CARRIER GLOBAL Corp Q4 FY2024 earnings call

• 2024 was a strong and transformational year with 3% organic growth, double-digit growth in global commercial HVAC and aftermarket for 4 consecutive years. Total company orders up low teens, HVAC Americas supplied up ~40%, global commercial HVAC backlog up mid-teens. Core earnings conversion near 100%, margin expansion 180 basis points, adjusted EPS growth 16%. - Spin in phases: First phase built foundation, second phase sharpened vision and transformed portfolio, third phase accelerating growth. - Increased addressable market and value proposition for customers through investments in product portfolio, aftermarket playbook, and introduction of fully integrated systems across homes, buildings, and cold chain. - Integrated with Viessmann Climate Solutions, executed divestitures, paid down debt, returned ~$2.6 billion to shareholders through dividends and share repurchases.

HVAC segment: Organic sales growth of 11%. Americas organic sales up high teens, with Commercial up mid-teens and Light Commercial down ~10% (tough comp), Residential up 35% (strong volume vs weak Q4 2023). EMEA organic sales flat, driven by double-digit growth in commercial offsetting declines in residential and light commercial. Asia organic sales slightly positive, driven by Japan and South Asia, offset by declines in China residential and light commercial. Refrigeration segment: Q4 was first quarter without commercial refrigeration. Global truck and trailer down ~10% (NA down ~25%, Europe down low single digits, Asia up high single digits), Container down low single digits, Aftermarket and Sensitech up mid-single digits. 2024 full year: HVAC business had continued growth and margin expansion; Refrigeration segment down 1% organically with container up ~25% offset by North America truck and trailer declines, margins expanded 20 basis points.

• Expect mid-single-digit organic growth in 2025, with HVAC segment expecting Americas up high single digits, Europe up low single digits, Asia up low single digits. Refrigeration segment expecting Global Truck and trailer up mid-single digits, container up mid- to high single digits, Sensitech up double digits. - Total company adjusted operating margin expected to be up about 100 basis points. Core earnings conversion expected to be about 30%. Free cash flow expected to be between $2.4 billion and $2.6 billion. Intend to repurchase about $3 billion in shares. - Adjusted EPS expected between $2.95 and $3.05, up 17% at midpoint. - Q1 2025 revenues expected to be about flat sequentially, ~$5 billion, organic revenue growth flat to up low single digits, organic growth for refrigeration flat, ~100 basis points of margin expansion, adjusted EPS between $0.55 and $0.60.

• Political and economic uncertainty in Europe, with market volume expected to be flat to down mid-single digits. - 5-point full year revenue headwind associated with last year's Q1 backlog reduction. - Uncertainty around tariffs, particularly related to Mexico, with team focused on mitigating impact. - Potential mix down at the margin for residential HVAC due to consumer behavior and price increases.

Q: Can we drill a bit more into resi and what was seen in the quarter?

A: David Gitlin said there was a bit of prebuy, with about $75 million to $100 million worth of 410A units pulled ahead, inventory levels in channel slightly elevated, movement up about 15% from distributors to dealers in 4Q and strong in January. Patrick Goris added they will sell some 4 in Q1 from inventory.

Q: Drill into outlook for [indiscernible] and visibility to flat growth?

A: David Gitlin said there's economic and political uncertainty in Europe, putting volume at flat to down 5%, with about 4 points of headwind from last year's Q1 backlog reduction. But has visibility into 3 to 4 points of mix up (double-digit heat pump growth, down a bit in boilers), point or 2 of aftermarket growth, point or so of price, and $100 million of revenue synergies.

Q: On resi side, HRI data up, how in line with industry?

A: David Gitlin said they have tools to assess inventory and movement, and on a 12-month roll, gained around 100 bps of share, but on a bottoms-up assessment, feel balanced on the mix laid out.

Q: Update on Quantum LEAP initiative, contribution from data center?

A: David Gitlin said data center sales went from ~$0.5 billion in 2024 to expected $1 billion in 2025, doubling. Excited about being a one-stop shop for data center cooling needs with integrated solutions, and partnership with STL for liquid cooling.