Operator: Our next question comes from Nicole DeBlase of Deutsche Bank.
Nicole DeBlase: I guess maybe just when you guys have — based on what you’ve received from an order perspective related to AI so far, has that been mostly focused on upgrades of existing data centers? Or would you say it’s kind of a balance between that and actual new AI data center construction?
Giordano Albertazzi: We feel a bit of 2, but it’s still predominantly new data center for the time being.
Nicole DeBlase: Okay. Got it. That’s clear. And then I guess with respect to the outlook for order growth, I know you guys said in the slide that you’re expecting like sequentially down Q-on-Q, makes sense. I guess, what gives you conviction that there was a pull-forward? Like I mean, obviously, like every time we look at data center CapEx, it continues to rise higher. Why do you think it was a pull-forward into 2Q? Is that a direct customer comment? And any other color on like quantifying the level of order growth you guys are expecting in 2Q? I know I’m trying to pin you down, but there’s obviously a lot of investor sensitivity to like expectations into the next quarter.
Giordano Albertazzi: Absolutely. I mean the commercial side of that is not an exact science. Let’s put it this way. We try to make the science statistically relevant using pipelines and stacks on the pipeline. So we call an order that lands in Q2 probably very granted, but there are things that are not necessarily in our control or Q2 or any other moment of time. So what we do is be very diligent in the way we manage pipeline and very diligent in the way we analyze pipeline statistically. This is something that characterized pipeline last quarter in Q4, and I was vocal about that was an acceleration. So the time it takes to — in order to — opportunities, sorry, to become an order. And we see statistically the same is true here.
Now we are happy about our pipeline size. But from there to make an exact state of what future will look like is difficult. But our comments about pull-ins, if you will, are statistically based on things happening more rapidly than historically they’ve had, if it makes sense.
Operator: Our next question comes from Noah Kaye of Oppenheimer.
Noah Kaye: I would like to just maybe revisit Mark’s question around the relationship between the longer lead time on the orders and margins. The company has done so much work over the last year-plus to improve management processes around pricing and sourcing. So as we see this backlog continuing to grow, how are you protecting margins in backlog? Do we indeed have higher visibility to the margin profile?
Giordano Albertazzi: We multiple times have indicated and been vocal about our strengthened and continuously strengthening pricing muscle. And that also includes being factoring in dynamics on the material cost side of the equation and factoring in our targets of price/cost positivity, if you will, but also in terms of better contractual terms that allow us to react to something that is unforecasted. Well, that’s also — it’s a commercial relationship. But we are in a much stronger place than we were, and we are happy with the trajectory in which we are and the actions and the mechanisms that we have implemented in the way we price and approve price.
Noah Kaye: Okay. And a related housekeeping item. The guide last quarter was for $60 million positive price/cost for the year. Is it fair to say that it’s still the assumption? Any changes to that? Is it also possible to say what it was for 1Q?
David Fallon: The — our expectation for full year has not changed significantly from what we shared in the first quarter, if anything, trending a little bit more favorable, but not significantly different.
Operator: This concludes our question-and-answer session. I’d like to turn the conference back over to Giordano Albertazzi for any closing remarks.
Giordano Albertazzi: Well, thank you, everyone, for your questions — multiple questions. But first and foremost, I’d like to thank the Vertiv team around the world. The focus on innovation, the customer service and execution is certainly something that is very palpable and strong. So thank you for the progress. Thanks for joining us today. And we really appreciate everybody’s support, and have a very good day.
Operator: The conference has now concluded. Thank you for attending today’s presentation. You may now disconnect.
