Carrier (US:CARR)2023-05-14 08:27Carrier Global Corporation Conference Call Summary Company Overview - Company: Carrier Global Corporation (NYSE:CARR) - Date: May 10, 2023 - Participants: David Gitlin (Chairman and CEO), Sam Pearlstein (VP of Investor Relations), Joe Ritchie (Goldman Sachs) Key Themes and Core Points Transformation Strategy - Carrier is focused on "performing while transforming" to become the leading climate and energy solutions provider in the industry [3][4] - The acquisition of Viessmann is pivotal, positioning Carrier as a "Global Climate Champion" with integrated solutions in solar PV, battery, heat pumps, and energy management [3][4] - The company plans to exit the Fire & Security and stationary Refrigeration businesses to concentrate on higher growth and margin opportunities [3][4] Financial Performance - First quarter EPS exceeded expectations, reinforcing confidence in achieving the high end of the full-year guidance [4] - Productivity initiatives are projected to yield $300 million in savings, with an additional $200 million from positive price-cost dynamics [4] - Free cash flow is anticipated to reach $1.9 billion for the full year, equating to net income [4] Market Opportunities - The European market presents a "once in a generation opportunity" due to regulatory shifts from gas and oil boilers to electric heat pumps, with a projected growth rate of 20% [6][12] - Viessmann holds a strong market position with approximately 20% share in Europe and a premium brand reputation [10][12] - The company has a robust installer network with 75,000 direct relationships, providing a competitive moat [7][10] Product and Technology Insights - Viessmann's technology includes integrated solutions that create a digital ecosystem for installers and homeowners, enhancing customer engagement [8][10] - The transition from traditional gas boilers to heat pumps is expected to drive significant growth, with a target of increasing heat pump sales from 1 million to 10 million units annually by 2030 [12] Divestiture Plans - Carrier is actively seeking buyers for its Fire & Security and Commercial Refrigeration segments, with strong interest from both strategic and private equity buyers [19][20] - The divestiture of Commercial Refrigeration will occur separately from Fire & Security, with a focus on maximizing value and ensuring a clean exit [22] Supply Chain and Productivity - The company is enhancing productivity through a structured approach, utilizing a common digital tool to track initiatives across all operations [28][29] - Supply chain issues are improving, allowing for reduced lead times and better order fulfillment [35] Market Segments Performance - Light commercial HVAC orders grew over 30%, while residential orders are expected to stabilize as the year progresses [38][39] - The company is monitoring inventory levels closely, particularly in the residential segment, to ensure alignment with market demand [42][43] Aftermarket Growth - Carrier aims for high single-digit to low double-digit growth in its aftermarket business, with a focus on expanding service agreements and digital connectivity [49][50] - The aftermarket segment is expected to yield higher margins compared to original equipment manufacturing (OEM) [49] K-12 Market Insights - The K-12 market in the U.S. has significant funding opportunities, with $190 billion allocated through stimulus packages, though less than $100 billion has been spent [58] - Improved indoor environments in schools are linked to better student performance, highlighting the importance of HVAC investments [59] Additional Insights - The company is committed to addressing corporate costs and streamlining operations post-divestiture [25][26] - Carrier's future portfolio will focus on intelligent climate and energy solutions, moving beyond traditional HVAC definitions [24][25] - The integration of Viessmann is seen as a unique opportunity to impact global climate change efforts [68][69] This summary encapsulates the key points discussed during the conference call, highlighting Carrier's strategic direction, financial performance, market opportunities, and operational insights.