated modular infrastructure.
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