Carrier Global (CARR) 16th Annual Wells Fargo Industrials & Materials Conference summary

Business performance and outlook

• Strong quarterly and annual performance expected, with $6 billion in sales and $0.80 EPS for the quarter, and robust execution despite market volatility.

• Data center segment is exceeding expectations, with 2024 demand fully covered and capacity investments planned to support $2.5 billion in 2025 and beyond.

• Shorter cycle businesses, including residential and light commercial, are outperforming expectations and are poised for recovery.

• Commercial HVAC, controls, and aftermarket segments are set up for strong demand into 2027.

• Leadership transition in the European business, with Thomas Donato succeeding Thomas Heim, following successful integration and cost optimization.

Market trends and demand drivers

• Residential HVAC demand in North America is stabilizing above 7 million units for 2024, with a gradual trend back toward 9 million units by 2027 as deferred replacement demand returns.

• Underlying demand is supported by housing shortages and pent-up replacement needs, though high mortgage rates and consumer sentiment remain headwinds.

• Channel inventory levels have normalized, with field inventory down 30%-35% YoY, positioning well for Q3.

• Commercial demand outside data centers is strong, especially in healthcare and industrial verticals, but growth is constrained by capacity.

• European heat pump demand is rising, especially in Germany, France, and Italy, with residential heat pumps up mid-single digits and commercial business flat.

Data center and technology investments

• Data center capacity has expanded 4x for water-cooled and 3x for air-cooled chillers in North America over four years.

• Product portfolio now includes differentiated chillers, liquid cooling, and digital twin capabilities, with further investments planned.

• Aftermarket revenues from data centers are expected to be 5x-10x OEM sales, with high-margin service offerings.

• Strategic investments in two-phase liquid cooling (ZutaCore) and ongoing development of CDU portfolio to meet evolving cooling needs.

• AI and digital solutions are being integrated to optimize thermal management and energy efficiency for data centers.