JPMorgan’s HVAC ace on unit volumes, pricing dynamics, and the road ahead

When America’s publicly traded HVAC companies — Carrier, Lennox, Watsco, and others — host quarterly earnings calls, a small group of analysts from select banks and research firms press executives on performance, trends, and expectations to make sense of what’s happening across the industry. 

One of them is Steve Tusa, a managing director at JPMorgan who has spent over 25 years at the firm and is regarded as one of Wall Street’s top HVAC voices. 

Given the industry’s rollercoaster of a past five years — from Covid and the A2L transition to a new administration and cautious consumers — Homepros caught up with Tusa for a candid conversation about the demand picture, affordability pressures, and a shifting competitive landscape.

Below is our conversation, lightly edited for clarity.

Shipment volumes have whipsawed over the past several years: A ‘pull-forward’ during Covid, a drop-off, a rebound due to A2L, and then another decline in 2025. How much of what happened last year is distortion due to all of that versus actual end-demand weakness?

There are a couple of layers to that. If it were all [because of] pre-buy at the distributor level, then you would have seen Watsco and distributor sales stay strong and decouple from the AHRI data. 

The AHRI data was certainly down more in the second half of 2025, probably by 10 percent. But unit volumes for Watsco were also down on the year, like 15 to 20 percent. The point being that most in the industry agree there was a bit of a change in behavior at the consumer level as well — more repair than normal amidst a tough macro environment.

Combined A/C and heat pump shipments, specifically, fell 20% year-over-year in 2025, and Carrier forecasts a 10 to 15% decline from that level this year. But what about the others?

Both Trane and Lennox have called the industry down mid-single digits on a unit basis [this year]. Keep in mind, Lennox is 70 percent sell-through [direct to contractor], so they’re more like a Watsco/distributor and see less inventory-related volatility than Carrier sees, because they don’t have as much of a distribution buffer between them and the contractor. Carrier missed [expectations] last year, so I think they’re just being a bit more conservative on the industry.

Where does Daikin fit into all of this? 

When everybody was buying R-410A in late 2024, Daikin shifted early to R-32 — they lost [market] share in 2024 because they didn’t participate in the pre-buy.

But when they came into 2025, they had a product that was already a bit more mature in the channel. They regained that share over the course of the year. That’s how they’re differentiated versus the market. 

They’re much more smoothed out after the share loss… [and they’re] still down year over year, but they’re calling the market basically down low single digits on a unit basis this year.

Housing weakness and consumer uncertainty are commonly mentioned as factors that have played into what’s happened recently. But there are mixed views on how those might trend this year. What are you seeing from all the data you look at?

I don’t really see the consumer getting that much better. I don’t see rates moving that much here, and so affordability is still an issue. My macro lens says it’s going to be tough for that to change much. But I don’t think these groups [OEMs, distributors] are counting on that. I think they’re going into this year being realistic about things.

How would you describe the current dynamic between the contractor and the OEM regarding pricing? They both need to make money, but they also need to sell. 

Despite recent consolidation, which has given some contractors more negotiating power, there’s still a more fragmented [contractor] base than the OEMs, so the OEMs continue to have a good degree of pricing power. Contractors also have all the incentive in the world to do a bigger ticket replacement, even if that means they have to push price through. 

But I think when they’re getting to the kitchen table and discussing options for the consumer, more often than they had in the past, they’re hearing about a bit of sticker shock from all of the cumulative price increases, and so it’s like feedback up the chain that starts at the kitchen table.

The contractor goes back to the distributor, kind of scratching their head about how this would have been a nice sale, but now they’re doing a motor repair, which won’t make any sense two years from now, but it’s the option their customer chose. I think if enough of that feedback gets up the chain, then the OEMs have to react to some degree.

I believe the industry’s competitive structure is also a bit more challenged for the traditional U.S. OEMs. Not only do you have Bosch coming in and trying to reinvigorate the York brand, and bringing their own technology in, but you also have the emergence of the side-discharge hybrid ducted product, which I believe will continue to grow and take an incremental share of the industry, where the publicly traded U.S. OEMs are disadvantaged.

How are the OEMs looking at price increases for this year, in particular?

They’ve all put through pricing increases for this year on a headline basis. They’re significantly less than they were during Covid and nowhere near what the price-mix benefits were last year for the transition.

Carrier is guiding very low single-digits. Lennox is guiding three [percent]. Trane is guiding one percent-plus. So they’re out. But I think there’s trepidation and less confidence in getting those numbers this year. And while we’re not hearing about negative price, the net capture is likely lower than in the past.

All things considered, gimme an open-ended ‘crystal ball take’ for the rest of this year.

A bit of a down year on volumes. I don’t think it’s down 10 to 15%, but I think it’s down kind of like Lennox and Trane are talking about. 

Also, with a more consolidated contractor customer, and new entrants like Bosch, and new replacement alternatives like the side discharge, inverter-based, hybrid ducted product, the competitive environment is hardly status quo. Then I kind of watch the price dynamics on that front. 

I think the consumer point, too, is interesting — there not being a huge catalyst that you can expect or predict to kind of unlock or sort of shake out a lot of the uncertainty. We’ll see how it plays out.