Vertiv Holdings (VRT.US) Q3 Earnings Call: Management Says AI Data Center Demand Is Accelerating, 800V and Liquid Cooling Layouts Support Share Gains

Vertiv (VRT.US) management said on its Q3 2026 earnings call that AI data center demand is accelerating. Q3 net sales were US$4.3 billion, up 61% year over year, with 55% organic growth; adjusted operating margin was 25.2%, 70 basis points above guidance; organic orders grew more than 100% year over year, with a balanced customer mix. The company raised its full-year 2026 guidance: revenue of US$14.65 billion, adjusted EPS of US$7.15, and free cash flow of US$2.7 billion, and expects to continue delivering significantly above-market organic growth in 2027. Management emphasized that supply, quality, and delivery execution are core strengths, and that new technologies such as 800V DC and liquid cooling will support share gains. Results beat expectations, and full-year guidance was raised across the board. Vertiv Q3 net sales were approximately US$4.3 billion, up 61% year over year, with 55% organic growth; adjusted operating profit exceeded US$1 billion, up 83% year over year; adjusted operating margin was 25.2%, up 290 basis points year over year and 70 basis points above guidance; adjusted EPS was US$2.21, up 78% year over year; free cash flow was US$652 million, up 50% year over year. The company raised its full-year 2026 guidance: revenue of US$14.65 billion, with organic growth of approximately 38%; adjusted operating profit of more than US$3.5 billion, with a margin of approximately 24%; EPS of US$7.15; and free cash flow of US$2.7 billion. Q4 revenue guidance is approximately US$4.4 billion, with organic growth of approximately 50%, and adjusted EPS of US$2.25. Orders were strong and balanced, with broad-based demand signals. Q3 organic orders grew more than 100% year over year, strong whether or not NeoCloud is included, and the customer mix was consistent with the market mix. The project pipeline is strong globally: Americas sequential growth was the fastest of the year; the EMEA pipeline roughly doubled year over year, with organic orders growing even more; APAC was broadly strong in Australia and India, with initial recovery signs in China. Management said the orders are not catch-up of delays, but reflect the strength of Vertiv's technology, execution, and customer relationships. The company will no longer disclose order data going forward, but backlog includes only purchase orders, covers approximately 12 to 18 months, and its shape has not changed materially. Supply and quality: responding to doubts with performance. Approximately US$100 million to US$150 million of delayed revenue from Q2 was recognized in Q3, one of the factors behind Q3's stronger revenue. The company continues to expand plants, raise utilization, and lock in long-term supplier capacity to enhance project-level delivery resilience. In response to quality discussions such as compressor and UPS overheating, management said the best answer is performance; early-life failure-rate statistical curves for new products may be elevated, but quality data continue to improve. The company does not consider itself perfect, but views quality and reliability as a competitive advantage, and industry complexity is not unique to Vertiv. Technology and capacity investment accelerated. The 800V DC roadmap is progressing as planned: initial 800V-to-rack configurations, a transitional BaaS solution, and full 800V DC in the validation stage, with revenue beginning in 2027 and customer validation, and market deployment in 2028. Liquid cooling's share in first-level heat extraction is rising, air cooling remains, and system-level thermal chain coordination is more important. The company is collaborating with NVIDIA DSX, Polar Data Center, and others to shorten design and deployment time through digital twins and modular converged infrastructure, which can increase cumulative AI token output in the first 12 months after project launch by up to 30%. On capacity, new expansion in the Americas, expansions in Slovakia and Ireland in EMEA, chiller capacity doubling by year-end, and a new Johor, Malaysia plant coming online; the company also completed the acquisitions of Utility Innovation Group and King Environmental Services. Positive 2027 outlook, with capital allocation prioritizing organic and inorganic investment. Management said pacing factors such as power availability, permitting, and skilled labor actually play to Vertiv's strengths, and with a strong backlog and pipeline, it expects to continue growing significantly above the market in 2027, with strong growth across all financial metrics and margins continuing to expand in an inflationary environment. The long-term incremental margin framework is 30% to 35%, toward the lower end during growth ramp periods. Capital allocation prioritizes investment in its own capacity, engineering R&D, and scalable acquisitions, while continuing to evaluate buybacks and dividends. The following is the transcript of Vertiv Holdings Co's Q3 2026 earnings call: Executive remarks David Cote Executive Chairman of the Board To borrow Mark Twain's line, reports of our demise have been greatly exaggerated. I am very pleased with Q3 and year-to-date performance. It proves how customers view Vertivleading technology and reliability, undeniable scale capability, and superior service performance and capability. This is reflected in strong Q3 organic orders, and on top of very strong first-half organic orders. As Gio will mention, Q3 organic orders were not only strong but very balanced across customer types; orders were strong whether or not NeoCloud is included. To be clear, we do not plan to continue disclosing order data going forward. Despite strong orders and financial performance, I will be the first to say we are fully committed to continuously improving customer and financial performance. We can still be much better. These results did not happen overnight; they are the payoff from years of planting seeds and years of investing in technology, capacity, service, and all capabilities, because we believe this opportunity will be large. It has proven larger than most imagined, and we believe it will remain enormous for a long time. We are only in the early innings of the digital age, and we expect it to develop for decades. Its foundation is data storage and processing, that is, data centers. Without data centers, there is no digital age. Vertiv provides the "picks and shovels." We are at the forefront of the technological transformation in these "picks and shovels," and we intend to stay there. I have always believed it is important to occupy a favorable position in a good industry, preferably with technological differentiation, and then build a high-performance culture that serves customers and investors well. Vertiv is doing this. I am pleased with the pace of development of Vertiv's high-performance culture. The more technology changes, the better it is for us. It is exciting. As the famous book says, we are achieving two seemingly conflicting goals at once: delivering very strong results today while aggressively investing for tomorrow. This is usually difficult, and most companies choose one; Gio and the team do both. I believe the gap between us and other companies is widening. The fact is, we are still early and far from finished. As I have said before, buy early while supply lasts. I will now hand it over to Gio. Giordano Albertazzi Chief Executive Officer and Director Q3 was very strong. Net sales grew 61% year over year, with broad strength across all regions: Americas up 75%, APAC up 50%, and EMEA returning to credible growth of 23%. Organic net sales grew approximately 55%, with acquisitions contributing an additional 6%. Disciplined execution drove adjusted operating margin to 25.2%, up 290 basis points year over year and above guidance. Adjusted operating profit exceeded US$1 billion, up 83% year over year. Adjusted diluted EPS was US$2.21, up 78%, driven primarily by volume growth and continued operating productivity. Adjusted free cash flow was US$652 million, up 50% year over year. The quarter-end net cash position corresponded to negative leverage of 0.2x, a very strong balance sheet. We raised guidance for all key metrics for the full year: net sales are expected to be US$14.65 billion, US$650 million above July guidance, with organic growth of approximately 38%; adjusted diluted EPS is expected to be US$7.15, up 70% from 2025; adjusted operating profit guidance was raised to more than US$3.5 billion, up 68% year over year; full-year adjusted operating margin is expected to be 24%, up approximately 360 basis points from 2025; adjusted free cash flow guidance was raised to US$2.7 billion. On the market environment, the project pipeline remains very strong and global. Demand signals are clear and broadly distributed across technologies, customer types, and regions. We expect orders to continue growing strongly next year. The company does not disclose orders and will not in the future, but it is worth sharing: Q3 organic orders grew more than 100% year over year, to illustrate what that level of strength actually means. The customer mix, including large enterprises, NeoCloud, and others, is highly consistent with the market mix. By region, Americas pipeline sequential growth was the fastest of the year, converting into very strong Q3 organic orders. Power availability, permitting, overall sentiment, and skilled labor at construction sites are pacing constraints, but they have not slowed growth. We previously said EMEA demand was being unlocked; in Q3 EMEA project pipeline roughly doubled year over year, with organic orders growing even more. Momentum has entered the market, and we expect these dynamics to continue into 2027 and beyond. APAC was broadly strong, especially Australia and India, with Q3 organic orders rising sharply. China showed initial signs of recovery. Commercial execution continues to be favorable, and we expect price/cost to be positive in 2026, including the current impact of tariffs and countermeasures. On operations and supply chain, sequential and year-over-year growth reflect continued capacity expansion, utilization improvement, adoption of the Vertiv Operating System, and overall disciplined backlog execution, as well as increasing maturity in executing complex converged infrastructure projects. The company is making significant capacity investments globally to serve customers and execute its strong backlog. In the Americas, multiple new or expanded facilities were announced, covering infrastructure solutions, power management, thermal management, and rack systems. EMEA is expanding its Slovakia campus for power and thermal management and infrastructure solutions, and expanding its Ireland power facility; chiller capacity will double by year-end. In Asia Pacific, a new plant in Johor, Malaysia has come online, enhancing the ability to serve customers in Southeast Asia and Australia. This added capacity already contributed to Q3 and Q4 growth. Beyond its own capacity, the company continues to proactively lock in and expand long-term capacity agreements with key suppliers to ensure they expand in line with the company's growth. Welcome Mike Resha as the new Executive Vice President of Manufacturing and Logistics. Mike brings strong operational experience, capability, and lean management experience. Anders will remain as a senior advisor, focusing on a smooth transition and special projects. Time to first token is very important to customers; it determines how quickly AI data centers and compute investments generate revenue. We are working with NVIDIA, Dassault Systemes, and Polar Data Center to significantly shorten time to first token and accelerate all stages of the cycle. In the design stage, pre-engineered reference designs are configured and validated in digital twins, reducing design time by 10x. In the deployment stage, factory prefabrication and modular deployment significantly reduce on-site complexity and run in parallel with site preparation, cutting deployment time by up to half. The result is up to 30% more cumulative AI token output in the first 12 months after project launch. For the same installed capacity, customers can generate output sooner. Polar Data Centers has applied this in the first 41 MW phase of its Heroya campus in Norway, with expansion potential to 100 MW. Craig Chamberlin Executive Vice President and Chief Financial Officer Q3 adjusted diluted EPS was US$2.21, up US$0.97 or 78% year over year, US$0.41 above the midpoint of guidance. The year-over-year improvement was driven by higher after-tax adjusted operating profit, primarily from revenue growth and operating margin expansion. Net sales were approximately US$4.3 billion, up approximately US$1.6 billion or 61% year over year. Organic sales grew approximately 55%, with acquisitions contributing an additional 6%. Regional organic growth: Americas 66%, APAC 48%, EMEA 19%, all above Q3 revenue guidance. Adjusted operating profit was approximately US$1.1 billion, up US$491 million or 83% year over year, US$169 million above the midpoint of guidance. Adjusted operating margin was 25.2%, up 290 basis points year over year, 70 basis points above guidance. Margin expansion was driven by strong volume growth, operating leverage, and continued productivity. The business teams continue to demonstrate the ability to scale operations while expanding margins. The company continues to invest in capacity and engineering R&D to support future growth. Adjusted free cash flow was US$652 million, up US$216 million or 50% year over year, driven by improved adjusted operating profit, partially offset by working capital usage and higher net capital expenditures. Quarter-end net leverage was negative 0.2x, providing significant strategic flexibility. By segment, the Americas stood out: net sales of approximately US$3 billion, up 75%, with organic growth of 66%; adjusted operating margin of 29.4%, driven by strong operating leverage. APAC net sales were US$779 million, up 50%, with organic growth of 48%; the full-year outlook is positive, supported by end demand and commercial execution; adjusted operating margin was 17%, up 380 basis points year over year, mainly from operating leverage. EMEA net sales were US$545 million, up 23%, with organic growth of 19%; the market continues to strengthen, pipeline conversion is accelerating, laying the foundation for continued organic growth; adjusted operating margin was 28%, up 920 basis points year over year, driven by operating leverage and improved commercial execution. All three regions performed very strongly in Q3. Q4 2026 guidance: adjusted diluted EPS midpoint of US$2.25, up 65% year over year; the year-over-year improvement is driven by higher after-tax adjusted operating profit, primarily from revenue growth and margin expansion. Net sales midpoint of approximately US$4.4 billion, up approximately US$1.5 billion or 53% year over year; organic sales growth is expected to be approximately 50%, with acquisitions contributing an additional 3%. All regions are expected to continue strong organic growth: Americas in the mid-50% range, APAC in the mid-50% range, and EMEA in the low-20% range. Adjusted operating profit midpoint of approximately US$1.1 billion, up approximately US$470 million or 70% year over year; adjusted operating margin midpoint of 25.8%, up 260 basis points year over year, driven by strong organic sales growth and operating leverage, offsetting a small mix impact. Q4 is expected to remain strong, reflecting the business teams' excellent operational performance. Full-year 2026 guidance raised: adjusted diluted EPS midpoint of US$7.15, up approximately US$2.95 or 70% from 2025, US$0.45 above prior guidance; the year-over-year improvement is driven by higher after-tax adjusted operating profit, primarily from revenue growth and margin expansion. Net sales midpoint of US$14.65 billion, up approximately US$4.4 billion or 43% from 2025, US$650 million above prior guidance; organic sales growth of approximately 38%, with acquisitions contributing an additional 4% and favorable FX contributing 1%. Regional organic growth: Americas in the high-40% range, APAC in the mid-30% range, EMEA in the low-to-mid single digits. Adjusted operating profit midpoint of approximately US$3.5 billion, up approximately US$1.4 billion or 68% from 2025, US$190 million above prior guidance; adjusted operating margin midpoint of 24%, up approximately 360 basis points from 2025, 20 basis points above prior guidance. Margin expansion is driven by strong organic sales growth, continued operating leverage, and productivity realization. Adjusted free cash flow midpoint of US$2.7 billion, up US$813 million or 43% from 2025; the year-over-year improvement is driven by higher adjusted operating profit and favorable cash interest, partially offset by higher net capital expenditures as the company continues to invest in capacity expansion and operational capability. The company delivered strong results, raised its outlook, and executed with discipline. Giordano Albertazzi Chief Executive Officer and Director Preliminary view for 2027: data center demand is accelerating, despite pacing factors such as power availability, permitting, some data center sentiment headwinds, and skilled labor shortages at sites. Many pacing factors are not headwinds for us; instead, they directly play to Vertiv's strengths and help the industry solve problems. With strong backlog and pipeline visibility, we expect to continue delivering significantly above-market organic sales growth in 2027. The company will continue to invest in engineering and R&D to develop next-generation technologies, expand capacity, and scale supply chain and service to widen its competitive lead and keep up with customer demand and pace. Growing at this rate is a lot of work and not always orderly, but the company is clearly demonstrating operational strength. Despite a continued inflationary environment, margins are expected to continue expanding, driven by productivity, strong commercial execution, operational discipline, and deep adoption of the Vertiv Operating System. We expect to continue generating significant adjusted free cash flow to support strategic reinvestment in engineering R&D, capacity expansion, and targeted acquisitions. Entering 2027, the demand environment is strong, and the company is well positioned to capture demand and gain share, with strong growth expected across all financial metrics. Q3 performance was strong and exceeded guidance, and the team continues to raise the bar. The company raised 2026 guidance for all key metrics and feels good about finishing the year and the momentum entering 2027. The acquisition of Utility Innovation Group was completed, adding microgrid solutions, advanced power control, and behind-the-meter power design capabilities; the acquisition of King Environmental Services was completed, expanding fluid management and load testing services in Europe. An example of execution strength: working with long-time customer EdgeConneX and design engineering and construction management firm BCEI, which continues to expand with Vertiv as the preferred end-to-end power and thermal management chain and service provider; Vertiv's innovation, quality, scale, and reliability support multi-site gigawatt-scale facility deployments. Working with SGC Energy and KT Cloud on the Gunsan, Korea AI data center project, the design supports scalable high-density AI data centers, and the project uses converged infrastructure to accelerate time to token and deliver at scale. Global reach, technology depth, quality and reliability, scale, and industry-leading service define Vertiv's value proposition. Q&A session Amit Daryanani - Evercore ISI Institutional Equities, Research Division: The Q3 data is very strong, with orders up more than 100% year over year, which seems to far exceed the incremental gigawatt capacity in the AI ecosystem, almost implying Vertiv is gaining share, which contrasts with investors' prior concerns about product quality and potential share loss. How much of the more than 100% order growth is catch-up of prior delays versus underlying demand improvement? How is the company's share in AI deployments evolving? Giordano Albertazzi: The company strongly believes it is growing above the market. The market model shared in May is largely complete in terms of outlook. The order trajectory reflects the industry's belief in Vertiv; the company's technology, execution, customer relationship strength, and delivery capability serve customers well. This is not catch-up; orders reflect the company's strength in the market. Scott Davis - Melius Research LLC: Regarding discussions of supply chain issues and product quality, including compressor burnouts and UPS system overheating. Are these normal product development challenges, or are they opening the door for competitors? Based on current results, should these issues be considered exaggerated? Giordano Albertazzi: The best answer is performance. The company is in a high-growth, very active new product launch environment, with many products new to the industry. Growth is accelerating across the entire product portfolio. Quality data are encouraging, with good trajectory and direction. Early-life failure-rate statistical curves for new products may be higher, with a mix factor. But early quality of new products continues to improve. The industry and products are complex, and not just for Vertiv. The company is not perfect, but continues to strengthen quality and reliability as a competitive advantage. Charles Stephen Tusa - Wells Fargo Securities, LLC, Research Division: Please update on how the Q2 supply chain issues have evolved and whether delayed revenue is being recognized within the year. Also, a preview of 2027 capex? Craig Chamberlin: Part of the Q2 delayed revenue moved into Q3, amounting to approximately US$100 million to US$150 million, part of Q3's recovery. The company continues to build plant resilience to ensure project-level delivery outcomes. Q3 showed clear improvement reflected in revenue recovery, but work will continue to stabilize delivery. Capacity has been invested, partly affecting margins. We will not provide a 2027 capex percentage; the long-term guidance already exists and will be updated after Q4. Joseph O'Dea - Vertical Research Partners, LLC: Please discuss Americas mix dynamics and the margin gap, and the impact of future new product efficiency gains and mix narrowing on margin expansion. Craig Chamberlin: Americas incremental margins in the second half are slightly below the first half due to favorable comparisons; the significant Americas capacity ramp in the second half brings inefficiencies. More product output than service, with a mix factor. Mix balance could bring a slight improvement; capacity coming online and learning curve improvement also have potential. The long-term incremental margin framework is 30% to 35%, about 30% during ramp periods and 35% at the high end. Andrew Obin - BofA Securities, Research Division: The service organization seems to be an important differentiator. Please share KPIs, especially the difference in service attachment rates between power and thermal management and future opportunities. Giordano Albertazzi: Service is an important differentiator, especially when the industry is complex and new technologies are being deployed in volume. We do not disclose specific service attachment rates, but the direction is satisfactory, measured at granular levels by region, product line, and so on. There may not be dramatic differences between power and mechanical, but more specific to product lines. Converged infrastructure and system-level solutions create more opportunities on a broader installed base. Andrew Kaplowitz - Citigroup Inc., Research Division: Please describe the order pipeline further and whether it is broadening geographically. The U.S. remains the largest opportunity; how large are the opportunities in Europe and India for 2027 and beyond? Giordano Albertazzi: The pipeline is strong and broad. The core of the Americas is the U.S., which is indisputably the world's largest market; Q3 Americas pipeline accelerated in absolute terms, very satisfying. Outside the Americas is also very good, with EMEA accelerating and India's pipeline and market strength highly convincing. It is not only the Americas, but the Americas is absolutely strong. Mark Delaney - Goldman Sachs Group, Inc., Research Division: Please update on 800V progress, customer momentum, and the revenue impact in 2027. Giordano Albertazzi: In July we used a page to show the evolution of power infrastructure, including 800V DC, with three configuration modes: current infrastructure, 800V DC to rack and row, and end-to-end 800V DC. The situation is consistent with then. The market direction is consistent with what the company described: initial 800V to rack, with medium- or low-voltage AC, and BaaS as a transitional configuration; full 800V DC is being validated, with revenue beginning in 2027; 2027 is the customer validation phase for fully native 800V DC, with market deployment in 2028. Consistent with what was shared in May and July. Amit Mehrotra - UBS Investment Bank, Research Division: Q3 to Q4 revenue usually shows a clear sequential increase, but guidance shows roughly flat because Q3 was stronger. Please explain; also, with capacity coming online, pipeline, and strong orders, is the Q4 organic growth stepping stone appropriate for thinking about 2027 growth? Does organic growth accelerate in 2027? Craig Chamberlin: Approximately US$100 million to US$150 million of Q2 delayed revenue was recognized in Q3, making Q3 above historical trends; adjusted Q3 to Q4 sequential growth is more normal. Guidance includes some prudence. We will not comment on 2027, but the pipeline and order book are good, and we are confident based on Q3 and Q4 execution. Tobenna Okwara - Morgan Stanley, Research Division: Inventory is up more than 100% year over year. Is this a normal operational positioning reset, or a transitional phase of adjusting the supply chain to support modularization? Craig Chamberlin: Both. Inventory growth supports growth and ensures plant resilience, as mentioned last quarter. It supports both future growth and resilience as projects are delivered more like a product business. Tobenna Okwara - Morgan Stanley, Research Division: Liquid cooling mix comment: is liquid cooling taking a larger share of orders and revenue? What is the margin impact? Giordano Albertazzi: We do not disclose specific data, but have repeatedly expressed satisfaction with the direction of the liquid cooling business. Liquid cooling accounts for a larger share of first-level heat extraction, and the market mix is shifting toward liquid cooling; the company is very satisfied with its role, win rate, and leadership position. Air cooling will not disappear, but will account for a smaller share of total heat extraction in high-density racks. System-level coordination of the full thermal chainliquid cooling, air cooling, and heat rejectionis more important. The margin impact is included in current results and full-year guidance, and the overall feel for liquid cooling and service attach is good. Nigel Coe - Wolfe Research, LLC: Please discuss internal supply chain measures and what was done for the huge Q3 ramp. Current satisfaction and room for improvement? What does new EVP of Manufacturing and Supply Chain Mike hope to bring and what problems to solve? Giordano Albertazzi: Craig explained the Q2/Q3 revenue recognition dynamics. The company brings complex site delivery into the factory, which requires establishing processes and a mature operating model, an industry first and still unique. Progress is good, and we are satisfied with the learning curve, combining execution and system architecture. It is not finished, but this is not tension about the future; it is continuous evolution forming a competitive advantage. The company leads but still has work to do. Mike will continue to drive operational excellence and maturity of the Vertiv Operating System; he is highly qualified. Welcome Mike again, and thank Anders for everything he has done. Nicole DeBlase - Deutsche Bank AG, Research Division: The company has repeatedly mentioned pacing factors such as power availability, permitting, and moratoriums. From the perspective of shipment timing and customer requirements, is the company seeing data center construction projects delayed by these factors? Giordano Albertazzi: Project-level changes are not unusual compared with what the industry has seen for years. Construction activity sometimes slips and sites are complex; converged infrastructure is changing the game. We have not seen these dynamics major or unusual shifts. Customers are sophisticated and start procuring materials and equipment when projects can be completed. Luke Junk - Robert W. Baird & Co. Incorporated, Research Division: The company previously planned to launch its 800V product portfolio in the second half. What is the industrialization progress? Scope of opportunity, relationships with chipmakers and hyperscalers, and what enters backlog? Giordano Albertazzi: We are satisfied with progress. Current product launches cannot be separated from capacity, dedicated lines, and dedicated supply chains; this is part of new technology launches. All 800V DC configurations, whether to rack, to pod, or end-to-end, are no exception; supply chain footprint, capacity, and technology need to match simultaneously, and industrialization is an intrinsic part of the product launch. Customer validation combines hyperscalers and silicon-side partners; we will not be more specific. Ananda Baruah - Loop Capital Markets LLC, Research Division: NVIDIA last week announced the DSX pod and broader DSX AI factory platform aimed at accelerating time to online. If it gains momentum, does it help Vertiv convert orders to revenue faster? Or is data center construction time fixed, affecting only customers' time to first token? Giordano Albertazzi: The company is deeply involved in the DSX pod and broader DSX AI factory data center design; this is public information. The fundamental driver is time to token, which can be worth billions of dollars to customers, and the whole industry has a strong desire to accelerate. The company's converged infrastructure and modular converged infrastructure use reference designs, configured through simulation and digital twins, compressing deployment and design time and avoiding snowflake customization; deployments are engineered and customized for specific data centers. This is consistent with NVIDIA DSX direction, sharing a vision. The company accelerates the learning curve of complex delivery operational excellence, forming a competitive advantage that helps expand share and serves as a technology pull vehicle. Varun Govindaraj - Bernstein Institutional Services LLC, Research Division: Are customers extending the order placement time frame, placing orders further out? What is the impact on backlog? You previously said 12 to 18 months; is that still the case? Giordano Albertazzi: Order lead times have not changed dramatically, and have not changed much over the past few quarters; 12 to 18 months still applies. The company strictly defines backlog, counting only purchase orders, not capacity agreements. The shape of backlog has not changed much; strong orders will be reflected in backlog. Andrew Buscaglia - BNP Paribas, Research Division: What is the 2027 margin outlook? There was some noise in the second half of this year, but incremental volume, better mix, and capacity coming online should provide a strong starting point. Is this year's exit margin the starting point for next year? Craig Chamberlin: We will not specifically comment on 2027 incrementals. The historical framework and long-term plan are incremental margins of 30% to 35%. Lower during growth periods, higher at steady state. The framework is unchanged, and 2027 guidance will be provided at the end of next quarter. Noah Kaye - Oppenheimer & Co. Inc., Research Division: Q3 to Q4 incremental margins are above the historical average. Does this indicate improved efficiency in the new capacity ramp, or sometimes timing benefits? EMEA margins continue to rise; is that sustainable? Craig Chamberlin: Q3 to Q4 incremental margins are slightly higher but not significantly. More standardized operation of APAC facilities and continued EMEA pull-through bring positive effects. There is no material difference from Q3, but the positive effects from EMEA and APAC are clear. David Tarantino - KeyBanc Capital Markets Inc., Research Division: Capital allocation and Utility Innovation Group (UIG): with more behind-the-meter power, what is the opportunity to enter the grid interconnection market? On broader capital allocation, the balance sheet remains strong; would you consider opportunistic buybacks in a volatile market? Craig Chamberlin: The capital allocation strategy is unchanged. The company holds cash and wants to keep available funds to invest in itself and inorganic opportunities, requiring appropriate returns. Buybacks and dividends will continue to be considered, but the most valuable value creation is investing in its own capability capacity and/or inorganic assets. UIG is a strategic move that brings the company to the table earlier and into architecture discussions earlier, extending up the value chain, with synergies from microgrids to data center architecture. Gio added: we are pleased to add UIG to the power chain and look forward to it. Giordano Albertazzi: Thank you for your questions. The organization demonstrated its strength this quarter. The opportunity ahead is significant and durable. Customers are building at a scale and complexity the industry has never seen, and they need a partner that can scale technology, execution, quality, reliability, and service. That is exactly what the Vertiv team is doing. I am proud and satisfied with this quarter's achievements, but by no means complacent. There is more ahead, and we are ready.