Yahoo Finance Carrier Global Corp (CARR) Q1 2024 Earnings Call Transcript Highlights: Strong Growth and ...
Reported Sales: $6.2 billion, up 17%.
Organic Sales Growth: 2%.
Adjusted Operating Profit: $927 million, up 44%.
Adjusted Operating Margin: Expanded by 280 basis points.
Adjusted EPS: $0.62, up 19%.
Free Cash Flow: Outflow of $64 million.
Viessmann Climate Solutions Contribution: Sales down 12%, impacting overall figures modestly.
Aftermarket Revenue Growth: Up 6%, on track for $7 billion by 2026.
Cost Synergies: Tracking to about $75 million in 2024, over $200 million by year 3.
Revenue Synergies: Expected in the hundreds of millions of dollars.
HVAC Segment Margin: Expected to be about 17.5% for 2024, up roughly 100 basis points.
Refrigeration Segment: Sales down 2%, adjusted operating margin down 120 basis points.
Fire & Security Segment: Sales up 2%, adjusted operating profit up over 50%.
Full Year 2024 Guidance: Reported sales expected just under $26 billion, adjusted operating margin approximately 15.5%.
Adjusted EPS Guidance for 2024: Maintained range despite earlier business exits.
Release Date: April 25, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Q & A Highlights
Q: Could you provide an update on VCS sales expectations for Q2 and the full year, particularly concerning the solar PV business and core HVAC components? A: David L. Gitlin, CEO of Carrier Global, explained that for Q2, they anticipate sales numbers similar to Q1, which would represent a year-over-year decline of about 10% to 15%. For the full year, they forecast a potential decrease of about 5%, assuming a typical seasonal pickup in the second half. The decline in the solar PV business, which has lower margins, is expected to exceed 30% for the year. However, they anticipate growth in heat pumps and a strong performance in the aftermarket sector.
Q: What are the margin expectations for the HVAC segment for the rest of the year? A: Patrick P. Goris, CFO, noted that they expect the HVAC segment's margins to improve by about 100 basis points year-over-year in Q2 and Q3, with even better performance in Q4. This improvement is partly due to stronger growth anticipated in light and applied commercial HVAC.
Q: Can you discuss the prioritization of the sale of the residential and commercial fire business and its potential closure by year-end? A: CEO David L. Gitlin confirmed the focus on selling the residential and commercial fire business, with an offering memorandum expected to be issued in two weeks. The business is performing well, which supports their decision to prioritize a sale over a public market exit.
Q: How is Carrier positioned in the data center market, and what are the expectations for bookings as 2024 progresses? A: David L. Gitlin highlighted Carrier's strong position in the data center market, particularly with recent key wins. The company is expanding its capacity to meet growing demand, driven by the AI movement. He expects bookings to continue increasing from the levels seen in Q1.
Q: Could you provide more details on the productivity improvements seen in Q1 and expectations for the rest of the year? A: CEO David L. Gitlin expressed confidence in Carrier's ongoing productivity improvements, attributing them to enhanced materials management, logistics efficiencies, and overhead reductions. These factors are expected to continue contributing positively throughout the year.
Q: What are the plans and expectations for the A2L refrigerant transition in the residential segment? A: David L. Gitlin stated that Carrier is ahead of many peers in transitioning to A2L refrigerants, with products already in the market. He anticipates less than 20% of this year's mix to be A2L, with a significant increase next year. The transition includes a price increase of 15% to 20% over two years.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.
