CARRIER GLOBAL Corp Q2 FY2025 earnings call

• Strong organic growth: 6% organic sales growth, 14% in CSA segment. • Adjusted operating margins: Expanded 130 basis points to 19.1%. • Aftermarket growth: Total company aftermarket up 13%, resi aftermarket up 10% first half. • Product introductions: New large capacity air cooled chiller with magnetic bearing, fully integrated air-to-water heat pump in Americas, data centers on track to double revenues to $1B. • System solutions: Success in data centers, Shanghai Oriental Hub project, leveraging Viessmann and Toshiba technologies. • Cost synergies: Expecting $200M cost synergies by end of next year.

CSA segment: Organic sales growth of 14%, Commercial (excluding NORESCO) led with 45% sales growth, Residential up 11%, adjusted operating margin 27% up 210 basis points. CSE segment: Organic sales growth overall and residential/light commercial were flat, strong heat pump growth in Germany offset by weak overall German heating market. CS Asia Pacific: Organic sales down 4%. CST segment: Organic sales down 1%.

• Reaffirming mid-single-digit organic sales growth. • Expecting close to 20% adjusted EPS growth. • Free cash flow guidance: $2.4B to $2.6B. • Q3 expected sales ~$6B, mid-single-digit organic growth, adjusted operating profit flat year-over-year. • Q4 EPS expected up ~20%, similar to first half growth. • Targeting $3B of buybacks this year.

• European market challenges: Overall market more challenging than expected, mix issues in RLC Europe. • Inventory issues: Higher inventory in North American resi channel impacting sales projections. • Tariff impacts: Margin impact of tariffs as a 20 basis point headwind.

Q: Dive into Europe margin guide and synergy capture?

A: David Gitlin discussed mix issues in RLC Europe, Patrick Goris noted margins in Germany and sales outside.

Q: Flesh out 3Q framework?

A: Patrick Goris explained $200M sales tailwind from currency and tariffs, offset by unfavorable resi mix, 24% ETR leading to $0.80 EPS.

Q: U.S. resi weakness timeline?

A: David Gitlin said May movement softer than expected, June movement weaker leading to higher inventory, expecting inventory levels to balance in second half.

Q: Data center growth?

A: David Gitlin said on track to double data center revenues to $1B, new product introductions driving wins.