Good morning, and welcome to Carrier's fourth quarter 2021 earnings conference call. This call is being carried live on the Internet, and there is a presentation available to download from Carrier's website at ir.carrier.com. I would like to introduce your host for today's conference, Sam Pearlstein, Vice President of Investor Relations. Please go ahead, sir. Thank you, and good morning, and welcome to Carrier's fourth quarter of 2021 earnings conference call. With me here today are David Gitlin, Chairman and Chief Executive Officer, and Patrick Goris, Chief Financial Officer. Except as otherwise noted, the company will be speaking to results from operations excluding restructuring and other significant items of a non-recurring and/or non-operational nature, often referred to by management as other significant items. The company reminds listeners that the sales, earnings, and cash flow expectations and any other forward-looking statements provided during the call are subject to risks and uncertainties. Carrier's SEC filings, including Forms 10-K, 10-Q, and 8-K provide details on important factors that could cause actual results to differ materially from those anticipated in the forward-looking statements. We'll leave time for questions at the end. Once the call is opened up for questions, we ask that you limit yourself to one question and one follow-up to give everyone the opportunity to participate. With that, I'd like to turn the call over to our Chairman and CEO, Dave Gitlin. Thank you, Sam, and good morning, everyone. Before we get into our 4Q results, let me start on slide two. On Sunday, we announced that we reached a definitive agreement to acquire Toshiba's controlling stake in Toshiba Carrier Corporation, our long-standing HVAC joint venture. This is an important and compelling deal for us that we believe will create significant value for our customers, employees, and shareowners by enhancing our position in the fast-growing variable refrigerant flow and international light commercial markets. We established our minority JV with Toshiba in 1999. Carrier has had distribution responsibility, with Toshiba having design and production responsibility. Together, we have successfully grown TCC to be a world leader with over $2 billion in sales. This acquisition will enable us to accelerate growth and profitability in this business by consolidating design, production, and distribution under one roof, realizing synergies, and leveraging our global scale to deliver even more differentiated products and solutions to customers globally. Before we talk more about the strategy behind this deal, let me have Patrick quickly discuss the financials. Patrick. Thank you, Dave, and good morning. Under the terms of the agreement, we will acquire substantially all of Toshiba's interest in TCC for about $900 million. As you can see on the slide, Toshiba owns about 60% of TCC. Taking into account direct and indirect ownership structures of Toshiba-TCC subsidiaries, Toshiba's economic interest in TCC has fluctuated between 30%- 50% over time. Toshiba is retaining a 5% interest in TCC or less than a 5% economic interest. TCC generated 2021 calendar year sales of about $2.1 billion and approximately $250 million of EBITDA. We have been recording equity income associated with the TCC joint venture and have collected dividend payments as well. After the transaction closes, we will, of course, no longer record equity income, but will instead fully consolidate TCC's financial statements. Adjusting for intercompany sales and for the equity income that we recognize today, we expect to add about $2 billion to consolidated sales, EBITDA of about $160 million, and operating profit of approximately $90 million before purchase price adjustments such as intangible amortization. The $90 million operating profit is a reasonable proxy for the economic EBITDA we are acquiring. Expected cost synergies of about $100 million will help us increase TCC's EBITDA margins. This acquisition is aligned with themes you have consistently heard from us, profitable growth, simplification, focus, and improved free cash flow. Let me turn it back to Dave for slide three and the strategic rationale behind the transaction. Thanks, Patrick. First and foremost, we have been consistent in communicating our determination to become a more significant player in the fast-growing VRF market. In 2015, the global VRF market was about half the size of the applied market. Since then, VRF has grown at more than 2x the rate of the applied market, and we project VRF to continue to outpace applied growth going forward. VRF's growth is no surprise. It is highly efficient, electric, sustainable, modular, has lower installation costs, and enables individual zone controls and segregated billing. With the acquisition of TCC, last year's Giwee acquisition, and our own VRF organic growth, our consolidated VRF sales will have increased 4x on an annualized basis since our spin less than two- years ago. Second, as you would expect from Toshiba, TCC has highly differentiated technology made possible by its impressive 750 engineers. Its proprietary inverter technology and its award-winning three-stage rotary compressor technology provide world-class efficiency levels. Third, the Toshiba brand is deeply admired globally, and we have signed a long-term product license to the Toshiba name, which will align well with our multi-brand, multi-channel strategy. Finally, TCC has an excellent complementary global manufacturing footprint with new facilities in China and Poland and impressive factories in India, Thailand, and Japan. We are very excited about this deal and expect it to close by the end of Q3. Now turning to Q4 results on slide four. Q4 was another strong quarter, wrapping up our first full year as an independent public company. Organic sales in the quarter were up 11%, driven by continued strength in residential and light commercial HVAC and transport refrigeration. Operating profits and free cash flow came in as expected. Order strength continued and led to record backlogs, positioning us well for 2022. We also saw continued aftermarket growth, which has been a major focus area for us, and the team continues to establish a more resilient supply chain for the future. Progress in 2021 was very important as we target increased dual sourcing of critical components, increased automation, and new direct relationships with chip manufacturers on security of supply. We have been balancing rising input costs with price increases to reach our goal of being at least price cost neutral in 2022, and our operations team has gone to tremendous lengths to support our customers. I thank all of them for their outstanding efforts. I am proud that the team finished the year well, capping a full year of strong financial performance during which we exceeded all of our expectations as you can see on slide five. We came into 2021 projecting organic sales to be up about 5%, and we ended up with organic sales up 15%. Adjusted operating margins grew 80 bps over 2020, despite the supply chain and inflationary challenges, and we invested an incremental $150 million to support continued growth. Adjusted EPS increased 36% year-over-year, well above our initial expectations. Finally, free cash flow of $1.9 billion converted at 114% of net income. In addition to our strong financial results, we successfully executed on our strategic focus areas, as you can see on slide six. ESG and sustainability remain paramount for us, and we made great progress last year towards reducing net Scope 1 and 2 emissions on our way to carbon neutrality in our operations by 2030. We also progressed on our Scope 3 goal of reducing our customers' carbon emissions by more than 1 gigaton by 2030 by introducing a greater number of electric and heat pump technologies, lower GWP refrigerant offerings, and more energy-efficient solutions for our customers. On healthy buildings, we booked about $500 million in orders last year, and the pipeline has grown to about $700 million, more than triple what it was at the end of 2020. We continue to see strong traction and momentum in verticals like K-12, where orders were up high teens in 2021, and the year-end pipeline is up double -digits sequentially from Q3, further validating the high demand for indoor air quality solutions that help rebuild confidence as society reenters schools, office buildings, stores, hotels, and restaurants. Providing customers with data on air quality is one way to build that confidence, and our digital and intelligent capabilities are critical differentiators. We made strong progress on our two platforms of focus, Abound and Lynx. On Abound, we saw adoption by customers in the sports, education, and healthcare sectors. On Lynx, we continued to expand our offerings with Lynx Fleet and subscription activations in EMEA truck trailer and container globally, adding more than 15,000 units in Q4 alone. We are very focused on delivering lifecycle solutions and exceeded our stretch aftermarket targets. We saw a double-digit aftermarket sales growth ending the year with more than 60,000 chillers under long-term agreements, and we plan to add another 10,000 this year. We continue to take a very structured and balanced approach to capital deployment. With the net proceeds from the Chubb divestiture on January third, we have reduced our net debt from over $9 billion at spin to about $4 billion. We completed 4 exciting acquisitions, and we continue to build out our pipeline. We increased our annual dividend by 25% in December, and we continue to repurchase our shares. We also drove gross cost savings through our Carrier 700 initiatives to help reduce the impact of inflationary headwinds. The entire organization remains focused on driving out discretionary costs as controlling the controllables is even more paramount in this inflationary environment. Slide seven describes our overall view on 2022. Given our strong backlog and overall constructive economic environment and our strategic positioning, we see another strong year of financial performance with organic sales up high single- digits on top of the 15% that we generated in 2021. We expect continued margin expansion despite dilution from price cost and acquisitions. We anticipate approximately $1 billion of inflationary headwinds in 2022 and are therefore targeting at least $1 billion or 5% of price realization this year, over 80% of which is carryover from actions taken last year and price increases that became effective in January of this year. Excluding Chubb from last year's results, we expect another year of double-digit adjusted EPS growth and strong free cash flow. Our focus areas heading into 2022 remain the same. We will continue to drive innovation and differentiation in our pursuit to be the world leader in healthy, safe, sustainable, and intelligent building and cold chain solutions. We will continue to take concrete actions to increase our already top-quartile ESG performance and use sustainability solutions to drive recurring revenues and growth. We are targeting another year of double-digit aftermarket growth while not losing our progress on tenacious cost reduction. Our commitment to disciplined capital allocation remains unchanged, with our strong balance sheet enabling us to play more offense going forward. Before I turn it over to Patrick, I wanted to provide an update on our upcoming Investor Day. On February 22, members of our leadership team will provide a deeper dive into our attractive growing markets and how we plan to continue to outperform in those markets. With that, Patrick. Thank you, Dave. Please turn to slide eight. Q4 benefited from solid organic growth throughout the segments. Residential and light commercial HVAC and transport refrigeration were important growth drivers in Q4, with organic sales growth well into the double- digits. We realized more price than expected in the quarter, but that was more than offset by continued and increased inflationary challenges. Similar to Q3, supply chain constraints impacted our factory efficiency levels and our ability to ship product, but it has left backlogs well-positioned to deliver growth in 2022. Adjusted operating profit grew 14% year-over-year, and margins were up 20 basis points over last year. Increased year-over-year investments offset the absence of one-time cost items we incurred in Q4 of 2020. Price cost finished about $30 million negative for the quarter versus our October estimate of about neutral. Q4 adjusted EPS of $0.44 benefited from $0.06 of discrete tax items. As expected, free cash flow was $775 million in Q4 and $1.9 billion for 2021. We repurchased 4.7 million shares in the fourth quarter and about 10.4 million shares for the year, in line with what we shared with you in October. Let's turn to slide nine and cover our segments performance. HVAC organic sales were up 14%, driven by continued very strong growth in residential, light commercial, and our ALC controls business. Resi sales were up high teens, and movement was up 6%. Residential and light commercial demand remains very encouraging as orders continue to grow, leading to very strong backlogs as we enter 2022. Distributor movement was up 15% in our light commercial business, leading to field inventories for that business being down low- single- digits compared to last year. Commercial HVAC was up mid-single- digits in the quarter and was impacted by supply chain challenges, particularly in North America. Our aftermarket business grew mid-single- digits for the quarter and was up double- digits for the year. We met our goal of achieving at least 60,000 chillers in our service contracts by the end of 2021. Price cost was slightly positive in this segment, but a headwind to margin. Acquisitions increased sales by about $90 million for HVAC, but did not contribute operating profit given intangible amortization and integration costs. Moving to refrigeration on slide 10. Organic sales were up 17% as a result of widespread growth throughout the segment. Truck trailer was up almost 30%, and container was up over 30%. Electrification capabilities are an important differentiator for us in this segment as we lead the industry with electric trailer units currently operating in 10 countries and additional capabilities being launched. Commercial refrigeration was up low- single- digits, driven by solid growth in Asia, offset by flattish EMEA sales. Sensitech and Aftermarket were both up double- digits. Margins were down 10 basis points in the quarter compared to last year. Price realization is improving in this segment but is not yet offsetting increased input costs. In addition, operating performance in commercial refrigeration remains a significant opportunity. Moving to Fire and Security on slide eleven. Organic sales were up 3% as products grew 6% while Chubb was down 3%. Operating margins expanded by about 60 basis points in the quarter. Same as for refrigeration, price realization is improving, but price cost was negative. Mix was a tailwind to margin for this segment, as was the absence of one-time items in the fourth quarter of 2020. Slide twelve provides more details on orders performance. Excluding Chubb, company organic orders were up about 20% for the quarter. As I mentioned, residential and light commercial orders remained very strong in the quarter, even against difficult comps. Commercial HVAC orders remain strong as well, with backlogs for this business up over 30% compared to last year. Refrigeration saw a mid-single-digit decline in orders for the quarter, mostly because we worked with customers to support demand but did not reopen the second half 2022 order book till January of this year. In other words, timing. We've already noticed a sequential pickup in orders in January. Backlog remains up about 30% in both transport and commercial refrigeration compared to last year. Order intake for our fire and security products remained very healthy at over 10%. Growth was led by commercial fire, industrial fire, and access solutions. As you can see on the right side, we saw continued strength in all regions except China. COVID-related measures implemented in China impacted order intake in late Q4. That seems to have improved since the start of the year. We've seen some delayed projects booked, and commercial HVAC in China saw double-digit order growth in January. Moving on to slide 13. We saw a $0.13 increase year-over-year in adjusted EPS. Within operational performance, the benefit from higher volume and the absence of 2021 one-time items was partially offset by investments. Price cost was a $0.02 headwind compared to last year. The effective tax rate was a $0.07 year-over-year benefit and mostly relates to discrete tax items. Finally, we saw a slight pickup from lower interest that gave us an extra $0.01 compared to last year. For your reference, we included a full year 2021 adjusted EPS bridge in the appendix. Moving on to 2022 guidance on slide 14. Note that our guidance excludes the impact of the pending TCC acquisition. We expect reported sales about $20 billion and organic sales of high single- digits on top of the 15% organic growth we generated in 2021. We expect price to contribute about 5 points of the organic growth and volume 2-3 points. Acquisitions are expected to add about $200 million in sales with minimal operating profit given intangible amortization and integration costs. Adjusted operating profit is expected to be up compared to 2021 on about $600 million of lower reported sales. Operating margin is expected to expand by about 75 basis points, helped by the sale of Chubb and a billion dollars in price realization, offset by $1 billion of increased inflation. We expect all businesses within HVAC to have about high single- digits organic growth in 2022. We expect mid- to high-single-digits growth in both refrigeration and fire and security. You can see expected adjusted operating margins for each segment on the bottom right. For fire and security, the significant margin expansion reflects the higher margin products business now that Chubb has been sold. I will cover adjusted EPS on the next slide, but just want to point out that our free cash flow guidance includes about $200 million in tax payments for the gain on the sale of Chubb, and also assumes about $100 million of cash restructuring payments. On slide twenty-one, you will find additional information about 2022 guidance. Let's move to slide fifteen, 2022 adjusted EPS bridge at our guidance midpoint. As we've mentioned before, the Chubb sale is a 24-cent headwind to adjusted EPS next year. Operational performance is expected to deliver 24 cents of adjusted EPS growth next year. That is about $250 million of adjusted operating profits. At a high level, think of about $120 million or so of volume leverage and about $300 million of productivity, partially offset by about $100 million each for investments and merit increases. As I mentioned earlier, price costs are expected to offset. Obviously, at about $300 million, productivity will be a major driver of earnings in 2022 and includes about $100 million of G&A reductions. Investments in 2022 will be focused on enhancing our digital capabilities, R&D, and technologies enabling continued G&A cost reductions. Currency and net interest expense are a small headwind and tailwind, respectively, and the benefit of share repurchases offsets a higher expected adjusted effective tax rate of about 22%. That gets us to our midpoint of about $2.25 for next year. We've talked a lot about Carrier 700 in our cost reduction mindset this year, so we wanted to provide more insight on that on slide 16. The Carrier 700 program was created over two years ago in a low inflation environment, which obviously does not apply today. Excluding the significant material inflation challenges we faced in 2021, we actually made great progress on our Carrier 700 initiative by driving approximately $300 million of gross productivity savings. Since we historically included material inflation in our Carrier 700 numbers, our net savings were about neutral for the year. Moving forward, and starting in 2022, we will measure our gross productivity efforts, excluding the impact of inflation. We plan to manage price to offset inflation. As I mentioned, we expect to drive about $300 million of cost reductions in 2022. We will provide further detail on our long-term opportunity for continued productivity at our upcoming Investor Day. The bottom line is that cost takeout remains a key focus area at Carrier and will continue to fund investments, annual merit, and drive margin expansion. Moving on to slide 17. Our priorities for capital deployment remain the same. As you can see on the right side of the slide, we have already committed to $3.75 billion of capital deployment for 2022 and will remain disciplined in capital allocation to maximize long-term shareowner value. The last topic I wanted to quickly touch on is the outlook for Q1 of 2022. We expect to see organic sales growth in each of the three segments, leading to high single-digit organic growth for the company. We expect price cost to be modestly negative in Q1 at a level similar to Q4. With an adjusted effective tax rate of about 15% based on known discrete tax items benefiting Q1, we expect adjusted EPS to be approximately $0.45. Free cash flow is expected to be a use of cash in Q1 of about $100 million. Q1 is typically light and includes tax payments related to the Chubb sale and timing of the incentive compensation payout. In closing, Q4 wrapped up another strong year for Carrier with double-digit organic growth and 36% adjusted EPS growth. Thank you to all of our colleagues and partners managing and supporting strong demand in a very challenging supply chain environment. With that, I'll turn it back over to you, Dave, for slide 18. Thanks, Patrick. We are very pleased with our 2021 performance, but it is time to look forward. As we do so, we are very bullish on the strategic and financial opportunities that lie ahead. With that, we'll open this up for questions. If you'd like to ask a question at this time, please press the star then the number one key on your touchtone telephone. To withdraw your question, press the pound key. Our first question comes from Julian Mitchell with Barclays. Hi, good morning. Morning. Morning. Just wanted to start off, perhaps, with the margin sort of cadence through the year at the HVAC and refrigeration segments. You know, maybe help both were down year-over-year in Q4, refrigeration only slightly. But maybe help us understand kind of how you see those margins in that Q1 guide and how quickly you get back to growth to drive that sort of 40 bps of expansion. Yes, Julian, Patrick here. Maybe I'll start with providing a little bit of additional color on the Q4 HVAC margins. As you mentioned, they were down 100 basis points year-over-year. Think of volume being a tailwind to segment margin of 100 basis points. Think of acquisitions where we added almost $100 million of revenue, but given also intangibles, operating profit is still slightly negative. That's almost 100 basis points headwind to margin for HVAC. Price cost, while slightly positive, as I mentioned for this segment, is actually half a point or 50 basis points of a headwind for this segment, as is JV income. JV income is down year-over-year. That's another half a point of headwind. Investments offset, mostly offset the Q4 2020 items we had. That gets you basically to the 100 bps of headwind year-over-year for HVAC. In terms of 2020 and the calendarization there Twenty-two. 2022, I should say. We provide color about the overall company rather than by segment. For Q1, we think that the segment margins will be similar to what they were in 2021, maybe a little bit lower, a few tenths of a point. For Q2, we think it will be similar, and so we think that Q3, Q4 margins will be a little better in 2022 than they were in 2021. Of course, that reflects what we're expecting from a price cost point of view. We expect Q1 to be still slightly negative for price cost. I mentioned that in my comments. We expect Q2 at this point to be about neutral. In Q3, Q4, we expect to be slightly positive, and that would help our margins across our segments. That's very helpful. Thank you for that detail. Maybe, one other point around refrigeration. You know, you mentioned in the slide ten that commercial refrigeration below expectations. Maybe just help us understand kind of the sort of scale and margin rate of that business, and how you do expect that to perform. Any quick commentary on transport refrigeration, how you expect bookings to play out. Obviously, one of your peers sort of frightened people, I think, with some of their comments. Yeah, Julian, first on our commercial refrigeration business, it is one of our lower-margin businesses. It's kind of been in that mid- to high-single-digit range from a margin perspective, and we've been consistent that we need to improve that business. We have a lot of focus on it. We're pushing the team for significant margin expansion this year. I would tell you, it's one of the businesses that last year did not perform at the levels that we would have expected. Now, we are being more aggressive than we had been in the past on the price side. We are pushing operational performance. We are pushing differentiation and digital performance. We're rolling out Lynx. Tim White and David Appel and the team are really focused on doing the right things to improve the business, but that's a key focus area for us, and we know that we need to do it, but we have confidence around our plans in 2022 to really improve the margins of that business. For overall transport refrigeration, I mean, the fundamentals remain strong, as Patrick said up front. You know, we did toggle back on our order book purposely in the fourth quarter. We have plenty of backlog. We were working with our customers to make sure that we were taking the orders at the right time to support their needs when they need them. We reopened the order book here in January. January orders were consistent with what we expected them to be. We feel good about our backlog position in both North American truck trailer and European truck trailer. The overall market seems like in a good place to us right now. Our overall focus for transport refrigeration and just generally is supporting our customers. You know, we still remain challenged on chip side and some other input challenges. We're spending a little bit more than we have in the past operationally. It's driving some inefficiencies in the factories, but our focus right now is supporting our customers. The business feels positive to us, Julian. Great. Thank you. Our next question comes from Nigel Coe with Wolfe Research. Thanks. Good morning, everyone. Good morning. Morning. Lots of details, especially in your answer to Julian's question. Just curious, you know, just confirm the $1 billion, that's just the raw material bucket, so that excludes other sources of inflation. Maybe just, Patrick, if you maybe break out the price, the $1 billion. I think last quarter, you talked about $350-$400 of carryforwards. Would that mean $400 from the January 1 price increases and then another $200 to be sourced from somewhere else? Yes. On the first question, I think on the $1 billion, think of $600 million or so related to commodities, Tier 1 and Tier 2, and think of the remaining $400 million being other components as well as freight. That's the $1 billion. In terms of price realization, the $1 billion, on the last call we said last quarter, we said that the carryover we expected for 2022 to be 350-400, as you mentioned. We actually did better than we expected in Q4 on pricing. We actually delivered about 50-60 million dollars better than what we expected on price, and it also means that the carryover is better. That's why we say of the overall $1 billion that we now target for this year, all but $200 million of that is either carryover or the prices that we have announced and have become effective in January of this year. Great. Thanks. Thanks, Patrick. Just thinking about the obviously steel is a really important input, and we're seeing some really encouraging signs on the futures and spot price for HRC is down. What are you dialed in for steel specifically into your guide? Are you assuming any benefits at all, or are you just rolling forward the current prices? Yeah, Nigel, we were not gonna get into the details of what we're assuming for steel, aluminum, and copper. I would just say that for aluminum and copper, we're about 70% locked for the year in terms of hedges. Also, we also have some protection on the steel side as well with some agreements with some of our vendors. We were not gonna get into the specific rates we got locked into. Fair enough. Very helpful. Thanks, Patrick. Thanks. Our next question comes from Deane Dray with RBC Capital Markets. Thank you. Good morning, everyone. Morning. Good morning, Deane. Hey, I don't think you called it out in your prepared remarks, but and you had 11% organic revenue growth, but did you have any supply chain issues where you couldn't make any shipments? Maybe customers weren't ready, you didn't have parts, but can you size for us what shipments might have been missed? Yeah, Deane, what I'll tell you is that we certainly did have some supply chain issues. What I will tell you is that the bookings have been extremely positive. We do have some overdue sales to our customers. It's probably in the $200 million-$300 million range that we could have gotten had we not had the supply chain issues. But I would tell you that despite that, we went into this year with record backlogs. I will tell you that I'm very, very proud of the operations team in going to great lengths to support our customers despite the challenges. Great. Just congrats on the Toshiba acquisition, and we know VRF is a priority. Does this complete the platform for you? Do you need more manufacturing, at least like in North America? Just where does that stand in terms of build-out? Well, it's kind of one step at a time. What I'll tell you is that our sales in VRF after we close on the Toshiba acquisition will be up 4x from the time that we spun. Organic growth on our own VRF business that we had has been very positive. Then we added Giwee. Now we're gonna close on Toshiba in the coming months. You know, we're gonna be integrating 6,000 phenomenal Toshiba employees into the system. We're gonna have a multi-brand, multi-channel strategy. We have to kind of let the dust settle on that, and then we'll assess where we go from there. You know, our goal in all of our business is world leadership, and we'll drive that in all segments. Got it. Very helpful. Thank you. Thank you. Our next question comes from Jeff Sprague with Vertical Research. Thanks. Good morning, everyone. Hey, Jeff. Good morning, Jeff. Morning, morning. First, just a clarification, Patrick, your comment about the Q1 margins being similar to Q1 2021. You know, Q1 2021 had Chubb in it last year. I just wanna make sure we're comparing to kind of the margin with Chubb or you're making some adjustment relative to the portfolio change. Compared to our reported margins from last year, so including Chubb, the external reported ones. As I said, similar, maybe a few 10 bits lower. Okay. Great. Thanks for that. David and/or Patrick, maybe just coming back to Toshiba, I know it's early and you don't own it yet, but can you give us a little more color on what you might be able to do relative to your own investment spending? I guess I'm kind of thinking of the fleet average of margins now in your VRF undertaking, and what synergy or what R&D you might be able to now avoid that you had on the docket internally, and just kind of the overall margin trajectory that you would expect out of now, out of the VRF effort. Yeah. You know, if you look at what we've said, Jeff, is that the business that we're gonna be inheriting is a little over $2 billion of sales, call it $2.1 billion of sales with $250 million of EBITDA. You have the margins on the base business there. We said that we would have $100 million of synergies. We'll grow margins through synergies, and we'll also grow margins as we would expect with all of our businesses, through top line growth and, of course, the aggressive cost reduction actions that we take in all parts of our business. We do see VRF margins growing. We do know that we have one of our peers in the VRF space with margins in the mid-20s. We won't be at that level in the next year or two, but we also see that we have significant room for margin expansion. The other thing is that one of the big things with the Toshiba acquisition is our focus on sustainability. You know, they come to the table with phenomenal heat pump capabilities. We can use that technology in other parts of our business. For example, Riello, as we start to transition boilers and burners into more of a heat pump-based business, we can use that, the Giwee and the Toshiba technology to bring up the margins of that business. We see this as margin expansion for the base TCC business and helping the broader Carrier margin story. Great. I'll leave it there. Thank you. Thanks, Jeff. Thank you, Jeff. Our next question comes from Andrew Obin with Bank of America. Hi, guys. Good morning. Morning. Morning, Andrew. Just a question on product transition in 2022 and how this will sort of impact the cadence, right? I'm thinking, what should we be thinking about second half of 2022 as we sort of try to manage the channel, try to manage production, try and introduce new product ahead of new sort of SEER regulations? How will we see it on the revenue side this year? Will there be anything unusual in terms of annual cadence? Thank you. Yeah, Andrew, if I understand the question, it's really about North American resi, and as we transition to the new SEER requirements for 2023- Yes Do you expect an element of pre-buy? I think it'll be at the margin. You know, we're expecting our resi business to be high single- digits this year. I mean, the bulk of that's coming. We're getting very good price realization in that business, so the bulk of it is from price. We may get a point or two from volume. There could be a bit of pre-buy in the North because that's state mandates. We're not really banking on much pre-buy there. So, what I will tell you is that what we focused on for 2023 was differentiation, things like copper to aluminum and other key technical attributes that we think would distinguish us in anticipation of 2023. The product's ready, the manufacturing sites are ready, and we just gotta kind of get ready for that ramp as we get into the latter part of this year. Great. Just a follow-up question on Toshiba. How should we think going forward, the integration of Toshiba and Giwee? Because, similar technology, different price point, will you maintain two separate brands, or will they be some form of integration? Because I'm thinking VRF, heat pumps, how will that play out? And also from a manufacturing standpoint. Thank you. Yes. We will actually have a three-brand strategy. We'll have Toshiba, Carrier and Giwee in our VRF space. What we're gonna do and Chris will get into this more on our February 22 Investor Day, but he's gonna create a third segment under him. He'll have the traditional commercial applied business, we'll have residential light commercial, and then we're gonna have a third business that has that VRF international light commercial heat pump business in it for it globally. That'll include the Toshiba business, the Giwee business, and some other aspects of our heat pump business. Then we can work a multi-brand, multi-channel strategy for that business globally. Thank you. Thank you, Andrew. Our next question comes from Tommy Moll with Stephens. Good morning, and thanks for taking my questions. Hey, Tommy. Wanted to start on Toshiba and just following up on the multi-brand strategy here. You'll now have three under the same umbrella. Just in terms of channel or the product portfolios as they sit next to one another, what are the operational advantages you wanna realize here with the three brands, like I said, under one umbrella? Well, what's great about one of the many things, Tommy, that's great about this acquisition is we try to work customer back. You know, we have as part of the TCC joint venture, we've been responsible for almost all the distribution globally. So we get that customer input, but the design and production has largely been under Toshiba's responsibility. So there's been a bit of a break point there. Now having it all under one roof, we get the customer input, what exactly features are they looking for, what brand and what technologies would be most suited for that application, and then we can feed that back into the design and the production of the product. Depending on where we are in the world, I can tell you that Toshiba is very well-recognized and respected globally, certainly in China and elsewhere, so that brand plays great. We've been growing the Carrier brand under VRF, of course. Giwee, we're now in the mix. We can work this multi-brand strategy. Operationally, Toshiba comes to the table with a great footprint. They have brand new factories in China. A brand new factory in Poland, which plays well for putting more load from light and from Carrier into those factories as well. They have facilities in Thailand, Japan, and India, so a great footprint. There's a lot of complementary footprint actions that we can take on both sides. Of course, the supply chain piece. You know, this is what we do for a living, HVAC. This is one of, obviously, more than half our sales are in this space, so integrating them into our overall supply chain can drive a lot of cost synergies and operational improvements as well. Appreciate it, Dave. Shifting gears to the 2022 outlook. I wonder if you could provide any detail on the $300 million of gross productivity, just any timing context you can provide or any of the buckets underneath that supply chain factory and G&A that you could provide would be helpful. Thank you. Yes, Tommy. Patrick here. I'd say that, and I mentioned this in my comments, that clearly the G&A element of our productivity for next year is gonna be much larger than it was in 2021 at $100 million. A lot of these actions have already been implemented. I'd say that is something where we do not have a big hockey stick in the year. There will be continued savings on the factory side as well as on the direct side, the direct material side, including a healthy amount of carryover. I'd say that Q1 will be closer to about 20% of the full year number of productivity we're looking at. I'd say not a huge hockey stick throughout the year, but we are assuming an improvement in factory efficiencies starting in Q2 versus where we were in Q4 and early Q1. That's certainly something that we are working hard on to revise because we are assuming sequential improvement in factory efficiencies. Thank you, Patrick. I'll turn it back. Thanks, Tommy. Our next question comes from Josh Pokrzywinski with Morgan Stanley. Hi, good morning, guys. Hey, Josh. A lot of good detail, but maybe a couple questions here on residential. I know orders in a kind of seasonally lower quarter might not be as telling, but I think you're comping like a 20% number from last year with the 50% this quarter, sort of getting kind of into serious numbers here. You said the movement was a little lower than sell-in. Like, how do you anticipate distributors sort of react as the channel stabilizes? Like, is there a risk that they overshoot? Or as your lead times start to come down, is that something that gives them confidence to sort of trust the system rather than pile it on in their warehouses? Well, let me just give you a few data points, Josh. Obviously, we focus a lot on movement and inventories. Movement in the fourth quarter was up 6%. It's continued to be fine into January. You know, one key thing is that movement from our distributors to our dealers has continued to be positive. Inventories, we don't see getting away from us. We mentioned that, splits in the fourth quarter were up, say, mid-single- digits, but, largely in balance to what we would have expected. We come into the year with our backlog up almost 3x year-over-year. Very strong backlog. Inventories generally in balance. Movement seems okay. You know, we watch the order rates, but frankly, orders will be down, probably in the first quarter year just given compares and given the overall backlog situation. So that doesn't alarm us. What we watch more is inventory levels and movement, which both seem to be generally where we would expect them to be. Got it. That's helpful. Just on Toshiba, obviously picking up, a growthier product category there, but, maybe help us with kind of the breakdown of aftermarket versus new construction. Like, are you picking up a lot more Asian new construction exposure? What is the structural kinda all-in difference in free cash conversion at the organizational level, as part of the transaction? Well, Patrick can take the cash piece. I mean, what I will mention on that is they're just coming off having built entirely new factories in China and Poland. CapEx over the last couple years was inflated versus the levels that you would expect. CapEx will come down, and I think cash will get more in balance as on a going forward basis. It's a nice balance between OE and aftermarket. We'll get into some of that more of that color in February. The great news, I would say, is that the technology and the brand, Josh, are really something special. If you look at the inverter technology, which has enabled this three-stage rotary compressor, which really is differentiating the marketplace, you combine that with our global distribution channel, there is the potential to make a really, really positive and big impact on the global VRF market. We could not be more excited about, how we can grow the business, how we can improve the margins, how we can really create a competitive advantage with our multi-brand, multi-channel strategy. This is a deal that we've wanted to do for a number of years. We had the timing worked out great, and we could not be more excited about it. Patrick, anything you wanna add? Oh, Josh, on the free cash flow for the TCC, as Dave mentioned, they've had some several years of big investments in new facilities. Our estimate is that for 2021, the free cash flow conversion there was closer to about 80%. Once you normalize CapEx, we see no reason why it would be similar to us, which is about a 100% conversion of free cash flow. Of course, once we go through the integration, there might be some one-time costs associated with that, but that is all the work that will be done over the next several months. Awesome. Great detail. See you guys in a few weeks. Thank you. Thank you. Our next question comes from Joe Ritchie with Goldman Sachs. Thanks. Good morning, everyone. Morning, Joe. Yeah, morning. Hey, guys. Can we maybe just start on the investments? I think we originally had you guys doing roughly around $150 million incremental last year. Just curious where that shook out, what to expect for 2022. Maybe just some more kind of qualitative color just around how far you are along in your sales force expansion initiative. Yes, Joe. Actually, for 2021, full year investments were $150 million, 150 incremental to 2020, which is exactly what we shared with you, when we initiated guidance, one year ago for 2021. That was heavily weighted towards selling about half of it and then digital and R&D capabilities. For 2022, as I mentioned in my comments, we are targeting $100 million of investments and a similar split in terms of digital capabilities, R&D, and selling. Although I'd say that it's probably a little bit more weighted in 2022 towards digital and R&D versus selling. I think, Dave, you wanna add some color on selling? Yeah. What I would tell you, Joe, is that I think that, a chunk of the selling is just carryover for hires that we made last year. I don't see 2022 being a year of significant adds to our sales force. I think that we felt like we had to get to a certain level, make sure that we integrate our sales force appropriately, train them, incentivize them, make sure that we are getting the drop through that we expect. I think that we're in a bit of a settling out period on that. I don't see significant headcount adds to our sales force 'cause we like where we are going into 2022. Got it. That's super helpful. You know, clearly, since you guys became a standalone entity, there was a lot of focus, around deleveraging and what you could potentially do from a portfolio standpoint. You guys have been extremely active. I'm just curious, as you kinda think about the portfolio today, just any thoughts on on maybe additional actions on pieces of the portfolio that maybe are, I don't know, below segment average? I'm just curious, how are you guys thinking about portfolio optionality today, given all the changes that have occurred in the last couple of years? Well, the nice thing, Joe, is that we've put ourselves in position for that optionality. You know, we started when we spun from UTC less than two years ago, $9 billion-$10 billion of net debt, and now we have a little less than $4 billion. We are in a position to do a lot of things on the capital allocation side. We obviously have Toshiba. We talked about increasing the dividend by 25% for this year. We talked about the share buyback of around $1.6 billion. We have plenty of firepower for additional acquisitions. We've done a lot of work in building out the pipeline. Of course, our focus right now is integrating, closing on and then integrating Toshiba. We continue to look for other acquisitions, and we wanna make sure that they're in the fairway and focused on our key areas of strategic priorities, healthy, safe, sustainable, and intelligent building and cold chain solutions. There are again, we're building out the pipeline. We continue to look at our current portfolio, make sure that everything in our current portfolio fits with us and we're the better owner, and we'll continue to look on the outside and always prune. We have a lot of self-help capabilities, and we'll continue to stay active. Makes sense, Dave. Thanks so much. Thank you. Our next question comes from Steve Tusa with JP Morgan. Hey, guys. Good morning. Good morning. Just on this, on the pricing, what was the absolute price capture for the company on a dollar basis in 4Q? A little over $200 million, Steve. Okay. You're saying that the $1 billion for 2022 includes $800 million of carryover and then stuff that you're initiating on January 1. I guess, does that mean the extra $200 is stuff that you kind of are thinking about for, later in the year? I mean, how much visibility do you have on that extra $200 million? And am I looking at that the right way? Steve, you are looking at it the right way. In terms of visibility, I think this is something over the next couple of months, not six months from now. Okay. It is more concrete than we're thinking about it. Okay, got it. Just one last one, just on the HVAC incrementals in the fourth quarter. I appreciate there's a lot moving around. Can you just remind us of what I think we had, like, $100 million of, like, what you guys called some unusual headwinds in 4Q 2020. Is that kind of still the right number to put in the bridge for this year? I just wanted to kind of clarify that stuff. No. Yeah, I'll do so. Last year, Q4 was closer to 50 for the overall company. HVAC being the largest segment got a majority of that. That was mostly, not completely, offset by incremental investments in the segment in Q4 of 2021. Other items I mentioned was, we have about a half a point headwind in HVAC because of price cost, even though price cost was slightly favorable. JV income and acquisitions were a slight headwind as well for HVAC in Q4 of 2021. Wasn't there some contract renegotiation charge or something like that in 4Q 2020 as well? There was something contract-related that was part of that whole. That was part of the 50. Part of that 50. Yes. Oh, got it. Okay, great. All right, thanks guys, appreciate it. Thanks, Steve. Our next question comes from Vladimir Bystricky with Citigroup. Good morning, guys. Thanks for taking my call. Yes. Good morning, Vlad. Lots of ground has been covered already, obviously. Maybe you can just comment a bit, obviously good order momentum here. Can you comment on what you're seeing in market share across the portfolio, particularly in HVAC, and how you're balancing your margin expansion objectives versus driving faster growth and taking market share? Well, obviously, we wanna make sure that we get margin expansion, but we've seen very good price realization. I think a lot of the share gains that we've seen are in part because of the investments we've made in things like digital differentiation, technology differentiation, and the additional sales force we've had. We've also worked very closely with our distribution partners to kind of improve those relationships and how we support our customers. Frankly, our operational performance is, I think really helping us in our ability to support the demand that's out there. We gained about 130 basis points in share and splits last year. We gained about 350 basis points in light commercial, and that is not on the pricing side through anything we're doing there. In fact, I would tell you we've been, I think, appropriately aggressive on the pricing side given some of the dynamics we're seeing on the input side. We have to do both. We have to grow the business. We're focused on differentiating the business, and we have to have margin expansion. I think we've done a nice job of balancing those. Okay, that's really great color and helpful. Then maybe just continuing on the growth front. You've talked in the past about opportunity in resi HVAC to drive stronger parts sales in that business. Can you talk about what kind of traction you're seeing with that initiative and how much of a tailwind that can be over the next couple of years? You know, it's the same with the rest of our businesses, that we wanna provide lifecycle solutions for our customers. To drive additional parts on the resi side, it has to do with how we work with our suppliers, how we work with our distribution partners, our dealers, our end customers. We've tried to take a series of actions in a new playbook to make sure that we can get customers the parts they need when they need them, at the price points they need them. It's been frankly a focus area, and it's been some nice tailwind for us. That concludes today's question and answer session. I'd like to turn the call back for closing remarks. Okay. Well, thank you all for joining. We're looking forward to seeing you here down at Palm Beach Gardens on February 22nd. Thank you all. Thank you. This concludes today's conference call. Thank you for participating. You may now disconnect.