Carrier Global (CARR) 28 Jul 222022 Q2 Earnings call transcript

Good morning, and welcome to Carrier's Second Quarter 2022 Earnings Conference Call. This call is being carried live on the Internet, and there is a presentation available to download from Carrier's website at ir.carrier.com. I would like to now introduce your host for today's conference, Sam Pearlstein, Vice President, Investor Relations. Please go ahead, sir.

Thank you, and good morning, and welcome to Carrier's second quarter 2022 earnings conference call. are Goris, Chairman Chief today Officer; Chief here Patrick and Financial me David and Gitlin, Executive With Officer. significant restructuring Except will as referred and to excluding significant as nature, be company a other costs items. speaking to by and/or otherwise results from often noted, non-operational items of the other non-recurring management operations, reminds expectations call forward-looking other during the and are uncertainties. listeners to statements the and earnings sales, that company any The and flow risks subject cash provided and XX-Q differ X-K, details Carrier's anticipated SEC XX-K, filings, cause to including factors important results in could materially provide that statements. Forms on those the actual forward-looking from is Once and call you follow-up limit questions, to opened the participate. we one ask the that up for everyone to question one give yourself to opportunity turn and the our to to like CEO, Gitlin. over Chairman call I'd that, Dave With

you, continued chain amidst morning, and how deliver I I'd am start ability to current the the COVID good backdrop strong proud like supply to by Carrier’s challenges inflation, team and saying of lockdowns overseas. results Sam, Thank everyone. of

hard full team's and quarter high-performance adjusted culture, and sales capping by work, EPS adjusted raise profit our another growth, organic solid to our us strong operating first of enabling a resulted half year guidance. in fueled Our

quarter, despite delivered year-over-year QX the on our profit and Chubb we points at for margins Price/cost expect specifically and Looking the by basis now price/cost X% positive sales slide divestiture. X% positive two, results growth, we organic XXX operating to operating the year. in expanded increased by be was adjusted

use but cash. digits. Free compared improved particularly to year. performed double and up of to was well was meaningfully compared is up flow XX% the last backlog last quarter, Our cash Aftermarket

playbook. cash concerns not our has such and are three, times, do disciplined we allocation. free need outlined slide we the recognize new changed, above-market expanding We doubled about capital have. strong margins, playbook Investor down that framework In We on slowing that driving to there the creation a growth, we organic that Turning flow Day delivering not value at economies.

demonstrates our of challenges. and We the are the record focused we on in execute controllables, track that controlling face

playing are digitally We investing offense, growth, aftermarket enabled solutions. particularly in

driven suffer on quality plenty is asthma as provides indoor particulates better also longer effectively for deployment, no will airborne of see classrooms quality, flexibility safety our VOC entering critical of is forest levels. and and our nice-to-have. ability improved Indoor illnesses. out value-added cost K-XX sheet outside or you with and healthy spread including improved when pollution, equally our can symptoms. from from to harmful that critical and performance X% are XX% health air, from of with in whether It's to improved classroom improves cognitive the a their today. home. important filtration performed Students by and fires our perform. prevent and the Proper reduces inadequate have optimizing COX ventilation schools Studies compelling children performance. show environment ventilation that us strong Xx, air Studies XX%. systems or to IAQ of and COVID, have benefit reduce microscopic IAQ up price aggressively spread filtration than balance four. air of investments multiyear the and capital We the does more prevent and safety and by from secular health, trends show driven sustainable to that of But the the slide cognitive ventilation including system, of

building in orders first pipeline to XX% the challenge. over responding XX% year-over-year remains in at orders, we $XXX half K-XX increase In up healthy QX, the were over the and saw a of million. We year. are the

with in in at won And Carolina and only their air solutions. an handling China facility want provide office a and air into air air solutions and portfolio also handling to offers filtration. UV technology include large theme new that quality. environments wins US prioritized key units, school for our with three HEPA light units partner upgrade a schools, Carrier diversified North new coating Some manufacturing unique healthy featuring in industrial park Customers antimicrobial the in but were not homes. also holistic district their to HVAC schools buildings opportunity restaurants,

monoxide our recently detectors. of Kidde air industry's business example, series integrated healthy introduced and smoke, quality products the first that For a connected smart, includes indoor carbon and

We Healthy & Homes partnership Procter are excited with about our recent also Gamble.

reduce remain decreasing EcoBlue while low drive This beltless our and our through benefits a rank and Germany, by future. marketing among emissions committed proof and critical using light asset with the them performance We for to where digital vision and respective record those joint point record. last than will nine rooftop poised commercial increased differentiated years countries system, now of of efficiency, sustainability, our XX in warmest on Recently, and progress healthy first AC to where is air UK direct support homes a providing solutions start manner. refrigerants Demand coupling innovative conditioning rooftop an costs years capabilities solutions activities are saw is to our the American innovative increasing change. energy-efficient demand in X% towards this have in fan we utilization technology feature climate on the demand sustainable solutions consumers less we to units will we air with the optimize energy and of axial fight business, our with is Addressing and sustainable installation units. for A maintenance Therefore, conditioning. industry patented educating for in in technology. North help and vein On on exclusive our promotion GWP homes the improves efficiency. temperatures

we where with energy Our efficient same drive start heat similar with changer. and away opportunity from units belt game fossil from pump an strength. shift solutions. are compared It's and to a position are more factors driving presents in shift of a various real heating, significant fuels EcoBlue This XX% the accelerated traditional toward a footprint, up industry's to equipped a fans the

of North in today market-leading We with America the pumps, and player comprising and have pumps heat commercial are commercial over leading heat the pumps. residential position split our in heat in XX% residential light European

investing low-temperature We in are effective and solutions. heat also pump

successfully transport with confident Giwee, enable product in see our Toshiba revenues in validated the combination in us where we are steadily more in Carrier, billion equal that along to Toshiba We we heat efficient the heat shift other to our introduction. of heat now and revenues pump coefficient with transport Department Dawson of challenge, with of all-electric an our Riello that refrigeration and performance many ambient units requirements increasing. commercializing acquisition of of expect globally about a residential X added grow we same Transicold climate business August, are Group, the the to Energy's market $X that close business to we units Vector completed We vector early of heat than will demand pump the Including and market eco solution have at annual pump to cold and for for pump Carrier we European Carrier, all temperature degrees sustainable. offerings. companies, of electrification Italy residential compelling the Fahrenheit, for will have be an higher X.X fleet their

market space. in our leadership expanding this position are We

cycle Regarding scale verticals office buildings gain Abound centers remaining ranging traction our our with desire. platforms solution with the university continue continues retailers offerings. to that to to and in enhance solutions on we Abound Lynx from commercial and national our to digitalization, providing to life focus data further they differentiate customers

for enhanced chain at Digital platform we adding improving aimed Advanced ranking through Lynx. in excellence innovation. silver a are received cold Edison chain to significantly Our Awards Like visibility new the the features supply increased connectivity Lynx and Abound, from

loss, fuel and battery hours. key levels a Our These and and XXX,XXX to asset of We year. shown minimize recent Lynx summary around remain unit track operational dashboard, and Lynx costs. incorporates feedback and by downtime metrics reducing to subscriptions the this ultimately fleet rollout customers' notifications on customer our have helped end in provides alerts low run

the see year, aftermarket first track we're which is has Another year critical recurring been driver through the of and half slide for five. revenues, and growth. double-digit growth up Aftermarket higher-margin you of double-digits another on on

HVAC aftermarket connected XX,XXX this ahead QX. over XX,XXX segments chillers three All Commercial to up of for now saw chillers, schedule of us our double-digit year. putting is connected growth in

We XX,XXX also BluEdge team LTAs and commercial, light by to on the new to residential In chillers year. for under expanded track the this remain adoption national customers by playbook see Breeze end working. continues platform of is account the of

efficiency, energy Carrier balancing bit pioneering color TCC's coupled accelerate more over longer dynamic demand, system technology, I Toshiba technology the TCC's its quieter on providing thereby for and pump intelligent international with on allow well inverter heat rotary turn to positions customers Before greater opportunities. slide compressors and acquisition light of air-conditioning life commercial operation. us the six. Patrick, VRF and to a with it

multi-brand, that, over further and well Solutions, Patrick. leadership will and run synergies HVAC to turn a Riello unit multichannel penetrate been we're in as We our markets. Global Solutions to working within give team acquisitions, America. will of North strategy With plans, achieving Giwee commercial business business Comfort deploy include on critical TCC go. supply global with European million. collectively, new and ready the business Global the The of detailed and our confidence outside Tokyo. me $XXX it complementary created execution team as footprints, rate the has us chains a We segment, our Comfort And based strong Patrick? in light to let

line down and divestiture. offsetting organic than despite the good grew up than sales quarter Reported lockdowns adjusted about $XXX for operating significant roughly Chubb sales company. QX the of million our $XX operating was more were in X%. billion segments in in profit turn All QX of to All headwind compared the Dave, includes organically onetime as you, realized to total benefit lower than year resulting translation inflation. with reported impact last of the was the was profit favorable X% the of X. The Shanghai on or anticipated slide price X%, $X.X in in quarter, segments expected due million. Adjusted expectations, a quarter sales. Please Thank higher the $X.XX of growth higher to expected items. Currency morning, everyone.

and currency productivity $X.XX due of was to despite EPS cost positive QX stronger better to dilutive basis year, was points, price/cost Adjusted compared with of still than owned margins. reduce on in Carrier and venture. mainly these onetime ventures Carrier expected, refrigeration joint the profit excluding These plans items, sale results stronger to Even Toshiba gains of two Our of operating last consistent joint better whereas and than was one the was mainly adjusted included result expected a QX, minority expected, operating it margin as transactions price number ventures. was headwinds. simplify are XXX than our to joint up margins.

year-over-year on For your a slide in Free $XX bridge of million $XX cash XX. We about taxes Chubb in flow to reference, we the the have use appendix adjusted QX on of gain the paid related million. the EPS sale QX. was

In HVAC sequentially. sales detail. in Supply driven growth particularly was flat June, more and by movement led with movement June. stronger the affect was receivables. X, Inventories driven was sales to chain and the challenges by QX up inventory May, HVAC in organic Residential residential performance businesses. yet in to of very slide higher than double-digit we subsided strong controls relatively growth flat. up our X%, After levels. will continue resi addition, price. June, were expected not our second weak ALC Starting our were segment's in half have cover

business digits Light comparison very last due as strong. Our and chain QX was grew tough mid-single demand year challenges a of XX%. light supply commercial remains over to commercial down

in the was impact of margin the the we mainly which are I price the and volumes, earlier, this the compared and the from to impact TCC the driven HVAC by quarter year, down expected, margin in operating lockdowns. income due higher due segment. Shanghai for up impact commercial productivity, single-digit X% to cost which price Adjusted offset gains. equity from gains and to favorable in last mentioned saw HVAC strong income productivity segment profit onetime compared growth modest As of the the year cost to last equity lower strong was reflected Operating XX bps low

consolidate price about cost of We full incur expect basis this by will its The about income equity this year. of will million statement segment TCC, XXX no margins dilute but consolidation points year segment upfront to income related remain will the as we the costs. to record integration for positive in $XX longer entire TCC instead HVAC and

XX%. Our is, current operating expectation full of year HVAC's XXXX therefore, margin about

single-digit basis deliveries component up mainly last were and teens operating the Sensitech continues single-digits the QX. to related high up Commercial is was XXX solid refrigeration refrigeration as XX% and saw in of lockdowns up were reduction driven truck it shortages up held gain Europe grew in Moving compared the Within sales volume, quarter. QX organic almost commercial in by results of to refrigeration container last double-digit the America This transport an resolved that quarter, on sequentially. XX%. up points year, to refrigeration, for Adjusted points trailer the of in both a China basis nine, were productivity top the improvements, refrigeration. growth on almost and venture. X% slide to small despite to almost low year's and project delays. North sale were due related sales low as growth XXX deliver some in one-time margins margins joint transport on

this segment in the the We are pleased made quarter. with progress

& strong from segment for levels the Adjusted the Moving quarter provides details XXXX, more Chubb's productivity. on positive on orders was Backlog points remains Security excluding sales segments. X%. orders basis because healthy and to Slide flattish as XX, segment of sales divestiture company Total quarter. well. XXX in organic expanded slide mainly & at Price/cost were in were operating Fire up XX this margins performance. very throughout Security of the all Chubb the second quarter, Fire on

double-digit sequentially. commercial continued business. sixth business. almost were up backlog its both in a As solid with up on proactively XX%. refrigeration quarter, signaling grow demand to year-over-year orders truck businesses were as of Backlog refrigeration along America remains about that approximately we both and of focused demand expected, quarter last resi orders residential all and and transport their were XX% XX% The trailer the in and to refrigeration in Commercial across continued in up commercial the refrigeration to HVAC much compared backlog up slight the for continued & quarter, XX% regions as about also growth order XX% orders book. HVAC orders backlog Fire XX% Demand with decline year. Light saw North strong segment's that are down transport for to down manage continue in with of in mid-teens consecutive growth marking quarter very about Refrigeration products we quarter. Security remains backlog healthy profitability the

the the saw EMEA. to but China was see in in Americas the down Asia on were and right demand. As activity you the China, down excluding can side, primarily in orders order flattish quarter, strong lockdowns, due the region, Shanghai

fund TCC that approximately the guidance, Before In complete with $XXX end plan repurchased the $XXX on talking to worth wanted million partially authorization yen provide by the loan an reduction shares, in million to about by approximately update we've about full Consistent to funded to you I portfolio February, the The divestitures simplify further proceeds, about half collect our The referred will million balance million. we $XXX after-tax $XXX second to and cash. earlier, year we what expected in shared our with of expect yield the are acquisition. about I year. our consistent of quarter, billion. the repurchased under the we denominated debt million this to with capital of $X We the deployment. year. be borrowed week be which term in remaining earlier be Year-to-date, $XX used will will

capital be and balanced consistent the our deployment. balance with out continued plenty provides we actions at flexibility will for Our sheet to continue of priorities Investor deployment our capital laid Day, value-add

expected. half on better Now has first slide XXXX than Performance of in guidance been moving XX. on to the

mostly from Last price billion. a XXXX. the In offset impact to slightly challenges. volume unfavorable revenue consolidating TCC price includes be impact to quarter, of to of our the $X.X from translation mentioned chain expected our I expect additional currency be into billion financials. of we The now result closer and the supply by price impact will $X lower exceed as guidance We that for now updated addition, year-over-year

range a adjusted offset equity is higher This $X.XX With costs. to impact of interest foreign offset add the an lower offset in contribution headwind million $X.XX are costs. expect due our and increased revenues year-to-date, to the $XXX $X.XX. acquisition TCC earnings TCC strong of expense not EPS to count, share expected net income EPS is price integration impact to that, to We adjusted this year, lower largely from and loss guidance this input by The We performance exchange. increasing primarily expect about by is by the do we a mostly from profit operating as be year.

and income from operating consolidating will the we XXXX by XX the to joint year As these margin equity full statement, about basis excluding ventures XX we reduce expected, income points.

share the equity after-tax is points. income to rate income, effective XX by increase because about addition, In for consolidating basis will tax year XXXX our full of our TCC XX

Importantly, changes dollars this the but does or expense not change the rate calculation. our actual tax of tax income, only

We target continue generate year. on given team free supply working focused capital cash the more has in approximately second $X.XX but expect continued Achieving half. in this become this better headwinds, flow performance billion to to challenging, is the chain

amortization to information year operating guidance. this prior would estimate will to related provides earnings interest venture believe drive about now compared Lastly, of release of full adjustment will economic of XX% investors We close joint of activity in to with net to own, shared high profit, intangible or up the M&A adjusted the requires this exclude the adjusted the morning, value the $XX unusually our this better adjusted acquisition our EPS. from TCC operating to $X.XX Carriers' amortization. as intangible we XXXX amortization in performance. The us we we nature adjusted the income impact which effective We already step of acquisitions million related and evaluate exclude press the

included on adjusted benefit, a we For EPS guide-to-guide slide your bridge XX.

another Dave. overall, quarter I'll improved and it that, you, good turn for back outlook With to So an XXXX. over

Well, thanks, Patrick.

our pleased performance half We the year. of first the through are with

instills open half, team's this up backlog the and to strong Our outlook we'll confidence for for that, results. in driving keep second in our ability questions. I am our confident With

Certainly. [Operator Sachs. Instructions] Goldman first And the our Ritchie Joe from line question comes from

question, please. Your

morning, Thanks. Good everyone.

Good Joe. morning,

Joe. morning, Good

guys. Hey,

through, business -- I'm is volume your much there, then other key the quarter. rest any out that there growth but price? is maybe So I forward? commodities was price. to -- this that quarter. business? just just understand like thing in -- the parse curious, HVAC the parse volume out looks of resi And coming as do how quarter? about to was just want play this It nice to keep just Was all ability across also translate deflating how you kind going margins now, of your feel of it guys not the I'd HVAC And the that right that, how like into are will pricing

latter Let start the me then with on piece, the discuss first the Patrick part. pricing can and

Our increases goal, Joe, is we've to gotten. keep that the price

business some has job. needed in expecting but You'll X%. price, for about that more case like a done the of a in realization we And team recall on year. year, maintain just this discipline which parts sales pricing $X.X of our which is or $X business, our so we billion looking where price, into about been have We're at the expectation in any $XX portfolio. now is of across billion commercial would X.X% we refrigeration the nice not year resi, came of In that billion the pricing, the

of tailwind we're as aluminum, commodities. well So And second we have half price get certainly be down, our we year, XXXX. on second the into into But would blocked this year, to things expectation pretty is into copper, year. that get should that, some they then into our continue low, see remain get see a retain steel but that be next tailwind for as expectation come the we'll is the hope we If about as but bit and and they it like half we if next of to this of we'll a piece. year, that

growth question, your of part most was first for segment, the on HVAC price. of Joe, the the organic So,

of negative of the growth in as commercial And commercial pick we Shanghai given so the lockdown. And the that's, up performance, actually And there. impacted volume expect second was, by which expected, HVAC HVAC year. the was half slightly course, we we've to

quarter? Got timeframe. as things to it. you started the kind bit we started it a -- you and as little July the were pretty pick but trends then about commented That’s XQ, maybe it's obviously, June in up early of like the as just the then -- And helpful. guys had And in timeframe. still Can you that, talk sounds exiting

got we May. we it weaker movement in picked June really XX%, around and Yeah. saw in June. been resi in April was What a into as particular, was up movement and up had bit

was we that where continued July, in -- movement our levels them into So it with is be. that see we was end very, And in the about expectation in carefully. pick balance resi encouraging inventory to to That's up we’d very watch which ourselves a expect because to that movement something for encouraging June. is year

are to channel, customers. we inventory the levels the manage hard supporting in very while So our trying

recovering two-thirds So we bit part which other with as of on a we it's refrigeration, problem. us In We've last chips, like do of strong into of to parts our up helped our paced June. the the controls couple and nice us been just movement latter the transport with In business, still got really we of over into parts we chain got June. a by more lot supply output into months. the fairly to is saw business as had of it that the see quarter, of about got catching as

guys. Thanks Helpful.

you. Thank

Thank you.

from Mitchell the Barclays. of comes from Thank next you. line And Instructions] our [Operator question Julian

please. question Your

question Hi, outlook. the first orders a just Maybe good around morning.

five been quarters QX had orders flattish in of four the So strength. extreme were after what or

year-on-year suppose broadly refrigeration, ACT in the thinking, that wondered you And been transport fine. with was where if data trend has in half. I orders the the were think So line what back development particularly orders just I about how we interested in think should

You a steep decline in pretty orders. had obviously

that half particular about how are thinking orders? maybe you So for as well the on in back

me let on orders. some Julian, color Yeah, give

Commercial about If up orders row. HVAC take digits quarters in six were been double digits. has up you half double now of for business, our a

underlying which Architectural very seeing you been HVAC. the we're that Index pleased XX And we're in look straight it with that So Billing know is the commercial we north has ABI, orders for at XX months. they're of

that's very So encouraging.

as business, which get questions, commercial orders. had orders. had F&S Our double-digit they doesn't many Like double-digit

think I it the XX%. of in was range

a the flattish there in supply more in So truck months. four trailer. but about kind was terms and resi, output, chain issue The of strong of backlog resi so of weeks supporting gave overall at commercial. say, orders Carrier have in areas terms backlog. four weeks, been two of we that measure We're light was extremely sitting On real or usually an

as track saying We movement, So in we is expect metric down that year-over-year been normalizes, levels. row for for quarters track. that we've that backlog orders track the many we we a now inventory not and resi come to

managing strong on And in We -- expect our orders to there, have still order the sitting truck question but in book, decline, been customers. your trailer specific we we're very American especially backlog. North to the with trailer truck

backlog for very it's next something metrics truck in that in terms well-positioned watch those We of trailer. So we're ACC our year.

digits is It's used backlog the probably double-digit it they're the range. high for to but right think I now single what is saying in be good.

were is is of the much down, on team to given thing CCR we're figure CCR tough out it with being at And bit, very purposeful is CCR. how margins down how the expect expected we we're quite two in. margins, resi we orders by mention not I'll be very, things at the are was we improve And things then to wrong clear to but market challenged much and compares. the So bid things us. that the margin. driven areas, We and bid trailer last going and a that the our that were container we're right by to to is going what driven very have truck and

to orders So a we but bit, we did also is see which in see. little decline a significant margins, encouraging improvement saw

So, year. Julian, XX% we're XX that -- last are backlog up over more on than sitting levels

everyone expected So, we about for than But slowdowns. light will we beyond what what less in we expected. what nothing continue of to concerned us, is we some see in is orders cases, with actually what watch economic

then EPS is. we see what helpful half maybe And That’s implied Dave. the can Thank full just of the in guidance second the question on a sort year you. --

Just if of price wonder of you'd quarter? because QX any between fourth dynamic perhaps QX and points around margin for of highlight there's the year-on-year third earnings split trends the terms sort in and of between Any example. cost,

which Patrick expect to about Julian, -- so little Yes, XX% below. here. a is not to each, actually QX, similar, And We QX close unusual. then and organic growth be bit pretty maybe

QX. little We expect a half over second XX% of to in be our of the year

rate. growth EPS a QX QX than overall little So in higher similar bit

Thanks Patrick. Great.

Julian. Thanks

the our Coe from Research. from Thank you. question Wolfe next of line comes And Nigel

question Your please.

Good Sam. Dave, Thanks. and Good Patrick, morning morning.

Good morning.

Lot morning. Good to morning. this have

the Patrick, my lot principle on on didn't -- back, quite a sort you've of we more a amortization the understand through now point. P&L. add is a basis. got the question I cash EPS amortization your XXXX And Sorry, of Are FY for

So, I'm little bit not a higher quite not something than it's sure $X.XX, why that.

clarify that if So, be you just can that, would great.

Sure. this full our had we outlook P&L The of you about for Hi $X.XX about acquisitions. related Nigel. way current April, our is in in had amortization back think year intangibles we to can and the

interested kind already we $XXX by economically amortization interest And of our today the what's the With will about own acquisition of of XX% up likely go expense in million. is, overall TCC, Toshiba.

own that So, for the of we our already amortization Toshiba. expense would up significantly, part including go

compared We that the in to and forward, so to prior going have EPS. to is adjusted acquisitions improvement decided a exclude guidance, related $X.XX amortization the

mentioned. of course, increase impact in would higher the amortization that forward expense I be significantly just Of the going because large

reason back is the haven't you're of half the absorbing from year, the because the that got why the in obviously, ex-amortization we P&L. Toshiba And Okay. in accretion of integration cost

additional clear. the from billion, in have actions price due step-up to billion was Patrick. $X.X better due didn't as to Thanks. And to just $X then on yields was or on of price April, it very the increases? place pricing you in that's Okay, that that announced

We bit has I do billion. a pretty think well-priced. the year gone the both. more year into announced increases to subsequent to it's And had actually the We $X we've of along. price as came get a to bit

So say a a announced of Refrigeration Fire American increases had And have price commercial, then we we I bit commercial price that for had business. higher planned. than our the increase light will to announced our during Security year. North HVAC course been the has & recent realization both

So a announced of combination plus I it's realization. your price think within increases

And are way commodities now And the that trending, we on the would they're if helpful. based residential just do that focus price on beyond increases? here, we're the be you anticipate more right just could then now, business where maybe

trends with one the clearly, copper, aluminum, respect Nigel, we're steel, to seeing there.

too call negotiating. seen it's that the I think copper, other the some very that But were components, trend. the us we've steel, I would we're end something don't that that purchased in it, is much early downward on that not besides -- for HVAC that that we for I say resi to increases. Obviously, of say cost aluminum,

much. very Thanks Understood.

Nigel. you, Thank

Nigel. Thanks

from Stephens. line our And question you. Tommy next comes from Moll Thank of the

Your question please.

my Good taking morning questions. and thanks for

Tommyy. Hi,

give any guided then year-over-year, not if some drill us to on wanted recall into maybe factors down Can qualitative? quarter this you you quantitative, If as HVAC correctly, I you insight us similar there. quarter, gave last margins. I XQ XQ, down for and

Well, all, than with came a to Tommy, QX, bit expected. margins little we in respect better the first of

was Of still on or But perspective. that a about headwind price we gain from I helped for saw margin course, also the that. XX will say so That a cost with bps. QX,

operating operating but price quarter. the dollar on cost HVAC still a cost positive for segment perspective, was about margin price headwind XXX-point in from profit the So

year, the will, For HVAC balance of course, TCC. the by of be the margins impacted of consolidation

cost sizable And a We year the to now prior to expect down HVAC for HVAC guide. versus from margins. expect the be closer for be still headwind margins to including full of price we on QX, XX% XX%

some your helpful. to commentary Patrick. back And you, of wanted circle Dave, I around to That’s orders. Thank

the second slowdown of I you sign the that you trended gave at is a any some to seeing simply and or us can your if your we're reasons be is quarter the business looking bit the expected you of may there think business? not what economic P&L? not lot currently seeing orders why. us And macro what why of it order on, gave walked even you that moderated alluded falling of would also short are in parts But have case, some You have investors trends. any just orders might are the a just an to the focused you in that of you're that reasons maybe where point signs which of through some in down But there

orders wouldn't really. China, decline mean, the on we direct The is the in we that would blame answer macro, that COVID-related we lockdowns. saw but not I blame on

quarter. watch we how have a is trailer in think we And thing particular it's for most don't we've if is, in how of history. say this because true months, with know just couple I in the is is we had than self-induced been probably we some answer and lower to that call it our And one came pricing would orders much the too look and the area the that much bit was European related. in a that yet, expected, truck early a to in because is to company's in But trend. I little discipline market extent, aggressive of CCR CCR to

America large, strong. North on and an have So keep we'll to eye But by remains that.

we book don't it a trailer, the of talk we managing lot strong. alarming plays how resi because was rest wasn't truck and a order again, but of We'll extremely about, XQ it. was us that to see was out. the And Southeast levels. and which have China expected Asia, lot weak, inventory

Dave. it, Appreciate I’ll back. pass That’s and helpful it

Thanks, Tommy.

Tommy. Thanks,

Thank from next Deane line And comes of our you. our RBC. question. One Dray moment the of next question from

question, Your please.

you. morning, Good everyone. Thank

Deane. Hey, Deane. Good morning,

morning. Good

seeing How Hey, only Dave, demand given past with X% this expected in that prepared statistic headlines a months? new air form you is conditioning. with UK Carrier lot for that are any of ramp of the of average kind capacity? of And on couple some of the household

the close light in globally in that space of UK. it's really the Toshiba. we're that kind of us that on very Well, and in positions Germany multifamily, commercial one like to places Toshiba excited reasons

homes, get the we're for obviously, technology, for in Toshiba well. a into obviously, and that Europe multifamily not some And Giwee commercial So us very But larger, our when the well. say major player single-family homes. then extent, to you position would we HVAC, doing we're extremely

for transition these pump and going in people trend heat one say well. pumps months, we it's the in positioned a same be Europe that the about heat going get would Europe. we as in lot the that's commercial heat are side, into talking well that a HVAC as is to be Europe, to is in which And big to winter pumps we're number we're So then that on demand

So London when the that going not leaning Oregon problem, conditioning had see of solutions parts but change. as of space, and the the whether part that Frankfurt, world more solution, us before, obviously, be you're and or it's want to we you air sustainable now have see on part AC Portland, climate into of also never with because, to Seattle well,

Yes. That’s is prime the K-XX for then And hear. great the activity. summer to time construction opportunity,

just So there over some especially what installation construction the are going the be to -- on is how previous -- lot in if But right the given shortage hamper might of mandate. should there that cycle air a this time compare should parts, that Is there summer. quality cycles, be indoor I labor, concern does significant if -- there now. anything a

billion on I I a damper specifically think and with just by macro in I constraints. think we're encouraged the extremely has appropriations of spending not really because is $XXX billion where that's billion of ESSER that sort $XXX K-XX, $XXX and about for billion that's bulk allocated. towards go the the total the of $XXX that But that's concern because will it, I SRX. And US Yes, larger K-XX, right think is of opportunity. put think you will don't ESRX mean, broad a is I been the now significant think yet labor

were the team on have performing about with they a is When could in So, up slowdown, And that of them. amount well our do we XX% well. this in one K-XX first an dedicated space, of funding half, the put think during and economic K-XX. they're orders we verticals

we're -- So encouraged very space. by this

Thank hear. you. All good to

Deane. you, Thank

of Thank you. Khanna question Gautam from our line from the And next Cowen. comes

question please. Your

have Yes, two questions. thank you. I

And be the curious you think given able commercial? think say I'm would if the pressures price that? First, about where resi in about to year? pricing you in in face elasticity next can has do is all or hold it I the declining the in industry Would commodities. be -- there any price the Then price follow-up. and a industry What do announced they actually have of Would in the it will emerge? business, business, be -- you elasticity what

me is to to what into resi. next that with which has seen increase the XXXX seen let come going on comment And continue ability to over the switch a you're commodity XX% retain all price year would next an year because first see XX% and We've units, increase. headwind and a that Yes, think the to price industry appropriately going is SEER to higher think it. -- I we given

have to elasticity the will So, curves. watch we

we that increases the clear it's seeing. of think rate same kind been to I we've price won't continue that with say

think that increases we last or so. not had we've six I obviously, subside, today over XX And but will see do months the prices declining.

whether that with where the to of more into an And whether increase we're going SEER it's sell you're conditioner broadly, we're whether situation replace markets raise But critical breaks, outside, prices. had of vaccines get our we foods been or in it's expect we world as when peers year, but equipment we'd air it. it's certain transporting us hot no have to choice, really essential fortunately, or when we've products or given to -- and fact, next life In in it's I all shift. parts the think where safety a your

We'll seen increase price But elasticity it, expect year and So, price not right now, and retain see think sure. we've curves do I we next an not reductions. going for ability price into we the of decreases. to do watch

if early where gotten on just and are And happens. I as Thanks. a visibility you. maybe better, wondered David, give made supply Thank chain follow-up, going where couple How quick of the it on just the next areas your supply that trend controls. comments it could to and it metrics improving over you is us you And around quarters? some hasn't chain has about what the some

to were was we in been get we for units of that quarter those the to able had controls and units on reefer saw Yes. and What we and release we saw at waiting end the of second delivered some those field. while, a were our inventory the

end dealing At we we supply last two-thirds about to of contributes We quarter was the said that by encouraging. by the seen that have in the macro level, with a last our significant we more expect So, our chip issues XX% of sustained to critical the We're on quarter, improvement year. a that the XX% see and way, chain of problem. end of that not components redesign yet. still would

and today, we of productivity challenges, We cause do the millions that factories, it us to does like and see us. issues but And motors hurt continue just where continue to hundreds suppliers not chips, customers we on other with our to our customers. sitting of to continue overdue but that, things cause surprise does are to in

airfreight challenges, usual. we having XQ chain to So we to The to bit have because news sure back are the as bad rates supply counting we half. into is that numbers hit that are is into still also chain next supply of that down, really looking we're get going improving our the and a at cash good that than we more news do leading need make in we're on And logistics. year, spot come

it I be is doing challenge. So we're team we the to the continue improvement but right year, does think and this anticipating as get half of things, into back a the

Thank you.

Thank you.

Thank from Tusa from of Steve line you. the JPMorgan. And comes our question next

Your question please.

morning. guys, Hey good

Hi, Steve.

price estimate follow-up. then numbers the just I second on the absolute a price the the us for just for and year, price cost us And year? you cost, the you the but gave what's give for have cost quarter? So the And then can

Steve. Yeah,

to million. $XXX QX And overall margins. was over was price In positive about that said it I but price still million. company price $XXX QX, cost a in was dilutive So

you do maybe if math, couple of a pennies. So the it's

was billion What for expecting now $X on now expecting And are cost? before? then I it think what the are year, you you cost, on

be cost price expect we price to going to it's $X.X positive, And to expect We billion. to not again, pennies, dime. it's be be a going about be

it's company. on dilutive by below and for margin price overall that about bps So the still XX

it. got it, Got

your for stack, to we're now positive. slightly a Just on info, two-year neutral about

I'm I Patrick, little And second XQ think half like the guess, a it I'm doing sense. usually surprised right. bit kind to in weighting EPS. when make That's the XQ seasonally question, just Julian's and want to I weaker, sure then, came would for of right. be XQ, is I that Yeah, makes said Right, because a XX-XX both response to you quarters. $X.XX-ish math

Steve, to XX%. mentioned I little over I said a or Julian

think I to So close XX-XX.

Okay, that makes a lot sense. more

up-to-date view most your just your expect market one what the -- Okay. one, this year, the for from And year? what's of for last what's market the you then resi resi most volume-wise kind on

in would resi the that like low were half. Overall, to single be digits. first we is I up say going up XX% volume

be will about XX%. half Second

full the call previously resi I high was XX%. digits. about We going to said single think, be, year had So

from price, that to that some but of digits. in in XX% the low X% XX%. volume single So it's range, to expect now we to bulk going be do closer The

Appreciate Okay. it. for Awesome. Thanks the color.

Thank you.

you. next of question. And question comes of from our line for next the Thank Andrew our moment Bank One from Obin America.

Your please. question,

morning. good Yes, Hi.

Good morning, Andrew.

question, to you forward? America, going like Asia, driver? in places existing added the year? improving counting you do freeing supply the of how about you What's supply, more capacity much do think have on coming North going how Just incremental biggest being next chip a out chip into back whole or new capacity And up, visibility are

now, rather and that's with Well, we critical really, We we capacity and do for into going folks, to know And work trying partners design that that hopefully building are around next come Microchip are our are available. and get as we at than our to shortages, later. TI on and sooner year, right our friends NXP others. chips

anxiously goes Act tactical once now, CHIPS I it's time, But the anticipate XXXX. redesigns that additional and capacity over for online the fairly while a exercise around coming through, into think we year next will really await be beneficial.

a shifting the just lower is SEER just -- sort units, everybody, to follow-up just mix but for of for that. availability. because chip that seems just not on It And you, of

the how of more think structurally chips year we on on that So mix about should could mix and lift down available impact a product a improves improves, you mix basis, like-for-like become much as How get the next high-end as eventually. line? towards Thanks.

margin is lowest if increase it think means Meaning regulations. least one perspective a positive estimate regulations dollar new We SEER that the XX% we XX% a a resi Actually, from from to is market level, and Andrew, at the and little that neutral I the of up, that over that will see may benefits price at new margin with the want. the mix the over view. market you from of half in percent we XXXX, point a with half of of margin think perspective,

mix from so, we think And shift of a point view. biggest the that driver be may

Right, but you can the chips that available. assumes get

starting them this to and we're already Yes, but sell units, month. in we're new for those production

a Thanks lot. Terrific.

you, Thank Andrew.

Thank for And moment line our question the question. from Credit next next you. Suisse. One our comes Walsh of John from

please. question, Your

Hi. everyone. Good morning,

Hey, John.

John. morning, Good

Hey.

& Fire of ground covered HVAC bit refrigeration. lot to Security talk a and a on the little So I about wanted margin.

XX% suggested could margins. on security there. of little get kind you we HX, a put bridge if the you were Wondered a out quarter, the fire last just looking and little than had think HX you bit bit of a back better I

Yes. Fire of the are growth And at we One, year. is benefit & items in first the higher that of versus look the cost. price second element for expect Security the rates year. half us expected then in the to Fire second half organic there of Actually, Security, two half you & if be to are year the the second

neutral. & recall Fire & Fire that cost price Security you in QX, was For Security, may

of the price half to the for back expect be -- favorable the cost of half back We year in the year.

performance two that for be that of the driver these margin improved main And combination so we think of a segment. will

could structural? any pricing back on surcharges well the Are in just pricing Great. we this just talk there And things the about if you. to might side? around out? fuel kind anything is of going or there pricing, all reverse then then commercial Thank And as that spares commercial HVAC,

structural, surcharges the trying believe of to that or in things avoid we ephemeral best are Yes, we're nature. our ability

part question? price And of to the the structural. sustain. that it's intend actual It's So, increases we second

service parts also Just ability on around spare through of the or non-contractual pricing to that. push at outside

number we've kind aerospace using at a we that what really elasticity at on Yes, more to level. to to tried akin was part creating -- a much and the used what be and really bit more look the of intelligent do more side curves that's more about something algorithms,

and the much on And an So, models side. that been pricing we've had think I area focus parts think I a of the better success on that's gotten with. team's lot

it pass I'll along. Great. Thanks.

Thanks John.

Citigroup. Vlad Thank you. And our next question comes the from line of Bystricky from

question please. Your

thanks guys. taking for Morning call. my

Vlad. Hey

the So, about Security Fire talk a supply on that's side. & chip HVAC & Fire on HVAC maybe how on follow-up seeing component the as that the just the But different whether and side availability talk any situation. you in and Security, of a obviously, you what electronics see about and than you're lot chain can resolving?

highest doing Access They've businesses, that of been In & plagued those which We've even us, been. us Vlad, been businesses, for HVAC. business, has has and for overdue more margin. in in know but than really a LenelSX we're one it's even businesses. partners of it strong it. well-positioned Supra our a Yes, demand it's with our working very BlueDiamond and And or that's Onity our quietly whether say, great Security -- where been in job, supplier I lot our The actually are had margin acute Solutions. parts or very is high businesses, chips support team is to by our which of would Fire for particular,

the our coming that on have higher-margin year, than as to is So, of on reliance by into we the bit about ROS. is businesses impacted about higher really some been a Patrick expectation talked chips. XX% a recovering said, at The that. And be

of mean to know that a months. as it's they're there. we get track I just we going We sight over to we when are next few to happen it XQ it's has recovery not the not that line redesigned we into but it, part are hope. when just specific get There anticipating numbers

it's big you to -- line shifting see things that the that's any And good close obviously, watching to I’ll some be have those August, talk then the in I have color Can for do also to on that. guess there. construct? a differently that couldn't acquisition deal improvement you. you the just $XXX to historical sight to as Carrier, Toshiba of opportunities you million to you under in JV And synergies. you hear look do timeline achieving done about what

you, tell August, to early got could I not Sure. we early the closed that we next week. We is more said excited. be expectation here

months a It's over the TCC really and last use is got much product six integration at we've rotary our gearing And the with to look which the so. where has is What ready this countries or So enables We're have by in team great Giwee. up. compressors, go. differentiated The we're phenomenal this has -- technology, and as really JV brand, China -- high-end it Toshiba Toshiba traveled worked to we and a actually lower we it's a the really well now at JV inverter Carrier design line. as globally. you Corp the team. world to going so as be like been and minority especially some technology, very and overall. We But did or distribution have that it, control we demand found which then remember there we partner, didn't cost, got or production followed partner, is brand, for JV

residential, so talking pumps, were wait us they into to there get the and and can't our designs. we're see excitement we are pulling Middle where OEMs We compressor of there's really as to heat much things in unit the East So that European for like close. traveling we for for some especially condensing

and tell portfolio, has we you the really also is supply that facilities, chain product on line can companies. two phenomenal and that like between brand-new excitement I our there's China the opportunities in leverage across Poland TCC building. can the Toshiba places So

going say, So run I five so. we said we're And basis confident a on next, million or rate we're achieve years that the that. to would $XXX over

you Thank exciting. guys. Very good. Sounds

you. session. Thank for any back conclude does remarks. question-and-answer to program hand to the This the I'd management like further

for thank well, everyone, Okay, in. you, joining

course, we I a busy Sam and around of it's know While questions. morning, for are

So thank you all.

program. and for participation gentlemen, This your you, in the today's Thank ladies conclude conference. does

You now Good day. may disconnect.