Carrier Global (CARR) Morgan Stanley's 14th Annual Laguna Conference summary

Growth trajectory and business performance

• Record backlogs in long-cycle businesses and double-digit aftermarket growth signal strong momentum, with global HVAC orders up over 50% in H1 and a total backlog of about $8 billion, excluding minimum volume commitments without POs.

• Significant investments in product differentiation, such as a new 3-MW air-cooled chiller for a hyperscaler, have led to expanded pipelines and competitive wins.

• Capacity expansion includes a new site in India and an upcoming U.S. site to support demand through 2027 and beyond, targeting both data centers and other verticals.

• Americas resi and light commercial businesses are recovering faster than expected, with both projected to be up high single digits this year; European growth is driven by heat pumps and air conditioning.

• Q3 sales are expected to exceed $6 billion, with adjusted EPS on track at $0.75, as sales are balanced between Q3 and Q4 to de-risk year-end performance.

Data center and commercial HVAC outlook

• Data center revenue is projected at $2 billion for the year, with $1.5 billion in the second half, supported by robust supply chain management and multi-sourcing strategies.

• Next year's data center pipeline is expected to reach at least $3 billion, with a new U.S. site doubling current capacity and supporting both data center and non-data center products.

• Customer mix is balanced between hyperscalers and colocation providers, with manufacturing lines designed for fungibility to serve multiple verticals.

• QuantumLeap system and controls business drive systems-level differentiation, integrating digital and modular solutions for both data center and commercial customers.

Regional and segment performance

• U.S. residential business benefits from the absence of destocking and disciplined pricing, with share gains and strong channel relationships, including new partnerships with Home Depot and continued collaboration with Watsco.

• Light commercial segment outperformed expectations, driven by strong execution and pent-up demand, with high single-digit growth projected for both halves of the year.

• European growth is robust across resi, light commercial, and commercial HVAC, fueled by heat pump and air conditioning demand, with new product launches and a focus on margin improvement through pricing discipline and operational changes.

• Asia shows strong growth outside China, particularly in India, Southeast Asia, and Japan, while China remains challenging in residential; commercial HVAC and VRF drive regional gains.