Carrier Global (NYSE:CARR) 2026 Conference Summary Company Overview - **Company**: Carrier Global Corporation - **Date**: February 19, 2026 - **Speakers**: Dave Gitlin (CEO), Patrick Goris (CFO) Key Industry Insights Growth Strategy - Carrier aims to achieve accelerated growth through new product development, aftermarket services, and system-related growth, targeting a growth algorithm of 6%-8% once market conditions improve [3][4] - The company anticipates facing a market headwind of 3-4 points in 2026, particularly in the CSA RLC business, which is projected to decline in high single digits [4][6] Market Conditions - The residential HVAC market is expected to decline by 10%-15% in 2026, with Carrier projecting a high single-digit decline for itself due to destocking effects [13][62] - The company is actively monitoring inventory levels and market indicators to better anticipate market fluctuations [8][10] Product Development and Market Position - Carrier has introduced new products in the data center segment, significantly increasing market share from 10% to nearly 40% in water-cooled chillers [31][32] - The company is focusing on system-level differentiation, integrating traditional cooling with advanced technologies like AI and digital twins [34][126] Financial Performance and Projections Revenue and Margins - The company expects attractive incrementals in the second half of 2026, with sales in the residential segment projected to increase by double digits [18][19] - Operating margins have improved significantly, with data center orders in Q4 up 400% compared to previous periods [32] Cost Management - Carrier anticipates a net headwind of $60 million from material costs (steel, copper, aluminum) in 2026, offset by a price increase of approximately one point [104][106] - The company has implemented productivity measures to mitigate cost impacts, including redesigning products and optimizing logistics [104][112] Regional Insights North America - The Americas commercial HVAC segment has shown strong growth, particularly in data centers, with orders up over 80% in Q4 [29] - The company is optimistic about the recovery of the residential market, contingent on factors like existing home sales and new construction [70] Europe - In Europe, the market is currently challenging, with a projected decline of 5%-10% in 2026. However, new product introductions and system sales are expected to drive future growth [39][40] - The company is preparing for a significant new product launch aimed at capturing market share amid changing subsidy levels [42][46] Asia and Emerging Markets - Carrier is expanding its presence in Asia, particularly in India and the Middle East, where demand for commercial HVAC is strong [76][78] - The company is optimistic about growth opportunities in Japan, especially in the data center sector [80] Innovations and Future Trends - Carrier is focusing on integrating home energy management systems (HEMS) with HVAC solutions to reduce grid demand during peak hours [126] - The company is investing in AI to enhance customer service and operational efficiency, aiming to leverage data for predictive maintenance and improved aftermarket services [99][100] Conclusion - Carrier Global is strategically positioned to navigate current market challenges while focusing on innovation and growth in key segments. The emphasis on system-level differentiation and proactive cost management will be critical as the company aims to achieve its long-term growth objectives.

Financial Data and Key Metrics Changes - For Q4 2025, reported sales were $4.8 billion, adjusted operating profit was $455 million, and adjusted EPS was $0.34, reflecting a year-over-year decline largely due to lower volumes in higher-margin CSA residential and light commercial businesses, leading to a 9% decline in organic growth, partially offset by a 3% tailwind from foreign currency translation [15][16] - Total company orders were up over 15% in the quarter, driven by strength in CSA commercial, indicating continued strong demand for products in this market [16][21] - Free cash flow in Q4 was approximately $900 million, with full-year free cash flow of about $2.1 billion, aligning with expectations [16] Business Line Data and Key Metrics Changes - CSA segment had a challenging quarter with organic sales down 17%, while commercial sales were up 12%, but this was offset by a nearly 40% decline in residential sales and a 20% decline in light commercial sales [17] - The CSE segment saw organic sales down 2%, with commercial up mid-single digits, offset by declines in residential and light commercial [18] - The transportation segment experienced a strong quarter with 10% organic sales growth, driven by exceptional growth in container business [20] Market Data and Key Metrics Changes - In the Climate Solutions Asia Pacific segment, strength in India and Australia was offset by weakness in residential and light commercial in China, leading to an overall 9% sales decline [19] - The residential heating market in Europe, particularly in Germany, continues to be challenging, with expectations of mid- to high-single-digit declines in the overall market [18][46] Company Strategy and Development Direction - The company aims to focus on outsized growth in products, aftermarket, and system offerings, with significant investments in data centers and HVAC solutions [4][6] - The company is positioned to outgrow the commercial HVAC market, with expectations of double-digit revenue growth, including a 50% increase in data centers [6] - The company plans to continue investing in technology differentiation and maintaining a strong balance sheet while returning cash to shareholders [4] Management's Comments on Operating Environment and Future Outlook - Management noted that the short cycle residential and light commercial market softened more than expected in the second half of 2025, but they are positioned for stronger incrementals when these markets recover [3][14] - The company expects flat to low mid-single-digit organic growth for 2026, with continued double-digit growth in commercial and aftermarket globally, offset by expected softness in shorter cycle businesses [22][24] - Management emphasized the importance of operational excellence and controlling costs while preparing for a potential recovery in demand [26] Other Important Information - The company distributed $3.7 billion to shareholders through buybacks and dividends [4] - The company expects to repurchase about $1.5 billion in shares in 2026 [24] Q&A Session Summary Question: Can you discuss the expected margins in CSA for Q1? - Management expects CSA margins in Q1 to be close to about 15%, with higher sales compared to Q4 2025 [32] Question: What is the full-year guidance for the CSA residential business? - Management anticipates industry units to be down 10%-15%, with their sales expected to be down high single digits year-over-year, benefiting from low single-digit pricing [44] Question: How are channel inventories in CSA residential? - Management reported that channel inventories are down about 32% year-over-year, aligning with their targets [53] Question: What are the implications of recent comments from NVIDIA regarding chiller demand? - Management stated that data centers will require a combination of liquid cooling and traditional cooling, and they are working closely with NVIDIA on future cooling requirements [80]

Financial Data and Key Metrics Changes - For Q4 2025, reported sales were $4.8 billion, adjusted operating profit was $455 million, and adjusted EPS was $0.34, reflecting a year-over-year decline largely due to lower volumes in higher-margin CSA residential and light commercial businesses [15][16] - Total company organic sales were down about 1% for the full year, with a 9% decline in organic growth for Q4, partially offset by a 3% tailwind from foreign currency translation [15][16] - Free cash flow for Q4 was approximately $900 million, with full-year free cash flow at about $2.1 billion, aligning with expectations [16] Business Line Data and Key Metrics Changes - CSA segment had a challenging quarter with organic sales down 17%, while commercial sales were up 12%, but this was offset by a nearly 40% decline in residential sales [17] - The CSE segment saw organic sales down 2%, with commercial up mid-single digits, but residential and light commercial experienced mid-single-digit declines [18] - The transportation segment achieved 10% organic sales growth, driven by strong container growth, while global truck and trailer remained flat [20] Market Data and Key Metrics Changes - In China, overall sales were down about 20%, with residential and light commercial down approximately 30%, while commercial in China was down mid-single digits [19] - The residential heating market in Germany, Carrier's largest market, continues to face challenges, with expectations of a decline in overall industry units [18][46] Company Strategy and Development Direction - The company is focused on investing in high-return opportunities, maintaining a strong balance sheet, and returning cash to shareholders, with $3.7 billion distributed to shareholders through buybacks and dividends [4] - Carrier aims to outgrow the commercial HVAC market, with expectations of double-digit revenue growth in 2026, including a 50% increase in data center sales [6][22] - The company is also enhancing its product offerings, particularly in the data center and aftermarket segments, to drive future growth [5][6] Management's Comments on Operating Environment and Future Outlook - Management noted that the short cycle residential and light commercial market softened more than expected in the second half of 2025, but they are positioned for stronger growth when these markets recover [3][14] - The outlook for 2026 includes expectations of flat to low mid-single-digit organic growth, with continued double-digit growth in commercial and aftermarket segments [22][24] - Management emphasized the importance of operational excellence and readiness for potential demand increases as channel inventories are at low levels [101][102] Other Important Information - The company expects to repurchase about $1.5 billion in shares and anticipates adjusted EPS of approximately $2.80, reflecting high single-digit growth compared to 2025 [24][25] - The company has implemented cost actions expected to deliver over $100 million in savings in 2026, which will help mitigate the impact of unfavorable business mix and inflation [4][90] Q&A Session Summary Question: Can you discuss the expected margins in CSA for Q1? - Expected margins in CSA for Q1 are close to about 15%, with a slight improvement from Q4 due to higher sales and a lower effective tax rate [31][32] Question: What is the full-year guidance for the CSA residential business? - The company expects industry units to be down 10%-15%, with their sales down high single digits year-over-year, benefiting from low single-digit pricing realization [40][43] Question: How are channel inventories in CSA residential? - Channel inventories are down about 32% year-over-year, aligning with targeted levels [54] Question: What are the implications of recent comments from NVIDIA regarding chiller demand? - The company is working closely with NVIDIA on cooling requirements, indicating a need for both liquid and traditional cooling solutions [105] Question: How does the company plan to manage operational costs moving forward? - The company has taken significant cost-cutting measures and is leveraging AI to improve productivity while managing costs [120][121]

Summary of Carrier's Investor Day Conference Company Overview - **Company**: Carrier - **Industry**: HVAC (Heating, Ventilation, and Air Conditioning) and Climate Solutions - **Key Leadership**: Dave Gitlin (Chairman and CEO), Patrick Goris (CFO), Gurang (President of Climate Solutions Americas), Thomas Heim (President of Climate Solutions Europe) [5][3][93] Core Points and Arguments Strategic Priorities - Carrier aims to be the global leader in intelligent climate and energy solutions, focusing on talent, culture, and purpose [6][5]. - The company has undergone a transformation since its spin-off, establishing a new leadership team and a performance culture [8][10]. Financial Performance - Sales have increased by 30% and profits by over 80% since the spin-off, with margins expected to be 400 basis points higher than in 2020 [12]. - The HVAC business is projected to exceed $20 billion in sales, up from under $10 billion in 2020 [13]. - The company has reduced its leverage ratio from close to 4x to about 2x, providing ample capital for growth [12]. Growth Strategy - Carrier targets consistent growth of 6% to 8% over the medium term, driven by differentiated products, aftermarket services, and systems solutions [16][30]. - The growth formula includes contributions from market growth, aftermarket, and new product offerings [17]. Market Trends and Opportunities - Significant global demand for air conditioning is expected to rise, particularly in regions with extreme temperatures [18]. - The shift towards electric solutions and the increasing demand for transport refrigeration, especially in China and India, are key growth drivers [19]. - Carrier is positioned to address energy consumption challenges, as HVAC systems account for over 50% of home energy use during peak hours [19]. Product and Aftermarket Innovations - Carrier has increased R&D investment by 50% since the spin-off, leading to improved product differentiation and market share [20][21]. - The aftermarket business has seen double-digit growth, with a parts capture rate increasing from 20% to a target of 65% [26][27]. - The company has a large installed base of 45 million residential units, providing significant aftermarket opportunities [27]. Digital Transformation - Carrier is leveraging digital solutions to enhance customer engagement and operational efficiency, with over 3.5 million connected devices [29][40]. - AI-driven diagnostics and remote monitoring are being utilized to improve service delivery and customer satisfaction [43][60]. Capital Allocation and M&A Strategy - The company prioritizes organic growth, followed by selective M&A that aligns with strategic priorities [44][45]. - Carrier plans to deploy $10 billion of excess capital for further value creation [44]. Regional Insights - **Americas**: The Climate Solutions Americas segment reported $10.5 billion in revenue with a 22% operating margin, focusing on both residential and commercial markets [50]. - **Europe**: The Climate Solutions Europe segment aims to improve its adjusted operating margin from 9.4% to mid-teens levels, leveraging the combination with Fisman Climate Solutions [95]. Additional Important Insights - Carrier emphasizes a performance culture and continuous improvement as core to its operational strategy [39]. - The company is focused on reducing complexity in its product offerings, achieving a 50% reduction in SKU count [86]. - The integration of various technologies and systems is expected to enhance energy efficiency and customer value [36][38]. This summary encapsulates the key points discussed during Carrier's Investor Day, highlighting the company's strategic direction, financial performance, growth opportunities, and commitment to innovation in the HVAC industry.