Heating, ventilation, air conditioning, and refrigeration company Carrier Global (NYSE:CARR) met Wall Street’s revenue expectations in Q2 CY2025, with sales up 3% year on year to $6.11 billion. The company’s outlook for the full year was close to analysts’ estimates with revenue guided to $23 billion at the midpoint. Its non-GAAP profit of $0.92 per share was 1.9% above analysts’ consensus estimates.
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Carrier Global (CARR) Q2 CY2025 Highlights:
- Revenue: $6.11 billion vs analyst estimates of $6.10 billion (3% year-on-year growth, in line)
- Adjusted EPS: $0.92 vs analyst estimates of $0.90 (1.9% beat)
- Adjusted EBITDA: $1.48 billion vs analyst estimates of $1.45 billion (24.3% margin, 2.1% beat)
- The company reconfirmed its revenue guidance for the full year of $23 billion at the midpoint
- Management reiterated its full-year Adjusted EPS guidance of $3.05 at the midpoint
- Operating Margin: 14.8%, up from 12.2% in the same quarter last year
- Organic Revenue rose 6% year on year vs analyst estimates of 6% growth (4.8 basis point miss)
- Market Capitalization: $55.94 billion
StockStory’s Take
Carrier Global’s second quarter results met Wall Street’s revenue expectations, but the market reacted sharply negatively, likely due to concerns in its residential and light commercial segments. Management emphasized robust commercial HVAC growth, particularly in the Americas, and ongoing margin expansion. CEO David Gitlin described the 45% surge in commercial HVAC in the Americas as “exceptional,” while also acknowledging that residential volumes fell more than anticipated due to a late cooling season and higher channel inventories. The company also noted mixed regional performance, with strength in India, Japan, and the Middle East offset by persistent softness in China and parts of Europe.
Looking ahead, Carrier Global’s guidance for the rest of the year is shaped by a cautious view on U.S. residential demand, ongoing inventory normalization, and a focus on productivity gains. Management highlighted expectations for continued aftermarket growth and large-scale commercial wins, particularly in data centers and integrated systems. CFO Patrick Goris stated, “We remain on track to deliver close to 20% adjusted EPS growth this year,” while also outlining that margin expansion will hinge on cost synergies, product mix, and targeted cost actions, especially in Europe. Management is closely monitoring inventory levels and consumer trends in the residential market as key variables for the remainder of 2025.
Key Insights from Management’s Remarks
Carrier Global’s results were driven by strong commercial HVAC momentum and aftermarket growth, but residential softness and regional variation weighed on overall performance.
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Commercial HVAC outperformance: The commercial HVAC segment in the Americas posted 45% organic growth, fueled by both data center and non-data center projects, as well as increased capacity and new product launches. Management cited marquee wins in the Middle East and strong backlogs as key success factors.
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Aftermarket and digital services expansion: Aftermarket sales were up 13% in the quarter, and management highlighted rapid adoption of connected chillers and enhanced digital offerings like the Abound app, which now leverages AI for operational insights. The number of connected chillers tripled over the past three years, supporting recurring revenue growth.
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Regional disparities: While India, Japan, and the Middle East delivered significant growth, the Asia Pacific segment saw softness due to ongoing weakness in residential China and select Southeast Asian markets. Europe’s residential and light commercial segment faced continued pressure in Germany, but heat pump sales in the region grew over 50%.
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Inventory and volume headwinds: U.S. residential volumes declined in the quarter, with management attributing the weakness to a late start to the cooling season and higher-than-expected channel inventory. CEO David Gitlin noted that inventory normalization and muted consumer movement remain headwinds for the second half.
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Productivity and cost actions: Margin expansion was supported by cost discipline and productivity initiatives, particularly in supply chain and indirect costs. Management said these actions are critical to offsetting mix and regional headwinds, especially in the European business, and to achieving the company’s synergy targets following recent acquisitions.
Drivers of Future Performance
Carrier Global’s outlook centers on continued commercial strength and margin initiatives, while residential softness and regional uncertainties present ongoing challenges.
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Commercial and aftermarket focus: Management expects data center and large-scale commercial HVAC projects, along with double-digit aftermarket growth, to be the primary drivers of organic revenue and margin expansion in the upcoming quarters. These segments are seen as less volatile than residential and are supported by robust backlogs and recent capacity investments.
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Residential inventory and demand risks: The company anticipates ongoing weakness in U.S. residential and light commercial segments, with continued inventory normalization and uncertain consumer demand. Management has revised down volume expectations for the second half of the year, assuming channel inventory levels will be reduced to historical norms by year-end.
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Cost synergies and margin management: Margin guidance relies on capturing cost synergies, especially from the integration of Viessmann in Europe, and ongoing productivity improvements across supply chain and manufacturing. Management believes these actions will help counteract region-specific headwinds and unfavorable product mix, particularly in Europe and China.
Catalysts in Upcoming Quarters
In the coming quarters, the StockStory team will be watching (1) whether commercial and data center backlogs convert to sustained revenue growth, (2) signs of inventory normalization and volume recovery in U.S. residential and light commercial segments, and (3) the ongoing realization of cost synergies and productivity gains, particularly in Europe. The interplay between aftermarket growth and regional demand trends will also be key to monitoring Carrier’s execution.
Carrier Global currently trades at $66.96, down from $80.25 just before the earnings. In the wake of this quarter, is it a buy or sell? See for yourself in our full research report (it’s free).
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