Carrier execs confident in residential market despite regulatory uncertainty

At a conference in London on Thursday, Carrier’s CEO and CFO discussed the residential HVAC landscape, President Trump’s fluctuating tariff policies, the EPA’s recent “reconsideration” of a refrigerant rule, and more. 

Some highlights from their conversation, per a transcript obtained by Homepros: 

On the residential landscape: While CEO David Gitlin previously forecasted residential unit volumes to be “flat to down low single-digits” this year, his outlook has changed. “We expect a little bit of volume growth,” Gitlin said last week.

• “Movement was quite strong in January,” he continued. “We [expected] double-digit growth in residential in the first quarter, and [it’s] looking like the number will come in a bit higher.”
• When questioned about consumer preference toward repairs over replacements, Gitlin responded, “We really do not see this shift. If there is some pressure on the lower-end consumer, you’re going to see [it], but we have not seen any trends around that.”

On the refrigerant transition: The EPA on March 12 announced that it’s “reconsidering” several regulations, including one affecting the industry’s refrigerant transition. While it’s created a hint of uncertainty, Gitlin remains unfazed. 

• “The idea of switching back to something like 410A… would create a whole bunch of costs in the system, because our manufacturing lines have switched over, and those costs would need to go somewhere,” he explained. 
• “Not only would it be a step back for the environment, it’d be a step back for the homeowner… We’re confident that as we and our peers have discussions [with the administration], there will not be a rollback.”

On tariffs: Since Carrier’s February earnings call, the President has implemented a 25 percent tariff on steel and aluminum imports from all countries, and delayed tariffs on HVAC products from Canada and Mexico until April 2. 

• “I think all the tariffs that have been announced are manageable,” said CFO Patrick Goris. However, “Mexico would be different,” he added. “The good thing is the exemption… [and] we feel good the way it is today.”
• “If that exemption is no longer there, that would be a challenge for us. But we’ve been very clear about our playbook… Some of these price increases have already been announced, meaning our partners know that [they’ll] come if tariffs go into effect on April 2.”

On A2L: “We should be done shipping 410A by the end of this quarter,” Gitlin noted, adding that Carrier expects to ship a “fair amount” of 454B heading into the second quarter.

• “We were deciding how much 410A to ship to our distributors last year — we looked at movement and inventory levels — and we [tried] to save some for the first quarter of this year,” he elaborated.
• “I think some of our peers are shipping a little bit more 410A than [us]. We purposely wanted to shift to 454B as soon as we could… We expect [movement] to slow in March because some of our peers are shipping more, [but] as soon as that transition happens, we’ll pick up again with 454B.”

On federal incentives: Following President Trump’s January 20 executive order halting the disbursement of funds under the Inflation Reduction Act (IRA), five states have suspended or delayed their HVAC rebate programs. 

• Meanwhile, as Congress works on a $5 trillion tax bill, discussions have included potentially removing a consumer tax credit for qualified HVAC installs. 
• “The reality is we have not seen a material benefit [from those incentives],” Gitlin admitted. “We’re just on the cusp of getting our dealers to really educate homeowners on the opportunities. But we’re hopeful those provisions in the IRA stick, as we think [they] could have a meaningful impact on the consumer.”