Specialist
Executive at a residential services platform
Agenda
- Competitive positioning of key HVAC (heating, ventilation and air conditioning) players such as Trane (NYSE: TT), Carrier Global (NYSE: CARR), Lennox International (NYSE: LII) and Daikin Industries (TYO: 6367)
- Impact of new regulations, incentives and industry move towards efficiency
- Technology innovation update and emerging trends
- 2023 demand outlook
Questions
1.
How has the outlook for the US residential and commercial HVAC [heating, ventilation and air conditioning] market changed since our last Forum Interview [see US HVAC Industry Outlook – Competitive Landscape & Supplier Relations – 15 November 2022]? What are your expectations for 2023? What should we be monitoring?
2.
What needs to happen for OEMs to fix their commercial lead times? What materially needs to change before Q2 2024 to reduce lead times?
3.
Which OEM is best-positioned in 2023 across residential and commercial? Has there been any deviance from the various performances in 2022?
4.
You noted an overstocking trend so far in 2023. Does this mean we should expect a softer price environment in 2023? What price increases and pricing environment should we expect?
5.
What is your volume outlook for 2023 vs 2022, for quantitative context?
6.
What is your expectation for new heat pump installations in 2023 vs 2025? What type of growth do you expect for heat pumps vs the current install base?
7.
You mentioned the cost differential between repair and replacement work. Could you elaborate on the margins for new equipment sales vs repair work? Is a heightened repair cycle a plus for HVAC OEM revenues?
8.
If we start to see credit scores going down – you noted that they’re currently holding – what might it mean for the HVAC industry and the various aspects between OEMs and distributors? Will that affect lag or will it be immediate?
9.
Do you see any companies as uniquely positioned to thrive in a recessionary environment and potentially taking market share from financially struggling competitors?
10.
When looking at close rates on sold systems and retail prices, could you estimate how financing quantitatively affects those numbers? You said it makes both rise, but could you give some colour there?
11.
You mentioned 20-30% EBITDA for large PE consolidators in the US HVAC industry. How much longer can this record profitability last, in your opinion?
12.
If inflation continues into 2025-26, how much margin compression should we expect?
13.
Could you outline any potential consolidation or M&A activity from PE consolidators in 2023? Which notable platforms do you think might look to make moves?
14.
Do any particular regions have an excess of small-to-mid-sized HVAC service company opportunities?
15.
What’s your assessment of the primary HVAC OEMs such as Watsco, Carrier Global, Trane, Lennox International and Daikin Industries? Is there anything to highlight about their performances in 2022? Did any OEMs beat or lag vs expectations?
16.
How much market share would you estimate Carrier or York has taken in 2022 and 2023?
17.
It’s my understanding that Aaon has decently higher margins vs those of competitors. What drives that margin lead?
18.
You noted 5-10% market share for Carrier. What type of bottom-line growth does that equate to, if you had to estimate? How might that read through to 2023?
19.
What led to Daikin falling behind in 2022 after getting off to a hot start and making waves in the US? Will the company likely see margin improvement when it figures out lead times?
20.
What’s your take on the next large HVAC industry change – the refrigerant switch that’s coming up? What is driving this change and how could it impact the HVAC industry?
