64 annotations
services is twice the profit of the average of the company.
servic es twive profit margin of company
Transcript
2023 Q4
14 Dec 23
For the full year, we anticipate Global Products to stabilize in the second half of 2024 as backlog continues to normalize and Building Solutions converts its higher-margin backlog.
gp to stabilize in H" and BS to convert on backlog
Transcript
2023 Q4
14 Dec 23
Our capital allocation strategy remains unchanged, targeting to return 100% of our free cash flow to shareholders through dividends and share repurchases.
tsrgetting 100% cash return to investors
Transcript
2023 Q4
14 Dec 23
On the working capital front, our receivable collection has extended as our installation business critical to generate our service business has grown.
We are making structural changes such as more upfront payments to improve our cash collection cycle in the installation business.
While inventories remain elevated versus historical levels, primarily due to the challenges in our global residential businesses we saw overall inventories improved 5 days sequentially in the fourth quarter. We anticipate further improvement entering fiscal 2024.
We have the fundamentals in place to be a 100% cash conversion company over time.
However, continued growth investments and some further restructuring in fiscal 2024 will be headwinds in the fiscal year.
cf headwinds holding back hitting 100% conversiob rarte
Transcript
2023 Q4
14 Dec 23
s George mentioned, during 2023, we returned $1.6 billion to our shareholders via dividends and share repurchases.
Our free cash flow conversion of 76% was better than our updated guidance.
fcf conv etteer than forecast, 1.6bn return gto shareholders
Transcript
2023 Q4
14 Dec 23
Building Solutions backlog remains at record levels, growing 9% to $12.1 billion. Service backlog increased 12% and installed backlog grew 8% year-over-year.
9% backlog in crease in bs
Transcript
2023 Q4
14 Dec 23
Building Solutions backlog remains at record levels, growing 9% to $12.1 billion. Service backlog increased 12% and installed backlog grew 8% year-over-year.
9% backlog in crease in bs
Transcript
2023 Q4
14 Dec 23
the heat pump market overall experienced lower growth than anticipated.
heat pump lower thsn expected
Transcript
2023 Q4
14 Dec 23
. Adjusted EPS of $1.05 increased 6% year-over-year and include a $0.04 headwind from the cyber incident.
4c from cyber incident
Transcript
2023 Q4
14 Dec 23
The cyber incident was a 1% headwind in the quarter.
cyber head9wjd of 1% to revenue
Transcript
2023 Q4
14 Dec 23
Converting our strong top line growth into improved margins and cash flow is our top priority.
We are beginning to see our gross margins improve as supply chain disruptions continue to lessen. Within Building Solutions, we are also seeing stronger margins in our record backlog and as service continues to accelerate, we should see favorable mix as well. Cash flow is a key area of focus for us.
On the receivables front, we are making progress in improving the longer collection cycle historically associated with our installed business. Inventories in our short-cycle businesses continue to reduce as lead times normalize, and we are adding capacity to meet the strong demand in our applied HVAC business.
improving cf conversion is "top priority"
Transcript
2023 Q4
14 Dec 23
Moving on to Slide 5. Fiscal 2023 saw continued strength in install orders, which creates a strong service opportunity over the life of the equipment.
As we advance our digital strategy, including more than doubling our connected assets during the fiscal year, we are gathering more intelligence through data. This data allows us to better segment customer needs and create more proactive offerings across all of our domains, effectively utilizing our industry-leading service organization of over 20,000 professionals
install orders growing as is its digital strategy
Transcript
2023 Q4
14 Dec 23
In fiscal 2023, we generated $1.8 billion in free cash flow which represented 76% conversion.
low fcf conversion
Transcript
2023 Q4
14 Dec 23
Building Solutions
building solutions
Transcript
2023 Q4
13 Dec 23
Weakness in global product due to the resi demand, some more normalized comp as the supply chain is normalizing for our global product division and then, of course, the impact of cyber.
global product weak, resi weak, cyber
Transcript
2023 Q4
13 Dec 23
t is focused on the EV and semiconductor manufacturing. And then when we look at our pipeline, it's very strong. And a lot of that pipeline is focused on these key verticals. I would say from a booking standpoint, we were tracking prior to the cyber incident, a little bit better. And then with the outage, I think we're somewhat slowed a bit in that last week.
ev and swmi v good
Transcript
2023 Q4
13 Dec 23
Can you just provide a little bit more detail around the impact from the cyber attack? I mean, I think you said $0.04 in the fourth quarter, but it was kind of late in the fourth quarter. And then in particular, which businesses it impacted just kind of the mechanics of the thing? And then just clarify what you're saying in the first quarter, I think you said $200 million in cash, but then $0.02 of earnings, I might have missed. I'm not sure I can reconcile like all those numbers.
So maybe just a little more mechanical detail on the impact of the cyber attack.
Olivier Leonetti
Yes. let me give you some of the numbers. In Q4, we believe that the impact on the top line was about 1%. And it will be the same in Q1. What you have going on, Steve, I would go to the EPS impact in a second is what you lose in Q4, you recover some of it in Q1, right? That's why you have those numbers going on.
So 1% in revenue in Q4 and in Q1. The EPS impact in Q4 is about $0.04 and the impact in Q1 about $0.02. What is mainly impacted is everything which is short cycle, if you need to satisfy demand for something that you need to have in inventory, if you don't have it, you lose it, that's where the impact will be. My $200 million impact in cash is lower collection in the first quarter because we're not able to build immediately as we could not be immediately then that has delayed collection. That's the $200 million, Steve.
cyber impact
Transcript
2023 Q4
13 Dec 23
Global Products saw continued strength in Commercial HVAC, which grew high single digits after growing mid-teens in the comparable period 1 year ago. Demand remained strong and our leading position in Commercial HVAC was further extended in fiscal 2023. Client security declined low single digits as inventory further rebalanced as lead times improved materially year-over-year. Industrial Refrigeration had another strong quarter, growing over 45% driven by EMEALA. Global residential declined high-teens, driven by a greater than 30% decline in North America and a high single-digit decline in rest of world. North America faced challenging year-over-year comparisons as we were still working out of a backlog from last fiscal year. In Europe, the heat pump market overall experienced lower growth than anticipated.
comm hvac offsetting weak resi and fire & security(inventory rebalance)
Transcript
2023 Q4
13 Dec 23
Global Products
global prpducrts--- seems to be the issue with cyber
Transcript
2023 Q4
13 Dec 23
e're initiating guidance for fiscal 2024 for approximately mid-single-digit sales and adjusted EPS growth, respectively, and for free cash flow conversion of approximately 85%. Olivier will provide additional color on the guidance later in the call, but fiscal 2024 will show improvement following a seasonally slower first quarter.
2024 guide
Transcript
2023 Q4
13 Dec 23