Carrier Global (CARR) 6 Feb 242023 Q4 Earnings call transcript

Good morning, and welcome to Carrier Fourth Quarter 2023 Earnings Conference Call. I would 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 Fourth Quarter 2023 Earnings Conference Call. With me here today are David Gitlin, Chairman and Chief Executive Officer; and Patrick Goris, Chief Financial Officer.

certain relevant on performance in business. discussing management call, of be are believes assessing will non-GAAP this measures which the We the financial non-GAAP website at in GAAP is These to ir.carrier.com. reconciled presentation, available Carrier's earnings which figures from download are measures our to

any could are actual filings, reminds and I'd provide CEO, statements. subject and and over results Carrier's that that SEC to Forms flow listeners provided XX-K, turn materially X-K, factors statements those anticipated forward-looking Chairman differ Dave call important company sales, the from [Operator earnings on risks details and cause to forward-looking The our the cash during including like XX-Q to and the expectations Gitlin. in other the call uncertainties. that, Instructions] With to

Sam, Well, and everyone. morning, good you, thank

saying welcome new by navigating XXXX in heartfelt transformation. I'd to a excellent Solutions. Climate to also and portfolio thank members while delivering for our compelling our start like me XX,XXX and Let team team from results Viessmann such significant a you thank

impactful industry kickoff seen and to Our ever and combination are than down warmth excitement had will profoundly on the energy, be our seen, journey so that more have go as most month this celebrations. that this day I believe has X from ever last I excited business we formal together.

flattish quarter, growth a As sales. Slide on and the the XX% to achieved points finish strong of kept of great adjusted you double-digit a another on margin for EPS quarter XX quarter aftermarket see In we can fourth growth of year Carrier. X, expansion basis driving

in am capital. by significantly of as million the so continued team can Slide Overall, over for Importantly, strong free flow of I X. beat on our see cash expectations, you accomplished what proud XXXX, driven working performance $XXX

ability and despite delivering our chain moves. an our significant excuses. persevering customers to strong headwinds deliver in shown Overcoming consistently shareholders spin for supply challenges results without to and following outperform COVID has XXXX, team Our through portfolio

year, earnings the from we to we key billion. growth detailed and year, productivity Not delivered growth $X.X strong as also expansion. to than flow Slide on led solid in XX% sales shareholder margin on $X.X EPS improved core X% free X. conversion more XX% XXXX cash returns did organic actions deliver company, consistent for since a and about results the became took we year-over-year performance growth over by initiatives For we our to you position planning This XX% differentiated billion public see growth, drove can only performance on has

was take and As our we many of culture our innovation past new for Carrier. century the that spin, established advantage business but goal core at intimacy simplified customer and prepared strengths our a to opportunity portfolio. also our create with a unique to Carrier We and established the leverage performance our over

space. the We as have accelerated proven have growth lean and sustainability to driven leadership invested into recurring organization focus been our an this around a disciplined on continuous our with We in sharpened improvement playbook. long-term have in in and revenues trends productivity,

as So our our of next we're our about to performance We're excited record. next chapter we proud track level. more even the take

Slide which you climate to see of intelligent listed some starts global can Our in introduction, the X. solutions, product as is and energy differentiated you be mission leader with on see clear, here. It

customers, low our heat energy on AI low across efficiency, and that engineers developing specific X,XXX for portfolio cut integrated such sustainable refrigerants, our focusing now our sensing GWP technologies temperature the as globe, across electrification solutions. differentiated and energy pumps, solutions algorithms, are management We

so. ensure will we to do continue and that to We to out-innovate are we poised win, and invest

residential split Nearly XX%. in as reflected were XXXX. up market-leading XX% commercial European North Europe heat portfolio. over were sales and pump heat share we are gain XX% systems our America efforts grew pumps our refrigeration in These in electric sales results of our across transport our

walk talk. For we the leadership, sustainability

our commitment track our for carbon than X to and We achieve across metric more help our customers' operations XXXX. remain We way X have in emissions for XXX our reduced by by neutrality using footprint ensure that million tons on Scope our XXXX it. are gigaton Abound on to we

also greenhouse XXXX by framework. map across to out laid zero SBTi We value emissions a net clear the chain achieve road under gas our

growth, consecutive approximately and years which X HVAC one ago. on our we beyond. Slide field year, now and long-term year at XX% agreements, with you coverage We attachment the just In is has again years commercial chillers other our last This X,XXX are up have consistent XX% targeting double-digit for attachment just We from of sustainability, growth. rates double-digit this addition themes ago. X. Growing connected of playbook. X last growth represents as XX,XXX XX% now year our roughly helped It's can we to the third double-digit versus achieving year see key service achieved and aftermarket year aftermarket our of working, know another in

are the reception continue you received from we that weeks Slide and while X. see new our energy just Europe a few on ago. transforming, many we members across I warm we summary, perform In customers team to as and already mentioned

with is superiority, its in deeply in intimacy, team, deep Here its an of brand. Viessmann what culture, excellence channel a reflected culture all is customer product is admired design, clear. excellence, organization

this The for and will come. planet tangible to benefit people, investors the and intangible decades benefits customers, our combination from

Board, fortunate also with our We have insights who on unique already now Max is and perspectives. us providing Viessmann to are

mid-single to USD Viessmann targeted first high teens year-end billion of Climate our with business all upside closer benefit the we our to about of synergies. sales targeting significant cost we synergies, be planning adjusted case. This be which XXXX includes Internally, look EBITDA margins. When to X.X are XXXX, a we revenue year would are up digits off for Solutions

second Solutions we growth last in the though supply which cost other impact target growth some first European and to business to subsidy of intake, savings. Climate the we X countries return half order in expect regulatory or XXXX, year's Even and year, EBITDA half to achieving and our in chain exceeding this by Viessmann year expect of uncertainty delayed we adjusted do case solid accelerating

off we're running. So and

We are our Viessmann's playbook Toshiba culture ensure successful team we tremendous integration value integrating and to from preserve create to while applying superb with that the together.

Turning business to our exits X. Slide on

in close our Solutions You together commercial yield and on all saw proceeds. announcements or will about $X Access $X.X net refrigeration, billion which to billion

sale a We and around our of the expect good to first announce industrial progress the definitive are fire making still quarter. agreement end on

combined sale a businesses We fire residential commercial are or to also exit via and our market preparing exit. public

the exits, path a we business about to indicated. by this we now leverage and the year ratio is performance than previously of Xx cash which of about these our earlier have a year, achieve Given net progress end

Before I on of looks our word than to key less turn growth X%, be significantly enable double-digit outgrow economies. many growth. global to markets guidance a over our XXXX Slide on are Patrick, in continued mid-single-digit GDP us aftermarket planning and it to X. megatrends for we though quick Even Sustainability

we to aspect XX and of continue points will We therefore, margin and be operating every adjusted basis tenacious are, expansion. disciplined of over targeting on productivity,

this turn me over Patrick? Patrick. let to that, With

guide earnings and $XXX a million from and morning, were was tailwind were impact of everyone. even Slide reported October, of were Organic X flat Dave, we though sales currency the by Please divestitures. good lower. sales provided expectations QX and about favorable you, ahead XX. in to $X.X of the point our translation Thank turn billion offset

adjusted flat inventories. Organic in drove QX sales demand by reflected mostly than favorable up down compared partially as distributors field by lower HVAC driven were expected, sales business America residential despite we price/cost X% to was operating productivity, offset year and North and our volumes last investments. lower profit

compared adjusted expanded a margin XX As year. last basis operating result, points by to

refrigeration was fight ahead implied of up $X.XX. net of to items expense. a was we and XX% little $X.XX were benefited light, discrete year-over-year security our expectations, and QX and and our margins somewhat were better, of little EPS from guide a lower interest tax HVAC margins Compared and Adjusted

than about of year, $XXX for flow billion XX% and which million net October of was we free generated full guide, $XXX the of adjusted million flow is better our cash income. cash Free $X.X

our free in net Excluding of some cash fees the out which flow restructuring XXX% M&A-related XXXX. we into over adjusted are of results, adjusted of income cash and spend, converted

XX% Moving completely high aftermarket. mostly due X%, The HVAC, down commercial significant had by expansion segment high HVAC good teens. continued America the margin quarter double-digit starting including were another in North in sales headwind Americas in segments, the operating commercial with offset growth exceptional was growth HVAC This quarter XX. and down of to Organic to light on sales Slide almost despite on residential over flat single-digit in growth growth sales. another HVAC, being

and was XXXX mix the in the to residential America by was North related down continued realization high partially SEER which offset HVAC price up the XXs, transition. volume positive

very up XX% XX% strong of industry HVAC was year a another for full year, year-over-year commercial light an Our the quarter with business business growth. best. finished This about

Adjusted margin another operating business. segment year price margin HVAC flattish for XXX XX.X%. basis this This full driven year and points up our great operating by sales cost on growth to year-over-year led was a of Overall, productivity. for

Transitioning to Refrigeration on Slide XX.

quarter XX%. transport sales up growth significantly in X%. refrigeration, the and around As expected, to were for was segment Within the returned container organic up

digits and and and was in Asia. single strong truck flat business America trailer growth global North Europe low Our up with

single single onetime was and Our Operating year-over-year. few digits as solutions Sensitech high to margin XXX for points business, insurance. and high tracking which provides such digits. basis refrigeration products comprehensive year-over-year items Commercial a down in visibility investments monitoring due warranty was temperature-sensitive contracted up

Fire favorable XXX in were segment partially Adjusted strength and operating Solutions, about XX. by year, which Argentinian by was margin compare revaluation Moving & for very offset points. peso currency, the was down in offset X% XX%. The basis was versus to Access by given volume profit this impacted Security cost. XX%. margins prior sales almost Organic over up Slide driven fire, partially a the of Full mix price year industrial operating on tough on down by

Turning XX. to Slide

HVAC As while you backlogs in and to year. our result on down longer-cycle orders significantly of North the chart, the compared mostly down businesses of in continues company to America orders Total being can were single quarter, to as digits our our see for trailer commercial last business normalize. left side backlog truck a low continue shorter-cycle increase, the

order XXX% opened of book. XXXX trailer truck In orders as were year-over-year exceptional QX we the North up America XXXX, an and

were orders America Carrier's orders, more orders continue as to were that which decline returned the were down HVAC to Excluding growth low in organic as lead residential orders up and North XX% single-digit truck business. times digits in than up offset in commercial mid-single QX. improve roughly light trailer, mid-teens, HVAC which

in very backlog and extending orders the in stack quarter, in mentioned XXXX. XX%, container orders America, in X-year truck the low on comp roughly was North XX% by Refrigeration and offset reflecting orders down tough only single orders up half to were the the were growth Commercial a digits, business, remained HVAC global well a the were strong, where trailer of -- in with partially I growth longer-cycle earlier. low nearly down single-digit around into and XX% up refrigeration. XX% and orders commercial return up about second This

XXXX return longer-cycle Overall, to with as container. in orders commercial growth we residential a robust and in HVAC such enter backlogs HVAC businesses and key

Moving on Slide to guidance. XX,

Let some to key transformation. guidance our assumptions embedded start me related with portfolio in

a acquisition on X. we included Solutions the Climate year have We Viessmann closed full of as January

sale that date, that the June. they the of both included and Therefore, close. a Solutions in operations and previously with exit are Global communicated refrigeration, in so guidance our guidance of definitive Access You until will end may our continuing we XXXX businesses business both agreements through place midyear assumes in exits remain for commercial recall

so are exits residential be guidance to Accordingly, the the have will our X down and place, fire definitive in debt. as XXXX for likely and agreements good into a industrial year and estimate our guidance there pay will commercial to we do the We net from fire assumes used exit include these full we proceeds and until date.

of Now to the XXXX guidance. details

growth billion, equal with of sales mix. contribution from volume We $XX.X about price about expect mid-single-digit including organic sales and reported

to reported Solutions the with sales to about divestitures Refrigeration the We KFI expect along XX% to about growth represent Solutions and to Commercial Climate reported headwind Global deconsolidation of contribute Access organic growth mid-single-digit sales. for of a Viessmann and X%

is by Adjusted 'XX, structure overall compared an expected our impact be given impact is over of million is $XX simplify XX% restructuring points company and FX productivity. The Viessmann actions Core XX%. driven benefit and earnings as acquisitions, margin we our Solutions operating this about is of includes conversion and and from operating executed up earlier volume quarter over we basis between to transformation. neutral. excluding margin to Climate Productivity XX price, XX.X%, divestitures that the

an of rate, effective the adjusted $X.XX expected. Incorporating us we $X.XX, EPS acquisition an includes which Viessmann range to a tax to this $X.XX from about guidance adjusted as headwind gets XX% estimated

about Similar payments to exits. exited expected of Underlying Chubb, XXXX. will cash cash related is impacted to sales will be flow from of the free flow free some to transformation activities. to given Reported on lower XX% be the tax XXXX, flow up cash these gains when by business we operations the portfolio compared be

the transaction Given of the $X.X fees related transaction the X large announced, $XXX Viessmann free Solutions billion the outflows expected all restructuring. related cash to additional about Commercial gains expect gains to net cash payments on million. transactions we X and of expected on and Refrigeration, flow the to already and tax This about Access exits includes

expect not $XXX be impact we weighted. XXXX, our from cash cash divestitures payment proceeds and the flow we investing free back Seasonally, to tax pretax. of flow as expect cash restructuring typical business statement XXXX than Unlike show charges half exits, in on activities do million the in therefore, the flow. gain to about the higher free the Similar will

mid-single-digit Solutions year. the of on the Global about business operating shown second of slide, segments. Access higher-margin X the Fire organic Security side reflects growth in in all absence we & the the half expect XX% As margin of the right of

$X.XX XXXX midpoint. to shows bridge. EPS the moving chart $X.XX from increases how This Now adjusted XX, Slide EPS adjusted to at

over and blue representing XX% dark X Our the we businesses will business retain guidance our expansion. conversion earnings blue strong to leading of of benefit representing core volume lighter over the exiting. of leverage margin core and includes productivity bps XX the Think the as businesses and are we the all

the to We up despite Viessmann. expect close impact XXXX of the our to core earnings XX% of in be business dilutive

by net and the the contribution from impact Refrigeration from and net proceeds. see X losing the interest Solutions Solutions months Commercial Climate earnings can offset Access You of Viessmann of from savings

expect the from tax adjusted a effective as headwind XX% rate. We return we to tax

you course, the right, proceeds of The reflect businesses redeployment that and benefit year On residential see EPS includes $X.XX full $X.XX and far commercial being does about to net industrial of the adjusted from the not fire exited. our XXXX the of related exits guide of of fire. expected

February proceeds XX. deployment other dividend on items provide flow the we in on starting and With capital the recently this respect year be the XXXX, free payable dividend. we exits. usual, focus to of appendix a Slide increase And As estimates net in cash will from our announced with deleveraging through generation

return As we net to we leverage, about share resume repurchases. to Xx intend do

turn color to before the quarter. provide over some additional Dave, I let first it Finally, on me

$X.X of single-digit bps the low expect headwind, to about Viessmann, billion be and from right KFI less $X.XX $X.XX than growth refrigeration not of -- about and at revenue margin revenues EPS gain organic the little We from adjusted but expect and each $X.XX last expansion. $X.XX. on and XX above $X.XX right including We, tax about We with higher therefore, year-over-year QX year's from adjusted had sale deconsolidation a a rate. EPS

year growth half We throughout improve do expect in revenue the with easier of XXXX. second organic sequentially comparisons the

in We expect and half EPS balance of than realized full XX% less the the of year little in half. year second a first the the to adjusted be

I'll Dave. turn to it back With that, over

delivered to again geared and company, results for benefits while company. a in sustainability-focused as we will combination start strong sound we we pure-play higher-growth see on are the transform. closing, Thanks, In execution year a a we'll the In is to head XXXX, perform us focused we Viessmann will big do we will tremendous up of as [ so that realizing Patrick. remain in ] This continue and and XXXX XXXX. from and

With that, questions. up we'll for open this

Research. [Operator Jeffrey Instructions] comes Vertical from question first The Sprague with

you chaos can end in the year? bit more German and you detail kind of see playing and political on Obviously, Dave, incentives in clearly year just XXXX. things play impacted the a the address the of out uncertainty and color are how through Viessmann the and little

expecting might in comfortable how higher the little we particular, the So color countries. that cycling And do just other you just with you're get in in Germany what on bit back of half how a in offset 'XX? more business

as book February, feel do at Jeff, look positioned order What then we Well, see increase heading said. as need well January, what we go we we XQ. is just that March into see did and to we you exactly into

elsewhere heading XQ saw Germany that pause a we of Some like of slight and in stretch in put countries on a into dithering orders the legislation new for XQ. did period around

European regulation getting looking add now now coming the to now but to new about the by talks of going greenhouse emissions which out a We gas clarity. XXXX, see reduction by provision not We and XX% renewables is that XXXX. they're in XX% Union, like have only

there heat get around pumps. can't You without more regulation

So which we January, subsidies Germany in to range depending of XX% got the more definitive legislation factors. a has in variety those on XX% in

like have and more countries certainty We Italy. in France

in funding. administration Poland, new a EU have unleash of which should the We some

So as up bit. in France range. think will we year, be look digits, be we Germany, and probably at a Poland double the Italy the down will mid-single-digit

we is Jeff, point, half your a sales when back-end especially XX% supply probably the start second chain would start XX%, in bit more the synergies I half. are say loaded in To more the a synergies, EBITDA us, for bit back-end to from second to the accumulate --

definitized. pump activity bottom to We see increase website that So we're pick got as preorder watching what legislation increase. line now German starting we saw now, into We're We our heat is applications on the activity of up orders. January. saw

was So that encouraging. very

filling at be to case. original or We're half. And frankly, chain bit to clearly second at up which should at little looking the looking first half of going half we're growth the some We're a EBITDA, supply aggressive year at second business on EBITDA we're ahead of those our full set synergies looking that So be over orders. growth.

pivoting actually for Great. in just the give us, little how revenue I know, is don't refrigeration? XXXX bit can then and much actual security as a And you possible as guide commercial just precise Patrick. Patrick, for and profit

Yes.

full For the year?

Like the in X Yes. and guide, your second half be those leaving? for embedded how for it's are gone actually revenue guide to in that right? much profit going first businesses half is Well, the

about evenly X% year, year. think being or lose for lose full loaded the for business we'll less exits and we more Well, the the of of as full the

So of being about take. margin profitability year a bit profit in would billion, as point point first -- and think from I a little similar the the to $X probably of we yes, margin businesses. or give say, profile of a And more of view, what view, from these the shared

So $X take give Jeff. billion, or

The Barclays. next from Mitchell Julian with question comes

giving lot for many Thanks of clear a parts. amidst detail moving

of just terms XX, segment first Maybe HVAC that the on within In for my you've U.S. terms versus I mid-single the on price guess, of, resi sales got volumes? that on sort guided example, up of, guide, sort business any full what year. And guide sales in core the question, of for HVAC assuming Slide for you're maybe more that detail please? digits

be it global the and single-digit the the high And you light Yes, commercial range. North will is will American way about business, up probably commercial in mid-single business down digits. I X if it our of ways. Those in those North both sort look America kind Julian, think HVAC probably be of at resi

And any the volume price the year? on within for the thoughts segment

mix. for rest of say Yes. HVAC, to X% about I for looking you're at volume price, X.X% the price would

just Solutions. Viessmann quick then Climate a follow-up And on

some some about so growth that so but growth And if you much to like the that give of much of very mid-single-digit which in heat think boilers much perhaps, you Wondered across and so maybe which if volume-based. that, perhaps investors of but aggregate. not within you sort of guide forth, forth? seasonality, is products, nervous pumps guide the in and products so -- the any any talked flavor color the color addressed more by I get by addressed, region, about for You sales terms any as not other year of how and

it's volume price. Yes, than more

I respect have at looking some rest say we talking to growth probably about lower few price of for to couple that reasons, our where peers the mid-single-digit with some Viessmann, Julian, You're growth. say are. points think, would organic of a growth I I are confidence than a of high the know in we of I And things volume. would here's,

play. Number one is that, we're not a heat pure pump

have the are. flex of we the with boilers on So to what conditions market kind ability depending

We capacity of residential XX now higher will in for not new to the are that Europe, anticipating in have product new the market us gains. and products. of before the into that introduced XX% we all XX more product which that a sort higher give There's where than Viessmann's share access single-family kilowatts, to line than which part multifamily. offering segment, way that, of a did gets much

push for we're at be only do plays So products not but to the on put also market. into fairly in level that significant Germany underlying benefit second And targeting there's certainly on recover mix, We're start the The new think, our number revenue haven't share of geographic we ourselves model. think we some us start see introduce to services. We'll the favorable synergies the we're that to internally. looking we into parts at half. looking as of going I a gains,

little we'll taking is would lower bit, still of pumps start we'll for business. as We'll margin recovery to sales. So watch, more which but on place. a may heat see it us that be PV side see slow boiler a something some the

starting in we're confidence benefit to picking do we the growth all, up with around we Viessmann see in certainly a of will the clarity a salespeople, have spend time chance So with more team regulations a I've had lot that of now lot us to leadership have second and that the the and all activity half.

helpful. That's

with Kaplowitz Citigroup. The from next comes Andrew question

then year. volume? single on price you the expectation in out Patrick, seeing you're between talk for you the you I resi think David, high resi And your can inventory Can the sales think And rolling progress versus XXXB? target? about talking of where I down and up in mid-teens? in were then you out the about break did digit mentioned year

Well, Dave. it's Andy,

out. Let me it try break to

points we'll think the price way Remember, about we is few that, units basic March about of mix. price you resi up for a for the year, will to a And I we percent of think X% year. percent resi XX% price, talked over a can of years. look, XXXb the Remember, volume next announced expect that a being few just price for rest XX% be for few this our price business. increase effective X

And then the or versus price team. XXXB on of I'm for the so look, of a And probably difference that, top you're proud units the at about XXXA. looking XX%

I as speak. think so units mixed XXXB. We're going some to start homebuilders March. subdivision, shipping a early on want side to for as of don't to our that the start going we're We'll start build the new because

for heat a start So bit units to for they're training national some XXXB out taking earlier, going pumps little get we'll purposes.

think and I failed all year, will in the Andy, I'm and said be to I will another have XX% XXXA about piece XX% there be the address? did done sorry, this probably XXXB. you is And be that when

end inventories where the of the in of sort Just channel year?

and we to a end We was up us. wanted down XX% big inventory. year-over-year This Yes. in mid-teens ended down for one

was That was targets purposeful our very fairly in a with one that our us biggest effort of So by XQ. distributors. working closely

partly being that a lighter we in reason thought, of as I resi or we X, had possible. sure behind that over I be ended yes. as for And month levels. were little XQ, then -- more than bit we to bit XXXX and got there think XQ in us Now as that's destocking destocking a more typical behind much making next us the think achieved here we But that. back tiny the we're Could up

then and guys? that about like mid-single-digit And HVAC, for kind reaccelerated Great. talked, mid-single markets you David, X%. orders reacceleration sort the growth the for on But anything then a sort you up guidance I key in decline Julian's side, of about of to digits you certain seeing Are in you alternatively of 'XX. the mix. And of actually down questions sort commercial bit think, commercial HVAC visibility answered

Yes. we we've actually a while. at Americas look it's -- the been robust been When in for orders,

been HVAC little look strong. at would as in Americas, continuous there commercial this positive both still had close for were and the year partly We sales say some driven in very You look our When in And it's orders surprisingly sales We last data growth commercial to up centers. we growth fine for at the Europe. Orders side were fourth demand well. XX%. in strong Europe. see and digits. HVAC a the there Americas double-digit for double in quarter by the it's bit on of industrial I

would pretty have the still is Asia we liked. than solid. China orders in fourth quarter lower were

say of XX% real will China, of the commercial to in is now kind it's a terms watch XX% industrial and and But HVAC estate XX-XX item. in we So I used be reverse. China infrastructure.

in centers The So EV for China. data strong we're demand seeing continues production. strong very to be

the that a So continue, is a but China is clearly I rest and weak strong. spot, think weak will property is

we to continue level banking go we're some this the in strong where because we have and China actually optimism growth on year, So customers of are.

guys. color, the Appreciate

from question Next with Markets. comes Deane Capital Dray RBC

It's see about seasonality. moving all more kind the resumption fog we're of of here, but the of through hard to hearing pieces

what into see baked what's seasonality? regarding as the we guide Just typically would

in say, years. Deane, different no I than would prior general,

QX. that's happening by flow residential loaded, HVAC. generally in And seasonality biggest side, So typical, back-end of as so QX be, course, view, point by very then and we to heavy quarters of QX what's the our far, QX and always, a driven, in cash from in expect, more on

X point half lower higher say, typically in we second similar, current very first year maybe But half, we assumes of big seasonality in points offset X terms differences the year, XX% In EPS half, so the than in XX% the about split XX.XX%. EPS second would the This see. half. the our in year, no that, first it's did in than of last full I our besides guide

Viessmann activity to pickup, expected we half for year. that be the more one, given in, we of the but expect second the specifically, kick particularly towards weighted because given the synergies mentioned, order Dave seeing expect half, of cost it As the volume second also to -- second half the in we're

you Dave, discussion and rates quarter plus. regards of Great. so industrials stage. and these And are to log front of the then win expect That's really sort what still about these the positioning of discussion billion this all sounds like Where do in with mega It projects, you are helpful. forth? $X across to of most lots be

talked than of about the for positioned Very feel data XX% we've bit company. established some go Americas, our that really target the a we've That's property is real little bigger of commercial very look us It's the just being customers percentage our the we as centers -- to group scale less a well the as our market a strong, HVAC strong. us data -- bigger in percentage we a central market. when double-digit low is centers it, scale than with projects some with at for business customers, unbelievably in Deane. We estate of mega

we've new recently And introduced products.

United the that's chiller air-cooled XXx in States Europe. over in has years. space both data a and growth get Europe us have X We the seen significant in center wins, helped last new

higher other So been of to bringing when we has education, we retail continues back, care parts CHIPS Act at are look be ed, that to retail, health at data of strong verticals production strong, even strong. in K-XX the centers. some look There's some

were HVAC. I last feel Asia. tell in very positioned overall we year in in well flattish share you, And So would up in we picked we the probably share Americas. commercial in Europe,

projects. these well So we mega positioned feel with

That's very helpful.

comes Noah from Kaye with question next The Oppenheimer.

question, segment about bit 'XX. little And growth in guidance we mid-single-digit for basis assumptions Can regional transport the you're get particularly a for talk there? the what on organic First Refrigeration for the a to refrigeration? assuming

terms I'll Yes. the rebound of of take business, in This that. looking share. Dave. at both container we're first in the Yes. in Well, market strong a terms of is all, and

of we digits. north the business will be double So container for well think us, that certainly

the look you trailer it and North The truck market double at last up global the the it's last like a if it. and excludes we for APUs, we volume that's remember, down piece business, get For that is But trailers. small pricing grew partly truck, ACT, mix trailer that significantly, truck actually because was from look ACT, electrification. down people things digits. is single-digit at that's year, and of low year, in That American sheer It range. market, just

flattish point even think both year or is could double And And Asia the market or then XX,XXX maybe of in maybe this the we're double-digit trailer. truck but at Europe in We point down looking be give business. take I so or would well. strength to refrigeration this we commercial probably X we starting would say that up or probably flattish units kind growth NATT, says I from X, see the year, digits, truck side to as rebound X. European on So saying trailer think ACT, think, continue though and business last actually see we'll down that -- I in year. XX,XXX a market end be that

Dave. helpful, Extremely

think potential flow flow I some transformation back we cash at of past conversion get on onetime of on this there course free profile adjust to be guess move of the outflows flow And XX%. free core get you core do you we think free year the cash that when initiatives, looking these for going are about a Is I focused to over how still basis? what cash as north to cash we there? go-forward the to XXX%? conversion

conversion. flow cash free on focused always We're Yes.

we if year XXXX, our they're restructuring and so flow adjusted of you conversion. As cash fees of I mentioned out, adjust of part free actually items XXX% income, we're which like some this well not over M&A-related in adjust the for

GAAP relates it take or you it over to back income of income. net adjusted some So

guide our mentioned $X.X Now cash for XXXX, includes items. $XXX free for billion of those flow. I that million,

Solutions XXXX business, finalizing billion, embedded from within expect we're take well, we reason that guide be which XXXX. Climate So key CapEx as some is in the our projects. of perspective that a for that a is Viessmann larger And $X.X elevated to for

is And million than or $XXX the would so be. million our run probably that rate about about CapEx $XX so we XXXX outlook think million of higher underlying for what

think absolutely at XXXX, spend XXXX. restructuring, in But account, take that that's we target so the would account didn't. cash free be in obviously, into XXX% if I element flow And we And always to conversion. on an you taking cash into

Sachs. Joe with Goldman Ritchie comes question from Next

Dave, on I focus first my want question just Viessmann. to

what for start. So know embedded slower I number in expected mid-single-digit exit of of half be what's that just kind to year, trends the it's the a like were then of the kind And XXXX? for the expected year? in first

the sales or in quarter the a of last we the came second fourth -- of about the digits you're looking perspective, the mid-single It a we XX% was we look would say were quarter in half. this of first year. see of XX% lower lighter orders the and probably at But did so Look, the and that fourth sales half, calendarization bit half sales little year, at impact thought. did up from in I versus that in when still the back about Yes. than

is it's weighted that's kind for of of more because look -- a when got the piece in. effective which was Joe, I -- can beneficial you think in our at encouraging it start like become as did more see and we see mentioning back I out But as tale apply once the we EBITDA, to of we X you towards -- When retroactively subsidies, of the Germany, a little was legislation January, cities. the definitive the earlier, come synergies bit half

the picked on saw pages activity You Viessmann up. web

started started the see installers. increase. heat amongst you applications And to see energy You to pump

that of we on dithering saw some legislative side new clearly, So the impacted orders.

you start are pick we're second pump going Now confident we and very have to sales something? orders heat level half. see we'll up to that a the add certainty, And in that the Patrick, of

say, digits. half just Joe, And be Viessmann just a QX Yes, XXXX were to with of flattish sales was down of year, going mid-single mentioned. in them this XXXX, about about the pickup Dave for I to expect second we as of QX for so then

inventories know what I perfect. And talked just now. you're seeing and of maybe of just already we guess color. just curious we've right and inventory That's in some that's the provide cycle on on specifically are. I'm business I'm just you I portfolio. security kind that where the rest curious business No, your good color Can through HVAC across the resi

Patrick Well, year. we've And calibrated for in said, Look, we feel in are for on levels we I half of security. normal We -- first we're -- to half. sort think the where on side, more back of guided for the that as security backlog where we the are

we're parts, HVAC backlog XX% still our at we for mean, I looking a on X-year When other commercial at up side, look stack.

So we're the we of this going very into have year. well good -- coverage second half

levels channel. when partly So of And in about commercial the HVAC. we're it's said we that. watching down feel when at commercial piece, have we light good watching not the partly our growth sales we're that inventory helped frame the we for -- look we we mid-single-digit in because projections the range, It's think the

with than I say actually, still XXXX, XXXX would XXXX. in saw Now will numbers our of the we we forecast, it even be lower kind

strong into and the heading XQ watching we're beyond. very inventory coverage So levels, we still have but

levels, have But on is coverage have. about watch light a the eye Carrier. that, an are we we by keep but commercial encouraged tough of we'll and So we we'll the that there. of -- X% all inventory but remember, compare And obviously

next Nigel Wolfe comes question from The Coe Research. with

little comments, pretty making for a easier And Julian's thanks I us. echo setup bit complex for a

we you XX-XX, XX-XX And based Just for the roughly to want go Patrick, I -- mentioned on back think about comments to XXXX. that got our Viessmann. model,

seasonality. that's So normal as where sure on comment the benchmark. you then we sort can up want I think, just Viessmann, just of sort make of I EBITDA maybe more billion finished on for And X.X EUR to

to got for And you XX% in XX.X%, neutral the margins spur is, question fairly range 'XX. really of Viessmann I've I margins EBITDA the the Patrick, be think, mentioned in XXXX.

So want where you Viessmann make I that's margins sure to 'XX? the see for just

Quite about things there. with said had -- few EBITDA. and Okay. start Viessmann million $XXX where the about a billion XXXX. ended in X We I'll Nigel, in EUR

billion EUR sales. So X . in

million. $XXX

below. came On both they EBITDA. In in slightly items,

So or million sales came were EBITDA and close billion in below to that. so EUR about X.X $XX

where So the year. ended that's Viessmann

from margin embedding of our terms operating In is margins point VCS an the Viessmann full of guide year, for right mid-teens. at view,

an mid-teens. And high call middle of at teens. of the, point it, think from EBITDA I in margin the they're So right view,

margin basically to So their well. the accretive in company with The the EBITDA operating average overall is right line margin slightly as is company.

Okay. just quick there, And but thought I'll I follow the was a offline. follow quite follow-on... low depreciation we'll up up offline.

the boosted and step-up fixed that transaction that that there depreciation. To part point, of a was the the in assets as

heat you thinking Dave, makes boilers. pumps then just Okay. -- about the That talked total ability Viessmann to about for between and pivot And sense.

my about boiler. the understanding because is there price higher are Just than pumps much wondering impact heat mix ticket

a mix as consider So should impact there's well? if just wondering we

Yes.

at you're But margin I Xx for the think both price on they're sales the very we're clearly, side, than on similar. side, boilers. heat looking the seeing about for pumps

more XXXX, into year. in XX%. at look that bit be pump to guide top at that obviously, term, year, compare get our you're last growth seen mix this heat them long whether baked growth, we the whether heat expected It heat but for when pump remains for tough of So for and boilers pumps growth XX% we'll a is we the a than think looking mid-single-digit see that we line between

Capital question Hammond Markets. KeyBanc comes next with The Jeff from

One, couple comps? to And are a speak on Just sell-in, that of resi, of there? versus the seeing destock? light order versus what market cleanups mid-single on maybe just then down purely HVAC. you commercial is absence are thinking you digits, sell-through weakness the Or for

Well, such it seeing swings I we're orders difficult is because at in just enormous orders. first, -- on the of part to X comps look, and look a latter orders it's very is

support marketplace much What how then with backlog verticals. quarter underlying looking just we're coverage. that at XX%. and XX% So demand, the for down to at the or more is actually you can fundamental light we're demand in commercial look look have certain out at we and We're looking orders seeing we a at that

that quarter. have look we half we into for the way goes goes expect, that we normally XXXX, sales as at of So would good the into first it go. and beyond It where the coverage second

we're So levels. inventory watching

the of was of some your in things remain Please lower-end do we're like coverage. then good strong, the come retail second business. pretty that on verticals like quite generally the question resi. space. year in to some of and watching And the commercial half me the have orders K-XX new We know what feed light We remind parts

Just demand resi, on is? what think you market Yes.

Yes.

been channel point, we're have what other. pre-COVID, is and think you'll would We to what which feel the our movement sales to we used to partners each to been have like from dealers. now which start more back moves a to sell and to into see similar I channel, would very the start

of our sort we of more sales to movement, back more X:X a We're and for So should our levels. normal to from distributors. our movement start match see

about around shipments level, And of over you're you're last at market you ducted this handful in looking years, the look million. about on million. at $X.X a 'XX these XXXX, $X.X of And of looking think splits market at year, total back

coming we was of a it feels bit pre-COVID about couple for up we'll year. good off resi this and zone the of projected like and where there. that for in would And been growth we of traditional of grow we reset we're kind back rates of $X year got Last have years into we're year million So range. a feel where that we have levels, from a the sort more to now

resolution point? and Okay. the have what's you'll And sale spin on then at commercial do business, this just lean kind versus the when think resi fire you of

as think to we the in a little I'll we're commercial priority EBITDA that's the residential effectively close working exiting. and And and soon that at half the And an exit to that is we can, the security, combining as -- commercial we than everything do about buyers. refrigeration can bit of more now, When with sure our close fire Yes. as looking we tell want together. make right we we're the you #X

within announced next we in work couple is do an as we're we're now work and The well. all ] ways. have We're all sale that. And fire industrial the preparing here the QEV associated exit. line commercial months. a resi next [ could of both a priority we the a prep around market though it activity hopefully whole have progressing right frankly and it with for doing We're public at fire, the very and preparing deal that's we Then internally looking with and prep

meantime, in improving we'll in which Edwards. like end it underlying and focused of Kidde exit, or long-term internally. down down what maximizing way to go to we're And comes shareholder and the businesses that really just assess the performance heads day, great public those at franchises continue are of on the sale And the market we value,

Okay. Great. Appreciate color. the

Stephen from comes next Tusa with The question JPMorgan.

Congrats on closing the Viessmann deal?

you. Thank it. We're excited by

versus mentioned What you data exactly about there? What million $X.X $X.X talking point were Dave, ducted million? the you about are splits. you talking

total That's Yes, Steve, different. know you've split talked for America. like volume I North

So the how HRI from differ does data? that

off-line, For it the industry? take We have Steve, can if you different...

rolls how -- what OP kind for Okay. put in us looks that And can then and maybe of much of savings about should that much we profile how off would just just for how this 'XX the what year talking you we next into kind then like, forward -- context you're -- help interest with roll when year? what

is thinking EPS business this blue this at to And year-over-year. for our or It our by Yes, Steve. helpful be core one we deck dark I'm look might in XX percent the year, this. included the so the way grows bridge about

that impact What's -- we be would we year, exit at course, embedded the businesses the end the Next that lose. proceeds. is redeployment a of to course, net the offset the there dilutive all assuming, of of this year, related of is, not $X.XX would

course, and that, our could core double we continue grow at if that of business of to Add this redeployments net disappointed, proceeds. would the So to the not guide. $X.XX We digits. year be per

In Xx the given market be would be repo. addition flow to level, that we close to we'd net that, free doing back cash in

the business core question? think after ourselves And to positioning so would be I this I attractive we for Hope our answered year. rates at grow

Yes.

take So then like $X.XX like XX%-ish? at of about it at kind grow and

the intend we'd of be family. yes, repurchase the the the somewhere doing the generate, and of teens. free it'd issued the -- Viessmann equivalent of proceeds we're so business, so redeployment the we the less. to in XX% that, our disappointed core if But net year, impact to dilution, we flow be This excluding top shares Viessmann in cash On

think so lot there's there of is us. And available I -- a power earnings to

Yes.

last price was helps. for just And That Okay. one What one. quarter? then the cost

quarter. the for cost Price

Yes. The net.

pricing the the So quarter what and was then net, yes. for

No, was probably due for price exact expanded but have basically Steve. to margin number, in was cost I bps there, productivity was That over company the XXX embed investments. points. -- XX and by and basis because view, that offset overall It understood. some of don't mix it unfavorable productivity. all was point I an our significantly favorable

comes with question Mizuho. Linzey from next The Brett

give a fourth back orders China, markets Just and there. come wanted little there. color buildings quarter of number gave to between Asia seeing that just there, complexion some transport of in the bit XX% the XX%, Could but to specifically markets you activity the versus and you up order you're

bit well, Brett. -- we that amongst relatively of that business for a in the overall, but the and We all, in on F&S Yes. HVAC The of -- headwind then China extremely kind we very around was the in orders a it's commercial saw number ref first high, but of little extremely was were mid-single-digit high. It China, orders had range. small XX% side was was high. And

little orders So bit more product launches a a light new commercial when lot overall, and of residential we And have Toshiba. up the say, X% of were in we China. about picked very picked up sales the space. our pleased, in with We I we would that It's business. on

said really us new gets before that worked of we revenue a some we to spend lot. think we continue Viessmann product kind Toshiba us into market, introduced China between that as into the of new like what introduce the a we and synergies So Giwee where we'll I team's with new the to helping products market, a on know and anticipate that some

And have between now us China thing like I real strong to will is play more pieces actually But and China, all the some what we industrial the spaces Obviously, was [ to property estate pivot manufacturing in if this infrastructure, in the big in for single-digit ] the positioned. in 'XX, we I to we think watch. we EV, China like we're range. right of up feel it's well continue have know if think electronics, high

Great. then just follow-up to Okay. that. And a

identified the at Viessmann. You significant synergies

on a maybe of the the sizing products so here, for new those great. branding, be is Any and timing some on? had time context finer that really You've would integration what put and point and the new

the We dimensionalize is -- what revenue think do revenue But I Yes. start put multichannel, those for for has is Europe. everyone synergies, would we'll -- what synergies investors single the -- X would would and here channel I I -- residential would the put bit I agree, time. to would little I put it's the our Viessmann the is multibrand. in market best early. categories. do over One But in a

brand Toshiba as than the more Europe secondary installers, more a to in installer direct relationships, So into channel. can with brand, do that brand there's XX,XXX And then at the we're introducing looking well. and potentially Carrier we

an is like North example. the And do more and that's China with the India So in there in places we Viessmann States or in can or brand United America.

multi-channel, So multi-brand.

tool X more a that have a around that Viessmann They to second digital though see more we Is have a of services it's homes water could heat or have phenomenal even in New that -- or have of in you they their in States, the can to States. places use drive like with geothermal the today within or more innovation. that a market through we heat we pure some technology, tools is of that pump especially air see radiated Viessmann for England Carrier United might United that bit trend even there within just installers. we growth digital do the has The niche

units that integrated that heat then very what transfer has. the us would Viessmann combined Europe, systems, the complete offerings in opportunity things I pump for is apartment an in where like call could the Viessmann heating, does with do we like commercial United a management district and well which And States, last home today is energy

We've dimensionalize get a on kind the we'll start that to of see more audacious investors. ourselves internally. our So we board, And we target very as for of aggressive given lot wins for a some opportunity.

Back Okay. And not this right? that's baked half? year, in

Correct.

Okay. Well, -- up. let me wrap things let me

you thank for all all, of First joining.

it's York a For day. New actually us, Stock in here We're Exchange. big the

but which ring were We spun will in COVID, be we down. Stock we it the company in was the a to when little Exchange, as a bit bell back going overdue was public York shut XXXX, because New

we'll So bell many with we're excited be leaders and here to our have shortly. -- ringing here of our key us, the

us them. the are about We And today, building to in have with which not company. we're only future customers so excited we with of XXXX, time excited but spend the this

We so I'm since are around sustainability proud days what has are well trend, team our best so of assure the this our ahead. but accomplished I you and spin, positioned that

you Sam, available always, as for and all thank questions. So for joining,

This Thank the does you program. conclude for participating.

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