Specialist
Former executive at at AC Today Inc
Agenda
- Competitive positioning of Lennox (NYSE: LII), Trane (NYSE: TT), Carrier (NYSE: CARR) and Goodman (TYO: 6367)
- PE activity and possibility of new HVAC (heating, ventilation and air conditioning) entrants
- Impact of SEER (seasonal energy efficiency ratio) rating changes due January 2023 and innovation of new technologies
- Supplier relations and branding recognition
Questions
1.
What macroeconomic trends should we be watching? Would you highlight any trends affecting the US HVAC [heating, ventilation and air conditioning] industry in the current operating environment?
2.
How sizeable are the price increases you might be expecting due to the new efficiency standards? Do you think it’ll be along the 30-35% lines that you mentioned were industry-wide, or do you think there will be another increase as well?
3.
You’d mentioned that inventory specifically for that heavy tonnage equipment in parts is low, so do you have any outlook or any forecast of when we’ll see healthier inventory volumes of equipment and parts? What will have to happen for that to come about?
4.
Could you outline how the new SEER [seasonal energy efficiency ratio] changes coming in January 2023 will drive demand for new HVAC equipment? Could you also describe the changes themselves?
5.
It sounds as if we’re going to see a spike in heat pump demand. Are there any associated challenges or costs when it comes to installing heat pumps as a homeowner or an OEM? Would you highlight any associated challenges?
6.
How much of the current equipment that’s deployed – the current install base – will meet the new SEER requirements? How much do you estimate will need to be replaced or upgraded by the 1 January 2023 deadline?
7.
Is there anything that would speed up the natural replacement cycle you mentioned? It’s usually 8-12 years. Is there any way we could see that sped up to perhaps get some of that grandfathered equipment out of the installed base?
8.
How do you normally assess demand for repairs vs new equipment? Should we monitor any factors that you use to assess peaks and troughs of new equipment demand vs repair demand?
9.
How will a likely recession affect demand for HVAC equipment? How does HVAC demand typically trend during market downturns, in your experience?
10.
Could you outline the competitive landscape around US HVAC for the residential and commercial markets? Who are the traditional OEMs, and who dominates what segment? Could you start on the manufacturer side and then get into contractor?
11.
What key factors make Carrier the market leader? What competitively differentiates the company from the other four premium OEMs, aside from the e-commerce offering you mentioned?
12.
You mentioned Daikin eating up market share. What do you think is driving that, and who is the company taking share from? It sounds as if it might not actually be taking it from the other premium OEMs.
13.
Are any other companies in the residential or commercial industries primed to take share from the big five major OEMs? Are there any disruptors you could see potentially breaking into this market, or is it kind of static with the five OEMs?
14.
If you’re a regional competitor in the US – such as PremiStar, formerly Reedy Industries – dealing with the larger premium OEMs, how do you compete? Or do you just have a different customer base?
15.
How should we assess Google and Amazon’s growing presence in the US HVAC industry, with smart home features? What is your outlook for their presence?
16.
Are there any consolidators that you think would offer key synergies for Amazon and Google?
17.
Are there any major risks with an M&A strategy focused primarily on residential HVAC? Are there any regional differences in the M&A landscape around residential HVAC?
18.
Is there a status of the technician labour pool? Are we seeing shortages in that labour pool? Is there any data you’d use on total HVAC techs in the market over time?
19.
Would you like to highlight anything else around US HVAC, perhaps any upcoming legislation or industry demand trends that we should be monitoring as we go into 2023?
20.
Can you walk us through the actual change that’s taking place in US HVAC? What actual efficiencies are being addressed to make the add-on cost worthwhile at the end of the day?
