CARRIER GLOBAL Q1 FY26 earnings call CARR

Company orders rose 11%, led by global commercial HVAC up 35% — including CSA commercial HVAC up over 80% — and global data-center orders up over 500%. CSA commercial order growth reflected some large data-center wins. Since spin, global CHVAC sales are up 80%, backlog up 130%, share up 500 bps and margins up 3x. Management characterized the CHVAC product portfolio, field network and operational capacity as 'night and day versus where we were at spin,' with new maglev-bearing air-cooled chillers and a high-margin controls business gaining U.S. share.

CSA organic sales fell 3%, with Residential down 12% on movement (distributor-to-dealer volume) down 8% and field inventories down ~35% YoY. Q1 movement (~down 10%-12%) beat the feared ~20% decline, and resi orders were up 5%-6%. Management expects existing home sales up mid-single digits and flattish new construction; mortgage-purchase applications were reportedly up 20%. April started better than expected but management stressed the season hinges on May and June. Field inventories remain deliberately lean (still down ~35%).

CSE organic sales were flat, a few points better than expected. Heat-pump demand inflected as Germany's electricity-to-natural-gas ratio fell to ~2.5, below 3 for the first time since early 2023; Germany subsidy applications rose 30% and Germany heat-pump sales rose ~20% (low teens across Europe), while boilers fell mid-single digits. Segment margin was disappointing on heavier-than-planned one-time^📎 promotions and lower commercial volume; management converted ~150 new installers and 500+ first-time homeowners, implemented price increases and surcharges effective April 1, and expects full-year margin up ~100 bps YoY.

CSAME organic sales fell 1%: commercial outside China was up high teens (India, Australia) but was offset by China RLC weakness. China overall was down low teens, with RLC down ~25% and commercial down low single digits; Middle East sales were down mid-single digits on the regional conflict. Middle East sales were ~$400M in 2025 (mostly CSAME). Segment margin fell to ~10%. Management sees no clear residential bottom in China but points to encouraging CHVAC opportunities in data centers, EV battery, healthcare and semiconductor fab verticals.

CST posted a third consecutive quarter of solid organic growth, with container up nearly 40%, partially offset by weak global truck and trailer. Segment margin declined on unfavorable business mix. Management expects container to outperform its earlier down-year expectation while North America truck and trailer (NATT) runs a bit worse; full-year ACT view is flattish to up low/mid single digits. Class 8 recovery timing is uncertain, hurt near-term by higher fuel prices delaying customer capex despite pent-up demand.

The QuantumLeap integrated offering (chillers, CDUs, Nlyte DCIM, BMS, digital twin, air handlers, lifecycle support) has won ~$300M-$400M of orders since launching about a year ago, much of it CDU-related. Carrier is developing CDUs organically — a 1MW unit is introduced, 3MW is due ~Q3, and 5MW toward year-end/early next year. The company expanded its investment/partnership with ZutaCore, one of the few players with a two-phase solution; management expects an eventual migration to two-phase cooling within roughly five years while continuing single-phase/DC investments and smaller (millions-scale, not billions) bolt-on M&A.

Management reiterated an aftermarket 'DNA' playbook — designing products for aftermarket, working supplier and distributor contracts toward 100% parts capture, adding scaled salespeople/technicians, and driving mods/upgrades. Connected devices in the field rose over 25% in the quarter. The resi digital ecosystem aims to link homeowners, dealers, distributors and Carrier into a single 360-degree stack to lift renewal rates, parts capture, forecasting and working capital. Management is 'extremely confident' in a sixth straight year of double-digit aftermarket growth, targeting ~13%-14% internally.