Good morning. The largest climate company on the planet reported this week, and the story isn’t the record orders — it’s the margin. Carrier sold more equipment than a year ago and kept less of every dollar. Read that as the weather report for your own P&L.
Top story: Carrier’s sales rose 4%, but its margin fell — input costs are outrunning price
Carrier Global (NYSE: CARR) reported second-quarter 2026 net sales of $6.35 billion, up 4% (organic sales up 3%), on July 28. Here’s the line for your business: adjusted operating margin was 17.2%, down 190 basis points from a year earlier — and the company’s own explanation is that favorable volume and productivity were “more than offset by the impact of increased input costs and unfavorable business mix.” Adjusted earnings per share came in at $0.86, down 7%. In plain terms: the biggest buyer of steel, copper, compressors and refrigerant in the industry still could not fully pass rising costs through in the quarter. If Carrier is eating some of it, the shop replacing a condenser this week is eating more of it. “Sales are up” and “margins are down” are living in the same building right now, and most owners only track the first one.
Quick hits
Residential replacement demand is holding up. Inside Carrier’s Americas climate segment, Residential and Light Commercial were up 9% and 10% organically, even as the larger Commercial line slipped 8% on delivery timing. CEO David Gitlin called “improving Residential and Light Commercial markets” a bright spot. The homeowner-replacement engine that most trades shops live on is not the thing that’s soft.
The data-center wave is real, and it’s lengthening lead times. Carrier said total orders rose about 40%, with Commercial HVAC orders up about 65% and data-center orders up more than 300%, citing “record backlog levels.” Record OEM backlog is good for demand and bad for your schedule: when the factory is this full, equipment lead times stretch and allocation tightens. Order early, confirm ship dates in writing, and don’t promise a homeowner an install date you’re building on an OEM’s record backlog.
They raised the outlook anyway. Carrier lifted full-year guidance to about $23 billion in sales and about $2.90 adjusted EPS. Confidence in demand is high — but note the shape of it: growth in dollars, pressure on the point of margin. That’s the exact combination showing up on a lot of contractor income statements this year.
The Tip: track your gross margin trend, not just your revenue line
Once a quarter, pull your gross margin as a percentage — revenue minus direct job costs (materials, field labor, and equipment), divided by revenue — and line it up against the last four quarters. Revenue can climb while that number quietly slides, and by the time you feel it in the bank account you’ve given away a year of pricing. If the trend is down, the fix is boring and it works: re-price your flat-rate book to current equipment cost, add a dated material-cost line to quotes so a copper or refrigerant move isn’t your loss to absorb, and stop honoring 60-day-old estimates on jobs where your supplier’s price has already changed. Carrier has a procurement department and a hedging desk and still lost 190 basis points. You have a spreadsheet — use it more often.
Tool watch — [Not sponsored]
You don’t need software for this; you need a habit. Build a one-page quarterly margin tracker in whatever you already have — a Google Sheet, or the job-costing report inside Jobber, Housecall Pro, or ServiceTitan if you run one — with four columns: revenue, direct cost, gross margin dollars, and gross margin percentage. Fill it in the first week of every quarter before you look at anything else. The owners who hold their margin in a cost-inflation year are almost always the ones who can see the trend line. No one paid for this mention.
That’s the callout. See you next time.
Source: Carrier Global Corporation — Carrier Reports Second Quarter 2026 Results (PRNewswire, 28 July 2026): https://www.prnewswire.com/news-releases/carrier-reports-second-quarter-2026-results-302836318.html