Earnings Recap — Q2 FY2026
CY Q3 2026 · Reported July 28, 2026 · Beat 6 of last 7 quarters
The Buildout is a website built on agentic AI tools, currently in beta, and could have factual errors.
Carrier's record backlog and doubling data center sales underscore the accelerating AI infrastructure buildout, with data center orders up 4x YoY and capacity expansion in the U.S. to meet 2027+ demand. The company's ability to secure long-term agreements with hyperscalers and colos, and its investments in liquid cooling (CDUs), position it as a key supplier in the AI cooling infrastructure ecosystem.
Carrier delivered Q2 2026 revenue of $6.4 billion, up 3% organically, with adjusted operating profit of $1.1 billion and adjusted EPS of $0.86, beating consensus. Orders were very strong, up ~40% YoY, with data center orders up 4x, and backlog reached a record $8 billion+. CSA Resi sales grew 9% and Light Commercial grew 10%, while CSE Resi grew high single digits with heat pumps up 20%. Commercial HVAC sales were down due to timing of data center deliveries, but management expects a significant pickup in Q3. Segment margins were mixed: CSA margin of 24.4% was ahead of guide but down YoY on mix and input costs; CSE margins were disappointing, leading to a leadership change and a more aggressive cost/pricing approach. The company completed the Riello divestiture, announced the sale of NORESCO, and acquired 75F to expand BMS capabilities.
Management raised full-year 2026 guidance: sales to ~$23 billion (organic growth mid- to high single digits), adjusted operating profit to ~$3.5 billion, and adjusted EPS to ~$2.90 (from $3.4B and $2.80). The raise reflects a $1 billion organic sales increase versus prior guide, split between improved CSA Resi/Light Commercial and higher data center sales, partially offset by a $200 million headwind from the NORESCO divestiture. Second-half operating profit and EPS are expected to be up ~50% YoY, driven by volume and productivity, with a $0.05 headwind from NORESCO exit and new U.S. site start-up costs. Management expects the second half to be up mid-teens, with total company sales up ~20% in the back half (10 points from absence of destocking). They are building a new U.S. facility (Texas or Alabama) to support data center demand, with CapEx now ~$600 million. The tone was confident, emphasizing record backlog, strong orders, and continued share gains in commercial HVAC.
“2Q orders were very strong, up about 40%, with commercial HVAC up about 65%, driven by continued strength in data centers where orders were up 4x over last year.”
on Orders and data center strength
“We are now increasing our full year data center sales outlook to about $2 billion, which will be our second year in a row of doubling our sales in this important vertical.”
on Data center outlook
“We will continue to drive strong growth initiatives and will take a more aggressive and structured approach to cost reduction and pricing discipline.”
on CSE margin improvement
Can you go into a little bit more detail on the margin decline issue—mix versus price/cost, and how much was timing?
Patrick Goris explained that margin decline was driven by unfavorable mix (heat pumps, battery/solar, container, new construction), timing of tariff mitigation (tariffs effective early April, pricing late April), and lower JV income. David Gitlin added that new leadership will drive more disciplined pricing and cost reduction, including footprint, supply chain, and G&A.
On the capacity expansion, what's the scope, how do you derisk it, and what's the potential revenue run rate?
David Gitlin said the new U.S. facility (Texas or Alabama) will support data center demand, with advanced-lead-time equipment already ordered. He emphasized they are being careful not to overbuild, noting they only need to grow share from 10% to 15-20% versus peers starting at 30%. Patrick Goris added that backlog is north of $8 billion, with commercial ~70% and data centers 40% of that.
What gives you confidence that underlying Resi demand is improving, given the back-half growth is off easy compares?
David Gitlin cited movement expected up mid-single digits in the back half, healthy field inventories (down ~20%), and improved inbound calls to dealers/distributors. He noted pent-up demand for new homes and existing home sales, and that people are getting more comfortable with higher mortgage rates.