Carrier Global (CARR) 29 Apr 212021 Q1 Earnings call transcript

Good morning, and welcome to Carrier's First Quarter 2021 Earnings Conference Call. This call is being carried live on the internet, and there is a presentation available to download from the Carrier's website at ir.Carrier.com. I would now like to introduce your host for today's conference, Sam Pearlstein, Vice President of Investor Relations. Please go ahead, sir.

Thank you, and good morning, and welcome to Carrier's first quarter 2021 earnings conference call. are Financial Chairman Officer. today Patrick CEO; here Chief Goris, me David and Gitlin, and With and of Except be often items. from costs speaking otherwise referred to significant as noted, as results operations, the to by excluding other non-operational non-recurring and/or a company management will other nature, items significant restructuring reminds company any sales, subject forward-looking provided statements the risks other call to cash are and The earnings that and uncertainties. during listeners and flow the expectations details XX-K, from Forms factors XX-Q the including on filings, provide results materially important could X-K differ forward-looking SEC those actual cause Carrier's that and in statements. to anticipated This year for the XXXX morning end. for first full we’ll financial and the the time leave discuss we’ll review outlook questions our quarter results at and ask Once follow-up the that and one give yourself to call to one question to is limit opened participate. we the questions, you opportunity everyone up for to over Dave With the Gitlin. that, our CEO, turn I'd Chairman and like call to

Sam, in by impacted of of underway. XX% planned. driven early indications performing those in two a continued pandemic everyone. stronger our American and XX%, organic growth businesses Reported and which over have North including quarter an that economic Residential, XX%. were Starting indication Thank QX than sales morning Overall, by volume and verticals that very have acutely quarter are early we portfolio and us of recovery. well was showing the to slide of came were up strong up another great is recovery quarter. a the global improve on good for you, overview Areas that an been with was

HVAC and in saw also refrigeration. transport commercial We strong growth a

up the up were organization to close XX% million end up at This trends our organic well including Orders on aftermarket the last of organically. year, grew growth QX driving to digits. We close the first to XX% as strong the grew to All of approximately execute of quarter of healthy produced contributed profit, we our organic X% quarter. sales over double compared year-over-year. XXXX, a coupled leading sequentially which XX% up continues about year-over-year. the backlog was to to backlog and Notably, the operating initiatives, with compared the to order growth segments adjusted XX% $XXX in

constraints, incurring Given are supply additional higher chain meeting pressures costs we customer inflationary and and some logistics demand.

are working pricing cost additional these mitigate through headwinds actions. We to and

expected reported earnings given cash confidence to stronger we on encouraged the and the guidance not cash generation We do XX% to tailwind adjust flow our am I including FX. from trends a sales, in first regularly after expect X% by Finally, the full our than sales for free quarter. guidance X% Through free now are to increasing seeing. we're one expect in quarter, QX year flow macro just grow results that we and

We expected about increase projected to year In our XX% free explain the the calls to billion. cash I've culture. shows by a left million we adjusted continue we drive increasing focus drive value. by upper our key for at about will in EPS that flywheel the areas $XXX that earnings to we about shareholder ensure are three, used midpoint to prior flow Slide the $X.X how performance and

targeted and and by say investment standalone the journey a growth. I that one so input tough target started we balance now $XXX putting year profitable million a to to fundamentally in into are our headwind. are capital on the a Carrier cost we are are and for later building focus from and and offset culture we We is to off playbook can our our our our year a prioritization, price to culture XXX QX in focus as sheet company million cornerstone We public on a environment. new company Increased unrelenting position. of different additional pressure achieved Also the our actions on costs momentum. strategy year, $XX a reduction place, putting are is our we in cost core unplanned driving about

traction on all pillars gaining strategy. growth our are We three of

We helped and innovation the XXX an R&D past $XXX months. share this support gaining added over increasing that about sales in spend from arising are our across from year portfolio, and the million million to XXXX we've people additional by nine $XXX sales

significant our gaining focus push business aftermarket to digital traction as models recurring revenues. offerings, and Regarding we more are on we

of from to by to on we service continue that under on digit to track are and offerings all increase a coverage contract our digital this across year number chillers to edge are enabled implementing we Increased traction XX,XXX of and our expect XX,XXX our We deliver are solutions double this blue aftermarket segments. growth year.

we capital cover. to which a Lastly, take continue disciplined approach very to will Patrick allocation

that solutions and effort. a we we said new sales building discuss safe I'll million products solutions which organization seasoned building a both healthy would continue $XX created Agrawal’s currently services solutions healthy team for and opportunities four. QX global million. orders of cold leadership and chain In a also on of building with We more pipeline growth, dedicated We to have inorganic and we in over for than under sustainable and $XXX slide this Ajay of to had of invest healthy,

the platform acts with logic SaaS, also sensors view an systems data a healthier anomalies. and a of performance experience. It from sensor of smart is sensors building our it release after ABOUND. based identifies digital and layer to gathers interfacing platform, building. confidence sought as environments this our This simple introduced solution that party but providing architecture our and had crowded with different reenter only a and we're and systems performance open sources an controls all automated of not it system intelligent Coud rebranding giving presents also and third offering is in ABOUND differentiated not It management and to and offerings data gives week's a helps customer’s by indoor digital address interface. and new offerings about building in is we energized portfolio, throughout called We indoor clear simple

support vertical had have with range gone space, to the is sector, Braves and we the start beverage and and have for well. fans deal of Those pilots as the they signed spaces educational Park. a key the customers food Atlanta club that Truist space office sports A monitor We to confidence guests. a welcome the building tremendously huge entertainment underway location vertical. and will ABOUND in vote covering to back indoor of

subscription recurring additional a As SaaS ABOUND sales. including revenues, and and also to equipment platform, to drive pull more through services expected Carrier is help

up with equally other our XX%, ecosystem chain QX key healthy, cargo focus, our safe progress had and part are sustainable offering large due We vaccines. strong business of on partnership with the building to of record in cold based monitoring that to a called key in cloud LYNX. COVID are to a seeing Similar related solutions. our we distribution Sensitech differentiator digital sales demand AWS ABOUND, is

by highlight We to launch recently which over enhanced capabilities accelerate traditional solution have announce we growth growth right agreement growth its to LYNX our and acquire help And key name to the chart, had rates for our the were of brand in variable This acquisition commercial fleet SeaCube consistently outsized a X,XXX we the attractive to flow markets. digital deliver selected side international will which very the inorganic As customer, referred market, pleased containers. progress. our finally, of CHIGO. refrigerant refrigerated on Giwee, light

we With the can that manufacturing of technology, globally. VRF and CHIGO, acquisition scale important capabilities design will we own cost low

to the the majority transaction to the with expect we shareholder close family. We Carrier to excited are XQ, CHIGO and the team in welcome

We we the Way. the and continued lean add to superb talent Carrier promote also as deployment into of

for to an Jennifer will As Chief strategic strategy help Sustainability as remains Officer. on another a recently focus corporate our very commitments. toward ESG. focal example delivering serving our development important leading as Carrier and we work drive XXXX Anderson we ESG key welcome Carrier, point She

the We on to are now D&I with top emissions solutions. five continue as number building companies. good than by introduce also gigaton our within products our more we quartile category and improved our energy are week to And carbon to one of make of out Carrier progress and score Sustainalytics XXX initiatives. a we commitment more efficient Last we electric tracking reducing customers’

diverse that, let With XXXX sustainable are ensure we and in it to to number inclusive leaning turn truly has of changes making to since culture. executives a me increased Patrick. significantly that Our over we have

Thank five. you, Dave, to and good morning everyone. Please turn slide

was Currency was million. QX a the billion point start discussed, tailwind X Dave quarter, in of for a As $XXX the were year. Sales sales the XX% year. up $X.X about prior great versus to

operating expanded growth was lower included by their shared XXX of about freight Earnings with costs top teens and across almost saw quarter to the our On you we expected Price the better in some particularly points. growth exceeded quarter. product margin organic at Organic issue investments. was the trouble Adjusted February, the and conversion a JV. was higher Results also income, of to better March XXX sales of and the last neutral. conversion all offset XX% of were in stronger one-time I expectations cost a compared we profit the XX% return minority deferred was than in strong high than the impact Carrier businesses businesses. and on currency. conversion by loss and year-over-year three items operating for year up equity The organic expected growth XX% we partially and a all delivered in We was significantly our performance. despite growth driven benefits QX sales from discussed. sales related and line compensation than previously Strong basis buyer segments the

capital about items, of quarter million better performance. income working Free the than improved $XXX these reflected cash and quarter. net expected Excluding in conversion flow XX% in mainly was the

about of share. we $XX.XX average per an cost During the quarter repurchased shares XXX,XXX at

was by refrigeration low Sales track month basis digits Europe over how quarter, cyclical that Commercial the we truck very Europe by year. started on starting QX. than and XX% growth. points more a segment and The XX% in slide Commercial XX% sales. Let's trailer field volume earlier organic down the residential was in up America quarter Over sales America quarter we’ve points service segments refrigeration on growth in last and generate HVAC order particularly have Distributed was in expected and with continued truck strong Commercial up digits. were movement to slide channel. and up offset which recovery, XX% to XX% the trailer at last residential seasonal for double team up over build transport the in driven North mid-teens over seven. HVAC to by about recovery XX about and the margins believe this HVAC improving. the to and are levels high applied XX% in compared driven Light in now there refrigeration container orders basis and grew lower XX% growth. in performed, expanded than positioning each by remains the in seen XXX inventory mid-single XX% up growth organically in rates Transport in were in the service. North materialize year. to Asia. and sales strong in look Light six. on were some quarter, XX% were as in growth margins at The inventory year, re-openings Commercial, this was as down digits, strong Margins business in pent-up demand compared up drove driven the Strong organically. single grew in were

We continue freight. to but so demands, to incurring air do including some costs are higher customer meet

and operating truck growth grew slide eight, to X% businesses the accelerates. in expect and at rates. similar and trailer business the at segment higher organic America fire North security products improve sales the Flipping as margins We fuel grew to both margin

end to XX% to access sales, a business while business leading Within residential in businesses remained industrial month saw solutions a March, pick up the continued commercial be fire challenging. the Of of our strong quarter. note, represents products the significant which of about the product of and the solid segment in

driven largely Chubb Our about generated was Asia. rates The of fuel order sales growth Europe in X%. were and by especially strong business organic growth

in the see largest its improvement you Chubb margin on slide, segment. Carrier a this can basis XXX performance order helped As installation ever. booked drive Strong XXX point

review me activity order saw nine. in let first quarter slide we Now, the on the

ago quarter the up in a light see to in for compared business. high that position and QX last continue solid to still year our and up increase see, residential and strong year almost can businesses over XX% you HVAC was season. demand. it's and threefold us commercial Commercial cooling were in shipments teens to As to Backlog sequentially and last compared puts orders backlog entering a compared up residential

year-over-year truck well position XXX% sequentially. and easier and order to orders up were begins activity XX%. trailer business orders we against over about America For XX% in teen’s was and orders residential get to remain and to to continued to a security and organic better as the and to quarter, up hospitality in up strong for X% Europe refrigeration, quarters, / improve comp. our in / end markets improve weak, Strong were were the trailer fire to year. intake were continue quarter the sales have closer a Field truck high backlog up with Europe Like the Product North order industrial record up solid an exiting for end comparisons QX segment orders segments but for sequentially. organically activity pick backlog. growth the should over continued commercial the Order also refrigeration QX. in achieve intake and fire. especially vertical prior Asia Installation

the walk XX. through bridge on Let's EPS slide

mentioned, was the as impacted the I including earlier, QX on Strong As I trouble as Operational is here, prior the headwinds is Carriers growth to year driver freight operational and can million. product main XXX than growth EPS some comes a costs and the also savings from you bridge. of largely of was about as see $XX $X.XX performance higher the minority well performance at JV. sales referred $X.XX higher by

our the recently loss working and announced actions. transport second as HVAC related the and to well line additional we business $X.XX and item but bridge in a year-over-year headwind the in tax implementing costs this All deferred on the pricing bio similar While areas which through actions in increase price are We an other of carry refrigeration for will much the of impact inflationary residential pressures with portfolio. quarter. a June, in year. as items our was and of increase federal comp expected, about except we're continue, pretty in The income through we're offset the what other equity

Let's stronger already represents higher input XX, X% are outlook, X% range and improving new than organic on A of are outlook point updated increasing slide than actions a a pricing sales bit have to half or our to of QX incremental move X%, incremental Based X%. performance to we taking organic an less growth to expected a from outlook. of to offset we the costs. range

continue We about to to cost expect be price neutral for the year.

QX margin operating of at of The all XX% $X.XX mid-point could to adjusted over now should XX%. be around $X.XX, be adjusted our expect now than item guidance. We EPS a bit means an discrete leads tax full to rate the our rather favorable initial a our improvement This that tax XX.X%. $X.XX range outlook year

the CHIGO updated does Our outlook include not transaction.

EPS some in The of about conversion Finally of about volume. XX to cash each guidance as our the item the the our capital flow prior sales to but is improvement the expect tax priorities reiterate our for adjusted no XX, biggest to $X.XX mid-point and on us of we mid-point allocation of these Over interest our Dave additional free guidance current are $X.XX. $X.X Lower for call, execute where since the bridge from started outlook expense the range. to driver operational on priorities XXXX. the changes shows we Slide are mentioned, yes items. There now QX slide billion. the our adding

we a making towards with X the share to our year. term will announced this on closed capital During declared paid have shares and Last dividend of down week work QX M&A $XXX long million have to transactions deployment million in quarterly million date, repurchase or progress debt this of exceed we're we $XXX that our and been year. target

digit expect it in XXXX, back reiterate just to should turn We the volatile in the let XXXX. comparisons I strong Before comparisons. that given of XXXX half still the and quarters second to in double me in the first residential Dave, closer continue half to growth impact flat organic the

be year the to full about first in half. half earnings expect of We the

a full board. to So across in puts turn good it outlook With year back our to the the raise us I'll Dave. year position a that, start

Thanks Patrick.

We raised done, much year. remains be a the to we'll in pleased up start balance Though guidance this open work for are the with our of we confident strong to very are questions. the that, With year. for

Instructions]. [Operator

Mitchell Barclays. first from Our come question Julian of the from line will

You may begin.

Hi, good morning.

morning. Good

margin to [ph]similar the for be on guidance, in did circle like figure. wanted a that Maybe to guide may the low you back QX. impaired the year XXs so margin incremental Looks just all

sort understand, quarter, of first versus improve. over to QX, it cost isn’t out price margins look balance refrigeration the as wanted from year just sounds should of the different like So you the but very

maybe investment the remaining cost So of nine some of other maybe spend moving us the the parts understand help around and phasing savings months. over

Yes Julian, it about here. good first answer as Patrick follows. XX%. Reported conversion the is quarter morning, in I’ll

the year XX% closer and we For from to reported conversion year, that the be last expect get the currency adjust items for XX%, for we to buyer full one-time year. full to and

XX% We quarters expect XX%. out, conversion to reported for expect XX% from closer up reported, in so to that the operationally year improve as mentioned, that full future from the on closer I to conversion earnings here to and conversion and we improve

terms In quarter. in about investments, the of did XX we first million the

split it throughout the from will evenly so be an year think quarter. point don't investment the swings of pretty big I view I and much throughout expect

that current $XX $XX by assumes million million. or the prior million inflation $XX guidance, asked offsetting so, know of dollars to from current also our we're guide, pricing. that up so guide about with prior of of of that And millions our incremental with tens think compared I another about you several you costs headwinds and our went the incremental guidance input

And view, neutral. so where cost timing will point costs price year is from unfavorable. for maybe that one the a In the the full of quarter remain bit quarter second little price a

much. perhaps very and us you then the balance in secondly, as said terms And incremental a in first you those year help incrementals down some little were improve just chain how quickly that of understand bit, refrigeration Maybe refrigeration the on that the Thank maybe supply issues. quarter, mix getting segment, focusing of way the up. over

Yes Julian.

international lower we as trailer growth margin So which growth refrigeration. sales truck highest quarter, Those our than margin had within a commercial North container, refrigeration American carry good a and was particularly said, trailer the business. truck and

North actually would and expect digits We single in America trailer truck QX. high – perform at was

We to growth conversion refrigeration to expect expect out. out, that here accelerate for improve on and we from on from here earnings the so

We in expect improve that be the margins margins the starting for year for XX%. about to expect and to we full segment QX segment

Great, thank you.

Julian. Thanks

question line Our from Bank America. comes of Andrew next the from Obin of

You may begin.

morning. good Yes,

Good Andrew. morning,

organic Just that increase. the think in across a saw, that the price sales think and we was it March of of and should increases, industry the of because in the question applied How the will I recent most X%, effective and think we seems on scope inversely about June. become May guidance increases X% impact I price them

you that So incorporate outlook? do how your in

the is of where of organic in million That in organic always for which organic take we little the Those terms in less really incremental of growth up in relates pricing. in million price, year full think exact going The on incremental the pushed so growth costs areas you the offsets resi than can half at assumed year the throughout from announced it of midpoint, point at HVAC, announced which current in to refrigeration. our and of our X.X increase input so the actual a price the the or to a balance the earlier. the businesses. that to is increases really X% and have little gives headwind that you both pricing that X.X% The $XX yield incremental The that we've increase give timing of growth. way different commercial, organic that guidance, referred growth Andy, full than for is increase. price transport year Yes of bit includes about that course outlook our I for the of are of $XX and some we’ve organic course mid-point,

you second heard That was thank stimulus – you. highlighted, the I folks. you, it from recent has other highlighted we’ve I great the have guys have train And a with question answer, bill, think for

lot a of money know going You schools. is to

next three think something billion tune a years. to the I of $XX the year for

I quality a industry, money of XX% right. folks last have their projects, for go it There’s time that getting improvement, around on really people what actually that the HVAC we it stimulus, means. should system capital this talk been When designation spending the fair have hard improvement. think the this hands in to

been that long, this it hasn't vertical impact but school two this have You HVAC refurbishment (a) about it guys money the demand of next know do for year, does framework to a in years. I you. know upgrades too of for think what how you Thank mean over the the and

significant. it's Well, think we Andy

look package, Jobs You if includes an and trillion went re-opening look the schools. the infrastructure that you the toward at of billion President's $XXX at bill, additional for American proposed new $X.X billion it $XXX Plan, then stimulus school

be flow the school the state but from to report had the spent needs and the XX% remain significant have districts that insufficient of Obviously federal how will a it's to gets So to that the said seen. GAO school districts, to it when HVAC. because local

a XX% very think that that $XXX makes a when for and a we move towards light We’ve HVAC come billion kit districts it. school and implement So important our upgrading across amount it's material it KX-XX overdue look business. part at it's of needed. in is you country our selection because of to when targeted make XX,XXX the the with easy America go sales of to systems, an which quickly applied It spend, about the offering, will in commercial. North long out represents potential of

We dedicated have sales a team.

and our also OptiClean are we like come these solutions. now it's we've that solutions important innovative think solutions forward ABOUND with have sustainable because and things We

you So end this we with Go Operator, us will year next, out business. question Talk] have oh! the think to and Sorry. this HVAC ahead Andy. provide how see the have our – next it specifics, we do for will plays can but multi-year [Cross tail

will of Josh Our from Stanley. next come question Pokrzywinski from line the Morgan

You may begin.

Hey, good morning guys.

Josh! Hey

first residential. on Okay, question just so maybe

you strong mentioned you channel know that – you still out maybe little know as You to is but maybe thinking sell-in’s sell-through about good, here. Can bit. match are still so XQ brimming in your still high. how was needed XQ quite the distributors guys for or inventory low, you a the sell where to Backlog not the high, they but point de-stock

Well XQ Josh feels strong. still

You to know backlog hard quarter-to-quarter. think to We it's in into nice that we came going be do with XQ. track a

You almost year. and to step full back look the at have

rates the is I abnormal year we're think growth to calendarization. normal for what going see with

we half very quarter So and looking what given the was is up XX% then XX%. the the first the compare, what to sales is year, in second around up probably in sales the the we last saw the probably of XX% half first first in strength closer difficult we're second and down have at for half half given

in the movement kind movements and be thought was an is quarter. So really clearly that looking very was a we're mid-single XX% up the in strong for encouraging abnormal over the strong is like would XQ. range first continue digits. here low not it's It year. What's to digit in raising mid-single the – we year, which year It's had originally to be

XXXX, to said, normal. are probably be you they than really QX compare, year starts a up not been you than at XX% to better least strength a quarter first at which at They levels which year-over-year, furnaces, we of the and we the not demand, would that was Now but inventory completely would higher up think of we're pre-stocking it, movement are we is continues as the Housing the seeing levels a higher abnormal. we pent indicate if know lot strength XX% They'll continued seeing that inventory XX% we've end for XX% and to stay inventory. pace or saw having is amount continue be this the in which of saw very lot material and strong. XX%, said,

keep to fourth quarter going this you third have we're look, XX, quarter to up up it course, XX, was of So XX. know quarter eye an because on up

to While well continue positioned we'll the we XQ support rest of to and year certainly then strong share, take how so have continue our to see to we in we feel movement, plays see we the continue customers, out.

to That was then the I service guys across know hard XXX simply for up. time And build to sourcing some board, and those you where thinking maybe you you point it's there, of of the exceptional. right, finding the hiring the training you new whether including you're just transformation Carrier bottlenecks midst maybe comes new new on whatever know across board. it's because it a folks, think out substantial organization, initiatives there’s suppliers in in trying in guess initiatives, a know that pretty a suppliers, are I them that out to some Anything technicians, at that seeing onboard kicking there is out

mean I mentioned. challenges there's XXX, you seeing headwinds ones coming are way. Carrier look, is No headwind some not driven but we're – Josh. the our by inflationary seeing Commodities, there. not we're on Those Clearly

over we Of course there there not challenge Build have see but we to suppliers, a labor short keep input to productivity, to term hiring a costs quarters. factory Tennessee that manage XXX with our coming the and of coming in the where process up and like in tier Logistics to frankly demand, manage from that. have our people we the few only some one the [ph] we are got Carrier shortages two places we're remain our sustained demand because

out really I'm challenges and team. the there's there of operations proud So

in but mentioned, think coming, certainly you without are we demand saw out in then stock the it of I lot it's need, its But one authorized January had of we're and of we managing we get as inventory. some things a I I front Patrick helped the I that some we make that that to going they us pre-stocked actually influx anticipating. actually inventory buffer demand to that a were face things sure the think bit not to and in December this parts the is trying has were best-in-class, we that and in challenges. think of

call I I’ll line. Good get in that. it. back Got color. appreciate the on

Thank you.

question line Nigel of come Research. next Wolfe Coe a from Our will from

You may begin.

Thanks. Good everyone. morning

Nigel. morning, Good

commercial it down, mostly of been the the of likely probably would mid-teens but is U.S. have coming wouldn't into and something So Hey! some HVAC we quarter in guess growth that’s the

in light some the you you just And talk commercial on Thanks. easier then dig mid-teens. of a evolving know much in moving commercial selling Maybe next talked pieces see probably I you over how the of comp. the wondered, the year? could just you XQ balance that level much, about about just to So within in

Sure.

me on the applied Let start side.

was here the we'll that term issues of watch catch equipment was is probably short our pleased up applied American down Sales up Europe commercial North item. American Europe. with there. XQ, in know up a very up short a digits. that in with very in mid-teen us China issue, had We we up was so the in that XXX%. pleased growth side. American did and You a the we was have term the were on range. equipment double with North one in with sales for some Obviously mid-teen factories were so were in a We couple of easy growth comparisons saw over bit, North aftermarket China actually

the especially a think is the recovery, equipment I nice for American when Architectural you poised North Index. at look Billing ABI, the So

which at but XX was as in good at below know got XX, very now XX months we XX we've is level. and March low above it You looked XX, been a it very, and as

encouraged double of a indicator And down then seeing commercial and was so the So I and activity, continue the warehouses, about in lean bit. growth, stimulus is mentioned package strong. construction like very anticipate we on digits leading we which will in Light course we're the we're the of applied aftermarket up to to a it commercial, healthcare, backlog and so. be North which space big in in centers and data education, what America especially verticals

it's fourth as to so order the up, very seeing You start trends. what been sequentially and encouraged open restaurants commercial improved we're quarter by better, know every but we're with quarter, getting has retail from light

set going XX% be seeing probably were what year levels very So are growth. a easy digit. up We're about a compare, and They I it’s field it's mid-single encouraging up We trends. is what's that improved obviously backlogs. light seeing backlog commercial not but around we're really up in light – nice down XXX% order commercial thinking a be is and are for inventory to the It's strong it’s this XX%. would really down. mean is

a nice we it's rebound beyond. as So XQ for set up get into and

globalize Amazing, fit amazing, you whitespace, on so to going Are then position, detail. does Toshiba, bring CHIGO in Toshiba. thanks VRF with plan? for putting congratulations what’s Thanks. for up and to And on that U.S. and your that queued product in the relationship the quick but then the it with how

of first a step Yeah, at CHIGO we many. look as

not higher entire as market look other that's the had really you a is see XXXX, markets, the the VRF I you is a chiller the what manufacturer, commercial, some have mentioned in not we’re the at the we VRF we are back – remarks, the that didn't about we did issue this can for prepared VRF, were they're CAGER if that and in imagine space market same not is capabilities look reality size, an XXXX, in we and $XX of traditional VRF we know really design size and OEM, we not a so distributor. exponentially than and the now international You but of and half you out and as billion was light the

to one plays So that player of VRF important we the manufacturing but China. and design and with become could outside make few operation in of this great Guangzhou was a there

and back It decades they more do So I only global being very, those and those to clear a but discussions very see enabling more to a that of. that play with gets constructive that believe CHIGO that acquisition win-win like go there but us Madea player. been are proud China, have partners. mean there great We've partnerships to are meaningful folks be very for for with with we not these We we’re player. optimize Are a into Toshiba, relationships? it very frankly partners, the opportunities become pleased. in we're we

David. Thanks

you. Thank

of from will the Sprague question come line Jeffrey Vertical Research. next from The

begin. may You

you. Thank everyone. Good morning

Mr. Sprague. Good morning

flush on Yeah, roots elaborate time, Healthy A differentiate just the so little out business? how defining kind a I ABOUND for how bit that because the bit just know lot covered. to more in seeing that, through. pipeline back the you around of Can it’s in interested of just pipeline timing my the you're kind little dynamic. two or you kind I've you're – kind Buildings, of versus coming opportunity you gotten what kind Sprague’s it this are maybe there core Dave does [ph] be us, a – mean I’d would maybe of just actually circling the of

have to, strict the definition, and would on are we Jeff, take way the focus try we very disciplined Buildings. really these Yeah gotten is to we which sales not try a Healthy that prior to

type became offerings more a the building really when $XXX lot in that pipeline pandemic IAQ of that the know hit, about. we talked I you put So really that prevalent the healthy million much

OptiClean would examples So include you know.

really ABOUND excited the have you XX,XXX really, than that we're we offering. put or orders we in building that we more there and units UV that healthy new OptiClean put for the are about by When and sell upgrades driven really light, category. filtration know We in

the know big indoor a healthy You over and it'll a what six on team visible digital the Healthy works with have and type safe offering the a come will is enabler the differentiated almost Buildings, Bobby how this do last out end is months and skunk make to be environment. because so it'll consumer, working or group with been to for that it George

You to a make consumers start or back reservation that’s you that exactly managers have know indoor building that, restaurant they having we taking we're certain to What before they're strategy, chips certain that come building office of any expectation or to mitigate an is and end can their ask commercial PC's. about Intel consumers they going for crowded ABOUND indoor in think steps the in the and see will have that the it expectations a going inside to you environment like with where to know go see enable. health spaces, a anomalies an in

ABOUND in So we put well. subscription the sales will Healthy Building category as

my second of well Yeah, the that was question. part

You rate of which guess with talked about to there. some and little alluded I a these service a evolving more this kind even of color bit maybe kind of kind a you that. part seeing little service are of but attachment offerings, attachment just equation, different new models business chiller on Maybe

on the too mean early Jeff, I it's – for in we say. We as last and the win we Truist a - we've with welcome but Atlanta about. That outside the for quarter well. Park. were school, welcoming projects a We excited office fans was We few really as to of excited school Braves building. KX-XX commercial a the with been working to profound anticipate they really Atlanta first so months were us that with pilot very back worked

an been out really earlier proving official we've it this week. We technology. So offering the made

will elite we we equipment offerings edge more also to tier specific more sales, and but revenue clearly So but it's – through offering through of question, blue edge drive say of subscription your too it's blue LTAs more pull and ABOUND response and this in believe have to early recurring sales. our

call. the pass I’ll thanks. Right,

you. Thank

of will RBC Our next the question Capital Dray come line Deane Markets. from from

You may begin.

good morning Hey, everyone.

Good morning, Deane.

and the have kind quality had opportunity? air that focus because to pandemic. of follow definition you is school not concern of there up probably the the indoor there, Are clarify the in been line system the related just air indoor the want quality. Jeff’s of a to COVID upgrades HVAC just of would had Is all questions not on I including the that

No, base to driver behind that as more oppose we we’ll it. on offering the the it provide

So it's if environments, we is and school time, much all district of as play, what modernization an energy is ends the is what more we but go and yes, the put efficient we safe to indoor energy happening healthy a more which in kind up the and of by the premise we do not in. is offering of probably building category, healthy would if efficiency would driving more put around it that those underlying driven

good. Okay,

in quality that's indoor So what's terms in helpful air pocket. of framing that

Yes.

at then second operational did know out relatively it's but owned minority issue I question a And it small, is get this called is, JV.

that that, JVs issue the frame out of address the how Just approach Carriers rationalized. the flesh what's broadly spotlight it number get you and the what minority if you Does of there on know and them was? could put portfolio might to and time

I second focused spun been part mean Deane, yes, on Well, since and for big we our themes the of question has simplification. your one Carrier

XX. think about you we’ll and portfolio, closer started our end with we if minority this So JVs JV XX to year

JV's So overall not that we very really lot approach clinical of the but for the a to to are various have business. of been some There taking reasons. risk, value reducing number propose a

JV's. reframe consolidating reduced we area or strategic very specific you them have partners the and have that still not know does EBIT, area some areas. we that discussions wish critically of sales our one not things are there know have in that's So bit, but strategic and I then us on. our of minority we're an in was in in to discussions controls had those, are disparaging place a respect we we've that JV some that issue say to our we're With for we we if a never especially it's with control do our we're the it product that of product to could one own because issues, issue, you that in in some I more want in so of highlight that

Okay, thank you.

it size, the of a terms about penny. was in Deane And

you. Thank it. appreciate I

of will Joe from question from Goldman line next Our Sachs. Ritchie come the

begin. You may

Good Yes, everybody. you. thank morning

Joe. morning Good

topic we Since the I may well. as add Buildings, of Healthy well are question on my as

you've like grown it opportunity. your So seems

$XXX it opportunity was for addressable thinking XXX, uptick, how guys? commentary seems highlighted quarter. point? is million the the like But you starting seeing $XXX quarter, broad around think based. isn't the this really you any pretty about opportunity then where last million there this the probably think I Is and you're you're also $XXX it I like million guess I also

is significant it of it's based know you opportunity and across the that verticals. Joe is, number broad a think we Well,

discussions know So in but universities of broad very as United focus their key with clearly first back we reimagine footprint, people to as Stadium, deals that universities. are mentioned hospital would safe indoor other providing area, We've but the the into the – Commercial office a the future that you the work want we and they come make Healthcare a sure us there, area as education, a very the do globally optimistic models universities be people buildings, of and various is with office they at would I KX-XX most States look the they key to is do. have but for if well. environment. that focus of even well. a in Braves, as been deal

various to discussions. people add anywhere weeks in starting had a somewhat where crowded a of more indoor friend with he a lot owns seeing be restaurants, kind who OptiClean of ago environment, of so a you I to units have we're dinner for are So couple wants his restaurant and a interest. there

trend come. offering, first is is that be with us taught the the ABOUND theme. know of COVID sure In it is and past the disease our a lot You of Because a is years healthy, is. this environment. a to having We Building much Healthy the you really airborne pandemic are and won't for and indoor thing under how is it's sustainability going know about sticky when that more more globally, is making will that I that be what last we once the tune be sticky one people a keys the to safe control in question isn't to transmitted it that think get sticky think especially

of deficiencies will make any and to to them, So this with and MO use is test do time. AI think trend and correct environments, visible ultimately it indoor a I withstand anticipate the to that

then the like Patrick, slightly for gave of follow-on as to for my maybe That’s I try Dave, And thanks. details look I around mean it differently. helpful you year. a guess lot guidance I color the

much in the better segment than came at level. quarter expected first we The

of implies maybe guidance $XXX only the I better. year think level. The about like segment kind half for million full the at that of

like into baked guess the for I’m so year to understand you I of just rest the year. the incremental rest of conservatism And you the headwinds know the like versus from expect trying what that's

One seasonal I believe we seen, element HVAC some [inaudible]. can been at we've of we have inventory could think is way acceleration residential within of mentioned is the strength look build. the Joe, the you some that the of

but So for not a change little full not necessarily the year, as that would did bit year resi outlook raise the we from although the much resi, as HXB.

very element, the is in quarter a quick and business. second end The saw March security this for to strong we a and turn fire so it's

year updated our We that card another so this segment outlook full have and not point, for would there. at take

little well In and terms of full I in raised. more dial then what more year. from bit a for freight the as did leverage bit costs profitability, million full a headwind little the We we of year of as more $XX volume offsetting air price, $XX said million more

– full kind that's year little and the detail more the of outlook. bit color a So around

Thanks Got appreciate I it. it. Patrick.

Thank you, Joe.

line come Hammond KeyBanc. of Our next Jeff question will from the from

You may begin.

morning good Hey, guys.

morning, Good Jeff.

watch or supplier the still the kind demand versus on know a of Just being America more there. that issue side applied, how was of much clarification you North choppy

Now and that. it had couple over nothing really. a We it. did a did as XPL We of transferred issues had we we made on as we

now behind is very was it which a So issue short term us.

about chain seeing but supply transport. into just are you Okay, the and anything truck, lot then issues in piece. transport a know you We've leaking heard any

resins – I raw broad even there material molding based. Yes, into we there I are chain issues, process. electron issues, mean are injection our are supply things like there the are put electronic mean that issues fairly

We refrigeration of tier one key have to our couple suppliers in a items. with key are watch that work business transport

I'm day. really like of ocean the certainly are it's supply the manage which some the I would to team just challenges, the team with In every there done team So it the but is there past, the have issues well, is freight chain is really, that but we team in rest to so proud the think managing portfolio, battling without air the some cases over things how of do. its working are not and that cost them, but having is

meeting are we customer demand. Jeff,

costs having We are more bit a input in so doing little just including freight.

businesses of level don't know maybe how then reopening, know you great. Okay, And bigger in. thinking the longer through interest thanks. to just that could just are term, just maybe Maybe of a know pandemic, fit minority inflecting seems the more lot of at are portfolio And you in just sneak beyond, the about you a kind if demand one reshaping stakes, be you we here. some I

Well look, that you day I portfolio and very review and continue existing can that will on we would started a assure structured that's of one we clinical said that and something take our we forever. that

and So for through it put elsewhere. to or determine, it proceeds is we of regular of continue and area at a right improvers use those the our someone look portfolio aspect worth us lenses is it to to hands to invest else invest we more kind set every of of would the and in

of at So current we aspects continue our all to portfolio. look

energized very, place. are We have very the by in playbook we

those that We roadmap. confidence in strategic are have great our bored

funded We Carrier by pillars of XXX. growth, have our three

toe solutions, with water are these we'll put but on we so cold others in with you on at sustainable in transformational healthy, know strategic of a look front looking we and there's to that chain our have and CHIGO big the we two safe And we bolt buildings execute really go We those out know we're focused energized on, course the the obviously out We at to we’ll by and we're continue at, in have M&A then us. ability rounding ecosystems of there as roadmap look forward. portfolio, our more opportunities portfolios.

helpful. Thank very guys. Okay,

you. Thank

from of comes line Tusa question from next JPMorgan. the Our Steve

You may begin.

Hey guys, good morning.

Steve. Hey

the What cost you for in and was guys? quarter price

about was It Steve. neutral

capture? price actual And

little was a it QX less less a In point. half bit quarter, in the in it it itself actually than point. quarter than A itself the – well, – was

little For a the for full year total it point than will less be a the company.

kind when of the others it. of your in saying scheduled the what ground. are from not like what spring. what’s maybe about obviously. know the they is channels key Is Watsco, I well and from they your got there you on actually be you okay. for channel, of I product outside contractor of are And bit so last customers? The know But you up what’s catch sell-through able we pretty to you good. on happening it neutral the were get of kind people okay, Yeah, talk channel commodities, you mean what’s, year, to When to talked hearing little a talk some to

for because it's Well, there's we entire we both hear they then demand replacement Obviously is down units in new because us in think and stay-at-home, seeing more replacement. We've the repair cycles you and support strong that what from our is is and or you're we there's our entire condensing really continues seen We over seen that. more haven't down partly can than demand from distributors actually and anticipated construction previous actually lot systems of would customers. they're have extremely so any saw that cycle I the seen contractors right its a more more entire partly this strong. and liquidity of units, to real that pushing in That previous. mix what be is had because

one their new look So often of do homes lot buy have your people the are homes when new inspection you the prioritizing the spend home, we're in things they at HVAC of also buy on system. a you people a and and is seeing

we're share Carriers they think the a by down of seeing on support they're then in some haven't it. we'll to I continue XX%, an see. had and them actually but our phone are and driving Obviously our area inventory that's we hearing, hick-ups, channel, that ability there that their we'll to what encouraged They sign. have if we see So in recently of last encouraging it’s the helped there's key of but movement But to encouraged have and distributor gains that be with to we've can were north seen, some out they're contractors. what the said not that's probably Texas week It's ability. by the from very

And would I to share share kind you you know you local in else’s would price gains, know at mean the get efforts margin you selected. you price raising to go after everybody distribution of kind allow margin with the mentioned targeted some dramatically. of make at markets, you know

the price price in a We’ve with X% announced others announced. We a increase coming We resi came that to been have June. into I year. for increase on think consistent in up

expect to across clearly pressures no the So only ready, on it. look, have really and inflationary think in prices, and our there’s on portfolio raise but side, customers but there choice not I we

So that and what that I we'll I've phenomenon. peers it think like our from seems industry be wide read that's doing from an

is Is that’s where final question, there down, price anywhere my sorry.

No.

a great. Okay, lot. Thanks

Thank you.

Thank you, Steve.

Our next from come the Gautam will of question from Khanna line Cowen.

may You begin.

Yes, thanks, good morning.

morning. Good

competitive I environment. want to ask the about

example. to was orders, your You of manifested how well way know mentioned it. you produce couldn't – know in call that last that curious, for there's kind that had meet issues the among and quantify year resi so, if that as competitors competitors they've resi seen are any and a if some we you their on I guys seeing is couple to [inaudible] Lennix

competitor. Yeah look, comment we a never will on

for through respect amount all I different during our go We of competition and think we have times. a tremendous challenges various

various So I experiencing are all we challenges. think that

operationally. our our and strategic in level ramp, if I there We’ve else. issue we think operations that’s has our so ramp helped our very an be inventory us. think own that is place, because of think great clock some been one I team I support support the with have to know can we tried our is supply redundancy, going somewhere chain to team did working anticipating pre-stock I some to lengths the customers around and up operations to to

So are any not by means flawless. we

helped do We way. of operational up our have but pick the has up I bit along think the performance a challenges, share

Thanks.

Thank like have for the today. time any call to over turn to speakers you. closing the questions-and-answers for And we remarks. I back all that’s

and what our follow-up thank joining. are we and so are to some by what for you you. by see with the questions. quarter and lies well we please performance Okay, very reach Clearly out the to of and Thank energized first energized everyone we you in encourage you, the all. trends, any we Thank Sam macro ahead quarter

today's This program. concludes

may You now disconnect.