Summary of Carrier's Investor Day Conference Company Overview - **Company**: Carrier - **Industry**: HVAC (Heating, Ventilation, and Air Conditioning) and Climate Solutions - **Key Leadership**: Dave Gitlin (Chairman and CEO), Patrick Goris (CFO), Gurang (President of Climate Solutions Americas), Thomas Heim (President of Climate Solutions Europe) [5][3][93] Core Points and Arguments Strategic Priorities - Carrier aims to be the global leader in intelligent climate and energy solutions, focusing on talent, culture, and purpose [6][5]. - The company has undergone a transformation since its spin-off, establishing a new leadership team and a performance culture [8][10]. Financial Performance - Sales have increased by 30% and profits by over 80% since the spin-off, with margins expected to be 400 basis points higher than in 2020 [12]. - The HVAC business is projected to exceed $20 billion in sales, up from under $10 billion in 2020 [13]. - The company has reduced its leverage ratio from close to 4x to about 2x, providing ample capital for growth [12]. Growth Strategy - Carrier targets consistent growth of 6% to 8% over the medium term, driven by differentiated products, aftermarket services, and systems solutions [16][30]. - The growth formula includes contributions from market growth, aftermarket, and new product offerings [17]. Market Trends and Opportunities - Significant global demand for air conditioning is expected to rise, particularly in regions with extreme temperatures [18]. - The shift towards electric solutions and the increasing demand for transport refrigeration, especially in China and India, are key growth drivers [19]. - Carrier is positioned to address energy consumption challenges, as HVAC systems account for over 50% of home energy use during peak hours [19]. Product and Aftermarket Innovations - Carrier has increased R&D investment by 50% since the spin-off, leading to improved product differentiation and market share [20][21]. - The aftermarket business has seen double-digit growth, with a parts capture rate increasing from 20% to a target of 65% [26][27]. - The company has a large installed base of 45 million residential units, providing significant aftermarket opportunities [27]. Digital Transformation - Carrier is leveraging digital solutions to enhance customer engagement and operational efficiency, with over 3.5 million connected devices [29][40]. - AI-driven diagnostics and remote monitoring are being utilized to improve service delivery and customer satisfaction [43][60]. Capital Allocation and M&A Strategy - The company prioritizes organic growth, followed by selective M&A that aligns with strategic priorities [44][45]. - Carrier plans to deploy $10 billion of excess capital for further value creation [44]. Regional Insights - **Americas**: The Climate Solutions Americas segment reported $10.5 billion in revenue with a 22% operating margin, focusing on both residential and commercial markets [50]. - **Europe**: The Climate Solutions Europe segment aims to improve its adjusted operating margin from 9.4% to mid-teens levels, leveraging the combination with Fisman Climate Solutions [95]. Additional Important Insights - Carrier emphasizes a performance culture and continuous improvement as core to its operational strategy [39]. - The company is focused on reducing complexity in its product offerings, achieving a 50% reduction in SKU count [86]. - The integration of various technologies and systems is expected to enhance energy efficiency and customer value [36][38]. This summary encapsulates the key points discussed during Carrier's Investor Day, highlighting the company's strategic direction, financial performance, growth opportunities, and commitment to innovation in the HVAC industry.

Financial Performance & Targets - Carrier expects net sales of approximately $23 billion in 2025 [15, 332] - The company aims for a medium-term organic revenue growth of 6-8% [29, 230] - Carrier targets a medium-term adjusted operating margin exceeding 50 bps annually [71, 230] - The company anticipates a medium-term adjusted effective tax rate of approximately 21% [230, 257] - Carrier projects a medium-term free cash flow deployment of around $15 billion, allocating approximately $5 billion to dividends and $10 billion to acquisitions and share repurchases [270] Business Segment Highlights - Climate Solutions Americas (CSA) reported net sales of $10.5 billion in 2024 with an adjusted operating profit of 22.1% [80] - Climate Solutions Europe (CSE) reported net sales of $5 billion in 2024 with an adjusted operating profit of 9.4% [115] - Climate Solutions Asia Pacific, Middle East & Africa (CSAME) reported net sales of $3.5 billion in 2024 with an adjusted operating profit of 13.3% [164] - Climate Solutions Transportation (CST) reported net sales of $2.7 billion in 2024 with an adjusted operating profit of 16.9% [196] Strategic Initiatives - Carrier is focused on product differentiation, aftermarket growth, and system solutions to drive organic revenue growth [29] - The company aims to capture a larger share of its own aftermarket, targeting double-digit growth [43] - Carrier plans to invest in digital capabilities to enhance product differentiation, revenue opportunities, and organizational productivity [73]

Core Viewpoint - Carrier Global Corporation is focused on accelerating growth through a transformed portfolio and strategic initiatives aimed at enhancing shareholder value [2][6]. Company Strategy - The leadership team emphasizes a simplified, focused, and balanced portfolio that supports organic growth and margin expansion [2][6]. - The company aims for a medium-term financial framework that targets 6-8% organic sales growth, over 50 basis points of adjusted operating margin expansion, and mid-teens adjusted EPS growth [6][7]. Financial Performance - Carrier has a proven track record of expanding adjusted operating margins, generating strong free cash flow, and increasing adjusted EPS growth [2]. - The company has approximately $15 billion available for capital deployment over the medium-term to enhance shareholder value [6]. Investor Engagement - Carrier is hosting its 2025 Investor Day to share its growth strategies and financial framework with investors [1][3]. - The event is being webcast live, indicating a commitment to transparency and investor communication [1]. Portfolio Transformation - As part of its transformation, Carrier revised its reportable segments to better align with its business strategy and improve management reporting [10]. - The adjusted operating profit measure now excludes restructuring costs and amortization of acquired intangible assets, enhancing clarity for investors [10]. Non-GAAP Financial Measures - Carrier utilizes non-GAAP financial measures such as organic sales, adjusted operating profit, and free cash flow to provide additional insights into its financial performance [12][14]. - These measures are intended to supplement GAAP results and offer a clearer picture of the company's operational efficiency and liquidity [11][14].

Core Insights - Carrier Connect Data Solutions Inc. has been listed on the Frankfurt Stock Exchange, expanding its market presence beyond the TSX Venture Exchange [1][2] - The company aims to access a broader market of technology and data center investors through this European listing [2] Company Overview - Carrier Connect operates a Tier II/III data center in downtown Vancouver, British Columbia, providing co-location and data center solutions to service providers, enterprises, and small businesses [3] - The data center is a carrier-neutral facility, meaning its systems are fully independent and owned outright within its leased space [3] - The primary market for the company is the Vancouver Metropolitan Area, serving clients who utilize its facility as either their main data center or as an ancillary site [3] Management Commentary - CEO Mark Binns expressed satisfaction with the Frankfurt listing, highlighting the opportunity to share the company's growth plan with European investors [2] - The company anticipates providing further updates to shareholders in the near future [2]

Core Insights - Carrier Global Corporation plans to invest an additional $1 billion over five years in U.S. manufacturing, innovation, and workforce expansion, creating 4,000 highly skilled jobs [1][2] Investment and Job Creation - The investment will fund the expansion of existing facilities and the construction of a new state-of-the-art manufacturing site for heat pumps and battery assemblies, essential for Carrier's Home Energy Management System (HEMS) [2] - The initiative includes the TechVantage program, which aims to hire 1,000 U.S. service technicians and train over 100,000 climate solutions service and sales professionals over the next five years [3] Company Commitment and Growth - Carrier has grown its U.S. workforce by approximately 20% over the past five years, reinforcing its commitment to American manufacturing and economic growth [4] - The company positions itself to capture significant growth in the industry and deliver innovative solutions for customers [2]

Core Insights - Carrier Global Corporation has been recognized as an Organization of the Year in the 2025 Excellence in Customer Service Awards for its innovative customer service initiatives [1][3] - The company's BluEdge™ Command Centers have delivered significant operational efficiencies, saving customers over $19 million and 600 million kWh in energy costs in 2024 alone [4] Group 1: BluEdge™ Command Centers - The BluEdge™ Command Centers utilize AI-driven insights and advanced connectivity to monitor and manage building operations, reducing equipment downtime and maintenance costs while enhancing occupant comfort [2][3] - Each month, the Command Centers handle over 10,000 proactive service requests and support more than 12,000 service technician calls, enabling swift resolution of issues [3] Group 2: Customer Impact - The operational efficiencies achieved through the BluEdge™ Command Centers are estimated to save customers more than $19 million and over 600 million kilowatt-hours of energy in 2024 [4] - The recognition from the Business Intelligence Group underscores Carrier's commitment to digital innovation and customer service excellence [3]

Core Viewpoint - Carrier Global Corporation has acquired Addvolt, a Portuguese company specializing in transport electrification technology, enhancing Carrier's capabilities in electric systems for refrigerated transportation [1][2][3] Company Overview - Carrier Global Corporation is a leader in intelligent climate and energy solutions, committed to innovation and sustainability [6] - Addvolt, founded over a decade ago, focuses on patented electric systems for refrigerated transport, emphasizing low maintenance and reduced emissions [2][4] Strategic Implications - The acquisition combines Addvolt's expertise in electric systems with Carrier's industry-leading solutions, positioning the company to innovate beyond refrigerated transportation [3] - This partnership is expected to create opportunities for new applications and enhance Carrier's electrification strategy through advanced technology and engineering talent [3][4] Operational Details - Addvolt has approximately 60 employees who will join Carrier's Climate Solutions Transportation segment following the acquisition [5] - The technology developed by Addvolt is already in use by Carrier Transicold customers in Europe, including the world's first fully autonomous electric trailer refrigeration system, the Vector® eCool [3]

Financial Performance - For the three months ended March 31, 2025, net sales were $5.2 billion, a 4% decrease compared to the same period in 2024[124]. - Gross margin for the same period was $1.4 billion, a 4% increase year-over-year, with gross margin as a percentage of net sales rising to 27.7% from 25.6%[126]. - Operating profit increased by 63% to $629 million for the three months ended March 31, 2025, compared to $385 million in the same period of 2024[124]. - Operating expenses decreased by 18% to $816 million, primarily due to productivity initiatives and synergies from the integration of the VCS Business[127]. - Organic sales increased by 2% for the three months ended March 31, 2025, primarily driven by strong demand in the Climate Solutions Americas segment[125]. - For the three months ended March 31, 2025, the adjusted operating profit was $843 million, a 10.4% increase from $764 million in the same period of 2024[136]. Segment Performance - Climate Solutions Americas reported net sales of $2.6 billion, a 9% increase year-over-year, driven by a 20% increase in the residential business and a 15% increase in the commercial business[141]. - Segment operating profit for Climate Solutions Americas was $570 million, a 34% increase compared to $425 million in the prior year[142]. - Climate Solutions Europe experienced a 10% decrease in net sales to $1.2 billion, with a segment operating profit decline of 37% to $105 million[143][144]. - Climate Solutions Asia Pacific, Middle East & Africa reported net sales of $826 million, a 7% decrease, while segment operating profit increased by 12% to $121 million[145][146]. - Climate Solutions Transportation saw net sales decline by 26% to $651 million, with segment operating profit decreasing by 14% to $97 million[147][149]. Investments and Acquisitions - The company completed the acquisition of the climate solutions business of Viessmann Group, enhancing its portfolio in sustainable building solutions[119]. - The company divested its Commercial Refrigeration business during 2024, part of a broader portfolio transformation strategy[119]. - The company completed the divestiture of its Access Solutions business for cash proceeds of $5.0 billion on June 2, 2024[158]. - The divestiture of the Industrial Fire business was completed for cash proceeds of $1.4 billion on July 1, 2024[158]. Cash Flow and Debt - As of March 31, 2025, the company had cash and cash equivalents of $1.7 billion, down from $3.97 billion at the end of 2024[151]. - Total debt as of March 31, 2025, was $11.184 billion, a decrease from $12.278 billion at the end of 2024[154]. - The total debt to total capitalization ratio improved to 44% from 46% in the previous period[154]. - The company maintains a $2.0 billion commercial paper program and a $2.5 billion revolving credit facility, with no borrowings outstanding as of March 31, 2025[155]. - Net cash flows provided by continuing operating activities increased to $488 million for the three months ended March 31, 2025, compared to $45 million in the prior year[162]. - Net cash used in continuing investing activities was $30 million for the three months ended March 31, 2025, significantly lower than $11.1 billion in the same period of 2024[163]. - Net cash used in continuing financing activities was $2.7 billion for the three months ended March 31, 2025, primarily due to stock repurchases and long-term debt repayments[164]. Shareholder Returns - The company repurchased 19.0 million shares of common stock for an aggregate purchase price of $1.3 billion during the three months ended March 31, 2025[160]. - Dividends paid on common stock totaled $198 million during the three months ended March 31, 2025[161]. - The company declared a dividend of $0.23 per share of common stock payable on May 22, 2025[161]. - The company has authorized the repurchase of up to $7.1 billion of its outstanding common stock since February 2021[159]. Tax and Market Risk - The effective tax rate for the three months ended March 31, 2025, was 20.3%, up from 19.3% in the same period of 2024[133]. - There has been no significant change in the company's exposure to market risk during the three months ended March 31, 2025[165].

Financial Data and Key Metrics Changes - The company reported sales of $5.2 billion with 2% organic sales growth, including about 2 points from price increases [15][16] - Adjusted EPS was $0.65, up 27% year over year, driven by strong productivity performance [17][18] - Free cash flow for the quarter was $420 million, stronger than expected, driven by higher net income and lower capital expenditures [18][19] Business Line Data and Key Metrics Changes - Climate Solutions Americas (CSA) segment had organic sales growth of 9%, with residential and commercial sales up around 20% each [19][20] - Climate Solutions Europe (CSE) saw organic sales down 7%, with mid-single-digit growth in commercial offset by a decline in residential light commercial [21] - Climate Solutions Asia, Middle East, and Africa (CS AME) experienced a 6% decline in organic sales, primarily due to weakness in residential China [23] - Transportation segment's organic sales were up 2%, driven by a 20% increase in container sales [24] Market Data and Key Metrics Changes - Total company backlog was up about 10% year over year and 15% sequentially [4] - Organic orders momentum continued, with high single-digit growth across most segments except CS AME, where orders were down [24] Company Strategy and Development Direction - The company is focused on driving sustained growth through differentiated products, aftermarket services, and systems [5][6] - A new partnership with Google was announced to enhance grid resilience and support smarter energy management [8] - The company is committed to mitigating tariff exposure through supply chain and productivity actions, with a balance of $300 million via price increases [12][13] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving mid-single-digit organic sales growth for the full year, with adjusted EPS guidance increased to $3 to $3.1 [13][28] - The macroeconomic environment remains uncertain, but the company is focused on customer needs and investing in differentiation [13][28] Other Important Information - The company is on track to achieve over $200 million in cost synergies by the end of next year [10] - The new German coalition government supports heat pump subsidies and infrastructure investments, which is expected to boost demand [11] Q&A Session Summary Question: Confirmation of Q2 guidance and EPS expectations - Management confirmed expectations of mid-single-digit organic growth and sales of about $6 billion for Q2, with adjusted EPS growth close to 20% [30][31] Question: Insights on the Americas segment performance - The residential side is expected to see high single-digit to low double-digit growth, while light commercial is projected to decline by about 10% for the full year [38][40] Question: Clarification on tariffs and pricing impact - The company has effectively mitigated most tariff impacts, with $300 million remaining to be offset through pricing [35][114] Question: Update on Viasman and margin expectations - Management expects Viasman to remain flat for the year, with margin improvement anticipated in the low teens [55][59] Question: Dynamics of free cash flow in the quarter - Free cash flow was stronger than typical for Q1, driven by lower working capital use [104][105] Question: Service business growth and initiatives - The service business is expected to continue double-digit growth, with initiatives to harmonize operations globally [106][110]

Financial Data and Key Metrics Changes - The company reported sales of $5.2 billion with 2% organic sales growth, including about 2 points from price increases [16][17] - Adjusted EPS was $0.65, up 27% year over year, driven by strong productivity performance [18] - Free cash flow for the quarter was $420 million, stronger than expected due to higher net income and lower capital expenditures [18][19] Business Line Data and Key Metrics Changes - The Climate Solutions Americas (CSA) segment had organic sales growth of 9%, with residential and commercial sales up around 20% each [19][20] - The Climate Solutions Europe (CSE) segment saw organic sales down 7%, with mid single-digit growth in commercial offset by a 10% decline in residential light commercial [21] - The Climate Solutions Asia, Middle East, and Africa (CS AME) segment experienced a 6% decline in organic sales, primarily due to weakness in residential China [23] - The Commercial Systems Transportation (CST) segment had organic sales up 2%, driven by a 20% increase in container sales [24] Market Data and Key Metrics Changes - Total company backlog was up about 10% year over year and 15% sequentially [6] - Organic orders momentum continued with high single-digit growth across most segments, except for CS AME [25] - In the Americas, organic sales growth is expected to pick up in the second quarter, with mid-teens growth anticipated [33] Company Strategy and Development Direction - The company is focused on driving sustained growth through differentiated products, aftermarket services, and systems integration [7][8] - A new partnership with Google aims to enhance grid resilience and support smarter energy management [10] - The company is committed to mitigating tariff exposure through supply chain and productivity actions, with a focus on maintaining competitive pricing [13][14] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving mid-single-digit organic sales growth for the full year, with strong margin expansion and close to 20% adjusted EPS growth anticipated [28] - The macroeconomic environment remains uncertain, but the company is focused on customer needs and investing in differentiation [15][14] - Management noted that the new German coalition government supports climate goals, which is expected to drive demand for heat pumps [12] Other Important Information - The company repurchased $1.3 billion worth of shares in the quarter and plans to target $3 billion in share repurchases for 2025 [19] - Adjusted operating profit increased by 10% compared to last year, driven by strong productivity and pricing [17] Q&A Session Summary Question: Confirmation of Q2 guidance and EPS - Management confirmed expectations of mid-single-digit organic growth and approximately $6 billion in sales for Q2, with adjusted EPS growth close to 20% [30][31] Question: Insights on the Americas segment performance - Management indicated that residential sales in the Americas are expected to be strong, with a potential increase in guidance for the full year [40][41] Question: Clarification on tariffs and pricing impact - Management stated that they have effectively mitigated most tariff impacts, with $300 million remaining to be offset through pricing [35][119] Question: Update on Viasman and margin expectations - Management expects Viasman to remain flat for the year, with margin improvements anticipated as the business integrates [58][63] Question: Discussion on commercial HVAC business growth - Management highlighted strong growth in the commercial HVAC sector, particularly in data centers, and noted that capacity increases have allowed for more aggressive sales efforts [66][123] Question: Inquiry about inventory levels and pre-buy effects - Management acknowledged elevated inventory levels but indicated that movement has been strong, with careful monitoring of distributor inventory [99][127]