Oct 29, 2026 earnings call — Data center wins and capacity expansion
Data center orders increased 300%, and year-to-date data center orders have exceeded $3 billion.
Revenue $6.3B (est $6.1B) · EPS $0.87 (est $0.76)
Key quotes
"Data center orders increased 300%, and year-to-date, data center orders have exceeded $3 billion, an increase of nearly 350%."
"In addition to top-line growth, by overdriving on price, productivity, and volume, we expect to deliver double-digit EPS growth this year, despite facing unexpected in-year input cost headwinds of $550 million-$600 million, driven by tariffs, commodities, and supply chain inefficiencies."
"It now appears to be tracking to between 7.5 million and 8 million units."
Analyst Q&A 9
Americas margins outlook
Q (Julian Mitchell · JPMorgan Chase): Analyst asked how quickly Americas margins can improve next year and whether price vs cost headwinds will persist. He also asked where pricing is sticking and what the company is doing to make price increases stick.
A: Management said Q4 looks like Q3: strong organic growth will flow to the bottom line, but the IEEPA refund benefit is gone so headwinds remain. They expect sequential improvement next year but no quick snapback in early quarters, and they plan price and cost actions while targeting double-digit EPS growth. They described new pricing tools, a WeatherMaker by Carrier brand, product updates, and AI-backed dynamic pricing to be more proactive on price.
"With respect for next year, we think that this will improve sequentially, but I don't think we'll see a snapback in the first or the second quarter." — Patrick Goris (CFO)
Residential pricing power
Q (Nigel Coe · Wolfe): Analyst asked why residential pricing power seems weak despite planned aggressive price increases, and what the principal problem is. He also asked how much mix or the Texas facility will affect margins and the data center ramp.
A: Management said the residential business is strong but was hit by sudden, large input cost increases (tariffs, metals, fuel) that made full price recovery hard this year; they have announced an 8% price increase for later this quarter and will be disciplined on price and productivity. On mix, they said Americas mix was roughly neutral in Q3, the new Texas facility adds only a couple pennies of cost this year, and they are not providing full margin guidance for next year yet while targeting double-digit EPS growth.
"We announced an 8% price increase effective later this quarter, and I expect us to be incredibly disciplined and tenacious going forward, both on price and all things productivity and supply chain resiliency." — David Gitlin (CEO·CHAIR)
Side-discharge (ductless) market share
Q (Steve Tusa · Wells Fargo): Analyst asked about market dynamics for side-discharge and ductless products, including strategic approach and current market share of the 7.5–8 million unit market. He also asked how the Midea partnership is structured.
A: Management said demand for side-discharge and hybrid ductless units is increasing and the company is well positioned with good margins and strong products, including tech from the Toshiba acquisition. They estimate the side-discharge segment is about 20% of this year's roughly 8 million unit market. On Midea, they said the partnership has been very positive but could not detail the commercial structure; both Carrier- and Midea-branded routes exist.
"Look, it's probably, in terms of your question of what percent of the overall market, it's probably about 20% of the 8 million or so that we're going to see this year, the 8 million market." — David Gitlin (CEO·CHAIR)
Data center LTAs and protection
Q (Joe Ritchie · Goldman Sachs): Analyst asked about LTAs with minimum volumes: the margin profile and what pricing mechanisms protect the company from input cost inflation. He also asked about current supply-chain/component challenges.
A: Management said they feel well-protected on minimum volumes and margins for the data center business and that applied sales are accretive to applied margins. They highlighted strong execution, design speed, and backlog wins. On supply chain, initial teething pains affected first production units (fans and some parts), but designs are stable, dual/multi-sourcing and materials strategies are on track, and these issues should ease in 2027.
"Yeah, I think we feel well-protected, both on the minimum volume side of it and on the margin side." — David Gitlin (CEO·CHAIR)
Fort Worth facility purpose and timing
Q (Scott Davis · Melius): Analyst asked whether the Fort Worth facility lets the company bid more or just relieve pressure on hot factories, and the timing for it. He also asked if Europe has capacity to serve a rising data center market.
A: Management said the Fort Worth site will both free up capacity at busy plants and let them pursue more wins; the shell is finishing soon and tenant work targets it to be operational mid to late next summer. The site will more than double Americas capacity and will serve data center and non-data center demand. For Europe, they said there is existing capacity in France and Poland that can be optimized, and they are building capacity in India and considering Eastern Europe as needed; residential capacity is ample.
"It's going to effectively more than double our capacity in the Americas, which we need." — David Gitlin (CEO·CHAIR)
CSE improvements and CSA commercial strength
Q (Andy Kaplowitz · Citi): Analyst asked for more color on CSE improvements, heat pump and air-conditioning strength, and visibility into 2027. He also asked why CSA commercial is doing better and which markets drive it.
A: Management said CSE growth is arriving later than expected with heat pumps up strongly (35%) and air conditioning up ~35% in the quarter; Toshiba and Viessmann products support their European channel approach. On cost, they have a comprehensive cost-out and footprint plan and will drive sequential margin improvement. For CSA commercial, they said K–12, retail, healthcare and national accounts are stronger, field inventory is healthy, and Q4 order trends should be up around 20%.
"So both not only the Toshiba product that is a really good business for us, in Europe, but we've now introduced the Viessmann branded air conditioning that we can put through our traditional channels." — David Gitlin (CEO·CHAIR)
Input cost vs tariffs split
Q (Joe O'Dea · Vertical): Analyst asked how the $0.55–$0.60 per share input cost hit splits between tariffs and other input costs, and what to expect next year. He also asked what changed in the U.S. residential market this year.
A: Management said full-year input cost headwinds are about $800 million and a little less than half of that is tariffs; they expect carryover inflation into next year because some tariffs began in April. Management also said there was no fundamental change in the residential market: this year saw unusually sudden and large input-cost shocks (tariffs, copper, steel, fuel) that made immediate dollar-for-dollar price recovery difficult, and they plan to get out in front on pricing next year.
"If you look at it from a full year perspective, our input cost headwinds are about $800 million." — Patrick Goris (CFO)
Boilers shift and commercial pricing
Q (Andrew Obin · BofA): Analyst asked whether the boiler market is improving and the momentum there, and whether commercial HVAC pricing is under pressure given new capacity and lower-tier competitors.
A: Management said boilers are declining as customers shift to heat pumps; heat pump demand is strong across Europe and boilers should fall in the single-digit range. They noted the new European heat pump has good margins. On commercial HVAC pricing, management said pricing has been fair globally and not the primary factor in recent wins, and they have seen positive pricing across segments in Q3 and expect the same in Q4.
"We have seen positive pricing in every segment in Q3, Andrew, and we expect the same in Q4." — Patrick Goris (CFO)
Non-data-center verticals and liquid cooling
Q (Nicole DeBlase · Deutsche Bank): Analyst asked which verticals drive the 20% order growth in non-data-center commercial HVAC. She also asked about demand for liquid cooling, CDUs, and related offerings.
A: Management said the strength is widespread: industrial reshoring, hospitality, healthcare, pharmaceuticals, semicon fabs in Asia, renewables and battery factories are driving orders, though commercial real estate, government and higher education remain softer. On liquid cooling, they are seeing very good demand: they introduced 1 MW and 2.6–3 MW units and will launch a 5 MW unit later this year and are already booking orders; they chose to develop CDUs internally and are winning orders for integrated QuantumLeap systems that combine cooling, CDUs and BMS with digital twins.
"When we look across healthcare, pharmaceuticals, industrial, semiconductor fab in Asia, we see some really good demand, even for renewables and battery factories." — David Gitlin (CEO·CHAIR)