Carrier Global Corp at Robert W Baird Global Industrial Conference Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Timothy Wojs - Robert W. Baird & Co. Incorporated - Analyst : Awesome. Thank you very much for that. If anybody has any questions, feel free to raise your hand. I'm going to start, Dave, just kind of on the portfolio. A lot of incremental change really over the last 6 or 7 years, right? And so I guess as you kind of get this HVAC portfolio in the right shape. How do you kind of think about, I don't know if you want to say, giving the portfolio room to breathe? Where are your priorities going to be in 2025 and 2026? And how is that different than what they've been over the last 2 to 3 years?

Question: Timothy Wojs - Robert W. Baird & Co. Incorporated - Analyst : And is there still -- obviously, you have some stranded costs from some of the acquisitions. But is there still a kind of core productivity opportunity that's kind of untapped with the new portfolio?

Question: Timothy Wojs - Robert W. Baird & Co. Incorporated - Analyst : On your global commercial HVAC business, obviously, data center has been strong. Aftermarket has been strong. What else is kind of going on in the global commercial market today? And then as you think about Carrier-specific initiatives, I think you always have had aspirations to get that kind of market share in global commercial back to maybe where it was a long time ago. What are some of those initiatives that you talked about in terms of like regaining some of that, recapturing some of that market share within commercial?

Question: Timothy Wojs - Robert W. Baird & Co. Incorporated - Analyst : And then where -- when you're talking about -- I mean, is it -- when you think about service, how big is the service business within the commercial HVAC business today? And I think in the past, you've said double digit forever. Maybe that's the quote?

Question: Timothy Wojs - Robert W. Baird & Co. Incorporated - Analyst : Okay, okay.

Question: Timothy Wojs - Robert W. Baird & Co. Incorporated - Analyst : Across portfolio, okay. Maybe just thinking about the residential business, obviously, very topical with the AFFF transition. I guess, how do you think Carrier is prepared for this transition, shifting from the old refrigerant to the new refrigerant? And maybe you can frame for us how you think this plays out over the next couple of quarters because you have concerns about prebuy, you have easy comps, you have some of the sales. So how do you think we kind of go through the next couple of quarters on the AFFF transition?

Question: Timothy Wojs - Robert W. Baird & Co. Incorporated - Analyst : Yes. And even on a sell-out basis, I mean, the inventory is going to probably get you through what, the second quarter and then we're all going to beat it?

Question: Timothy Wojs - Robert W. Baird & Co. Incorporated - Analyst : And then is it the same, like, inventory dynamics or is it pretty much...

Question: Timothy Wojs - Robert W. Baird & Co. Incorporated - Analyst : Less than that, okay. Okay. And then maybe just kind of thinking about Viessmann, I know you're not going to give me guidance for 2025 next year. But could you maybe give us a little bit of context around if the market for Viessmann grows X, what should Viessmann grow? Because I think in your view, you should be growing faster than market. And how would you kind of build those pieces up?

Question: Timothy Wojs - Robert W. Baird & Co. Incorporated - Analyst : Okay. That's helpful. And then obviously, there's been a lot of change in the regulatory environment over there. Does that change the investment case for Viessmann at all?

Question: Timothy Wojs - Robert W. Baird & Co. Incorporated - Analyst : Okay, great. Any questions from the audience? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. NOVEMBER 12, 2024 / 5:50PM, CARR.N - Carrier Global Corp at Robert W Baird Global Industrial Conference All right. So then just when we think about the Viessmann business model, -- I'm very familiar with the residential HVAC business here in the US. I'm less familiar with the residential business in Europe. So how is Viessmann different than the other kind of players that are in the market? Especially, there's been Asian competition and those types of things. So how does Viessmann really differentiate the offering and why is it so attractive?

Question: Timothy Wojs - Robert W. Baird & Co. Incorporated - Analyst : Even with the lower sales base this year, it seems like the cost synergies are on track, and it does seem like you're actually pulling forward some revenue synergies. So from a bottom line perspective over the next couple of years, Viessmann should be still kind of in the realm of where you thought it was going to be when you acquired the business, right?

Question: Timothy Wojs - Robert W. Baird & Co. Incorporated - Analyst : On the data center business within commercial HVAC, how are you differentiating yourself? Are you -- do you have customer relationships that are unique to Carrier? Do you have products that are unique to data centers for there? And as you think about going from the chiller business to maybe doing more inside the data center, is there an opportunity for you to play there as well? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. NOVEMBER 12, 2024 / 5:50PM, CARR.N - Carrier Global Corp at Robert W Baird Global Industrial Conference

Question: Timothy Wojs - Robert W. Baird & Co. Incorporated - Analyst : Okay. And then can you give us some context around how much capacity you guys are adding within the chiller business?

Question: Timothy Wojs - Robert W. Baird & Co. Incorporated - Analyst : You're not actually adding square footage, you're just repurposing it. I got you, okay. Any questions? Unidentified Participant (microphone inaccessible)

Question: Timothy Wojs - Robert W. Baird & Co. Incorporated - Analyst : And is your footprint, just in general, much different than the overall HVAC industry?

Question: Timothy Wojs - Robert W. Baird & Co. Incorporated - Analyst : So if there is sort of tariffs, I mean, everybody will probably use price as a lever or those types of things?

Question: Timothy Wojs - Robert W. Baird & Co. Incorporated - Analyst : To offset it, okay. I guess when you think about capital allocation, obviously, a lot of change going on. What are some of the near-term priorities on the capital allocation side we should think about?

Question: Timothy Wojs - Robert W. Baird & Co. Incorporated - Analyst : Okay. And you've talked about the new portfolio really growing 6% to 8% over time. What are the key pieces to that growth when you look at each of the businesses that you outlined?

Question: Timothy Wojs - Robert W. Baird & Co. Incorporated - Analyst : On decarbonization, this has always been kind of a payback industry in terms of replacement, right, especially on light commercial and the global commercial sides. What has decarbonization or the idea of decarbonization done to those payback periods? Has it made them a little looser, so the payback period is maybe a little bit more graceful and that's driving demand? Or do you really need like the incentives and things like that to drive the replacement? Just kind of curious like overall how the payback periods are kind of changing and the, I guess, the customer view on the payback period in general.

Question: Timothy Wojs - Robert W. Baird & Co. Incorporated - Analyst : Do you think the model for commercial HVAC evolves over time, where somebody like yourself is, I don't know if it's performance contracting like, but you're starting to deliver a certain set of energy savings to a customer versus just kind of installing a new chiller kind of servicing? Do you think there's a performance angle to this business that you can capitalize on over time? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. NOVEMBER 12, 2024 / 5:50PM, CARR.N - Carrier Global Corp at Robert W Baird Global Industrial Conference

Question: Timothy Wojs - Robert W. Baird & Co. Incorporated - Analyst : Any questions? Unidentified Participant Is there a pickup in kind of the replacement cycle that goes beyond economics of [Carrier] technology and innovation? (microphone inaccessible)