• Revenue: Reported sales of $5.1 billion in Q4 2024, with 6% organic sales growth.
• Organic Growth: 3% organic growth for 2024, with double-digit growth in global commercial HVAC and aftermarket.
• Orders: Total company orders up low teens; HVAC Americas orders up about 40%.
• Backlog: Global commercial HVAC backlog up mid-teens versus last year.
• Adjusted Operating Profit: Up 65% in Q4 2024 compared to last year.
• Adjusted Operating Margin: Expanded by 370 basis points in Q4 2024.
• Adjusted EPS: $0.54 in Q4 2024, up 50% year-over-year.
• Free Cash Flow: Full year free cash flow of $30 million, about $200 million better than guided.
• Share Repurchases: $1.9 billion in 2024, about $1 billion more than October guide.
• Debt Reduction: Returned to roughly 2x net leverage.
• 2025 Guidance: Mid-single digit organic growth, 100 basis points of margin expansion, and adjusted EPS up 17% at the midpoint.
• Capital Deployment: $3 billion in share repurchases planned for 2025.

• Warning! GuruFocus has detected 5 Warning Signs with CARR.

Release Date: February 11, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Carrier Global Corp (NYSE:CARR) achieved 3% organic growth in 2024, driven by double-digit growth in global commercial HVAC and aftermarket.
• The company successfully completed its portfolio transformation, integrating Viessmann Climate Solutions and executing divestitures, yielding over $10 billion in gross proceeds.
• Carrier Global Corp (NYSE:CARR) returned over $2.6 billion to shareholders through dividends and share repurchases.
• The company expects mid-single-digit organic growth in 2025, with continued double-digit growth in aftermarket and global commercial HVAC.
• Carrier Global Corp (NYSE:CARR) anticipates a 17% increase in adjusted EPS at the midpoint for 2025, with about 100% free cash flow conversion.

Negative Points

• Carrier Global Corp (NYSE:CARR) faced unexpected weakness in residential light commercial HVAC in Europe and China during 2024.
• The company expects a 5-point full-year revenue headwind in 2025 due to last year's Q1 backlog reduction.
• Political and economic uncertainty in Europe is expected to result in flat to down mid-single-digit market volume in 2025.
• The company anticipates a $750 million year-over-year headwind from the commercial refrigeration exit.
• Carrier Global Corp (NYSE:CARR) faces potential challenges from tariffs, particularly concerning operations in Mexico.

Q & A Highlights

Q: Can you elaborate on the residential HVAC pre-buy situation and its impact on inventory and sales? A: David Gitlin, CEO, explained that there was a modest pre-buy of $75 million to $100 million worth of 410A units, which was anticipated. Inventory levels at distributors were slightly elevated, but movement from distributors to dealers was strong, up about 15% in Q4 and similar in January. Patrick Goris, CFO, added that some inventory will be sold in Q1.

Q: What is the expected price increase for 454B units, and how does it affect sales growth? A: David Gitlin, CEO, stated that the expected price increase for 454B units is about 10%. The transition to 454B is expected to contribute to a high single-digit sales growth, with 80% of volume impacted by the refrigerant transition and 90% of that being 454B.

Q: How do you view the competitive environment in the residential HVAC market, especially regarding pricing? A: David Gitlin, CEO, mentioned that despite concerns about competitors being aggressive on pricing, Carrier has consistently realized expected price increases. They anticipate a 10% price increase for 454B units and believe it will stick, although it's uncertain if all competitors will follow suit.

Q: Can you provide more details on the capacity expansion for Americas Commercial HVAC and its impact on backlog conversion? A: David Gitlin, CEO, highlighted that Carrier has significantly increased capacity by establishing a new facility in North America, allowing them to more than double their output. This expansion positions them well to meet demand and convert backlog faster.

Q: What are the expectations for Viessmann Climate Solutions' growth and margin improvement in 2025? A: David Gitlin, CEO, expects Viessmann's EBITDA ROS to improve from low teens to mid-teens in 2025, driven by $150 million in cost synergies. The focus is on controlling costs and achieving revenue synergies, with a detailed plan for growth.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.