The paragraph introduces the speaker, Sam Pearlstein, and the other participants in the call, David Gitlin and Patrick Goris. It mentions the use of non-GAAP measures and reminds listeners of the risks and uncertainties associated with forward-looking statements. It also introduces a new leader in the Refrigeration business and mentions the strong performance of the company in the second quarter.

In the second quarter, Q2 organic orders for Carrier were up 30% year-over-year, with a particularly strong performance in data centers. The company saw strong sales growth in their Global Commercial and Light Commercial HVAC businesses, offsetting weakness in their RLC businesses in Europe and China. The company's Resi business in North America also returned to year-over-year volume growth. Carrier's margins expanded by 200 points and their adjusted EPS was up double-digits, driven by strong productivity and business transformation efforts. The company has also made progress in selling off non-core businesses and reducing net debt, allowing them to initiate a multi-billion dollar share buyback. Carrier remains focused on their goal of being the global leader in intelligent climate and energy solutions, with a strong emphasis on connectivity and providing scalable solutions.

The company has seen significant growth in their Abound intelligent building platform and Lynx cold chain platform, as well as establishing an AI center of excellence. They have also introduced new sustainable solutions and have a strong focus on enhancing grid resilience. Aftermarket growth has been 9% in Q2 and the company is confident in their ability to continue delivering double-digit growth. They have implemented new digital tools to drive better execution and provide new solutions for customers.

Carrier has successfully transformed into a more focused company with a higher exposure to sustainability, electrification, and energy resilience. They have integrated with Viessmann Climate Solutions and their divestitures are on track. The company has reduced net debt and plans to initiate a multi-billion dollar buyback. They are working closely with Viessmann Climate Solutions to maximize the potential of the combination. Carrier's heat pumps are superior in terms of electricity savings, noise attenuation, energy efficiency, installation, reliability, and aesthetics. They have gained market share and achieved positive price growth. Synergy savings have also been identified.

The company sees potential in leveraging their channels, such as delivering their products through Viessmann in Europe and using Viessmann's technology to provide unique solutions. They are also focused on achieving cost synergies and controlling costs, and while the residential market in Europe has been weaker than expected, they remain confident in the long-term growth potential due to the EU's target for reducing greenhouse gas emissions and the shift towards heat pumps. The company recognizes that the industry may not always have strong macro conditions in certain areas and sectors every year.

The company has purposefully built a strong portfolio that is well-positioned for growth and has a strong global presence. They have a performance culture that gives them confidence in their ability to consistently deliver on their commitments. In the second quarter, they had strong earnings and sales growth, with the acquisition of Viessmann Climate Solutions being a major contributor. They also saw strong productivity and margin expansion, resulting in a 10% increase in adjusted EPS compared to last year.

In the appendix, a year-over-year adjusted EPS bridge is included, showing that headwinds from lower earnings at Viessmann Climate Solutions and earlier timing of the Access Solutions exit were offset by stronger sales in commercial HVAC and North America light commercial HVAC, productivity, and timing of taxes. Free cash flow was better than expected and up 35% compared to last year. The HVAC segment reported sales growth of 18%, while refrigeration had 1% organic sales growth and flat reported sales. Within transport refrigeration, container sales were up while global truck and trailer sales were down, but European and Asian truck and trailer sales were up. Sensitech business had mid-single digit sales growth. Overall, it was another strong quarter for HVAC.

The commercial refrigeration sector saw a decline in sales and a flat operating margin due to a mix of factors. However, the Fire & Security segment had a strong quarter with reported sales down 7% but organic sales growth of 3%. The Residential and Commercial Fire business was up mid-single digits and adjusted operating margins increased significantly. Overall, the company's orders increased by 30%, with HVAC orders up over 40% and strength in key verticals. Commercial HVAC orders were up over 20% and the backlog for that business is growing. Refrigeration orders were down, but orders for the Resi and Commercial Fire business were up over 10%.

The company expects to present the Fire & Security segment in discontinued operations in future quarters as they get closer to announcing a sale of the Resi and Commercial Fire business. This could happen in Q3 and will not apply to commercial refrigeration. They do not know the full impact on reported earnings from continuing operations this year, so their July guide will be consistent with previous disclosures. They will continue to disclose actual and projected 2024 results of their core business, including Viessmann Climate Solutions. The updated guide includes commercial refrigeration for nine months and expects reported full-year sales of roughly $25.5 billion with mid-single digit organic growth. The expected upside from Commercial and Light Commercial HVAC businesses offsets lower revenue at Viessmann Climate Solutions. The company maintains its adjusted operating margin guide of roughly 15.5% and expects full-year core earnings conversion to be over 40%. Interest expense is expected to be around $510 million based on the timing of exits and redeployment of net proceeds.

The company is maintaining its adjusted EPS guide range of $2.80 to $2.90 for the year. The free cash flow outlook remains at $400 million, with an underlying outlook of $2.4 billion. The adjusted EPS for the core business is expected to increase by 17% compared to last year, while the dilution from Viessmann Climate Solutions reflects lower sales. The impact of the business exits is also reflected in the adjusted EPS, with a modest benefit from share repurchases and a higher adjusted effective tax rate. For the third quarter, the company expects sales of $6.6 billion and adjusted EPS of $0.80, with a 500 bps increase in the adjusted effective tax rate.

The company had a good second quarter and is on track for a strong year. The operator opens up the call for questions from analysts. The first question is from Andy Kaplowitz with Citigroup. David Gitlin, the CEO, responds that the forecast has been de-risked and they expect 15-20% growth in the second half. They are looking for an inflection point in October when subsidies start paying back in Germany. The company is balanced and has seen an inflection in order trends, with a focus on data center orders.

In response to a question about the growth in data centers and residential areas, David Gitlin, the CEO, explains that the company has gained 120 bps of share in the past 12 months in the US residential market. He also mentions that commercial HVAC orders were up over 40% in the Americas, with strong performance in data centers, healthcare, and K-12 education. However, he notes that some orders may have been placed ahead of schedule, possibly due to distributors trying to plan for the A2L conversion.

The speaker discusses the performance of the company in the third quarter, mentioning that they will need to adjust production planning based on customer needs. They also mention the strong performance in the Fire & Security segment, with a focus on price and productivity. The speaker clarifies that there may be a 100 bps drop in margins in the third quarter compared to the previous year, due to the acquisition of Viessmann.

The company is expecting to lose $100 million in operating profit and face a $0.06 headwind due to exits. However, they anticipate some volume pickup and strong price and productivity to offset these losses. The company expects Viessmann to be flat in the fourth quarter and has an updated operating margin assumption of mid-teens for EBITDA and a few points below for operating margin. They also expect the divestiture of their resi and commercial fire business to happen quickly due to the likely involvement of a sponsor.

David Gitlin discusses the progress of industrial fire and residential orders, as well as the mix of 410A and 454 for the year. He also mentions the increasing demand for data center orders and plans to increase North America content to sell into that vertical.

The company has formed a dedicated team for a specific vertical and has secured a big order from a customer, with discussions ongoing with other customers. The company is confident in its technical offerings and has exceeded customer's technical requirements. The company is ramping up operations in various locations and is developing an aftermarket strategy for these critical customers. There has been no update on light commercial expectations for the year, but orders have turned positive and the company is feeling more confident about the business.

The speaker is optimistic about the performance of their company's light commercial sector, which has seen growth in the first two quarters of the year. They have had success in certain verticals such as K-12, retail, healthcare, and quick-serve restaurants, but have also seen softness in areas like warehouse and office space. The team is performing well and they are seeing positive orders for the first time in five quarters. The company has adjusted their revenue guidance for light commercial from a decline to a low-single-digit increase. The speaker also mentions a decrease in margins for the third quarter, particularly in HVAC, and a projected 20% decrease in Viessmann in the third quarter.

Nigel Coe asks about the accuracy of the full-year EBITDA for Viessmann Climate Solutions (VCS), to which Patrick Goris confirms it is in the ballpark. He also mentions that Q3 sales for VCS will be down high teens and Q4 will be flat year-over-year. David Gitlin adds that there will be strong productivity but the VCS acquisition offsets it, resulting in a 100 bps lower margin for HVAC in Q3. Nigel also asks about the order strength in HVAC and a potential prebuy due to distributors wanting to stock up on 410A products before the one-year install window. David responds that it is unclear how much of a prebuy there will be, but it won't have a significant impact on this year or next year.

The company is starting to determine how much they want to invest in the upcoming year. They and their customers are aware that there will be a 10-15% base price increase. The current guidance assumes a small prebuy. A question was asked about A2L and the speaker confirmed that the 15-20% cumulative increase mentioned before includes their annual price increase. The speaker believes this increase is appropriate and will stick. The company plans to repurchase $1 billion in shares in the second half of the year and expects to close the last divestiture by the end of the year. They expect to take back all Viessmann dilutive shares from the float by the end of next year. Another question was asked about A2L and the speaker confirmed that the 15-20% cumulative increase mentioned before includes their annual price increase.

Jeffrey Hammond asked about the organic growth in HVAC and specifically the weakness seen in China and Europe. Patrick Goris, the speaker, explained that in the second quarter, the Americas had mid-single-digit growth, while EMEA had low-single-digit growth. Commercial HVAC, driven by data centers, had strong growth in both regions. However, residential and light commercial business in Europe was down mid-teens. In Asia-Pacific, the main factor was China, which saw a mid-teens decline. Goris expects growth to pick up in the second half of the year, with the Americas up double-digits and EMEA and Asia-Pacific up high single digits. The operator then moved on to the next question from Andrew Obin with Bank of America.

David Gitlin discusses the impact of data centers and the evolving technology in the industry. He mentions that the company has a broad range of offerings for both water cooled and air cooled systems and is adding capacity in places like Charlotte and Mexico. Gitlin also talks about the need for more liquid cooling in the future and mentions partnerships and investments in this area. He emphasizes that liquid cooling is not a replacement but rather an addition to traditional cooling methods.

David Gitlin, CEO of Carrier, discusses the current state of their customers' funding applications before the deadline and the potential for tougher comparisons in the education sector. He mentions that there is still $40 billion remaining out of the $190 billion allocated, and many states have applied for extensions to spend the funds beyond the initial deadline of March 2026. Gitlin also mentions that there may be annual price increases in certain parts of the business, but does not expect any in the residential sector. He also notes that while there was some inflation in nonmaterial costs, the recent decrease in copper prices has offset this.

During the earnings call, the company discussed the impact of divestitures and their plan to eliminate stranded costs. They have already executed an $80 million cost reduction program and are taking additional actions to align their overhead structure with a simpler, more focused company. The company expects G&A to be lower in 2024 and beyond compared to 2020 and 2021. The resi orders for July are also strong, and the company expects this trend to continue in the third and fourth quarters.

The company has not set a cutoff date for ordering 410A refrigerant, but has asked distributors to start giving a sense of their orders for the year. Second quarter orders were up 60% even when taking out orders that would normally come in the third quarter. The company is well booked for the second half of the year and expects high-single-digit growth in the resi sector. The team has also de-risked the production of 454B refrigerant and expects strong orders in the second quarter.

The speaker, David Gitlin, is responding to a question from Steve about the growth of the company. Gitlin says that the company is seeing a lot of strength in the system and expects high-single-digit growth, possibly around 8-10%. He also discusses the growth of data centers within the company and expects it to be around 15% of the total portfolio next year. He mentions that the company has seen a significant increase in orders for data centers and is currently bidding on more, indicating that they are in the early stages of growth in this area.

In this paragraph, the speaker discusses the potential growth in the aftermarket for their company's water cooled chillers. They mention the increasing demand for data centers and the need for reliable, high-quality products in this market. They also mention recent competitive moves by Bosch and Lennox, but do not see any major changes to the competitive landscape. The speaker expresses confidence in their team's performance and ability to continue gaining market share.

The speaker provides an update on the company's mega projects, specifically mentioning their focus on data centers and the success they have had in the bid process. They also address a question about trade downs by consumers and state that they have not seen a material trend in customers opting for repair over replacement. They then discuss the performance of their various business lines, noting a decline in heat pumps and boilers, but also mentioning the unexpected decrease in solar PV.

The company saw a decrease in sales in Q2, but it is expected to improve in the full-year. The team has been successful in driving aftermarket growth and controlling costs. The company is facing challenges in the market, but is confident in its unique combination and is poised for growth next year. There have been some supply issues in the industry, but the company has not been significantly impacted.

David Gitlin, CEO of the company, does not want to talk about their competitors and instead focuses on their customers and team. He mentions that their team has seen a 120 basis point increase over the past 12 months and their goal is to have the right products at the right price for their customers. Gitlin is confident that if they continue to prioritize their customers, they will see continued growth. The call ends with Gitlin thanking the participants and stating that 2024 is an important year for the company as they transition their portfolio and aim for sustained growth and margin expansion.

This summary was generated with AI and may contain some inaccuracies.