CARR - Earnings call transcript Q2 2024 | Carrier Global Corporation

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Operator

Good morning, and welcome to Carrier's Second Quarter 2024 Earnings Conference Call. I would like to introduce your host for today's conference Sam Pearlstein, Vice President of Investor Relations and CFO of the Fire & Security segment. Please go ahead, sir.

Samuel Pearlstein

Thank you, and good morning, and welcome to Carrier's Second Quarter 2024 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.

new Carrier, Collins extensive from to into program both increased Let Officer moved and has who Product role business comes Chief who me. Aerospace to Tim reporting lead bringing on for responsible thank business, focus Ed, me Welcome, into you, results. RTX first experience White Refrigeration driving delivering and our Tim. growth us our and Ed succeeds global to a welcome execution Ed platforms, Dryden

businesses XX% orders QX very another Pivoting or and me, commercial organic up quarter. centers. organic order and strong were organic year-over-year roughly in orders Europe sales light strong to our businesses excuse HVAC in HVAC our up over were in with and -- QX to XQ, data Better-than-expected commercial helped XX% RLC intake weakness and continued growth strong China. global sales offset in

poised our as significant EPS system. again orders levels, by operating of expansion. strong quarter execute Excellence strong adjusted double returned we resi points XXX expanded margins business second volume to another productivity up digits, driven was XX.X% business Carrier by and year-over-year operating we for and reflected given and adjusted well, fueled by half. QX strong by inventory our to North Also, low America channel continue a to Importantly, in are now growth margin

we and we Refrigeration continue transform, we we on to access the end transaction solutions fire closed Commercial industrial KFI close and the perform, around closed on QX. our of the to sale, While businesses, expect sales of its

have quarter also are quarter and positioned Residential us Commercial contributed this of and reduction about dollar Strong our $XXX free and the in initiate business. the buyback, Fire the of on flow our half to progress sale cash making of business to the for a progress significant We net our billion great $X year. in debt share targeted the million exits multibillion second have on

our X, in we leader As North purposeful you the global key to has being progress see can energy and strategy. and we the in solutions. Each word our great climate and on of of on elements laser-focused vision our our Slide intelligent Star are prioritize meaning, continue stay towards to make investments

As a is segments. to major across enabler global leader, we provide Connectivity all intelligent a have scalable gained solutions. share key

XX,XXX now year-end. to connected chillers by track almost on have XX,XXX We

our for currently building subscriptions billion feet, cold monitors Lynx XXX,XXX square platform X.X Our Abound platform. over intelligent and now we have chain over paid

We of and to alongside and chiller more productivity generative have to maintenance. seen are call service up we centers. for excellence. records to deliver and center to contract services an targeting real-time provide Externally, from maintenance of classic combining we productivity have customers where also everything AI data we AI, improved reviews Internally, XX% established now increased analyzing proactive

to of low innovate first GWP QX, we continue and variant to introduced launch Likewise, emissions. low a water differentiated solutions. reducing savings units customers greenhouse these GWP their with EcoBlue technology Fan while offer rooftop We sustainable highly cool chiller. All tier energy AquaEdge entry the our award-winning refrigerants. differentiated we our XX-ton In to gas offerings are with X using our provide

We play role grid key in enhancing resilience. a

For hours the greater importantly relates now expanded to us. XX-kilowatt our capacity example, energy recurring customers from propositions that The battery revenues system a and provide solutions unique with hours, value provide recently concept Solutions expanding to XX-kilowatt to launched our we to storage Climate Viessmann addressable market. they

You see examples of traction aftermarket our on Slide X. continued on

we in that growth year was are double-digit Aftermarket QX this we growth. another X%, of will and year, confident deliver

playbook and have we tools We both new have customers. execution solutions with that further refined for better globally driving our digital cascaded our new

to formula double-digit proven growth continue aftermarket are works as We confident forever. target our that we

X. exposure company we a higher-growth more Moving About the to that into energy to that do significantly report be Carrier tailwinds say a sustainability, do. our year electrification team ago, to proud secular what resilience. continues Slide going and higher we're to with transforming pure-play I focused to announced we we around would am

We Viessmann are successfully Solutions with Climate integrating truly world-class a organization.

are very as remain divestitures on Our committed. proceeds the deploying much and track we

first $X proceeds. X yield Our gross will exits billion over in

to also plan We a agreement well, transaction excellent the by a is year-end. around of progressing with and business commercial fire before Our supported exit announce QX end closed signed residential performance.

debt to buyback have that mentioned earlier. I by the our billion second initiate Given in over quarter multibillion-dollar reduced net $X progress, our we and plan

realize the full focused this tremendous on progress you With and we can transformation portfolio down are Solutions our tracking plan, on potential working Viessmann to to combination with the X. Climate Slide heads see of

business. and team world-class a truly is This

for Our customers. superior electricity unquestionably best-in-class. attenuation, all installation, aesthetics our differentiated, and ease heat are savings pumps providing energy of are reliability Noise efficiency,

growth and continue next year. expand X,XXX year launch added this us have capacity relationships direct-to-installer pumps larger successful this expect our new network. to year, that point give we than of and The will heat more our We a of

across has share strength particular sells Solutions Germany. primary pumps gained countries with in all in heat where Climate Viessmann it

year-to-date. realized have We positive also price

The opportunity millions hundreds identified of have We respective dollars our channels. leveraging of synergy savings. rate of is run most immediate

units in example, Beretta our we branded conditioning Europe, already through channel. air Carrier first our Viessmann branded have the For boilers delivered and

XX% the space. grow roughly have Given in conditioning, of homes Germany, see for to opportunity XX% air unique we that cooling-only in only a Europe us in

unique and combined Viessmann's for leveraging a applications our include Examples residential deploying Viessmann's management solutions also provide to level, home at energy are digital strengths. technology America across one-base working platform all We using systems integration North remain and year, $XX supply with We to over million logistics on this value and year engineering. of achieve particular battery $XXX progress and track systems X chain, on synergies cost by capabilities. million

also necessary The cost additional tough team is taking but control actions.

higher this of for us All up set rates. conversion

drop than been outlook in our for down typical which We lower second a Europe residential year-over-year XX% with sales were was are also XXXX weaker in sales the of clear XX% by assumes seasonal about expected. QX market VCS that roughly revised sales. the year-over-year, X/X about And pickup driven has PV half. solar we in a

of Importantly, steadfast growth in the XX% we Europe fossil business. its long-term pumps the EU critical shift emissions role. Over in XX% from greenhouse still must fuel clearly greenhouse remains strategy in have in gas home reduction are and play gas for a homes. The boilers alternative by come target pumps in of best XXXX heating. emissions to the deep conviction and Heat profile to heat the

continued So long-term we remain in confident transition. this

on have surrounding positions trends growth provide our of all the be the is thing verticals The Slide that And about increased been balance, see to X. reality love we which very globally. every focus, will you portfolio key strong certain in and our We geographies great purposeful constructing year. resiliency, industry and secular not is macro exposure that our to

We prospects in are the in other achieve #X to same targeted most X or segments with segments. ranking

our aftermarket we operations, the do presence other we confidence and only global engineering benefit entire and in portfolio the culture to have that Not we markets, our performance to believe scale consistently on we portfolio. the gives and will combination continue have that our of deliver right the The right commitments. us functions

to growth our we portfolio. to across a strong for that, are Patrick? look XXXX, With will of significant turn poised Patrick. it we As ahead I over percentage

Patrick Goris

to everyone. Slide in and Earnings Dave, XX%, second Reported and profit you, were sales to a over with Climate We billion the by price provided Climate partially contribution for ahead driven was driven of Viessmann implied in to year, X. of guide our good up month organic last and contribution up were divestitures compared adjusted sales by good XX% all $X.X quarter. up net with EPS sales Thank expectations Acquisitions April. X%. a had billion morning, by our offset turn XX% line substantially Solutions, of of of had X mostly $X.X Access operating of adjusted the absence and Solutions, Viessmann Solutions. QX productivity. Please

led of acquisitions, also to excluding Core currency, XXX productivity was and strong quarter. in margin over divestitures Continued the earnings impact operating XXX% points that adjusted conversion expansion. the a is basis

was Solutions of of Compared $X.XX XX% growth than the offset up organic and more Climate Adjusted year, price to last acquisition. year-over-year. the dilutive impact productivity Viessmann EPS

Compared commercial were taxes. light XX. few by better free year-over-year appendix a last million on to expected, We than of mainly the EPS Climate adjusted XX% at cents earlier capital expectations, earnings to QX from of from and and cash the offset performance a the and by of sales year-to-date productivity driven Slide was lower Free headwinds timing cash HVAC bridge Viessmann Access the and on compared year. our a HVAC, about up in Solutions North commercial $XXX flow exit basis, America in flow working is Solutions have timing stronger included

sales the and commercial the low and commercial by by single HVAC, on growth Moving Slide reported reflects and in growth on starting American Climate XX. be resi was X%. North and XX% Viessmann commercial. Organic in increase were up offset double-digit commercial segments, each organic in of a to were partially digits, in Organic mid-single quarters. light residential digits, the about growth up EMEA Americas driven light mid-single expect and Solutions weaker HVAC of sales to sales in up sales XX% the of volume driven of contribution up we sales. about digits, year-over-year remaining by

weakness and commercial productivity. expanded Pacific truck by up partially double-digit XX. Asia and residential HVAC. trailer truck XXX adjusted in growth to global segment flat. were down up Asia. and South X% operating points China, by North refrigeration, year-over-year, digits, HVAC due strong for and America. decline was net was offset while Organic XX% The truck over in European Slide X% Sales driven on Within container driven another digits trailer sales in transport around Overall, in up a our price basis in XX%. about and reported trailer up XX% sales refrigeration markets by down by Asia strong mid-single were Transitioning margins and was to around was mid-single light and quarter were

last Commercial productivity which net offset Adjusted flattish tracking business, compared operating was by was digits. was and mid-single refrigeration favorable margin This Sensitech and was temperature to price Our down mid-single up business provides driven monitoring solutions year. digits for year-over-year. by mix.

organic X% up by with year's Security on to & deconsolidation Access quarter. Reported from of headwind mid-single significant commercial month absence very more productivity of fire sales volume on KFI margins digits business XX% were and strong X% than growth business growth, XXX segment. the this residential Fire in as partially a X headwinds the well. and the is a strong XX. sales offset Moving was The last and Slide down of second year-over-year, basis Solution exits. points offset for up of Overall, Adjusted a performing and organic were quarter operating

verticals. up to about across XX% Total orders quarter. were key strength company up XX% orders XX. with over Overall, in were Slide Turning HVAC the

were were around Within up with in for light XX% EMEA or about was late over commercial over XX%. commercial orders and the this QX commercial over orders orders Organic Americas, light deliveries down up X%. orders EMEA up orders commercial QX low up and orders excluding order organic over with preordering XX% year. when America North resi over XX% and digits. intake XXX% were resi single up XX%,

for the center commercial trailer. offsetting regions, backlog orders orders in quarter, us XX% China with over Refrigeration HVAC countries. in growth. container strong We strength North over booked weakness Asia, to large that orders all in down commercial truck partially in grow. HVAC only positioning by the business were offset continues for Within weak Globally, data up X% other in continued America some were were and orders

America reminder, almost second orders trailer our quarter. North truck up As in last a XX% year's were

our in over Truck Europe fire strong. and were business trailer up orders and continue commercial Orders in Asia to be XX%. resi

XX, to Turning Slide guidance.

quarters. sale see will XX-Q to expect you with in consistent Before I resi that will and a we the I aggregate, & of details, the business, fire that the as get rules be future that Fire accounting today into likely get presented discontinued in we the later announcing Security in in segment closer operations will share commercial

not from would how which to the guide is operations This full disclosing this QX, as July earnings is we why not consistent yet commercial apply happen continuing as refrigeration. early but been could our year, on do our know impact We have results. reported with

to and continue plan actual best all project to businesses business, to core which we of performance. disclose we In results to the including addition, is XXXX keeping, that are financial see Solutions base we continue projected the as XXXX Viessmann our Climate

lower versus our to revenue billion with guide me let in commercial to to includes remaining exits, $XX under guide reported refrigeration a Climate expected light HVAC With respect our Solutions. of sales digits at updated X guide. months for underlying for upside full that, April now and commercial $XX.X XXXX. compared billion months little mid-single our year With offsets growth commercial businesses from now unchanged our organic in previous We Viessmann guide. expect essentially prior compared The provide outlook of roughly X our

and headwinds commercial Lower China for quarter. a and translation offset partially are sales currency commercial another stronger light refrigeration by only in foreign residential having

our We to the of $XXX maintaining end operating north Interest of $X.XX maintaining maybe expected of exits are is little EPS a year to million $X.XX. based timing be the is are continue adjusted to we the to The full conversion more, XX%. proceeds. of that expect adjusted margin earnings of be range roughly guide redeployment core and and XX.X%, expense on about our guide net result

transaction tax and $X cash from payment cash million outlook business restructuring-related and free billion $XXX the costs. flow exits reflecting Our gains on remains of about

free cash billion. flow $X.X remains underlying Our outlook

Moving we including bridge. Viessmann to XX, adjusted whereas up businesses to business represents that business from be the full adjusted can last lighter guidance EPS core year-over-year Solutions, our is contribution to EPS Slide midpoint. EPS on are Adjusted the we're from Climate XX% year exiting, the from adjusted $X.XX blue The the darker to you at last year represents the year. increases $X.XX projected see retaining, compared the blue EPS

of net operational exits The as commercial We Climate updated HVAC the refrigeration, the only earnings include Solutions fire to from effect of within business savings net industrial of months and from performance from dilution the expected Solutions months reflects well commercial contribution months all Access losing offset increased and earnings lower from stronger impact from light earnings $X.XX of productivity. X reflects now X by the commercial interest our as of stronger X Viessmann sales. proceeds. of businesses

in XXX There from a is a we quarter, the EPS third effective $X few from our is a the half sales you including we adjusted the rate modest headwind benefit to pennies In be respect $X.XX last that, $X.XX track from tax divested, on a effective second summary planned In new and and XX, to year. a about adjusted headwind. a the open compared year-over-year With expect bridge. $X.X questions. another it items, part With adjusted the good about on yet up expect summary, for overall tax find a businesses guide adjusted billion in Slide share XX, second the billion rate. up year additional of bps we'll which of be higher EPS on quarter repurchases of were year, guide And full and and to for to strong appendix updated guide. also will there a to Slide as of

Operator

first Instructions] question with The Citigroup. [Operator Kaplowitz Andy comes from

Andrew Kaplowitz

a Bison business, you've your and Obviously, expected longer how would derisked for that half you growth think about orders pickup. David, seasonal you're see Is you that visibility sales as ramp. I lowered you you do guidance typical XX% second a as been guidance base? Or but the you off get more still into now that the expectations I think saying for own for new the more lower talking characterize ramp. the

David Gitlin

call to would but half. growth it I also the half more it's second XX% first about over the derisked, XX% in

off of now we're but previously, lower that said base. had we coming So a

is in years of the getting back over terms number almost XX% we start a true time. of into and of we to seasonality, heating months, went XX% of I typical that XX% as think number the the

for as to we've So see we're the at really we year. We -- forecast 'XX, think of rest we what this we the need are start this is thinking looking do the inflection derisked about do point.

that in the for but get is and we pipeline closer that orders for orders back, forecast expect next into start which end for As at see do the year, this gives to paying that August, the to us when we'll year. October, leading Germany we subsidies the September feel start kind we'd balanced revised building of growth pick like up very of

Andrew Kaplowitz

the could than inflection then talking some into you it you data And in color and you they more been the the commercial broad-based? talk accelerating? in about order residential And but helpful. already centers it and relatively us a orders, bigger I you had easy the talked is Very maybe inflection turn know little about about in center the a more saw know Americas are data I that you saw. give comp you trends or Was quarter? you mostly gains, expected Was expected? actually share you've could

David Gitlin

we've a I get XX-month in, did bps U.S. think share on XXX roll. We Yes. about resi, gotten if of about share

out orders Patrick orders over significant. XX%. would is still been they XQ, see into said, if XXX% that obviously But go were lead time up have beyond that little bit about to you So as up a take our

order XX% growth for that that for really year position in us maybe so that high trends resi. this resi well So seeing or for good we're single-digit,

verticals up up but strong and time. was Pac, over it us EMEA low at some a for in we light first edge some data care K-XX to in strong commercial, well, of been particularly have XX% commercial the was that up positive strong, that in in centers, it strong. And particularly that digits. HVAC, was commercial was lot And in Asia we've us. health When higher Americas, single in saw the XX% as things other HVAC Europe, close seen remain look and helped been and And the we like there orders has there where Americas

Operator

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

Jeffrey Sprague

that comment calling Is you're just pre-buy you back the kind preorders some on of happening, jockeying this and of elaborate what's happening kind on the this into or can half? conversion behind really why AXL Dave, the that out? about

David Gitlin

No. out on the to our leading distributors the do we year, at a want shelf It's of And figure process. what think put next. I are place our in disciplined SIOP they into just trying -- because end this with fairly

really our So that do talking is, factories plan is What reality. you year you about just we then like this guys can feel need to them accordingly. and all

So about it's production planning. all

Jeffrey Sprague

on that's was selling F&S margins, quarter elaborate, something just margins? could the one-off & then surprisingly negative. or the gone in think, happening on a some is the Lenel But I just And business only else on has you obviously, Patrick, there kind going Was margin Maybe there? performance. Fire on strong mix Lenel a of for unusual month. Security what

Patrick Goris

In that was both essence, and it in very strong productivity performance on price segment.

compared We All as some lot price well. stranded of right. so of course, were a significantly we're margins, related obviously, of year. to that year, was that to had negative a benefits quarter strong to Also, last in doing a work where were And This They below segment year. productivity, XX%. last just last few our one-offs costs, very compared weaker.

Jeffrey Sprague

Thanks. Sam it doing good role. there. in his job a I'll must new be pass

Operator

The Julian next question comes Mitchell. from

Julian Mitchell

million third sequentially, $X.XX look quarter sort just perhaps. a question a lot large I you easier But it The versus clarify to of revenue unless $XXX just we $X.XX sequential the maybe the earnings commentary. down versus implies first it's very printed. wanted moving it a sounded sequentially. like for a like of Maybe sounded sort something It just -- of margin drop Patrick there's number line. so was below maybe around

that, on please? clarity of sort any So

Patrick Goris

a think a The to margins way a the prior little versus you dilutive Viessmann expect is about couple it will remain more maybe about The bit comments of impact. there. we can QX XXX Julian, bps, be Yes. year. in down

With represents as million of well. a the $XXX operating we're about tax exits, and losing then $X.XX headwind about profit

And and by pickup volume so all continues then price strong. That be of productivity. that and to some is offset

Julian Mitchell

back, That's then maybe to Viessmann. Dave, helpful. And just switching

second I sort understand half half-on-half have line seasonality. with the So in of bounce normal you

entering is way assuming Just year-on-year Just trying I is you're next flattish following updated for to now? exiting Viessmann understand maybe kind missed sort year? for the an but think fourth it operating Viessmann that the the it, of how to year you margin this think right looks sort And year quarter? assumption of that, up on there was that of in about it

David Gitlin

Yes.

expectation at of up we'll I think is -- be when XQ, might flattish so. to be will XQ year. our be we It X% look last or

Patrick Goris

Yes.

below to year-over-year QX be year operating full EBITDA and is about for sales margins few margin. for expect for mid-teens now, the Julian, a We flat that and the outlook points for

David Gitlin

With a better EBITDA XQ expect. as in XQ you'd than

Patrick Goris

Yes, is clearly the exit rate higher.

Operator

question Noah Kaye comes with from next Oppenheimer. Our

Noah Kaye

on hear divestiture. progress to and fire Good the resi commercial around

actual curious exit. agreements and some you've the that between on expected little bit a tighter executed. the than previously Just divestitures seems timing It of the

kind So us what understand time that frame? just of relatively condensed drive help would

David Gitlin

most to to likely going sponsor. a It's go

don't see any So real issues. regulatory we

pretty the close be So sign between we and think brief. time should

Patrick Goris

we've Yes. for fire exit. seen industrial And similar it's something

David Gitlin

there. saw we time of amount same Yes,

Noah Kaye

your expectations year. the helpful. Maybe clarify the around on versus That's to side you mix then can talk very (sic) lead XXXB just orders. again [ to resi XXX the of And for XXXA longer with the updated ]

what I would these of some like? buying look help that understand better dynamics us think

David Gitlin

Yes. We We than XX%. to we could thought XXXB had going there's said. it closer think be this lower year be previously to

are dealers a to it's the closer put XX%, less be in X% rush maybe don't in think think to XXXB. year. to our this distributors than lot going I a of major I and

but to get more our the maybe not XXXB, piece that because going We're We only probably construction you XX% initial out bit next mixed they're we X% starting this units But want developments. a to with there. year. than as probably new will it's about closer have residential that think be into year,

Operator

Joe next the Goldman question Ritchie from comes Sachs. with And

Joseph Ritchie

that maybe progress encouraging see it's center the to really just data with Dave, orders. --

to And what's know your little vertical. that more then progress. so sell you're that maybe talk a And about planning increase content to America that as driving well bit North secondly, I into

that helpful. And so on be would just update any

David Gitlin

focused equally, we're this put entire time operations, about it's that the Sure. support, the to are program an Senu we led It's vertical, I a we not we only together mean if team just by then do data first more importantly, center orders, enthusiastic team on very the opportunity. technical, here with not dedicated actually but whether everything aftermarket secure need to is customers. support our Christian

So, that in had we same big bit a to order up ended customer, and mentioned they had a XQ it. more we with the adding actually

hyperscalers in are with the colos. other We discussions and

We have by. we're encouraged customers that are and our by, encouraged the very technical offerings very

one we they we beat. some tell They you technical for I then us requirements more that significant customer, gave gave can us again. technical beat requirements, which

ramping up. couldn't operationally, we're technically, and engineering of more So our be team proud I

Asia We in have Europe. and facilities

United North the put both air facility, And going chiller add to capacity, capacity building our into facility to there. Mexico we're and out multiple States, Charlotte, in adding cooled Here capacity to Carolina our that. we're cool water max shifts

offering So our very that dedicated aftermarket to strategy critical win And then whole these our up than a starting excitingly, offering more really here. going share. to be we're to going exciting opportunity We're to unique we're a build fair aftermarket with customers.

Joseph Ritchie

a did update And commercial guys question, positive start better have know that light of I orders an missed that there's about more been some in I follow-up Patrick, that all don't off business, great given that then but kind your concern to to guys I you are give broadly. that see feeling for you guess turned if bit. I earlier, business expectations that's business Yes, the really fall you hear. year? my little know it to

David Gitlin

to good pointing each up we're in I say we it. and the we second we other mean, were what Yes, look, the over quarter, first to up tend tend be, last But quarter, We commercial. going experience years I my feel Patrick In who we about light takes is were X to are do. at the XX%. we XX%. --

full low digits. the single we're On saying year, up

mid the I saying think or down we into year came so.

I half. the verticals second that been The balanced we're in So unique is opportunity. a remain good. good think still K-XX have

health of soft, good. and office care, like still continue to be Some soft We are value-based see restaurants the space. retail, that quick-serve things are warehouse

offerings, that share great it's gains time. over an So technical great area we've had

We quarter. performing orders think in calibrated The team see to we instead we'll out. how is could continued single mid was see for the digits, and have it positive that be it low had year of plays up we're happy strength, I well. to perhaps But the

where Our orders was in QX orders X%, the had encouraging. about which which positive like X up first quarters, quarter we've in something was

Patrick Goris

light guide, to was the for compared swing And the less a million. revenue in Joe, prior commercial little than $XXX

So from down low single digits. digit prior guide to single now up low

swing other areas. big some a it's offset that So helps

Operator

with Coe next question from Research. the Nigel Wolfe comes And

Nigel Coe

orders. quite growth. eye-popping the That's on Congratulations

half, full thought second maybe XQ. very obviously just right. Viessmann exit like got of the that's correct it to think And implies On maybe lower sure on -- down just rate second I half. sort How I margin you want million, to said on because perhaps year XXX make just maybe XX% EBITDA I in color with sure those details that the a that's $XXX XQ Q-over-Q. strong. we've Patrick, Just I make then of more on looks basis for the few want about been some the HVAC the points margin,

Patrick Goris

start with I'll Nigel. second the question, your of part Yes,

revenue full from for ballpark a year. Solutions. flat point view we in expect teens is do the QX about number be be And Climate down growth EBITDA for your VCS So of high Viessmann and for sales to the year-over-year then to QX

acquisition, larger us however, XXX for some and investments HVAC and that, that. specifically specifically that's about currency The almost about some quarter, third the HVAC. margin -- And margin. in continue see see for to XXX margins that offsets take -- strong of we terms about In QX. -- VCS asked think bps were productivity year-over-year of besides that's to you The bps we I lower over you

David Gitlin

I'm sorry.

Nigel Coe

Please go ahead.

David Gitlin

high down teens and Yes, XQ, flattish. would would It then be be you're right. XQ

Nigel Coe

I'm Okay. my question, sorry. sorry. then And follow-up

On My building around It half there's interrupt a to mean a products, which to in the follow-up want -- prebuy. about didn't sorry implies here It the Dave, look that. have like strength in does prebuy like really the distributors question you, I XXXA HVAC. is order second fourth quarter. seems the

the of be X like maybe install sort pre-buy of that kind given feel what like some a from it year meaningful wondering should of more just because you're window fairly terms that does there just in color So hearing here. channel

Just curious on your thoughts there.

David Gitlin

much Yes, yet. clear just Nigel, not how just

to next go the year it won't year I it's they want year. think I this know sure. next Exactly into the because think at or distributors material the do I day, exactly customers with end starting figure shelf be end much how going and the XX%. But they be that the year XXX going into I that for think will know either they're a much next think out do to of how to on

just Just price modest for that prebuy. of assumes the today, XX% base day, very given guide to end it at XX% a with increase. the But we've the

Operator

with The next Tommy question Moll Stephens. comes from

Thomas Moll

XX% continues before. increase. just you mentioned if a But the wrong there -- correct? me to you increase you've sync with of I'm I XX% correct that the to to on here, up XX% to that follow-ups think well base XX% couple price Dave, AXL. talked Can Is cumulative

David Gitlin

Yes, Tommy. XX% to correct, over X That's XX% years.

our increase, includes annual year. few a XX% percent a to price XX% it, call that Now

that of -- base appropriate. be increase XXXB, best the on which the is would rest just price the the So

seems in know these and it. that it we're stick. appropriate that I've are it, will like heard that it calls just think our and like public peers doing seems I doing it I just it's that

Thomas Moll

for repurchase. Follow-up the on you question

is the Viessmann all that now you've it reasonable Is next $X the taken divestiture the the be the back closing good half, end billion goes line my of of year. an of bogey? question to Without by that think for end visibility according time you've all year, by to to second dilutive With of could announced out a the shares the got last float. if around sizable is, plan the reasonable putting it, exact

David Gitlin

Yes.

Thomas Moll

and you, back. turn it Thank Great. I'll

Operator

Jeff from KeyBanc. And Hammond our with next question comes

Jeffrey Hammond

and bridge you're HVAC. whole the growth of in to seeing A back Europe. come weakness good is to lot but wanted China in organic the numbers, Just maybe like the

that and you in visibility So you maybe forward. those what going about see if markets a can then just talk bridge from

Patrick Goris

look comments, do Americas mid-single-digit think my I growth well second continued I I quite quarter HVAC, at If to for with Yes. in growth. the the mentioned, as

With it's by in to the low the commercial in have continues EMEA, light little also Commercial grow there. HVAC, X there growth In and single then and pretty strongest lower, bit commercial growth is then mid-teens HVAC. well, data driven you And phenomena. a year-over-year. centers digits

light and more see have business commercial. Residential we and down light we residential organic Europe. obviously, And commercial, mid-teens. in a that counts And broadly then is where towards that

region. is the Asia And there mid-teens, about where so And a the broader residential kind about then in down in China is that's market, China, of see much and frankly, we that's and that Pacific, of including what light dichotomy very there all reflection commercial. in

in up the QX. be in in up. region about digits course, half to we HVAC overall up pick up single year, of of So Asia EMEA high think growth that second We by to will an digits organic growth resi that's overview expect in the expect half. of of the expect half as double year. be both Americas And second the the that, we and second rates the pick Pacific to kind of

Operator

look participant left. It that does like me. has Excuse

to So on the next move I'm participant. going to

David Gitlin

We can move on.

Operator

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

Andrew Obin

centers a impact. Just clearly, mean, making I question. are an data

evolves, center a capacity products us data now? versus you technology what data you about water technology elaborate that sort Just Can cool a talked you you And And as of have lot vertical? of targeting of cooled to can in versus centrifugal We're are term? is where air you sort some just long sort scroll. that products bit do right just a talk going right? adding think changes, hearing to the do what capacity little add you're center technology the

David Gitlin

Yes.

colos about, you're market, -- technology. the talking we For have hyperscaler or on almost of the entirety depending of regardless what the

customers. little the cooled We cooled like side. Charlotte have we're water bit support a the technology, adding and in and when for in of offerings to places a range both chillers, on air capacity Europe at cooled the Mexico we and air in and both more on water broad But you really have cooled look

cooling. I think for to liquid you're at longer the need looking what be term, more is going

units. of CDUs, in we're for distribution the development the middle So coolant

We in-house for elements have also cooling assisted the today. customers and between air some do offerings many and liquid do those to of traditional a CDUs lot hybrid of liquid can offering we're the capabilities the of units. We cooling well. as level And

direct we that future in have a That's number closely Dell employees We're is that also chip, really it's of working impressive that of working to going in-house a with to partnership STL, replacement, doing And cooling terms an them. with. combination with I have has an we're organic not a of to cooling. our And former investment. strengths. we think liquid And we're is right on play a But liquid development startup and. lot

Andrew Obin

customers sort standpoint, we going we're when think comps do running tougher from education? the is into deadline? are of in you finally funding out. before Where sort just of still in running terms And a regulatory to your of ESSER applying start for And

David Gitlin

billion. Well, it's now, of remaining funds -- as September to on the there's because $XXX $XX say hard year, still billion this the committed right by to need be but of

that we do legislation funding So, spent extensions under to And to has by for the itself applied XXXX. current that. know have be then of the many March

extensions after applied still that well or able have have that we for be And money that some to XX know of March spend so So we there's states time. XXXX. to

really a vertical us. been has for this strong So

the the Probably We continue extension in on be to lot to funding an see probably end and orders. front spent. an a extension back on strength of There's end.

Operator

from next our comes with Linzey And Mizuho. question Brett

Brett Linzey

to wanted I come pricing. back to

of a back HVAC probably and well nonmaterial Or higher. metals are puts the both set some to in seeing out pretty there price? takes you're in go businesses? So other need Is trends, some year and still the inflation this you with

Patrick Goris

price the more at business do business bit on they're if there they're be part of That's commercial more. more needed, I where think we project the of little really on year. like different expect dynamic. pretty -- And project, pricing point this anything by is this do parts a our can the increases. we're that, annual where we much resi side. don't I HVAC,

little On seen we've commodities, come down what but -- you run obviously, quite bit. the mentioning bit earlier the a were a it's up this on year, copper

a a with few that pennies absorbing still but So of we business. headwind of our are parts other probably compared to prior guide,

Brett Linzey

to there? in you All Got Is about actions stranded what or upon you're worked of of businesses about there as that look costs taking then to terms needs right. just the And guess, think get then these close. to it. Great. I the thinking divestitures, disentangle maybe some guys anything excess down? And are

Patrick Goris

Yes.

you're So absolutely right.

may we these actions so $XX we're the I very ensuring it. that on you an of think doing proactively We're all at costs. cost we this earlier any focused February is we reduction stranded eliminate of million that. program on ahead of And year, executed mentioned call, happening. That recall top get And to that additional

transforming overhead these basically Some more intention but of is we're exit, it of structure focused that aligned to into. businesses already is that a in reflected our company you some before see, of simpler, absolutely course, that, our margins with ensure our

than means and 'XX also that say, less 'XX be than was, will beyond in it and 'XX. G&A It

but maybe that's and the we're be up, where And we heading. S G&A, so lower, the expect to

Operator

Steve And Tusa comes the next question JPMorgan. with from

C. Stephen Tusa

just a we little Could get more info on.

and sure. the these I'm maybe and given like still pretty pretty June assume orders sales not date a, I kind perspective date cutoff see a like July. heard that the in bit XQ XQ into Maybe of July resi you, huge. for gigantic was even orders from do you what XX, as So a do looking good well. would But I've How extended orders the resi these cutoff are preordering. without is

David Gitlin

date, have Yes. a don't Steve. We cutoff

said a certain you're can formally haven't how get about sense just order is What date. a XXXA how got the past that longer XXXA year. for distributors, look, we asked our did want no we thinking you we much So you to of we

us So a that. please giving start sense of

tell the would in I XQ. you They strong orders surprised So very worked us.

we for still we up XX%. what think would you have later that if in XQ orders take that were got said XQ, they the is I out come normally

half for the look we year when half that you tell we second year, will at second of the the side. I very the well the resi of Now booked on are

sell-in, the book, the a see see still if look So little an easy very have we levels They're of we up single because get still into partly we down there high it's because equal. low. nice XX% is we as sales get in -- at digits, XQ, inventory the as to And strong about out year-over-year. are compare growth over guide looking sales very you but order you're XQ, sell-out into partly

destocking, So any over confident that's behind we kind of feel debate us.

side, produced quarter, say I team would end by I first the the our single say a derisking And that. the has third job every on have. XXXB have we of done would model for that we great will the units

very strength, front but has very bit, very strength. helped a of been but that, weather out tried sure we've XQ. to here lot get good So there in in of I'm in a orders much strength

C. Stephen Tusa

kind Is high comps we figure year for and basically that can then for XQ up the singles said the you for of and XQ. So resi, out right?

David Gitlin

than not we single the has strength the said or X%, of XQ. to plays a it of Yes. good. year-over-year single as July -- kind multi-double-digit it's been we're But how probably for X% XQ digit year. could XQ. high digits, there's just the probably growth very strong XX%, in see have be lot out. going and in the second high to But yes, system, if said, higher I half you what in XQ It's in in and Steve, that's much would it's It's say,

C. Stephen Tusa

building, the analogy, what like are of data the are of baseball the now are to be around year? the like is obviously How on we orders growth one stuff. your orders we that come a just a see think, we, And you give it order orders are the inning those The sales the the us you you expect If just percentage in of total where context lot. is in where like then growth up pipeline, up lot. -- expect you on do continuum and to that? up obviously What center do much the exiting in pipeline And a out versus much. timing the pipeline are a

David Gitlin

Yes.

XX% you it, commercial our NewCo, HVAC think about you little new one take are about first about completed Carrier Let the a me we've which centers divestitures, that think after of today. data if is our first, of overall is and can XX% over portfolio

Next closer year, be to to going on higher base. a it's XX%

course, value, of increasing data of centers absolute exponentially. So the is

for had more If you of for -- year, we orders it's last to have going this first year. centers all data half look at we the orders than through

mean I into think in is great that When as on would on our very, a we centers. you coming should strong think how we is So -- get overall. are double-digit from the question HVAC commercial It but very CHVAC with hyperscalers, lot be more. on We're of of about next the coming. can growth, I lot of currently our data extremely whole strong very XXXX, enter the bidding look -- at wins, we if lot that this be we've continue? go fifth early row a we our backlog long innings. some in an had year next I and would have bookings been A year a year

And years, the So I -- inning, significant. if in but think be going first don't not out very, fourth. the the many very know if aftermarket you is the we're second or to other certainly it's

in think with not building may you and having is chillers about about XX, water a typical X think option. have centers cooled we you If it, now failure an data

with real-time have type agreements looking We're at downtime. on They parts, site. really technicians with can no monitoring hyperscale

that about many the thinking sales. position customers hyperscale for should for us very growth after that our initial are we're years solutions for unique So

Operator

comes Manocha from next RBC. Sahil And question the with

Deane Dray

add I And can it's Dray. Deane my Sam? congrats to Actually

David Gitlin

Yes. Thanks.

Deane Dray

couple All moving right. pieces of in a competitive recently. landscape Dave, the

Samsung JV as Any on pumps. heat these see margin moves. on with and You've at changes got Bosch now focus competitively a a announcing Lennox with that you the this competitor

David Gitlin

great all No, I Bosch rational is material good business, change JCI's see competitor. competitors, They're competitor. Bosch buying the a landscape. don't to any a and

Samsung focus see combination And or great So pumps, of concerns nice don't there? both a and Lennox issues terms the that's on then we partnership any in heat and are competitors. Douglas

great, more I have there. could great. have change a see derisking resi new not products. you, our gains tell transition I share great. The been technology, growth has team. be the been The introducing proud been margins the The could differentiated of don't we XXXB So

I our any love don't to the So and that. I real way team. and we competitors, performing, they're see love I have change great

Deane Dray

good color update projects, there there. sight, of line to hear just All any of And kind bid then be any activity, the on mega would helpful.

David Gitlin

some We not projects. projects, data we're positioned chips that team. Yes. about centers. also includes It's these just It talk a very and act lot of mega program the between mentioned dedicated data mega well the But centers. there. I

wins And so had dedicated sales to And some major in had some with but well, there, announce process is activity the very hopefully, at working more one. well. We've bid as very that our and on key projects. We've important we'll team ones. some mega force, and we the have the the continue folks it colos focused hyperscalers, the

Operator

next question our comes from Cowen. Gautam with And Khanna

Gautam Khanna

quick I had ones. a of couple

consumers downs trade of opting repair evidence remark any yesterday. that Lennox a about or replacement, First, made for by

David Gitlin

it we instead watch replaced repair seen not and -- we seen have there. trend have opting material to not super customers we carefully, No, of real no

Gautam Khanna

mentioned you in you of the between what's And late, covered the product but you're just maybe and heat VCS seeing what on lines, your pumps, various components, expectations? of kind seeing Okay. broadly the lines in joined are maybe I what this what outside Germany, other the you're business going

David Gitlin

heat I surprising. start quite year-over-year, look a been a bit, as which I has see recovery pumps, heat seeing we've down but think is we XQ, boilers of a bit XQ on down pumps we been has to we has if a been mean at too, quite Yes. get been into what bit

want I bad see think down the good down, don't that's big solar PV of the to one, which but news, kind most. been that news is is we probably

the it's probably something year. that So down full in XX% for XX% QX, around was down like

margins boilers. heat comes that like and and things again, pumps And with lower

down some the of pumps we'd it, So and but rather thrilled not about we're heat have higher-margin that boilers. than be

Thomas the and and that in mid-teen news the Now driving both XQ been good have XQ. growth, aftermarket is team

easy So market short to And Leadership credit. against team you you when show that's tailwind. of It's have turn to what a we've up always huge have I leadership give time. markets period for steps that seen. when really

been controllables, dollar synergies, But being in of aftermarket controlling the billions team, Thomas that up range. will growth, hundreds taking the has of revenue driving that end costs out, in

withstand are uniqueness going test to time. the the So combination of of this

to year. market taking growth it of challenges the going right So we're we to be the the this be we're head-on poised combination in the year. and the right as is And see right we come market, this sure, for very out company,

super So we'll and our out come next year. this strong medicine take year

Operator

And the Karas last with question comes UBS. Damian from

Damian Karas

prior one the North We supply heard Just competitors that notable HVAC of following up hiccups. your of comments. was having order on American had some some

I wondering that of basis issues maybe industry be points any the growth you share was So orders more gains there broadly and what called about could if that might you supply just to talk impacting the strong out? XXX are extent out and

David Gitlin

XXX about We hear just as rather picked talk over we teams, talk our about customers which anecdotal the things our as bps up team, that and last the I'd our well. not XX competitors about is I But months. mentioned, and

for they And our customers, thing outsized growth. that need. see Our to right to continue continue the confident goal I'm if the need the is we right what when having right price do at products they we'll

Operator

remarks. back I would turn the now to closing like over management to call for

David Gitlin

thank for come. a for the important Okay. growth this and year for a positioned as expansion the pleased you portfolio, really finalize margin us position this years is joining we we're all and of for 'XX our a sustained strong transition well half We're for team morning. second year, to with of as first ourselves Well, very listen, us half. we

you of confidence you again questions And available Sam your us, throughout So day. team, appreciate the and we in for for the joining course, thank are us.

Operator

for call. participating. This Thank you concludes today's conference

now disconnect. You may

Carrier Global (CARR) 25 Jul 242024 Q2 Earnings call transcript