Executive Summary

CARR delivered Q2 2025 revenue of $6.11B (+3% reported, +6% organic) and adjusted EPS of $0.92, modestly above S&P Global consensus ($6.10B, $0.90), while GAAP EPS was $0.70; adjusted operating margin expanded 130 bps to 19.1% (consensus figures marked with asterisks below).
Commercial strength in Climate Solutions Americas (CSA) remained the key driver (Commercial up 45%; CSA segment margin +210 bps to 27.0%), offsetting weakness in China and the divestiture headwind in Transportation; company aftermarket rose 13% .
Management reaffirmed FY25 guidance (sales ~$23B, adj. op margin 16.5–17.0%, adj. EPS $3.00–$3.10, FCF $2.4–$2.6B), and guided Q3 to ~$6.0B revenue, flat adjusted operating profit YoY, and ~$0.80 EPS, with tariff impacts net neutral overall .
Free cash flow was $568M in Q2 on $649M CFO, and the company reiterated its target to repurchase ~$3B of stock in 2025; net debt was $9.65B at quarter-end .
Data center momentum remains a multi-year catalyst; management reiterated they are on track to double data center revenues to ~$1B in 2025, with capacity expansions and product differentiation (e.g., magnetic-bearing air-cooled chillers) supporting share gains .

What Went Well and What Went Wrong

What Went Well
- CSA Commercial was the standout: sales up 45% YoY; CSA segment margin expanded 210 bps to 27.0%, driven by organic growth and productivity .
- Aftermarket performance continued: total company aftermarket sales up 13% YoY; management emphasized “double digit forever” with connected chillers up ~40% YoY to ~63,000 and Link subscriptions nearing 200,000 .
- Data center acceleration: on track to double 2025 data center revenues to ~$1B; notable backlog build and competitive wins, supported by new high-efficiency chiller technology .
What Went Wrong
- U.S. residential volumes were softer than expected; management now assumes H2 volumes down ~20–25% with mix/price +10–15%, netting H2 RESI sales down ~10% .
- China remained a headwind: CSAME organic sales –4% with segment margin down 210 bps YoY (15.3% vs. 17.4%), driven by weakness in residential/light commercial .
- Orders down high teens YoY on tough comps; however, management cited a robust and growing longer-cycle commercial backlog supporting second-half visibility .

Financial Results

Headline P&L, Margins, and Cash Flow

Metric	Q2 2024	Q1 2025	Q2 2025
Revenue ($USD Billions)	$5.934	$5.218	$6.113
GAAP EPS (Continuing Ops)	$0.45	$0.47	$0.70
Adjusted EPS (Continuing Ops)	$0.73	$0.65	$0.92
GAAP Operating Margin	12.2%	12.1%	14.8%
Adjusted Operating Margin	17.8%	16.2%	19.1%
Cash from Operations ($M)	$660	$483	$649
Free Cash Flow ($M)	$549	$420	$568

Consensus vs. Actuals (S&P Global, Q2 2025)

Metric	Consensus	Actual	Surprise
Revenue ($USD Billions)	$6.098*	$6.113	+$0.015B (~+0.2% vs est)
Adjusted/Normalized EPS	$0.90*	$0.92	+$0.02

Values marked with * retrieved from S&P Global.

Segment Breakdown (Q2 2025 vs. Q2 2024)

Segment	Net Sales Q2’24 ($M)	Net Sales Q2’25 ($M)	YoY	Segment Op Margin Q2’24	Segment Op Margin Q2’25
Climate Solutions Americas (CSA)	2,865	3,252	+14%	24.9%	27.0%
Climate Solutions Europe (CSE)	1,194	1,253	+5%	7.8%	7.9%
CS Asia Pacific, Middle East & Africa (CSAME)	902	882	(2%)	17.4%	15.3%
Climate Solutions Transportation (CST)	973	726	(25%)	14.2%	17.6%

KPIs and Other Metrics

KPI	Q2 2025
Organic Sales Growth	+6%
Aftermarket Revenue Growth	+13% YoY
Free Cash Flow	$568M
CSA Commercial Growth	+45% YoY
Connected Chillers	~63,000, up ~40% YoY
Link Subscriptions (CST)	~200,000, “close to” 200k

Non-GAAP adjustments in Q2 included amortization of acquired intangibles ($214M), restructuring ($47M), acquisition/divestiture-related costs ($9M), and a CCR gain ($7M), totaling $263M to operating profit; tax effect of adjustments was $(75)M .

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Sales	FY 2025	~$23B; ~MSD organic; FX +1%; divestiture ~(3%); ~$750M CCR headwind	~$23B; same components	Maintained
Adjusted Operating Margin	FY 2025	16.5%–17.0% (+~100 bps YoY)	16.5%–17.0% (+~100 bps YoY)	Maintained
Adjusted EPS	FY 2025	$3.00–$3.10	$3.00–$3.10	Maintained
Free Cash Flow	FY 2025	$2.4–$2.6B	$2.4–$2.6B	Maintained
Revenue	Q3 2025	—	~ $6.0B	New Q3 detail
Adjusted Operating Profit	Q3 2025	—	~flat YoY	New Q3 detail
EPS	Q3 2025	—	~ $0.80; assume ~24% ETR	New Q3 detail

Management also indicated tariff impacts are net neutral to profit; required tariff-related pricing for FY25 reduced to ~$200M vs. ~$300M prior, with zero net margin impact maintained .

Earnings Call Themes & Trends

Topic	Previous Mentions (Q4 2024, Q1 2025)	Current Period (Q2 2025)	Trend
Data centers & Commercial HVAC	“Acceleration in data centers” highlighted; growing backlog; planned capacity adds . On track to double DC to ~$1B in 2025; strong applied growth and backlog build .	Reiterated on track for ~$1B DC revenue in 2025; new high-efficiency chiller launches and additional wins; global commercial HVAC sales expected ~$6.5B in 2025 .	Strengthening; sustained secular demand.
Tariffs & pricing	Fully mitigating tariffs; ~$300M price in FY25; net neutral to OP .	Tariff pricing now ~$200M; overall net neutral; Q3 flat OP YoY partly due to no drop-through on tariff/currency .	Improving mitigation; unchanged P/L neutrality.
U.S. Residential (454B transition)	75% of Q1 volume on 454B; ~10% mix-up; RESI up ~20% .	Volume softer than expected; H2 volume down ~20–25% with +10–15% mix/price; H2 RESI sales down ~10% assumed .	Near-term softness; mix/price supportive.
Europe (Viessmann/RLC)	RLC Europe Q1 organic sales –10%; margins 9.0% with plan to move to low-teens; subsidy momentum in Germany; synergies tracking .	CSE organic flat; margin +10 bps to 7.9%; H2 margin expected ~11–11.5% (Q4 ~12%); cost synergies and mix improve trajectory .	Gradual improvement; H2 inflection.
Asia (China)	Weakness in residential/LC China; some strength in Japan/India .	CSAME organic –4%; margin –210 bps; China RESI/LC remains weak; strength in India, Japan, Middle East .	Persistent China headwinds; ex-China resilience.
Aftermarket & services	“Double digit forever”; attachment rate progress; digital tools .	Aftermarket +13% YoY; connected chillers +40% YoY to ~63k; focused on long-term service contracts esp. in DC .	Durable growth engine.
AI/technology & Abound	Announced Google Cloud grid/HEMS collaboration; digital focus .	Enhanced Abound Insights Assistant app (AI-driven ops/maintenance insights) in late Q2 .	Expanding AI-enabled solutions.

Management Commentary

Strategic focus and performance: “We delivered 6% organic growth with exceptional 45% growth in commercial HVAC in the Americas... We expanded adjusted operating margins by 130 basis points... Free cash flow was also strong.”
Data centers and products: “On track to double our [data center] revenues to $1 billion this year... new large-capacity air-cooled chiller with proprietary magnetic-bearing compressor... more efficient... can operate at elevated ambient temperatures.”
Q3 setup and tariffs: “We expect Q3 sales of about $6 billion... adjusted operating profit to be flat year-over-year... net tariff impact in our July guide is zero... tariff-related pricing now about $200 million.”
Residential channel: “We have not seen a big switch from repair over replace... 454B mix of 10% [price/mix] has been sticking.”
Execution note: “The canister issue [for RESI]... is no longer an issue for us... pivoted hard in May and June.”

Q&A Highlights

Europe profitability path: management sees H2 Europe segment margin ~11–11.5% with strongest step-up in Q4 (~12%), aided by seasonality, productivity, and synergies; medium-term path toward mid-teens margins .
U.S. RESI outlook clarified: H2 volume down ~20–25% with +10–15% mix/price, net H2 sales down ~10%; price remains constructive (mid-single-digit in Q3, a bit softer in Q4) .
Q3 earnings cadence: ~$6B sales, flat adjusted OP YoY, and ~$0.80 EPS (about 24% ETR) given no drop-through on tariff/currency, and unfavorable RESI mix .
Transportation: NA truck & trailer returned to growth; container strength continues; segment margins up 200–300 bps YoY in Q3 tied to CCR exit .
Aftermarket priorities: securing long-term service agreements with hyperscalers/colos for data centers; connectivity and AI-enabled diagnostics to drive attachment and value .

Estimates Context

Q2 2025 performance vs. S&P Global consensus: revenue $6.11B vs $6.10B*, adjusted/normalized EPS $0.92 vs $0.90*; ~0.2% revenue beat, ~$0.02 EPS beat. Continued strong CSA mix and productivity supported margin expansion; Transportation margin benefited from CCR exit; China remained a drag .
Values marked with * retrieved from S&P Global.

Key Takeaways for Investors

Small but clean beat on revenue and EPS; more importantly, margin expansion and strong CSA mix quality underpin earnings durability .
FY25 guide held intact across all major metrics; Q3 set up is conservative with explicit color on tariff/currency pass-through and RESI mix headwinds; watch Q4 as the inflection quarter again, particularly in Europe .
Commercial/data center momentum is a multi-year thesis pillar with capacity in place and product differentiation; track backlog conversion and service attachment ramp as sustained EPS drivers .
U.S. RESI near-term volume softness is well-telegraphed; mix/price tailwinds (454B) and disciplined channel inventory management should buffer profitability .
China remains the key regional risk; balanced by strength in India, Japan, Middle East and by accelerating European self-help (synergies, mix) into H2 .
FCF remains robust ($568M in Q2), and the ~$3B 2025 repurchase plan offers support in a year of portfolio transition and organic investment .

Appendix: Additional References and Documents

Q2 2025 8-K and earnings exhibit (financials, guidance, segment tables):
Q2 2025 press release (consistent metrics/tables):
Q2 2025 earnings call transcript (strategic commentary, Q&A, Q3 guide):
Q1 2025 8-K (prior-quarter comps, initial FY25 guidance step-up):
Q4 2024 8-K/press release (context for prior two quarters, data center acceleration):
Other relevant Q2 press releases (AI/Abound enhancement; dividend declaration):

CARRIER GLOBAL Corp (CARR)·Q2 2025 Earnings Summary