WEBVTT - Carrier Global Chairman/CEO Dave Gitlin Talks Company Growth

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<v Speaker 1>Bloomberg Audio Studios, podcasts, radio news.

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<v Speaker 2>I'm pleased to say joining us now is David Gitlin.

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<v Speaker 2>He is chairman and CEO of Carrier, which is a

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<v Speaker 2>world leader in heating, air conditioning and refrigeration solutions. Great

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<v Speaker 2>to see you here.

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<v Speaker 1>Great to see you, Scarlette Romaine.

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<v Speaker 2>Thank you for having me so talk us through what's

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<v Speaker 2>new when you're investor?

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<v Speaker 1>Daid this year.

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<v Speaker 2>You had an investor day in twenty twenty two, and

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<v Speaker 2>it looks like a lot of the goals are similar.

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<v Speaker 2>What's different this time around in twenty twenty five, Well, what.

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<v Speaker 3>We said is that we did everything we said we

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<v Speaker 3>were going to do. Back in twenty twenty two. We

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<v Speaker 3>said we'd grow fifty BIPs a year of margin expansion.

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<v Speaker 3>We grew one hundred. We said we'd grow EPs about

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<v Speaker 3>ten percent a year. We've grown our EPs fifteen percent

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<v Speaker 3>a year. We did what we said on our effective

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<v Speaker 3>tax rate. We said what we would do on free

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<v Speaker 3>cash full equal to net income. But we did say

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<v Speaker 3>that we would grow sales six to eight percent a year.

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<v Speaker 1>The last few years we've grown four.

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<v Speaker 3>So the whole investor day we had four hours this

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<v Speaker 3>morning at the NYSE was how do we get consistently

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<v Speaker 3>six to eight percent gross. So we introduce a growth

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<v Speaker 3>algorithm the market. We said call it low single digits,

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<v Speaker 3>be conservative, and then we had a three prong growth

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<v Speaker 3>to a three prong strategy to growth. One is outgrowth

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<v Speaker 3>the market through products so share gains.

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<v Speaker 1>The second was aftermarket.

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<v Speaker 3>Where we've said aftermarket will grow double digits forever for us.

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<v Speaker 3>And the third is kind of a new frontier is

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<v Speaker 3>systems offerings. That combination gets us the sixty percent a year.

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<v Speaker 2>So it sounds like there's some tailwinds in your industry.

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<v Speaker 2>Walk us through which of it is structural, which of

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<v Speaker 2>it is cyclical.

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<v Speaker 3>There's a couple of unique tailwinds, for example, right now

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<v Speaker 3>around data centers. If you think about a typical commercial

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<v Speaker 3>office building, it may have three chillers.

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<v Speaker 1>A data center may have one hundred and fifty.

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<v Speaker 3>So the massive investments we're seeing in data centers place

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<v Speaker 3>right to our strengths. And we've just introduced a brand new,

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<v Speaker 3>very unique offering that we call quantum Leap, which is

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<v Speaker 3>a combination of traditional cooling with a chiller at air handlers,

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<v Speaker 3>but also a new liquid cooling which is a direct

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<v Speaker 3>to chip cooling. And our combination is very unique because

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<v Speaker 3>we're the only ones in the industry integrating traditional cooling,

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<v Speaker 3>liquid cooling, an entire building management system, server management all

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<v Speaker 3>into one offering.

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<v Speaker 4>What's been the demand for that, because I know we've

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<v Speaker 4>talked a lot on this program about the build out

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<v Speaker 4>of data centers and such, but there's also been a

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<v Speaker 4>lot of sort of promises to build things and I

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<v Speaker 4>know the building hasn't actually started for some of that.

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<v Speaker 4>So what's been the uptake here and do you expect

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<v Speaker 4>it to increase?

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<v Speaker 1>We do.

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<v Speaker 3>Last year we were about five hundred million in sales

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<v Speaker 3>for data centers.

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<v Speaker 1>This year will be a billion, so two x.

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<v Speaker 3>We're now taking orders for twenty six, twenty seven, even

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<v Speaker 3>into twenty eight. So the hyperscalers are growing at different

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<v Speaker 3>paces right now, but very very strong demand. And what

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<v Speaker 3>we're seeing is increased demand for colos, the co locators,

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<v Speaker 3>especially in Europe and China.

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<v Speaker 4>Really is there Are you involved at all in some

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<v Speaker 4>of the administrations push to help build data center projects

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<v Speaker 4>in the Middle East and elsewhere outside of the US one.

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<v Speaker 1>Hundred percent we are.

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<v Speaker 3>We're very much working on new wins in the UAE

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<v Speaker 3>that we're announced recently, we have a lot going on

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<v Speaker 3>in Saudi Arabia, so we see the Middle East as

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<v Speaker 3>a real good growth factor for US.

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<v Speaker 2>You also have a lot going on in the US,

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<v Speaker 2>because over the past five years, you've definitely grown and

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<v Speaker 2>focused on expanding your US workforce by approximately twenty percent.

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<v Speaker 2>How much of this was in response to the changing

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<v Speaker 2>political wins, how much of this was a strategic advantage

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<v Speaker 2>for you, specifically a strategic advantage.

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<v Speaker 1>We like to be where our customers are.

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<v Speaker 3>About fifty percent of our sales are in the United States,

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<v Speaker 3>so you know we've grown our workforce, as you said,

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<v Speaker 3>twenty percent.

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<v Speaker 1>Over five years.

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<v Speaker 3>We're by far the biggest player that's headquartered in the

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<v Speaker 3>United States in our industry. And what we announced last

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<v Speaker 3>week was an incremental billion dollar investment in the United

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<v Speaker 3>States over the next five years, which will create four

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<v Speaker 3>thousand additional jobs. And these are very technical jobs. It's

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<v Speaker 3>a combination of R and D. You can think mechanical,

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<v Speaker 3>traditional software and electrical engineering technicians that are out in

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<v Speaker 3>the field.

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<v Speaker 1>And we also announced that we're.

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<v Speaker 3>Going to establish a brand new manufacturing factory in the

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<v Speaker 3>United States.

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<v Speaker 1>We're very proudly in North Carolina.

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<v Speaker 3>I know, we're in Georgia, we're in Tennessee, but we're

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<v Speaker 3>now going to build a new factory. We're looking at

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<v Speaker 3>a location like Texas, but we haven't.

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<v Speaker 4>Finalized the choice with regards to some of those hires

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<v Speaker 4>and the technical expertise you need for these jobs. Do

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<v Speaker 4>those people come to the table with that or do

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<v Speaker 4>you have to train them?

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<v Speaker 1>It's a combination.

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<v Speaker 3>That's part of the negotiations with the states right now

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<v Speaker 3>as we are looking for some support on some of

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<v Speaker 3>the technical training. But we will train about one hundred

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<v Speaker 3>thousand technicians a year, so we know how to train

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<v Speaker 3>and then integrate on whether it's technicians or even highly

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<v Speaker 3>skilled manufacturing labor as well.

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<v Speaker 2>So when it comes to what we're seeing in the

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<v Speaker 2>higher education landscape, this idea that the government is going

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<v Speaker 2>to reduce funding to universities, how does that impact a

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<v Speaker 2>company like you who is looking to increase your footprint

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<v Speaker 2>in the US hire more. Is there a direct cause

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<v Speaker 2>and effect for a company like Carrier.

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<v Speaker 3>You know, we see it as a very competitive labor

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<v Speaker 3>environment for the kind of skills that we're looking for

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<v Speaker 3>right now. You know, when we look at technicians, we've

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<v Speaker 3>said that we're going to a thousand technicians in the

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<v Speaker 3>United States over five years.

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<v Speaker 1>We try to partner with.

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<v Speaker 3>Technical schools in particular, and that partnership has been very strong.

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<v Speaker 3>But what we also have to do is establish training

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<v Speaker 3>universities within our four walls within Carrier. So we've seen

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<v Speaker 3>great success, especially recently over both manufacturing R and D

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<v Speaker 3>and technical labor hiring.

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<v Speaker 2>So for those companies that those American companies that are

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<v Speaker 2>struggling to bring back jobs, bring manufacturing jobs back to

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<v Speaker 2>the US, how would you advise them? What would you

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<v Speaker 2>say to them to kind of rethink what they're able

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<v Speaker 2>to do?

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<v Speaker 1>You know, it is it is competitive.

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<v Speaker 3>For example, we have a manufacturing site just outside of

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<v Speaker 3>Memphis and Tennessee, and we do compete. We'll compete with Amazon,

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<v Speaker 3>we compete with FedEx for labor. What our goal is

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<v Speaker 3>to create an environment people want to come and people

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<v Speaker 3>want to say so. People want upward mobility, People want

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<v Speaker 3>to feel like they have a lot of upside on

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<v Speaker 3>the compensation side, and they want to be a part

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<v Speaker 3>of a company that matters. And one of the things

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<v Speaker 3>that we have is our purpose statement is enhancing the

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<v Speaker 3>lives we live in the world. We share what we

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<v Speaker 3>do matters. We contribute. Our industry contributes to climate change,

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<v Speaker 3>so we can be part of the solution that matters

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<v Speaker 3>to people that we can create a safer plan and

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<v Speaker 3>for generations to come.

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<v Speaker 1>We give there's three and a half.

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<v Speaker 3>Billion people in the world that live in the hottest

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<v Speaker 3>parts of the in the world. Only ten percent of

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<v Speaker 3>those folks have air conditioning. So we have an ability

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<v Speaker 3>to impact people's lives all over the world. And people

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<v Speaker 3>want to come to a company and feel like they're

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<v Speaker 3>part of something that really matters. So we've invested in

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<v Speaker 3>our culture, we've invested in our people, we've invested in

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<v Speaker 3>our workforce, and that's been paying off for us.

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<v Speaker 4>Is the growth that you're looking to do right now,

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<v Speaker 4>is that going to be primarily organic or are you

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<v Speaker 4>looking for acquisitions?

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<v Speaker 1>It's primarily organic.

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<v Speaker 3>You know, we just were coming off the heels of

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<v Speaker 3>integrating a thirteen billion dollar acquisition with the German acquisition

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<v Speaker 3>that we did with Visama Climate Solutions.

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<v Speaker 1>That's gone phenomenally well. The last year.

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<v Speaker 3>The sales were a little bit lower than we anticipated,

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<v Speaker 3>but it's a truly world class company that's going to

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<v Speaker 3>create value for years to come. Right now, our whole

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<v Speaker 3>theme this morning was on organic growth that's six to

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<v Speaker 3>eight percent, with a very strategy to drive it and

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<v Speaker 3>a lot of confidence in the team to do it,

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<v Speaker 3>and a very different portfolio than we had just five

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<v Speaker 3>years ago.

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<v Speaker 4>All Right, I really appreciate you coming here. What's tough

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<v Speaker 4>for facing investors for four hours, are facing scarlett for

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<v Speaker 4>you know, the last.

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<v Speaker 1>Facing scarlet and you are great. Well, thank you for

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<v Speaker 1>having me.

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<v Speaker 4>David get Letting, the chairman and CEO over at Carrier