CARR - Earnings call transcript Q1 2024 | Carrier Global Corporation

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Operator

Good morning, and welcome to Carrier's First Quarter 2024 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 First Quarter 2024 Earnings Conference Call. are Goris, Chairman Chief today Officer; Chief here Patrick and Financial me David and Gitlin, Executive With Officer.

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

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

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

David Gitlin

morning, family, an us team XX,XXX Sam, We've delivered Carrier the for Viessmann you, expansion start Thank financial year significant from and our on yet very welcomed margin members everyone. good We growth. strong solid the of positioning new exits results, business to made progress and and great to year. Solutions another had exciting Climate

X. growth, of first of of team. low-single-digit highlights with I very and growth. on am margin Starting we sales proud XX% the the quarter expansion results organic drove Slide adjusted XXX our points strong On basis adjusted EPS

and sustained have are our We driving journey it productivity, we on in made enormous results. progress seeing and our lean

productivity increasing overhead, in while invest working, margins. is reduce drive growth, formula simplify tenaciously, business, the Our all

we making on you global leader vision, our North clear to great energy the progress transformation see in solutions, be and on and performance Our tied X. to our all intelligent Slide are climate and as Star,

provide customers sustainability differentiated We solutions. our with

the in North efficiency buildings, market, rooftop smallest the small highest the with footprint. units have For our American

bearings, cooling during loads course of efficiency ability with provide day. water with with the the Our best-in-class the demand variable chillers, magnetic cool to match

newly by deliver Viessmann's are heat and addressable in our savings Europe Viessmann homes, fashion, the quietest to the For versus and XX% market. market energy billion $X typical launched approximately XX% expand on pumps in competitors

cold and our compared trailer competition. OptimaLINE unit XX% by reefer to new offerings our And to roughly previous XX% than consumption container chain, the compared by our XX% For our reduces consumes our competitors. unit less energy HEXX new fuel

enabler Our critical and differentiator. digital strategy also is a

buildings, attracted scale last more monitor from key than feet billion Abound, additional new quarter, now For X.X to square customers through a XX% with zero features. our we net increase

digital integrates energy Base the the malfunctions, storage potential management and with grid world problems to home a battery our InteliSense heating, address cooling, of solar enable in before they American North One is early and Viessmann's platform detection only Viessmann's platform One PV notifications homes, installers, Base with platform Both system helping that For with space interface. heating water occur.

cold cooling the costs, the we help XX% have new us reduce recently helping introduced chain, past increase subscriptions to in In operating customers' and by link just thus, year. our capabilities optimize

Global Climate the driven digital are with Champion, differentiation. as our we clear technology pleased summary, by In traction very and

driving aftermarket see very remain growth also We you in X. Slide purposeful on as

agreement, led XX,XXX our another chillers in we attachment digitally ever, which about aftermarket a are have commercial about track XX%. reached connected. HVAC, growth quarter on of now remain double-digit level We QX, another up by was And XX,XXX growth. its for In of of X%, and under double-digit rate long-term highest year

to bringing focus a and our in cascaded nearly chillers, the imperative. We since playbook and are X consistent ago. X,XXX quarter years this spin and our also The execution works highest connected KPIs globally,

-- $XXX a it we divest the of $X to at meeting, our planned about assumed we When to addition low-double-digit XXXX. Viessmann, to now With this made aftermarket billion committed of XXXX will high-single goal low remain of CAGR. million by and investor We aftermarket our business projection net of a our revenues exits high-single sales.

a to We CAGR. accelerating goal it. our committed are this So to and we remain target the of $X achieve XXXX the billion, achieve deployment to now proven low-double-digit of require playbook

strategies globally. supply This is a built technology, working Solutions Slide operational could and is to ensuring on work team multibrand, in chain solutions, of be have not digital more and Viessmann a with Turning that to proud company win. as on Viessmann X. our Climate team been best-of-best product Heim and all teams sharing seamlessly excellence. our Solutions. opportunities Climate Thomas multichannel one, We loves on combination his that

operations customer to advantage product opportunities satisfaction. premier clear brand culture channel talent differentiation, sustainability intimacy, The will leverage to and and give development and a differentiation customer its design, sustain in Carrier strategy, solution, excellence

in individual as XXXX, municipalities remain and growth have when market discussions gas households the gas the as sustained of or and to limited confident soon growth the to stopped. We in aiming deeply transition in towards With by major federal effectively as long-term become Bavaria greenhouse like electrification the in XXXX, be sustained supply to states Germany natural started neutral will market.

XX% adopt same performing Directive, buildings. the reduce building by the coming ago, its usage of XX% by own XXXX, the EU Performance weeks to time, from XX% adopted Energy least Buildings under at reduction which X the member of country energy renovations plan with each At the to must to worst

gains, market. sales market robust, in is our are our headwinds, And introductions, doing continue about While in headwinds team the for the electrification markets pricing. remains full end outperformed year. product we to the team through poised trend so European clear-eyed long-term and residential the the towards Despite boiler these short-term share new QX

overall, more half in solar carry than lower QX was which sales, down XX% sales by margins. were lower Viessmann's driven of which PV

adjusted seasonal down nearly typical XX% pickup. year, they a increase see pump QX full Though being in impact the QX team highest half now were the our to heat favorable were consistent synergies sales guide, than is and an expected in and and a reduced driving mix. only with to down Despite full up lower For productivity and XXXX be offset sales volume were VCS sequentially to to because in to the we revenues second EPS year-over-year, modest similar orders the increased flat see with X%, with expected our year the February QX we year.

$XXX for Cost recovers. broader to in actions us the about tracking earnings are synergies cost when $XX over XXXX and market million X. position by conversion The year higher million

also encouraged We we revenue believe which the of be dollars. in synergies, very will millions hundreds of by remain

more by we excited not opportunities this presented be the by combination. So could game-changing

and opportunity as centers, you Slide on unique by presented gears shift me the about data see Let talk X.

driving of that past the cooling by and The not wins and an with on outsized versus for generation up to customers securing next control typical capitalized scale traditional years, the X HVAC chips. Over huge Today, parting but we've heat this project of in on globally. the movement opportunity of increasing is given customers AI opportunity center, demand this space, drive for solutions. XX% only in growth the sustained data Xx providers, the AI hyper thus also makes driving center important that some load differentiated chips and key growth, and the few our XX% AI data need percentage grid years, about a to increase

to roughly HVAC to to increase XXXX. billion billion $X for billion center market is data the projected in XXXX $XX business from in $XX the Accordingly,

commercial this sales over us, of low For global applied HVAC XX% to business, increasing a our tremendous few we vertical HVAC and in of percentage double-digit of opportunity well commercial our a represents segment see next years. the this

further secured We optimize we in doubled the to wins our customers. backlog in QX April, of global key support our alone, use and our footprint as

to Slide Turning updates our transformation X. on

progress Viessmann also continue business to the to well. addition our In exits integration,

proceeds. with to maximizing a shareholder early in This industrial $X.X for we March, billion speed for the moving in are sale and deal We expected is XQ. In fire value. close agreement of definitive announced gross

We commercial now our buyers weeks a are of agreements of or and for have offering our definitive couple issuing residential and to fire business memorandum business. for of within prospective X exits X

by deal of year. We end the this are close targeting to that

We climate net track of XXXX. our put achieve but share proceeds The Xx the repurchases team to leverage we extremely finished. to higher a becoming as remains a in The are champion. on not closer about growth, and this and ratio transformation pace net pure-play draw leaner resume us focused, entire energized simpler, year

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

Patrick Goris

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

by we We operating by Viessmann in provided expansion well adjusted driven sales basis of year, and compared Climate the our $XXX Viessmann. Strong investments. with had sales from about Viessmann acquisitions profit million up and Climate and partially to Solutions, dilutive the guide of Reported divestitures, last contribution net XX% despite margin QX operating all up QX XXX up was point productivity and a compared February. XX% earnings price also productivity impact offset year. the and XX of XX%, and good drove points start $X.X last substantially a were expectations adjusted the billion ahead organic year, X% contribution Solutions. basis were to of to from price of favorable

over investments earnings. acquisitions, earnings price more our Compared than currency, the guide of particularly year-over-year Core was and Viessmann year, $X.XX. of of was up $X.XX $X.XX of of the the increased Solutions. divestitures productivity quarter. offset XX% impact is was and the XXX% and QX of was expected March excluding QX EPS well well Adjusted impact from strong, ahead that dilution Climate representing conversion, XX% in to and last

appendix bridge on included We year-over-year XX. the have a EPS in adjusted Slide

we $X.XX. of with and $XX few in M&A-related came was in fees. to cash tax, productivity reflects million outflow of stronger, items, including benefited our and about timing to amounting expectations, seasonality Compared typical from also QX line the of Free payments a

in around each of Solutions X% to Americas up reported by mid-single Slide driven on by partially starting XX. Organic Climate digits, continued XX%. the of on HVAC the This resi. commercial sales growth. contribution offset commercial, sales were Viessmann organic Moving XX% segment, in decline a strength and in the up was sales reflects light growth low-single-digit and

digits, was mid-single by in and Japan resi in flat, our year-over-year improve commercial, volume mix digits, down down China, quarters. growth while we remaining EMEA and that of sales Pacific in as around we up were EMEA Asia high-single offsetting Sales expect decline strong were with light in weakness to volume the driven a guided, significant each as country. resi Organic continue in to commercial in in America be in we North XX%. were remained up sales

This very that a quarter, margin impacted of adjusted to very by -- quarter price negatively strong Viessmann expansion the with strong despite due productivity and about segment operating XXX-basis-point points. XX Solutions consolidation strong and had had a margin Climate basis

offsetting synergies and operational expect broadly line impact XXXX be sales. were in based for to the now And up about to -- XX.X%, we points HVAC with margins expectations, compared quarter segment earnings favorable productivity HVAC. our year. quarter first be full on VCS excellent of XXX year about basis last with up lower-than-expected mix, An to performance,

Within refrigeration over and driven trailer on XX. teens, were by and Both down North elevated and Slide year-over-year was which down demand and truck was organic sales and down overall reflecting reported field global Transitioning about truck low was XX% container inventories. to up X%. trailer XX%, transport, America

a in last XX%. and a and truck truck up and trailer XX% European and was trailer North As up QX. reminder, flat, strong truck was over Asia trailer America was year's

digits. at digits performance mid-single in business, now up down for monitoring Sensitech to expect and provides Our refrigeration be temperature segment was We refrigeration the low-single XXXX up which digits low-single solutions organically. year-over-year. Commercial tracking was

last million Adjusted $XX to absence compared operating down basis This a XXX the last of gain year. points mainly sale first was quarter. to in a due related was year's to margin

QX gain, basis price year-over-year, adjusted and by were that up productivity. margins points Excluding driven XXX operating

This Fire the and financial was & residential to fire had X% the XX. KFI mid-single were strong organic on digits. Slide business headwind The offset partially sales growth, in sales performance Moving quarter. segment deconsolidation. from with Security up Reported X% up X%, commercial a on by

KFI XX% over year-over-year XXX volume adjusted a up the exit. basis currency Adjusted than good Overall, operating margins year, were the headwind points and operating was offset this more significant very up segment. productivity strong quarter a prior the versus profit of for and growth, as

XXXX, truck were the In X% due Total North to XX. North orders quarter, of a Slide up about year-over-year, trailer to America were mostly orders tough truck down and XX% by Turning in orders driven and trailer compare. X-X. America QX company

X% Excluding in down organic North and America in and Carrier's orders HVAC flattish the truck QX. trailer, were X% quarter. orders between Overall, were

tough mid-single times up were quarter commercial a consecutive as had orders growth. down were by around lead XX%, almost compare. an in and light Americas, resi America up year-over-year center Organic intake XX% are weak. EMEA roughly including the second over up increase and Within order orders impacted orders orders digits a XX%, commercial North order commercial rates in applied with were resi orders. EMEA very data equipment Light XX% remains orders commercial and of

orders orders weak in mentioned and where business North Globally, about commercial in were over by truck trends down Asia. and XX% up the other regions. global Japan growth to orders was continues for teens. the offset growth continued container the in about Asia, partially up the in growth that quarter, America, the to year-over-year XX% along Within in I XX%, orders grow This and were business, only and Refrigeration sequentially. decline driven reflecting Europe were mostly in high in offset trailer, XX% orders in backlog HVAC earlier, with by

Fire Security were Orders in & flat.

XX, Slide only the that the the half exits our included to industrial now year. to of first prior with Compared Turning respect for is is change guidance. guidance, fire to

full a time. been fire of definitive at included as guide agreement industrial year that prior had no announced Our

announced included account, year full of now X solutions, a only access exits, XXXX Taking into commercial we and the billion. reported little of that half now industrial first are $XX refrigeration, than all full So fire expect sales less year our guidance. for

Climate of in HVAC. roughly is expected translation, remains, unchanged rate $XXX business organic roughly Viessmann offset Earlier upside at reduction revenue timing at underlying currency light growth exit commercial guidance $XXX by The Lower and Solutions represents million. in expected mid-single and million commercial digits. another therefore, our

about be to now operating by proceeds QX. expense earnings lower, driven our to full increasing Interest XX%. are redeployment will We north given fire earnings industrial roughly conversion from year expect of million adjusted guidance the of $XX We be performance strong margin XX.X%, net sale. the the the in

headwind, We our fire, are despite the business. $X.XX exit industrial stronger in which adjusted performance given guidance EPS of range maintaining a core earlier our is

With the full the industrial XX% expect half, now in EPS strong of exit year. fire be the the adjusted QX in and half roughly first second year we performance of in to the of realized

Before in sale I cash do flow flow, not from free of proceeds like remind from investing, the I'd get businesses are to reflected therefore, free to flow. cash you cash that and impact

not sale tax However, flow. cash of flow do payments for on course, Whereas free cash this, flow cash the reflected performance the on and businesses are does metric. from in our the the gains overall therefore, company, does impact operations cash impact impact free of it

now from billion flow the tax cash $X exits million, free business about outlook transaction-related gains of reflecting Our is payments costs. on and $XXX

payments cash flow the $X.X guidance. So underlying expected performance reflects no now free in only prior versus cash fire tax lower change The free billion the sale. industrial on outlook flow announced the

guide bridge. guide Adjusted EPS Moving on to Slide XX. to

can retaining, the impact sales the offsetting the remains we lower Solutions. industrial the Viessmann Climate As the with of and at blue at contribution $X.XX, adjusted whereas Viessmann businesses The performance see, represents exit of Climate the you guide the $X.XX exiting. businesses fire we including the are midpoint blue of our darker stronger operational lighter earlier EPS Solutions, represents are expected adjusted from impact EPS

guide find adjusted new our appendix of bridge $X.XX. year-over-year midpoint guidance, midpoint. our EPS you the $X.XX the Slide At increases to EPS at core compared to XX, a February adjusted guidance on In will

midpoint baseline XX of with for the XXXX at framework our in a Slide this a core be the from portfolio business of $X.XX Given We XXXX. the the guidance. may tremendous transformation start year, helpful

we benefit In from adjusted fire EPS our our half another towards framework, industrial value target deploying of growth to double-digit addition expect proceeds creation year from the reduction. debt

that, to of exit deployment, available addition for residential would buybacks. from In the be fire commercial proceeds for net including and

repurchases. cash funded Finally, flow XXXX an free and XXXX lever share additional is

this messaging we issued levers short, intend In growth maintaining to family, EPS of at the least meaningful equivalent XXXX XX.X credit several repurchase All million in and rating. that have consistent our is investment-grade to adjusted prior deliver solid beyond. we available a shares the Viessmann to with while

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

David Gitlin

delivered very we confident will transform. continue that first We to we and strong in Patrick. are perform while Thanks, results the quarter,

of Climate energy exits solutions. With the the integration leader of and as completion Viessmann and our our Solutions, continue superb progress climate to on in the position business, intelligent global we ourselves base the

up And for this with questions. that, open we'll

Operator

question comes Julian Mitchell with Barclays. first Instructions] [Operator Our from

Julian Mitchell

In of, guess, VCS, terms surprise. I question, on first the maybe no

then as and understand down quarter full how QX sales that whole. is opposed in the should us much sort core playing second Maybe VCS? out about the for year low-single digits HVAC the a of decline a we for the talked as to You digits solar sort within year-on-year, about down whole, of think that? of low-double by that sort And of driven business PV as year how of part help

David Gitlin

Julian. Sure,

actually Well, start did for full up Let course, digits. flat down to mid-single can of mid-single the and me add. previously, say Patrick we digits year

for expect absolute sales QX that down about the case, to be be will which, XX% year-over-year in should QX as about number the would We QX, -- XX%. same put

the in compared that would to half. up assumes be the first second about forecast Our XX% half revenue

to seasonality. second be seasonality than see half, to pick that this down would closer be up flat. to for the the that If we get cause happen, then If typical better up So we would about were would pick us and orders year. in X%

in positive in pumps. full That's up the about year, think we probably range. As mid-single-digit expect still the heat we growth

see We the low-double-digit in boilers down range. probably do

year, lower doing the a with in as up for more the year. quarter, and probably the which, first the job about has asked and You was that That superb And for Thomas we mid-teens said, think XX% are aftermarket. will continue margins. solar full that's PV, team down than we

Julian Mitchell

That's very follow-up And the just quick then on segment. helpful. a HVAC

year you up So XXX in rate, talked I of made full of HVAC? we applied that should if you HVAC the kind balance being about assumed out within expect light Is for just changes Patrick, And year-on-year. called think, you the any now quarter the each stronger a similar margins growth about points think the commercial year? wondered for and I to I assumptions HVAC? year-on-year

Patrick Goris

a our will the Yes. little for and commercial better. think earlier light compared year to be bit guide, Overall, commercial we HVAC

the of XXX be expect QX we about QX points probably year-over-year and HVAC terms year-over-year up QX then In somewhat expect basis year-over-year. do will margin as we a as segment, to better for to be well. be similar,

Operator

next comes from question Research Our with Jeffrey Partners. Sprague Vertical

Jeffrey Sprague

Dave, commercial fire on and close, saw expedite year-end interesting -- there of you kind this to can of it to and so a with like right? couple get to hear the address sounds close prioritizing happening And of So that? all it sale JCI Obviously, of maybe ago. you're weeks now something that something PFAS is something resi and sale close? kind settled to we a MDL in process kind could

David Gitlin

feel kind we that's the Look, that XX PFAS progressing as of with very with And well. we've plaintiffs, KFI with exactly well. and and has Chapter been been gone well. progressing in we've Yes. mediation The gone been we expected

at looked JCI. we the So

I in It PFAS. was team terms didn't claims for progress of been Of the the that has their making overall legal course, cases. on the very with settlement pleased think PI. us, we're cover water But

be We're but the year. -- We year, variety with market possibility offering by And of tracking close of of well. weeks. the we're public than reasons, a memorandum fire then last exit, And memorandum business EBITDA the business was couple well. be an terms higher probably of sale. hoping and whole sale we're end a the performing prioritizing is in excluding sell. we're this -- in should it with much should offering and is progressing market extremely of residential market and The business, to this in in higher prioritizing weeks, our we X the the for not a of is The the a year performing in it's commercial

Jeffrey Sprague

I the But on else. kind deal company like. Carrier the good? Great. of little open Dave, biggest actually a incentive question you're Every you get to program hits still recent you going close consider I asked to for a other to cracked something Is maybe, have the Boeing. get there door if day, the with and home. And Are

David Gitlin

glad am clear asked I you because and Well, to notified be that Jeff, our that head it on, XXX% Board address do I on support a want do company frankly, I'm to member. really I'm and Boeing committed can Board to I Boeing that Board Carrier. the want really both as look, to I've to important the everything I'll Board. be I that honored

have name part of tell excited to commitment Carrier, from to mean committed do potential to to CEO I'm a you I such your removed I've my you, get consideration Carrier, my not transformational rarely be given journey. this And as But only of of in journey. Boeing. to a I'm so I career, part be

know as we're XX,XXX but think I the transformations I'm be don't down to so on members excited ever, what in, Carrier. what inning innings at journey on go and the biggest team with we're the of or And will in one so I early

to you I'm Carrier, put committed So XXX% Jeff. and asking that, I do staying appreciate

Operator

Kaplowitz Our Citigroup. next with Andy question comes from

Andrew Kaplowitz

be data centers, digits, sales HVAC global XX% could You low-double time. talked over about

centers backlog. said data this doubled that think terms you I quarter of in

in booked talk think where center Do about you Carrier's evolves? share bookings little see liquid the to going market? Maybe think cooling a of 'XX forward the position from of is, is center as bit you about increase what data in and Carrier QX? how could data what you continue your bookings So shape more terms to you in

David Gitlin

Yes.

weeks think, ago good in even a April. got frankly, I in of really we quarters, Andy, just some couple

time. would a in Today, U.S. exponential. So say this the I in unique moment It's is

chillers, is incredibly we air and perspective. from We well share. cooled a This have technology water but positioned we're low cooled both think for

not been for key It's expanding us our has all The technology. been capacity. about

as capabilities in globally, Mexico facilities also to our to be support and of all well. expanding out maxing our we're we're So this going

that of -- really sure we scale our there So all the into is are -- the we're customers especially some leaning making customers, for this. focus of our

here, some anything at looking It's not few cases, a order. time. In sell water a like And we're hundreds selling single we seen. in a we've at cool chillers

So invested We've a thermal strategic cooling. we exponential. We SLT, feel VC-type We in see in labs. very the growth well is made liquid positioned. investment being which

really direct-to-chip for a America, Europe. the time. in cooling positioning because in liquid So globally. space Asia we're And in space are team cooling, for us both this it on of market sales we've that strictly Probably well, but dedicated is strength that's this is Tiger done unique North XX% such a seeing in and our extremely moment we have a focused

Andrew Kaplowitz

Very helpful. thinking incrementals pricing? to the you're how sort you understand XX% raised know do And And obviously pass, maybe of in is I productivity think rest year? there. material color you margin the in obviously just drove you guided costs, give there Dave, the us you've the given what QX? QX. but productivity little more guidance. for rising a did about in how your sustainable XXX% But And saw of of with I you the kind acceleration offset into

David Gitlin

working Adrian Carrier productivity. since about tell have sustained been it that ability and I've to I operations you I to team Yes. the is have felt our our businesses, Button best at that achieve with

beat globally of is same our drum. different to have XX of are all one Every one one We productivity of the We it can single the single marching the sort actions in ways. database. source truth. We

our significant resuming of really probably still overhead, That's materials out of productivity. Logistics say XX well. particularly so piece. is taking of a tailwind. of probably negative a years after to productivity And lot percent, XX% is a which is would the couple I a factories productivity. doing we're are now or That's

year with the quarter more spoken lot into for. coming a every also productivity we're So and

So some I offset Price little seen of bit is to steel Yes and but we getting a progress. aluminum. from we've like got $X.XX, the tremendous feel up about copper headwind.

probably -- on about half hedged think year. I So copper we're very the for we're

as very forward productivity calibrated this. calibrated beyond the I So -- on and very, also very on go year feel we well

Operator

question next from Inc. with Our Moll Tommy comes Stephens

Thomas Moll

pricing terms reaffirmation us what to Dave, wanted a year you capture on or over with on there plan and or of next? I start update of can you the to give AXL. in start production an Any revision to when this ramp expect you What front?

new if throw there's the U.S. a next to of product out, might be the how of of competitors in want the And as one year, yesterday, did you would much that in then bogey helpful represent just well. terms your demand

David Gitlin

first base yes, a I base would versus And XX% price year. and includes we've I over X all, increase, the of low-double-digit think, percent get reaffirm Yes, you'll XXXA. this we then to what that said years. XXXB increase price about XX% mean of price few year next

I have for price We point confident X XX% know Obviously, feel selling already the that. the quarter. in in in first there's them. we to shipped the be We're We marketplace XX% skeptics a first So on our it that already some years. the won't the units. XXXB much over over But short term.

previously mix that be I XXXB. XX% had our said about that this year of would we thought

extent thought us offset the we by than will to that for prebuy a think I more less I be the be little ship on we than the think that. less going XXXB, it's year for But probably XXXA. to

this calibrated at about mix year. So year yesterday feel the saw our what the overall I good resi we one at high-single next about peers digits. of said

I it's look, to early say. think it --

for XX% range were think XXXB. in the suggesting I they

think more will than it be I that.

maybe tiny the the the of you'll of XQ, I into will volume cover I but into think that end to year some prebuy the into bulk XXXA, at a of have year this XXXB. bit XQ, and think percentage the on transition some will

be but range, it's it's XX%, the a if in I So it bit higher XX% than think but -- don't I seen. know remains it's to

Thomas Moll

revenue HVAC your meaningfully, And Can Americas. any environment? Dave, but commercial were there the a trends on aspect you refresh and a describe just in us obviously on demand on expectation follow-up year tough comp. of this Orders light down

David Gitlin

It's hard positioned for yes. were we're at to Quarters year. more We quarter the in look at significantly. down the year-over-year look how quarters, -- orders

mid-single down we sales had I this would down digits. think that be digits assumed for volume said that commercial year, high-single which light

our that a still was we up north quarter and sales, of good on have XX% Given backlog. little first

But And it. that said Patrick strong. remain I that upside number. there's clearly there's to still verticals think

some still You quick-serve of of of restaurants, that care value-based retail, K-XX, some look like some the strong. at healthcare urgent centers, space some they're the

So base to taking right on we the very of business orders the -- decline, way, taking even year-over-year strong. by though share keep we technology keep and that differentiation. And expect way share we based remains

our original again, So And still for guide a us. I upside to think, on good commercial. vertical light

Operator

Dray with comes Our RBC. Deane next question from

Deane Dray

Viessmann. holding on their People back were circle breath destocking. Just about

just European does on that that, sight what's And the reinstates, think of out? I what's start of Germany in incentives. those But country done kind on orders? the the typical all But prepared lag touched getting they you of various already. where have the that I lag line resumption the once you reinstatates, typical the Italy know So shake between your remarks.

David Gitlin

I look, we're in see the Well, our think direct Because to don't same do. that first installer, piece. of of many terms peers destocking we the

So traditional look is that We're us. is ship and book now business. it to I at piece way behind think we that largely the back

now level we an in you us, we're the look see a you typically -- So at years that Germany, untypical U.S. our think there's many same to definitization I backlog X.X subsidy we resi applications. -- of business, like high once true in other the countries that's of finalized experiencing had a new significant When being normal backlog of atypical promulgated, year, lag the what's in gets and saw kind ago, thing just that existed between the and levels. and a of legislation bit do it's back happening

sure in both to to would and be was wanted wouldn't the and down? that the you're think legislation to on to why term, many Europe and that, heat a Germany pumps. is bit question economy. tight make know boilers Europe stick in overall They customers is that new -- overall long little the that market Obviously, throughout heat transition be know I going pumps So there the change. going

that June we clearly we into our is for May into orders September what And we legislation the October. us do up pick that season as now to to position to is see and firm, up. heating expectation as the get start But orders and start get pick expect

Deane Dray

we one heat in then as threat a take That's this -- view the at other that players and about questions end. dynamics the matter? what brands is discount our on the high of Europe coming of Viessmann Asian a And share of better, product? the of that it stratification in at always really some helpful. -- that is there's good, would been of get the Would HVAC, and And in best pumps

into comparisons. what heat -- there market? the rattled the off pump European new risk just a about You of But entrants some future is

David Gitlin

clearly Well, I well, the I plays it you that answered Deane. think in think end the do Viessmann perfectly of market. premium

technology So mid-tier, the the entry channel, I level brand, of at as think directly differentiation, there see even competition because tier the to be think that will the threat and do more though don't Viessmann. unique that we the that a we major

you impressed company. with he will And If most top how that that by look will in not a brands. it's Solutions Viessmann And talking in the was respected major I of so X unsolicited is together, kind at and Viessmann CEO combination Carrier German to way, be. saying the powerful if the country. the brands this #X, Climate said he me, German combination I add, was he was of of the to

end. Viessmann the the at preserve we'll So brand very high

in cooling. for and the both mid-tier We for Carrier introducing heating range are

that's space. So And we unique of course, think we Toshiba. have a

the actually there well. on high only end, the So yes, seeing be price market, we but feel is will tailwind but bit in new protected we're some of as not entrants a Viessmann

Operator

from Noah Our Company. with comes Oppenheimer next Kaye & question

Noah Kaye

to VCS. Dave, with I'd stick like

on to some coordination color those Curious love product what any product an new what to extent introductions. were in going opportunity extent the kind road Would developed more by forward with Carrier? highlighted expanding You on just kind know And $X technology they introductions, the of the or to map TAM that's synergy legacy portfolio? billion. early across of

David Gitlin

well Look, space. XX watch. a of before was which range, this is Yes. I I mean to some no, our was period take for products done developing form I this time, the XX-kilowatt kilowatts, that residential credit, first of here introduced Viessmann, in up high-end new XX they the them, they over wish could that but which multifamily to gets XX into in in market second for which very home quarter. the introduced quarter, single-family small you a is And which

product this -- I TAM introductions. mentioned for. billion new attractive position they attractive new very $X very that themselves very, now So

about can while headline this one or up of range, we'll it's articles flat again, So like year. be why pumps reasons you could for us tenth the in Germany be see in many being even down heat pumps the heat percentage many

the is reasons the TAM. of new One

of case. see And our part will are said we I when the a your virtually millions, though, synergies zero question comes business synergies, we revenue latter I and why we working could actively of on the bunch whole hundreds to technologies. put in in on that that's it say, revenue of

going the think the say we I I case to when best look we we'll X upside that think to years that one business look back of from that's now, and saw. -- was

which boiler in attractive for other United Viessmann introduced technology heat America, in and North introduced And New -- our market go America, can was the locations. North traditionally Viessmann we discrete Canada their the channel leverage company. and in has just attack really places sale an in States. just Even England like some be a with pump air-to-water could America, North very They've to

So a lot interesting upside of there.

Noah Kaye

some on I where story? other talk Very of can this data sustain? mean Maybe is the applied interesting. the verticals just is And just broad-based much it? to strength. on just of continues the you center how demand How

David Gitlin

varies at solar strong some strong. ed example. very a We've data is things EV, was seen renewables, for a remains strong. still you like region. Well, China When it in that's very, it, Higher of it in China. centers. remains now changes What been little bit by That's shifted lot was China, Healthcare, production, look in all very strong. hospitals,

So we're now the some seeing decarbonization. like strength other aspects from and of infrastructure in China things of

then been what's areas will like weak. changes weak commercial move. And is some remains what's strong. globally. the some strong remained been centers than China So of Data within frankly strength strong other And of generally office has

Operator

Our Nigel next Research. Wolfe from Coe question comes with

Nigel Coe

got back to sale. markets to the I Dave. a capital want say C&R we expecting fire transaction, I've to were go

billion of margin, And maybe, Patrick, business, that sale EBITDA a So just size maybe of asset interest that you process? we've like got for in indication if XX% gives had revenues, sounds you that having it it's about $X that you some could wondering if confidence maybe good year.

So maybe XXXX. for give us just a projection

David Gitlin

because and Nigel, you Yes. were it -- I Look I it. expecting said mean

very So fair.

So we've changed.

a prioritizing interested has of teaser. discussed XXX% interest We've that are I The very a a been think, number buyers. high. completed We about, with We sale. XX-page

been we've with So the because pleased set great reaction extremely assets. it's a of

could business performing our I mean is you well. see Security Fire very &

differentiated. Kidde looking very You're at GST Edwards very very differentiated, differentiated,

brands that have phenomenal are their various set You of in spaces. positioned uniquely a

level X very we'll the thus ends the up, out on see and exactly weeks, of pleased it with send we'll where far, our memorandum financials? So am interest Patrick, I but offering in

Patrick Goris

Nigel, Yes, being you And of $X the EBITDA about business billion, the think rate I'm current run can that now. roughly in is rounding. mid-XXXs

with and much that So business. seeing in we're better, so the we're happy improvement

Nigel Coe

the XX.X% I'm based comments, margin, about XX.X% dilutive you color. backing the the Patrick, margin. great operating impact That's made mean And maybe maybe on Okay. a then to VCS. on segments, I into EBITDA back

high correct, the right? that wonky, if I'm if isn't my is that is teens And the just quarter, year? math for to is too wondering path what the For full

Patrick Goris

Yes.

margin So around QX you it from think year, EBIT be little low about Nigel, than view, again And for profit at the maybe XX%. higher point think a operating of of being we full that. can Actually, XX.X%. an the will

for average, with to below And probably to that's line couple at the X average HVAC segment. get in points for EBIT company level. but a X, EBITDA. the add of the And you points the that So overall can

Operator

Company. from & with our And Stephen JPMorgan next question Chase comes Tusa

C. Stephen Tusa

when EBIT? excluding say the that on Just EBIT comment, that's you amortization right, EBITA,

Patrick Goris

step-ups adjust Yes, some We intangible Steve. and amortization the as of the right, well. that's out

C. Stephen Tusa

guys think the Yes, bunch you guidance. a added Viessmann? I up prior Is the that to some versus truing said, of just you previously, on D&A financials

Patrick Goris

you're detail at DNA. best February of all right. the essence, course, the accurate estimate the of we guide, Steve, In provide the have didn't the Yes, time of to

inventory that as the impacts then, refined so not and the intangibles was difference there. the step-up amortization yet since we fully then backlog well. also And included and and goodwill, And the between

of So you think new that the driver. can being

C. Stephen Tusa

to Got earlier it. the And resi, movers like at just follow amongst heard you -- are then the -- least AXL. Did -- up your think on you that. we on guys guys sorry, I just had XXX on

is congratulations of channel, You of the that. already which have That's ahead on a product in some peers. definitely your

And fluid the working far all That's been have -- is very the then the as pivoting and and of Did question. quarter? the first demand Like product evaluating the follow-up price at give on you just And inflation the of just first us quick that market kind situation? in XXXA you there year for just updates then a how for for bridge? for kind you that as Patrick. changes? any the as the Can

David Gitlin

Yes.

Let start me me on AXL. -- yes, let the Steve,

technical producibility, end it doing SEER change, want Our capacity, it this don't We everything, to any the did of derisk with with get the way get year. change. AXL -- any front. in strategy into as We're the out we we is issues

our customers seamless this Our to support make to a is #X priority transition.

in -- We had way not week. So We we the dealers. product, about dealers probably our last had X,XXX X,XXX over for front, a shipping training getting only out to on ago. months together together XX,XXX on dealers closer are XX discussion but

the in So we are of over getting preparation. terms all

And -- for mentioned, I than I this mentioned less XXX, probably I year. think than it on a that next be XX% others that but of think that I AXL do XX% will I prebuy be bit will do year, as think it higher know

Patrick Goris

your Price price. Okay. following X%. questions the for was on then up quarter Steve, about And about

same for expect we the be year. company, about overall to that the the For full

organic our of price. half about growth So

$XXX terms expect QX, that we for In the combined, million $XXX material of about includes million year in combined productivity that full in price and the inflation, net example, guidance. of be for and current headwinds was about to that our

Operator

with comes Gautam Khanna Cowen. next TD from question Our

Gautam Khanna

what the of through on bridge the about I that will? north given and talking could wondering provided 'XX of in XXXX is of remainco the you basis, if algorithm growth the bridge, expectations, your kind -- still XX% growth of is adjusted off like? was you that off if Just just you base? what the of kind If just earnings talk

Patrick Goris

Right.

XX%. XX of in or -- year up if deck our So you the up business core we Slide this posted, at was look that is QX XX%

year, our core our creation we from to And year. expect be including grow value every framework to business, business the X, full XX%. that year dilution we'd our in the the like growth digits says double For Viessmann

on buybacks. to earlier, [indiscernible] can for buybacks, at rate think, That's see levers, double-digit again, million, very top And of and in you be reducs, available run available EBITDA fire. EPS half redeploying that's dividend, industrial flow for redeployment, least our including tax That cash ex disappointed net that, that a some mentioned a for I industrial leakage. management, slide, including business grow debt commercial not as proceeds be in would assume if $XXX -- year. net going and you So from would the deployment, plus to that of would are generated going I XXXX. XXXX additional be for core multiple fire on free there can and be XXXX on

to is saying, earnings long us. there so significant power of growth way think available we And a

Gautam Khanna

conversion would And 'XX your approximately $X number? be cash of in off that free of opinion what

Patrick Goris

We haven't number, $X net provided the about whatever is, -- number the target but we XXX% I of income.

Gautam Khanna

chatter opinion I of a early lot about and versus evidence trading And season, any know seen a quick follow-up any it's cooling just potential in Have the down. but of on on... you There's been resi. replace repair that?

David Gitlin

ask Yes, we sorry to seen interrupt. ourselves No, not that. evidence a any that. we of and not lot, We of have that seen evidence have

Operator

Our Linzey Brett next question Mizuho. with from comes

Brett Linzey

come back moving step commercial. been few talk pieces. some of some the of down a the quarter. the to year. light here, expectations did source for a a Maybe on on for commercial being did strength But first those about Obviously, a profit orders just outperformer I you wanted light take detail the years in it's to

David Gitlin

I long. because it's strong Yes. we been question mean, so for Look, so get a it's

strong, kind team we So here, remaining -- for that the underlying we resi, performing. much, talk same we'd see it's as a we're a don't light were year. mentioning of nice and XXXB gains, we dynamic course, where have But but been it year, combination generally knew have increase this We of have in base comp share into of the about coming strong, see verticals commercial. we the we'll mix last that same think tough price up And for I XX%. very the

XX% that years. So XX% to X over

XXXB, And bit There mix -- on commercial see might these would a won't higher be into as rooftop for next the next little to same kind which There units, but you light even be strong. small you the prebuy. of you an so year. year a verticals expect continue go gives be tailwind to

down better quarter. So XX% we slightly it than will the mid-single be this given first than digits think more year, in

Brett Linzey

through then And are container Great. sequential on of the you then -- hearing And some couple quarters? of customers? just the of I behind Okay. trends from shifting the sort anything us over in to the What those worst last up here? XX%. is guess

David Gitlin

worst the about the significantly up we XX% were I first is quarter. Brett. quarter. think We do were I the in up in mean behind fourth us, Yes,

probably full the range. up I think in for the XX% it's year,

just few a we've And something look getting called for introduced we've well space introduced that is we that new which -- ago. revenues. And subscription-based Lynx, years an done, then instead recurring we platform subscriptions provider, for being other you important, is digital as very the at now thing XXX,XXX we're just equipment that which a of have

in hats smooth cycles that team well. to will So of And off some business. the that help as there the

Operator

comes with next Our Bank from Andrew of question Obin America.

Andrew Obin

question Just buyback. the on a

start the to it where for current that is buyback safety capacity outlook? guys the trying How Just of your alluded incorporated to is the in Or guide? that? in understand comes 'XX. have you You that margin

Patrick Goris

you Yes, Andrew, provide this. question, context your thank and I'll on for some

And in So proceeds. the down $XXX loans announced term that in we X since paid billion have we about the million about QX. acquisition, net yield will $X.X in exits

as of may some will our that's although keep be attractive of is communicated as just paying we than that this economically deleveraging, all for expectation. what down some cash it may used be more And So we the debt.

at timing our guide But be to would we I for it in tends if and very included weighted. generally, be you year, QX. year. the -- in the cash in free our the cash buybacks probably them as second have excluding our flow of QX free half look given And this But not heavy for flow, recall,

not So in guide. included our

resume we of half year, in be As there the might it the second benefit. some

more benefit than I be in think it meaningful XXXX. will the be in much XXXX will

Andrew Obin

restructuring half And in levers reason, ability pull second what accelerate restructuring what 'XX? if -- -- just orders what's do on the you cost at that your guys Germany? your last follow-up in gated a not on you Viessmann? whatever versus ability up do pick I any kept quarter. What's for expected, still way Because you Viessmann. as the Are in to Are outlook limited on can guess you flat there or you can you Viessmann at timing for

David Gitlin

Yes. taken at been very understand It's at Andrew, actions at XX,XXX Thomas business I team this of that Carrier. and colleagues the And you to incredibly has have that has to with working important cost. Thomas so be the proud if taken, of for with that because and to would do combination have say I've apps been the central appropriately nothing overall aggressive Viessmann our on what's look with it the folks -- new market that is the Carrier all for conditions. actions fully

is but costs, of of to the And cost. of of part and cost, they're materials, aggressive just together of they've with been coming insourcing benefit value engineering, basic So elements aggressive takeout take not G&A, Carrier. all to on been going the very benefit part they've on on continue logistics which

lot certain to are kind natural costs business. them, ability pull going in a levers had take any we are but the that that of of for not the to those appropriate are there's that will that, of There to cost take way business the that in So the with can limitations agreement affect things and business out actions.

Andrew Obin

fair synergies, alluded, at the same have that actions, the whatever conditions? these Viessmann year control talk that market you point conditions? regardless So Is there's excludes would about when as that about cost Is cost the actions, to the you right accelerate have given the internal it? can think way Viessmann Sorry. X, that given $XXX we but have, time, by market taken million

David Gitlin

use. I fair cost of I description, that's It's think look, the a synergies, definition taken very a it's have we Andrew. out because cost we think combination. specific I --

those of buy So ability to we the to to there's or certain that we examples the more ability the suppliers. have a from renegotiate supplier, where go suppliers both bunch and of same work with get

of We have whole lot GWA and value engineering a between Carrier, Toshiba, Viessmann.

with the So cost there's see optimization. we things of part that that factory do we're some can We takeout same it because now family. our of

and there's phenomenal then synergies by to takeout I who that thank customers there's you. And they're us thanking top want doing doing out, team support on on always job. just it yes, and close So our a our of end own, their that. Yes, cost cost who to is

will as day for you questions. thank So you, all always, investors. also our available all. to Sam And be Thank

Operator

now program, you have disconnect. may the and conclude great This does day. Thank a Everyone, you for participation. your

Carrier Global (CARR) 25 Apr 242024 Q1 Earnings call transcript