Carrier Global Corp. ((CARR)) has held its Q3 earnings call. Read on for the main highlights of the call.
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Carrier Global Corp. recently held its earnings call, revealing a mixed sentiment among its various business segments. The company showcased robust performance in commercial HVAC and data center sectors, alongside notable growth in aftermarket and heat pump sales. However, these positive outcomes were tempered by challenges in the residential market, particularly in the Americas and Europe, as well as inventory issues and ongoing difficulties in the Chinese market.
Commercial HVAC Growth in Americas
Carrier’s commercial HVAC sales in the Americas experienced a significant boost, rising by 30% in the quarter. This growth was driven by a 60% increase in applied business equipment and over 20% growth in the controls business, highlighting the strength of the company’s offerings in this sector.
Strong Aftermarket Growth
The aftermarket segment continued to be a strong performer for Carrier, delivering 12% growth. The company remains on track to achieve its fifth consecutive year of double-digit growth in this area, underscoring the sustained demand for its aftermarket services.
Data Center Segment Success
Carrier’s data center business is on a promising trajectory, with expectations to double sales from $500 million to $1 billion this year. The segment boasts a strong backlog, with projections extending into 2026, indicating a bright future for this part of the business.
Heat Pump Sales Growth in Europe
In Europe, Carrier’s residential heat pump sales saw a 15% increase, with Germany leading the charge with a remarkable 45% growth. This reflects the growing demand for energy-efficient heating solutions in the region.
Share Repurchase Authorization
Reflecting confidence in its strategic direction, Carrier’s Board has approved a new $5 billion share repurchase authorization. This move signals a commitment to returning value to shareholders and underscores the company’s robust financial health.
Residential Business Challenges in Americas
The residential sector in the Americas faced significant challenges, with CSA residential sales down 30%, primarily due to a 40% decline in volume. This downturn has impacted the company’s overall financial metrics, highlighting the need for strategic adjustments.
Inventory and Supply Chain Issues
Carrier reported an increase in consolidated inventories by $500 million, largely attributed to a $350 million rise in the CSA residential segment. These inventory and supply chain challenges are areas of concern that the company is actively addressing.
Weakness in European Market
The European market presented difficulties, with residential and light commercial sales declining due to a downturn in the overall heating market. Germany’s market, in particular, reached a 15-year low, posing challenges for Carrier’s operations in the region.
Challenges in China Market
Carrier continues to face headwinds in China, with ongoing weakness in residential and light commercial segments. Sales in the region were down by mid-teens, reflecting broader economic challenges.
Decreased Total Company Organic Growth
The company experienced a 4% decline in total organic growth, primarily impacted by lower volumes in the CSA residential business. This decrease underscores the challenges faced in the residential sector.
Forward-Looking Guidance
Carrier’s guidance for the future reflects a blend of challenges and opportunities. The North American residential sector’s softness poses a $500 million sales challenge and a $0.20 to $0.25 adjusted EPS headwind. However, this is partially offset by a 30% increase in Commercial HVAC sales in the Americas. The company is implementing aggressive cost-cutting measures, including eliminating 3,000 indirect positions and reducing its footprint to align with demand. Looking ahead, Carrier anticipates $22 billion in revenue for 2025, with optimism for 2026 driven by restructuring benefits, tax, and share repurchases.
In conclusion, Carrier Global Corp.’s earnings call painted a picture of mixed performance across its business segments. While commercial HVAC and data center segments showed strong growth, challenges in the residential market and specific geographic regions posed hurdles. The company’s forward-looking guidance suggests strategic adjustments and cost-cutting measures to navigate these challenges, with a positive outlook for 2026.