Carrier 2025-26: Data Center $1B, Resi -40% Q4, FY26 ~$22B
FY25 revenue $21.75B (-3%); Op income $2.15B (-19%); NI $1.49B (-73% on FY24 spin gain base); EPS $1.70 (-72%). Data center business reached ~$1B. Commercial HVAC +25% FY25 with 5th consecutive year of double-digit growth + double-digit aftermarket. Q4 CSA -17% organic on resi -40% + light commercial -20%. FY26 guide: revenue ~$22B (flat to low-mid single org), adj op profit ~$3.4B, FCF ~$2B, $3B buyback intended.
Key takeaways
- Data center business hit ~$1B in FY25. Major strategic milestone — Carrier becoming a meaningful AI infrastructure cooling player. Commercial HVAC + thermal management for hyperscaler campuses.
- Commercial HVAC compounding double-digit 5 consecutive years. Combined with double-digit aftermarket growth — the high-margin recurring revenue layer growing strongly. FY25 Commercial HVAC sales +25%.
- Residential HVAC collapsed Q4 -40%. Light commercial -20%. Resi destocking + soft demand + FY24 prebuy depressed Q4. CSA segment Q4 organic -17% as a result.
- FY26 guide: revenue ~$22B, adj op profit ~$3.4B, FCF ~$2B. Flat to low-mid single organic with Commercial HVAC accelerating in 2H. Carrier intends $3B buyback in FY26.
- NI down -73% reflects FY24 base. FY24 NI of $5.6B included Fire & Security divestiture gain; FY25 $1.5B is the cleaner organic earnings. EPS comparison distorted similarly.
Business
Carrier Global is a leading global HVAC + transportation refrigeration company post-2024 portfolio simplification. Two reporting segments:
- Climate Solutions Americas (CSA) (~50% of revenue): Residential + light commercial + commercial HVAC + Carrier Aftermarket Service. Resi/light commercial cyclical; Commercial HVAC structural growth. Q4 organic -17% (resi -40%, light commercial -20%, Commercial +12%).
- Climate Solutions Europe (CSE) (~25% of revenue): European residential heat pumps + Commercial HVAC + service. CSE in transformation post-Viessmann acquisition (closed 2024).
- Climate Solutions Transportation (CST) + Other (~25% of revenue): Transport refrigeration (Carrier Transicold) + container refrigeration + Sensitech.
Strategic positioning post-FY24 reset: pure-play HVAC + transport refrigeration after Fire & Security divestiture (sold to Lone Star + others 2024). Viessmann (closed 2024) added European residential heat pump leadership.
Data center business: ~$1B FY25, growing fast. Provides chillers + pumps + thermal management + CDU (Coolant Distribution Units) for hyperscaler liquid cooling.
FY25 financial performance
| Metric (FY) | 2023 | 2024 | 2025 |
|---|---|---|---|
| Revenue ($B) | 18.95 | 22.49 | 21.75 |
| Gross profit ($B) | 5.18 | 6.02 | 5.63 |
| Op income ($B) | 2.16 | 2.65 | 2.15 |
| Op margin | 11.4% | 11.8% | 9.9% |
| EBITDA ($B) | 2.70 | 3.56 | 2.79 |
| Net income ($B) | 1.35 | 5.60 | 1.49 |
| Diluted EPS ($) | 1.63 | 6.15 | 1.70 |
| FCF ($B) | 2.17 | 0.04 | 1.70 |
| Capex ($M) | -439 | -519 | -392 |
| Total debt ($B) | 14.63 | 12.71 | 12.67 |
| Dividends ($M) | -620 | -670 | -772 |
| Buyback ($B) | -0.06 | -1.94 | -2.89 |
The earnings print: Revenue -3% (CSA resi/LC weakness offsetting Commercial HVAC growth + FX), op margin -190bp to 9.9%, EPS $1.70 vs $6.15 FY24 (FY24 included Fire & Security divestiture gain — FY25 is the cleaner number).
FCF recovered to $1.70B from $40M FY24 (which had divestiture working capital impact). Buyback step up to $-2.89B FY25.
Capital allocation
- Capex: $-392M FY25 (1.8% of revenue). Capital-light HVAC.
- Dividends: $-772M FY25 (+15% YoY).
- Buybacks: $-2.89B FY25 (vs $-1.94B FY24). FY26 intended $3B.
- M&A / Divestitures: Post-FY24 simplification (Fire & Security sold; Viessmann closed). FY25 quieter year for major M&A.
- Debt: $12.67B (-$40M YoY) — stable.
FY26 outlook (per Q4 2025 call, 2026-02-05)
| FY26 guide | Range |
|---|---|
| Reported sales | ~$22B |
| Organic sales growth | Flat to low-mid single digit |
| Adjusted operating profit | ~$3.4B |
| Free cash flow | ~$2B |
| Commercial HVAC global | H1 low-to-mid single, H2 mid-teens |
| Buyback intent | ~$3B |
The +0-4% organic guide reflects: Commercial HVAC continuing strong (5+ years double-digit); Resi cycle stabilizing in 2H; Aftermarket continuing double-digit. Adj op profit ~$3.4B implies +58% recovery from FY25's $2.15B GAAP op income — the bridge is operating leverage + margin recovery + Commercial mix.
Key risks
- Residential HVAC cycle: Q4 -40% volume signals deeper destocking + soft demand. Recovery timing uncertain.
- Light commercial cycle: -20% Q4. Continues HVAC industry cycle.
- Commercial HVAC sustainability: 5 years of double-digit; eventually decelerates.
- Data center capex cycle: ~$1B exposure ramping; AI capex pullback would compress.
- Tariffs: HVAC exposed to component imports + steel/aluminum.
- Viessmann integration: European residential heat pump cycle + integration risk.
Bottom line
CARR FY25 is the resi cycle softness + Commercial HVAC compounding year. Revenue -3% reported (CSA -17% Q4 from resi/LC), but Commercial HVAC +25% with double-digit aftermarket continuing. Data center hit ~$1B. FY26 guide ~$22B revenue + ~$3.4B adj op profit + ~$2B FCF + $3B buyback. Risks are resi cycle + Commercial HVAC sustainability + tariff. Quality of business + structural Commercial HVAC + data center ramp + capital return support the thesis.
Citations
- Carrier Global Corp. FY25 Form 10-K (filed February 2026, SEC EDGAR).
- Carrier Q4 2025 earnings call, 2026-02-05 — data center business ~$1B, Commercial HVAC 5th consecutive year of double-digit growth, double-digit aftermarket, Q4 CSA organic -17% (resi -40%, LC -20%, Commercial +12%); FY26 guide (revenue ~$22B, organic flat to low-mid single, adj op profit ~$3.4B, FCF ~$2B, buyback intent ~$3B); Commercial HVAC global H1 low-mid single, H2 mid-teens.
- Internal financial_statements view (consolidated annual + cash flow + capital structure).