What a difference a year makes! One year ago the economy was contracting, people were losing their jobs, and almost everyone across the country was locked down in their homes. The outlook for the HVAC industry was bleak, as homeowners initially pulled back on spending in order to preserve precious capital.
But by summer 2020, things started looking up, particularly for the HVAC industry. House-bound homeowners went on a spending spree, buying new heating and cooling equipment — as well as IAQ products — in order to make their homes more comfortable. The sales surge hasn’t declined, which has boosted earnings for OEMs in the first quarter of 2021 and led most to raise their outlooks for the year.
Carrier's first quarter sales of $4.7 billion were up 21% compared to the prior year, and organic sales were up 17% over the same period. GAAP [generally accepted accounting principles] operating profit in the quarter of $571 million was up 82% from last year, and adjusted operating profit of $608 million was up 39%.
The sales performance was largely driven by continued strong demand in the North American residential HVAC market, which was up 48% compared to the prior year; growth in transport refrigeration and commercial HVAC; and sequential improvement across the portfolio.
"Carrier delivered strong first quarter results as all three segments contributed to our 21% year-over-year sales growth,” said Dave Gitlin, chairman and CEO of Carrier. “We exceeded our expectations through continued strength in North American residential HVAC and improving order trends across the rest of the portfolio. We continue to lead the industry through innovation. I am especially excited about the launch of Abound, a cloud-native platform designed to give people confidence in the health and safety of their indoor spaces.”
As a result of the strong first quarter, Carrier has revised its full-year outlook to include sales growth of 7% to 10%, up from 6% to 8%, and organic sales growth of 5% to 8%, up from 4% to 6%.
“Overall, we are encouraged by our strong start to the year, order trends and market outlooks, and the momentum across our Healthy Building and Cold Chain offerings, which provide us with confidence to update our full-year expectations,” said Gitlin.
Johnson Controls announced sales of $5.6 billion for its fiscal second quarter 2021, an increase of 3% compared to the prior year on a reported basis and up 1% organically. GAAP net income from continuing operations was $343 million, and adjusted net income from continuing operations was $373 million, an increase of 18% versus the prior year.
“Momentum in many of our end markets continues to build,” said George Oliver, chairman and CEO of Johnson Controls. “Volumes in our Global Products business are recovering nicely, led by continued strength in residential, while order activity in our non-residential businesses is accelerating and the pipeline is expanding further as we enter the second half of our year. Based on our year-to-date performance, the strength and resilience of our backlog, and the outlook for the remainder of the year, I am confident we are positioned to deliver on all of our commitments.”
For its fiscal 2021 third-quarter guidance, Johnson Controls expects organic revenue growth to be up in the mid-teens year-over-year. The company raised its 2021 full-year guidance for organic revenue growth to be up mid-single digits year-over-year.
“Our performance continues to strengthen as we emerge from the global pandemic with a sharpened focus on our future," said Oliver. "I am incredibly proud of our employees' leadership and commitment through this time. The strategic actions we have taken to address future profitability, expand into key growth markets through disciplined capital allocation, deliver on sustainability, and expand our digital and service offerings, are all evidence of how we are executing our strategy.”
Lennox International reported record first-quarter revenue of $931 million, up 29% compared to the prior year. GAAP operating income was a first-quarter record $114 million, up 213%. Gross profit was $257 million, up 55%, and gross margin was 27.6%. Gross profit was positively impacted by higher volume, favorable price, mix and foreign exchange, factory productivity, distribution and freight savings, and sourcing and engineering-led cost reductions. Partial offsets included higher commodity, warranty, and other product costs.
“Lennox International posted record first-quarter revenue, profit, and earnings per share in the quarter with double-digit revenue growth and margin expansion in all three of our businesses," said Todd Bluedorn, chairman and CEO of Lennox International. “Our residential business set new first-quarter highs for revenue and profit. Revenue was up 37% on strong growth in both replacement and new construction business, and profit rose 197%.”
In its commercial business, Lennox also set new first-quarter highs for segment revenue, profit, and margin, said Bluedorn. “Segment revenue was up 12%, led by high-teens growth in replacement business and high-single digit growth in new construction. Commercial profit rose 47%. In refrigeration, revenue was up 21%. North America revenue was up more than 25%, and Europe revenue was up low-double digits.”
The company is raising its full-year 2021 guidance for revenue growth from 4% to 8% to 7% to 11%.
Trane Technologies reported first-quarter revenue of $3 billion, up 14% compared to the prior year, and organic revenues up 11%.
The Americas segment, which includes North America and Latin America regions, delivered strong revenue growth and margin expansion despite ongoing COVID-19 pandemic-related impacts. Reported bookings were up 37 percent and organic bookings were up 36 percent, while reported revenues were up 11% and organic revenues were up 9%. Commercial HVAC organic revenues were flat, and residential HVAC organic revenues were up over 30%.
“During the first quarter, our global team's relentless focus on sustainability and disciplined execution of our strategy led to robust bookings growth, revenue growth, and margin expansion both at the enterprise level and in each of our business segments,” said Mike Lamach, chairman and CEO of Trane Technologies.
Given the exceptional first-quarter performance and steadily improving end markets, Trane has raised its full year 2021 guidance above its previous ranges, said Lamach. The company now expects reported revenues to be up approximately 10.5% for 2021 and organic revenues up approximately 9% versus 2020.
“We are extremely well-positioned as we enter the balance of 2021, with record backlog and transformation-related savings to invest in innovation that drives market outgrowth, maintains strong leverage, and generates powerful cash flow,” said Lamach. “This flywheel powers our balanced capital allocation strategy and will enable us to continue delivering strong and differentiated returns for our shareholders.”