Carrier Earnings: Strong Commercial HVAC Demand Continues; Divestitures Moving Forward This Year

Narrow-moat-rated Carrier Global continues to capitalize on robust commercial HVAC demand. Indeed, in the second quarter, light commercial HVAC sales increased 60% year over year and commercial sales increased by a high-teens percentage. The company continues to make progress on increasing higher-margin aftermarket sales as well, and HVAC aftermarket revenue (along with controls) grew by a double-digit percentage. However, residential HVAC sales declined by a mid-single-digit percentage, in line with our expectations, as demand normalizes from peak levels seen during the pandemic. Overall, the HVAC segment reported 9% organic revenue growth and adjusted operating margin expanded 70 basis points to 18.8%, despite margin dilution from the Toshiba Carrier deal.