Q3 2023 Earnings Summary
Reported on Jan 4, 2025 (Before Market Open)
Pre-Earnings Price$190.31Last close (Oct 31, 2023)
Post-Earnings Price$200.57Open (Nov 1, 2023)
Price Change
$10.26(+5.39%)
- Strong pipeline and backlog in high-margin applied systems, particularly in growth verticals like data centers, education, high tech, health care, and life sciences, indicating continued robust demand and future revenue growth. , , ,
- Emphasis on innovation in energy-efficient and greener products, leading to increased customer appreciation and potential market share gains as global emissions targets and higher electricity prices drive demand.
- High visibility into future growth with elevated backlog levels and mega projects over $1 billion, providing confidence in strong performance in 2024 and beyond, with customers locking in long-term commitments, especially in data centers. , ,
- Flat to declining revenues in Asia Pacific despite bookings growth: Despite strong bookings growth in Asia Pacific (orders up 12%, with China high single digits), revenues were flat to down due to tough prior-year comparisons of 30% growth. This may indicate challenges in converting bookings to revenues in the region.
- Weakness in certain verticals impacting unitary equipment: The company noted weaker performance in verticals such as traditional office, warehousing, and retail, which tend to favor unitary equipment over applied systems. This could negatively affect future sales in these sectors.
- Gross margins at risk of normalization: While gross margins are at all-time highs, there are concerns whether this is sustainable or due to timing effects between price and cost. Wage and energy inflation are impacting the business, and gross margins may normalize going forward.