Earnings call transcript Q4 2022

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Operator

Good morning, ladies and gentlemen, and welcome to Carrier's Fourth 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.

Samuel Pearlstein

Thank you, and good morning, and welcome to Carrier's Fourth 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.

cash our Slide line all and Our flow were expectations, you on starting QX with results X. see can in sales, as for earnings

remained supported of We another and and HVAC, delivered due allowing global by truck light reduction chain in for continued improvements headwinds. quarter shipments continued, Supply past of Pricing and of sales XXXX. trailer commercial growth improvements growth in to anticipated offset further commercial strong a organic and with inflationary our our realization X%, double-digit aftermarket.

the from target productivity joint in Toshiba year the point million venture. digits great of and Our operating remains our up XX% XX-basis the in initiatives ended last mid-single two-year to XX.X% year, were stack our savings. of up margins consolidation backlog, quarter progress $XXX made very a healthy a up on which impact on XXXX from Adjusted Xx and year-over-year, at despite of full We levels. flattish compared achieved

to the We quarter our offense flow billion with deployment XXXX. cash $X the generated we about cash, with to in at as capital the billion XXXX ending $X.XX free continue into range. us of was allowing of of head quarter play $X.X high guidance EPS end Adjusted in

sales, X% sales we when of of adjusted X. related significantly our deliver strategic on full cash XX%, guidance EPS margin adjusted operating last accomplishments resulting EPS operating about discussed for and while Slide $X.XX We on in short divestiture. did original adjusted year our QX flow basis XX billion Though year. margin impact of result advancing the from free fall of of supply proud billion revised organic I guide, drove the our and we did a growth, to as We performance. points delivered outlook of Chubb inventory we we exclude and Moving am adjusted expansion growth our our team's our of $X.X October, challenges strong priorities. chain

So, record track deliver see secular trends of team on X. continues, our part to in that as surprises without in continue you is because our of XXXX, delivering Slide poised demand, to can key and drive results

continue to and particularly the customers Our we pump solutions, and that to fast-growing have sustainable healthy us differentiated their offerings space. needs, in for look heat meet

quarter Our were North pump heat heat in grew European commercial XX% sales America to the sales up pump a XX%. residential

initiative EU only RePower those Act increased areas propel grow stronger inflation the and to Reduction We as expect adoption. the

Europe. attractive impress. with expertise and innovative Toshiba's Toshiba's also compressors, combined efficiency continues in us our Additionally, are market pump inverter helping rotary improve. technology capacity and heat to penetrate heat leading dramatically growing and technology When the residential pump multi and

in also Our transport position is electrification market-leading.

over a XX the $X as than positive electric half in with be significantly refrigerated increased to countries plan in be trends over healthy The billion. and units by transport more We have sold quarter building pipeline to continued of were our units up XX% orders ramp to operating and XXXX. to

to the about remains be federal about allocated, XX% almost up XX%. funds expect orders with year-over-year, healthy year, encouraging with full were of acceleration the yet into and pipeline XXXX. building up we our two-thirds also K-XX government's further For ESR

As we We reduction set achieving as goals, focused target on net-zero targets, own with solutions and greenhouse committing not continue previous our but targets we gas ESG criteria. to remain systems recently distinguish the increased initiative XXXX as only theirs climate customers in science-based our well. achieve company, aggressive a also ourselves to line helping our emission

continues in reduction to our Additionally, in will Carrier network participants. emissions distinguished the be heating ESG a London, including space, in XX% carbon network customers' to where recognized recognition provide

on we aftermarket to in early growth. on a continued year, And our we stand-alone another levels. became you public rates we Slide as from perform see growth historical XXXX, emphasize year When also aftermarket We single-digit objectives, low aftermarket last produced growth can company X. double-digit increasing of

focus on our only Lynx and base. our digital also not platforms and through solutions differentiated new connecting providing remains installed Our our but significant products, Abound

Abound X customer. large-scale Our over billion square and onboarded recently sites over feet, for monitors we technology office commercial XXX a key now

Abound energy in leak a Lynx We usage the and released and capabilities reefer view, footprint U.S. the easy global with their data services linked Net a managed to fleet Zero major progress customers identify detection, health launched several measures. expanded new launched include our and track quarter. innovative analyze grocery conservation in recently and emissions the We and platform chain offering capabilities retail for We've early provides refrigerant similar with to way proactively our management, made across which an

expect agreements chillers achieved our of having We long-term XXXX. by in under XXXX and by of increase that end XX,XXX to the XX,XXX goal another

connected Importantly, XX,XXX to and this having we XX,XXX year. achieved of connect also plan another objective chillers our

strategic capital our with deployment making also executing priorities as delivering optimization recently a on our market see financial strategic are on Web Slide and collaboration Services, on agreement can and build, and We you solutions. progress our jointly portfolio are great digital to we sell we Carrier's announced only imperatives, X. Amazon on Not

debt billion. cash time we approximately our $X You'll recall about at balance sheet of the that and on of spin, carried $XX of billion our

over to X.X levels increasing $X.X Over level organic by from the reduced billion our $XXX just half while debt million. we billion $XX years, course of strategic in net have our investments growth nearly that

of business sustainability enhancing a completed by technology highlighted adjacencies Toshiba leadership, number core and growth, been accelerating consolidation also geographic compelling aftermarket All on and acquisitions Carrier. have of acquisitions focused differentiation the to driving expanding and have digital strategic and We coverage. our

disciplined existing our also best we are each evaluating is that portfolio in and the ensure to owner. We've business core been

a shares result, by XX spin. our portfolio also our venture optimized As sale we shares XX joint of from completing Bayer minority sale Chubb our to the since our count the reducing while completing -- and and Chubb of in

addition portfolio In and we've proactive disciplined capital our other been our with deployment actions. moves, to

our about completed dividend We have have billion repurchases in increased and $X share and steadily since consistently spin.

years, progress that mean last have does few we are not over the but great that say, to this of All we done. made

always evaluating are portfolio for We value simplification opportunities current for acquisitions in creation. potential our and

keep portfolio We as evaluating will we and beyond. our steadfast XXXX to enter remain in our commitment

our very cover X. guidance us. thematic Slide for more Focus on will Patrick detail, in but XXXX highlights remains will few I a emphasize

members team aligned XX,XXX key priorities, our and consistent. of remain All are our those priorities on

Carrier margin, cycle X.X and is be which and selling our result growth purposeful a the offerings. been healthy higher term and equipment pursuit high aftermarket focus throughout provide a of from outcomes will innovation to internally, sustainable have to primary that service rates. The a our our continued customers of on using represents shift product now life with we very using digital

in reducing on expect focused XXXX. and another in to remain We productivity costs million get $XXX

and factors about are broader to uncertainty in economic the macro best our along our calibrate have see this guidance XXXX challenges and in that left slide. done the clear-eyed of We you

on and cash We growth, EPS flow deployment. double-digit capital low expect growth. to organic us high free offense adjusted TCC solid deliver and Strong balance expansion, enable healthy excluding a margin strong sheet single-digit play to to very

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

Patrick Goris

Thank guide line our we morning, everyone. was provided. you, and Dave, the turn and In to QX Slide good short, much very expectations Please in with X.

we organic container very trailer, more slide, weak offset in & growth $X.X HVAC, I'll Reported Fire was down refrigeration. essence, truck in detail couple commercial a partially driven growth sales sales with lesser by billion, with were which about a saw price X% provide on a future by quarter to and points. organic and continued a but a of Security and X% strong global volume extent, in bit

by were or X%. The headwind Chubb in by reduced increased all positive acquisitions, quarter. a sales neutral Currency in the segments was of Toshiba sales X%. Carrier divestiture All price/cost XX% substantially translation

QX offset the completely compared margin last XX-bps to related acquisition. a driven productivity lower flat to headwinds about Strong margin headwind adjusted by related almost year, acquisition. margin the was to the operating the TCC and TCC volume

Adjusted EPS was full of $X.XX of the year end range. upper our guidance consistent with

appendix QX the EPS the adjusted For have the of in billion full Slide also bridge flow we included billion generated in free your about XX. and on as $X.X expected, cash quarter $X the was reference, for year. year-over-year we

from commercial the up was commercial by acquisition. the in ended growth movement and over flat HVAC. segments, HVAC the to in reported levels by inventory included volume. Residential organic sales higher quarter price growth a benefit single-digit X. end and sales on X%, Moving Slide on levels growth was than XX% about year-over-year targeted. XX% HVAC up starting driven in and fourth light low in XX% mid-teens residential, quarter the were down we growth Sales both field driven TCC

offsetting driven regions digits. price/cost double-digit up Adjusted with applied margin as equipment, volume, bps related was growth a down bps grew was headwind had sales and digits. with controls. Commercial volume another was productivity double mid-single XXX by price than to more All quarter Residential very aftermarket HVAC strong growth and in operating HVAC margin TCC. XX

dilutive segment. margin line Full XX had the bps TCC this provided with acquisition, guide impact about XX.X%, year we in this was XXXX on for which operating the for segment a post

XX. up European and teens sales strong down prior cycles the This was comp than transport driven X% teens. competitive tough lasted This as refrigeration, America also a second was in performance down for to year-over-year Truck/Trailer four quarter Within Truck/Trailer demand Organic business quarters. about Transitioning and Slide and which for translation were were X% low the a more offset down the this historical up well sales continued on headwind. about container, is by container was refrigeration was North high softness as have XX% down business year. currency

by single down European than productivity compared was despite pressured XX customers Adjusted were year-over-year, refrigeration offset prices. and for as this segment more price margin be up last lower lower and year retail with energy bps high inflation cost. of to food operating the our sales continue headwind to by Commercial volume, digits margins

costs operating lower XX.X% despite to full margin Full team of managed lower price volume. slightly our offset ahead bps impact XX the year was as guide refrigeration of strong sales year to over our and of expanded delivered compared productivity and XXXX, XX.X%

Moving XX. Fire & to on on Security Slide

supply high was digits. single for Operating Organic low and volume the margin costs a on performance X%, segment expected, down short due to driven this had by continued our challenges. sales growth sales. impact significant was Chubb chain expectations As reported price with of logistics operational and divestiture

full segment a for margin operating of operating margin XX.X% year As our result, guide. of XX% this was short

Slide orders XX and performance. on provides details more backlog

some our expect As to we our normalize as residential HVAC, shorter-cycle in businesses, adjust such backlogs order accordingly. of trends

seen few last have quarters over QX, that We particularly. trend and the in

down left were and can and the compared side, you company see roughly As orders XX% total XXXX. for XXXX organic on the to quarter up

ended backlog in up year, growth compared partially and in reduction HVAC year backlog offset with last Backlog the mid-single Security, digits to refrigeration. & by Fire

As down in orders expected, Residential HVAC were QX.

extends double-digit the is demand last commercial for is commercial HVAC consecutive XX% were orders eighth The the into backlog as and for saw Commercial robust to growth up that now up compared Xx well business. year up quarter. Light XXXX. over The in mid-teens quarter. well backlog remains orders

Global in Refrigeration over single year. XX% have and refrigeration Europe. continued Trailer Truck last partially strong driven XXX% that and the orders quarter, compared container North orders quarter, Trailer up was to weakness by the America commercial in North order backlog as weakness up in offset and down only Truck market Truck Trailer. strength roughly is offset the America Global to high by and were in digits in

orders refrigeration year. Container fourth compared XX% down market last about a were orders reflect quarter very softness. strong remain Commercial to and weak

Fire Security with growth positive & fire Security year-over-year in in the half fire in double-digit is the products businesses, Products the Orders residential our backlog access businesses, mix. almost fire XX% were including solutions. up roughly all and demand except Americas. of residential Finally, & was for

strong intake softer Businesses order residential container, commercial Overall, HVAC. and we entered and Trailer. order and continued in XXXX light commercial American and backlogs with and North trends commercial include experiencing Truck refrigerating HVAC strong

moving on guidance Slide XX. Now to on 'XX our

low growth of expect Almost including sales We about will to priced growth of billion, reported flattish. sales $XX all be organic growth digits. to we be mid-single organic expect as the volume

to of impact primarily currency on about be expect the one-point will We X% to contribute the translation growth. headwind Toshiba while about Carrier acquisitions,

Adjusted operating dilutive profit is from to XX%, XX compared bps Carrier. Toshiba with XXXX impact including at be up expected to a margin operating about

in provide double-digit more single-digit on EPS We that color XXXX. growth low to on next adjusted expect high slide. the I'll

adjusted full XX% and about of $X.X tax about flow rate net We cash XXX% expect or billion income. a effective year free of

and Our Congress flow assumes approximately free payments $XX expensing million the has not about guidance renewed since restructuring R&D. $XXX cash of tax cash headwind, full million of

the shown commercial growth continued in HVAC strong As expect are slide, the light we HVAC on side right as commercial, of organic flat and more than offset residential. growth in aftermarket mid-single-digit

offset sales continued we HVAC and double more In Carrier. contribution flattish container and teens growth strong Toshiba digits, low additional sales the the in should low refrigeration. growth consolidating Reported from be Global in Trailer in commercial given is months Refrigeration, seven organic Truck the by as -- expect of

single-digit low growth. expect we organic Security, & Fire For

similar HVAC consolidation the and of about pressure & expansion from bps absorbing XXXX margin XXX Fire operating expect in Security. be expect Toshiba, to in despite Refrigeration and We the margin of operating segment

Let's EPS XXXX at XX, guidance our Slide move to bridge adjusted midpoint.

coming Our million, flattish Price an profit profit productivity. volume and $XXX coming million expected price of $XXX expected growth. up $XXX gross with combined about despite million million, and productivity from operating to cost gross or operating cost $XXX is tailwind be from

Annual adjusted in TCC $XX about million expect minor all million million some $XXX pieces, profit. amounts and total, adds operating moving but we roughly merit about of smaller increased in that investments and headwind a integration additional to are $XXX There up costs. other adjustments to

impact divestitures and guidance at acquisitions, the the is excludes of FX which conversion, XX% earnings about Core midpoint.

compared bridge, gets for translation or us expense and offset currency of million some count to savings year our the the lower a about expected headwinds. next higher to right net growth XXXX. modest on rate Moving on interest $XXX share midpoint X% the and That to tax

appendix estimates on we the XX. other of Slide As usual, provide items in

in that XX, recently payout dividend we dividend expect Slide about our announced our We On million you'll In about allocation XX%. XXXX, significant priorities is remain another $XXX and capital see the same. expenditures. capital ratio increase

billion we Finally, repurchases target in in to $X.X XXXX. share $X billion

first turn I me let Dave, color provide it on Before over additional quarter. some to the

of We effective rate year. about a $X.XX from expect last higher compared headwind tax a XX% XX% to

In and addition, Fire decline & continued growth expect first and Refrigeration growth HVAC segment quarter volumes in down. revenue driven and be by commercial our This reflects with we to container from a in the sales an growth weakest segments flat perspective the the refrigeration. and quarter organic organic Security

We be expect residential HVAC to QX. down mid-single digits in

our XX%, to tough that QX Overall, industry-leading residential 'XX that revenues HVAC a for $X up Recall expect $X.XX, were billion be $X.XX. adjusted a over be to QX certainly little comp an and EPS in so business. sales we between

second will year adjusted EPS reverse the half usual, to first expect to earnings, XXXX. half. And the of of to about full cash be as free flow We $X.XX more $X.XX weighted be

XXXX. expect half of in We comps second with growth to easier organic improve revenue QX after the sequentially

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

David Gitlin

another to controllables. delivered year as Patrick. and we control the in execute year and performance targeting this Thanks, we XXXX, are continue strong strong We

use We customers, to and sheet continue to planet our see opportunities strong our come. shareholders create future for the to value to generations balance for

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

Operator

Instructions] And Mitchell coming question first of the [Operator Barclays. our from Julian line with

open. line Your is

Julian Mitchell

morning. Good Hi.

Just outlook with wanted quarter start the maybe first there. to start with

sort perhaps XXX of got or So firm-wide year-on-year. maybe points so margins XXX you've operating it down if sounds the as to

you the case. in bulk confidence that's back to headwinds downdraft can being flattish of the if wanted full the is, year? And coming in year Just of HVAC for margins the what's really HVAC to given resi that in kind get it the if check And presumably? is that

Patrick Goris

over -- in about is be here. QX, margins acquisitions, revenue, it: down not with but The of very specific, Patrick That's quarter. three XXX to there points, the Julian, them that mix, really basis expect we add and elements good of the million course, I expected HVAC to volume really contribution. morning. operating also One, down and $XXX but just is to in HVAC, to first profit is expected Two, in be segment. not little impacting, residential is refrigeration as mentioned, that

to contribution secondary the XXX That's QX. in bps so contraction or margin the

is cost. element third The price

cost to -- neutral And margin across QX, the headwind which be expect close a margins that segments. We is to to in quarter. in the price is first actually three

margin quarter. gets a would first the to to So that In year-over-year about XXX second in contraction quarter, EPS we bps to growth. return the expect

Julian Mitchell

year. helpful. on overall And up, HVAC segment That's for maybe the just following the

XX% expecting us mid-single for there sort just you guided residential in up the for you're think margins flattish what year. talked of that I your and So business, there that clarify about Maybe about you've a organic digit volumes, perhaps got there's the well? plus weighting And where on a on just a savings, guide? any margin, sort headwind TCC mix if HVAC the of get you margin offset things understand then that productivity to that as in and within like trying headwind sales

David Gitlin

bit the We're on Well, high and resi, the and down being price. a Julian, resi do then with on and digits, across expecting mix sales, flat color themselves. and seeing there a offset let of kind but we're commercial give in color me expect commercial, little for what can resi Patrick single XXXX. by light start of volume between flattish bit mix we of little potentially margins get with sales, We

at So new when construction you think resi, about XX%, potentially XX%. looking we're down

customers some range. remember, it but were saying Now resi, some be that, about it's better saying are could in only much of that of that's XX%, our than XX%

get have and we've calibrated mid-single into XX% construction down digits. new the residential So of but the down as year, replacement XX%, we to we'll see half second

year the and for are We by the price. seeing gets us that driven offset flattish sales that mix

this price the of new that's also effective March. and in because SEER just as XX% you some higher, price going know, XX% up X% that a a We've up as of in mix are have new announced pumps. units heat we we're to We're are coming seeing mix we year, carryover. to to we and pricing So increase transition

Also mix was, the a double said, which digits, commercial with be of helping as that nice do in in And controls aftermarket commercial, fourth year the strong. is with light digits, mix quarter, continues strong Patrick we our up XX% double in a up for piece. see backlogs that to very that

on Patrick, comment full the year. maybe

Patrick Goris

Yes.

I Dave to about But some mentioned we're in Julian, of the price margins, the $XXX us outlook cost deflation. in A XXXX expected On that with margin call is million HVAC That segment. the for we in aftermarket. what also be the a tailwind that for dials XX%. sits year. about mention HVAC comfortable of in benefits of from lot did

mentioned on $XXX a XXXX. million did size I we're same given another segment of addition, size, sizable 'XX. that In And course, delivering productivity the focused well. of in the is HVAC in in that of the course, as segment, We of

XX% for year. those So full the margins we're with comfortable

Julian Mitchell

Great. Thank you.

Operator

moment Ritchie from Thank you. next please One line of Sachs. coming next for our with question. question the And our Goldman Joe

Your line is open.

Joe Ritchie

Good morning, guys. Thanks.

like we in probably helpful. from being neutral there in perspective, front-end price cost be was occurring function comment then Is color me, any little price just cost that just that's carryover like effect on XXXX. that touch higher And a I more it inventory increases cost XQ coming would there's more of you wondering, price that through? Just I'm is loaded? that's the provide can cost merit given a on XQ? -- neutral guess So a to surprising from a can probably good

Patrick Goris

of negative Yes. impact first and point steel of is, actually year-over-year HVAC us. attractive pricing in view, quarter left it's of from mostly net a really for and the some it a at is The in is we short were XXXX, the

from In a we in to are the As kicks in quarter dialing XXXX. steel particularly have earlier, still mentioned a in that benefit QX, headwind, affects I of that we Julian deflation second HVAC. just

Joe Ritchie

margin and doesn't then segment. also, helpful, you Patrick. And XXXX fire the of margins the of and That's growth that understand in to And faced it to going I'm just that much challenges the guys just seem I it. guess this imply think Got guidance, kind then in stick to want as operational the security quarter. business some I about on

kind maybe how just those some So of issues us just of through the in rectify XXXX? what and are to are talk supposed

Patrick Goris

points. not is at price/cost tailwind Security, operational we The absence Volume you basis we basis business inventories XX aligned look lower up higher of The supply in think can that with margin the Yes. the mix in headwind it was performance to expected; expansion is and in Chubb impacts, If what & points. quarter supply a fourth year-over-year One, costs the expected. the margins. Fire margin I costs is chain XX way we margins. than And where about the fourth of a and experienced input a the to was than by of some two, slight the which was it were margins still today. year. And has what quarter net

growth that. to so And in have And is less Security. in price in we ’XX volume Security Fire driven, revenue is what driven. Fire we that minimal to therefore, we growth volume The through in mostly work 'XX & And XXXX. expect with have expect margin expect for we & expansion

Joe Ritchie

you. Thank

Operator

And our with question of coming Vertical next Research line Jeff Partners. the Sprague from

open. is line Your

Jeffrey Sprague

Good a maybe the encompasses little ended you bit on think how over your on obviously, field But versus of of And balance morning normalize the they inventories. could how you. you expectation? Patrick, gave inventories you color with kind what's elaborate more and that everyone. going Thank year? Dave on resi,

David Gitlin

when end target to Obviously, stocking season. the bit of getting we Jeff, quarter, in a of And the ended they anticipation field through Yes, level destocking the there's higher, we I would 'XX. year, will a do say, last some that happens that targeted, higher had but think as a first be we had in not the you're we go actually there year. higher. of just than they inventories were excessively at And where bit of flat

homebuilders to -- Florida still There's happened actually there. where think there When our of we we -- in our significant So When destock demand channel of products. are out the throughout have it's happens on what interesting. we some for talk partners, kind more us continuously we the pushing we year.

bit mix product. that taking So we're early. we of everything the is the Obviously, there's that have for and product, a the shipping demand new a started place South we in where new

to homebuilder we north of our new recognize some the but there starting key take still some to the ramp of customers, still get year. SEER place destocking in going do the units. from They're that the to There's is through course demand that's

So we'll have see how plays to year the out.

this that on know a of variety factors, swing based business quickly. relatively You can

So we think we've been next out. conservative in how we've to handicapped the quarters year, how see play and of then we'll these have couple

Jeffrey Sprague

can just up TCC. more But margins get fold. margins as you little over time of what actions improvement your you're the We the expecting it a arithmetic that? on then moving And comes what taking headwind to drive of of you're there, elaborate in into on plan and the on internal bit kind Dave, terms kind of

David Gitlin

ROS are Yes. TCC. making were be safe that to I said pleased the in -- out will mid-teens we We've acquisition. tell very in the as you, we team that five get after years on and the expect EBIT progress we with margins and Japan margins the

on a that we business. stand-alone getting now, the Right the of all had you of are picking if to rid kind number. of minority eliminating a lot And We and you for costs. the look confidence $XXX if that. That's low get We -- I going integration synergies. income were just track you're beat million that teens. we're have up of certainly noise the said of -- in

lot making of team that progress. a is So,

the technology. China. best-in-class. strong China in talked technology Europe. We our prospects could look the in We're the the TCC heating of applications residential North attractive Technology, despite to about technology, America, using There penetrate in inverter with uncertainty be space extremely that rotary some macro in

to where that. see cost come on supply supply in we've had the lot team opportunities, really takeout in companies. we've synergies aggressive been the doing aggressive we between rightfully and two especially so, chain there's chain, Japan, a pricing And of

pleased very far. So so

Patrick Goris

And pricing in aggressive increases. see Japan, by we

David Gitlin

I good aggressive. Yes. Yes, point. yes, mean,

Jeffrey Sprague

you. Thank

Operator

the Wolfe Coe coming with next line question Research. Nigel from of our And

Your line is open.

Nigel Coe

everyone. Good Thanks. morning

it low like So from mid-single-digit looks it looks pricing. to contribution --

just think gross $XXX some -- right So price you million versus actions the I'm that would in, down? the contribution maybe year? comes do X%? this pricing the that what Is of carryforward be year. from So from full in for how much from in these increases first XXXX the of coming is of layering half you're curious

Patrick Goris

in there, number the $XXX ballpark, in total Most of in is ballpark the $XXX carryover that of pricing. pricing, Nigel, of million million, you it's -- have most that carryover.

new increases announced We and well. We've as well. additional have price course, looking some we've of as dialed of we're price in, that increases some at that

David Gitlin

the into I'd weeks, it's announced year. came last appropriate. We Resi increases that the add, price fluid. announced we Nigel, feel few And over were we've price new that X% a increase.

is North light probably at to price the low range. Trailer, Truck North American America, mid-single-digit we're European X% and commercial both looking North going American Trailer up commercial, For in in to recent increase. We're to Truck prices raise

We this the but watch our price in watch So certainly think are of we it's year. first inflation we going we curves, increases -- to need do that continued elasticity appropriate trends. half

Nigel Coe

volume But net X% forward? lot you I as of we the curious see normal announce also price you I'm in if need normally, Refrigeration And X%, going There's maybe a moving how could of rate just down there. you you well increase last That some sort discounts maybe what and in been of segment break But capture the parts promotions XXXX? do just and if made couple of years. discounts. case the a of you when capture hasn't expect

that comps year out seen the you've within commercial with half see and in back in full playing segment? curious of year the Just both the ease the transport, how you

David Gitlin

Yes.

will our start me realization refrigeration, on then on pricing high add very the Look, of pricing of was phasing Patrick rate a on color Let realization, bit to last little the year. price. you of when that year done the last into billion. was we'd as number We the billion and know. year, said was year, to closer get And came $X thinking $X.X all

we've So to go into rates And as we would in 'XX. expect that realization we high pricing. very continue seen

a of without second level, bag. effectively at and a Refrigeration, of Truck the order this mix I'll saw in and We American order over high they a the XXX%, very you last that's year. full rates for Trailer year still half On the year, been you're QX has book tell bit for looking XX% at up strong. North were opening

has calibrated think, extremely -- well, performed European Truck well they we've we last that business, year. Trailer

two I container We're cycle. we're in that thing quarter mentioned business at of we tracking off the about which the a light. you're was refrigeration think is usually know Patrick coming looking the down business, four sales.

We expect another couple.

start we to year. expect as in of this the second we get that improve half to see So

And but demand was will commercial pent-up refrigeration for refrigeration. bit light, a commercial be there

in Some Europe chains their of the been squeezing do have forever. They that can't budgets. supermarket

So, to year, we expect commercial we think go to the we that come refrigeration as see back. do start through

And of I our that both a we've peer I'll we huge key and share Trailer. us amount know claiming have respect lot are of gained Truck who tell a that you, for in both

we globally. and with customer look I can't I that Truck could you we when chair at huge can't that order So rates, customer, the look our mathematically, both at we in in confidence But tell -- gained its United Europe Trailer States that and in be you right. will by tell we've

the and about So, see business, the our second we and about we to feel refrigeration we good that snapback feel into get container commercial as in as the we very half business. good recovery start

Patrick Goris

to digits, mid Think basically in be all mentioned being the Dave, particularly growth Same performance is half America refrigeration, to quarters container. high digits QX sales Truck related commercial assume Four that mid-single-digit year. comments to of of to refrigeration. in that organic strong QX of we see earlier returning more down Trailer. down, on mid-single then the with second North to and we continued couple and And single Nigel, and about what go. And two just down

that so we've a in And sales an for on which expect flattish year perspective basis. be dialed we from full how to is plan organic refrigeration, the

Nigel Coe

Thank you, very much.

Operator

from Stanley. coming Pokrzywinski question next the of our with line And Morgan Josh

open. Your line is

Joshua Pokrzywinski

Day whatever talk Carrier ground as like now -- guys. iteration just on on since productivity productivity. kind you price/cost about over shifting last of morning has Dave productivity of don't days these of or really formula. covered to Good Hi. demand Analyst the the have on a kind Maybe know much we're this I the and sorry, I'm front. XXX you lot

front how a million of you totality would left to of it about year? pipeline you've the for kind in Just year, initial separation? opportunities the net still that you you? the versus of like a What's $XXX the since feel gotten of think through Do And go? wondering this lot

David Gitlin

a lot We the came the -- out chain that ways really we we were a hurt We we a is headwinds supply that Josh. the had than go, last of fairly unexpected what productivity of have of good over industries. saw to year, gate, happened huge lot

So now significant of see come as we're opportunity. we out that, starting think I to

logistics. $XXX XXX five of effectively When think year. price month-over-month, two. We million this to productivity starting down We logistics at rates spot L.A. quarter-over-quarter. significantly said for total high Patrick was come our spot those to see big are electronics between containers of price back electronics, lot from plus global levels for we in for is paid us a a to see We're look price/cost coming What of for for opportunity costs, positive in Shanghai we logistics it, traditional a more

with great think to We opportunity our expect Tier We suppliers. there's a that X continue.

We slow shops. growth. of to activity the rely getting focus for had then lines became really feed focus to we long the parts back on into on Alliance, the can we Carrier for and our aggressive having very share that had now our get been partners we joint on our got that some in And term to that desire because

we it. factories. in productivity for the look We see So opportunities at

G&A. of takeout Continued

You'll transfers down X% last end is of like Eastern of the places X.X% of our Europe direct year. work got big And all material, sales. low-cost a to We recall to to as at More be to we which of that direct percent percentage Europe. things used buy. a going

are We significant away in cost for think got takeout. X% Carrier we're we opportunities a forever. from calling So of productivity what XXX. to X% early And said phases we

Patrick Goris

gross aligned a That's And of productivity, shared Day, what million the $XXX our falling Josh, bottom of through we is $XXX $XXX million in about guidance in offset at investments merit our guidance. by much million net very with Investor line. and

Joshua Pokrzywinski

out or How whether helpful. opportunities number, there. residential just net it. guys stimulus I over And IRA, shifting then think Patrick. do That's that of appreciate to commercial Got the this some of for gears the some year? you about

David Gitlin

final getting the look implemented IRA, through at that significant. the but of see Well, we going towards fully the the year, kind still comments. We middle is of opportunity there very

tax the really South, $X,XXX to pumps, the not in they there And only up incentive the drafting, $X,XXX, heat heat significant. a to at two provides what -- provide was in can to that looking parts two the for stage which could which was means XXC it heat made for pump. especially current heat pumps, really a a only from also key a significant to that a in be but the have You homeowner meaningful that's pump, cooling shift eligible credits, stage for really customer which

now We're It the XX% that seeing in XX% [indiscernible] And America, XX% commercial to sales pumps North start seeing split for Europe. same you're used be our we’re XX%. at for in of heat rates -- to pump, heat continue growth XX% our with

think $X Inflation commercial they energy also we commercial. that the residential, in XXXD $X.XX square credit up both doubled tax for the for be in doubled will but to efficiency So Act [ph] per meaningful, foot to They building systems. that Reduction

will think be we well. So that meaningful as

continue bullet not winter, Europe. are winter whole past drive what And because And for you incentives we're going Europe. had need into significant effectively as the in to that's be this is demand very XXXX. a significant of we're to dodged And the amount the that's that in the heat residential, to into there's looking they of pumps number penetrate. which pumps, heat to commercial but it one warm of as that then both a head Europe supplies going attractive get space they winter

Operator

question line of with And Group. from Mizuho Linzey coming our Brett the next

open. Your line now is

Brett Linzey

morning, all. Good

the put refrigeration. be to commercial might to and great? lower. profit was able I Let or hoping appreciate way imagine would frame some you weaker the I of back that the detail profitability all me there. sales is Refrigeration segment. to I that But context provide profile come much be a that any finer container on point

Patrick Goris

attractive is refrigeration. within business business really a container The

are base the given significant below refrigeration connect and installed trying enormous so us million-plus Commercial aftermarket drive revenue. XX%. also and to out Our they're today there after aftermarket margins, enables that to units has that go we're X lower operating

They're lot XX%. close in probably But to X% we've taken costs. of out to a

turn, incremental as there expect irrespective be commercial once refrigeration. on growth, volume starts we focus we attractive to to productivity in volume so of And

would from see of significantly than average But So underlying segment. we the there. incrementals in, operating given profitability attractive lower back an have margin work once the done, overall expect to the we kick volumes that

Brett Linzey

Got it. the over gross then shifting to Thanks. just And productivity.

million. said priorities? What sealed to those to $XX an of and the Patrick, You as investment XXXX? up Or for then million $XXX down those is noted signed balance those opportunity Toshiba. are the you and needed? there are offset flex And

David Gitlin

our around Carrier really digital center aftermarket capabilities. technologies, enabling really priorities to X.X, Look, our is shift which around

in set out Lynx when make we technical field. the been and comes investment priority. our aside plenty more all been more both for chillers heat our that bound have electrification have in trailer differentiation for we of And to That's truck to and very our in sure products, So energy-efficient things devices purposeful our energy-efficient it plan a pumps then for setting connecting business. in

shift because that because lines. there of So differentiation investments of as we some we consider part it's our are sacred key do our waterline for either or conscious process, product strategic

Brett Linzey

on, great. I’ll ok, thanks. pass Its it

Operator

next RBC. our with of Deane question the coming line from Dray And

open. Your line is

Deane Dray

like Thank the guidance. working morning that issues? finish Where Maybe on could you especially kind hitting of on to stand chain for ended with flow? outlook us the you. take like impact on year 'XX the flow, Patrick. you the sounded do It free expectations on how start does on everyone. free And inventory. inventory cash we capital. buffer provided Good up with with supply Strong higher dynamics, through cash

Patrick Goris

$X.X expect include which we free Well, flow, in inventories. tailwind reduced cash does actually billion XXXX from a for

we for year beginning And the ended the main so, we the missed $X.XX in of why the our year. year. we the Frankly, billion it's we inventories reason intended know target than

hundred few with more So, say would all of that to than we ended not fair call year, the inventory. a dollars think of expected. million it's we I inventory buffer I

that, the not frankly, the times of that lead to. coming are and supply chain used of are to Some we related the is what length still back to

lower where XXXX, in 'XX. or there 'XX $XXX in versus so assuming improvement will lead inventories ended that which And we'll we're the year to see in about from continued some tailwind we million so

Deane Dray

curves, -- then, question And elastic. there in everything seems and Dave, an COVID interesting you helpful. like comment earlier elasticity on referencing real had it was That's a during

don't some on here. memory pricing, the maybe is the no here I that take an reactions But some There muscle competitive setting lost and more saw what your of elasticity it's pressures. are we've of economics just through maybe You the normalization. us curves But part demand some destruction just impact because of -- be anywhere. know, about could insights kind of how

David Gitlin

price significant Yes. like Look, increases through our we the XX six went residential something we business, months. -- in in of span

increases to more 'XX, the to that we've and of you we've we've years realized. get only We pace over announced of also you price back that think is that I unusual seen last couple an into as that what 'XX head levels. think So not traditional do

year, further of we have that realized But of because even ago in that we've to not there. over. a we've first might January the increases not price that And announce the in perhaps inflationary had is continue months inflation pressures half anticipated the be to couple

light residential over to weeks, So the Parts probably think we will now on implemented within the brands business, it's right Security have less Security across our & in Fire XX depending last the equal of & Fire we all than pricing in increases HVAC, commercial, different in probably segment price commercial, couple extent. not our brand. segment and we'll container of segments. some We get the

but need we've the pressures the first in the half it, -- are accordingly. still of inflationary we believe and watch to that we'll price there, So year, we

Deane Dray

will It Thank you. helpful.

Operator

of line next JPMorgan. And question coming our Steve with from Tusa the

Your line is open.

Steve Tusa

light times know commercial as the orders Good very strong. obviously, big morning. XX-week I Can orders? commercial been context some market very the you of like on in talk Those of up see is just numbers well you nicely, about as the lead have Transport industry. in what but trend that light refrigeration

market you you to there trending the here? as perhaps several in some particular. how unusual could how orders But in quarters trending next see that curious maybe activity see be Just that because those over

David Gitlin

commercial. were Steve, been up start, We with in orders light I'll Light just the quarter. commercial strong. the mid-teens Yes. saw fourth extremely has in

still restaurants. If XXXX, at for overall K-XX, fast orders and you value like serve up strong is XX% quick demand casual And retail, look things were

trends light now extremely in shift. a our commercial I with can we're our have all positive. far right second-line the not we commercial. And So -- continues focus seem is as The issue customers. have we demand, second one be keeping up as where The is implementing demand in light issue to see,

Trailer North were extremely in trying for North Truck Transport North us strong down the American American order side, quarter Xx, up Trailer. the a orders America, with 'XX. the Europe orders fourth were book opening Truck up half to even On control bit. of the in second was

mid- would to believe. I single high say digits, I

first light half why -- remaining year. Trailer We have, the in of we've of calibrated American North But very piece, really which certainly down, course, that business what's is seen the robust Truck in the the very is demand container encouraging space, there. orders the

Steve Tusa

And then side. follow-up just one on resi the

above wide the the me is kind situation mean, view, outcomes of I to how you throwing make seems there, bit year. projections given for to are signals the for what you the demand like How assumptions out are like you this band what just channel. down. ended do with expected here to a just So inventory? the Like confident you're It everybody distributors' inventories you your -- in that with year how looking you making? in of is your flat in

informing in underlying, view fence of a January. and your outcomes for little maybe there But happened when kind quarter, the what what bit that's the of ask of the a fourth they volume? happened talk about band you And around in anything ring maybe on

David Gitlin

new be if Well, have we'll it when conservative, what said to and Steve. is say a question, said XX%, flattish their particular now to call earnings we the for the but at a year. conservatively, XX%. said year all try that out high would they down we on to when with digits done, we down volumes -- good construction of I -- it, couple for in it's get customers calibrate to looked single it home we I expect see have turned we that to Yes, put

we So will to have XX%, in the XX% down the outside industry. be share perhaps industry

could this respects, of that's business. in XX% then it on a many be around wide been business, can you've XX%? XX%, anywhere market, in residential replacement a swing fundamentally So the where of longer range in our way that the new I be the very but home significantly Who we that. But than construction. should cycle because have, But And the a short business knows it's again, industry. Could there's go outcomes of there flat? down it

going to a you're few summer, the significantly. weeks demand in really see pick hot And up

So but in the the of quarter. were tough yesterday, we we we'll first we out. volume there, the Again, see rest think half But just comps correctly first to have plays how calibrated even of and some the with keep our of that demand -- customers review many continuing a our key are and just doing be of from issues to demand. up continues there is resi to

Steve Tusa

a great. for color, Okay, lot appreciate. Thanks the

Operator

Khanna last with the Gautam And line from our in question queue of Cowen. coming

line Your open. is

Gautam Khanna

Trailer orders? Truck guys. out morning far Good according booking Can your you us how tell --

David Gitlin

Yes, second half of the year.

now of at it. for year. second We're looked the the So opening we our half order just book

Gautam Khanna

now QX? Okay. QX And or in that in was

David Gitlin

Now.

we basically, now only half. I the order taken our opened book might order specific But QX second for on we reason. for for a in discrete have think QX

Gautam Khanna

and wondering supply what you Tier from in Okay. pressure your components, inflation could That's is so just I year component aggregate, not was chain facing you're X the the on the about in commodities. helpful. And suppliers talk if this like? But

David Gitlin

we piece, but Well, of do I we on see they're in really steel. block I on of benefit. been from sort bit. quite first last some pricing down last steel year. raw that's heart the had be but should which good not swinging the the mentioned, Patrick a the year materials, ourselves that your They've -- see quarter question, we piece, know hangover of know we not from should on

Copper get still see we the expect a see but what to XQ, an bit of our is, as last year. we're And down see two increase out aluminum did with of benefit We categories. one’s and year-over-year you So benefit. of have going probably that. we then we recently, from Tier

have that take our build get the that peers You that at months from inflation. to over inflation. we'll won't continue you'll us have us thinking of a try they that some to level trying long-term and push because those inflation from inflation term are look last continue the to Then with that amount push some will fair trying relationships gotten for long to the have we of and XX volume to and

we for want our from term, be really the push they to for be will with those on that So those the long way. volume the continuing will that journey us shift to inflation beneficiary are that

to supply we're back go get saw the aggressive year. here we of path last it path. net-net, chain So that our as to We think supply I going really some very of it start we I opportunity into chain you in a had little conscious on of very But shift bit can sure, for because pause that our a our a job, and tell is 'XX. partners. on make way were we to to challenges And

Gautam Khanna

last just Dave. one, And

historically, here? about minimums that does how on over fade like minimum. you. sticky just to with your you to The the XX%-point the that the or prior is holds time? what's talked curious and between pricing curious respect Thank Do resi. I'm maybe You this price minimum think XX% on I'm difference here? that and cycle view

David Gitlin

Sticky. Yes.

confidence look, to unit for to high sticky 'XX go that differentiation, We slightly And been have sticky. redesign We it do far. thus for think sticky be look different more beyond. the than will we the for and that, approach and more as rather XX% will It's that. new remain through We we've very took done all the approaches. taken and XX% units less we've

microchannel shift. and lot heat exchanger. copper of aluminum size. driven We've We've spacing done a aesthetic more a fit a and of driven and We've to

some our the to new very, we've the make very big well. a done that one as will lot attractive things be and SEER control features And differentiated So a unit, -- of of

the of we getting, offering be So and we value think we're sticky. of because will the customer the think is that pricing because what

Gautam Khanna

you. Thank

Operator

call over remarks. to I will the now turn any closing back for management

David Gitlin

last and Well, we'll Okay. we excited the year questions. We're that, about you, call, to please reach for And with even about and close more Thank joining. how for thank everyone, excited closed out 'XX. any you all. Sam

Operator

participation. your our for you Ladies and gentlemen, concludes Thank that today. conference for

now You disconnect. may

Carrier Global (CARR) 7 Feb 232022 Q4 Earnings call transcript