Carrier Global Q4 2025 Earnings Report

Carrier Global EPS Results

• Actual EPS: $0.34
• Consensus EPS: $0.36
• Beat/Miss: Missed by -$0.02
• One Year Ago EPS: $0.54

Carrier Global Revenue Results

• Actual Revenue: $4.84 billion
• Expected Revenue: $5.05 billion
• Beat/Miss: Missed by -$214.66 million
• YoY Revenue Growth: -6.00%

Carrier Global Announcement Details

• Quarter: Q4 2025
• Date: 2/5/2026
• Time: Before Market Opens
• Conference Call Date: Thursday, February 5, 2026
• Conference Call Time: 7:30AM ET

Carrier Global (NYSE:CARR) (NYSE:CARR) is a global provider of intelligent climate and energy solutions. The company develops and manufactures heating, ventilation and air conditioning (HVAC) systems and related controls, building automation technologies, and services designed to improve indoor comfort, energy efficiency and building performance.

Carrier also provides refrigeration equipment and systems for commercial, industrial and transportation applications, supporting food preservation and cold-chain operations. Its offerings include air conditioners, heat pumps, furnaces, chillers, air handling equipment, refrigeration systems, building controls, replacement parts, maintenance and aftermarket services.

Founded in 1915 by Willis Carrier, the company serves residential, commercial and industrial customers in markets around the world. Carrier became an independent public company in 2020 following its separation from United Technologies Corporation. In recent years, it has streamlined its portfolio around climate and energy solutions, including through the divestiture of several fire, security and commercial refrigeration businesses.

Carrier Global Q4 2025 Earnings Call Transcript

Key Takeaways

• Negative Sentiment: Short‑cycle weakness remains a material headwind — CSA residential volumes plunged (~40% in Q4) and light commercial fell ~20%, management expects industry units down ~10–15% in 2026, leading to under‑absorption and margin pressure despite reduced channel inventories (~30% lower).
• Positive Sentiment: Long‑cycle and aftermarket businesses are driving growth — commercial HVAC posted another year of double‑digit growth, aftermarket is up double digits with >70,000 chillers connected, and the data center business reached ~ $1 billion with Q4 orders >5x year‑ago and projected ~50% data center revenue growth in 2026.
• Positive Sentiment: Cost actions and capital returns support profitability — decisive 2025 cost measures are expected to deliver > $100 million of savings in 2026, management cites ~ $400 million of productivity tailwinds, plans ~ $1.5 billion of buybacks, and guides adjusted operating profit of ~ $3.4 billion and adjusted EPS around $2.80.
• Negative Sentiment: Near‑term cadence is back‑loaded and Q1 looks weak — company expects Q1 revenue ~ $5 billion with organic down high‑single digits (CSA residential down >20%), Q1 adjusted EPS ~ $0.50 (benefitting from a discrete tax item), and full‑year growth to be second‑half weighted.

Presentation

[Operator]

Good morning, and welcome to Carrier's fourth quarter 2025 earnings conference call. I would like to introduce your host for today's conference, Michael Rednor, Vice President of Investor Relations. Please go ahead.

[Michael Rednor, VP of Investor Relations at Carrier Global Corporation]

Good morning, and welcome to Carrier's fourth quarter 2025 earnings conference call. On the call with me today are David Gitlin, Chairman and Chief Executive Officer, and Patrick Goris, Chief Financial Officer. Except where otherwise noted, the company will speak to results from continuing operations, excluding restructuring costs and certain significant non-recurring items. A reconciliation of these and other non-GAAP financial measures can be found in the appendix of the webcast. We also remind listeners that the presentation contains forward-looking statements which are subject to risks and uncertainties. Carrier's SEC filings, including our Form 10-K and quarterly reports on Form 10-Q, provide details on important factors that could cause actual results to differ materially. With that, I'd like to turn the call over to Dave.

[David Gitlin, Chairman and CEO at Carrier Global Corporation]

Thanks, Mike, and good morning, everyone. 2025 was an important year for Carrier. The short cycle residential and light commercial market softened more than we expected in the second half of the year. We made meaningful progress on our strategic priorities and reached major milestones, including growing our data center business to around $1 billion. Notably, even with CSA residential down nearly 10% and light commercial down about 20%, total company organic sales were down about 1% as we continued to drive growth in our long cycle and aftermarket businesses. We also reduced channel inventory and lowered overhead while continuing to invest in technology differentiation, salespeople, and technicians. Those actions position us for stronger incrementals when our short cycle markets recover. We had our fifth consecutive year of double-digit growth in commercial HVAC, while continuing to gain share and increase margins.

[David Gitlin, Chairman and CEO at Carrier Global Corporation]

Aftermarket was also up double digits for the fifth consecutive year. We offset tariffs with aggressive cost and pricing actions, drove strong material productivity, and took decisive overhead cost actions. And as you'll see in our outlook, the cost actions that we execute into 2025 will deliver over $100 million of savings in 2026. Finally, we distributed $3.7 billion to our shareholders through buybacks and dividends. In terms of capital allocation, we remain focused on investing in the highest return opportunities, maintaining a strong balance sheet, and returning cash to shareholders. We will continue to focus on outsized growth in products, aftermarket, and system offerings, and you can see the progress we're making on all three growth vectors, starting with products on slide 4.

[David Gitlin, Chairman and CEO at Carrier Global Corporation]

Our data center investments are delivering results, with fourth quarter CSA data center orders up more than 5x. We are still in the early innings, and our expanded portfolio now addresses essentially all major data center chiller applications. Our share of water-cooled chillers has increased 4x since spin, and with our recently introduced Mag-Lev bearing air-cooled chillers, we see meaningful share opportunity there as well. Key differentiators include quick restart, free cooling, and leading efficiency at elevated ambient temperatures. We introduced our first CDU for liquid cooling in 2025 and plan additional higher capacity CDUs up to 5 megawatts in 2026. Over the past couple of years, we have expanded our commercial HVAC engineering lab and chiller manufacturing capacity globally and have added hundreds of technicians.

[David Gitlin, Chairman and CEO at Carrier Global Corporation]

These multi-year investments have positioned us to outgrow the commercial HVAC market, as reflected in our 2026 outlook, with double-digit revenue growth, including data centers up about 50%. Aftermarket also remains a good news story for us, as you can see on slide 5. Our playbook works, and we continue to improve upon it. Three years ago, we had 17,000 chillers connected. Today, it is over 70,000. Our attachment rate in CSA grew more than 3x last year and is now close to 60%, and our global coverage, that is, chillers covered by service agreements, is up to 110,000, including Toshiba. We estimate that 70%-80% of our high complexity chillers are under service contracts. The area within our aftermarket business where we see the highest growth potential over the next five years is modifications and upgrades.

[David Gitlin, Chairman and CEO at Carrier Global Corporation]

Sales last year were up 20%. With a focused team, investments, and strategy, we see great opportunities in cities globally. In 2026, we are well positioned for double-digit aftermarket growth for our fifth—or excuse me, our sixth consecutive year. Turning to systems on slide 6. Our HEMS offering in the United States is getting tremendous attention from hyperscalers and utilities, and it is not surprising, given the magnitude of the impact that our solution can have on the grid. If our integrated heat pump battery solution were in every home and building that Carrier currently serves, we would free up nearly 15% of grid capacity during peak hours. It also weighs favorably versus alternatives in terms of time to market, cost of implementation, and affordability to the consumer. Our Carrier energy team's progress in 2025 was significant.

[David Gitlin, Chairman and CEO at Carrier Global Corporation]

Through field trial, field trials in Carrier employee homes, we have been demonstrating that we can consistently provide up to four hours of battery-powered heat pump operation during peak hours. We are planning market launch later this year. Likewise, in Europe, we have been working closely with our installers to offer differentiated HEM solutions. Our System-Profi installers, those qualified to sell and install complete solutions, including heat pump, battery, solar PV, domestic hot water, all connected through our digital home energy management system offering, drove their sales up double digits last year. We plan to double our number of qualified profi installers in 2026, driving strong growth for them and us. Turning to slide seven. In our CST business, there is no better example of end-to-end solutions than what we're seeing in our container business. Four years ago, Lynx did not exist.

[David Gitlin, Chairman and CEO at Carrier Global Corporation]

Today, we have over 220,000 paid link subscriptions, with over 110,000 on containers, including six of the world's top 10 shipping lines. We also recently invested in NetFeasa, which provides enhanced wireless IoT connectivity on cargo ships. By combining advanced AI-driven reefer health algorithms in our links applications with enhanced ship connectivity, we enable shipping customers to avoid manual checks on refrigerated units and to predict and avoid failures before they occur. This end-to-end solution is expected to help smooth the container cycles and provide meaningful recurring revenues while delivering differentiated customer value. Let me turn now to discussing some of our shorter cycle businesses, starting with CSA Resi on slide 8. Over the long term, residential remains a significant opportunity for Carrier.

[David Gitlin, Chairman and CEO at Carrier Global Corporation]

It is a large replacement-driven market with secular tailwinds in electrification and heat pumps, and our leading brands, channels, and install base are unmatched and position us for outsized earnings growth as demand normalizes. In this market, we estimated, we estimate demand in a typical year to be around 9 million units. Between 2020 and 2024, our industry averaged 9.7 million units for a cumulative overage, so to speak, of about 3.5 million units. Last year, we estimate our industry delivered about 7.5 million units, so we absorbed about 45% of that overage. We are assuming that we absorb the balance in 2026. Our assumption for the year is essentially no change to the macro conditions that we exited last year with. Little change to mortgage rates, consumer confidence, or new and existing home sales.

[David Gitlin, Chairman and CEO at Carrier Global Corporation]

That would result in total industry units down 10%-15%. With that industry assumption, our sales would be down high single digits as we benefit from the absence of destocking in the second half of 2026 compared to 2025, combined with low single-digit price realization. Turning to CSE Residential on slide 9. The good news in this market is that the transition from boilers to heat pumps is underway, with heat pumps growing double digits as anticipated. The bad news is that the total heating market has been in a cyclical downturn for the past few years. Like the Americas, the industry has been absorbing overage that we saw in the 2022, 2023 timeframe. We expect continued softness in total heating units in 2026, resulting in expected flat sales, with our growth initiatives being offset by lower industry volumes.

[David Gitlin, Chairman and CEO at Carrier Global Corporation]

When unit volume stabilizes, we are well positioned to drive strong earnings growth, given our strategic initiatives and the cost actions that we have taken in this segment. Turning to slide 10 for what this all means for our full year guidance. With respect to revenue growth, we expect that about 40% of our portfolio, commercial HVAC and aftermarket, will continue to grow double digits. Expected continued softness in our higher-margin short-cycle businesses, especially CSA Residential and Light Commercial, is expected to largely offset that growth, taking the total to about 1% organic growth for the company. On the profit side, mix is expected to be a headwind, somewhat offset by the cost actions that we took last year.

[David Gitlin, Chairman and CEO at Carrier Global Corporation]

Patrick will take you through the guidance in more detail, but we will continue to focus on controlling the controllables all across all aspects of growth, cost, and productivity. We are the best-positioned company in our industry when our short-cycle businesses recover, which they surely will, and we are poised to see outsized gains when they in fact recover. We enter 2026 energized and focused on outgrowing our markets, delivering best-in-class solutions for our customers, and driving productivity as we always do. With that, I will turn it over to Patrick. Patrick?

[Patrick Goris, EVP and CFO at Carrier Global Corporation]

Thank you, Dave, and good morning, everyone. I'll provide some color on our results and then move to our 2026 outlook. Please turn to slide 11. For the quarter, reported sales were $4.8 billion, adjusted operating profit was $455 million, and adjusted EPS was $0.34. As expected, the year-over-year decline in these financial metrics was largely due to much lower volumes in our higher-margin CSA residential and light commercial businesses, leading to an overall 9% decline in organic growth, partially offset by 3% tailwind from foreign currency translation.

[Patrick Goris, EVP and CFO at Carrier Global Corporation]

Total company orders were up over 15% in the quarter, driven by strength in CSA commercial, underscoring continued strong demand for our products in this market. Adjusted operating profit was down 33%, mainly reflecting lower organic sales and the unfavorable business mix I just referred to, as well as much lower manufacturing output, partially offset by strong productivity. The adjusted EPS decline mainly reflects lower adjusted operating profit, a lower share count, and somewhat higher interest expense and tax rate. We have included the year-over-year adjusted EPS bridge in the appendix on slide 21. Free cash flow in the fourth quarter of about $900 million reflected a large reduction in inventories and accounts receivable, and full year free cash flow of about $2.1 billion was in line with expectations.

[Patrick Goris, EVP and CFO at Carrier Global Corporation]

As to full year results, you can see that our organic sales were down about 1% due to weakness in our shorter cycle businesses, which represent over 50% of our portfolio. Very strong growth in global commercial HVAC, up 14%, helped mitigate the short cycle businesses sales decline. Moving on to the segments, starting with CSA on slide 12. This segment had a very difficult quarter, with organic sales down 17%. Commercial delivered another strong quarter, with sales up 12%, but this was more than offset by lower resi and light commercial sales. Resi sales were down close to 40%, with volume down over 40%, offset by regulatory mix and price. Light commercial sales declined 20%.

[Patrick Goris, EVP and CFO at Carrier Global Corporation]

Segment operating margin was just under 9%, a decline of about 10 points versus the prior year, reflecting the impact of lower sales and significant under absorption in our resi manufacturing facilities, which had less than half the output compared to Q4 of last year. At year-end, field inventories for resi were down roughly 30% year-over-year, in line with our expectations, and we believe that field destocking is now substantially behind us. Similarly, light commercial distributor inventories were down 25% year-over-year. For the full year, CSA Commercial had another excellent year, with sales up over 25%, offset by resi down 9% and light commercial down 20%. Moving to the CSE segment on slide 13. Organic sales were down 2%, with commercial up mid-single digits, offset by mid-single digits declines in resi light commercial.

[Patrick Goris, EVP and CFO at Carrier Global Corporation]

The residential heating market continues to be challenging in this region, particularly in Germany, which is our largest market. The transition to electrification and heat pumps is happening, as reflected by growth in heat pump sales and a decline in boiler sales. Segment operating profit and margin were both up year-over-year on lower organic sales, reflecting the impact of cost actions. Turning to Climate Solutions Asia Pacific on slide 14. Strength in India and Australia was more than offset by ongoing weakness in resi and light commercial in China, leading to an overall 9% sales decline. Overall, sales in China were down about 20%, with resi and light commercial down about 30%, where we intentionally reduced distributor inventory during the quarter, while commercial in China was down mid-single digits.

[Patrick Goris, EVP and CFO at Carrier Global Corporation]

Segment operating margin of about 12% was up 100 basis points, primarily driven by strong productivity, offset by the impacts of lower sales. Moving to transportation on slide 15. This segment had a strong quarter with 10% organic sales growth, driven by continued exceptional growth in container. Global truck and trailer was flat in the quarter, with growth in North America offset by weakness in Europe and Asia. Segment operating margins expanded by 30 basis points year-over-year, primarily driven by strong productivity, partially offset by business mix. Turning to Q4 orders on slide 16. Total company orders were up 16% for the quarter, with strength driven by commercial HVAC globally, which was up over 45%, and particularly in CSA, where commercial orders increased 80%, reflecting some large data center wins. Applied orders within CSA Commercial more than tripled compared to last year.

[Patrick Goris, EVP and CFO at Carrier Global Corporation]

Light commercial orders were up 70%, with resi orders about flat. As you can see on the slide, orders were flat to up in every segment. Moving on to slide 17 and shifting to 2026 organic sales guidance. We expect flat to low mid-single-digit organic growth and reported sales of approximately $22 billion. This includes a roughly $350 million year-over-year revenue headwind from the exit of Riello, mainly reported in the CSE segment. We announced the sale in December, and our guide assumes the transaction closes at the end of the first quarter. Also, as Dave mentioned earlier, our outlook reflects continued double-digit growth in commercial and aftermarket globally, offset by continued expected softness in our shorter cycle businesses.

[Patrick Goris, EVP and CFO at Carrier Global Corporation]

In commercial HVAC globally, we expect the first half to be up low to mid-single digits and the second half up mid-teens, reflecting comps and customer delivery timing. This back half acceleration reflects conversion of data center wins and delivery of our broader commercial backlog. By segment, we expect CSA and CSE to be up low single digits, while CSAME and CST are expected to be about flat. Within CSA Residential, we expect a very difficult first half, followed by growth in the second half as we benefit from the absence of destocking. CSA Commercial is expected to remain strong, and as I just mentioned, accelerating in the second half as we deliver more of our data center wins. Within CSE, our outlook for a flat RLC business largely reflects expected continued overall heating market weakness.

[Patrick Goris, EVP and CFO at Carrier Global Corporation]

Within CSAME, expected declines in China are offset by growth in the rest of the segment, and in transportation, declines in container, as 2025 was a record year, are expected to be offset by modest growth in our global truck and trailer business, as well as Sensitech. Moving on to slide 18, profit and guidance. Profit and cash guidance. Total company adjusted operating profit is expected to be about $3.4 billion. The benefit of modest organic growth and productivity, including prior year overhead cost actions, are partially offset by unfavorable business mix, given high single digit declines in CSA Resi and light commercial and investments. We expect free cash flow to be approximately $2 billion, which will be second half-weighted, reflecting our normal seasonality. Finally, we intend to repurchase about $1.5 billion in shares. Moving to slide 19.

[Patrick Goris, EVP and CFO at Carrier Global Corporation]

We expect adjusted EPS of approximately $2.80, up high single digits versus 2025. Adjusted EPS growth includes about $0.15 from increased operating profit, as I just outlined, as well as tailwinds from a lower tax rate and a lower share count, which are partially offset by higher net interest expense, NCI, and the exit of Riello. As usual, additional guide items are in the appendix on slide 23, and our guide assumes no change to the macro, including the current tariff environment. Finally, let me provide some additional color on the first quarter. As we've communicated previously, CSA Resi faces a very tough compare. We anticipate total Company Q1 revenues to be about $5 billion, with organic revenue down high single digits%, including CSA Resi, down over 20%.

[Patrick Goris, EVP and CFO at Carrier Global Corporation]

We expect Q1 company operating margin to be about 10%, largely reflecting the sales and manufacturing volume pressure in our higher margin short cycle businesses. Adjusted EPS is expected to be about $0.50, which includes the benefit of about a 0% effective tax rate due to a discrete tax item in the first quarter. Free cash flow is expected to be a use of a few hundred million dollars, in line with our normal operating cadence. While we expect sales and EPS to be pretty well balanced between the first and second half of the year in absolute terms, the year-on-year growth in sales and EPS will obviously be second half-weighted. Overall, we will continue to drive operational excellence throughout our businesses as we return to organic growth and margin expansion and remain focused on executing in 2026.

[Patrick Goris, EVP and CFO at Carrier Global Corporation]

With that, I would like to ask the operator to open it up for questions.

[Operator]

We will now begin the question and answer session. If you'd like to ask a question, please press star one on your telephone keypad. To withdraw your question, please press star one again. Please pick up your handset when asking a question. If you are muted locally, please remember to unmute your device. Please stand by while we compile the Q&A roster. Your first question comes from the line of Nigel Coe with Wolfe. Your line is open. Please go ahead.

[Nigel Coe, Managing Director at Wolfe Research, LLC]

Thanks. Good morning. Wow, what a, what a year, huh? Thanks for all the details. I did, I did want to, maybe, Patrick, dig a little bit deeper into the 1Q, you know, sort of mix. And can you just maybe talk about, you know, the, the CSA, margins? And it, I, it looks to me, if, if I, if I just, eyeball the numbers, it looks like maybe closer to 10%, maybe, maybe low double-digit margins in, CSA. And, number one, is that correct? And secondly, maybe just run through some of the drivers of that.

[Nigel Coe, Managing Director at Wolfe Research, LLC]

You know, the fixed cost absorption headwinds that you're facing, you know, any kind of raw material impacts, you know, just, you know, kind of what's driving that margin and maybe the, the recovery path from there.

[Patrick Goris, EVP and CFO at Carrier Global Corporation]

Yes. There's a lot there. I'll start with CSA expected margins in Q1. We expect them to be close to about 15% in Q1. And from an overall company point of view, the way you can think about Q1 is Q1 actually looks very similar to Q4 of 2025, but with a bit higher sales at about $5 billion and about a point higher of an operating margin point of view. In Q4, our resi sales were down about 40%, and we expect resi sales in Q1 in the Americas to be down about 20%-25%.

[Patrick Goris, EVP and CFO at Carrier Global Corporation]

And so that explains a little bit of the uptick in margin in Q1, and then in Q1, because of the 0% effective tax rate, there is about a $0.10 benefit versus Q4. So about a 15-cent improvement-

[Patrick Goris, EVP and CFO at Carrier Global Corporation]

... 5 points, $0.05 of that is better CSA performance, $0.10 of that is a lower tax rate.

[Nigel Coe, Managing Director at Wolfe Research, LLC]

Okay. Just the 10%, the 10% overall operating margins is what threw me off there. So maybe talk about the other segments, other downside drivers in the other segments.

[Patrick Goris, EVP and CFO at Carrier Global Corporation]

Yes, if I go through the other segments, the transportation segment is expected to have similar margins to the prior year, about 14%. Asia had very strong margins in the first quarter of 2025. We think the margins will be similar to what we've seen in the fourth quarter of 2025, so about the 10%-11% range. In Europe, we think that the margins will be similar in Q1 as they were in Q4. So generally, similar margins as to what we've seen in our businesses in the fourth quarter of the year.

[Nigel Coe, Managing Director at Wolfe Research, LLC]

Okay, thanks, Patrick.

[Patrick Goris, EVP and CFO at Carrier Global Corporation]

The Americas a little bit better, less of a headwind of resi.

[Nigel Coe, Managing Director at Wolfe Research, LLC]

Okay, thanks, Patrick.

[David Gitlin, Chairman and CEO at Carrier Global Corporation]

Thank you.

[Operator]

Your next question comes from Julian Mitchell with Barclays. Your line is open. Please go ahead.

[Julian Mitchell, Equity Research Analyst at Barclays]

Hi, good morning. Maybe, just wanted to understand, a little bit more about full year guidance for the, CSA residential business. Maybe help us understand what you're seeing in the market on, pricing and how you see, industry discipline on the, the price front. And maybe help us clarify, kind of how much volume fair gain or outperformance you're expecting this year relative to that, double digit, I think, sell-in market decline.

[David Gitlin, Chairman and CEO at Carrier Global Corporation]

Yeah, Julian, let me kinda walk you through how we came up with our forecast and guidance for this year. So we're assuming at the highest level that industry conditions are the same as last year. So no improvement on interest rates, consumer confidence, new or existing home sales. We assume that the second half of 2026 industry units are the same as the second half of 2025. So on a two-year stack, that would mean a 30% decline in industry units, which is what we assume for the first half of 2026. So all the result there is that in the first half of this year, industry units would be down year-over-year by 20%-25%, and in the second half, industry units would be flat to the second half of last year.

[David Gitlin, Chairman and CEO at Carrier Global Corporation]

So the full year would be down, industry units down 10%-15%. Now, Julian, what it means for us is that we believe that the distributor inventory destocking that occurred in the second half of last year is substantially behind us. So therefore, we think that in the first half of this year, we'll be down 20%-25%, consistent with movement. And in the second half, sales will be up. Our sales will be up 10%, given the absence of last year's second half destocking. So a bit complicated, but what that all means is the net result of all of this is that we expect our sales and our sales and our volume to be down high single digits year-over-year, with our sales including about a low single digit benefit from pricing.

[Julian Mitchell, Equity Research Analyst at Barclays]

That's super helpful. Thanks very much. Maybe my question would go on a different topic around CSE. You know, you had this dynamic in 2025, where decent heat pump growth, offset by a boiler price and sort of mix headwind. Just wondered what you're dialing in for that CSE RLC market for the year ahead and how you see your own internal dynamics vis-a-vis heat pump and boilers playing out.

[David Gitlin, Chairman and CEO at Carrier Global Corporation]

Well, look, I think the mix-up is essentially playing out as we thought, you know? So, the issue is that what we're predicting for this year, for 2026, is that the industry overall in Europe will be down mid- to high-single digits. Now, we guided to flat because we do get the benefit of mix up. You know, heat pumps up double digits, boilers down low- to mid-single digits. We'll see aftermarket up double digits, which drops through at a point, a point or two. And then we have our growth initiatives and our revenue synergies, which are frankly playing out well. The big issue that we've been having, frankly, is in Germany, where we're of course overweighted.

[David Gitlin, Chairman and CEO at Carrier Global Corporation]

So remember, we were thinking that the German market would go from something like 715,000 to 660, then we thought 640,000, and it ended up around 600,000. If you look over historically, the German market is about 800,000. So just like in the U.S., we do think there will be a reversion to the mean. We just don't think it happens this year, given some of the continued ambiguity and uncertainty around some of the heating laws in Germany.

[Julian Mitchell, Equity Research Analyst at Barclays]

Great. Thank you.

[David Gitlin, Chairman and CEO at Carrier Global Corporation]

Thanks, Julian.

[Operator]

Your next question comes from the line of Scott Davis with Melius Research. Your line is open. Please go ahead.

[Scott Davis, Chairman and CEO at Melius Research]

Hey, good morning, guys.

[David Gitlin, Chairman and CEO at Carrier Global Corporation]

Morning, Scott.

[Scott Davis, Chairman and CEO at Melius Research]

Morning.

[Scott Davis, Chairman and CEO at Melius Research]

... I'm looking at slide 8, and I'm just trying to figure out how far below normal do you think channel inventories are in CSA resi?

[David Gitlin, Chairman and CEO at Carrier Global Corporation]

Yeah, Scott, as we sit here today, we ended January versus January of last year, down about 32%. So we, we did go to great lengths with our channel partners to end at the field inventory levels that we had, we had said, and, you know, that's putting us at, like, 2018-type levels. So the good news is that the field inventory that we targeted to get down, we got down, and we've continued to take it down here in January.

[Scott Davis, Chairman and CEO at Melius Research]

Okay, helpful. And, moving to more fun stuff, data center is obviously usually helpful here, but I don't know how far out you're booking orders, but when you think about the billion-dollar revenue numbers that you put up, 60% up orders kind of implies $1.6 billion for 2026. Is that somewhere in the ballpark? And perhaps there could be some orders in 2027 and stuff. I'm sure it's not perfect, but I'm just trying to get a sense of that, how that orders flows through to revenues in 2026.

[David Gitlin, Chairman and CEO at Carrier Global Corporation]

Yeah, Scott, that's about right. What we're guiding is to $1.5 billion for this year, so you're in the ballpark.

[Scott Davis, Chairman and CEO at Melius Research]

Okay.

[David Gitlin, Chairman and CEO at Carrier Global Corporation]

So we saw great orders last year, I mean, phenomenal orders in Q4. January's been good, so we feel very well positioned. Now, the reality is that we have a lot more in Q3 and Q4. We would love to see a little bit more pulled in, but right now, that's when the customers that we've had great wins with are looking for the deliveries, but we feel really good about data centers for this year.

[Scott Davis, Chairman and CEO at Melius Research]

Okay. Helpful color. Thanks. Best of luck, guys. Appreciate it.

[David Gitlin, Chairman and CEO at Carrier Global Corporation]

Thank you, Scott. Yep.

[Operator]

Your next call comes from the line of Joe Ritchie with Goldman Sachs. Your line is open. Please go ahead.

[Joe Ritchie, Managing Director at Goldman Sachs]

Hey, guys. Good morning.

[David Gitlin, Chairman and CEO at Carrier Global Corporation]

Hey, Joe.

[David Gitlin, Chairman and CEO at Carrier Global Corporation]

Morning, Joe.

[Joe Ritchie, Managing Director at Goldman Sachs]

Hey, Dave, can we just talk about the inventory dynamics just a little further? So, so clearly, you saw a pretty big reduction in your inventories Q on Q. I think it was down 17%, but the inventory levels were up year-over-year about 8%. And so is that a, is that a function of just building inventories in the parts of your business that are growing? Just give us any more detail on, on that dynamic.

[Patrick Goris, EVP and CFO at Carrier Global Corporation]

Hey, Joe. Patrick here. You may recall that we decided last year to keep our U.S. resi manufacturing facilities running at minimal levels because it was more economical than shutting them down for several months and then having a cold start. As a result, there is $200 million more inventory on our books at the end of the year than we otherwise would, and our current guide assumes that that gets liquidated through the year. Quarter-over-quarter, inventories actually dropped.

[Joe Ritchie, Managing Director at Goldman Sachs]

Got it. Okay, great. That's helpful, Patrick. And then one last question. I know we're kind of beating a dead horse here on the resi side, but this 6.5 million unit industry average, I mean, assuming whatever you want to assume for new housing starts, you know, call it somewhere in that million, 1.5 million zone, really kind of assumes a replacement rate that's like north of 20 years for this year. It just seems, you know, it seems conservative at first blush.

[Joe Ritchie, Managing Director at Goldman Sachs]

Just any thoughts around, you know, if you go back even further, Dave, and you take a look at, you know, where the industry was even before that kind of 2020 time frame, like, you know, do you really think that for the year, you're gonna need to flush out, this much demand in order to get back to equilibrium, or just trying to be conservative to start the year? Thank you.

[David Gitlin, Chairman and CEO at Carrier Global Corporation]

You know, Joe, what we start with are some of those bigger picture analyses, you know, the average, you know, with new home construction of 9, 9.7 and 3.5 average, last year, 7.5. So we kinda use that for triangulation. Then we go towards what we're seeing with boots on the ground in the marketplace, and we're seeing that what we ended last year, a lot of those macros, we did not assume that we'd wake up on January first, and they'd all be suddenly better and different. So that's why we did the analysis that I kinda took Julian through of what we assumed in the second half, we just assumed for the second half of this year. 'Cause, you know, it is a seasonal business.

[David Gitlin, Chairman and CEO at Carrier Global Corporation]

We can't assume something for the second half and apply those volumes to the first half. So we tried to be as pure as we could about the analysis that we applied, and then we applied that two-year stack to 2024. So look, you know, we've guided to down high single digits for us, the market down 10-15, and if things play out exactly as they did in the second half, that's about where we would end up this year. Do we hope it's better? Of course, but that's how we're planning.

[Joe Ritchie, Managing Director at Goldman Sachs]

Okay, very helpful. Thank you.

[David Gitlin, Chairman and CEO at Carrier Global Corporation]

Thank you.

[Operator]

Your next question comes from the line of Steve Tusa with J.P. Morgan. Your line is now open. Please go ahead.

[Steve Tusa, Managing Director at J.P. Morgan]

Hey, guys. Good morning. How are you?

[David Gitlin, Chairman and CEO at Carrier Global Corporation]

Hey, Steve.

[Steve Tusa, Managing Director at J.P. Morgan]

Good. Good.

[Steve Tusa, Managing Director at J.P. Morgan]

Just on the resi side, I haven't done the math, but what do you think for the year now, like, movement ended at, you know, in the channel? And what are you assuming movement is for next year?

[David Gitlin, Chairman and CEO at Carrier Global Corporation]

... like help me with what movement was in fourth-

[Steve Tusa, Managing Director at J.P. Morgan]

Sorry, like sell out. Sorry, sell out.

[Patrick Goris, EVP and CFO at Carrier Global Corporation]

Yeah, Steve, Steve, movement was down about 30% in Q4.

[Steve Tusa, Managing Director at J.P. Morgan]

Okay. So that's the sellout number. Okay. And then what are you guys assuming for inflation and total company price? And are you or how are you marking the commodities? Are you marking them, like, to market today or year-end, or maybe just some color on the inflation side?

[Patrick Goris, EVP and CFO at Carrier Global Corporation]

Steve, in terms of pricing, Dave mentioned about low single digits, so give or take, close to a point for the total company. In terms of commodities, we block on a rolling four quarters. And today, as of today, we have about a $60 million headwind related to copper, steel, and aluminum, headwind for this year, and that is net of our blocking position. And that headwind is about equal across the four quarters. And we're about fifty-- a little over 50% blocked for the full year.

[Steve Tusa, Managing Director at J.P. Morgan]

Okay, and the 1% is in resi as well, or is resi a little higher than 1?

[Patrick Goris, EVP and CFO at Carrier Global Corporation]

Low single digits, so in that range.

[Steve Tusa, Managing Director at J.P. Morgan]

That range. Great. Thanks, guys.

[David Gitlin, Chairman and CEO at Carrier Global Corporation]

You know, Steve, we announced a price increase of up to, I think, 5 or 6, effective in March. And we think we'll realize in that low single-digit range.

[Steve Tusa, Managing Director at J.P. Morgan]

Great. Thank you.

[David Gitlin, Chairman and CEO at Carrier Global Corporation]

Thank you.

[Patrick Goris, EVP and CFO at Carrier Global Corporation]

Thank you, Steve.

[Operator]

Your next question comes from the line of Andrew Kaplowitz with Citigroup. Your line is now open. Please go ahead.

[Andrew Kaplowitz, Managing Director at Citi]

Good morning, everyone.

[David Gitlin, Chairman and CEO at Carrier Global Corporation]

Hey, Andy.

[Andrew Kaplowitz, Managing Director at Citi]

Dave, you obviously talked about the $100 million of cost benefits expected in 2026 that you actioned in 2025. Maybe you could talk about how the benefits are layering in in 2026, and if, for instance, CSE residential or CSAME continues to drag, what can you do to protect the margin improvement you have in your guidance?

[Patrick Goris, EVP and CFO at Carrier Global Corporation]

Okay, I'm gonna make sure I get the question, but I'm gonna walk you through the profit walk 2026 versus 2025. At a high level, we're targeting about $100 million of incremental operating profit. Volume mix combined is a headwind of about $100 million. We talked earlier about price. So price is about a point. If I combine that with some of the tariffs, it's about $100-$200 million. Productivity, including the cost actions that we have taken, is close to $400 million. You offset that with some of the inflation that I mentioned, the annual increase in merit, and then investments, and basically you get to about $100 million increase in operating profit.

[Patrick Goris, EVP and CFO at Carrier Global Corporation]

Then, of course, the segments each have their targets and are working on contingency plans depending on how they perform versus their targets for the year.

[Andrew Kaplowitz, Managing Director at Citi]

Helpful, Patrick. Dave, maybe you can touch on the guide for CSAME and the confidence level there for flat in 2026. As you know, China RLC revenue was down 30% in Q4 2025. You talked about destocking, but it looks like your orders bounced back a little and maybe easy confidence in China. So give us more on what you're seeing there versus the rest of Asia.

[David Gitlin, Chairman and CEO at Carrier Global Corporation]

You know, for AME for 2026, Andy, we were guiding flat. We expect China to be down about high single digits. We think RLC softness continues. We think that's down about 20, with the CA track business in China being up low single digits, and then the rest of Asia to grow high single digits. We've been doing very well in places like India and the Middle East. Japan, you know, those that are watching us for the last two years, Japan actually grew 8%. And frankly, when we bought that Toshiba business, very little growth with margins pretty close to zero, and by the end of this year, our EBITDA should be in the mid-teens, and last year we grew 8%. So a lot of good work outside of China. Resi in China remains tough.

[David Gitlin, Chairman and CEO at Carrier Global Corporation]

We tried to take some actions in the fourth quarter to decrease the amount of inventory in the channel on the residential side, so hopefully, that helps us a bit going into next year, but the macros in that resi channel business are still tough.

[Andrew Kaplowitz, Managing Director at Citi]

Appreciate the color.

[David Gitlin, Chairman and CEO at Carrier Global Corporation]

Thanks, Andy.

[Operator]

Your next question comes from the line of Deane Dray with RBC Capital Markets. Your line is open. Please go ahead.

[Deane Dray, Managing Director at RBC Capital Markets]

Hey.

[Deane Dray, Managing Director at RBC Capital Markets]

Thank you. Good morning, everyone. Hey,

[David Gitlin, Chairman and CEO at Carrier Global Corporation]

Hi there.

[Deane Dray, Managing Director at RBC Capital Markets]

Dave, if we just step back in terms of all the dynamics in the destocking, what's your expectation when we come into the typical cooling season? You know, there's still a sense there's pent-up demand on the resi side and channel inventory at eight-year lows. You know, will there be any chance of stock outs or just, you know— Sounds like the channel could be some channel inefficiencies. And just kinda how are you prepared for that?

[David Gitlin, Chairman and CEO at Carrier Global Corporation]

You know, it's one of the things that we put a lot of emphasis on, obviously forecasting, but also operational agility. So as we get into the season, we have our forecast. You know, we've assumed, for example, that the first quarter is down in the 20%-25% range, and January was kinda consistent with what we thought was gonna happen for the first quarter. As you get into the season, what we learned from last year is that things can surprise you to the upside or downside, so we just need to be ready. If we get into the season and weather is a very positive factor. We have inventory levels in the channel quite low.

[David Gitlin, Chairman and CEO at Carrier Global Corporation]

Demand starts to pick up, we will, we will be positioned operationally to support that, but we think we've tried to plan in a way consistent with what we've been seeing over these last six months.

[Deane Dray, Managing Director at RBC Capital Markets]

All right. That's good to hear. We'll be listening to Al Roker.

[David Gitlin, Chairman and CEO at Carrier Global Corporation]

Yeah.

[Deane Dray, Managing Director at RBC Capital Markets]

And then-

[David Gitlin, Chairman and CEO at Carrier Global Corporation]

Yeah

[Deane Dray, Managing Director at RBC Capital Markets]

On the data center side, what are the implications on the recent comments from NVIDIA regarding chiller demand? You know, does that change your expectations for the mix between water and air chillers? Does it change any of the configuration, economics of the configurations that you're modeling in today?

[David Gitlin, Chairman and CEO at Carrier Global Corporation]

You know, we actually have been very, very fortunate to work very closely with NVIDIA. Frankly, earlier this week in Vegas, our team was meeting with NVIDIA. We've been working together on a number of climate-optimized reference designs and thinking very closely about the chilling requirements for their future chip, the Vera Rubin. What I would say, Deane, at the highest level, is that, number one, data centers will require a combination of liquid cooling and traditional cooling, and we are confident that NVIDIA agrees with that. If you look at the Blackwell chip and the new Vera Rubin chip, they both have similar thermal profiles. They're both designed to operate up to 55 degrees Celsius, so both need some form of cooling.

[David Gitlin, Chairman and CEO at Carrier Global Corporation]

The Vera Rubin chips will be more efficient and delivers a lot more output, but the inlet, the input temperature, will be about the same, and that power translates directly into heat. So both designs require the same amount of heat dissipation. So we're working closely with NVIDIA and, of course, our hyperscaler and colo customers. We're working on both liquid cooling, traditional cooling, the combination through our Quantum Leap offering. And yes, there's gonna be, depending on the customer, some prefer water cooling, if you have access to more water, and then a lot of our recent wins have been on the air-cooled side.

[Deane Dray, Managing Director at RBC Capital Markets]

Good to hear. Thank you.

[David Gitlin, Chairman and CEO at Carrier Global Corporation]

Thank you, Deane.

[Operator]

Your next question comes from the line of Chris Snyder with Morgan Stanley. Your line is open. Please go ahead.

[Chris Snyder, Executive Director and U.S. Multi-Industry Analyst at Morgan Stanley]

Thank you. I wanted to follow up on some of that conversation around speaking to the channel partners. Do you think your channel partners, you know, plan for the same level of spring purchasing that they have done in prior years? Or do you think it would maybe be a more spread out cadence throughout Q2 and Q3, you know, just given all the volatility that they've had to work through over the last 12 months? Because, you know, while channel inventories, you know, have returned to 2018 levels, per some of the comments, it seems like demand could be tracking below 2018 levels. Thank you.

[David Gitlin, Chairman and CEO at Carrier Global Corporation]

Yeah, Chris, I think that our channel partners are planning the year very consistent with how we're planning the year. So, I think after what we all saw in the second half of last year, where frankly, we all got surprised by the magnitude of the decline, I think there's a reticent for-- a reticence for anyone to get out over their skis. So everyone went to great lengths to get field inventory down, our channel partners and us working with them. We think that we're balanced, and it'll all now be a function of underlying demand as we get into the season. So I think that clearly there will be more demand as we get into the season than off-season. I think it would be a typical ramp, but off a lower base.

[Chris Snyder, Executive Director and U.S. Multi-Industry Analyst at Morgan Stanley]

Thank you. I appreciate that. And then maybe if I could follow up on Americas' margins. I think Patrick said Q1 of about 15%. So if my math is right, it seems like, you know, you guys are calling for Q2 to Q3 to get back to that mid-20s-ish range. You know, and obviously, that's a level that you guys have gotten to consistently in the past. But can you just maybe talk about the path to get there? Because it feels like there would still be some level of absorption headwinds, you know, volume still down, and just continued cost inflation in the market. Thank you.

[Patrick Goris, EVP and CFO at Carrier Global Corporation]

Yes, Chris. So, most of the under absorption year-over-year, this year will be in Q1, for resi. And then sequentially, given the seasonal build, which there will be a seasonal build, that typically happens in the second quarter, late in the first quarter. And that is the reason, frankly, why sequentially, we expect margins to improve in that mid-twenties range, as you mentioned, for CSA. And so it's a combination of less headwind from under absorption, as well as an improvement in sequential sales, which is typical, for CSA, even though in absolute terms, organic sales will be lower than the year before.

[Chris Snyder, Executive Director and U.S. Multi-Industry Analyst at Morgan Stanley]

Thank you.

[Patrick Goris, EVP and CFO at Carrier Global Corporation]

You're welcome.

[Operator]

Your next question comes from the line of Amit Mehrotra with UBS. Your line is open. Please go ahead.

[Amit Mehrotra, Managing Director and Senior Equity Analyst at UBS]

Thanks, thanks, operator. Hi, everybody. Dave, I just had a maybe a philosophical question, and then I wanted to get a follow-up on incremental margins, if I could. So first, you know, folks sometimes never waste a good crisis, and what I mean by that is that, you know, given kind of the environment that you've had to endure, has that offered an opportunity to kind of rethink how the company approaches some of the structural costs? Is there anything that you're doing or want to do differently with respect to cost that that's born from this environment of just hyper cyclicality in the market?

[David Gitlin, Chairman and CEO at Carrier Global Corporation]

... Oh, for sure, Amit. I mean, I love the question because, as you just said, you never wanna let a good crisis go to waste. So we certainly from a cost perspective, we did take out, which is very, very difficult, but the right thing to do, we did have to reduce 3,000 heads last year, mostly in the second half of last year. We always look at our footprint, and we've had to rationalize our footprint, and there will be more of that as we go forward. And then we look at our overall way of doing business. So we're using AI across our functions to drive more productivity. There's a lot of demands on our people, so it's easy to just sort of try to take out costs.

[David Gitlin, Chairman and CEO at Carrier Global Corporation]

The hard thing is to drive better productivity while taking out costs. So the team's done a great job embracing AI as well to drive more productivity. And then we've looked across everything. We've looked at our forecasting, how our whole growth process and how we look at specific campaign by campaign and introducing new products into the marketplace to ensure we win. And we've looked at product platforming, so how we can use a back-office COE concept for engineering to drive product platforming. So we've made a lot of changes. Look, our formula worked since our spin. We got surprised in the second half of last year by some of the residential downturn. We are not pleased that we missed in the second half. It's not who we are. We plan for that never to happen again.

[David Gitlin, Chairman and CEO at Carrier Global Corporation]

That's not who we are as a company, and we went to great lengths to, to learn from that in the second half, to do everything in our power to make sure it never happens again.

[Amit Mehrotra, Managing Director and Senior Equity Analyst at UBS]

Great. And just a follow-up highly related to that. If I look at the decremental margins, obviously very, very high in the fourth quarter, kind of implied quite high in the first quarter as well. But, you know, the counterpoint to that is high decrementals sort of also imply high incrementals. And I'd just be curious, you know, when this thing turns, and eventually it will turn, how much cost do you have to - do you think you have to bring back? And can we be looking at, you know, the same type of margin, just incrementally as opposed to decrementally, if you can talk about that?

[Patrick Goris, EVP and CFO at Carrier Global Corporation]

Yeah, Chris, maybe a little bit about the Q4 decrementals, and if you look at the decrementals, it looks like it's a 70% decremental. It's impacted by currency. If you yank out currency, which is about $150 million in sales with no earnings, our decrementals are 50%. Still really high, but not, of course, close to 70%, and the 50% of the represents or reflects sales reductions in resi and light commercial in the US, and now the under absorption. So as those businesses recover, which, as you said, at some point they will recover, we expect to have high incrementals. And you mentioned how much of the cost we've taken out do we have to add back? Our current guide includes about $100 million of incremental investments.

[Patrick Goris, EVP and CFO at Carrier Global Corporation]

Throughout this period, we continued to invest in sales resources and digital capabilities, and so I do not expect we have to add a lot of incremental costs that we've taken out this year as business improves. We will continue to increase our annual investments, but I don't see a step up after what we've done last year.

[Amit Mehrotra, Managing Director and Senior Equity Analyst at UBS]

Right. Great. Wonderful. Thank you, guys. Good luck. Appreciate it.

[Patrick Goris, EVP and CFO at Carrier Global Corporation]

Thank you.

[David Gitlin, Chairman and CEO at Carrier Global Corporation]

Thank you.

[Operator]

Your next question comes from the line of Joe O'Dea with Wells Fargo. Your line is open. Please go ahead.

[Joseph O'Dea, Managing Director at Wells Fargo]

Hi, good morning. Thanks for taking my questions. Dave, can you just taking a step back and thinking about the, the resi cycle and 6.5 million units and, you know, underlying support for 9, just talk about the building blocks to, to get back to, to 9, the degree to which what we're seeing this year is just replacement that happened maybe sooner than it needed to in that 2020-2024 period, what you think about in terms of repair versus replace, dragging things out a little bit in 2026, but most important, you know, that path to get back to 9. Yeah,

[David Gitlin, Chairman and CEO at Carrier Global Corporation]

Joe, I think it comes back to the fundamentals. You know, once, once you start to see the 30 years start with a 5 or less, you know, it's been starting in the low 6s.

[David Gitlin, Chairman and CEO at Carrier Global Corporation]

A little bit of tailwind on consumer confidence, a pickup in new home construction, especially on the single-family side and existing home sales. A lot of those elements, once you start to see that underlying demand pick back up, we should start to see a reversion to the mean of that overall 9 million units. I think in terms of repair versus replace, I have no doubt that we saw an uptick in repair last year. We don't think that that's a long-term trend. And I would say for 3 reasons, Joe. Number 1 is that the economics will almost always weigh better in favor of a replacement. A typical repair can cost $1,000, a compressor can be a few K, but it only extends the unit's life by 1-3 years.

[David Gitlin, Chairman and CEO at Carrier Global Corporation]

So in general, a consumer will be better off with a full replacement. Number two, it was particularly impacted by low sale of existing homes 'cause it hurts you on both ends, from the homeowner that's been waiting to buy a new home is a little bit reluctant to have a full replacement a year or two before they sell their home. So they may be waiting and limping along with a repair, and once they buy the home. They will often negotiate a replacement of the HVAC product as part of the full replacement. So that decrease in existing home sales has put probably more pressure on repair versus replace. But as existing home sales starts to pick up, which it eventually will, you'll get back into that replacement cycle.

[David Gitlin, Chairman and CEO at Carrier Global Corporation]

And the third piece I'd mention is, what you typically see in an industry is, with a refrigerant change, you see more repair versus replace. It takes a while for the channel to get trained on the new refrigerant. Last year, we had a canister shortage with the R-454B, which impacted things a bit. And then the old refrigerant eventually becomes more expensive, and it's harder to access, so that it will lead to more replacement over time. So we need the macros to recover. We don't see repair over replace as a long-term trend. And once that happens, which it eventually will, and we'll be ready operationally to support our customers, the conversion on that will be quite positive.

[Joseph O'Dea, Managing Director at Wells Fargo]

That's helpful color. And then, just on CDUs, like, why do you win on CDUs? You know, we hear kind of talk about a pretty fragmented, competitive environment. Just the degree to which, for you, a sale tends to be more of a system sale with a chiller and air handling. You know, what that means for kind of margin profile of a CDU, and if that's dragging things down at all, just to explain that a little bit.

[David Gitlin, Chairman and CEO at Carrier Global Corporation]

Yeah. No, no margin drag at all from the CDUs. You know, I'm really proud of the team 'cause we looked. On the liquid cooling side, we've looked at both organic and inorganic, and we've opted for a couple of VC investments. You know, we still have a percentage of ZutaCore, which has a two-phase solution. On the CDU side, we decided to produce our own. It's essentially a mini chiller. We introduced a 1 megawatt or 1.3 megawatt last year. We've already had a really nice win down in the southern part of the United States. We just got a handshake on a new win earlier this week for another one in South America. So we feel good about what we've introduced organically. We have a 3 and a 5 megawatt coming out later this year.

[David Gitlin, Chairman and CEO at Carrier Global Corporation]

There's a lot of interest, and I think that part of it is our relationship with customers, but part of it is that BMS interaction, not only between traditional cooling and liquid cooling, but the entire cooling cycle with our, with our chip customers as well.

[Joseph O'Dea, Managing Director at Wells Fargo]

Mm-hmm.

[David Gitlin, Chairman and CEO at Carrier Global Corporation]

So we're really excited about what we have going on in liquid cooling and Quantum Leap. We're in the first inning, but we see this as a real differentiator for us going forward.

[Joseph O'Dea, Managing Director at Wells Fargo]

Thank you.

[David Gitlin, Chairman and CEO at Carrier Global Corporation]

Thank you.

[Operator]

Your next question comes from the line of Tommy Moll with Stephens. Your line is open. Please go ahead.

[Tommy Moll, Equity Research Analyst at Stephens Inc.]

Morning, and thank you for taking my questions.

[David Gitlin, Chairman and CEO at Carrier Global Corporation]

Hey, Tommy.

[Patrick Goris, EVP and CFO at Carrier Global Corporation]

Morning, Tommy.

[Tommy Moll, Equity Research Analyst at Stephens Inc.]

I wanted to circle back on the comments about movement. Two-part question here: Was the down 30 in the fourth quarter a volume number or a revenue number? And then, as you think about movement in 2026, Dave, if I'm trying to read between the lines here, I think you're essentially saying that channel inventories are pretty balanced currently. And so I think the takeaway there is movement ought to track your sales pretty closely through 2026, but correct me if that's not right.

[David Gitlin, Chairman and CEO at Carrier Global Corporation]

It's generally right. What I would say... First of all, Tommy, in Q4, volume was down a little bit north of 40%. Our sales were down in the high 30s, 'cause, you know, we got a mid-single-digit benefit from price and mix. The movement, if you think about this year, movement will generally track our sales, except in the second half, we get a bit of a benefit from the absence of destocking that happened in the second half of last year.

[Tommy Moll, Equity Research Analyst at Stephens Inc.]

Okay. Thank you for-

[Patrick Goris, EVP and CFO at Carrier Global Corporation]

To answer your question, Tommy-

[Patrick Goris, EVP and CFO at Carrier Global Corporation]

The Q4 number we said was volume, was units. The Q4 number-

[Patrick Goris, EVP and CFO at Carrier Global Corporation]

Down thirty

[Patrick Goris, EVP and CFO at Carrier Global Corporation]

... is down a little over 30% is volume.

[Tommy Moll, Equity Research Analyst at Stephens Inc.]

Yep. Okay. And just sticking with Resi for a follow-up here. Obviously, there have been a lot of headwinds on the volume side. We can all make guesses as to what the drivers are, but one that hasn't been mentioned squarely, that I just want to mention now, is Daikin, which obviously lost a lot of market share toward the end of 2024. You were one of the clear beneficiaries of that. And so, granted, the industry demand levels are pretty poor right now, but could your volumes also not just be reflecting the fact that they've been able to take back some of that share? And that's not a fault of anyone's. It's just a reality that there's a mean reversion in place, and so you're gonna see some of that in volume headwinds at Carrier.

[David Gitlin, Chairman and CEO at Carrier Global Corporation]

We don't think so, Tommy. We understand what you're saying, that we know that there's been some changes in share in the industry over the last five years. If you look at us versus spin, we're probably up a few hundred basis points since we spun. And if you look at our share last year, I would call it flat from a movement perspective, a sell-out perspective. So we saw no change in share last year. We understand there's some movement in terms of some folks that may have lost some share and picked it up. From our perspective, up a few hundred basis points since we spun, and last year we held steady at that number. And we expect to hold steady at that number, if not increase. We have a bunch of new products coming out.

[David Gitlin, Chairman and CEO at Carrier Global Corporation]

We have a new fan coil. There was a lot of interest in it in Vegas earlier this week. The team's done really well with our channel partners to position us, so we have no intent of losing any share while maintaining price, and we wanna ensure that we are on that track of gaining share.

[Tommy Moll, Equity Research Analyst at Stephens Inc.]

Thank you, Dave. I'll turn it back.

[David Gitlin, Chairman and CEO at Carrier Global Corporation]

Thanks, Tommy.

[Operator]

This concludes our Q&A session. I will now turn the call back to David Gitlin for closing remarks.

[David Gitlin, Chairman and CEO at Carrier Global Corporation]

Well, listen, thanks to all of you. We could not be more energized about this year. We did take the opportunity to learn from some things from last year and apply those to position us for a tremendous year in 2026. So my thanks to our nearly 50,000 teammates around the world, and thanks to our investors for your continued confidence.

[Operator]

This concludes today's call. Thank you for attending. You may now disconnect.

Participants

Executives

• David Gitlin, Chairman and CEO
• Michael Rednor, VP of Investor Relations
• Patrick Goris, EVP and CFO

Analysts

• Amit Mehrotra, Managing Director and Senior Equity Analyst at UBS
• Andrew Kaplowitz, Managing Director at Citi
• Chris Snyder, Executive Director and U.S. Multi-Industry Analyst at Morgan Stanley
• Deane Dray, Managing Director at RBC Capital Markets
• Joe Ritchie, Managing Director at Goldman Sachs
• Joseph O'Dea, Managing Director at Wells Fargo
• Julian Mitchell, Equity Research Analyst at Barclays
• Nigel Coe, Managing Director at Wolfe Research, LLC
• Scott Davis, Chairman and CEO at Melius Research
• Steve Tusa, Managing Director at J.P. Morgan
• Tommy Moll, Equity Research Analyst at Stephens Inc.