Earnings call transcript Q3 2022

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Operator

Good morning, and welcome to Carrier's Third Quarter 2022 Earnings Conference Call. I would like to introduce your host for today's conference, Sam Pearlstein, Vice President of Investor Relations. Please go ahead, sir.

Sam Pearlstein

Thank you, and good morning, and welcome to Carrier's third quarter 2022 earnings conference call. With me here today are David Gitlin, Chairman and Chief Executive Officer; and Patrick Goris, Chief Financial Officer.

certain relevant on performance in business. discussing management call, of be are believes assessing will non-GAAP this measures which the We the financial non-GAAP website at in GAAP is These to ir.carrier.com. reconciled presentation, available Carrier's earnings which figures from download are measures our to

any details are filings, reminds and provide subject forward-looking and important and Carrier's that SEC to Forms could results flow listeners provided XX-K, cause X-K, statements company [Operator statements. from to sales, earnings risks forward-looking The cash factors that differ during including Instructions] XX-Q the and those on the expectations other the call actual in anticipated uncertainties. materially

I'd CEO, our to like call the Chairman that, Dave over and to With Gitlin. turn

David Gitlin

Thank good you, Sam, and morning, everyone.

I which carrier this proud Let am of continues deliver results. consistent me team, start and strong tremendous saying to by how

X We results. up the heels Total year-over-year. Slide X% were our to on delivered about continued up X% for company traction a of the backlog sales is on and pricing. our growth orders of summary QX XX% Turning organic quarter, organic in

organic we slightly continues Adjusted deliver to be double-digit growth. continue cost than aftermarket price positive. we operating better profit expected, Importantly, and to was

about of tracking G&A $XXX gross are $XXX of million to We about which productivity, from come will million reductions.

strong Supply cash of chains We quarter generated million. free flow are $XXX approximately the in generally improving.

in delivery dual We later components than improved. year meaningfully has on-time cash improvements, thus for flow The year have study impacting supplier free forecast. sourcing been the increased and our planned, though have critical full

approximately deployment We of until billion realize acquisition important additional $X XXXX. integration we maturities successfully very closed XXX% on we during to to with Carrier to We cash of capital as and solid free starting flow improve, capacity working for and Toshiba and still progress conversion. are value-add and plenty debt cash sheet the balance quarter, chain remains expect no our capital supply synergies. As making the return are have

authorization. a $X which billion of million approved on top our $XXX week, this the is previous authorization, share Board Earlier repurchase the on remaining

strategy committed allocation, We prospects organic dividends shareholder share in remain long-term disciplined capital M&A, growth value and investments, are our buybacks. and including confident delivering and to through

Moving to want creation our our this we year. value presented framework Investor that to emphasize X. commitment the I Day at again to earlier Slide

Our and expanding principles team disciplined these delivering remains laser-focused four driving of organic on allocation. cash free above-market flow capital growth, strong margins,

We performance our thorough of a individual cascades critical alignment members XX,XXX areas have goal that to goals. process our team focus each

drive X. and that sustainability. progress that our as continue trends significant to customer making Secular on are on sticky one priorities, demand Slide definition We can theme is you see fits certainly

demand. Our enabler achieve this and customers cold their chain verticals key both fueling and and policies energy reduce bills residential and to carbon in mandates, is incentives to distribution. commercial motivated further the the shift are their footprint targets government and ESG with sustainability electrification in A buildings

our as up with our Starting the expanding EcoHome Tennessee offerings through financing American rapid Act. pumps. sales In to XX% residential Reduction U.S., the further passed split include be QX, over Today, Inflation will by transition accelerated heat pumps buildings. of recently heat In the were last customer and of over shipments XX% pump new to We established are our heat excellence our residential facility compared initiative. our year. center pump heat North

transition. new In and gone The XXXX solutions. to job a resi to has HVAC the managing to inventory has done well, X with continue cutover addition and pumps, energy-efficient units heat great innovation production through our compliant lead we team SEER differentiated our

Carrier and in We Las lineup. hosted dealer industry-leading our Vegas X,XXX about Bryant the product dealers and network energized recently is

weight. in size units and complete are differentiated performance, outdoor Our new outdoor indoor and redesign

SKU and to and channel us. efficiencies XX% a operational provides flexibility the addition, In reduction to

XX% to previous more efficient reduction driving are new generation cost and products. are actions We a at XX% pricing over the premium aggressive least units,

same we pump the heat and leader orders and more anticipate in Europe, were product up development pump market. in In the TCC full heat where heat XX%, year. QX a we heat in commercial pump and QX for Asia enables to accelerate magnitude segment the the the pumps, significant acquisition become the VRF us player are And fast-growing

is vector from also and operate our with Customers to We XX countries, traction units this continue truck benefit strong to now our electrification leadership the in in on these our shift trailer in business being units. segment recognized. innovative market equal

earned the and Product top of equal Awards Award Year Energy the Environment the vector recently, from Just Leader program.

focus In the increased opportunity by addition wellness. on continue presented the sustainability, and lean into to health to we

with partner for Wilson healthy Demand our pipeline QX, friend, to proud them innovative In provide to are build. with large-scale Russell our compared with and increased our over to to building continues indoor orders solution to XX% up environments. work We customers and as $XXX last were we million. healthy year, safe about

about up Within vertical, and XX% orders up XX% the K-XX QX we year-to-date. are were

at on but focus core, carrier solutions from intense to equipment-centric aftermarket its more transitioning recurring reasons, for many and are goal revenues. digitalization with an Our a provider we company

digital achieve tremendous. embed in outcomes to our specific use ourselves ecosystem offerings is to opportunity The customers' to help them

enabling with optimize and the new that total reduce sends cold sustainable we ownership Abound not of and applications, performance. healthy predictive building also health provides the outcomes more Abound equipment solutions, by digital including data asset introduced and key collect platform maintenance link and predictive and smarter, with chain and insights system cost have to Abound to provide only they technologies Our interact customers desire.

encouraging. a interacting team to key that long-term Carrier leadership an commercial customers, that and with locations wins XXX nationwide multisite will installation you I I is more to My growing of a stores to include than customer. make add portfolio and directly retail can willingness an Abound tell scale are Recent our buildings and additional commitments X,XXX their of office for chain drugstore managed scale

will excellence holds recognized chain true and more margin, awards to revenues and predictable and efforts the service outcomes. sales innovation, additional being stronger EcoEnergy same customer deliver generate for pull Our for ability and X for higher the its and recurring as Lynx equipment initiatives. sales here are positive services. XXXX received Abound a cold has Abound our Growing And in impact

We with Lynx on greater customers continue intelligence the our and across add capabilities flexibility, visibility platform focused to chain. providing to cold our

analytic protect increase provide business, saw by their equipment Lynx in We advanced automated of our and early year-end. insights and refrigerated operational trailer more XX% remain truck subscriptions improve invaluable Our refrigerant thousands QX uptime revenues XXX,XXX on American new models service than Lynx and new to North of for to XX%, by asset detection driven track year-over-year a refer subscriptions. In loss, cargo. performance enabling and customers our the

XX,XXX organically solution is you the aftermarket and in Slide on can a revenues was recurring driving up BluEdge traction billion to our selling more for the enabler. was are XX,XXX on expect on continue chillers to Our by we continued expect quarter, about and double year-end. attachment in revenue realize rate devices remain digits see reflected Connected Aftermarket third We chillers, XX% contracts in under have fundamental over to XXXX. track connected our performance, in by X. $X third quarter, as we

parts our accounts. we enabled our national two expanding also by where are platform new Breeze We sales onboarded

are seeing playbook embedded is and the results DNA, deeply aftermarket quarter-over-quarter. our Our we in

Lastly, X. on Slide

proven shareholder even to ability to We strategy. the our economic drive by staying of face confident in uncertainty in continue value our to be true

accelerate playbook recurring to exceeded We disciplined expectations, driving utilize shareholders. that and waste trends and our beyond, through capital reduction growth secular and strong return capital in address aftermarket differentiated in same remaining we will allocation growth driving tenacious solutions and opportunities, XXXX our cost have increased to eliminating consistently that and and and

XXXX, we by As controllables we close doubling to will ahead out control look proven on this QX down and the playbook.

deeply confident be that continued drive to our way. am results in ability despite team I challenges thrown the Carrier's may strong

over turn it me to let Patrick? that, Patrick. With

Patrick Goris

everyone. organic The flat. of sales in you, to increased sales a morning, price/cost headwind by Dave, X. Currency of divestiture translation up acquisitions, price, last the all the by segments $X.X Chubb were with quarter. was sales Carrier driven larger-than-expected year, X%, by All positive X%. Slide compared Please were Thank X%. XX% up Reported and sales volumes and Toshiba good X% to billion turn substantially and reduced were

was QX tax will TCC reverse in in divestiture impact points. QX, the adjusted each integration about cost, to the XX stronger annual includes rate XX be basis $X.XX XX% Price points basis operating ongoing last of expected than line Adjusted Toshiba, in benefit project margin headwind in year. a is effective basis is the of with essence, we about from other. our The expenses. the compared timing Chubb of quarter, although and to $X.XX positive down what at XX which a effective of Toshiba EPS acquisition. rate now given tax each points was acquisition of and offset adjusted The margin margin

Slide your a QX in appendix For the XX. reference, have EPS we adjusted year-over-year bridge on

quarter the $XXX Free in cash million. was flow

to deliveries and the thus, While there improvement some shipments affect been continue supply and inventory has component levels. in chain, shortages

Before let in move the the on you a P&L. I comment to see about our make income me other segments,

As We amortization stake the not operating $XXX intangibles EPS. a associated adjusted related taxable This event. about Carrier. adjusted million to essence, in exclude recorded profit onetime in and of from and result onetime Toshiba step-up QX, of in ownership gain acquisition, had the gain the Toshiba is we a a this Carrier is which, acquired we with already

commercial XX reported double-digit and reflect sales the of the Moving sales XX% segments, which and X. on single-digit growth. residential added in up course, impact Slide high our of points by growth driven commercial growth in year-over-year to light XX%, HVAC Toshiba, and organic starting HVAC were businesses. on were of up HVAC strong

and are about in the movement digits third XX% year-over-year. quarter-end was quarter, levels mid-single Resi field down inventory up

levels driven to as we field the digits. price Residential inventory down new growth as to work HVAC balanced mid-single was was products. towards XXXX continue all year-end year-over-year We volume transition by by

in aftermarket strong had with from Shanghai we in about the growth business as HVAC Our All regions more Commercial controls. impact field in QX grew QX up a were of lockdowns. Sales double-digit inventories light XX% very and than recovered the XX% applied equipment, remained grew commercial mid-teens. China XX% over year-over-year. and down quarter

X% Adjusted last segment year. operating was profit HVAC for up to the compared

operating mix margin points from offset XXX As The basis lower was good consolidation XX and to XXX price cost. impact about is income, and basis Toshiba with points balance JV basis expected, unfavorable the productivity. point by down due

deliver full consistent about full year to about XXX margins The margins impact positive We on a expect price Toshiba point what year quarter. of has the for HVAC you with segment. dilutive XX%, last the to with XXXX I acquisition full basis segment year shared cost remain and for this

transport a to this refrigeration. growth refrigeration, trailer North truck on given offset segment refrigeration within headwind currency is strong the significant sales significant growth commercial and down quarter, include trailer global. constraints in high were from truck declines up Organic very Slide as transport in QX America saw Transitioning slightly, sales reported translation chain X. as refrigeration supply With or container teens.

softness supply about issues sales leading Europe Container down strong and based trailer demand as well another double-digit increased affected XX% sales tough year-over-year Sensitech truck to comps. with growth. quarter on However, as delivered chain backlog inventories. were

high about was on Adjusted price lower cost flat deliver as XX.X% despite are sales bps our pressured with The were year-over-year margins currency and track last volume headwind. XX to retail customers food translation the offsetting European segment year. up Commercial more productivity, year energy operating and this remains refrigeration of prices. by margins compared to than inflation favorable

Security on Fire to XX. and on Moving Slide

mainly on This of basis sales points of productivity, offset the Price XXX chain more solutions sales segment cost margins Security supply deliver was negative were impact of XXXX, than in higher-margin year. access X%. Adjusted operating to this from divestiture segment margins positive quarter up the Chubb remains of third the Fire quarter is track by the business. Chubb segment and the and about which impacted expanded and this XX% because in particularly volume. especially challenges, Excluding

X.Xx mentioned, as XXXX. up HVAC us orders business, were Backlog versus now company on and up months, Similar quarter. should orders commercial prioritize as which total book All organic start I orders a their in digits within year orders backlog, good seventh position up to is and XX% were and to almost double-digit to Slide to that XX is weeks. in measured demand HVAC commercial NORESCO, the saw commercial and And normalize quarter. double-digit for that extends low down growth QX order last the were single orders business the strong into the is all continues the and quarter, typically consecutive HVAC for XX% still and saw well regions backlog more compared commercial details throughout remained as for provides robust The growth the backlog over Light expected, in segments. within XXXX. excluding remained year-over-year up last quarter performance. resi

driven of in of high the an North book up Refrigeration order in trailer single America tripling first opened digits as mid- for almost in to by the truck orders the we were quarter, half September. XXXX orders

book, we order as year-to-date America for looking how orders the backlog North a than trailer. performance. year-over-year refrigeration strength trailer X truck manage America truck Given Europe year-over-year almost months, business the at are up better America order XX% comparison properly XX% is for the order some North more year-over-year The offset remains transport weakness up container. and North truck trailer within Through

were organically profitability and the prices as on this inflation. And by energy as retail continue European improving of orders over customers XX% refrigerated are focus Commercial down business. to we food impacted

by access were has backlog is and impacted the each for solutions, positive in demand chain year-over-year our challenges. and products with the for except Security up XX% Finally, which businesses growth Orders remained healthy. double-digit in most businesses, except all of Americas. supply Fire fire almost residential been Security in Fire products

you see saw right businesses. As of can and in strong our many we slide, the on demand of side both the left

by in some Europe, we few such in refrigeration. trailer driven and weakness commercial areas truck a Europe However, seen have as

that addition, Singapore. impact this in weaker the Asia, mainly orders given books container In orders China, excluding business

total TCC, of For company reference, sales about our of China X% addition with the are business.

reduction on moving lower to we of year to billion now about revenues to XX. on Compared are balance sales of sales million organic full year $XXX our translation, due reducing full currency Slide expected our prior we growth. the Now guidance, $XX.X performance. points year and guide Accordingly, our to This about margins XX slightly to guide. with We the by prior most guidance tailwind compared the margin versus July expect to improved a now guidance. reflects of compared our operating of expect also is $XX.X points basis up margin translation compared billion. up QX adjusted last XX prior to basis XX.X%, Currency minor to due

We are to in primarily including translation. is earnings third adjusted This or of range increasing productivity incremental guidance than the that EPS our slightly end $X.XX more high the lower headwind full currency $X.XX. the performance guidance to our prior year volumes strong offsets from to quarter due the and

We profit continue income and offset and expect TCC with of impact contribution to profit have the be mostly EPS to to on the a XXXX adjusted by neutral expenses. operating adjusted loss equity acquisition operating in integration

negative shifted I in as of from to the TCC planned However, timing the causing earlier, QX in a integration EPS QX costs mentioned adjusted impact contribution QX, but a QX.

we flow Lastly, said challenging quarter, on flow. become chain supply has cash cash free continued achieving our target Last headwinds. more free given

did reduce free later it improvements chain our not $X.XX expected, so by of improvements supply are billion get to to inventories coming in to see will QX, and we While year-end cash than flow. be enough the

investments. dividends In from flow cash acquired and receiving from impacted addition, extent, than a of TCC equity rather cash that cash to through as we free the lesser is negatively acquisition

closer related expiration we R&D As approximately unfavorable flow. tax cash billion This $XXX Chubb a credits. a to free still and $XXX gain now to payments of in million million result, expect tax in includes to from impact $X.X the the the generate

quarter some In to chain good and summary, than performance our to in consumer-related are year strength inventory adjusted leading end and later flow. such helping improvements -- The balance another are in levels the coming cash Europe portfolio EPS operating free weakness our us guidance. in expected of elevated areas other as adjusted markets. good impacting we to are Supply we parts of enables profit see increase and another

Dave With that, Slide to for I'll XX. turn it back

David Gitlin

Thanks, Patrick.

and Demand excited our very for remains I'm products out close and in we solid the that another remain ability healthy, confident year. of our performance We opportunities in innovative strong to have year-to-date for have delivered front us.

we'll questions. this up that, open for With

Operator

Jeffrey Instructions] Partners. Sprague And first Vertical our [Operator question from come will Research from

line open. Your is

Jeffrey Sprague

of into Dave, what color on now with could kind plan look can looks in do if what give more of like? wheelhouse, the think the kind I restructuring forward of and that is bit you wonder Toshiba little kind there margins completely and 'XX you just a the us you the

David Gitlin

start, by we've at say opportunity. let and the Well, Patrick I under Toshiba, looked even Sure. me more what see we covers can some would as encouraged the in that add color. we're then

cost. slight was think I disappointment price one

I The year should think headwinds the in seeing. we earlier reacted bit company to little should of have have reacted. the cost we were a some that

were is when you of are also about on to come most side. fundamentally the with So you not We look It's that in Europe. And we as extremely on a tell talked we aggressively. exciting drive prices. we The business pump VRF going of But heat raise is of we at thing, top only and integration I million closed aggressive said, to deal, the the the the to in that. there's run $XXX think can the going to And us on growth, we did have team be Asia, rate in business. in going also synergies. -- I businesses, as opportunity cost but help our

products. And differentiated so, an years five EBIT gone the think I that's in think integration fast you're margins, extremely really team mid-teens. has I the well. looking So in out ROS terms at if or The you forward of with

Jeffrey Sprague

sounds work between stuff in QX it's really of on seasonally Is the think should extended, being higher XXXX? about being than SEER backlog now of but that very apparent that new delivered being you'd we inventories the kind like and should like. equation. side assume just expecting mismatch maybe maybe I backlog the we in also guidance, in just the But inventories. absorption your kind as some resi but down be And of you it pressure curious

David Gitlin

Yes.

down -- quarter. the inventory levels the and in watching of mid-single our tricky quite digits was movement, this been between that very that carefully. cutover Movement think kind we've I balance

working to will. objective channel key approach the partners end know, confident to cutover you with new is very Jeff, that much That's very, and more the make as us a more add that's imbalance. we SEER important aggressive extremely we sure units our to very to And actually The value product. to that with year we well. into Our gone has inventory took drive channel our partners I'm this carefully something and

from north. south. new in So to we're now new cutover the be products for the we XXX% the a cutover the in get as here product XXX% month now to We'll about

So that almost price about that's product to of shipped the will and cutover next at be is XX% new going year, very well. a all premium. XX%

think inventory that to I around So on X we're usually manage trying months of weeks. backlog sitting have we'd and balance, still X we're when

confident So we're are feel monitoring we but the now. right carefully where fluid situation, we

Patrick Goris

the on We a a levels exit Jeff, of want other say little of there sure headwind year I'd absorption, just And appropriate as yes, segments to of is the extends inventory. there. well. that to some bit we make with the that

in facilities, months more expected So we'll some we our downtime take just little bit ago. a than of a of couple

Operator

And our Nigel Research. we'll Wolfe next from take question Coe from

Your open. line is

Nigel Coe

about residential. talk Let's

some 'XX, seeing we're pretty I'm pumps between and 'XX and guessing that heat into AC will and continue divergent So units, trends beyond.

Some of your positions competitors have heat pumps. in weaker

a you've very So got position. strong

So share -- any seeing are I'm this out? as dynamic wondering, plays you just shifts

David Gitlin

I over Nigel, picked think if I I the know, would you XX bps Yes. clear share. say, it's of that don't so up, we or look XX months, last

manage channel pumps partners to side, levels year. do flip are again that helped as inventory they on with position think has their into our I heat think I that the we So And that. head our in next working

third We're backlog. the folks a construction that will know, questions sales. and we of about the at for But quarter, of thing, the managing think under inventories. sitting for be movement say, as lot the heat at answering residential our perspective, We're price. I kind business. pump on field That's broadly, year I new when some bit get, cutover. overall you in just I'm for watching we question, than is quarter first do of as of XX%, your And a good we piece. -- overall. the resi had a And at a pressure get the We're residential Nigel acutely more resi think a of level, look that you high be XX% we next look it's, most but will reminder

impact it's means was construction means X% that by about shift our like X.X%. have that which total that outside we It's line in is pumps in So mix new you're of business, then piece, pumps. these number whether because Florida positive top well, number, that cooling if countervailing our the just heat what the residential where And it's down share which a places have up, to we pick you of things XX%, would we're especially in a stories, particularly heat doing to is have only South. which bringing

the the on to We then the how units And entry mix SEER pump higher out, act reduction have depending inflation also have new from efficiency. you plays in. heat coming we level have,

of we concerns but So volume we next as position overall, the around are should guess, encouraging some year. us well watching I there that go counterforces some are into

Nigel Coe

at inventory Patrick, you issues you looked mentioned then, channel. absorption And the as in some

time, Just put but a going is about XX I we a and the as curve curve but obviously, step back for learning when there new well? the those the SEER manufacture well? impact units there long XX a about is there learning you mean, units as think think into for to new take as a you SEER South, -- incentive,

Patrick Goris

selling started in, them I believe, was July, Nigel. it We

there. we period think, we're this worked I time, on a worked So of we've long and for yes, on this

pumps. at pumps. had or don't performance a question you U.S. number a that about I of a one see So as headwind couple couple heat facilities. questions resi We we to to points our heat our are all believe Maybe the in in of the

over Europe strengthened not but with our with in course, of there. believe opportunity the TCC there pump up only positioned sales acquisition, benefit there. commercial even in really in quarter. well from we're residential we in then, XX% pumps. We up further we And position We we Europe, one quarter. in can number As each mentioned also XX% the the mentioned, the heat Asia, year-over-year HVAC that

Operator

Julian Mitchell Barclays. question from our next will And from come

Your line is open.

Julian Mitchell

the sales growth. I wanted start Maybe the organic for with just assumptions to off QX

in you're are up So single-digit to it? high then single. right of sort the embedding resi And think worse then we assuming are high that in think quarter you the And growth HVAC volumes Is fourth company-wide. in I assuming HVAC organic within is sort that, get about way mid- year-on-year to of that QX.

Patrick Goris

Nigel Patrick sorry, here. -- Yes. Julian

You're right.

we our bit expect be reported single from growth QX, organic what for little in For organic to growth. QX high A we digits. down

of to versus price In terms be volumes, in QX. about Again, we volume flattish. expect

of most the growth So price. in we growth expect by driven some of actually, have HVAC very the And the quarter organic sales do to in volume year, fourth modest.

Julian Mitchell

and slight HVAC very thinking that sort mid-single, QX? similar then of resi growth, commercial we volume to And strong down volumes are

Patrick Goris

expect commercial commercial, in are X would to we expect to down. have be really light seen again resi well in with that growth strong Generally, flat would backlog. have continued We businesses slightly volume doing to within to

Julian Mitchell

been in the to back saw for second. in second orders EMEA well. quarter down XX%. switching just They've a down then the And about We Europe as

refrigeration, idiosyncratic hard, you particular, being So the that like kind are how in looks broad is of there? It environment hit demand market. to maybe seeing something

any slowdown Europe playing you pace the see on of perspectives how of Just that kind out? broad

David Gitlin

of us first, about kind a it's Yes, Julian, for Europe. total I XX% for context, mentioned bag just sales. in it's of mixed our And

we when was closer Toshiba Chubb recall to had XX%. and before You'll

HVAC, said Commercial ago. of on The our business. watch, and well Having have been CCR. truck you key as the parts of have right fire pleased trailer, our in times our we year said, security So both from really trailer our bit it done is the side a chain. a that of orders we The supply exposure have sense European I quite things that, refrigeration because on increased now, Europe. and in to think orders was lead Europe with European as down is -- in truck what is,

for well the coming months. So customers our are pretty booked

course, piece But about significant we keep not trends on we're some of the because on. we as orders have Clearly, down. as months So out look to right ETT. backlog that's of concerned something an CCR now the eye is the

Some the surely our of of there affected by are some prices. energy customers

part we of was part in margins. down are I great in going because to improve lengths that because think, So our the market, to

So that's to mix sure there. there's bit areas trend, Too of in there a watch a but of a say couple there, are a probably early but for

Operator

And Markets. RBC our question Dray comes Capital Deane next from from

is open. line Your

Deane Dray

XX%. color we boost? through? But healthy for been orders driver funding, of start impressive. up with where frankly, pretty this Can there the waiting be of you And saw there a post-COVID. government here That's adding building come the a orders any type helpful. surge Is would we've particular these Was any

David Gitlin

Well, Dean, to to K-XX continue K-XX. is pick impetus in to think clearly rate helping. spend them And be for I there's the going up of

of $XXX buildings. around it's And XX%. to tell sit a to to make So We want do the on million, employees confidence orders up office come K-XX accessibility. back be healthy for quality. of the the in it a pipeline the year-to-date you that to I'll to that, lobbies. they chunk mobile back putting indoor put going part, that to has drive they now office. give with to this in their going try work -- as up to air they buildings They're office I encouraging name to people XXX to in We're the in particular Gap] have going we monitors customer, really to are they it [Audio is respected And signed a of Abound customer do use come that key but have mention the we technology scale But a customer can't the XX%. that's as

that. with So air see indoor healthy you We're quality can them the metrics working on on phone. your

We a has there's had controls more business a lot solutions. see there It They was China. about a focus starting handling We with So demand. our had win more done win and that we're to big key well. a in new Georgia ALC, center in an where China. had had million units exhibition IAQ in air nice $X win. a of

So here stay. to a trend Dean, it's think honestly, I that's

Deane Dray

given be expect, But your of kind then maybe order time that reasons are attachment attachment chiller the at the on would the the that rate giving And Is still question stage, of not XX%. follow-up are rate at this would what sale? What's you it's that customers higher early. you expectations? payback a of that --

David Gitlin

Well, what It's necessarily I at up it's would clarify, not . way, say -- just the by to XX% XX%.

Deane Dray

At XX%.

David Gitlin

we sorry. going said percentage a just XXs. our put the that drive we see to agreement. low to warranty, the we year, playbook, to points Yes, right comes year-end in the with salespeople when yes, right would attachment in I'm offering. in continue traction by look, where long-term and enabled think are at we to as we were we right that rate And off And us it locations the But there cities, add I digitally continue improve the get a

some to year-end. XXX% year. the other We service XX,XXX that we If that's always under chillers form pleased really it. sales, look be and the that XXX% one BluEdge we chillers very it's the percentage X long-term of definition that's to always paybook that's is the total sales. an a revenues, get we're agreement sticky, And call what and certain that's recurring We rate look that will time. if LTA, growing X,XXX we always growing We that's parts points attachment take want we of with interpretation definition and and year, use, the amount at at use, what of under we get because a get we -- predictable the a we sell want we we a sales, by is because chiller, is that's get a after strict So of progress. a do

Operator

Goldman next question come Sachs. from our will Joe from And Ritchie

Your line is open.

Joe Ritchie

cost? price looks Can of like segments. on across positive we the it was each start It

it was for carryover just on how into thinking then the XXXX, well. maybe provide potential on some quarter? as as you're Just quantification positive about effect And the any color that

Patrick Goris

some bit Yes, to Joe. was in be carryover prices purchases though With several inflation material favorable the is perspective, $XX dollars. QX would There growth million in XX it there. The we to pricing we next year a time, expect on carryover implemented, related price little to million margins to especially take, impact we we expect that respect give points. the say already year, have would from lag a to basis next dollar inflation I'll hundred But about a that same a have of was where also formulas. carryover quarter or alone. At unfavorable have thing, based

the net few So year called will lower of dollars than a be news. price P&L, impact to next just the the for cost million hundred good

worst. course, I'll potential Of next commodity at is course, also tailwinds. forward looking cost year, what from that we're to to for a good price neutral And of we cost target impact continue say

Joe Ritchie

the going into you're X seeing like strength my And commercial downturn. in then really double-digit obviously, is of resi commercial next now concern lot to the kind row. maybe HVAC just for orders follow on question, that on There's quarters market. that focusing of a a a

on So hear expectations and as of as of well? just kind that your into Dave, to what your we kind I'd thoughts love would be XXXX head

David Gitlin

that is And tell what the nice is seeing, American up me mentioned thing was China digits. that double-digit up the XX%. we're North something let double globe. of Joe, X orders was quarters Well, like you it's across you growth. the

was double close XX%. Asia-Pacific Europe outside was China digits. up of to up

where Certain do pivoted in centers, there. pretty some quite better industrial care, positive. than areas, China, So health broad-based. others, industrial, from even we They property very to K-XX, it's verticals to but especially continue purposefully be of the data

for buildings and up there the XX% is commercial is we're year HVAC, strong, backlog is Healthy next where So in quite year-over-year. to shift focus our strong. said, we well sustainability the as booked

row, you ABI, is would that XX% investments we lot XX%, been straight, but a of a So lot is going have XX%, that's toggles but -- around And to a indicator. now mention a in of encouraging. to XX create months then Joe, pull between for also and of XX% above is And that's some products. for Abound sticky it XX%, the months XX leading other be our long-term for thing know, above for nice I revenues, as

you same So HVAC is on and I encouraging light trends. true would tell commercial course, see of for the

Operator

Josh pkrzywinski Morgan Stanley. from come will from question next Our

Your open. line is

Gustavo Gonzalez

actually is Gonzalez Gustavo This for Josh. on

you market of how that? addressable the How to pieces demand sort for about into do or Just sort the of even sort various sort pipeline that And thinking of of XXXX? of at year. next are much you looking stimulus adds think

David Gitlin

at would of say couple three play. a I things. there's Well, things

And only you funds, You school. have K-XX, infrastructure happening you been they've Inflation the the K-XX. then the have $XXX bill. we have billion that's the start spent the towards in very of ESR with Reduction Act what's little If allocated

happens as do spending economic government-funded of K-XX should expect the our regardless strong to continue pick as spending on economy. broader I So withstand orders been have in that which, whatever course, up, cycles, of

encouraging. that's So

pumps kind of the very big will the the as as frankly, tailwind that as units couple which is see good a thing be to broader for has And I heat that higher-end good applies see similar out just broad-based planet, year entry-level mid-tier you're Europe. obviously our the Reduction the as Inflation for think then over well. would SEER us to sort in pumps, the whether happens, bills play of well. If And the things both Act to that Infrastructure provided for heat Act, of and your some the going SEER. On we customers' from good a upgrading happening mid-tier well incentive months next energy the $X,XXX then

I help think cycles. That does different us. for is regulation economic So very thematic incentives and during

Operator

next will from from Our Moll Stephens Tommy come Bank. question

open. is line Your

Tommy Moll

creation talked of scenario. you part investments. in your you've there I like to bring as could recession potential on some a could So And planning using if about look value productivity us fund the wondered framework, for what

and volumes would is those be a much were of extent objectives? sacrifice for push of could lower that there difficult planning. productivity helpful be pull get some to necessary? your pushed to the discretionary how realize buckets in to not just if that investments priority potentially potential priority And or there of versus it are some So willing more relatively recession, more the that out would Just different pressured highest

Patrick Goris

Tommy. Yes,

start remains year. we're for let achieve saying we started to and talking a on year. frankly, productivity, $XXX So out that would And path for in this year. by by target our target We the me that that full million productivity about for the

footprint, tremendous we still over of factory is of a case a from is whether things. we out in Now that point opportunity. our have sourcing -- couple have vendors we potential our whether G&A to of view, way One take recession, to or consolidate a this opportunity cost intend time it's system, too to continue many of

than the manufacturing we shortages I probably three are our say will ago inefficient years we were significant ago. been addition, or with that expedited we we've year last In logistics, less factories, have operations, efficient tremendous parts, look, inefficiencies freight, two wherever of years what pockets struggling even or X.X in where we years now is causing maybe

there our not levels would would that is if see we after today, equation. higher back much downturn, only expect So in about, would be to And we talked course, of to get what of which then, of to expect we go efficiency we cost some a whole continue facilities. the price/cost have to not

-- just costs where up we -- come have would We to environment would expect important intention down. see revenue significant our expect further of would don't clearly, this as We hedged input costs expect see very a commodity that we our down, been and decline. because no But giving we impact price. we see lock on or course, We we we've benefit positions. input of that an a might clear year from to go in of

Tommy Moll

repurchase I you the to that to pivot wanted announced. authorization

was it billion year, but reduced, significant back haul especially flow the that expecting half. was you're another guidance pretty still approved the cash think $X Board I for in and this a your

level the how the communicated Any steady what cadence priority before or more about there? So goes? think change should as of to repurchases, you've she of we

Patrick Goris

with about share and capital then point very The way TCC, and view, for can growing what clear no from of organic think example, a sustainable dividend repurchases. in organic, and a change. you priority Tommy, deployment it, is Funding growth we've done

free $X.X the counting to billion cash mentioned billion in, the year of that big $X.X $X so quarter And this expect cash. in is with today, not last in we're we as year, all of. a year of unheard billion about end of cash. on have You we And

new In terms of the authorization.

addition or pull all we're into the XXXX thinking of opportunities general bit. of or, what $X.X the left in in remaining obviously, to Think price about what's share authorization, for -- and of or back we'll more about the about is billion the macro outlook, little this, either share lean authorization the does XXXX. for have a we prior depending through on And that us So M&A taking course, we'll way repurchases.

there. have We plenty flexibility of

Operator

JPMorgan. Our next question will come from Steve Tusa from

open. is line Your

Steve Tusa

call I down being of didn't market the new for year, guess on you next really you and on touch housing kind so the Just mentioned

David Gitlin

if that [Indiscernible] What is I said, didn't. I gave Steve, I

Steve Tusa

Yes. Got Yes. it.

likely the What say True. didn't given what data, in kind should pretty seeing that's So like looks of we're that, you But right?

David Gitlin

No. for that you've a saying while. been

Steve Tusa

What's feel channel the the and Well, of there? you're the What's housing the I feedback think that about new around greatest debate one. replacement is the kind is the It's of of obvious latest year? the people next hearing market. really market for side on kind how from replacement

David Gitlin

strong I to years some off early coming we're there. would say. -- it's as know, really say you We're

just So of in it's something parts lot that the have there's a system. we're going because watch moving to to

to the market the that it a or like are tailwind. there volume home are one. And continue from to people on working pumps the a mix whether mix heat heat the X we've the up. pumps, higher some of from into higher sear, cooling out, in the that some side, from efficiency only those potentially changes underlying 'XX, mix go but and respects, playing mix these on volume Will some mixing be put have price lot seen cases, the of that pressures all entry-level have different there's you you potentially You trends that mix then in to in replacement things

bit going to exactly happen on say a the it's -- it's a the what's side bit So volume early to side. replacement for

Steve Tusa

but hearing some is bounced commercial. taking looks we're a choppiness that supply you're little Where that And are that having kind guys you're there's then in right lead of like like Lynx the is others? in market materially feel share scaling You through there. unlike chain, now we look perhaps or still -- on I is commercial, guys back train you like like it production, assume times. just And their bit extended

David Gitlin

in which we've that seen had quarter. we seeing been well there. would second we're we you the XX%, saw have seeing that orders kind want third very in up When our you We're that pretend progress. you. challenged saw I that the all sales material to we've tell up for would say I don't XX%, I we're very, challenges. quarter positioned Yes, of And

a look product a benefit the that I it not new would over the performance, period, you share. introduced continue replaced. And from folks efficient think think that if one only that more think taken but than some we agree we've operational we've I I XX-, XX% XX-month is

It of it record the operations for think our of X.Xx where I backlog Steve, So versus at commercial, in up last the Patrick the position on continuous levels. improvement in year. product side. script, is backlog a our like little us puts third is bit a new said quarter but

well, for next us but position head year. obviously, does that we into So as XQ,

Steve Tusa

one Sorry, last quick one.

are their but very up greatest on view it some there? on moving Just your one on America, in What's in, that? what's stuff. All Obviously, some and there's year, the latest this ACT the perhaps refrigeration market next -- number, around year, globally? stuff the North latest order the timing transport of orders a that books. they has into for those kind What's up but Europe opening little view next around cut strong the looks weaker.

David Gitlin

dealing definitely a was it's it It's piece QX year mean you see something really a watch because Steve. year. I was we item. XX%. as with did year, expected --Yes, business container like -- this fluid, of the are that we we containers the comps mean, record And down but I said, just tough a last

teens. We've look at do NATT script, was strong, as some his have to said in continue we And gotten orders quarter. it's orders, in watch. the So high watch. can't container, that up the we but to really Patrick we something recent third strong

think were look of it backlog where in up but was truck/trailer, it European at I kind strong and orders very year-to-date, We have mentioned to the look the position. down, at that you I

economic a broader we So but to early say, concerns Europe. bit little there's know in it's

positive link well. our to too So this there. And think say to I is in shift Sensitech quite a real helping early transport doing business

saw stuff the just truck the for but of good trailer, ACT would it NATT, numbers for XX% this some our news their down year we're is and over with next backlog sitting still same year, good is global So you positive be year-over-year. up on taking mentioned would backlog. I

to So that something it's sitting on early but a bit a we say, backlog. are strong

Operator

Khanna take our we'll question Gautam last from Cowen. from And

open. Your line is

Gautam Khanna

shake uncertain, positions Wanted next hedge to decline if follow or are kind in pricing you your are, comments if but snap to talk will and bit year-to-year? what price just pricing your may confidence high up your components And out number? where is think can down a fact, on of the just like volumes mid- increase on quantitatively the line opportunity volume next size kind cost, some resi industry terms the digits, that single other of where of what's a if, sounds then informs of or It year? whatever pick on could hold inflation you year. the about today talk So little and you about in commodities that you what -- of

David Gitlin

to it turn resi, me but start then and say over the for the Look, for I let Patrick broadly former. Well, with more Carrier. would latter for

eye on that for to of be to we one to an is think maintain should that and for should steel have that next I big down pricing the next be ourselves aluminum the have year but year. targets for coming we're copper, going keep and commodities,

those business. deal on a a next for go some bit Tier carryover X as globally. from too early and be mentioned is year, Alliance them then more journey us Patrick more we're to And positive we but will job increases our have And either suppliers, to that to only give into we not or us that contend resi, don't, and that it's suppliers with our lean And of to our be don't. we'll some say, cost So could for those story -- suppliers. into spread but through Carrier that manage with do have that to they aggressively. might we going that have have those support little that

these number we're of mix from only down but resi, in you as a in our transport the will shift to also price. of that's like not business commodities, year, we changes seeing look going up have as seeing, But middle certainly you're in all in of execution. that next be maintain is terms to to our things well. you're So But electrification that and get job think, a I at the of

first want to questions? hit you the do Gautam's of Patrick, part

Patrick Goris

the little it's to commodity. early a touched bit on too on It's for from that We Dave quantify. us the significant. potential as Yes. But said, tailwind

David Gitlin

to to Well, Carrier I you want by to call, the listen, of thanks on and the thanks just Okay. close all saying team.

a team this of 'XX. If all COVID the in know our same And you seeing to can over person supply kind I we're things class tell folks peers have there's that our certain we macro XX,XXX they look last in every have people come challenges through at look through through of do determined with in best in chain results. challenges. has day of it anxiety at gone and be gone everything our the I years, as But you couple

have team. We this because of optimism great

available. Sam is everyone. And course, of thank So you,

Operator

a Thank wonderful Everyone, This call. today's for you. Thank concludes you disconnect. your you have day. participation, conference may now

Carrier Global (CARR) 27 Oct 222022 Q3 Earnings call transcript