Sentiment Analysis of the earnings transcript to help figure out if there are any bullish or bearish sentiments that could be gathered from it. We're doing ML and AI based analysis on the earnings call to get some more insights.
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| And so it's a really good business |
| With remediation, then what we've said is we feel very strongly in the corporate veil that we have |
| So we are benefiting from significant secular tailwinds across all of the remaining businesses that we'll have in our portfolio and we'll have a very attractive portfolio, as I mentioned, across the different parts of the world |
| And the takeaway here is, of course, the message we'd like to send is we see an opportunity here given the exits that we've announced, given the net proceeds that we expect to get, plus the free cash flow generation from this year and next year, to have attractive earnings growth for -- into 2025 |
| We already have very strong positions in every part of the world for these businesses |
| In addition to that, we have tremendous opportunity to simplify what we do, drive cost out, which in turn provides us resources to reinvest in the company and expand our margins |
| So we expect to see attractive growth opportunities there |
| And we invest in digital platforms such as Abound and Lynx to increase digital revenues, but also to increase our aftermarket business which, as I'll talk about, provides significant upside opportunity for Carrier |
| So overall, we expect to see continued good performance in our Commercial HVAC business |
| And we are expecting a pickup in orders that we expect to see late this quarter into Q2 that would help us with better performance in the second half of the year, knowing, of course, that the comps get easier in the second half of the year |
| And we have a very strong desire, once we get to about 2x net leverage, to repurchase at least the equivalent shares issued to the Viessmann family |
| All of these are important drivers that, in essence, have a positive impact on our business |
| So again, another example where I see that besides the tremendous secular trends we benefit from, we have a unique opportunity internally to simplify what we do more than just the portfolio to drive out cost, to reinvest in our business and to expand our margins |
| And so I call these, we have a puzzle in front of us where we can pick the best, scale it globally, get tremendous scale benefits and further simplify our business |
| There is a benefit of lower interest expense, and then there is significant capital available for deployment that we intend to focus on share repurchases that will further boost our earnings growth for 2025 |
| And I think with the acquisitions of Giwee, Toshiba and Viessmann over the last just 2, 3 years, we have a unique opportunity because each one of these businesses either buy something from the outside that someone else within the company -- that we make within the company or there is an opportunity to pick best-in-class technology different businesses that we have and to scale that technology globally |
| And so it's a business that provides significant opportunities again long term |
| We like it because it's recurring revenue, it's existing customers, it's asset-light and on average 10% higher gross margins than the overall company |
| And as a result of this, as you can see on the bottom, we expect that as a result of this, that our multiple over time of course will increase because we'll be simpler, higher growth profile with tremendous growth opportunities ahead of us |
| We have a long history of being a leader in that space, and again, we have very strong differentiation in technology across the different regions in this space |
| So much more simplified company with leading positions, high exposure to attractive end markets and benefiting from secular trends, including the entire move towards electrification and the energy transition |
| But the outcome will be a company where we will be able to have significantly more scale benefits of the infrastructure that we have and an opportunity to drive more margin expansion over the next several years given the opportunities you see on this slide |
| So we've had already 2 years of a downturn in resi, while at the same time, actually we've been able to grow revenue and expand our margins |
| And so for the moment, early, we've only -- we're only 3 months in, but clearly we think we're making good progress there, which also means that as the heat pump business and the business overall, even accelerates, that we expect the incrementals to be that more attractive |
| Patrick Goris This is another good example where the more efficient or sustainable, sustainable the products become that we sell, there is a natural uplift from a revenue point of view and margin point of view |
| We expect and target at least 50 basis points of margin expansion every year |
| So the move towards higher sustainability automatically puts an uplift on our sales growth |
| Our home market, of course, being the Americas, we have the leading position in residential and light commercial HVAC in the U.S |
| Patrick Goris Applied, again, a really good business, a global business |
| And interestingly, of course, the Nlyte acquisition that we made several years ago is a differentiator for us because it helps operators of data centers to optimize the energy consumption of the racks they have |
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| What I was trying to lay out was we would be disappointed given our value creation framework that we would deliver anything less than double-digit |
| And as we think about just maybe go to Light Commercial because there are concerns about Light Commercial slowing, guided -- I think, has guided to be down mid-single digits |
| So we would expect all else equal or we would be disappointed if we wouldn't do that again for next year |
| I think the fourth quarter was really -- remained somewhat weak |
| And in terms of context, our resi business was down in '22 low single digits |
| The volume levels we expect in light commercial for 2024 are lower than they were in '18 and '19 |
| Commercial real estate remains somewhat weak in that space |
| So will we see some weakness in some North America truck and trailer, maybe this year |
| It was down high teens, almost 20% in 2023 |
| The container business went through a downturn is coming out of that downturn |
| That being said, of course, they're not immune to what's happening in the market |
| Andrew Obin Your outlook to -- the bull argument is that the resi downturn happened and you still hit your numbers |
| So how should we think about the underlying demand versus inventory? And when do we expect that cycle to bottom? Patrick Goris If I look at the expectations for light commercial for this year, yes, down mid-single digits |
| We just don't expect the business to be as strong this year as for last year, but not at historically high levels |
| Once the transformation is behind us, and we're only a few quarters away from this, the company will be even more exposed to some of the secular tailwinds you see on the left side of this slide |
| Can you just also update us on the bankruptcy process for KFI, where are we? Because, as I said, it seems there's been headlines |
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