Carrier (CARR) raised its full-year 2026 organic sales outlook after commercial HVAC and data-center demand helped drive double-digit third-quarter growth in sales and adjusted earnings. The company now expects organic sales to increase about 10%, up from its July forecast for mid-to-high-single-digit growth, while projecting full-year revenue of $23.8 billion to $24.0 billion.
Third-quarter sales rose 12% year over year to $6.26 billion, including 15% organic growth. Adjusted operating profit increased 33% to $1.09 billion, and adjusted operating margin expanded 260 basis points to 17.4%. Adjusted earnings per share climbed 30% to $0.87 from $0.67.
The adjusted results included about $130 million of refunds related to tariffs imposed under the International Emergency Economic Powers Act. Carrier said the refunds contributed approximately $0.10 to adjusted EPS, partly offset by a roughly $0.02 impact from noncontrolling interests.
Free cash flow, including continuing and discontinued operations, increased to $674 million from $224 million a year earlier. Carrier returned about $600 million to shareholders through dividends and share repurchases during the quarter.
Reported results were weighed down by a $3.1 billion goodwill impairment. Carrier recorded a loss before income taxes of $2.36 billion, compared with earnings before income taxes of $433 million in the prior-year quarter. Other adjustments included acquired-intangible amortization and restructuring costs.
Commercial HVAC and data centers lead growth
Organic orders increased about 35%, excluding NORESCO, with global commercial HVAC orders up approximately 60% and data-center orders up about 300%. Backlog exceeded a record $8.5 billion, about 60% higher than a year earlier.
Data-center sales were roughly 2.5 times the prior-year level, and Carrier said it remains on track to generate approximately $2 billion of data-center sales in 2026. Year-to-date data-center orders exceeded $3 billion, up about 350%, while non-data-center commercial orders grew 20%.
Aftermarket sales rose 9% in the quarter. Management expects continued double-digit growth in global commercial HVAC, supported by backlog, long-term agreements and its project pipeline, and is targeting continued double-digit aftermarket growth.
Americas posts strongest segment growth
Climate Solutions Americas sales increased 24% to $3.35 billion, including 25% organic growth. Segment operating profit rose 40% to $745 million, while margin expanded 250 basis points to 22.2%.
Orders in the segment climbed about 60%, with commercial orders up approximately 90% and data-center orders up about 400%. Residential sales grew more than 30%, while commercial sales, excluding NORESCO, increased more than 25%. Data-center sales more than doubled both year over year and sequentially, and Carrier expects sequential growth in the fourth quarter.
The Americas margin benefited from approximately $120 million of IEEPA refunds and organic growth, partly offset by higher input costs and tariffs. Field inventory was approximately flat from a year earlier, in line with the company’s expectations.
Climate Solutions Europe sales rose 3% to $1.34 billion despite a seven-percentage-point drag from net acquisitions and divestitures and a two-point currency headwind. Organic sales increased 12%. Segment operating profit advanced 40% to $168 million, lifting margin by 330 basis points to 12.6%.
European orders grew about 30%, including roughly 50% growth in commercial orders and 25% growth in residential and light-commercial orders. Heat-pump and air-conditioning sales rose approximately 35%, while commercial sales increased at a high-single-digit rate as data-center sales roughly doubled. Margin also included an approximately 100-basis-point net benefit from correcting a prior-period item, partly offset by higher inventory-related reserves.
Climate Solutions Asia Pacific, Middle East and Africa reported a 2% sales increase to $848 million and 3% organic growth. Segment operating profit rose 6% to $103 million, with margin expanding 50 basis points to 12.1%. Commercial sales increased 10% and aftermarket sales rose 13%, while residential and light-commercial sales declined at a mid-single-digit rate. Sales in the China region fell 4%, although China commercial HVAC returned to growth with a 6% increase; sales outside China grew 9%.
Climate Solutions Transportation remained the only segment with lower revenue. Sales declined 3% to $726 million, reflecting a mid-single-digit decrease in global truck and trailer sales. Segment operating profit increased 2% to $117 million, and margin improved 70 basis points to 16.1%, helped by productivity and approximately $15 million of IEEPA refunds.
Full-year outlook reflects higher sales and cost pressure
Carrier expects full-year adjusted operating profit of about $3.5 billion, adjusted EPS of $2.85 to $2.90 and free cash flow of approximately $2 billion. Its previous adjusted EPS forecast was approximately $2.90, while the operating-profit and free-cash-flow forecasts are unchanged.
The company expects pricing and productivity initiatives to help offset approximately $550 million to $600 million of unexpected incremental input-cost increases and tariffs. Carrier projects double-digit adjusted EPS growth for the year.
Carrier continues to expect approximately $1.5 billion of share repurchases in 2026 and said dividends and buybacks should return about $2.3 billion to shareholders for the full year. Its capital-expenditure outlook increased to roughly $650 million from $600 million.
The outlook remains subject to tariff and trade-policy changes, inflationary input costs, foreign-exchange movements, residential and construction demand, weather, supply-chain disruptions, and the execution of acquisitions, divestitures and debt-reduction plans. Carrier also noted that customer orders may be cancellable without penalty, limiting the extent to which backlog guarantees future revenue.
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