Carrier Global (CARR) 19th Annual Global Transportation & Industrials Conference summary

Market performance and demand trends

• Commercial HVAC and aftermarket segments are performing exceptionally, with data center orders up 500% in Q1 and expected to reach $1.5 billion in revenue this year, all organic growth.

• Aftermarket business continues double-digit growth for the sixth consecutive year, leveraging AI and connected solutions.

• Short-cycle businesses in North America and Europe show positive trends, with light commercial up nearly 10% in Q1 and residential tracking as expected.

• Inventory levels are well-balanced, down 35-40% year-over-year, with sell-in and sell-out ratios normalized.

• Data center demand is driving capacity constraints, with significant investments planned to meet 2027-2029 demand.

Pricing, cost management, and supply chain

• Price increases implemented in residential and light commercial segments, with overall pricing impact rising from $200 million to $600 million due to tariffs and input costs.

• Pricing actions are targeted and closely communicated with distribution partners, with flexibility to adjust as tariffs evolve.

• Margins are higher in replacement than new construction, but new construction remains attractive for market share and technology upgrades.

• Productivity initiatives include supplier negotiations, product redesign, and factory efficiency improvements to offset inflation and logistics costs.

• Price increases at the end of April are expected to cover input costs, with better price/cost dynamics anticipated in Q3.

Regional and segment outlooks

• Europe sees strong heat pump demand, especially in Germany, France, Poland, and the UK, supported by subsidies and new product launches.

• Boiler sales are declining as expected, while new Viessmann-branded heat pumps are set to launch before the heating season.

• Margin recovery in Europe is expected as volumes and absorption improve, with EBIT ROS targeted in the mid-teens.

• Americas margins are set to ramp up from Q1 to Q2, driven by seasonal volume increases and factory absorption.

• Non-data center commercial HVAC is expected to grow low single digits, with investments balanced between data centers and other verticals.