Well, good afternoon, everyone. Welcome to day 1 of Oppenheimer's 19th Annual Industrial Growth Conference. I'm Noah Kaye, Managing Director in Oppenheimer's Sustainable Growth and Resource Optimization Research Practice. Very happy to welcome back the management team of Carrier, Patrick Goris, CFO, and I have to congratulate the soon-to-be CFO of the Resi and Commercial Fire business, Sam Pearlstein. Gentlemen, welcome. Thanks for being here. Thanks for having us. Excellent. So Patrick, I thought maybe you could just start us off with a few short remarks around the state of the business today, and where you think investors should be focused in terms of the company's transformation and trajectory going forward. Great! Noah, again, thank you for having us. Maybe very quickly on the first quarter, obviously, off to a very good start with the acquisition of Viessmann Climate Solutions. I think the integration is really off to a good start as well. A lot of great activity there. But also in the financials. We started the year out really well. Adjusted EPS up over 20% or about up 20% year-over-year. Strong productivity and price, driving our operating margins up 280 basis points, while at the same time, we're continuing to reinvest in our business. So, reinvesting, meaning R&D, commercial resources, anything that can help our differentiation going forward. In addition to that, I'd say the business exits are on track. We announced three of the four exits having definitive agreements. We expect those to exit over the next several months. That leaves residential and commercial fire, and there we've said that we are now prioritizing clearly a sale as an exit transaction. We expect that to happen in the second half of this year as well. And so with the business exits, the expected proceeds, we expect to reduce our leverage by the end of the year by about 2x, which also means that we expect to be back in the market in terms of repurchasing shares, just as we committed to when we announced the acquisition of Viessmann Climate Solutions. So, overall, a good outlook for the year. We increased our outlook for our core business, as we call it, at the time of most recent guidance. Maybe at the end of the day, if you look past the big transformation we're going through, we're going to be a company that's simpler to understand, simpler to run, even more exposed to the secular trends we see out there: energy efficiency, sustainability, electrification, reduced food waste, and a company that is gonna be much more easier, and much streamlined, with still tremendous opportunities for market expansion, and a margin expansion, going forward. So, I'm very excited to be here and answer any of the questions you may have. That's great, Patrick. Let's actually start with that subject of portfolio transformation. Maybe just walk us through the first quarter plus of the Viessmann integration. What have you learned incrementally about the business and the market dynamics in the EU from actually operating Viessmann? Yeah, maybe about Viessmann itself, first. We've always said, since the time that we announced the acquisition, that we think we're acquiring or combining with the premier, company in that region in the residential, light commercial space. That's exactly what we're seeing. If you look at the brand, their technology, the people, the channel, we've been very, very impressed with everything that we've seen. I would also say that, we're not just the one seeing it. Just I think a few weeks ago, there was a Haustec.de, a German Reader's Choice Awards. All the companies in our industry could submit, only four entries, to get the rewards. Viessmann, all four Viessmann's entries won their first prize in their category. So it's a top company, very complementary to what we do. And so very pleased to have them on board. And the integration, besides the day-to-day activities, which is, of course, ongoing, a tremendous amount of work going on from a technology point of view, because now we're in a very attractive position, I think, where we can look at the technology that we already had, Carrier, the technology we acquired from GE and from Toshiba, and now Viessmann, and see what can we use best-in-class from the different companies, and what—and how do we scale that globally, across the HVAC business, in some instances, who knows, across the transport refrigeration business as well, because, of course, there are some overlaps, there as well. So, a lot of work being done by our teams, from commercial side, of course, the synergy side as well. We talked about cost synergies, over $200 million. We'll see. We expect to see about $75 million of that this year. Revenue synergies, of course, clearly a focus as well, was never in our business case, but as Dave mentioned, just on the most recent call, we expect them to be or our current pipeline is in the many hundreds of millions of dollars. And I personally believe that, over the years, the benefits from those revenue synergies will be larger than the cost synergies associated with this deal, and so, I'm very excited about all of this. So, we've learned a lot, and there is nothing that we don't like about it. On the contrary, we are very pleased with where we are and the work that the teams are doing together. So the guide for the year was, you know, for modestly lower sales year over year at Viessmann, but yeah, similar level of EBIT to what you originally targeted. And of course, please correct us if we're wrong in any part of this. I think on the call it was mentioned the company, Viessmann being, you know, more aggressive on cost out to help deliver earnings on target. So, hoping we could get a little bit more granular on the bridge. You know, what should VCS margins look like this year, and where can margins get to once we've given full effect to these cost synergies? Yeah. So what we said in the most recent call is that we expect Viessmann's top line to be flat to down mid-single digits. This year, our Feb guide had them up about mid-single digits. The operating profit is slightly lower in our current outlook than it was back at the February call. We lost about, I think $0.03 of EPS, of course. Associated with our lower revenue guide. And if you think about it, a reduction in revenue, a much more modest reduction in operating profit, accelerating some of the cost synergies that we just talked about. High focus on the revenue synergies as well. But then also some of the revenue reduction that we've seen at Viessmann is in their lowest margin business on the Solar PV. More than half, I think, of the year-over-year revenue drop that Viessmann saw in Q1 was in Solar PV, which has very low margins because it's a pass-through. So that's, that's so far Q1. If I fast-forward to this year, from a margin performance point of view, we expect Viessmann's operating margin, adjusted operating margin, to be about 15%, so very much in line with the company, and add a few points to that to for EBITDA, so you get to high teens EBITDA margins. Right, and then. And the only thing I would add to this, Noah, is that all the work we're doing now, so accelerating the synergies, driving cost out, will set us up even better for more attractive incrementals when volumes do pick up at Viessmann. And our current outlook is for that to happen in Q4 of this year, or latest Q4 of this year. Our current outlook for Viessmann has the second half about 20%-30% higher than the first half of the year. But if we go back in time, that tends to be general seasonality for Viessmann. And so we'll see whether this is a typical year or not, but that's kinda how we've built in Viessmann Climate Solutions in our current outlook for the year. Yeah. And your views now on, on how this solar PV and storage offerings, obviously, you know, solar storage has been something we've, we've covered for a decade plus. It's, it's got a unique, growth and incremental profile, shall we say, versus HVAC. So how do you think about optimizing that business and, and bringing it to other geographies, potentially? You know, nothing there has changed. And, I think it's one of the, the reasons why, we believe that over time, those revenue synergies can significantly outweigh the cost synergies. Because if you look at what Viessmann has been able to do in, in Europe, is to, go to a, a residential owner and, sell the solar, the battery offering, sanitary hot water, and the, the heat pump, and then the home energy management system. And the revenue per household, if a household owner, goes for this entire portfolio, is significantly higher. It's a multiple than if the homeowner would just buy a heat pump or a boiler. And the beauty is they can do this over time. They don't have to buy all of this all at once. And so, the opportunity for us to do something similar for, residential applications in other parts of the world is really, attractive to us. Also, given, of course, the market positions we have in other regions of the world, including in our home market, in the U.S., So whether it will look exactly the same as to how Viessmann does it in, in Europe is to be seen, but the, the principle of home energy management systems and integrating the solar with the battery, home energy management system, and then, of course, the heating and the cooling equipment, clearly the same. And that is something that, could provide very meaningful, revenue synergies. So, as you said, incremental conviction that the company will exit resi and commercial fire through a sale rather than a spin. Maybe just talk through how the process has unfolded to give you that conviction, that visibility. You know, we've always worked from day one on a dual track. There were times where we said it's more likely one exit versus another, but in reality, we always prep for both a sale and a public market exit. Where we are today, we just think that the best outcome for our shareholders and is and from a value-enhancing point of view is a sale, and that's what we're focused on. And so that is our primary focus today. The business is performing much better this year than it did last year, so our business leaders there have done really well. As I mentioned, I think on the most recent call, run rate EBITDA is about $250 million. And frankly, there is a path of getting it closer to $300 million. And so the process is ongoing, and actually, the confidential information memorandum is going out today. And so that is. That's all in, all in the works, progressing well, and I would expect, given the positions of those businesses in their respective markets, residential fire with Kidde, commercial fire, including Edwards, leading brands, iconic brands, we would expect there to be significant interest in those businesses. Sam, that sounds like a great setup for you. So, looking forward to that unfolding. I guess, Patrick, maybe you could just give us the playbook for the rest of the year around, you know, the total proceeds from the divestitures that have been announced, how you're gonna repay the debt, which pieces, and then how quickly you look to buy back the, you know, I think it was 58 million shares issued to the Viessmann family. Yeah. So, the way you can think about it, we announced three out of the four exits having definitive agreements. But those three deals, gross proceeds is about $7.2 billion, net proceeds of, give or take, $5.5 billion. What we have said is that $5.5 billion would go towards de-leveraging the company. And so we will first pay down our term loans. They carry the highest interest rate. After that, we'll see what we will pay down, what makes the most economical sense. We actually might decide to keep cash on the books for a little while because in today's environment, the cash may earn more than some of our debt, but we'll see. We're working through that now. And so it really means that once the $5.5 billion is redeployed towards deleveraging, any free cash flow and proceeds from Residential and Commercial Fire, the fire exit, would be available for additional capital deployment, including share repurchases. And so what this means is that we expect that starting later this year, with free cash flow-funded cash, and then, of course, with the proceeds from Residential and Commercial Fire when these come in, that we'd be in a position to make some meaningful share repurchases. And of course, it's our objective to repurchase those 58-point-something million shares as fast as possible because that's the commitment that we have made. And we expect to start, as I said, the latter half of this year. We have not embedded any benefit of that in our EPS outlook for this year, frankly, because I think it will be minimal, because it will be very back-half loaded. But clearly, it means that we expect a much more significant pickup in 2025, or benefit in 2025 from those share repurchases. So this is a little of a high-level question, and I think you touched on it a bit earlier, but, you know, would love, your more expanded thoughts. You know, the, the spin from, United Technologies clearly enabled the company to become more focused and allocate capital to, to growth opportunities. Clearly, when we look at the net effect of these divestitures, this is kind of the next chapter of that story. And so where, where do you see the greatest opportunities now, when this becomes a more focused company, in terms of product development, productivity, competitive strengths? Maybe you can talk through those three areas. The way I think about Carrier post all of these transactions, so simpler company, more exposed to end markets with very important sector trends, ones as I mentioned in the beginning of the call, and with leading positions in our markets across the different geographies: Residential, Light Commercial, Commercial HVAC, and Transport Refrigeration. So strong positions in each one of these markets, and as I also mentioned, now with the opportunity to use the technologies that we have acquired, together with our existing technology, to take the best-in-class, create more scalable global platforms that we can then use across our portfolio. So tremendous commercial opportunities, opportunities from a technology point of view, use best-in-class, modularize, and scale it. You brought up productivity. I think, even though we've done a lot of great work, I think, to date, in terms of driving cost out and expanding our margins, there remains a tremendous opportunity ahead of us. Even with the exits, there will be opportunities to continue to enhance our footprint, to continue to enhance our logistics network, our warehousing network, continue to drive out cost and simplify what we do internally. So I think we'll be in a very attractive position, not just from a commercial point of view, with leading technologies in the markets in which we operate, with additional opportunities or attractive opportunities to grow, including, as we just mentioned, the Viessmann capabilities, expanding that to different parts of the world, but with very attractive opportunities to continue to simplify our company and drive out cost. And so it's frankly part of the excitement of being part of this team because we will have several attractive levers to continue to use and drive value for our share owners. Maybe just a follow-up to that. You know, the company is sort of signed up for 50 Bps a year expansion. I guess when you think about this opportunity set around productivity, as well as, you know, the shift in the portfolio towards, you know, potentially higher growth, higher margin, products, better mix, you know, how do we think about those two levers of productivity and favorable mix in terms of the ability to drive incrementals going forward? Yeah, Dee, I think what you were referring to was the value creation framework we shared with investors a year, a year and a half or 2 years ago. That value creation framework calls for over 50 basis points of margin expansion per year. Obviously, we'd like to do better. Our current outlook for this year is to do about 100 basis points of margin expansion. Frankly, we would expect, or we target internally, of course, to do every year more than 50 basis points. Can it be every year, 100 basis points? Who knows? Clearly, we'd like to do as much as we can, but, and I say but, we need to make sure that we continue to reinvest in our business to drive our technology differentiation. And that's something that, of course, is really important, and so we, we do believe we can continue to expand our margins. Like this year, 100 Bps while reinvesting in our business. Of course, we'd like to do that every year going forward, and I, I think my comments about the opportunity for continued productivity can be seen in the light of, the company's comfortable that they can at least expand their margins by at least 50 Bps a year going forward, and of course, we'd like to do better than that. We, we'd rather over-deliver than overcommit. Well, let's talk a little bit about growth for the RemainC o. And I think we should start there with data center, just given the focus from investors- Yeah And on your recent earnings call, you know, you noted that data center was low double digits as a share of global Applied and Controls, and could grow to 20% the next few years. I think some of the questions we get around this relate to liquid cooling and, you know, that role in the portfolio, and evolution potentially towards water-cooled chillers versus air-cooled chillers in the space. Maybe just unpack for us how your customer mix, your offerings, and your wallet share opportunity are evolving. The way I'd like you to think about it is that we've been doing business with data centers for a long period of time. And so, these companies have required cooling for a long period of time, and we have been providing that to them. What's different now, I think, is that the demand is accelerating globally. In addition to that, given the latest chips, of course, the cooling requirements, they haven't changed, but they have increased. And so, what this means is that our traditional business will continue to do really well, we think, with data centers. And on top of that, it, we have this additional opportunity with respect to liquid cooling that we're looking at as well. So we've had some important recent wins with all kinds of customers in the space. We are comfortable we can do more than that. And if you look, you mentioned what we have in offerings. We have the air-cooled, we have the water-cooled, we have the handlers, we have the fans, we have all that. What we're also investing in, organically and inorganically, is liquid cooling. And more recently, I think it was a few weeks ago, we made an announcement where we made an investment in Strategic Thermal Labs. That's direct liquid cooling towards the chip. What is maybe less well known is actually we made an investment in... We've not made an investment, we actually acquired a company, Nlyte, in 2021, that is focused on data centers as well. It was just re-recognized last week as a leader in the category for data center infrastructure management. And so we have both software that's applicable in this space, and we have the traditional HVAC capabilities in this space. And now it's a question of how quickly can we, through organic, inorganic investments and partnerships, enhance our liquid cooling capabilities that are very complementary. Well, I think you just asked the question: how quickly can you do that? What... How do we think about it? We're doing it as we speak. Fair enough. So, so I think more generally around applied demand, you know, it's been very strong globally for, for really years now. Can you speak to how you're managing applied production capacity, and, and maybe benchmark lead time trends for us? Yeah. The way I think about this today is that the challenge is more in commercial HVAC today. Very simplified is that the challenge is more about the ability to meet demand than demand itself. And therefore, there has been a tremendous effort by our teams to meet that increased demand by leveraging our existing global footprint wherever it is in the world, and selectively increasing capacity. And as to the latter, I don't expect there to be major CapEx I would have to call out associated with that. And so in some parts of the world, like in the U.S., and in Europe, we're doing some elements to increase our capacity, not just necessarily in manufacturing footprint, but it's in engineering, it's in testing capabilities as well, as well as, of course, in supply chain. So those have been big focus areas for us. Lead times have generally improved significantly over the last few quarters. It gives us the confidence that we can continue to deliver. But as I said from the very beginning here, there is a continued opportunity for us to ensure that we have the right capacity in the right places to make sure we can meet demand. Data centers, of course, is just one element there. Right. We have a global footprint that we obviously are trying to optimize with that respect. That, that's helpful. Thanks. And then on the light commercial HVAC side, just maybe help us unpack the orders and sales growth trends you're seeing. You obviously had tough comps, following the 35% growth last year. You know, what are you embedding in guidance, and how should we think about orders and sales growth playing out from a, a cadence perspective? Yeah. So, Q1, we had a very good and actually slightly better than expected start to the year. Light commercial sales in North America were up about 20%. For the full year, we expect volumes to be down high single digits, but we expect our sales for light commercial to be about flattish, and that's all included in our current guide. In the second quarter, we're gonna compare ourselves to a quarter last year in which we grew 60%. So it's gonna be an interesting comp, but this business has been doing really well. And you referred to orders, and yes, the orders were down in the first quarter, but it's not unlike what we've seen in resi a year or so ago. Mm. As the lead times normalize, we see orders year-over-year be weak because when the supply chain was really tight and the lead times were long, people would place a lot of orders, and so their order intake was really high. Once the lead times normalize, you kind of get into the kind of comp we're going through. Overall, a really good business, and I think it's one of the businesses where we can really use as an example of a business where we have made investments in R&D, in commercial resources, in capabilities, that have led to market share gains. We believe we have, within the smallest footprint, the most efficient unit on the market today in the U.S., and that's an outcome of these investments. So overall, a great business, and if sometimes we hear that people think it's still at this, business is operating at very high levels of unit volume, there is some risk there. Mm. Who knows? But our outlook for unit volume, or the industry outlook for unit volumes for this year is below the volumes it was in 2019. So certainly not unusual levels of volumes, and I would not be surprised, as I think Dave mentioned on the call, that this business surprise us to the upside this year. and then on the aftermarket, and we'll get to resi last, 'cause that's, that, that's a whole kettle of fish. Yeah. It used to come first, actually. Yeah. So you recommitted to achieving the $7 billion aftermarket revenue target, and that's despite divesting roughly $500 million of related revenue. So maybe just talk about the blueprint to achieve that goal. You connected a record number of chillers in the last quarter. I mean, talk to us about this blueprint, what the future of connecting assets looks like, and what you're targeting for services attach rates going forward. Yeah. So our strategy and aftermarket leader, Ajay Agrawal, he at our Investor Day a couple of years ago now, I think he explained really well what our playbook is, and it's not one element. It's anything from design for aftermarket, what kind of agreements do we have in place with our vendors? Meaning, yes, we will use your components to produce units or manufacture units, but in return the aftermarket comes to us as well. It's connecting the units. The connectivity enables us to provide remote-type services, so we have tiered service levels. And so I can go on, but it's really a playbook that includes, like, many different chapters, and we're working on all of them to ensure that we drive success. I think over the last three years, having grown this business by double digits, I think it has done really well. As Dave mentioned several times, he sees aftermarket revenue growth as double digits forever. So with the exits, and I think what you were referring to is with the business exits, we exit some of the aftermarket business as well, yet we acquire Viessmann and its aftermarket business. The net of the two, the exits and the combination with Viessmann, is a reduction in aftermarket business by $500 million, but the profile of Viessmann aftermarket business is actually higher growth profile, and also at attractive margins as well. Mm. So to get to that $7 billion of revenue that we talked about by 2026, it will require a higher growth rate, and that is what we are focused on. But that higher growth rate, just to reflect back, would be somewhat in line with the higher growth rate for the industry as that you're now exposed to? It would be. Yeah, the higher growth rate, think of it as being our aftermarket growth rate, would have to be in the low double digits, right, rather than the high single digit to double digit range. Okay. Yeah. That is what would be required to get to that number, that bogey in 2026, and that has the full focus of all of our businesses within the company. So, resi, just help us think about one-time costs in guidance for the refrigerant transition this year. As we lap those, how do we think about mixed benefits from our 454B moving towards the, you know, higher percentage share of demand next year versus this year and closer to 100% over time? Sure, I'll take that. We've not called out any one-time costs. Clearly, there are development costs that have been taking place over time. That's just part of our business as usual, and so I would not think of that as something that is a significant driver of our results this year. We talked about the fact that in the first quarter, we delivered our first unit for R-454B. We obviously would expect it to grow as a percentage as we go through the year. We talked back in February about it being about 20% of our volume this year. And on our last call, we said it might be a little bit less than that. It's all gonna depend on exactly how the distributors, our distributor customers want to load, as we go towards the end of the year. They are mixed between 410A and 454B. And then, depending on how much we've produced, will obviously dictate how much we we actually are still shipping next year in terms of, 410A. But we've talked about the 15%-20% over two-year mix-up, which we're still comfortable with, with that. That, that includes two annual price increases, plus the increase cost for the units as well. Very, very helpful and clear. Thanks, Sam. Do you have any timeline around expectations for EPA clarity on components? And how would the ways those scenarios play out potentially affect Carrier and the industry? I mean, certainly there is, you know, as part of the change in the refrigerant, there was something we all called the loophole. We and other members of the industry have been in conversations with the EPA about how to close that in terms of making it where you can't just change every outdoor unit that's a R-410A. The DOE has made it more difficult by clarifying the minimum requirements for the combined efficiency levels of the outdoor and indoor units, you can't just change any of them. But we in the industry are working with the EPA to get that clarified, and we'll see when that comes. Maybe last question around resi. You know, there, there's been, I think, a lot of discussion of repair/replace dynamics, but not a lot of clarity for investors. So when you look at key indicators, you know, the age of the installed base, efficiency and cost improvements, interest rates, et cetera, you know, how do you view resi replacement demand dynamics versus repair over the next, say, couple of years? And what do you see as the true baseline for unit demand? I mean, I don't know that we're gonna get into that kind of detail. I would just say it is not as simple as taking deliveries from a certain number of years ago and assuming that, on average, they fail. We have a much wider way to look at that in terms of the actual age of units, and it's much more of a distribution in terms of when units are typically replaced. But I would say we've not seen a significant near-term trend or change in terms of the repair versus replace dynamic. No. Yep. Right. Very helpful. You know, with all going on, gentlemen, we appreciate you spending time with us. We're looking forward to seeing you, you know, transform and perform. Certainly, anyone who has additional questions can feel free to get in touch with us. You can email me at noah.k@opco.com. Hope everyone has a great conference over the next several days. Thank you, and have a good afternoon. Thanks for having us, Noah. Thank you.