Q3 2024 Carrier Global Corp Earnings Call
Okay.
Speaker Change: Good morning, and welcome to carriers third quarter 'twenty 'twenty four earnings conference call I would like to introduce your host for todays conference Sam Pearlstein, Vice President of Investor Relations and CFO of the fire and security segment. Please go ahead.
Speaker Change: Sir.
Sam Pearlstein: Thank you and good morning, and welcome to carriers third quarter 2024 earnings Conference call with me here today are David <unk>, Chairman and Chief Executive Officer, and Patrick <unk>, Chief Financial Officer, we will be discussing certain non-GAAP measures on this call, which management believes are relevant in assessing the financial performance of the business. These <unk>.
Sam Pearlstein: non-GAAP measures are reconciled to GAAP figures in our earnings presentation, which is available to download from carriers website at IR Doc carrier Dot com.
Sam Pearlstein: The company reminds listeners that the sales earnings and cash flow expectations and any other forward looking statements provided during the call are subject to risks and uncertainties carrier's SEC filings, including forms 10-K, 10-Q and 8-K.
Sam Pearlstein: Provide details on important factors that could cause actual results to differ materially from those anticipated in the forward looking statement before turning the call over to Dave. Please turn to page three and with the commercial and residential fire business is qualifying as held for sale during the third quarter, the fire and security segment in aggregate met the criteria to be.
Sam Pearlstein: And it is discontinued operations historical sales margins and earnings per share in the appendix on page 27, and 28% held for comparisons to help you interpret the results continuing operations includes the HVAC segment, the refrigeration segment, including commercial refrigeration and the corporate expenses and eliminations guidance now.
Sam Pearlstein: <unk> the corporate expenses that were previously allocated to the fire and security segment as well as the controls business that was part of the fire and security segment results discussed on this call will be continuing operations only with the exception of preliminary free cash flow unless stated otherwise once the call is open for questions. We ask that you limit yourself to one question.
Sam Pearlstein: And one follow up and with that I'd turn I'd like to turn the call over to our chairman and CEO, Dave Gitlin, well. Thank you Sam and let me start by saying a heartfelt. Thanks to you for everything that you have done for carrier over the past five years, we wish you the best as the CFO of the commercial and residential fire business I'd also like to welcome Mike <unk>, who will succeed.
Sam Pearlstein: Sam enjoying carrier on November 4th.
Sam Pearlstein: Our team continues to perform while we put the finishing touches on our transformation.
Sam Pearlstein: Organic orders were up 20% about 20% compared to last year, and we continue to increase our backlog.
Sam Pearlstein: Positioning us for continued growth as we head into 2025.
Sam Pearlstein: The team drove 4% organic sales growth by leaning into verticals of strength to help offset continued headwinds in residential and light commercial HVAC in Europe and China.
Sam Pearlstein: Importantly, we delivered double digit aftermarket growth and we are on a path for our fourth year in a row of double digit growth.
Sam Pearlstein: Sales growth combined with productivity drove very strong core earnings conversion of about 40%.
Sam Pearlstein: We repurchased roughly $400 million worth of shares in Q3, and with our new re authorization, we expect to repurchase approximately $5 billion worth of shares between the second half of this year and the end of next year.
Sam Pearlstein: We had said that we wanted 2025 to be a clean year. We are on track to do just that we closed on the sale of the commercial refrigeration business on October one and we are on track to close on our final divestiture commercial and residential fire by year end in.
Sam Pearlstein: In addition to completing our portfolio moves we have reached settlement subject to court approvals that we're confident will largely put the inherited a triple a potential exposure behind us.
Sam Pearlstein: We are pleased with the outcome, which Patrick will discuss in more detail.
Sam Pearlstein: Turning to slide five our vision remains unwavering to be the global leader in intelligent climate and energy solutions.
Sam Pearlstein: Leadership entails winning and winning the right way through differentiation and customer solutions.
Sam Pearlstein: We have gained share in nearly every business and commercial HVAC, we are achieving outsized growth in key verticals, including data centers de carbonization related infrastructure spend and Mega projects. For example, we had a recent win for a new semiconductor fab facility on the West coast of the United States and data centers are orders year to date are up more.
Sam Pearlstein: <unk> three X and we expect continued momentum.
Sam Pearlstein: Data center equipment growth will drive aftermarket growth, where there is a five to 10 X multiplier opportunity versus the installed base over time.
Sam Pearlstein: Our commercial HVAC business is far better positioned now than it has ever been.
Sam Pearlstein: Everything connected everything intelligent in Q3, we connected an additional 5000, new chillers in the field and are on track for 50000 connected chillers by year end.
Sam Pearlstein: We also continue to expand our overall number of connected devices and offerings for our abound and links digital platforms.
Sam Pearlstein: Climate is at our core as a company we achieved the U S Department of Energy's Cold climate heap pump challenged by validating that our infinity variable speed heat pumps with green speed intelligence can operate in the field at 100% capacity at zero degrees Fahrenheit and reliably at negative 13 degrees Fahrenheit.
Sam Pearlstein: We also introduced a new version of the vector trailer refrigeration unit, which will reduce <unk> emissions by 73%, while maintaining best in class performance.
Sam Pearlstein: With our increased investments in expanded HVAC portfolio. We are now running a year or two ahead of our goal to reduce our customers'.
Sam Pearlstein: Our carbon emissions by one gigaton by 2030.
Sam Pearlstein: On energy, we are focused on introducing complete home energy management solutions in Europe, we remain confident in the sustained transition from boilers to heat pumps, where we see a mix a factor of more than three to one.
Sam Pearlstein: Adding integrated solar PV and battery can more than double the mix up factor.
Sam Pearlstein: In North America, we are making great progress working with major utilities validating that our technology can help them manage peak hour demand, which would also result in savings for our customers, we will be introducing pilots into the field. This next year.
Sam Pearlstein: And finally on solutions, our aftermarket growth formula continues to yield results.
Sam Pearlstein: Coverage for our Chillers is about 75000 units and we remain on track for more than 80000 by the end of this year.
Sam Pearlstein: Our aftermarket playbook continues to gain traction across the portfolio.
Sam Pearlstein: As we look ahead. There is no question that we are a new carrier as you can see on slide six.
Sam Pearlstein: Just the four years since our spin our HVAC business revenues will have nearly doubled from $10 billion in 2020, we.
Sam Pearlstein: We are focused and simpler and now positioned as a higher growth profile company with our complete portfolio exposed to sustainability related secular tailwind in.
Sam Pearlstein: In addition, we have leading positions in all of our targeted HVAC our markets globally to help us drive consistent profitable growth through geographic and vertical cycles.
Sam Pearlstein: Turning to slide seven.
Sam Pearlstein: I am very excited about the benefits that focus will bring since our spin we have made great progress on culture talent, winning innovation customer centricity growth and margin expansion. We have done this while navigating COVID-19 supply chain challenges and a significant portfolio transformation.
With that behind Us our portfolio going forward are clear laser focus on our customers and share and margin gains in our core businesses double digit aftermarket growth complete ecosystem solutions for our customers and continued balanced capital deployment I am so excited for 2025 as we can double.
<unk> down and our focus on execution and growth benefiting our customers our people and our shareholders.
Sam Pearlstein: Before I turn it over to Patrick a few words on visa climate solutions on slide eight.
Sam Pearlstein: For the first time this year, we are seeing encouraging market indications.
Sam Pearlstein: The backlog, which was still elevated coming into the year is now back to traditional levels. So this business has returned to being a book and ship business without without with about a month of backlog.
Sam Pearlstein: Orders for much of the year and Germany were constrained in large part because the government declared in February that subsidies would not be paid until October.
Sam Pearlstein: We start orders would start to pick up in Q3, which they did just later in the quarter than we anticipated.
Sam Pearlstein: Therefore, our Q.
Sam Pearlstein: Q3 sales were down about 25% rather than our estimated 20%.
Sam Pearlstein: <unk> and the full year expectation now being down in the high teens, rather than our previous estimate of down in the mid teens.
Sam Pearlstein: Encouragingly.
Sam Pearlstein: Recent trends around orders and subsidy applications have improved.
Sam Pearlstein: He pump subsidy applications in Germany in Q3 were up about 50% sequentially and up <unk> <unk> versus last year.
Sam Pearlstein: BCS orders overall turned positive up low single digits and it was the best quarter in over best orders quarter in over a year orders were up about 10% in September and that strength has continued in October.
More broadly the integration has exceeded our expectations. There are so many obvious and some less obvious benefits to this game changing combination.
Sam Pearlstein: Consider technology development and now having best of the best approaches to scalable global platforms. We are now harmonizing, our electronic control board designs around the <unk> platform.
Sam Pearlstein: Cost per board is projected to decrease significantly and we will also benefit from avoiding duplication across the network supply chain management obsolescence managing management and quality.
Sam Pearlstein: The same is true for our embedded software, we will be harmonizing standard embedded software for all of our electronics around the <unk>, one based ecosystem, which will shorten time to market and decreased development costs.
Sam Pearlstein: We are also working on implementing best of the best digital connectivity with our customers.
Sam Pearlstein: But revenue synergies, we are targeting over $100 million in revenue synergies next year. These include new carrier cooling and heat pump.
Sam Pearlstein: <unk> through the <unk> channel and a new carrier branded propane heat pump for light commercial applications and.
Sam Pearlstein: And we know we will drive cost synergies, we remain on track for over 200 million in cost synergies in 2026 and of course, we are driving internally to do better than that by controlling the controllable and leveraging this phenomenally differentiated company I am confident that we will together drive tremendous value for decades.
Speaker Change: To come with that I will turn it over to Patrick Patrick.
Patrick Patrick: Thank you, Dave and good morning, everyone I'd like to start by thanking some of my colleagues in the corporate finance team.
Patrick Patrick: So far this year the team has successfully integrated riesman climate solutions financials.
Patrick Patrick: <unk> the accounting for five different exit transactions and more recently <unk>.
Patrick Patrick: Transition to our financial statements back to 2022 to reflect disc ops treatment for the fire and security exits.
Patrick Patrick: Just one of those moving pieces would be a big project. The combination of all of these in less than a year is truly an enormous and complex undertaking so a big thank you to our chief accounting Officer Crockett.
Patrick Patrick: Our tax and Treasury lead Mike <unk>, and our corporate planning and IR leads Gen Costco and Sam Pearlstein as well as their entire teams very much appreciate it.
Patrick Patrick: Please turn to slide nine.
Patrick Patrick: A reminder, that with the exception of preliminary free cash flow all of these results refer to continuing operations reported.
We reported sales of $6 billion were up 21% with organic sales up 4%.
Patrick Patrick: Recent climate solutions contributed 17% to year over year sales growth.
Patrick Patrick: Q3, adjusted operating profit of over $1 billion was up 19% compared to last year driven by the contribution of recent climate solutions, the benefit of organic growth and price and productivity.
Patrick Patrick: Adjusted operating margin was down 40 basis points.
Patrick Patrick: Deconsolidation of Eastman climate solutions represented about 130 basis point headwind to adjusted operating margin in the quarter.
Patrick Patrick: On a year to date basis, adjusted operating margin is up 120 basis points, driven by the benefit of organic growth and strong productivity.
Speaker Change: As Dave already mentioned core earnings conversion that is excluding the impact of acquisitions divestitures and currency was about 40% in the quarter and over 100% year to date.
Speaker Change: Adjusted EPS from continuing operations of <unk> 77 was up 3% year over year, driven by organic growth price and productivity, partly offset by higher net interest expense, a higher tax rate and higher share count.
We have included the year over year adjusted EPS from continuing operations bids in the appendix on slide 22.
Speaker Change: Including the six adjusted.
Speaker Change: Adjusted EPS from discontinued operations overall, adjusted EPS of <unk> 83 was better than our guide by about <unk>.
Speaker Change: Q3 fire and security sales now excluded from our reported results were about $500 million.
Speaker Change: Preliminary free cash flow for the company, which includes the results of both continuing and discontinued operations was an outflow of about $370 million in the quarter.
Speaker Change: This figure includes roughly $1 1 billion of cash taxes on the business exit gains.
Speaker Change: Transaction costs and restructuring costs, resulting in preliminary underlying free cash flow performance in the quarter of about $700 million on a year to date basis preliminary free cash flow is $120 million with preliminary underlying performance of about $1 $4 billion.
Speaker Change: Moving on to the segments, starting on slide 10 <unk>.
Speaker Change: <unk> reported sales growth of 26% reflects organic sales growth of 6% and the contribution of Eastman climate solutions.
Organic sales in the Americas were up high single digits, driven by an almost 20% increase in commercial HVAC and double digit sales growth for residential HVAC.
Speaker Change: Light commercial was down mid single digits.
Speaker Change: Organic sales in EMEA were up low single digits, driven by double digit growth in commercial HVAC, partially offset by a decline in resi and light commercial sales, reflecting continued market weakness in that segment.
Speaker Change: Sales in Asia Pacific were down low single digits, driven by continued weakness in our residential and light commercial markets in China, partially offset by continued strength in the rest of Asia.
Speaker Change: The HVAC segment operating margins were down 100 basis points as we expected.
Speaker Change: The benefit of organic growth and productivity.
Speaker Change: Offset by the consolidation of Vcs, which represented about a 200 basis point margin headwinds in the quarter.
Speaker Change: Overall, another solid quarter for HVAC.
Transitioning to refrigeration on slide 11.
Speaker Change: A reminder, that commercial refrigeration results are included in continuing operations as they do not qualify for disc ops treatment.
Reported and organic sales were up 1% transport refrigeration was up 3% within transport.
Speaker Change: <unk> was up 30% year over year, while global truck and trailer was down mid single digits, driven by North America truck and thriller which was down over 15% Euro.
Speaker Change: European truck and trailer was down low single digits, while Asia truck and trailer continues to perform very well with about 20% growth.
Speaker Change: Our sense of Tech business was up double digits commercial refrigeration was down low single digits Q3 is the last quarter to include the commercial refrigeration business as we close the sale transaction on October one.
Speaker Change: Through three quarters commercial refrigeration sales were at about $750 million with immaterial adjusted operating profit contribution.
Speaker Change: Adjusted operating margin for this segment expanded 50 basis points compared to last year driven by productivity.
Speaker Change: Turning to slide 12 for orders.
Speaker Change: Indians in the interest of time I'll just mention a few highlights.
Speaker Change: Total company orders were up close to 20% on an organic basis.
Speaker Change: North America Resi HVAC orders were up 30% year over year and reason and recent movement has been stronger than we expected.
Speaker Change: We're not counting on any material <unk> pre buy this year.
Speaker Change: We see continued strength in global commercial HVAC with orders up about 15%.
Speaker Change: Data centers remain particularly strong and.
Speaker Change: And global truck and trailer orders are up 85% held by very easy compare.
Speaker Change: Turning to slide 13 guidance.
Speaker Change: Our guidance for 2024 now reflects continuing operations with the exception of free cash flow.
Speaker Change: There are a few moving pieces put our new adjusted EPS guidance is essentially unchanged compared to the July adjusted EPS guide, except for the impact of discontinued operations.
Speaker Change: We now expect reported full year sales of roughly $22 5 billion compared to the prior guide that included fire and security with underlying organic growth of about 3%.
Speaker Change: Our adjusted operating margin guidance remains roughly 15, 5% up 150 basis points year over year, and we continue to expect full year core earnings conversion to be well north of 50%.
Speaker Change: Our guide for adjusted EPS of continuing operations is now about $2 50.
Speaker Change: As I mentioned earlier, the change versus our July guide of $2 85.
Speaker Change: It's all related to the transition to disc ops treatment of the fire and security exits.
Speaker Change: In the appendix we have included a guide to guide bridge on Slide 23, as well as on Slide 24, our bridge from what we called core adjusted EPS due to $2 50 guide of continuing operations.
Speaker Change: As you will recall, we estimated earlier this year that 2020 for full year adjusted EPS of the businesses, we are retaining would amount to $2 60.
Speaker Change: As you will see on the bridge the difference between the $2 60, and the $2 50, adjusted EPS is all related to disc ops and more specifically the treatment of costs previously allocated to the fire and security segments and net interest expense in disc ops accounting.
Speaker Change: As I mentioned earlier commercial refrigeration has an immaterial adjusted EPS contribution in 2024, hence it is not included on the bridge.
Speaker Change: Our free cash flow outlook is now an outflow of $200 million versus an inflow of $400 million in the July guidance, reflecting about $600 million of cash tax payments related to the business exit of commercial and residential fire.
Speaker Change: This was not in our July guide given timing of the definitive agreement.
Speaker Change: Our underlying free cash flow outlook remains about $2 4 billion.
Speaker Change: And we now expect capital expenditures about of about $500 million.
Speaker Change: And cash restructuring closer to $150 million.
Speaker Change: From a capital structure perspective, we expect to be at about two <unk> net leverage at the end of the calendar year consistent with the commitment we made earlier in the year.
Speaker Change: In the appendix on Slide 26, there is a summary of additional items, which were also updated as part of the New guide.
Speaker Change: Moving on to slide 14, while we plan to issue 2025, adjusted EPS guidance. When we report earnings in early February I want to update you on some of the building blocks.
Speaker Change: Starting with our current 2024 guide of $2 50, a adjusted EPS.
Speaker Change: Consistent with our value creation framework, we expect double we expect to deliver double digit adjusted EPS growth from organic revenue growth.
Speaker Change: In addition to that we expect tailwind from the elimination of costs previously allocated to the fire and security segment.
As Sam mentioned these costs are included in the $2 50, adjusted EPS of continuing ops.
Speaker Change: We started addressing these costs at the very beginning of calendar 2024, and we will have eliminated about $200 million of run rate cost throughout 2024 with some residual benefit in 2025 IC you can see on this slide.
Speaker Change: Moving on to an expected tailwind from lower net interest expense.
Speaker Change: Pay down throughout 2024 means that 2025 net interest expense is expected to be a five to 10 cents tailwind.
Finally, we expect second half 2024, and 2025 share repurchases to amount to about $5 billion, eliminating the dilution from shares issued from the Vcs acquisition by the end of 2025.
Speaker Change: In short given these building blocks, we expect to have another year of strong adjusted EPS growth in 2025 from.
Speaker Change: From a capital deployment perspective, we expect to continue to target a growing and sustainable dividend representing about a 30% payout.
Speaker Change: We also expect to pay down the $1 2 billion maturity early next year, and refinanced $750 million euro debt tranche subject to market conditions.
Speaker Change: Moving on to slide 15.
At the end of last week, we announced important settlements related to a triple F.
Speaker Change: Let me start with our state claims or claims that care is responsible responsible for any liabilities of <unk>, including all those related to the manufacturer or sale of a triple left.
Speaker Change: Upon court approval.
Speaker Change: This settlement will permanently resolve all such and such present and future claims with a water personal injury airport or anyone else.
Speaker Change: Moving on to direct claims or claims for Utc's actions between 2005 and 2013 when its own the a triple that business.
Speaker Change: We believe the settlement will resolve substantially all current and future eight triple left related claims by public water providers and airports.
Speaker Change: We also believe that any potential remaining claims lack merit.
Speaker Change: Cash settlement payments amount to $615 million, which we estimate will be paid over time as you can see on the slide.
Importantly.
Speaker Change: We expect instruments payments received in the aggregate will cover the full amounts paid by carrier under the settlements. The timing is not expected to match the timing of flows in.
Speaker Change: In the early years the.
Speaker Change: The settlement enabled enables carrier to receive up to $2 $4 billion from shared insurance recoveries.
In addition to the $650 million of cash payments. The settlement also provides.
Speaker Change: That the KFI net sales proceeds of $115 million or contributed.
Speaker Change: This is a noncash item for carrier as is the 120 $125 million contribution from insurance recovery.
Speaker Change: The settlements will not impact our capital deployment plans, including dividends and share repurchases.
Speaker Change: In short we had another good quarter transformation is substantially behind us and we are optimistic about 2025 and beyond with that we'll open it up for questions.
Speaker Change: Thank you to ask a question. Please press star one on your telephone and wait for your name to be announced.
Speaker Change: Your question. Please press star one one again standby, while we compile the Q&A roster.
Speaker Change: And our first question comes from Jeff Sprague with vertical Research partners. Your line is now open Sir.
Jeff Sprague: Alright, Thank you and good morning, everyone.
Jeff Sprague: Good morning, Patrick I don't know, what you're going to do with all your spare time now you've got all the stars and the finance team there but.
Speaker Change: Hey, Dave on this then obviously, it's been a sort of a moving target here trying to find the bottom that looks and feels like we're likely there, but can you share your view on.
Speaker Change: What the bottoming process and turn might look like and give us some indication of how you are expecting things to kind of correct.
Speaker Change: Travel.
Speaker Change: Revenue standpoint into 2025.
Dave Gitlin: Yes, Jeff it's been there have been a lot of a lot of moving parts I feel that with Thomas and the team were in a rhythm now of looking and they have been throughout but we look together.
Dave Gitlin: At weekly orders, it's really orders translate into sales almost overnight. So we're looking at all the underlying factors and they seemed to have now been solid I mentioned that September orders were quite strong they were up about 10% orders so far it's only been.
Dave Gitlin: Two or three weeks here in October, but so far this month, they've been even stronger than that so it feels like we've seen some level of turning now we are of course entering the season.
Dave Gitlin: And throughout Europe, and in Germany in particular, they are starting to now pay the subsidies so that could be contributing we obviously don't feel confident enough that we can call a bottom, but when we look at subsidy applications over the last three months in Germany. We look at the orders that we've been seeing not only in Germany, but throughout Vcs. It does feel like we've turned a corner.
Speaker Change: And then just shifting completely to the pre buy question.
Speaker Change: Either you or Patrick said, Youre, not expecting a pre buy it sounds like what is happening in real time.
Speaker Change: So maybe just.
Speaker Change: Elaborate on that and do you have the.
Speaker Change: Capacity to meet the demand for <unk> pre buy if if youre getting that impulse from the channel.
Speaker Change: We definitely have the capacity what we did is we went out to our distributors and said look tell us how much you think youre going to need to have on the shelf at the end of this year going into next year, because we're going to run out of capacity to produce it. So we don't look as much at the orders you saw very strong orders in <unk> around 100% this quarter around 30.
Speaker Change: Percent. So I think some of that had to do with folks having wanting some level of <unk> on the shelf as they enter into next year. What we're looking at sales what we're trying to do is build the inventory that we think we need going into next year to determine whether it's a pre delivery, which I think.
Speaker Change: Is the right word are you delivering in 2024 for demand that would otherwise incur occur in 2025, you look at the movement and you look at the underlying demand for our end consumers. So the good news is that movement was strong coming out of <unk> movement has been very very strong in October much higher than we anticipated.
Speaker Change: So we will enter next year with some level of <unk> inventory.
Speaker Change: Within carrier, we think it's for the underlying demand that there will be for the first quarter of next year.
Speaker Change: But as it looks right now we don't see any material pre delivery of <unk> this year.
Speaker Change: Understood. Thank you.
Speaker Change: Thanks, Jeff.
Speaker Change: And our next question comes from Julian Mitchell with Barclays. Your line is open.
Julian Mitchell: Hi, good morning.
Julian Mitchell: Good morning, maybe good morning.
Julian Mitchell: First off I, just wanted to circle back to slide 24, and 25. So just trying to understand if you could clarify a little bit more.
Julian Mitchell: At 10 cents.
Julian Mitchell: Delta sort of what exactly is moving on slide 24 between the core and the continuing ops died.
Julian Mitchell: So I guess on slide.
Julian Mitchell: 25, you have that 40 operational tailwind guy.
Julian Mitchell: Guided I think last quarter that number was about 55 cents. So just trying to understand kind of the moving pieces on those two items. Please.
Julian Mitchell: Yes, Julian good morning. This is Patrick so the $2 60 on slide 24, with our estimate of the EPS in 2024 of the businesses that we are retaining.
Julian Mitchell: And so that is that was our estimate back then.
Julian Mitchell: The $2 50 is 2024, according to continuing operations with continuing operations.
Julian Mitchell: Charges that were allocated to the fire and security segment from corporate and other functions unless they were direct charges are allocated to continuing operations that was not the case in the $2 60, because we looked at $2 60 from our core clean company going forward.
Julian Mitchell: The two <unk> the difference between the $2 $62 50 is basically allocation of <unk>.
Julian Mitchell: Headquarter charges to the.
Julian Mitchell: Segment that we assumed would not be there. The second that's about five pennies. The other five pennies is basically how interest expense is treated in disc ops.
Julian Mitchell: This explains when you look at our bridge from the $2 50, the building blocks for next year Youll see that as a <unk> <unk> pick up from disc ops treatment of some of the stranded cost that's part of it.
Julian Mitchell: 10, since you see here and you also see that as a 5% to Tencent pickup from net interest expense next year versus this year that also is part of the 10 since you see here on slide 24.
Julian Mitchell: With that I'll move over to <unk> 25 on 25 again this is based on.
Speaker Change: The $2 20 of continuing operations. The operational performance is an improvement of 40 of adjusted EPS I think youre, referring to last quarter 55 <unk> of operational.
<unk> improvement that included the fire and security segment.
Speaker Change: Of the 55 of last quarter about 15% to 20 related to fire and security. So the core operational performance of our business has been unchanged.
Speaker Change: Current guide versus the prior guidance.
Speaker Change: That's really helpful. Thank you Patrick and then maybe just one last clarification, one just on the fourth quarter kind of core assumptions there. It looks like I think it's about a.
Speaker Change: Just on the sort of 50, or so and you've got about mid single digit organic growth year on year in the mid teens operating margin just wondering if you could flesh out.
Speaker Change: Any of the the guide posts fourth quarter on the on the go forward basis.
Speaker Change: Yes. The way you can think about this mid single digit organic growth, we expect HVAC to be close to 10% in the quarter with continued strong double digit growth in commercial HVAC.
Speaker Change: We also believe that refrigeration will be down about mid single digits, mostly driven by North America truck and trailer.
Speaker Change: Adjusted EPS.
Speaker Change: <unk> to be a little less than 50% as you mentioned <unk>.
Speaker Change: A little bit less than 50 50.
Speaker Change: 50%.
Speaker Change: Less than 50.
Speaker Change: But up about 33% year over year and our operating margin is expected to be up about 300 bps year over year, a little bit more than that actually and so the margin expansion is really.
Speaker Change: Outcome of stronger volume and mix.
Speaker Change: Good price and productivity and actually in Q4, we expect the net impact of acquisitions and divestitures and our margins to be about neutral.
Speaker Change: That's great. Thank you.
Speaker Change: Youre welcome.
Speaker Change: And our next question comes from Andrew Kaplowitz with Citigroup. Your line is now open.
Andrew Kaplowitz: Good morning, everyone.
Andrew Kaplowitz: Andy.
Andrew Kaplowitz: David Patrick as we think about the bridge to 'twenty five Interestingly you gave us the 6% to 8% organic growth profile for the new carrier, which I know is not a 25 guide per se, but would you say at this point you have above average visibility of that growth profile in 'twenty five given the double digit increase in backlog exiting Q3, and then you mentioned core income.
Andrew Kaplowitz: Rentals in Q2 of 40% I know you've been focused on improved productivity.
Andrew Kaplowitz: You continue that kind of performance into 'twenty five.
Andrew Kaplowitz: So.
Speaker Change: You are right and we're not going to provide guidance on this call.
But what we what I said in my script was that.
Speaker Change: We would expect double digit EPS growth from organic growth and Thats. The first building block.
Speaker Change: And <unk>.
Speaker Change: Based on what we see today in our businesses commercial HVAC as you mentioned very strong performance this year, a big increase in backlog.
Speaker Change: We continue to see our backlog increase.
Speaker Change: <unk>.
Speaker Change: Dave mentioned earlier, we do not expect a big pre buy this year may be a pre order, but not a big pre buy that business for the last several quarters has returned to growth and so we have some big elements of our portfolio and they've just mentioned about Eastman as well we have some big elements of our portfolio that either are returning to growth of our <unk>.
Tuning to perform quite well so at this point, we would be very disappointed if at least that first bucket of our first building block for next year, if that does not represent double digit adjusted EPS growth and on top of that you can see the benefit of the stranded cost elimination net interest tailwind.
Speaker Change: And of course, the tailwind from our significant buyback.
Speaker Change: Got it Thats helpful. And then just following up on light commercial and residential obviously, there seems to be some market share movement.
Speaker Change: But could you help us separate a bit how much better for instance, America's light commercial markets are maybe resident residential margins versus your initial expectations.
Speaker Change: I know you have more <unk>, maybe than competitors how might that also translated into 25 forgetting about the pre buy for a second it seems like there's some market share movement as well.
Speaker Change: Yes, Andy I think on both we have gained share both resi and light commercial resi more share.
Speaker Change: Our resi shares Ben.
Speaker Change: Share gains have been north of 100 bps I think in part because yes, we were able to support our customers with the <unk> and we may have had a peer or two that were not.
Speaker Change: We're able to do so.
Speaker Change: What we're watching light commercial this year has been better than we thought we thought we'd be down low single digits will be up low single digits and that even assumes Q4 being down something like 15% now we'll see what ends up happening, but we're trying to do in Q4 is number one continue to support our customers we've been coming off years are very <unk>.
Speaker Change: Strong growth.
Speaker Change: In part due to share gains in part due to new product introductions. Some national accounts, we've picked up so I think the good news as we go into next year is that we want to make sure. We end this year with balanced inventories. So we've assumed down 15% in Q4, which would put us up low single digits for the year again, I'm talking light commercial and for the firm.
Speaker Change: Time, and now a few years, we'll have an easier compare next year than we've had over these last few years. So the team's performing well I think we'll end up low single digits, there and on the resi side hats off to the team. We continue to see high single digits. This year, we've taken share we've manage the 'twenty three zero transitioned very well were managed.
Speaker Change: The 454 be transitioned very well, we have the <unk> to support our customers. Obviously this year and then probably next year about 90% probably more than 90% of our deliveries will be the $4 54, B, which we still expect the benefit of pricing on so I think that as we go into next year. If we continue.
Speaker Change: To see the kind of movement, we've had inventory levels in the channel are low they ended up last quarter down about 10%, we want to make sure. We end up this year with balanced inventory. So we feel good about the growth next year in and resi for sure.
Speaker Change: I appreciate all the color.
Speaker Change: Thanks Sandy.
Speaker Change: And our next question comes from Nigel Coe with Wolfe Research. Your line is now open.
Nigel Coe: Yes, thanks, good morning, everyone.
Nigel Coe: Marty look lots going on here that's for sure.
Patrick I just wanted to pick up on the four key moving pieces just want to confirm.
Nigel Coe: 12% adjusted operating margin for <unk>, maybe just help us on how that divides between the C and the segments and perhaps the below the line just given the.
Nigel Coe: The corporate costs moving around with the discontinuation.
Nigel Coe: If I look at operating margin for Q4.
Speaker Change: It's going to be about 12, five for the overall comp.
Nigel Coe: Company.
Nigel Coe: I mentioned the growth rates earlier.
Nigel Coe: Between refrigeration and.
Nigel Coe: HVAC I think HVAC margins will be close to 15, 15, five and refrigeration about <unk>.
Nigel Coe: 13, or so in that range.
Speaker Change: Okay. That's helpful. And then you think <unk> would be another 10 basis points impact there.
Speaker Change: No actually I think the margin impact of <unk> in Q4 on the.
Speaker Change: Overall company will be <unk>.
Speaker Change: Flat and on the HVAC segment would be a headwind of about half a point.
Speaker Change: Okay because of the ramp up sequentially, Okay, great and then just on the buyback.
Speaker Change: You said I think the term in the sciences buyback underway does that imply that you're already in.
Speaker Change: In the market buying back stock.
Speaker Change: I will now $4 $7 billion between now and year end 25 is that do you.
Planning regulatory regular way buybacks in the open market or would you consider some form of an ASR or tender.
Speaker Change: Yes, Nigel so we repurchased about $400 million in Q3.
Speaker Change: Our current outlook for this year is about $1 billion, so about a $600 million of still more to go this quarter, depending on the timing of the.
Speaker Change: Proceeds from our last exit, which we expect to close by the end of.
Speaker Change: By the end of this year.
Speaker Change: May decide to do more this calendar year.
Speaker Change: We are looking at open market purchases as well as an ASR and so it could be a combination of all of the above it is not clear yet this year, what it will do more than $1 billion that will mostly depend on the timing of the proceeds and of course on market conditions.
Speaker Change: That's really helpful. Thank you.
Thank you.
Speaker Change: And our next question comes from Deane Dray with RBC. Your line is open.
Deane Dray: Thank you and good morning, everyone.
Speaker Change: Good morning.
Deane Dray: Hey, just.
Speaker Change: I want to wish Sam Best of luck. Thanks for your help and welcome to Mike.
Deane Dray: Just first question on data center, a couple of points here. One is can you elaborate on that five times multiplier because thats right in the range of what we've been looking at its much better sell HVAC equipment as a data center that are one time electrical equipment that doesn't have that kind of aftermarket. So what are the assumptions.
Deane Dray: About five times multiplier and Dave are there differences in the equipment that you are providing to the hyperscale today, because they require significant redundancy. So are there any complexities in the equipment.
Deane Dray: Or how standardized is that as it as it looks today.
Speaker Change: They are the equipment can be a bit customized depending on the specific requirements. Obviously, we start with the baseline of our existing water cooled and air cooled Chillers, but then they may have unique bespoke requirements and.
Speaker Change: Our applied engineering team has done a phenomenal job understanding the specific requirements, especially of the hyperscale.
Speaker Change: Passing.
Speaker Change: Our first of kind units with.
Speaker Change: In many cases exceeding their requirements and I think we're working very closely with our customers to satisfy their specific requirements. It may be that.
Speaker Change: They have a requirement for operating at very low output levels capacity requirements, but not having a complete turn off of the chiller continuing to operate at say, 5%. So they don't have a complete cold startup and our team has been able to manage requirements like that so generally more than 80% comment I would say with our.
Speaker Change: Existing chillers, but with some modifications.
I would say our team.
Speaker Change: Dean has done a phenomenal job we've seen great wins, you won't see all of it on our orders because we may have a commitment from our customers that hasn't made its way into our orders number, but I mentioned orders up 250% year to date, we've made great progress not only in the United States with the hyperscale or and for their facilities outside the United States, but with.
Speaker Change: The Colo as well folks like vantage and others. So we're very pleased with the progress that we've made.
Speaker Change: And we're very confident in our continued wins we started this journey with a target of how many chillers that we felt we needed to win to increase share.
Speaker Change: Not only in North America, but globally and support our customers and our target now is orders of magnitude higher than anything we established upfront. So very very pleased with the progress.
Speaker Change: And I think that the aftermarket opportunity is going to be transformational for carrier in terms of how we think about supporting those customers, but customers in Chicago, our Shanghai, because we're going to have if you picture having anywhere from $50 to 200 Chillers at a single site now youre dealing with a rotable pools real time monitoring of the <unk>.
Men prognostics to anticipate failures diagnostics technicians on site with multi shifts. So you may have two technicians in the day to technicians at night, So all hands on deck to support them and we're going to be pricing. It as kind of one of our most elite offerings in kind of a power by the hour type agreement. So.
Speaker Change: Excited about the new wins and the aftermarket opportunity again that won't kick in for a few years of course, but we believe that will be at least five X the equipment value.
Speaker Change: Great that's exactly what I was looking for and then for Patrick on the congrats on the a triple that settlement I know that's a difficult process.
Speaker Change: So needs court approval, what would the circumstances be where you would be able to collect above that.
615, that's referenced the $2 4 billion what would the circuit would there have to be new claims filed how might that play out.
Patrick Patrick: I'll take it Deane, it's really going to be a function we have the policies we have.
Patrick Patrick: Coverage that certainly exceeds the $2 5 billion that Patrick mentioned.
Patrick Patrick: So we have the ability to collect more or we just then forego some of the policy so it'll be.
Patrick Patrick: It'll be a function of how we decide to navigate this with the plaintiffs because they have access to the insurance recoveries as well. So look when we look at it and I want to thank Kevin O'connor and the legal team. Because this was obviously difficult to navigate where we've I think we are the only company in the world that can say that we have.
Put the underlying.
Patrick Patrick: Liabilities, we call them. The state claims because KFI is of course in bankruptcy, but when we look at the underlying claims associated with the manufacturer of sale of a triple F.
Patrick Patrick: We have now put those.
Patrick Patrick: Effectively in the rearview mirror subject to final court approval. So we feel really good about that we feel really good that even on these direct claims which you would call a tenuous at best These are claims that over a decade ago, something UTC would've done during its ownership.
Patrick Patrick: Of this business that is unrelated to the sale of our manufacturing of a triple F. Those are those claims and we've even settled assuming we get court approval a big chunk of those so we feel that between the insurance recovery the settlements that we had.
Patrick Patrick: We can start 2025 with our portfolio transformation behind us a triple a triple that fundamentally behind us and now we can just focus on good old fashion customers growth execution innovation.
Patrick Patrick: The real the real exciting stuff.
Speaker Change: Congratulations thank you.
Patrick Patrick: Thank you.
Speaker Change: And the next question comes from Joe Ritchie with Goldman Sachs. Your line is open.
Joe Ritchie: Hey, good morning, guys.
Speaker Change: Hey, Joe Good morning.
Speaker Change: Hey.
Joe Ritchie: Real quickly on just the <unk>.
Joe Ritchie: <unk> I know you talked about resi HVAC being up double digits in the third quarter I'm curious like how much was it up specifically and whats embedded in the.
Speaker Change: Yes, eight back up 10% and <unk> for your resi business.
Speaker Change: The.
Speaker Change: <unk> business was up double digits.
Speaker Change: In the third quarter and.
Speaker Change: When we look at the.
The fourth quarter again, we're not we're not assuming that there is a.
Speaker Change: A significant any kind of a pre.
Speaker Change: Pre buy.
Speaker Change: Uh huh.
Speaker Change: And the number now I think go ahead, so Q3 was up 11.
Speaker Change: Percent and in Q4 is going to be a lot more than that but frankly, you remember last year Q4 was really weak and so Q4 is going to be up probably 20, 30%, but again, that's more of a function of <unk>.
Speaker Change: <unk> last year with the destock rather than us.
Speaker Change: Having a lot of pre buy as we said in our guide we do not assume a material.
Speaker Change: Bye.
Speaker Change: Yes, I remember.
Speaker Change: Remember Joe as Patrick mentioned, we had a pretty easy compare last year was down about 20% of resi.
Joe Ritchie: Got it that's Super helpful guys, and then as Youre thinking about the dynamics for next year, Dave with.
Joe Ritchie: This transition that's happening I know you mentioned that 90% of what you're going to sell is going to be our 54, B I guess.
Joe Ritchie: Do you have any concerns around the <unk> unit.
Joe Ritchie: Perhaps like being.
Joe Ritchie: Yes.
Mentioned that like your distributors arent really stocking in but basically having enough inventory on hand for the first half of the year such that the <unk> units are a little bit slower to pick up and then as you're thinking through pricing specifically for our 54 B I know that you guys are expecting double digit pricing, but how do you think.
Joe Ritchie: About the net realized price associated with those units.
Speaker Change: Well first on the first piece, yes, we fully expect there to be <unk> sold in the first quarter I think that will be selling <unk> to our distributors and certainly our for our distributors will have four today on the shelf going into next year. So we expect a fair amount of 410, a to be sold into distribution and into the market.
Speaker Change: In the first quarter I think the question that folks are trying to wrestle with.
Speaker Change: Is are we selling more for 10, a this year pulling from 2025, and we just don't see much of that because there'll be a couple of percent once all the dust settles, perhaps but we just it's all a function of the true underlying demand and the only way we can understand that is by looking at underlying.
Speaker Change: <unk>, which again has been very strong here in October and look at the inventory levels that we see in the channel and again those have been down 10%. We expect the year to end in balance. So we don't think it's a pull forward, but we certainly expect <unk> to be sold a fair amount of it in the first quarter I think in terms of pricing we've been very.
Speaker Change: Clear that the base price of $4 54, b will be 10% higher than the base price.
<unk> and then to get to the 15% to 20% over two years, you get escalation and I think that that's appropriate and I think that once.
Speaker Change: Our customers and others I assume see the underlying cost impact of having to put additional.
Speaker Change: Parts into the 450 <unk> system in different controls and algorithms to associated with the <unk> I think others will price. It however, they decide to price. It that's how we've determined as appropriate for us to price it and we think that that's going to stick.
Speaker Change: Got it that's very helpful. Thanks, guys.
Speaker Change: Thank you.
Speaker Change: And our next question comes from Stephen to solve with JP Morgan Your line is open.
Speaker Change: Hey, good morning.
Speaker Change: Hey, good morning.
Stephen: Sam Thanks, again for all the help and best of luck.
Speaker Change: Yeah.
Stephen: So just on this light commercial business. How are you kind of looking at that into next year and any impact you're seeing from the from the Essar Cliff.
Stephen: Well.
Speaker Change: A little bit early to say next year, Steve I think our goal right now is.
Speaker Change: To end with inventory levels and balance that's why we assume.
Speaker Change: Down 15%.
Speaker Change: In the fourth quarter of this year.
Speaker Change: So it's been very very helpful. But that continues the actual spend associated with Essar will certainly continue throughout 2025, what happened with us or is the 190 billion.
Speaker Change: <unk> funding is now behind US there was about 20 billion that I think got returned from the states of the department of energy, but that has to be spent currently it's the requirement is that gets spent by March of 2026. So we will still be continuing to spend on our wins throughout all of next year into URL into the 2026 and there was about 30 states.
Speaker Change: That are looking to extend their spend requirement beyond March of 2026, we've had some really big wins on K through 12 in particular, there are states like California, and Arizona, where we've had very very significant win. So that's that's been a big part of our success. It's not just K through 12, but some of the other verticals. So it's been a good news.
Speaker Change: For Us I think this year will be up as I mentioned low single digits early to say, Steve exactly what we see for next year, but our whole focus now is especially on the small rooftop units, making sure inventory levels come down a bit in the in the channel.
Speaker Change: That's helpful and then just for for Eastman.
Speaker Change: Hi.
Speaker Change: A little bit of math required here, which is always a challenge I guess early in the morning, but.
Speaker Change: It looks to me to be about I don't know like 10% margin for adjusted Op margin for <unk> and then for the year now youre at like more like 11%.
Speaker Change: Is that about right.
Speaker Change: Steve.
Speaker Change: Yes, Steve for the full year 11.
Steve: Certainly in the ballpark and then EBITDA is mid teens mid teens actually.
Steve: Mid teens EBITDA, but the adjusted op. The adjusted Okay. That's running through your adjusted P&L.
Steve: Yes, Yes, I mentioned certainly in the ballpark and full year EBITDA.
Steve: Close to actually mid teens actually we know you'll want to get to the lowest number Steve.
Steve: Okay.
Steve: Yes.
Speaker Change: Okay. Thanks, a lot guys, yes, thank you Steve.
Steve: Yeah.
Speaker Change: And our next question comes from Noah Kaye with Oppenheimer. Your line is open.
Noah Kaye: Thanks, Good morning, let me spend a minute on refrigeration.
Speaker Change: I think first can we sort of level set what the margin profile.
Speaker Change: <unk> it looks like just to have a base as we enter 2005 as a sort of like a <unk>.
<unk> thousand, 14% type or a little bit lower EBIT margin business.
Speaker Change: Is it material in the second part of the question is.
Speaker Change: Good to see orders and truck trailer in flex. So maybe just talk a little bit about the business trends and how those might set up for growth entering 'twenty five.
Speaker Change: Maybe let.
Speaker Change: Let me take the second one first and Patrick will take the first one we're not reading anything into the orders numbers that you saw for <unk>. There are some easy compares there were just looking at the underlying business is going to be a tough year for north American.
Speaker Change: Truck trailer.
Speaker Change: Because some of the we don't think we've necessarily gained or lost any share there, but it's just a tough business for the market. The key for US is to make sure that we close out the year, but really position ourselves for growth next year, we're confident we'll get growth.
Speaker Change: Going into next year.
Speaker Change: Has relatively modest growth I think mid single digits going into next year, but we have some other things that we want to push to kind of get outsized growth on top of that but yes were the orders number was very high but we're sort of discounting it because of the comparison.
Speaker Change: Yeah, and then on the on the first question.
Speaker Change: This year.
Speaker Change: Refrigeration margin, excluding commercial refrigeration would be up about 300 basis points give or take.
Speaker Change: And then as I mentioned for a carrier going forward.
Speaker Change: Or think carrier 2025 versus 2024.
Speaker Change: We will lose $750 million of revenue related to CCR, but basically as I said immaterial operating profit. So if you do that math basically our operating margin next year will be up 50 basis points.
Speaker Change: Just because of the absence of commercial and refrigeration.
Speaker Change: Okay.
Speaker Change: Last quick question.
Speaker Change: The $200 million of cost synergies for VTS by year, three could see that reiterated.
Speaker Change: Where do you expect that to pencil out.
Speaker Change: For this year, specifically, if it's still $75 million or so and then should we think about kind of a ratable amount of synergy capture and 25 as well.
Speaker Change: Yes, I think it's a good way to think about it I think this year. We've said 75, it may end up being a bit more than that but it's kind of in that zone and I think it will be a bit ratable.
Speaker Change: Look hats off to the team in the category of controlling the controllable as we've seen very strong savings on the materials side, both direct and indirect the team has been very aggressive at taking cost out it's never fun, it's never easy, but I would say if theres been any anything good in the midst of that.
Speaker Change: <unk> being down much further than we planned is it's forced us to take a bunch of costs out of the system. So if we can keep that overall costs down as we go into next year it should drop through at higher margins than we had anticipated.
Speaker Change: Great. Thank you guys.
Speaker Change: Thanks, Mike.
Speaker Change: And our next question comes from Andrew <unk> with Bank of America. Your line is now open.
Speaker Change: Hi, guys good morning, Hey.
Speaker Change: Hey, Andrew good morning.
Andrew Kaplowitz: Just to follow up on Steve's question on running over what we've been hearing is that.
Speaker Change: Sort of folks have been able to tap into other sources at the Iras, So thats whats.
Speaker Change: Smoothing out the process.
Speaker Change: Would that be consistent with what youre hearing in the channel.
Speaker Change: I think so Andrew I think the way we're looking at it frankly is that there has been more funding available for this segment K through 12, then than ever basically.
Speaker Change: And the way we see it is that that's really been driving a lot of the strength that we've seen in that segment for the last couple of years, leading into the next couple of years, what we think will happen and the reason we don't see the strength. We've seen there are discontinuing as we get into the second half of 2026 is the school budgets themselves.
Speaker Change: But they've been having budgets they have not been spending because they have been spending federal money. So I think that theres going to be pent up.
Speaker Change: Capacity of the local school budgets to spend as we get into 2026 and beyond so we think the strength. We've seen will continue because frankly, there is long overdue requirements in the school system.
Speaker Change: Gotcha.
Speaker Change: Just a follow up question I know you've sort of provided initial framework or <unk>.
Speaker Change: 25.
Speaker Change: Just a question as it relates to free cash flow.
Speaker Change: Any one time items that we should consider within that framework that where may be related to recent acquisition. How is it treated some of the items on the balance sheet anything that we should.
Speaker Change: Think about it for 25 or should we just model normal free cash flow conversion rate within historical range for 'twenty five.
Speaker Change: Yes at this point, Andrew there is nothing that I would call out.
Speaker Change: Absolutely we would target too.
Speaker Change: To get to 100% of adjusted.
Speaker Change: Income taking into account restructuring charges that are cash that we adjust out so obviously, our target would be to get to that level.
Speaker Change: Thanks, so much and south congratulations.
Andrew Kaplowitz: Thanks, Andrew.
Andrew Kaplowitz: Thank you Andrew.
Speaker Change: And the next question comes from Chris Snyder with Morgan Stanley. Your line is I'll spend.
Chris Snyder: Thank you I wanted to ask on orders, obviously the up nearly.
Chris Snyder: Nearly 20% a very strong mark, but you guys said at Laguna conference that the first two months of the year. We're tracking up 20 to 30. So I guess my question is that anything soften in September or anything get pushed out or is there some impact from the move into discontinued ops.
No.
Speaker Change: What it really was Chris is just frankly was Ramsey.
Speaker Change: Theres been some swings in ordering some of the resi orders, we mentioned resi was up 30% in the quarter a lot of that was in the first two months and a lot of resi orders for the 410, a really stopped or slowed as we got into September. So we had said at Laguna Beach that it was up 20% to 30, we ended up right around <unk>.
Speaker Change: <unk> and I think the only delta had to do with resi orders in September.
Speaker Change: Great. Thank you and then Dave you also talked recently about an after market to <unk> strategy.
Speaker Change: So maybe can you talk a little bit about how that differs from the existing <unk>.
Speaker Change: Aftermarket go to go to go to go to panel approach and is there a cost associated with the new strategy and then ultimately what opportunity does that bring for carrier.
Speaker Change: Yes, I think when we energized with Azure ergo on the team.
Speaker Change: One point in our strategy going back to like 2019 2020. It was a lot of the basics. It was really making sure for example that we had parts flowing through our system and not going around us it was having a tiered offering it was having.
Speaker Change: Digital connectivity, so that we could start to monitor some of the equipment and track the equipment and having really cascade had set of metrics around attachment rates and conversion rates and total coverage I think we're now looking at just the next level of sophistication, having to do with Rotable pools, and looking at where we stack our.
Speaker Change: Tori and using better algorithms to make sure that we have the right parts in the right locations to support our customers when we need when our customers need us to avoid the high leakage rates, we're seeing in parts. When we look at connecting 50000, Chillers now using that data to create value for our customers and looking not only at maintenance uptime.
Speaker Change: Our teammates that we have within carrier we've had a lot going on in the system. This whole performing while transforming I can't thank our team enough and I, Thank our customers and our shareholders for their continued confidence and we're very very excited to close out the year strong and then really deliver outsized results as we get into 2025. So thank you all very much.
Speaker Change #100: This concludes today's conference call. Thank you for participating you may now disconnect.
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Speaker Change #100: Okay.
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