DEF: Carrier Global Navigates Headwinds, Boosts Data Center Sales

Carrier Global Corporation's 2026 Proxy Statement details resilient 2025 financial performance amid challenging markets, strategic investments in HVAC and data centers, and executive compensation proposals.

Summary

• Net sales for 2025 reached $21.75 billion, reflecting strong performance in global commercial HVAC, aftermarket, and container segments, offsetting softness in residential and light commercial markets.
• Global commercial HVAC sales grew double digits, with the Americas experiencing over 25% growth.
• Global data center sales doubled to approximately $1 billion in 2025 and are expected to grow to $1.5 billion in 2026, with a backlog exceeding $1 billion entering 2026.
• Aftermarket sales grew double digits for the fifth consecutive year.
• Residential and light commercial heat pump sales in Germany increased approximately 35% year-over-year, driven by electrification within Climate Solutions Europe.
• GAAP diluted earnings per share from continuing operations increased 39% year-over-year, primarily due to lower interest and tax expense.
• Adjusted diluted earnings per share increased 1% year-over-year, supported by commercial HVAC growth, productivity, and share repurchases, partially offset by residential and light commercial sales declines and business mix.
• Approximately $3.7 billion was returned to shareowners in 2025 through share repurchases and dividends.
• The Board approved a new $5 billion share repurchase authorization.
• The quarterly dividend was increased to $0.24 per share, a 200% increase since 2020.
• Investments included $625 million in research and development and $392 million in capital expenditures.
• The 2025 Annual Bonus Plan's Company Performance Factor was 39% of target, as overall financial performance fell short of plan targets for Sales, Adjusted Operating Profit, and Free Cash Flow.
• The 2023 Performance Share Units (PSUs) achieved a final performance factor of 71.1% based on EPS CAGR and Relative TSR over the three-year period ending December 31, 2025.

Sentiment

Score: 6

Explanation: StockSavvy.ai views this filing as moderately positive. While the company missed its annual bonus financial targets and faced market headwinds in some segments, strong performance in strategic areas like data centers and commercial HVAC, coupled with significant capital returns to shareholders and ongoing innovation, demonstrates resilience and a clear path for future growth.

Positives

• Achieved net sales of $21.75 billion in 2025, demonstrating resilient financial performance.
• Global commercial HVAC sales grew double digits, with Americas growing over 25%.
• Doubled global data center sales to approximately $1 billion in 2025 and entered 2026 with over $1 billion in backlog, projecting $1.5 billion in 2026 sales.
• Aftermarket sales grew double digits for the fifth consecutive year.
• Residential and light commercial heat pump sales in Germany increased approximately 35% versus the prior year.
• GAAP diluted earnings per share from continuing operations increased 39% year-over-year.
• Returned approximately $3.7 billion to shareowners through dividends and share repurchases.
• Board approved a new $5 billion share repurchase authorization.
• Increased quarterly dividend to $0.24 per share, a 200% increase since 2020.
• Successfully delivered on Viessmann Climate Solutions revenue and cost synergy targets.
• Introduced new sustainable, digitally enabled products like Carrier QuantumLeap data center solution and piloted Carrier Energy residential solution.
• Matured digital offerings with over 70,000 chillers and 220,000 transport refrigeration units connected.
• Ended 2025 with approximately 110,000 chillers on long-term service agreements.

Negatives

• Overall financial performance fell short of plan, and the company did not achieve target goals for Sales, Adjusted Operating Profit, or Free Cash Flow financial metrics under the Annual Bonus Plan.
• Global market softness impacted residential and light commercial segments.
• Refrigerated transportation business experienced weak market conditions.
• Adjusted diluted earnings per share increased only 1% year-over-year, partially offset by residential and light commercial sales declines and business mix.

Risks

• Government actions, including developments in trade policy, imposition of tariffs, and climate regulations.
• Cybersecurity threats and incidents.
• Economic conditions in operating industries and markets, including financial market conditions, inflationary cost pressures, and levels of end-market demand.
• Competitive landscape, including disruptive technologies.
• Human capital management challenges, including talent acquisition, development, and retention.
• Logistics and supply chain disruptions.
• Impact of disruptive events such as natural disasters and pandemics.
• Uncertainty regarding future sales, earnings, cash flow, and other financial performance measures.
• Potential for actual results to differ materially from forward-looking statements due to various factors.

Future Outlook

Carrier Global Corporation expects continued growth in data center sales, projecting approximately $1.5 billion in 2026. The company remains focused on its long-term strategy anchored in product, aftermarket, and systems, with ongoing investments in capabilities, talent, and capital allocation discipline to support sustainable growth. Management anticipates navigating near-term uncertainty while building long-term shareowner value through innovation in climate and energy solutions, including advanced commercial HVAC, liquid cooling, and home energy management systems.

Management Comments

• John J. Greisch, Lead Independent Director: '2025 was a demanding year for Carrier, marked by challenging market conditions across several businesses and regions.'
• John J. Greisch, Lead Independent Director: 'The Board and management remained tightly aligned on Carriers long-term strategy — anchored in product, aftermarket and systems — and on the actions required to strengthen performance through cycles.'
• John J. Greisch, Lead Independent Director: 'The Board believes Carrier enters the next phase of its journey better positioned to navigate near-term uncertainty, while continuing to build long-term value for shareowners.'
• John J. Greisch, Lead Independent Director: 'The Board partnered closely with management throughout 2025 on key areas of emerging risk and opportunity, with artificial intelligence serving as a notable example.'

Industry Context

StockSavvy.ai notes that Carrier's strategic focus on intelligent climate and energy solutions aligns with broader industry megatrends such as urbanization, population growth, food security, electrification, increasing demand for climate control, and accelerated digitalization. The significant growth in data center sales and investment in liquid cooling solutions positions Carrier well within the rapidly expanding digital infrastructure market. The company's emphasis on heat pump sales in Europe also reflects the global push towards electrification and sustainable heating solutions, a trend seen across competitors like Trane Technologies and Johnson Controls. While residential and light commercial markets faced headwinds, Carrier's strong performance in commercial HVAC and aftermarket services demonstrates resilience in segments less susceptible to short-term economic fluctuations, mirroring diversified strategies adopted by other industrial conglomerates.

Comparison to Industry Standards

• Carrier's 2025 net sales of $21.75 billion place it among the larger players in the industrial and climate solutions sector, comparable to companies within its Compensation Peer Group such as Eaton Corporation plc ($23.2 billion revenue) and Honeywell International Inc. ($36.7 billion revenue), though smaller than Caterpillar Inc. ($67.1 billion revenue).
• The doubling of global data center sales to $1 billion and projected growth to $1.5 billion in 2026 indicates strong competitive positioning in a high-growth niche, potentially outpacing general market growth rates for traditional HVAC systems.
• The 2025 Annual Bonus Plan's Company Performance Factor of 39% of target, due to missed financial goals, suggests underperformance relative to internal expectations, which could be a concern when compared to peers who may have met or exceeded their targets in similar challenging environments.
• The 2023 PSUs achieving 71.1% of target, based on EPS CAGR and Relative TSR, indicates a mixed performance against long-term goals and a subset of the S&P 500 Industrials Index, suggesting that while some performance was achieved, it was not at the highest tier compared to the benchmark group.

Management Changes

Corporate Governance

Related Party Transactions

• Carrier acquired Viessmann Climate Solutions on January 2, 2024, making Viessmann Generations Group a related party due to Max Viessmann's role as a director and controlling stockholder.
• Payments to Viessmann Generations Group amounted to approximately $18.4 million from the beginning of the last fiscal year until February 1, 2026, related to various agreements.
• An Investor Rights Agreement grants Viessmann Generations Group the right to nominate one Board member for 10 years and includes voting, standstill, lockup, and transfer restrictions.
• A License Agreement grants Carrier an exclusive, worldwide license to use Viessmann trademarks for an annual royalty of 12 million euros for the first five years, then based on net sales.
• A Transitional Services Agreement outlines interim services provided between Carrier and Viessmann Generations Group for agreed-upon charges.
• Other agreements include framework agreements, lease agreements, and a paying agent agreement for Viessmann Generations Group employees.
• On June 5, 2025, Carrier repurchased 4,267,425 shares of its common stock from Viessmann Traeger HoldCo GmbH (an entity controlled by Mr. Viessmann) for $300 million, at a 1.5406% discount from the closing price.

Stakeholder Impact

• Shareholders: Benefited from approximately $3.7 billion in capital returns (dividends and share repurchases) and a new $5 billion share repurchase authorization. Will vote on key governance matters and executive compensation.
• Employees: Compensation programs are designed to attract and retain talent, with a focus on long-term performance. Employee engagement surveys (Pulse) are conducted three times per year. Clawback provisions apply to executives for misconduct.
• Customers: Benefit from continued innovation in sustainable, digitally-enabled climate and energy solutions, including new data center and home energy management offerings.
• Suppliers: Impacted by Carrier's global operations and supply chain management, with a focus on efficiency and risk mitigation.
• Communities: Carrier supports organizations promoting well-being of the planet, people, and communities, and engages in public policy advocacy.

Next Steps

• Shareowners to vote on the election of 10 director nominees at the 2026 Annual Meeting.
• Shareowners to cast an advisory vote to approve Named Executive Officer (NEO) compensation.
• Shareowners to ratify the appointment of PricewaterhouseCoopers LLP as the independent auditor for 2026.
• The Board and management will continue to execute the long-term strategy anchored in product, aftermarket, and systems.
• Ongoing investment in capabilities, talent, and capital allocation discipline to support sustainable growth.
• Continued evaluation of compensation programs based on shareowner feedback from the say-on-pay vote.
• The next say-on-pay vote will occur at the 2027 Annual Meeting of Shareowners.

Key Dates

Recommendation

The filing presents a mixed picture for Carrier Global Corporation. While the company demonstrated strong performance in key strategic areas like commercial HVAC and data centers, and returned significant capital to shareholders, it also explicitly stated that overall financial performance fell short of annual bonus plan targets due to market headwinds in residential and light commercial segments. The strategic transformation and innovation efforts are positive long-term drivers, but the immediate financial results indicate challenges. A 'hold' recommendation reflects the balance between these strategic positives and the near-term operational and financial underperformance against internal goals, suggesting investors should maintain their current positions while monitoring the execution of the long-term strategy and market recovery in softer segments.

Keywords

HVAC, Climate Solutions, Energy Solutions, Data Centers, Cold Chain, SEC Filing, Proxy Statement, Executive Compensation, Corporate Governance, Share Repurchase, Dividends, Viessmann, Sustainability, Electrification, Digitalization, Risk Management