Speaker 1: Bloomberg Audio Studios, podcasts, radio news.
Speaker 2: I'm pleased to say joining us now is David Gitlin.
Speaker 2: He is chairman and CEO of Carrier, which is a
Speaker 2: world leader in heating, air conditioning and refrigeration solutions. Great
Speaker 2: to see you here.
Speaker 1: Great to see you, Scarlette Romaine.
Speaker 2: Thank you for having me so talk us through what's
Speaker 2: new when you're investor?
Speaker 1: Daid this year.
Speaker 2: You had an investor day in twenty twenty two, and
Speaker 2: it looks like a lot of the goals are similar.
Speaker 2: What's different this time around in twenty twenty five, Well, what.
Speaker 3: We said is that we did everything we said we
Speaker 3: were going to do. Back in twenty twenty two. We
Speaker 3: said we'd grow fifty BIPs a year of margin expansion.
Speaker 3: We grew one hundred. We said we'd grow EPs about
Speaker 3: ten percent a year. We've grown our EPs fifteen percent
Speaker 3: a year. We did what we said on our effective
Speaker 3: tax rate. We said what we would do on free
Speaker 3: cash full equal to net income. But we did say
Speaker 3: that we would grow sales six to eight percent a year.
Speaker 1: The last few years we've grown four.
Speaker 3: So the whole investor day we had four hours this
Speaker 3: morning at the NYSE was how do we get consistently
Speaker 3: six to eight percent gross. So we introduce a growth
Speaker 3: algorithm the market. We said call it low single digits,
Speaker 3: be conservative, and then we had a three prong growth
Speaker 3: to a three prong strategy to growth. One is outgrowth
Speaker 3: the market through products so share gains.
Speaker 1: The second was aftermarket.
Speaker 3: Where we've said aftermarket will grow double digits forever for us.
Speaker 3: And the third is kind of a new frontier is
Speaker 3: systems offerings. That combination gets us the sixty percent a year.
Speaker 2: So it sounds like there's some tailwinds in your industry.
Speaker 2: Walk us through which of it is structural, which of
Speaker 2: it is cyclical.
Speaker 3: There's a couple of unique tailwinds, for example, right now
Speaker 3: around data centers. If you think about a typical commercial
Speaker 3: office building, it may have three chillers.
Speaker 1: A data center may have one hundred and fifty.
Speaker 3: So the massive investments we're seeing in data centers place
Speaker 3: right to our strengths. And we've just introduced a brand new,
Speaker 3: very unique offering that we call quantum Leap, which is
Speaker 3: a combination of traditional cooling with a chiller at air handlers,
Speaker 3: but also a new liquid cooling which is a direct
Speaker 3: to chip cooling. And our combination is very unique because
Speaker 3: we're the only ones in the industry integrating traditional cooling,
Speaker 3: liquid cooling, an entire building management system, server management all
Speaker 3: into one offering.
Speaker 4: What's been the demand for that, because I know we've
Speaker 4: talked a lot on this program about the build out
Speaker 4: of data centers and such, but there's also been a
Speaker 4: lot of sort of promises to build things and I
Speaker 4: know the building hasn't actually started for some of that.
Speaker 4: So what's been the uptake here and do you expect
Speaker 4: it to increase?
Speaker 1: We do.
Speaker 3: Last year we were about five hundred million in sales
Speaker 3: for data centers.
Speaker 1: This year will be a billion, so two x.
Speaker 3: We're now taking orders for twenty six, twenty seven, even
Speaker 3: into twenty eight. So the hyperscalers are growing at different
Speaker 3: paces right now, but very very strong demand. And what
Speaker 3: we're seeing is increased demand for colos, the co locators,
Speaker 3: especially in Europe and China.
Speaker 4: Really is there Are you involved at all in some
Speaker 4: of the administrations push to help build data center projects
Speaker 4: in the Middle East and elsewhere outside of the US one.
Speaker 1: Hundred percent we are.
Speaker 3: We're very much working on new wins in the UAE
Speaker 3: that we're announced recently, we have a lot going on
Speaker 3: in Saudi Arabia, so we see the Middle East as
Speaker 3: a real good growth factor for US.
Speaker 2: You also have a lot going on in the US,
Speaker 2: because over the past five years, you've definitely grown and
Speaker 2: focused on expanding your US workforce by approximately twenty percent.
Speaker 2: How much of this was in response to the changing
Speaker 2: political wins, how much of this was a strategic advantage
Speaker 2: for you, specifically a strategic advantage.
Speaker 1: We like to be where our customers are.
Speaker 3: About fifty percent of our sales are in the United States,
Speaker 3: so you know we've grown our workforce, as you said,
Speaker 3: twenty percent.
Speaker 1: Over five years.
Speaker 3: We're by far the biggest player that's headquartered in the
Speaker 3: United States in our industry. And what we announced last
Speaker 3: week was an incremental billion dollar investment in the United
Speaker 3: States over the next five years, which will create four
Speaker 3: thousand additional jobs. And these are very technical jobs. It's
Speaker 3: a combination of R and D. You can think mechanical,
Speaker 3: traditional software and electrical engineering technicians that are out in
Speaker 3: the field.
Speaker 1: And we also announced that we're.
Speaker 3: Going to establish a brand new manufacturing factory in the
Speaker 3: United States.
Speaker 1: We're very proudly in North Carolina.
Speaker 3: I know, we're in Georgia, we're in Tennessee, but we're
Speaker 3: now going to build a new factory. We're looking at
Speaker 3: a location like Texas, but we haven't.
Speaker 4: Finalized the choice with regards to some of those hires
Speaker 4: and the technical expertise you need for these jobs. Do
Speaker 4: those people come to the table with that or do
Speaker 4: you have to train them?
Speaker 1: It's a combination.
Speaker 3: That's part of the negotiations with the states right now
Speaker 3: as we are looking for some support on some of
Speaker 3: the technical training. But we will train about one hundred
Speaker 3: thousand technicians a year, so we know how to train
Speaker 3: and then integrate on whether it's technicians or even highly
Speaker 3: skilled manufacturing labor as well.
Speaker 2: So when it comes to what we're seeing in the
Speaker 2: higher education landscape, this idea that the government is going
Speaker 2: to reduce funding to universities, how does that impact a
Speaker 2: company like you who is looking to increase your footprint
Speaker 2: in the US hire more. Is there a direct cause
Speaker 2: and effect for a company like Carrier.
Speaker 3: You know, we see it as a very competitive labor
Speaker 3: environment for the kind of skills that we're looking for
Speaker 3: right now. You know, when we look at technicians, we've
Speaker 3: said that we're going to a thousand technicians in the
Speaker 3: United States over five years.
Speaker 1: We try to partner with.
Speaker 3: Technical schools in particular, and that partnership has been very strong.
Speaker 3: But what we also have to do is establish training
Speaker 3: universities within our four walls within Carrier. So we've seen
Speaker 3: great success, especially recently over both manufacturing R and D
Speaker 3: and technical labor hiring.
Speaker 2: So for those companies that those American companies that are
Speaker 2: struggling to bring back jobs, bring manufacturing jobs back to
Speaker 2: the US, how would you advise them? What would you
Speaker 2: say to them to kind of rethink what they're able
Speaker 2: to do?
Speaker 1: You know, it is it is competitive.
Speaker 3: For example, we have a manufacturing site just outside of
Speaker 3: Memphis and Tennessee, and we do compete. We'll compete with Amazon,
Speaker 3: we compete with FedEx for labor. What our goal is
Speaker 3: to create an environment people want to come and people
Speaker 3: want to say so. People want upward mobility, People want
Speaker 3: to feel like they have a lot of upside on
Speaker 3: the compensation side, and they want to be a part
Speaker 3: of a company that matters. And one of the things
Speaker 3: that we have is our purpose statement is enhancing the
Speaker 3: lives we live in the world. We share what we
Speaker 3: do matters. We contribute. Our industry contributes to climate change,
Speaker 3: so we can be part of the solution that matters
Speaker 3: to people that we can create a safer plan and
Speaker 3: for generations to come.
Speaker 1: We give there's three and a half.
Speaker 3: Billion people in the world that live in the hottest
Speaker 3: parts of the in the world. Only ten percent of
Speaker 3: those folks have air conditioning. So we have an ability
Speaker 3: to impact people's lives all over the world. And people
Speaker 3: want to come to a company and feel like they're
Speaker 3: part of something that really matters. So we've invested in
Speaker 3: our culture, we've invested in our people, we've invested in
Speaker 3: our workforce, and that's been paying off for us.
Speaker 4: Is the growth that you're looking to do right now,
Speaker 4: is that going to be primarily organic or are you
Speaker 4: looking for acquisitions?
Speaker 1: It's primarily organic.
Speaker 3: You know, we just were coming off the heels of
Speaker 3: integrating a thirteen billion dollar acquisition with the German acquisition
Speaker 3: that we did with Visama Climate Solutions.
Speaker 1: That's gone phenomenally well. The last year.
Speaker 3: The sales were a little bit lower than we anticipated,
Speaker 3: but it's a truly world class company that's going to
Speaker 3: create value for years to come. Right now, our whole
Speaker 3: theme this morning was on organic growth that's six to
Speaker 3: eight percent, with a very strategy to drive it and
Speaker 3: a lot of confidence in the team to do it,
Speaker 3: and a very different portfolio than we had just five
Speaker 3: years ago.
Speaker 4: All Right, I really appreciate you coming here. What's tough
Speaker 4: for facing investors for four hours, are facing scarlett for
Speaker 4: you know, the last.
Speaker 1: Facing scarlet and you are great. Well, thank you for
Speaker 1: having me.
Speaker 4: David get Letting, the chairman and CEO over at Carrier