Carrier, Watsco execs talk industry at California conference

At a Morgan Stanley conference in Laguna Beach, California, this week — a prominent annual event for institutional investors — executives from Carrier and Watsco were interviewed during separate events. 

What’s happening: Leaders of both companies sounded optimistic about the near term.

• Carrier’s residential and light commercial businesses in the Americas are “both expected to be up high single digits this year,” CEO David Gitlin said. “It’s far better this year than we guided. It’s far better than we kind of were thinking internally.”
• Industry shipments totaled 9.2 million units in 2024, then fell to 7.5 million in 2025, he said. “We thought this year would be around six and a half to seven, and it’s going to be seven and a half again.”
• The Florida-based manufacturer will announce the location of a new factory “in either Texas or Alabama in the next few weeks. That new site doubles the capacity that we already have,” Gitlin added. 

Yes, and: Watsco executives suggested there’s lots of room to grow through new technologies — its SupplySync platform will help manage inventories and meet demand — and acquisitions. 

• EVP Barry Logan noted that the company has a network of 700 locations, “and then we’re still not in 10 states; we’re still not representative of all brands in the market.” 
• “I think the aperture for M&A and the opportunity for partnering with more terrific businesses — it’s as great today as it was 10 years ago, 20 years ago,” said VP Rick Gomez.
• Watsco holds roughly 10 percent of the industry, which has about $75 billion of total addressable market, he added. “If you just look at traditional residential unitary shipments, we are 18 to 20 percent of the market.”

Zoom out: “We exited last year and began this year with a little bit of humility and modesty about where the industry was. And we said exiting our first quarter that things appeared to be getting better. We said exiting our second quarter that things appeared to be more stable,” Gomez said. 

• “And we can say today that trend has continued, and that the selling season has, I think, given us more confidence, not less confidence, on the trajectory of the industry,” he added.         
• “I think all else equal, we feel better about the state of the industry today, the state of the end market than we did certainly to start the year, and it’s been good to see that stability. It’s been good to see what would be more long-term conventional averages in terms of price, volume, and mix. And we’ll see where it takes us. But I think it’s an improved picture relative to three, six, and nine months ago.” 

Between the lines: Carrier plans to continue raising prices. 

• “We had input costs come up this year a little bit more than we anticipated with tariffs on fuel and copper and steel and aluminum, and we’ve been pushing pricing,” Gitlin said. 
• He noted that “we may need to look at additional pricing, out-of-cycle announcements… The good news is that’s a nicer problem to have than when you’re chasing volume down, and we’re going to be in a really good position on growth.”
• Typically in residential, “you get some commodity headwinds, you just raise price,” he added. “Look, back in ‘22, we probably raised price eight percent multiple times over the span of 18, 24 months. We’re not in that world. We can’t raise price eight percent every four months, but we can and will continue to raise price.” 

Looking ahead: Watsco’s Logan said there has been a “liberation of spirit” after getting through the past four or five years, which included both pandemic-related supply chain issues and the A2L transition.  

• “Almost any math you do would tell you that the growth is there for ‘27, and quite good growth,” Gitlin said.