Carrier Global Corporation

Good morning and welcome to Carrier's second quarter 2026 earnings conference call. I would like to introduce your host for today's conference, Michael Rednor, Vice President of Investor Relations. Please go ahead.

Good morning and welcome to Carrier's second quarter 2026 earnings conference call. On the call with me today are David Gitlin, Chairman and Chief Executive Officer, and Patrick Goris, Chief Financial Officer. Except where otherwise noted, the company will speak to results from continuing operations Thank you. Thank you.

Thanks, Mike, and good morning, everyone. With strong orders, record backlog levels, and first half results being better than expected, we are raising our full year guidance on sales, operating profit, and EPS. 2Q orders were very strong, up about 40%, with commercial HVAC up about 65%, driven by continued strength in data centers where orders were up 4x over last year. Our total company backlog, which excludes orders that we expect from long-term agreements with hyperscalers and colos, is now over $8 billion, up about 40% versus last year and up 20% sequentially. Given the increasing demand for our differentiated commercial solutions, we have announced a new facility in India and are finalizing plans for a new site here in the U.S. We are pleased that our resi businesses in CSA and CSE were both up high single digits, while CSA Light Commercial was up 10%, a similar rate to the first quarter. Our strong free cash flow enabled us to continue to invest in growth, and we returned about $640 million to shareholders. We continue to remain proactive in optimizing our portfolio with the divestiture of Riello Complete and the sale of Noresco announced yesterday. In terms of acquisitions, we are excited to welcome 75F to the Carrier family as you see on slide 4. This acquisition accelerates our path to creating intelligent and fully autonomous buildings. There are three primary benefits from this combination. First, 75F's BMS platform is perfectly positioned for small and medium-sized businesses and for international markets. Because our ALC BMS offering has primarily been focused on larger building applications in the U.S., 75F expands our TAM by about $20 billion. Second, 75F will significantly enhance our BMS capabilities. It is AI-enabled and cloud-native, which, when combined with carriers' platforms, enables agentic AI applications for autonomy and other critical features to drive reliability, uptime, Great interaction, comfort, and energy optimization. Also, its wireless and auto-commissioning capabilities enable faster and seamless installations for both new applications and retrofits. And third, 75F plays an important role in our systems integration strategy, nicely complementing our equipment portfolio and lights data center infrastructure management offering, along with our digital tech stack enabled by Abound and ALC. Intelligent and autonomous buildings are the buildings of the future and Carrier, now enhanced by 75F, is positioned to lead the way. Turning to slide five. In 2026, we expect that nearly half of our portfolio, our commercial HVAC and aftermarket businesses, will have their sixth year in a row of double digit growth and these businesses remain very well positioned for continued strong growth going forward. In addition, It is encouraging that our shorter cycle RLC businesses in North America and Europe have returned to growth. Though the timing of the recovery in Global Truck Trailer remains unclear, there is clearly pent up demand as we head into 2027. So with the record backlogs in our longer cycle businesses combined with our shorter cycle RLC businesses in the Americas and Europe turning, we expect the second half to be up mid-teens and are well positioned for strong growth to continue. On slide six, last quarter we walked you through our transformational commercial journey since our spin. I am very proud that our team's strategic investments and great work are yielding such strong results. We are now increasing our full year data center sales outlook to about $2 billion, which will be our second year in a row of doubling our sales in this important vertical. With our recent significant wins, Our 2026 data center sales forecast is all in backlog and we continue to partner with hyperscalers and colos to further strengthen our backlog for 2027 and beyond. We continue to gain market share and the rapidly increasing install base that we are delivering today will drive attractive aftermarket growth over the long term. Turning to CSA Resi on slide seven. Bottom line is that performance has been better than we expected with our 2Q sales up 9%. We now expect the market to be around 7 to 7.5 million units this year, largely stable versus last year. Field inventory levels continue to remain healthy, ending 2Q down about 25% versus last year. We also continue to invest in differentiation, including building out our digital ecosystem A key priority for us, leveraging Beastman's cutting-edge digital platform. We now have about 55,000 channel partner technicians monitoring systems real-time, up about 35% from a year ago, driving customer loyalty and channel efficiency. We are now raising our full-year expectations for CSA Resi sales to be up high single digits. Resi sales in Europe are also improving, as you can see on slide 8. Sales were up high single digits in 2Q with heat pumps up about 20% and boilers down high single digits. Market dynamics remain favorable with continued high prices for natural gas and Germany recommitting to subsidies. We also remain very encouraged by pre-order activity for our new VitoCal 200 units. This Wiesmann branded offering has all the benefits that our customers have come to expect. High efficiency, low noise, great aesthetics and connectivity, along with lower product and installation costs. It will be a tremendous secondary offering for Germany and the primary offering for most other countries in Europe. We are on track to formally launch in the fall and expect this new product to significantly increase our TAM. Though our European commercial sales were lower than we expected in the first half, our 20% 2Q orders growth and strengthening backlog give us confidence in the second half being up mid-single digits Segment margins in 2Q were disappointing We are seeing the benefit from improved volume and price costs, but that was offset by unfavorable mix and selling investments We will continue to drive strong growth initiatives and will take a more aggressive and structured approach to cost reduction and pricing discipline. Last month, we appointed Thomas Donato as the new president of this segment. I am confident that Thomas and the team will take the right actions to get this business to mid-teen operating margins over the next few years. Moving on to aftermarket on slide nine. We remain on track for double digit aftermarket growth. Through the first half, we are up high single digits, and we have the playbook team and plans in place to deliver double-digit growth for the full year. On slide 10, you see a lot more greens for our business units compared to our original guide, thus enabling us to raise our full-year outlook for sales, operating, profit, and EPS, and will serve us well as we head into 2027. With that, I will turn it over to Patrick. Patrick?