Carrier (US:CARR)2023-06-02 00:47Carrier Global Corporation Conference Call Summary Company Overview - Company: Carrier Global Corporation (NYSE:CARR) - Event: Bernstein's 39th Annual Strategic Decisions Conference 2023 - Date: June 1, 2023 - Participants: David Gitlin (CEO and Chairman), Brendan Luecke (Bernstein Analyst) Key Points Industry and Market Position - Carrier is focused on becoming a leader in intelligent climate and energy solutions, emphasizing energy efficiency and climate-friendly technologies [14][15] - The company is integrating with Viessmann Climate Solutions, which is positioned in the fastest-growing market globally for home energy management solutions [3][4] Financial Performance and Strategy - Aftermarket sales increased in the high teens during Q1 2023, with expectations for price/cost benefits to improve in Q2 [2] - The company aims to achieve strong productivity to fund growth investments [2] - Carrier's net debt has decreased from $10 billion at the time of its spin-off to $5 billion, with a target leverage ratio of under 2 within a couple of years post-Viessmann acquisition [11][12] Business Exits - Carrier plans to exit its fire and security and commercial refrigeration businesses, which generated approximately $3.1 billion and $1.1 billion in sales, respectively [5][6] - The company has received significant interest from potential buyers, indicating confidence in achieving favorable multiples [4][6] Acquisition of Viessmann - The acquisition of Viessmann is expected to close by the end of 2023, enhancing Carrier's position in the residential heating market in Europe [17][18] - Viessmann is recognized for its direct-to-installer channel and comprehensive product portfolio, which complements Carrier's existing offerings [48] Market Trends and Growth Opportunities - The transition from fossil fuel heating to electric heating (heat pumps) is driving significant growth in Europe, with a projected increase in heat pump installations from 1 million to 10 million by 2030 [35][36] - Carrier anticipates a compound annual growth rate (CAGR) of around 20% for heat pumps in Europe, driven by regulatory changes banning fossil fuel heating [35][36] Digital Transformation and Services - Carrier is investing in digital tools like Abound, which provides real-time monitoring of carbon emissions and energy efficiency for commercial buildings [86][87] - The company aims to grow aftermarket sales from $4.5 billion to $7 billion by 2026, leveraging its existing installed base and improving attachment rates [40][81] Challenges and Risks - The North American residential HVAC market is experiencing a downturn, with expectations of flat sales and a high single-digit volume decline for 2023 [66] - Regulatory changes in Europe may impact growth, but the overarching trend towards electrification is expected to continue [41][43] Conclusion - Carrier is strategically positioning itself for future growth through acquisitions, divestments, and a focus on digital solutions and energy efficiency, while navigating current market challenges and regulatory landscapes [19][53]