Demand for building products has helped the Carrier Global Corporation survive a tough 2020 and put the company in a strong position for 2021.
Carrier president and CEO, David Gitlin, said there has been a tectonic shift in how business, government and society value the safety of indoor environments.
Gitlin said there has also been a ground swell of focus on sustainability, all of which represent opportunities for Carrier's business now and in the future.
Speaking last month at Carrier's fourth quarter 2020 earnings conference call, he said a big opportunity has been in building automation and control systems.
“Overall, we have over $100 million of orders for healthy building products and services and have a pipeline of more than $200 million,” Gitlin said.
“The next milestone is the release of a new digital solution that we're calling upon that will work with building management systems to provide visibility to indoor air quality and other key healthy building indicators.
“Using machine learning, this solution will connect to building control systems and auto mitigate deficiencies. The overall goal is to work with our customers to give their patrons and tenants confidence to re-enter indoor environments.”
Gitlin said the company will continue to invest in and grow its ALC building automation and controls business, where customers have embraced Carrier’s open architecture solutions.
“About 50 per cent of our 2020 sales in that business came from recently introduced products, and we are complementing that with continued investments in our channel and field network,” he said.
“We met our objective of adding over 500 sales and sales support people, and invested over $400 million in R&D, which allowed us to introduce over 120 new products last year.”
Gitlin said 2020 was both a foundational and transformational year for Carrier.
After its spinoff from United Technologies Corporation (UTC), he said it was clear the organisation had to create a new Carrier.
“We started with our culture and took an intentional and deliberate approach to launching the Carrier Way,” Gitlin said.
“Our culture reinforces our values and is centred around customers, agility, innovation, talent and winning, and the energy level within Carrier is tremendous.
“In addition to culture we have invested in and promoted existing employees, while infusing the team with key outside talent who have brought fresh perspectives and proven leadership.
“From its culture and our growth mindset, we are taking a very disciplined approach to capital allocation. In the span of just nine months we reduced our net debt from about $10 billion to approximately $7 billion and ended the year with over $3 billion of cash.”
This balance sheet improvement now opens the door to bolt-on M&A.
In short, Gitlin said there were no surprises, sales were up two per sent and residential HVAC remained very strong with a 25 per cent year-over-year increase.
There was $453 million of adjusted operating profit putting Carrier in a strong position for 2021.
Asked about the Asia Pacific, Gitlin said economic conditions were still uncertain.
He said the company has been gaining traction in the Asia Pacific region but it is still a market that remains fragile.
“The Asia Pacific was actually showing a bit of strength toward the end of last year for the first time in eight or nine months,” he said.
Gitlin said the company was “pleasantly surprised by some of the traction we started to see in parts of Asia outside of China.”
While China has remained a strong market for Carrier, Gitlin said places like Singapore, Australia and Hong Kong are still a mixed bag for a multitude of reasons.
“It was nice to see progress in Southeast Asia but it is still a watch item,” he said.
“Fourth quarter sales in China were up 10 per cent, orders were up about five per cent and refrigeration was particularly strong where there was an increase of 20 per cent.”