Brookdale Senior Living Inc.

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

Good morning and welcome to Carrier's first quarter 2025 earnings conference call. On the call with me today are David Gitlin, Chairman and Chief Executive Officer, and Patrick Gores, Chief Financial Officer. Except where otherwise noted, the company will speak to results from continuing operations, excluding restructuring costs, amortization of acquired intangibles, and certain significant non-recurring items, such as acquisition and divestiture-related costs. 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. One additional note, as you probably saw in both the press release and webcast presentation this morning, we announced our revised reportable segments and segment profitability measures, so we will be speaking to financials on this basis going forward. With that, I'd like to turn the call over to Dave.

Thanks, Mike, and good morning, everyone. Let me start by thanking our 50,000 teammates for delivering another strong quarter. I'd also like to welcome Michael Gerges to our team. He is leading our climate solution segment in the Asia Pacific, Middle East, and Africa region, and we are thrilled to have him on board. So, a strong and better than expected start to the year. Orders were up high single digits with double digit orders growth in Climate Solutions Europe and Transportation. Within Climate Solutions America, sales in both residential and commercial were up about 20% each, more than offsetting weakness in light commercial. Global aftermarket remains on track for another year of double-digit growth following one Q of 8%. Total company backlog was up about 10% year over year and 15% sequentially. The team continues to use carrier excellence to drive strong productivity with core earnings conversion of about 100%, and 210 basis points of margin expansion. We drove 27% adjusted EPS growth on 2% organic growth. Pre-cash flow was $420 million, and we returned about $1.5 billion to shareholders in the quarter through dividends and share repurchases, plus paid down $1.2 billion in debt with no additional maturities until 2027. Turning to slide four, we made great progress on all three drivers of sustained growth. products, aftermarket, and systems. In terms of differentiated products, channels, and brands, we introduced Carrier's first air-cooled commercial heat pump in Europe, delivering high temperatures, increased energy efficiency, noise reduction, and enhanced operational performance, all of which address increased demand for district heating and cooling in Europe. Also, as we displayed at the recent ISH show in Frankfurt, we are gaining traction selling our Carrier-branded air-to-air residential heat pumps in Europe, leveraging Wiesman's channel. Aftermarket strength continues. We drove tremendous progress in the attachment rates on our commercial chillers, now surpassing 60% for the first time, and we now have over 50,000 connected chillers, up about 5,000 versus the prior quarter. Aftermarket for global commercial HVAC was up about 10%, supported by mods and upgrades, which grew about 20%. We also introduced a smart device application for Lynx Fleet, providing increased real-time visibility, enhanced customer operational efficiency, and reduced costs while maintaining cold chain integrity. On systems, we introduced Wiesman's ProFeed to accelerate and expand our hemp sales in Europe. Selling heat pumps versus boilers is a mix-up sales benefit of about four to one. Selling complete systems versus boilers is a mix-up benefit of closer to 8 to 1, with more value to the homeowner, so we see this as a significant win-win opportunity for sustained growth and customer stickiness. For HEMS in the United States, we announced an exciting new partnership with Google to enhance grid resilience and support smarter energy management. By integrating carrier HEMS technology with Google's cloud's AI and analytics, We will help increase the efficiency of the existing energy infrastructure, reduce grid congestion, unlock greater energy utilization, and reduce energy costs to the homeowner. Turning to slide five for an update on our residential and light commercial business in Europe. Organic orders were up mid-teens, driven by strength in heat pumps, offset by a decline in boilers. Germany heat pump subsidy applications in Q1 were up significantly, the highest Q1 we have seen in the past five years. Our RLC Europe book to bill was 1.3, and our backlog was up 60% sequentially. Organic sales were down about 10% as we expected, and we project the RLC Europe business to return to modest growth in 2Q. Revenue synergies remain on track for about 100 million this year, and about 200 million next year. Cost synergies also continue to be strong, and we are on track to achieve more than 200 million by the end of next year. A few comments on the recent election in Germany. We were pleased to see that the new coalition government is committed to the European Union's 2030 climate goals, which include a 55% reduction in carbon emissions, which will contribute to a continued shift to electric heating. Also encouraging is the Coalition's continued support for heat pump subsidies and its €500 billion infrastructure investments, including about €100 billion for additional green investments. Importantly, the new government is also committed to bringing down electricity pricing by at least 5 cents per kilowatt, which is expected to bring the ratio of electricity to gas prices below 3. Further improving the ratio will be ETS2, where across Europe in 2027, we expect fossil fuel prices to increase. All in, we're pleased with improving heat pump demand and traction on our key growth initiatives. A word on our guidance and the macro environment on slide six. Let me first say that we, of course, support free and fair trade. Also carriers proud to be the largest us domicile player in our industry. And we've grown our domestic head count by about 20% over the past five years. And we continue to invest in our us workforce and factories. With respect to tariffs, virtually all of our imports from Mexico are us MCA compliant for the tariffs that are in effect today. China is about 80% of our exposure. As reflected in our guidance, we are fully mitigating our tariff exposure through supply chain and productivity actions with a balance of about $300 million via price, which represents a little over 1% of additional pricing. In addition, given the fluidity of the current market environment, we are taking additional cost containment measures. Based on our strong start to the year and current FX rates, we are increasing our full year adjusted EPS guide to $3 to $3.10, which is up about 20% year over year. As always, our team is committed to taking the actions needed to deliver on our commitments to our customers and investors. You saw this when we addressed COVID and supply chain disruptions, and we are confident that you'll see us do the same here. Importantly, while we remain clear-eyed and prudent given the current macroeconomic uncertainty, we will remain laser-focused on our customers and continue to invest in differentiation and solutions to drive sustained outsized growth for years to come. With that, I will turn it over to Patrick.