1 00:00:02,360 --> 00:00:06,680 Speaker 1: Bloomberg Audio Studios, podcasts, radio news. 2 00:00:06,840 --> 00:00:09,080 Speaker 2: I'm pleased to say joining us now is David Gitlin. 3 00:00:09,160 --> 00:00:11,320 Speaker 2: He is chairman and CEO of Carrier, which is a 4 00:00:11,360 --> 00:00:15,319 Speaker 2: world leader in heating, air conditioning and refrigeration solutions. Great 5 00:00:15,360 --> 00:00:15,920 Speaker 2: to see you here. 6 00:00:16,040 --> 00:00:17,360 Speaker 1: Great to see you, Scarlette Romaine. 7 00:00:17,400 --> 00:00:20,120 Speaker 2: Thank you for having me so talk us through what's 8 00:00:20,160 --> 00:00:21,040 Speaker 2: new when you're investor? 9 00:00:21,079 --> 00:00:21,720 Speaker 1: Daid this year. 10 00:00:21,760 --> 00:00:23,800 Speaker 2: You had an investor day in twenty twenty two, and 11 00:00:23,840 --> 00:00:25,800 Speaker 2: it looks like a lot of the goals are similar. 12 00:00:26,600 --> 00:00:29,160 Speaker 2: What's different this time around in twenty twenty five, Well, what. 13 00:00:29,160 --> 00:00:31,920 Speaker 3: We said is that we did everything we said we 14 00:00:31,920 --> 00:00:33,839 Speaker 3: were going to do. Back in twenty twenty two. We 15 00:00:33,880 --> 00:00:36,320 Speaker 3: said we'd grow fifty BIPs a year of margin expansion. 16 00:00:36,360 --> 00:00:38,880 Speaker 3: We grew one hundred. We said we'd grow EPs about 17 00:00:38,880 --> 00:00:41,960 Speaker 3: ten percent a year. We've grown our EPs fifteen percent 18 00:00:42,000 --> 00:00:44,000 Speaker 3: a year. We did what we said on our effective 19 00:00:44,040 --> 00:00:46,040 Speaker 3: tax rate. We said what we would do on free 20 00:00:46,040 --> 00:00:48,680 Speaker 3: cash full equal to net income. But we did say 21 00:00:48,720 --> 00:00:50,720 Speaker 3: that we would grow sales six to eight percent a year. 22 00:00:50,760 --> 00:00:52,480 Speaker 1: The last few years we've grown four. 23 00:00:53,040 --> 00:00:55,520 Speaker 3: So the whole investor day we had four hours this 24 00:00:55,560 --> 00:00:58,720 Speaker 3: morning at the NYSE was how do we get consistently 25 00:00:58,800 --> 00:01:01,640 Speaker 3: six to eight percent gross. So we introduce a growth 26 00:01:01,680 --> 00:01:04,520 Speaker 3: algorithm the market. We said call it low single digits, 27 00:01:04,560 --> 00:01:07,240 Speaker 3: be conservative, and then we had a three prong growth 28 00:01:07,280 --> 00:01:10,280 Speaker 3: to a three prong strategy to growth. One is outgrowth 29 00:01:10,280 --> 00:01:12,760 Speaker 3: the market through products so share gains. 30 00:01:12,800 --> 00:01:14,720 Speaker 1: The second was aftermarket. 31 00:01:14,200 --> 00:01:17,280 Speaker 3: Where we've said aftermarket will grow double digits forever for us. 32 00:01:17,720 --> 00:01:19,880 Speaker 3: And the third is kind of a new frontier is 33 00:01:19,920 --> 00:01:23,360 Speaker 3: systems offerings. That combination gets us the sixty percent a year. 34 00:01:23,760 --> 00:01:26,319 Speaker 2: So it sounds like there's some tailwinds in your industry. 35 00:01:27,280 --> 00:01:29,360 Speaker 2: Walk us through which of it is structural, which of 36 00:01:29,360 --> 00:01:30,119 Speaker 2: it is cyclical. 37 00:01:30,480 --> 00:01:33,840 Speaker 3: There's a couple of unique tailwinds, for example, right now 38 00:01:33,880 --> 00:01:37,520 Speaker 3: around data centers. If you think about a typical commercial 39 00:01:37,520 --> 00:01:39,280 Speaker 3: office building, it may have three chillers. 40 00:01:39,319 --> 00:01:41,120 Speaker 1: A data center may have one hundred and fifty. 41 00:01:41,280 --> 00:01:45,039 Speaker 3: So the massive investments we're seeing in data centers place 42 00:01:45,120 --> 00:01:48,160 Speaker 3: right to our strengths. And we've just introduced a brand new, 43 00:01:48,680 --> 00:01:51,000 Speaker 3: very unique offering that we call quantum Leap, which is 44 00:01:51,040 --> 00:01:54,440 Speaker 3: a combination of traditional cooling with a chiller at air handlers, 45 00:01:54,800 --> 00:01:57,200 Speaker 3: but also a new liquid cooling which is a direct 46 00:01:57,240 --> 00:02:01,040 Speaker 3: to chip cooling. And our combination is very unique because 47 00:02:01,080 --> 00:02:04,640 Speaker 3: we're the only ones in the industry integrating traditional cooling, 48 00:02:04,680 --> 00:02:08,880 Speaker 3: liquid cooling, an entire building management system, server management all 49 00:02:08,919 --> 00:02:09,800 Speaker 3: into one offering. 50 00:02:10,240 --> 00:02:12,240 Speaker 4: What's been the demand for that, because I know we've 51 00:02:12,280 --> 00:02:14,040 Speaker 4: talked a lot on this program about the build out 52 00:02:14,080 --> 00:02:16,320 Speaker 4: of data centers and such, but there's also been a 53 00:02:16,320 --> 00:02:18,800 Speaker 4: lot of sort of promises to build things and I 54 00:02:18,840 --> 00:02:20,880 Speaker 4: know the building hasn't actually started for some of that. 55 00:02:21,000 --> 00:02:23,160 Speaker 4: So what's been the uptake here and do you expect 56 00:02:23,160 --> 00:02:23,760 Speaker 4: it to increase? 57 00:02:24,040 --> 00:02:24,359 Speaker 1: We do. 58 00:02:24,480 --> 00:02:26,680 Speaker 3: Last year we were about five hundred million in sales 59 00:02:26,680 --> 00:02:27,480 Speaker 3: for data centers. 60 00:02:27,480 --> 00:02:29,320 Speaker 1: This year will be a billion, so two x. 61 00:02:29,360 --> 00:02:31,960 Speaker 3: We're now taking orders for twenty six, twenty seven, even 62 00:02:31,960 --> 00:02:35,240 Speaker 3: into twenty eight. So the hyperscalers are growing at different 63 00:02:35,240 --> 00:02:38,280 Speaker 3: paces right now, but very very strong demand. And what 64 00:02:38,320 --> 00:02:41,240 Speaker 3: we're seeing is increased demand for colos, the co locators, 65 00:02:41,360 --> 00:02:42,960 Speaker 3: especially in Europe and China. 66 00:02:43,000 --> 00:02:46,040 Speaker 4: Really is there Are you involved at all in some 67 00:02:46,160 --> 00:02:50,360 Speaker 4: of the administrations push to help build data center projects 68 00:02:50,360 --> 00:02:53,000 Speaker 4: in the Middle East and elsewhere outside of the US one. 69 00:02:53,000 --> 00:02:53,920 Speaker 1: Hundred percent we are. 70 00:02:54,080 --> 00:02:56,359 Speaker 3: We're very much working on new wins in the UAE 71 00:02:56,440 --> 00:02:59,000 Speaker 3: that we're announced recently, we have a lot going on 72 00:02:59,080 --> 00:03:01,240 Speaker 3: in Saudi Arabia, so we see the Middle East as 73 00:03:01,240 --> 00:03:02,600 Speaker 3: a real good growth factor for US. 74 00:03:02,880 --> 00:03:04,720 Speaker 2: You also have a lot going on in the US, 75 00:03:04,800 --> 00:03:07,040 Speaker 2: because over the past five years, you've definitely grown and 76 00:03:07,080 --> 00:03:11,240 Speaker 2: focused on expanding your US workforce by approximately twenty percent. 77 00:03:12,040 --> 00:03:14,680 Speaker 2: How much of this was in response to the changing 78 00:03:14,680 --> 00:03:18,280 Speaker 2: political wins, how much of this was a strategic advantage 79 00:03:18,280 --> 00:03:20,799 Speaker 2: for you, specifically a strategic advantage. 80 00:03:20,840 --> 00:03:22,560 Speaker 1: We like to be where our customers are. 81 00:03:22,600 --> 00:03:25,400 Speaker 3: About fifty percent of our sales are in the United States, 82 00:03:25,440 --> 00:03:28,480 Speaker 3: so you know we've grown our workforce, as you said, 83 00:03:28,480 --> 00:03:29,399 Speaker 3: twenty percent. 84 00:03:29,160 --> 00:03:29,919 Speaker 1: Over five years. 85 00:03:29,919 --> 00:03:32,560 Speaker 3: We're by far the biggest player that's headquartered in the 86 00:03:32,639 --> 00:03:36,040 Speaker 3: United States in our industry. And what we announced last 87 00:03:36,040 --> 00:03:40,160 Speaker 3: week was an incremental billion dollar investment in the United 88 00:03:40,200 --> 00:03:42,680 Speaker 3: States over the next five years, which will create four 89 00:03:42,720 --> 00:03:46,200 Speaker 3: thousand additional jobs. And these are very technical jobs. It's 90 00:03:46,240 --> 00:03:49,280 Speaker 3: a combination of R and D. You can think mechanical, 91 00:03:49,480 --> 00:03:53,040 Speaker 3: traditional software and electrical engineering technicians that are out in 92 00:03:53,040 --> 00:03:53,480 Speaker 3: the field. 93 00:03:53,720 --> 00:03:55,000 Speaker 1: And we also announced that we're. 94 00:03:54,880 --> 00:03:57,600 Speaker 3: Going to establish a brand new manufacturing factory in the 95 00:03:57,680 --> 00:03:58,280 Speaker 3: United States. 96 00:03:58,320 --> 00:03:59,960 Speaker 1: We're very proudly in North Carolina. 97 00:04:00,000 --> 00:04:03,120 Speaker 3: I know, we're in Georgia, we're in Tennessee, but we're 98 00:04:03,160 --> 00:04:05,360 Speaker 3: now going to build a new factory. We're looking at 99 00:04:05,360 --> 00:04:07,400 Speaker 3: a location like Texas, but we haven't. 100 00:04:07,200 --> 00:04:09,520 Speaker 4: Finalized the choice with regards to some of those hires 101 00:04:09,800 --> 00:04:13,240 Speaker 4: and the technical expertise you need for these jobs. Do 102 00:04:13,360 --> 00:04:15,120 Speaker 4: those people come to the table with that or do 103 00:04:15,160 --> 00:04:15,880 Speaker 4: you have to train them? 104 00:04:16,040 --> 00:04:16,839 Speaker 1: It's a combination. 105 00:04:17,000 --> 00:04:19,320 Speaker 3: That's part of the negotiations with the states right now 106 00:04:19,360 --> 00:04:22,320 Speaker 3: as we are looking for some support on some of 107 00:04:22,360 --> 00:04:25,359 Speaker 3: the technical training. But we will train about one hundred 108 00:04:25,400 --> 00:04:27,680 Speaker 3: thousand technicians a year, so we know how to train 109 00:04:27,720 --> 00:04:30,799 Speaker 3: and then integrate on whether it's technicians or even highly 110 00:04:30,839 --> 00:04:32,600 Speaker 3: skilled manufacturing labor as well. 111 00:04:33,440 --> 00:04:35,600 Speaker 2: So when it comes to what we're seeing in the 112 00:04:35,640 --> 00:04:38,720 Speaker 2: higher education landscape, this idea that the government is going 113 00:04:38,720 --> 00:04:41,320 Speaker 2: to reduce funding to universities, how does that impact a 114 00:04:41,360 --> 00:04:44,920 Speaker 2: company like you who is looking to increase your footprint 115 00:04:44,920 --> 00:04:47,839 Speaker 2: in the US hire more. Is there a direct cause 116 00:04:47,880 --> 00:04:49,560 Speaker 2: and effect for a company like Carrier. 117 00:04:49,960 --> 00:04:52,960 Speaker 3: You know, we see it as a very competitive labor 118 00:04:53,040 --> 00:04:55,279 Speaker 3: environment for the kind of skills that we're looking for 119 00:04:55,360 --> 00:04:59,200 Speaker 3: right now. You know, when we look at technicians, we've 120 00:04:59,240 --> 00:05:01,480 Speaker 3: said that we're going to a thousand technicians in the 121 00:05:01,600 --> 00:05:03,000 Speaker 3: United States over five years. 122 00:05:03,000 --> 00:05:04,320 Speaker 1: We try to partner with. 123 00:05:04,279 --> 00:05:08,240 Speaker 3: Technical schools in particular, and that partnership has been very strong. 124 00:05:08,320 --> 00:05:10,719 Speaker 3: But what we also have to do is establish training 125 00:05:10,800 --> 00:05:14,359 Speaker 3: universities within our four walls within Carrier. So we've seen 126 00:05:14,480 --> 00:05:18,279 Speaker 3: great success, especially recently over both manufacturing R and D 127 00:05:18,440 --> 00:05:19,800 Speaker 3: and technical labor hiring. 128 00:05:20,279 --> 00:05:23,400 Speaker 2: So for those companies that those American companies that are 129 00:05:23,400 --> 00:05:27,120 Speaker 2: struggling to bring back jobs, bring manufacturing jobs back to 130 00:05:27,160 --> 00:05:28,680 Speaker 2: the US, how would you advise them? What would you 131 00:05:28,720 --> 00:05:31,640 Speaker 2: say to them to kind of rethink what they're able 132 00:05:31,640 --> 00:05:31,920 Speaker 2: to do? 133 00:05:32,360 --> 00:05:34,120 Speaker 1: You know, it is it is competitive. 134 00:05:34,160 --> 00:05:38,000 Speaker 3: For example, we have a manufacturing site just outside of 135 00:05:38,040 --> 00:05:40,960 Speaker 3: Memphis and Tennessee, and we do compete. We'll compete with Amazon, 136 00:05:41,000 --> 00:05:43,919 Speaker 3: we compete with FedEx for labor. What our goal is 137 00:05:43,960 --> 00:05:46,160 Speaker 3: to create an environment people want to come and people 138 00:05:46,200 --> 00:05:49,479 Speaker 3: want to say so. People want upward mobility, People want 139 00:05:49,480 --> 00:05:52,039 Speaker 3: to feel like they have a lot of upside on 140 00:05:52,080 --> 00:05:54,080 Speaker 3: the compensation side, and they want to be a part 141 00:05:54,120 --> 00:05:56,479 Speaker 3: of a company that matters. And one of the things 142 00:05:56,480 --> 00:05:59,719 Speaker 3: that we have is our purpose statement is enhancing the 143 00:05:59,760 --> 00:06:01,640 Speaker 3: lives we live in the world. We share what we 144 00:06:01,680 --> 00:06:06,520 Speaker 3: do matters. We contribute. Our industry contributes to climate change, 145 00:06:06,520 --> 00:06:08,360 Speaker 3: so we can be part of the solution that matters 146 00:06:08,360 --> 00:06:10,200 Speaker 3: to people that we can create a safer plan and 147 00:06:10,279 --> 00:06:11,400 Speaker 3: for generations to come. 148 00:06:11,839 --> 00:06:13,239 Speaker 1: We give there's three and a half. 149 00:06:13,160 --> 00:06:15,280 Speaker 3: Billion people in the world that live in the hottest 150 00:06:15,320 --> 00:06:17,680 Speaker 3: parts of the in the world. Only ten percent of 151 00:06:17,720 --> 00:06:19,880 Speaker 3: those folks have air conditioning. So we have an ability 152 00:06:19,920 --> 00:06:22,680 Speaker 3: to impact people's lives all over the world. And people 153 00:06:22,720 --> 00:06:24,640 Speaker 3: want to come to a company and feel like they're 154 00:06:24,680 --> 00:06:27,520 Speaker 3: part of something that really matters. So we've invested in 155 00:06:27,560 --> 00:06:29,919 Speaker 3: our culture, we've invested in our people, we've invested in 156 00:06:29,920 --> 00:06:31,760 Speaker 3: our workforce, and that's been paying off for us. 157 00:06:31,920 --> 00:06:33,520 Speaker 4: Is the growth that you're looking to do right now, 158 00:06:33,560 --> 00:06:35,520 Speaker 4: is that going to be primarily organic or are you 159 00:06:35,520 --> 00:06:36,520 Speaker 4: looking for acquisitions? 160 00:06:36,560 --> 00:06:37,760 Speaker 1: It's primarily organic. 161 00:06:37,800 --> 00:06:39,560 Speaker 3: You know, we just were coming off the heels of 162 00:06:39,560 --> 00:06:43,360 Speaker 3: integrating a thirteen billion dollar acquisition with the German acquisition 163 00:06:43,440 --> 00:06:45,280 Speaker 3: that we did with Visama Climate Solutions. 164 00:06:45,279 --> 00:06:47,800 Speaker 1: That's gone phenomenally well. The last year. 165 00:06:47,880 --> 00:06:49,880 Speaker 3: The sales were a little bit lower than we anticipated, 166 00:06:49,880 --> 00:06:52,159 Speaker 3: but it's a truly world class company that's going to 167 00:06:52,200 --> 00:06:55,960 Speaker 3: create value for years to come. Right now, our whole 168 00:06:55,960 --> 00:06:58,320 Speaker 3: theme this morning was on organic growth that's six to 169 00:06:58,360 --> 00:07:01,359 Speaker 3: eight percent, with a very strategy to drive it and 170 00:07:01,400 --> 00:07:03,160 Speaker 3: a lot of confidence in the team to do it, 171 00:07:03,400 --> 00:07:05,560 Speaker 3: and a very different portfolio than we had just five 172 00:07:05,640 --> 00:07:06,120 Speaker 3: years ago. 173 00:07:06,320 --> 00:07:08,839 Speaker 4: All Right, I really appreciate you coming here. What's tough 174 00:07:08,839 --> 00:07:11,280 Speaker 4: for facing investors for four hours, are facing scarlett for 175 00:07:11,600 --> 00:07:12,520 Speaker 4: you know, the last. 176 00:07:13,160 --> 00:07:15,200 Speaker 1: Facing scarlet and you are great. Well, thank you for 177 00:07:15,240 --> 00:07:15,680 Speaker 1: having me. 178 00:07:15,880 --> 00:07:19,440 Speaker 4: David get Letting, the chairman and CEO over at Carrier