Carrier Global (NYSE:CARR) raised its full-year 2026 sales, operating profit and earnings-per-share outlook after reporting stronger-than-expected second-quarter results, supported by a sharp increase in orders, record backlog and improving demand in residential and light commercial HVAC markets.
Chairman and Chief Executive Officer David Gitlin said second-quarter orders increased about 40% from a year earlier, led by roughly 65% growth in commercial HVAC orders. Data center orders rose fourfold year over year, helping lift the company’s backlog above $8 billion, up about 40% from the prior year and 20% sequentially. The backlog excludes orders Carrier expects under long-term agreements with hyperscalers and colocation providers.
Second-Quarter Results and Updated Outlook
Carrier reported second-quarter sales of $6.4 billion, adjusted operating profit of $1.1 billion and adjusted earnings per share of $0.86. Organic sales increased 3%, while adjusted operating margin was 17.2%, slightly above the company’s expectations. Free cash flow totaled $810 million during the quarter.
Chief Financial Officer Patrick Gorris said organic growth reflected improving residential and light commercial end markets in the Americas and Europe. Adjusted EPS declined 7% from a year earlier, however, due to lower operating profit and a higher effective tax rate, partly offset by a lower share count.
For 2026, Carrier now expects:
- Sales of roughly $23 billion.
- Organic sales growth in the mid- to high-single-digit range.
- Adjusted operating profit of about $3.5 billion, up from a prior outlook of $3.4 billion.
- Adjusted EPS of about $2.90, compared with previous guidance of $2.80.
- Data center revenue of approximately $2 billion, versus its prior forecast of $1.5 billion.
- Capital expenditures of about $600 million, including approximately $100 million of additional spending tied to a new U.S. facility.
The updated outlook includes an estimated $125 million year-over-year revenue headwind from the planned exit of NORESCO. Carrier also said it expects share repurchases to remain at $1.5 billion for the year.
For the third quarter, Carrier forecast revenue just below $6 billion, including an approximately $200 million year-over-year effect from the Riello and NORESCO divestitures. The company expects about 10% organic growth, an operating margin of roughly 16.5% and adjusted EPS of about $0.75.
Data Center Demand Drives Capacity Expansion
Carrier increased its 2026 data center sales outlook to about $2 billion, which Gitlin said would mark the company’s second consecutive year of doubling sales in the vertical. About $500 million of data center revenue was recognized in the first half, with the remaining $1.5 billion expected in the second half.
Gitlin said Carrier’s data center sales forecast for 2026 is fully supported by backlog. The company is working with hyperscalers and colocation customers to build backlog for 2027 and beyond, while expanding capacity to address demand.
Carrier has announced a new facility in India and is finalizing plans for a new U.S. site, with Texas and Alabama under consideration. The U.S. facility is expected to begin operating by the end of the first quarter, according to Gitlin. It is expected to manufacture air-cooled and water-cooled chillers and include some vertical integration, including compressors.
Gitlin said Carrier’s existing capacity could support a data center revenue run rate of about $2.5 billion, but additional capacity is needed for expected demand in 2027 and later years. He said the company is designing its production lines and product portfolio to be applicable to non-data-center commercial uses as well.
Gorris said commercial operations account for about two-thirds to 70% of Carrier’s total backlog, and data centers represent 40% of commercial backlog.
Residential Recovery and European Heat Pump Growth
Carrier’s Climate Solutions Americas residential business posted 9% sales growth in the second quarter, while CSA light commercial sales increased 10%. The company now expects CSA residential sales growth in the high-single-digit range for the full year.
Gitlin said Carrier expects the North American residential HVAC market to total approximately 7 million to 7.5 million units this year, largely stable with 2025. Field inventories ended the second quarter down about 25% from a year earlier. Carrier expects second-half residential sales to increase about 20%, aided by the absence of prior-year destocking, mid-single-digit shipment growth and mid-single-digit pricing.
In Europe, residential sales increased by high single digits, with heat pump sales up about 20% and boiler sales down by high single digits. Gitlin cited high natural-gas prices and Germany’s continued subsidies as favorable market factors. Carrier plans to formally launch its Viessmann-branded Vitocal 200 heat pump in the fall, positioning it as a secondary offering in Germany and a primary offering in most other European markets.
European commercial sales were below expectations in the first half, but Carrier reported approximately 20% order growth in the second quarter and said it expects commercial sales in the region to rise by mid-single digits in the second half.
Margins, Portfolio Changes and Building Automation
Carrier said segment margins in Europe were disappointing, despite benefits from improving volume and price-cost trends. Unfavorable mix and selling investments offset those gains. Gorris also cited the timing of tariff-mitigation pricing, lower joint-venture income, growth in lower-margin battery and solar products, and a stronger mix of container sales relative to truck-trailer operations.
Gitlin said Thomas Donato, recently appointed president of the European segment, will pursue more aggressive cost reductions and stronger pricing discipline. Carrier is targeting mid-teen operating margins in the segment over the next several years.
The company also continued reshaping its portfolio. It completed the divestiture of Riello and announced the sale of NORESCO. On the acquisition front, Carrier added 75F, a provider of building management system technology focused on small and medium-sized buildings and international markets.
Gitlin said 75F’s cloud-native, AI-enabled and wireless platform expands Carrier’s addressable market by about $20 billion and complements its Automated Logic building management offering, Abound digital platform and Nlyte data center infrastructure management business. He said the technology’s wireless and auto-commissioning capabilities can reduce installation complexity in new construction and retrofit projects.
About Carrier Global (NYSE:CARR)
Carrier Global Corporation is a leading global provider of heating, ventilation and air conditioning (HVAC), refrigeration, fire and security, and building automation solutions. The company designs, manufactures and sells a broad portfolio of products that includes air conditioners, furnaces, heat pumps, chillers, rooftop units, commercial refrigeration systems, fire and smoke detection and suppression systems, security sensors and access controls, and a range of building controls and analytics software.
