CARR - Earnings call transcript Q1 2022 | Carrier Global Corporation

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Operator

Good morning, and welcome to Carrier's First Quarter 2022 Earnings Conference Call. This call is being carried live on the Internet, and there is a presentation available to download on Carrier's website at ir.carrier.com. I would like to introduce your host for today's conference, Sam Pearlstein, Vice President, Investor Relations. Please go ahead, sir.

Sam Pearlstein

Thank you, and good morning, and welcome to Carrier's first quarter 2022 earnings conference call. are Goris, Chairman Chief today Officer; Chief here Patrick and Financial me David and Gitlin, Executive With Officer. significant restructuring Except will as referred and to excluding significant as nature be company a other costs items. speaking to by and/or otherwise results from often noted, non-operational items of the other non-recurring management operations, reminds expectations call forward-looking other during the and are uncertainties. listeners to statements the and earnings sales, that company any The and flow risks subject cash provided and XX-Q differ X-K, details Carrier's anticipated SEC XX-K, filings, cause to including factors important results in could materially provide that statements. Forms on those the actual forward-looking from

one time We to opportunity the participate. we leave CEO, call that to give is With the up to like to and Chairman that, for over will Dave and end. call ask Once Gitlin. to the turn follow-up questions at our yourself the you everyone questions, for limit I'd opened question one

David Gitlin

chain Price/cost outflow levels. to supply due better Chubb. was a XX% summary and you, of flow our impact and XX% Sam, compared growth, quarter, of up QX in at shortages than last I teens, profit We X% to good I'll challenges. Slide the impacting morning, expected. proud is results the mainly organically us, everyone. Thank in the almost impact year the versus with execute sales and continues our in operating cash global delivered up QX of how another backlog remained of neutral excluding for Chubb. up last year. strong larger-than-expected of orders Organic growth inventory am the XX% on and quarter to our Free was team X. was face a start Adjusted excluding strong was high quarter

results was colleagues and Hyderabad saw our $X.XX these I'll priorities. energy cash which of not and and a margin as priorities above-market allocation. generate strong Asia investors creation disciplined free driving on framework This together talented our first-hand via and discipline free Poland, slide presented our We growth see Slide for basis focused year. to remain this power you value value sites for the spent expect flow and but it of at Europe flow encouraging that the in focus, address expansion, updates our our tremendous X, in organic on We solutions X. continue the growth, the coming in I our provide starting from summarizes cash key the our are our Singapore our world-class our customers. internal this to see elements billion the process. From to tied how forms on container Slide of on our and only in empowered in week creation factory to drives week a framework progress culture priorities also with Investor to Day, New globally people throughout our to recent teams goal operations alignment recently to our capital innovation Delhi, to

healthy orders indoor the the presented uncertainty macro to buildings growth continue quarter. supply Day trends are than now million, provided of challenges. at more We and worth we is QX, the $XXX chain Investor from in above-market despite and will lean $XXX pipeline by On XX% that into sequentially up drive we confident fourth opportunities secular healthy saw million our environments, our

residential complement acquisition heat global the the This and attractive position newly upcoming European We commercial continue in pump heat us The our design and Toshiba sustainability. market. enter favorably play of offense heat to pump will combination excellence on pumps. center European our announced ESG of leadership to

the in orders is are service. have more first in example, refrigeration, now largest GWP an equally low We in where chain. where all-electric XX% we than critical pump chiller countries [ph] Australia's added in quarter. recently supermarket our were Woolworths, units Electrification over XX heat As our Europe reefer transport eCool up Vector

across of of important focus verticals, million monitoring Chan our wins retail terms are rapid win into digitalization, Public remains on monitored and There We've incorporated achieved Abound square reporting Lynx recent including Health. T.H. includes and by This platforms. alert of adoption and our In platform and now feet School Harvard's our education, key industrial. energy over capabilities XXX Abound. with key Abound an

Our receiving digital more widespread recognition. are capabilities

optimize to actions example over is OEMs. operations, customer digital currently XXX,XXX awards, This from building and the to Breakthrough good base. building platforms Excellence and equipment within of pieces Award's offers example, XXXX the connected Intelligence Best insights CORTIX a including Analytics by diverse and a predictive our Business performance organized of For platform, installed Artificial Abound across Intelligence our deliver Predictive recently XXXX autonomous key Award the several Group; AI won solution equipment CORTIX multiple and platform. how value is the

penetration also XXX,XXX middle continue by to to of temperature We subscriptions solutions of We drive India, levels low. of class remain will on demand as expanded such including end capabilities, we increasing for have Lynx income asset are where in track levels countries the the remain our increasing our that products have and tracking, and Lynx portfolio remain confident and prognostics our year. alarms, this

XXXX. you addition introductions we core these on Slide releasing to on from to After innovation new track new XX which secular for products differentiation, in X. through we trends, than businesses continued accelerate growth can QX, the remain more tailwinds see and product in in our In XXX

our example all introduced detector sensors One innovation and smoke a ecosystems. and chain is cold building that is healthy, and sustainable with carbon to Our of smart around solutions. centered air indoor connectable monoxide intelligent core the safe, quality we data home recently embedded pipeline strategy with

at of ambient on disruptive well. on the are pumps cold Energy's Our example improve One our heat traction of the efforts progressing to is R&D technologies Department temperatures. challenge efficacy

the unit National currently test Our at under is Labs. Oak Ridge

of performance X coefficient of better-than-required expected low demonstrated performance a GWP with temperatures ambient Fahrenheit at have refrigerant. degrees our forthcoming using We the

pumps increase heating roles to level. and previously We XX,XXX digital oil working (inaudible) innovation help held Technology announce the our the we Chief gas our at experience Officer. Aerospace's cutting-edge systems Bosch. and to recently are am customer to over critical range technologies and and at heat driving new I in commercialize solution of Honeywell fuel led perfectly regions. of His a pleased a that have BorgWarner colder hardware engineers to take across adoption solutions next efforts of broad position him intersection to

is sales single parts were having coverage; revenues, under XXXX, within X. KPIs segment, each QX. digits Across growth XX,XXX digital aftermarket agreements up in for recurring here: Carrier We sustainable healthy KPIs, XX% XX,XXX by we Another capture; us which remain across long-term in on Slide the driver that vectors high critical year aftermarket and offerings. solutions; committed and growth to detailed connected you delivering chillers After and and full have you including service and year-end. on see see chillers our

So, our encouraging. remain drivers growth

the closer points, a remain expansion by to operating to margins productivity with expansion we to and over Slide we Turning per we track of that At We me we With basis in commitments XX let improvement, increasing chain it and resilient building committed basis tracking that turn the sourcing of basis adjusted XXX are savings to on for to projected our factory XX margin dual X. year productivity first on that to to be to gross Patrick. Related points purposeful points. to our XXXX Day, over of around exceeded components margin growing that, deliver quarter, committed and XXXX. about are very supply more we million critical automation. Patrick? $XXX Investor

Patrick Goris

Thank good you, morning, Please X. everyone. Dave, to and Slide turn

than sales was to to QX EPS due $X.XX inflation up over margins and better year X% price/cost, a guidance, was we compared growing income year. and Core the sales February than XX% over than given price guidance and and divestiture. XX% and stronger Chubb light of higher which despite anticipated all price/cost better with up light expected, up commercial resi Organic impact organically. were HVAC was reported also Residential compared to the contributed neutral. growth in operating was Productivity with conversion, to single-digit our also As the we was commercial expected, sales, growth and than last Both lower adjusted over count. segments were down high sales. excluding was XX%. higher provided Adjusted strong lower earnings of JV reported last profit, well stronger share

Free use an XX. million added adjusted appendix Slide we million a of the increase to versus was bridge earnings of driver $XXX call. inventory. reference, than The cash on your QX For our primary on we flow in EPS guided use the was in an $XXX

expect expect still flow chain to full $X.XX this more the half. to operate shipments. and will to missing in stock continue delaying but with supply free We for are in We components loaded safety improve second back-end billion higher the as we year, be conditions cash generate

was turn were and our in up to compared slightly inventories HVAC, Slide mainly and residential, commercial up Adjusted light inventories commercial strong with quarter field to were freight splits volume businesses. by performance. digits single up and XX% up segments than better-than-expected digits. low and Resi Commercial costs. double grew Within price Light versus modestly margins operating and movement distributor movement HVAC our positive for to digits. field and sales growth both year, and points this mix. as organic prior material was up Let's realization cover X basis leverage continued higher Controls for offset the double due very furnaces driven in more Price/cost year. Applied XXX segment ALC/Controls were last

positive segment this to expect We year. this remain price/cost

affecting quarter, chain Moving X% to Slide sales and bit up challenges the due expected were trailer. lower XX. Organic to a on than Refrigeration mostly supply in truck

volume down realization As to and trailer digits, expected, digits. improving by QX. quarter year, cost. mid-single solid segment digits. up basis lower up were record to XXX Sensitech and mainly double up well last year. neutral container and mid-single was in was a EMEA, and operating mid-teens compared compared due do in last to Commercial Truck Price margins price growth be refrigeration expected to points driven this Adjusted is continues is in was was and to down

Security Moving on to Fire Slide & XX. on

Price/cost than company orders in the XXXX, as up X% segment divestiture. XXX growth basis Total about the Chubb the result strong XX%. better organic Fire quarter, Excluding expanded first sales margins Chubb details points more sales mainly operating expected. were a of Security was Adjusted this year. this up & with orders provides quarter neutral Slide broad-based were in XX of performance. on segment, from

quarter. continue intake the compared HVAC Commercial business this and trailer to last down for Light modestly up orders order healthy, commercial products Refrigeration flat down also manage year. for remains portfolio. in orders actively Residential Transport QX levels. to truck book As commercial double orders up with about the XX% XX% about for orders throughout to over were quarter, orders HVAC both last very were backlogs last year. in strong, our the remained Order expected, as XX%. refrigeration we the widespread were and backlog The year's modestly business. was with very Fire remain our about Growth & Security up transport in compared

strong As continued growth Order continued see April, saw with all regions you can the strength world. of was all of down on exception in we the China, in areas which side, in the right year-over-year. orders

$XXX on capital about $X.X million Slide billion debt. and had in paid some collected of to $X.XX worth on from shares quite We update activity billion an deployment We worth the sale, of Chubb QX. Moving repurchased down XX.

In our with JV announced million. Toshiba for acquisition about the $XXX of addition, we

expect acquisition for the progressing. Integration end We QX. is acquisition to of the by to this continue planning close

value-add and for actions provide plenty metrics of to Our flexibility continue capital our strengthen credit deployment.

for $XXX to TCC prior continue million, billion debt our with Day. $XXX $X.X you consistent what in acquisition. repurchases to XXXX for XXXX yen-denominated of expect to debt we share reduction Total Investor at shared million issue with of February We target remains and the

growth, quarter From that, calendarization adjusted to to HVAC to maintaining But on flow. and a by as for we Dave a on a EPS behind about in guidance This XX. Slide Shanghai are businesses we perspective, just lockdowns with I'll businesses open sales QX's start this better-than-expected in we operating expect next both area. and free cash footprint X to margin, XX. back assumes our organic up currently Now that in full have the few mainly in the XXXX. it to and adjusted impact commercial With moving our trailer us, weeks, and $XXX good impact not guidance expect sales and truck Slide do turn manufacturing year. We had million, to

David Gitlin

Patrick. Thanks,

pleased are strong to a with We start the year.

we'll strong continues for gives challenges us up deliver overcome customers With confidence that, to and macro our this team unexpected backlog growth, investors. about and our results Our continued questions. the to for open

Operator

Morgan first Your from question Stanley. Instructions] [Operator Pokrzywinski with is Josh

Josh Pokrzywinski

commercial about are here, on first guess, whether saw you Dave, maybe I you feel So air the stuff just do momentum. of question been talking some some like quality side, on maybe indoor the other of it's or education, side comps more some into on of structurally we've to where back getting there? Or money the of kind COVID system? we the stimulus kind the and of just is going hitting easy still work

David Gitlin

it to we've with that launched. the initiatives do trends the think a and lot I some No, has secular of

which is, know, up K-XX, as at significant. you our look You orders were in Josh, first the XX% quarter,

pipeline Our XX% grew sequentially.

focus the seen, a up in then and think, digits funds was straight north up being we SRX was starting that's been when at we our itself, Controls where in we're of underlying us. which broadly for business. HVAC months was XX So, look has area Aftermarket and north see XX%. of I now double to business released encouraging. SRX And more K-XX, big have XX%, ABI

continue America North to The strong. up was over business global applied orders So, XX%. up XX%. was very be

aftermarket So, these through. lot we've ALC, we about trends, and XXX buildings of when underlying dropping talked that now Controls, are look at trends the K-XX, then where pipeline a is at healthy

Josh Pokrzywinski

terms And marketplace. it. we're then price-on-price-on-price the the Got point this at kind on That's of helpful. business, resi just in of

at movement in elasticity end of healthier, of Are I kind seeing what a that or pretty think point we a not demand the versus are Inventories terms about in the to of increase higher for kind How the should if little you of there? sell-in. usual. than price? think mentioned sensitivity you significant pushback any is dollar consumer

David Gitlin

more that I is, from half for price said What Not record quarter seeing in levels up XX%, the than we are really, us of realization. was that of resi yet. guess We first over price.

about have of because couple to price way, announced we have the costs So the input seeing. last in And the years. by increases we're X of that we

So really, through in And focus line been watch expected were we up of in that to down out we But inventories, is dealing on in we're was range inflationary for of through that That increases. the doing have very front if modestly, you movement generally trying kind with here price stay with it pressures clearly, what carefully. splits and in furnaces. we have field fine both low orders single-digit but April. orders resi,

then, demand So half see for there's strong. into resi. place gear introduction. for switchover to as folks have course, up realization of back the a Price And the lot we'll been takes we the of how XXXX year, pent-up as get the has of

Operator

Your question comes Mitchell next Barclays. Julian with from

Julian Mitchell

sort dynamic. the Maybe cost just price to start versus with off of

So headwinds for I of billion think cost guided something before price $X billion or so you like the of and year. $X

those the first the X and impact from Just of on updated was what items quarter. wondered those sort points X any thoughts maybe in

Patrick Goris

Patrick here. Julian, Yes.

at versus be billion could we $X billion. for have the with full price that and inflation. will we've the as on seen track costs the is bit all up the billion I'd well. at than better than of that was $X negative. input we're we've recall, -- but do price, said do year, bit time, better on a It increases the little you we're current billion, than the -- for on clearly, come expected some $X we billion. $X the a likely announced, same Frankly, little it what say $X QX seeing, So we quarter neutral that better Based

year, the little understand a cost billion, will will $X but pricing neutral likely and we than continue higher price being, for be target to so that we And the so inflation. bit for time

Julian Mitchell

Thanks, headwind Patrick. hundred what, And in few was, so? cost the or a first quarter, the million

Patrick Goris

north was It $XXX million. of

Julian Mitchell

And to you plus would want of then drivers do catch the the around up? where main for see and we follow-up kind that What kind them that margin my of just bps Refrigeration business range. just getting sort margins How that? that in quickly XX are of the for slope be be

Patrick Goris

will or of price/cost. in expectation that A Julian, QX that QX. be in for in margins point about low was a so basis point Well, is Refrigeration. our driver big XXX for segment headwind the was margins QX Price/cost

We in versus neutral margins it's expect the headwind. and improve price/cost help where will starting is to QX, be today, where more significant that it a

realization so what the second almost improved improve in And QX QX. we've of thing was the -- price frankly, Since last Refrigeration. of good quarter year, as is price it double realization and since seen price every was in has in quarter realization

the -- right believe we're there. So, we on track I believe

Operator

with Next question Bank Obin comes Andrew of America. from

Andrew Obin

a distribution. and rates question interest on Just

the with financing is idea is this up distributors time? as very comfortable inventory that how commentaries will and large referred with the because, less right, go of floor your they reason channel regardless inventory that carrying that much an cheap. rates basis, as from but is maybe rates you coming strong the the With up and the will up, going payments -- this right, One structurally, interest with pretty just is, discussions the on is up, interest interest is appreciate the of distributor over one carry absolute cycle because have does it distribution going very, I

David Gitlin

our channel the in as seeing what same the major not That No. been our for has well. focus is area only we've couple seeing but with that been -- right last we're our of -- our The distributors, resi a for not discussions now years. dealer

the what same they're growth trends strong anxiety best continue. that, positive year, seeing generally this migrating channel a And consumer, quarter, generally tied of with seeing. a residential. XX% last drove XX%. can starts continues. growth is work-from-home were is more the XX% the in north whole they're completely in that environment. stay And is They XX% partners what see drove first there's sort quarter. general Housing hybrid So, That to about I that about ago, do a and we know drove This first the in our years X which to phenomenon were up of work

we've We continue so, on, that you some share the gains chain challenge we have the is more share more quarter. for demand that's gains. and the where year and of there's in units. And Carrier at side. continued end probably that bps rely you the to XXX on higher about first had higher-end get, last the in or see We The the of chips supply struggled

So the of a trends continued. lot have underlying

the of I up around South, think and as but going such in impact, for it's especially interest it's the around units. cutover XXXX date to as the the we have the much the not second installation. gear biggest move discussion that's we that take place in is of year switchover where unprecedented And an half because the just rate more is

South inventory So great be. that the switchover to not news X we dealers the and -- and as could that's be second but the could end units is to first support going that of distributors have want And in it be quarter. with the today's unprecedented inventory the up to get sufficient into half, we

are channel news a takes We managing others doing partners, we're late. have better in than on has we little as because needs customers well. The can. confidence, you, But helped availability Availability to their us tell our and we've Chris been think, I and Justin cutover some see place. been our bit a can of many is completely hurt still how that will with best as gain I basis we've daily and share with that tied good

Andrew Obin

appreciate answer. that's I it. great a No, really

question. Just a follow-up

Carrier TAM this in Could is? size the for mentioned You what time? pump Europe. you what over a just be opportunity And could market heat

David Gitlin

it, -- giving confidence commercial tell and on -- we think very, heat heat it we specific I'll Europe. you can pumps market. at a that very we're I say pump the are bullish you, look at with with if market number, European look Well, commercial without on side, in the Andrew, leader mean the I you you

great technology. have We

added we've saw few in We're Toshiba months. great have course, And we'll alone We -- low we the we heat commercial that product in the by next pump helped was we've talked to, quarter of And be were channel fact what the orders year, GWP be in of a that Giwee, adding partners. that first new introduced going quarter the in it's this last quarter the first about. air chiller great up cooled XX%. first

key today. bigger for So is a play not Europe us the make pumps in for resi we're where player to heat real a

we're So space. that in invest going to

of in to going be Europe think million pumps that on I know XX about add probably side going you heat it's by the to resi because grow. we They're should confident XXXX.

a adding we we're but Italy Toshiba, using a player, channel. So not a have and Giwee. Riello pump of center business heat excellence be already adding We're we'll our in has

to emphasizing going resi going we're Europe in heat So be forward. pumps

Operator

comes question Coe Research. next Your Nigel Wolfe with from

Nigel Coe

Good quarter, of start good year. the

apologize this has the in been April already But you joined captured for still had price this of this I late, in price more billion increase. know if plan any billion little call tracking Sorry, price I have you and realization that the increases year? the a so the Are $X year? to for do And $X plan we X I discussed.

Patrick Goris

Yes, Nigel, here. Patrick

comfortable or more to So we'll everything this year. billion announced earlier price realize that that what we $X with of was date, said we've we're

given But also this do that believe than than better likely, the will it's year. expected billion performance that a so quarter our be And we'll ago. $X QX inflation $X the in higher we we billion

That's both announced, prices will realized, thing -- also that the course. than is but think of $X we least or The billion realization price we good And not have price $X think announced, comfortable so $X at billion higher yet with we realization this be the billion. we're of inflation year. with

David Gitlin

with in Refrigeration, than price in more his concerted his that Jurgen seen we've history. we're investors fixate across assume add, team our on in I we way portfolio. seeing ever lot our I talk pushing effectiveness and What a prices Fire is & would all price, a very say, with What team Nigel, resi. we think the Tim when would I in Security, and of it's

clearly, the So price which rest confidence team and in numbers But very, Chris well have our really very for side, is across in overall on it great us the of HVAC portfolio. done the the year. gives the

Nigel Coe

mentioned on was the you to But then And you great. confirm this clarify, broader is that. segment Refrigeration. why just wouldn't that's just just neutral for year? to implies price/cost transport my arguably you in obviously But -- that for be were was side? price/cost is, than question David, wouldn't quarter, XQ neutral. the that I if And think that is you better comp? the overall the whole in transport the that toughest Was XQ, or for your was better full that just negative the be be why it HVAC positive can if refrigeration neutral then given plan

David Gitlin

of It It's guess does I that us aggressive year. was we've expected well we you we that give on pricing and neutral. have mean, where bode rest short said, inflation early. remains it an to confidence be QX -- answer the eye lot taken negative, a also the that as the -- that's But is of actions I uncertainty. we to for Nigel, there keep

few ability going inflation predict out suspect. quarters think is to I a anyone's

few the So out. more months keep cost do eye now, have on to eye feel an us an stand play a on things we but to how about continue see through we'll going very keep on where to we it and Right price we it. give year, good

Nigel Coe

fair. That's

was in quarter? what sorry, the price residential And

Patrick Goris

by XX% over sales, that more overall up was half residential said price. We driven than of

Operator

Your with question Steve comes from next JPMorgan. Tusa

Steve Tusa

bridge. mentioned had a of guys other items for You the couple

that. on far concerned? then was I a think was that bridge quarter? on in number what first number changes something anything the productivity it around as annual moving million like $XXX as Any the And like else or

Patrick Goris

overall million change of sorry, no, $XX million. over the $XXX no the million to -- target first continue for And $XXX Steve, year. of in still was quarter million We productivity reinvestment. productivity, $XXX

Steve Tusa

out? China Okay. And the then expect the so million mentioned shifting mean else on in should we as I seasonality? or Or far $XXX somewhat quarter second a in as And seasonality? XQ? anything anything normal you more

Patrick Goris

high, almost will HVAC I'd say year, margins XX%. do were exceptionally the We somewhat high in were QX. to normal they say in margins be HVAC I seasonality, that recall, expect last may Steve. think you that I not

in QX basis bit We overall extent to to little it compared last the year. QX, be below not maybe points HVAC what in last expect our a was And up few that it to expect we to margins a be year. margins was but

Steve Tusa

Yes.

And typically? sorry, what What normal second normal is these how But seasonality? think guys EPS? it don't know half, like is you I I half seasonality comes to do first is. normal when days, see maybe what that

Patrick Goris

expected Well, QX tend EPS is QX. than up to also and pick in volumes higher volume -- to be the in QX, because the QX

Steve Tusa

of play but what that Maybe how Right. you're the more a Like products that strategy currently looking expect the products guess a like is to there, little David, for transition? 'XX comes out, on old give last on course one. to Yes, and over sell-in the exactly thinking front? you're color little and 'XX. take do new you precision I'll current precise the more I this was it can the I just what and half into with I us when what's get there. second the taking outcome the One

David Gitlin

No, the starting in the the we current be XXXX strategy is on focused that will months. really next few product the introducing South

start into August, fourth introduce January to they'll right have start products that's be new South inventory manufacturing to units be third the what selling the as the the We'll because gear data X. of in closer we in the will getting to up on quarter. the So the that for because of North XXXX today's and the end they product we products that's the be as receiving stocking that get North in year they'll because

inventory see product expected. balance North, to for movement we watch all for would very, introduced later cut-over. I and levels, levels South So have And and generally with 'XX the they you, tell the in the then what we'll remain earlier carefully. the Steve, We very

of the course, in the depending, our X partners actually what network our but happens super levels we And months with We not dealer transition. on only alarming. expect stay be anything going over well. or with inventory inventory movement So with is would close levels year-end haven't expectation inventory down levels do so. we also year-over-year, distributor But we haven't to inventory next in our year-over-year. year-end stocked partners, being watch this down what's And seen we're be as

Steve Tusa

would And to the those as then, when as consider would mix you channel? whatever they're into layer correct, they move you when related increase price, you XX% opposed in start and you selling like are, or higher the consider -- those the revenue

Patrick Goris

Well, single XX% (inaudible). movement, we've digits, seeing not been on low

Steve Tusa

price On per new price, right, in up on that difference per minimum level. unit, go product? unit, that the the for Doesn't price minimum of unit at the

Patrick Goris

The today's point. the units price said be to yes, we've new good of XX% will -- higher XX% unit. Yes. than The price Yes.

So yes, that plays in.

Steve Tusa

And correct? price, not mix, but that will be a

Patrick Goris

the Yes, look to Yes, way that's at that's it. one right.

Operator

with next Sachs. question from Your Ritchie Joe Goldman comes

JoeRitchie

just little China. bit maybe -- So, just elaborate a more on

embedded orders I'm down You you've April, guys mentioned $XXX because that's and million headwind turned then for negative. this assuming of lock in the XQ.

the like little what range like of outcomes a more like on and ground? of give and you're Just color there actually hearing the seeing bit on us kind what are

David Gitlin

us. Joe. HVAC, residential. the kind which sales that our the news fire, year mean what of these around Well, X% our estate. is our leader of We carefully, biggest the a sales. estate upfront that being commercial than But China, We is part we're transport, I focus is and say only of watching real multifamily that in know. X/X been with of I'll to where important less you We're in our XX% as good concern in biggest of area, China vector. has real are China is is this believe It came into commercial one growth it's

their in specific transport. is have us a is us, over has exception that would knock-on pushing So good we of we say, We for But a of of in less HVAC, questionable vertical -- the happened to reopening, And the it's it's last of have being hoping in We're region. But lot only for couple folks. not I our where We What's but logistics. it's managed. having not We've granted attention compliant a keep a that -- where X And situation I process. get being how for over for the it's on effect track sales. applied these suppliers for been commercial for been we also and it's of to lot for factories on just Shanghai, there. couple overall had daily. really reopening Shanghai, rules. us think a for -- X We're keep lockdowns a in down, than impact suppliers. our under we X have a heads significant in our and need X.X% it reopen XXX Riello, months acute

couple happen I'd it's believe in do a the expect show we where to would shutdowns for impact into $XXX ability same an could do or quickly, of China or to We product we our the and million is it very recover China XQ. expect Most so for us China. Asia there issue. Pacific. are that COVID So, a we get this it timing Patrick We said, Like recover quarter. as throughout

only Some into China, Shanghai, the But much things global U.S., market. pushing the rapid not really come but a but for in for are we for reopening hard less. very

JoeRitchie

you're start range? quick of off then clearly, the like just helpful. just to one, about kind lost kind maybe on revenues? margin That than Is you're thinking a it a Yes. But proper follow-on XX% of super if I one on on guess annual And decremental like China. was quick the then a better guide. question, XX% the follow-up to And the margins.

year basis just possible to expansion you kind to point of that number get year-end. throughout kind any give that on so the XX cadence by us margin can of And

Patrick Goris

margin with start And decrementals of I That's Steve's related specific margins will question, mentioned we we looking -- perspective. what part decrementals margins incremental Yes, our below last then not and half I'll believe QX will shared we're Joe. slightly second of be We to in the current below the of on ahead China, may of the are world. have the or that we where on were in be And do that as really QX year. at we think be QX. QX, were slightly where QX from a our cadence and that QX question, your where

So into. not can get that's really something I

Operator

Your next question Capital comes RBC from Deane Dray with Markets.

Deane Dray

the you saw slowing, spotlight that about much investment, What XX% geographies. a terms does troubled is I your up people. Russia. took have represent and XX%, in the some charge of million keep into of in on And guidance? there your but you concern orders baked to $X in like how impairment receivable, now to I'd assets that either for then EMEA,

Patrick Goris

you're believe, that to very assets if take million we I'll one In brought first most world. in of that the essence, Deane, off the related of part Russia. Yes, Yes, is, right, of and we Ukraine assets not our $X quickly. all,

assets look that. is, So the off. hangover in a we it's of We going QX. higher don't be basically, if part these to in all of the million be that and to wrote bit have be might world decided dollars. a to we in There it But the at than it few little expect

David Gitlin

that we last Chubb, Deane, it's to And to XX% on Chubb, without our of mind Keep year in close our sales. was now Europe. when sales. it XX% closer of had

digits. So us QX were to become that will Europe for exposure carefully, continued we're you up us. orders Europe. were What strong. is very for less orders watching be They but this very double April I have strong has tell in

to it on signs there's we'll in continue But the obviously, So with tangible watch world, of going carefully. no weakness. quite everything

Deane Dray

due issue on to couldn't supply the That's was past you this million, you an missing $XXX the on helpful. follow-up, us it of But semiconductor I $XXX because everywhere. talked which chain ship. color especially as comparable fourth know and think can of can be And issues. in you We number What quarter, And lost In quarter? million would components a any give sales update terms any components. or the that's about you then side.

David Gitlin

demand continue our tell for X/X painful chain our fast in what mentioned supply million hundred for a to number chips. didn't the of issue we be of of would The same cannot lot they It's extremely Chips the issues, have customer issues. range you us. number The and few overdue to of is dollar as Yes. you, if any about are XQ. our that enough we ship recover could root I

the So level things, that as second many the right I do Microchip optimism chips. next the direct gives we're we are, and towards those. we're we're their best us I as a that direct XH relationships have really of of believe The with help to of half get things ourselves doing STMicro they're then, redesigning some And get our are them, doing into establishing we our we're number these customers which relationships. and where of team to chip all is one, And this year year. key OEMs TI key -- of our pushing like and doing they really know us support many lot but into on

our So by we of critical XX% by QX XX% have will this in the quarter here IC's of redesigned then and end year-end.

us So a we are available. lot that chips that where gives around more actually optionality redesign

some stoppages, to are only about of wait So us are But impacting suppliers as There supplier on-time of gives hope. what OEMs our our that signs capacity some 'XX. seen. But we the and we've come well. while they're us, in chips impacting line it's optimism chip not for delivery of level online

biggest in availability. terms the watch that's So to of we thing that need

Deane Dray

I great. we've of some redesign are to the that fastest like of out, would more it's like trying point heard That's to do. a comment just us OEs sounds to that that, that pace

like it making good So there. sounds progress you're

David Gitlin

new have unfortunate, chips; honestly, it engineers it -- a want on what to we've had It's so something on what small Well, do working because we introduction is to that working it that it's is redesigning globally. product army we reallocate is.

this doing engineering quickly cannot are recover all operations the teams our enough. think and I but right things,

Operator

from Credit with comes question John next Walsh Suisse. Your

John Walsh

bit. Fire & year. to little you QX, initially of Maybe margin the guys the Security better the around a the much Clearly, for year. shifting Question start expectations gears Good than thought. balance

actually assume it still was XX% year, think hear is again QX. but the in year-over-year right for down guided probably ballpark. didn't full the the I in I that

help rest margin from maybe for the the perspective? understand us Security of a how year & Fire Just looks

Patrick Goris

John. Yes,

but the was to As year. expected that driver in than price/cost you I we where look volume expected. price/cost. where big a And it to that the versus said, little good was better was segment We -- be, if at better bit we margins the start in segment,

to inflationary a as year. the this margins mentioned too is our Clearly, us still outlook. but So in in to start upward, early I call pressure way And a for increasing there the change it, to we're an segment, in earlier, still our early good seeing still year, year headwinds. full but good

on year, us too for path to start our clearly to good that, better little the but a guidance. bit change So XX% price/cost, early do better-than-expected than to

John Walsh

some new an X I market share you're share applied, kind either And what build of shifts a businesses? you. I quarter know think then makes put Got one away was that good you've No, any you're that of question maybe any around in walked competitors on share. expecting those you're sense. there, to just you're really gaining Light initiative. then I you kind seeing but if kind if from and know your stuff. is And market guess, if growth. Curious some of of commercial, I'm seeing shifts. of curious extrapolate, tough up

David Gitlin

clear way, think it's we've significant prices raising I the while share, commercial, Light Yes. by significantly. gained

share -- so, last basis -- we would of XXX saw, saw XXX I year the over basis you, that over XQ. So continued tell share We XXX gain or and of QX. points in points into about over

we've you, is in probably share less think than I flattish; we in be the strong and proud and it's some stickiness, the XQ. it's executing performance, would Light But all innovation, probably what of gains So is operational China I Applied Applied Europe's may share been tell is on we it's in seen America, things North that a customer slightly been well overall, because and flattish been And push team team market. been thought. been the it's commercial pricing, it's

Operator

Stephens. next with Your from Moll comes Tommy question

Tommy Moll

see that the I of of weaker versus global do wanted that activity? so is through quarter, unfolding? think stronger up XXXX, good Or you kind side accelerating us the as you like give then of a unfolding? the for to mid-teens holding on of HVAC about you rest And level world trends those to business applied of But business, trend? How commentary see see. in which continue feel can which what the were the parts it's how the on good does you do or

David Gitlin

was XX% first North quarter, and the Europe That XX%. around strongest. America up the Tommy, XX%, was around was In was around Yes. Asia

high because keep have the So to that for differentiated around HVAC sort up year, of but that as soon demand good strong. enough in the over as ABI of China metrics, can trends get very talked have margins, on quarter. as lines is double the a digits facilities Overall the be possible at of up our in couple the we're The news single ALC/Controls eye would doesn't board to China so digits. high one, overall, is; going we for product underlying for business, quarter customers. second underlying item support probably the remains us stays that reopened about very beginning of Applied get Number Shanghai need We've XX%, to the in across mentioned, we an the it. Aftermarket we first rest down strong. do XX% really now. call, right the said the we credit, on biggest we the watch

back verticals key education, especially So some commercial care, buildings a centers lot online. like warehouse, in health of coming and data strength,

there. a to one the now thing you I lot So right we is watch would acutely very to got tell like China.

Tommy Moll

Dave, that's helpful.

highlight there M&A, expect underlying couple up But investments? you Following deals of a this do And what's a on not there? Toshiba noted that Is potentially think to Capital cadence of those XQ, related it by could large-scale I track the deal for type to said. on what kind point And and umbrella another already. Group, announced for close investments, likely of scale of you underneath us to assume see then year? is Venture we're safe recently you smaller strategy some you the were on

David Gitlin

the and firepower continue M&A. on we have plenty more first, for Well, cash of to

leadership, the pipeline things about our along that our Investor lines on sustainability relate and of a we're talked overall with So focus at we working actively Day trends. what our huge to aftermarket

would of north had certainly the So could could we sense. if we right billion, a deal, we if it $X do and deal, made obviously,

AddVolt, we launch our and think energy In on excited the important and terms on unit. one of about reefer to management Carrier it with a deals announced ventures, we OhmConnect of side, very batteries were our as [ph] couple one

And we So investments the have a right a -- focused interesting and we're Jennifer at. and we're in of the core the Anderson on, episodic. of and pipeline, will what a of working number team looking be pipeline cadence opportunistic

So the for These aside around -- And it's investments add Patrick, are see we we've typically we'll to anything right to budget team. certain investments. make a that that? that $X them. not if there, set million type

Patrick Goris

No.

Operator

Your next Vlad question comes from Citigroup. Bystricky with

Vlad Bystricky

So, little. I the just market wanted you're strength in K-XX seeing to dig the a on in

XX% orders I up or over year-over-year XX% over think year. said you

funds as it more you accelerating? Or mean, how market about available? is of that is are larger, longer-duration Federal more So, evolving orders? you type district-wide of deployments broadening seeing you just can sort talk are -- seeing become I

David Gitlin

we're seeing a Yes, system-level more transition sales. a to

included HVAC Ohio, and UV upgrades Vlad, building to win of broad sold key a had had recently, school. example, systems. a They included we So, we in management light the suite where solutions. It for some

the we're what district schools not solutions, So, a point asthma. realization units a seeing with very kids air were and OptiClean in things ventilation we're seeing and helps sell XX but like a system-level X transition. sustainable we're quality fortunate and Because We school bunch -- in the more have indoor to to only that seeing of transition is from solutions.

but and with also important illnesses So testing asthma. and helps helps show schools. that COX better COVID studies ventilation the We've it improve and cognitive in to of It lower levels, done for with scores airborne diseases, spread it's obviously, functionality.

is with being interact overdue with from make they schools with long to especially And is SRX sustainable a funds the more the have So, solution. seeing -- the investments. news structural, what we're that released, we funding looking for good

Vlad Bystricky

ongoing there. some momentum should like That's good it that helpful. continuing sounds And and be

factory you've I was about automation to that on your XQ comments hours So of shifting interesting, X additional XXXX. Maybe your an ramping that's through follow-up me, XXX,XXX for just exciting. productivity talked and sort know in adding efforts. significantly And

is what annually deployments given you've over how efforts? on as those in about you're seen just you can you few way of, automation's you've a sort to done frame, there the So next thinking ramp date, the years productivity impact that

David Gitlin

next XXXX. of, now increase Well, and say, hours manufacturing what we so hours. to said on remember, the that over million million XX automation is -- said And we X remember, that we our X or a base that's between would million from

of total a that the into replacing eliminating automated it benefits look an have things at higher that and costs hours. So, also hours. other But Obviously, that becomes you percentage you see you're of quality with investment get variable with and some our your goes that. around things. and to other there's benefits Obviously, much

continue So, there's to that add, Patrick? benefits automation we're from we that clip. a at you seeing the lot investments. a and of And to continue expect pretty good Anything want

Patrick Goris

No.

Operator

next Your Gautam Cowen. with from question Khanna is

Jack Ayers

buying color guess mixing parts Ayers just system helpful. perspective this replacement. provide of is I of any I is your back know on forward guess price I like concern Gautam the question, I there I just going going any would could I kind seeing. cycle. to first versus pretty maybe be kind you're resi on what consumer yield guys the believe, got today. the down quarter. maybe just Jack on you This for HVAC you full there good behavior, guess if guess on

David Gitlin

that. -- -- which down. a evidence seen we something it watch short evidence very, very We no of seen of again, no mixing cycle. on this is such We've We've evolves watch market, It's carefully.

In of versus replacing lot seen fact, higher-end our components We've systems. evidence we've for desire no seen of systems. the opposite, a entire Infinity

So, looking into a system-level refrigerant, with into probably higher more system-level be changes. we'll at have get watch going as And then you probably the units, SEER to XXXX you're get we changes. more Obviously, new it. to as

no So -- it's something we of. watch, but evidence we've seen

Jack Ayers

Okay.

inflation given And increasing kind here. to with rates in. of going of can definitely up, That's switching then another helpful. I guess, I guess one gears like if Okay. I sneak backdrop just kind the commercial, just

commercial, commercial bit macro here easier. quarter. Just sort cycle these I comps like still early in were like of fairly manifest a We're strong orders of orders? these guess at guys this in when of little do some see backdrop are to themselves commercial. you some expect

David Gitlin

is remain seen underlying strong, the our like up at up I over the highest XX%. in Orders While Underlying in trends at March levels a think mid-teens up was backlog trends year of XX%. again. commercial, we've ABI,

right it. specifically So, on trends, to we're we'll encouraging. like eye Again, China and be now. But watching lot keep of controls including an a underlying the continue things aftermarket

Operator

Linzey Brett Mizuho. with question next The from is

Brett Linzey

wanted chip and to really running? this was progress to And revenue a of Just to you at now back as least unserved back supply that think you last how to held you result seen sourcing. business the couple able or on Are of size redesigns dual much chip of as limitations? get you've quarters how up that shift 'XX capacity and year, come much the

David Gitlin

is to working And at things, that how we've What environment. not chips. chips, of year million it's much see. see. that goes logistics. in how have overdue to fluid hundred recover on But to the our is I demand Brett. a around customer of And And because sized see and right to it shortages. it's few a can challenging tell we're I clock year, if into working is of situation, we have have all much you we'll very the X/X we'll this a going to chain quickly relates that, frankly, of believe, next to team, just very, supply Well, How our it's then overdue

continues do industry is right Some capacity of time, I online the challenging. entire key material for, as at the think, the team our same things. is soon The coming input the I think be possible. to chip doing But as

of some improved. the dysfunctionality And logistics getting

Patrick Goris

are supply on just of as mentioned. of & the would And availability improve chips, backlog second counting improving and I -- past we working it, half to the, our the add some within chain Brett, year. the call are that, backlog we Dave Fire the on due especially of Security, in

we half that the to turn sales are in of expecting so, year, F&S particularly into some second And the segment. of the in

Brett Linzey

that follow-up Was F&S, very outliers balanced and or the XX%. And you versus product sense. just hoping Fire on versus Makes any then could X commercial, industrial, on unbundle between it. there? orders really Got maybe side, strong residential up Security fairly

David Gitlin

Access been well Residential mean, XX% Fire very is Commercial very most positive. as on we Fire Solutions is reliant chips. comes have kind piece was it's issue to Industrial Fire plus. well. watch I No. they're The did because up really POG the doing of back. that

we're very But happens is demand to business online that we well has piece, the high need been So, quite so strong the key positioned. for more start recovering. a that And in operationally, Access be us. Solutions they margin chips can

Operator

it this Q&A remarks. And you. concludes will Thank for session our management final pass to back any today. for I

David Gitlin

Okay. you, thank Well, everyone.

people team here execute proud way. of our Carrier, thanks to First, team started our year how get despite and continues at to Really the thrown the our XX,XXX than has headwinds this more that globally.

And be our of of joining. questions. follow-up of course, all for proud very any Sam for you So to will thanks team, available and

Sam Pearlstein

you. Thank

Operator

And you with today. you for participating, that, ladies program and Thank now our and may gentlemen, conclude we disconnect. for

Carrier Global (CARR) 28 Apr 222022 Q1 Earnings call transcript