Carrier Residential Sales Fall 12% in First Quarter

Q1 Results 

Setting aside the legal challenge, leadership stated that CSA residential HVAC performed better than expected, but first-quarter sales still declined by double digits. According to CFO Patrick Goris, “Residential sales were down 12%, driven by movement. That is the unit volume from distributors to dealers, which was down 8% in the quarter, and lower field inventories, which were down about 35% year-over-year.” 

Still, the decline was not as severe as initially expected. Gitlin noted the company had anticipated a drop “in the 20% range,” but instead, “it was down more in the 10% to 12% range. So it was a little bit better than we thought.” He added that April started stronger than expected, but the second quarter will ultimately depend on how May and June develop. 

CSA light commercial was a bright spot, up nearly 10%, “driven by share gains in large retail accounts and continued traction from our recently introduced highly efficient hybrid fuel rooftop units,” said Gitlin.  

Sales in the commercial business were up low-single digits, with Goris noting performance was “in line with expectations.” The segment continues to benefit from demand tied to data centers, which management expects will drive more significant growth later in the year. 

Pricing 

Not surprisingly, price increases were a hot topic during the earnings call, but Carrier positioned higher prices as a necessary response to rising input costs. As Gitlin noted, “We are seeing an increase in input costs as a result of new tariffs, fuel, and raw material prices. We expect to offset these headwinds dollar-for-dollar through supply chain actions, cost reduction, and increased pricing. On the latter, we now expect to realize an additional 2 points of pricing globally this year.” 

Goris added that approximately 75% of the pricing actions are tied to tariff-related increases, with the remainder driven by higher fuel and commodity costs. Gitlin noted that these increases were applied broadly across the U.S. residential and light commercial segment, rather than selectively, to avoid disproportionately impacting specific products. These price increases and surcharges went into effect in April. 

While these increases have led to difficult conversations across the channel, Carrier indicated that distributors and dealers largely understand the rationale. “No one likes it,” said Gitlin, but added that partners recognize the need to respond to sudden input cost increases. “We’ll take every action we possibly can to mitigate those costs with supply chain actions. We’re actually doing everything we can to optimize activities in the United States.”  

When asked whether other manufacturers are also raising prices, Gitlin said he had no insight beyond what has been shared publicly.  

“We know that all of us have cost input challenges, and how others react on the pricing side is their call. We do have very good elasticity curves, so we watch that quite carefully.” 

Outlook 

Looking ahead, Carrier reaffirmed its full-year outlook of approximately $22 billion, with flat to low-single-digit organic growth. For the second quarter, revenues are expected to be just below $6 billion. 

Volume recovery in residential HVAC remains uncertain, but early indicators are improving.  

“There is clearly pent-up demand both at a housing level — there’s 4 million too few homes in the United States — and for HVAC replacements, because there was probably a bit of repair over replace last year,” said Gitlin. “So, we think existing home sales will be up in the mid-single-digit range, which would be very important. New home construction is probably flattish.” 

Goris said second-quarter residential HVAC sales are expected to be down in the mid-teens, roughly in line with Q1, with “a similar headwind from mix” carrying over. Light commercial is also expected to decline, down in the mid-single-digit range. 

“Basically, our two most profitable businesses will represent a headwind on margins for CSA in the company in the second quarter of the year, just not as much as it was in Q1,” said Goris. 

As for commercial HVAC sales, Carrier expects to see significant growth in the second half of the year, primarily driven by data centers.  

While the year is off to a good start, Gitlin cautioned that it is still early and macro uncertainty remains.  

“There’s still some stress on the consumer with the high fuel prices,” he said, adding that consumer confidence, inflation, and tariff-related pricing are also concerns. 

“I’m pleased with the start to the year, and we’ll have to see how the next couple of months and the rest of the year play out,” said Gitlin. “But so far so good.”