On capacity. I’m comfortable with the investments we are making, and it will support our customers. As a reminder, we have 22 manufacturing plants globally. As explained in the past, we have stringently cadence spend rigorous process to manage further capacity expansion decisions. We previously provided a $75 million to $200 million range for CapEx this year. We expect to be at the high end of that range. So please assume $200 million CapEx in ’24, still comfortably within the 2.5% to 3% range of sales we provided at our investor conference.
The ramp-up of production of liquid cooling globally continues as planned, and I’m happy to report we have production underway already at 2 of the 3 plants we shared with you we were planning to activate in ’24. We are on track with the capacity ramp-up as shared in February. We continue to see strong momentum with AI-related orders. While we are not disclosing specific detail on our liquid cooling orders, or more broadly AI-related orders, we did see the pipeline for AI projects more than double in the last 2 months.
We are starting to see AI scaling in North America. This is consistent with the GPU road maps, whereby next-generation chips will require liquid cooling. The pipeline is reflecting that technology shift, not only in terms of liquid cooling but in terms of the whole powertrain and thermal chain. We are working closely with our customers to get their infrastructure ready for what is ahead.
Now to the right side of Slide 4 still. Supply chains continue to operate as expected, not without an occasional bump, but that’s where our constantly improving supply chain resilience comes into play. We continue to build out our supply chain to support deployment of liquid cooling technology with the same rigor and resilience we have built in our existing supply chain. The geopolitical environment is becoming increasingly complex. We are working to constantly increase the resilience of our business. Looking at material inflation, a mixed bag, but we know things can change quickly. We continue to believe we are in an inflationary world, and the price/cost plans we’re executing reflect that yet.
Let’s now turn to Slide 5. There is an intense focus on thermal management lately and rightfully so. As the market leader in data center cooling, we are uniquely positioned for that opportunity. But power is also very central to the evolution of data center design and to enable AI deployment and to fuel the overall market acceleration.
Vertiv has a complete power offering, the whole powertrain to serve the data center market. We are quite relevant in both the power distribution and power quality segments of the data center market. The acquisition of E&I expanded the Vertiv portfolio to include medium-voltage switchgear, low-voltage switchgear and busway offering.
We often get asked about capacity. We talked about liquid cooling in February. We want to spend a minute on power now. We are expanding our operational capacity significantly across the powertrain to support customer demand. A good example are busbars and switchgears. We have already doubled our capacity since we acquired E&I at the end of ’21, and we are on track to double it again by the end of ’25 to support the growth we see ahead.
You heard me talk about always maintaining a circa 25% capacity we have room to cover demand peaks. This on average continues to be the way we manage capacity. The ability to operate end-to-end across the powertrain similar to what we do with a thermal chain is testament to Vertiv having the most complete digital infrastructure solution. This is an important reason why we are a partner of choice for our customers and work with them on designing the infrastructure for the high-density future.
And with that, David, over to you.
David Fallon: Thanks, Gio. Turning to Page 6. This slide summarizes our first quarter financial results, strong performance to start the year. Organic net sales increased 8% with all 3 regions growing relatively consistently in the high single digits. Sales were above the high end of guidance with EMEA, the primary driver of that overperformance.
Adjusted operating profit of $249 million was $73 million higher than last year’s first quarter mainly due to favorable price/cost and higher volume. We exceeded the high end of guidance driven by the sales beat and higher productivity than expected in our model. Our adjusted operating margin increased 370 basis points to 15.2%, further demonstrating our continued focus on operational excellence, and that is certainly driving results. But as we have mentioned, still plenty of opportunity and much to do.
Moving to the right. Our first quarter adjusted diluted EPS was $0.43, $0.19 higher than last year, primarily driven by the higher adjusted operating profit and also a small tailwind from income taxes. On the far right, adjusted free cash flow was $101 million for the quarter, which was 4x higher than last year’s first quarter with the higher profitability flowing through to free cash flow. As Gio mentioned, net leverage was 2.2x at the end of the quarter. And despite the $600 million share repurchase, net leverage is only slightly higher than the 1.9x at year-end as we continue to expand EBITDA while generating cash. And based on forward expectations, we anticipate net leverage to decline to 2x or lower in the third quarter, if not sooner.
As mentioned, the $600 million, 9.1 million share repurchase in the quarter included $525 million and approximately 8 million shares from Platinum as they exited their position. All in, we repurchased shares at an average price of $66, which looks pretty good at this point.
Turning to Page 7. This slide summarizes our first quarter segment results. We had relatively balanced growth across the regions. Americas grew 7% driven by hyperscale and colocation. And this growth was on top of an extremely challenging comparison to first quarter 2023, where Americas grew over 60% from the prior year. Adjusted operating margin in the Americas expanded 340 basis points from last year’s first quarter to 20.3% with the increase primarily driven by favorable price/cost and also productivity.
APAC sales increased 9% organically, a stronger number than we have seen in this region in quite a while with this growth driven by continued strong market demand in India and the rest of Asia with both those subregions growing low double digits. Although not as strong as the rest of the region, China sales grew low single digits in the quarter, encouraging. But as we see China stabilizing, albeit at low levels, and we expect China growth to remain stable but muted throughout 2024.
