Carrier Global Corporation ($CARR)

All right. This is the last one. Hopefully, you guys have enjoyed yourselves and learned a little bit about the industrials sector and had some food and drinks. So that's kind of the point of all this. But we're going to finish off here with Dave Gitlin, CEO of Carrier. Dave, thanks for being here. And sorry, Mike Redner as well. Dave, thanks for being here, and I'm going to kick it over to you for some intro and then we'll go into Q&A.

Well, thanks, Steve. Thanks for having us. Thanks to JPMorgan as well. As we close out 1Q and look at our positioning for the rest of 2026, our team is energized and executing against a clear strategy. Over the past several years, we have intentionally reshaped Carrier into a focused, high-quality portfolio exposed to durable secular tailwinds: electrification, energy efficiency, digitalization and the growth of data centers and cold chain infrastructure. With leading positions across attractive verticals and geographies and 50,000 tremendously talented and dedicated teammates, we are advancing our vision to be the global leader in intelligent climate and energy solutions, guided by a disciplined playbook to win in products, aftermarket and systems. The strategy is showing up in results. Roughly 40% of our portfolio, commercial HVAC and aftermarket, have grown double digits for the past 5 years, and we remain on track to deliver our sixth consecutive year. In commercial HVAC, we continue to see strong demand and record backlog, with data centers a standout driver. In CSA, data center orders were up about 400% in 4Q, and we expect another strong quarter in 1Q. Importantly, our wins are not just cyclical, they are share-based, enabled by differentiated new products, expanded capacity and deeper technical resources, all helping us capture a larger portion of the data center value chain. In aftermarket, the playbook works, and we continue to drive annual double-digit growth by increasing service attachment and leveraging digital tools to deepen customer relationships and improve uptime. This creates a more resilient, higher-margin earnings stream. On our shorter-cycle residential and light commercial businesses, we are translating our innovation road map into differentiated launches that support margin expansion and share gains globally. In CSA Residential, we've introduced our first integrated heat pump domestic hot water offering and new digitally enabled thermostats to increase customer intimacy. In light commercial, we introduced a dual fuel rooftop unit, which automatically selects the most efficient fuel based on the outdoor temperature. In CSE, we are launching a new Viessmann-branded lower cost but highly differentiated heat pump, which will expand our TAM. In CSAME, we released a Toshiba-branded side discharge VRF system that has best-in-class efficiency with higher reliability and great aesthetics. In our Truck and Trailer business, we expanded our all-electric refrigeration units into Asia, leveraging advanced technology to deliver faster cooling with lower energy consumption and Lynx-enabled cold chain visibility. Taken together, these actions reinforce the core of our strategy: leading with innovation, scaling our aftermarket and digital capabilities and allocating capital to the highest return opportunities, positioning us to expand margins and gain share across cycles. From an outlook perspective, we remain on track to deliver our guidance on sales, profit and adjusted EPS. We are excited about 2026 and focused on delivering best-in-class results for our customers and shareholders as One Carrier. With that, Steve, happy to get into the Q&A.

Great. Thanks, Dave. We're just having everybody kind of open up with a bit of a state of the world around all the events going on in the Middle East and how that may impact you guys temporarily. Or your exposure is pretty low, I understand.

It is. It's actually a very strategic area that we want to grow, but today, it's about 1% of our sales in the Middle East. So not material exposure. Our #1 priority, of course, is supporting our 800 people in the region, the safety of them and their families, and we've gone to great lengths to do that while supporting our customers. We have equipment that are in critically important areas to our customers, and we're balancing, obviously, the safety of our people and making sure that we support our customers. So no material exposure. We'll watch some of the logistics of containers making their way through the Persian Gulf. But for us, we've been shipping all of our units from Asia to America around Africa, around the Cape of Good Hope. So we don't have anything that goes through the Suez Canal. And we've taken all of those routes away from product going into Europe. So not a material exposure for us as a company.

Okay. Just sticking with, I guess, the near term. You guys talked about $5.5 billion to $5.6 billion-ish of sales to 2Q. Anything on the bottom line that we have to be aware of as far as the move from 1Q to 2Q on kind of the sequential seasonality? Understanding that you just reaffirmed the annual, of course.

Yes. And look, reaffirmed the quarter, reaffirmed every quarter, reaffirmed the annual because there was some sense at a couple of the conferences down in Miami that we were changing something for 2Q, and we were not. Everything is playing out exactly how we thought it was going to play out. $5 billion first quarter, $5.6 billion in the second quarter. And I think what happened is we generically said that we're kind of balanced between first half and second half, and we believe balance as in exactly 50-50, 49%, 48%, 1 half, it fit our definition. But having said that, look, what you're dealing with in 2Q is we said, if you think about just CSA, residential is still down about 20% year-over-year, light commercial down in the high single digits. We have really tough comps on the commercial HVAC side because 2Q of last year was up 45%. So I don't think we have any particular call-outs on the EPS side, and we feel good about the $5.6 billion in 2Q.

Okay. Anything on the order comps in -- to keep in mind as we move through the year? You just talked about -- I guess, touched on data center being another strong quarter. Anything to think about in this quarter from an orders perspective?

No, not really. I think if you look at orders last year, the first half was down 6%, second half, I think, was up 3%. But when you look at it at a business level, it was kind of all over the map. If you look at CHVAC, we had really good quarters. I think it was 2Q and 4Q. Transport was really good, 1Q and 3Q, and resi got weak as we kind of got into the middle of the year. And you know that data centers can be extremely lumpy. So I guess, Steve, short way of saying or a long way of saying no particular call-outs on the seasonality or calendarization of orders. I will say that -- I mentioned in the prepared remarks that Q4 was really strong with data centers, especially in CSA. We continue to grow our backlog. Our orders will be very, very strong again in 1Q. And we continue to win head-to-head, which is extremely encouraging.

Yes. It's really -- you guys have really cranked hard on this data center stuff for sure. In that whole business, the transformation of where you were to where you are today has been pretty impressive. Obviously, you've got kind of empty cupboards from a technology perspective that you really cranked up over the last 6 or 7 years or so.

Well, I appreciate you saying that because we'll -- we were working on something to show when we do our 1Q call that shows the product portfolio that we had on the CHVAC side when we spun and what it is today. So if you looked at -- there's nothing that we don't bid today. And there was a lot of stuff 3 years ago that we just didn't have the products to compete. So we are -- you think about what we've done, water cooled chillers, maglev bearing, 10-, 18-megawatt. Not only do we have them, but we're winning with those products. 2-, 3-megawatt, air cooled chillers, maglev bearing, precooling. So we are very excited, the screw chillers that we have over in Europe and Asia. So the product portfolio is night and day. So have we spent maybe a little bit more R&D than a couple of our peers? Sure, but we had to really build out that portfolio. And I can tell you, we're going to have one of the hyperscalers present to our Board next month. But they will tell you that when they witness our FOK, our first of kind unit test and they put us through a bit of the ringer on the requirements, they will tell you to a person that technically, we are performing at superior levels.

And just talk about the shift in the industry from -- not air to liquid cooling, but within the chiller industry from what's going on between water and air cooled chiller because I think people sometimes get mixed up in -- from liquid cooling and air cooling. But within the chiller industry, there's water cooled and air cooled. Maybe just look at -- talk about how Carrier views that transition and how you're addressing that.

We still have both. There was this -- like our first major hyperscaler customer really had a bias for water cooled chillers. And those were 18-megawatt and maglev bearing. And it depends a little bit on your access to water in some of these locations. You know that traditionally, data centers were built in very cold temperatures where water was a little bit more plentiful. Now you're seeing it built in hotter climates where water is a little bit tougher to come by. So you see -- both are closed-loop systems, whether it's a water cooled chiller or air cooled, they're both closed-loop systems. But when you -- a water cooled chiller will just use more water that needs to be treated. So you are seeing, especially with a couple of the colos, especially in Europe, which has a bias for air cooled chillers, and some of the colos and even some of the hyperscalers, a bit more migration to air cooled. If you look at Carrier, when we spun, a couple of our -- the key players, I'd call them like 30% share, we were probably in the 10% range. On water cooled, when we introduced this new product line, we went from 10 to 3x that, 4x that in just the last 5 years. If you look at what's about to happen on air cooled, I don't know if we're going to go up 3x or 4x, but we're going to go up exponentially because what we're winning and bidding now a lot are these 2- and 3-megawatt, now they want 5-megawatt air cooled chillers. So our share will de facto increase on the air cooled side as well.

And so is the market going in that direction? Or is that Carrier now pivoting to focusing on share in that direction? Just talk about how the market is evolving. I guess it's still pretty split.

It's still split. I mean, it's both. We have a hyperscaler that we're close on a win with. It will be a mix. They're going to order some water cooled, some air cooled, and it kind of depends on the specific needs of the location. I would say probably a little bit more of a move generally towards air cooled, but you still see demand for both.

And as far as your capacity is concerned with all this growth and all these orders, just talk about where you've been on chiller capacity to date and then where you're ultimately going by, let's say, 2030, where do you expect to be from here?

Well, I think it's -- our capacity expansion, especially here in the Americas, has helped us tremendously. Because we're probably up 3x to 4x for both our capacity for air cooled and water cooled here in our 2 major facilities in North America. So we have the ability to take orders I think that some of our peers cannot. So I think we're winning technically. I think we're winning in part because of the relationship we built with a lot of our key customers and how we support them not just by shipping a product, but also seeing it through to commissioning, the type of aftermarket agreements we're working with them. And I think, look, we came into the year with about $1 billion of backlog for 2026, not -- that excludes backlog we have for '27 and '28. We committed to do $1.5 billion. I don't think it would surprise you that internally, we're pushing for a bigger number if we're externally going to commit to $1.5 billion. And so that means we needed $500 million of book and ship business just within the year, and we're pushing for more than that. But I can tell you, we're working with one guy who's kind of vacillating between an order for 2Q and 3Q, and we're telling him, "You tell us what you need and we can support either one." And I don't think there's a lot of guys that can do that.

And is that out of 1 like, main facility? Or are you kind of like leveraging your whole footprint to be able to do this?

We actually try to leverage our entire footprint. We try to deliver for the region within the region. So in North America, we have our Charlotte facility, which we've expanded by 50%. We've converted one of our Monterrey, Mexico facility that used to do boards entirely to chillers now. So we try to do most of what we need for North America in North America. There will be times we import from Asia if we -- before we had some the capacity expansion. But we typically do a lot of in-region manufacturing.

And as far as the revenue numbers here, the $1.5 billion you're doing, is there -- and you call it data center revenue. Is it the vast majority chillers? Or are there other things in there like a BMS or something else that -- some other type of product that may work its way in there? Is the majority of that chillers?

The majority of it is chillers. BMS is meaningful. I tell you, it's one of the unsung heroes within the Carrier portfolio is our ALC, our automated logic controls business, very high margin. It's grown double digits every year since we spun, really well positioned. I mean, kind of the go-to for one of the hyperscalers in particular. It's like we have, I think, 80% share. But they -- it's a real -- a bit of a gem that's now, I think, going to become the big differentiator. When you think about how do you differentiate with this whole liquid cooling, traditional cooling, I think a lot of it will come down to the controls. And we've gained a lot of share. There was a point at which we were #5. I think when we spun, we toggled between 2 and 3 now in the Americas. And I think the big differentiation will be the control mechanism between traditional cooling and liquid cooling. Because a lot of -- I think most of us in the space will have the capabilities to do most of everything. It's going to be how you have the algorithms and the sophistication around the controls, and we have this gem of a business that will enable that.

How much liquid cooling revenue do you think you're going to have in '26?

I would say it's probably less than $100 million.

But that's part of the $1.5 billion?

It's part of the $1.5 billion. But we've been -- we've taken the approach, Steve, being kind of very judicious and structured on how we attack this opportunity. There's no question that we believe we have a right to win in the space. We looked at acquisitions on the CDU side. But as you know, it's effectively a mini chiller. So we said, let's just -- we could develop it ourselves or we could go outside. We actually -- pace matters because speed to market. But technology matters, and we have brilliant engineers. We have over 5,000 engineers, a lot of whom design chillers for a living, which a CDU effectively is, it's a packaging exercise. So we have our own 1-megawatt. We have a 3 and a 5 coming out here in the next few months. Manifolds, anyone can do, never buy. Cold plate, they're still like trying to figure out the best way to handle that. So I don't see us doing a liquid cooling. I think that the key for us is organic development. And if we're looking at M&A, it's probably in the $100 million to $200 million range. It's probably not in the $5 billion to $10 billion range.

And you're saying that cold plate is not an area that you don't really want to go that far into the room?

No, I'm not saying that. I think cold plate is a part of the system. What we're debating is what we want to do in the area of cold plates. I don't think we necessarily need to manufacture cold plates, for example. But do we need people that know -- like today, we work very closely with NVIDIA and Dell and the chip manufacturers. Do we need to build up those skills? Do we need to build up systems engineering? Do we need people that can design cold plates and know how that can interface with the CDUs in the most effective way? Yes, that's a capability that we believe we need, but we're not looking to necessarily get into cold plate manufacturing. There is -- the jury is out on something like that.

Right. And the thing about the CDU landscape is it's changing so fast, that like you don't want to -- it's kind of like the train is moving and you're -- everybody is kind of running, trying to stay close to the train, ready to hop on at any given time. So to pigeonhole yourself into one of the early versions and then have to kind of like constantly redesign, I think it's been interesting to see how all the HVAC guys have -- I think it's the right play to attack it when it becomes a system-level component, which plays right into your guys' strengths.

Yes, you need the elements. The technology, as you said, Steve, will change. We have this relationship with ZutaCore. It was one of our early VC investments. We continue to be very, very...

Is that two-phase or emerging?

Two-phase.

Two-phase, yes.

So we believe we're going to go from single-phase to two-phase. ZutaCore is two-phase. So we like that investment because we think that's not -- it's not whether, it's when we'll move in that direction. We're not spending a lot on immersion today, but we are spending on, obviously, single-phase and now ultimately through ZutaCore, two-phase, and we may look at other things in that space as well.

So the $1.5 billion of data center, maybe a little bit upside there. On the rest of the applied markets, what are you guys seeing there? Pretty much in line as far as the orders and the revenues coming there?

Yes. I mean, the math would get you to LSD on the non-data center piece. And that's really a function of focus. I mean, we have so much energy going into some of the data center activity. But look, the -- I know we have 1 peer that often talks about 14 verticals, but we participate in all those as well. Education, higher ed's kind of made it a bit of a comeback versus last year. Same with K-12, which cuts across light commercial and applied. Hospitality, we'll see what happens, obviously, with the war and how long that lasts. But hospitality has been doing quite well for us as well. Even commercial real estate surprisingly for us has been year-over-year positive. I saw the ABI numbers earlier today, which were in spitting distance of 50, even projects proposals was above 50. So we'll see. I think we're well positioned in the non-data center piece, but that's about what we thought.

And so as far as this trajectory in the second -- you got a kind of a tough comp, so it's growing low singles, and it's kicking up pretty nicely in the second half. Is that really when the data center shipments really start to hit?

Yes.

In the second half?

Yes. 100%.

Okay.

The backlog is there. It's going to be an execution thing. And we -- I wish it were more linear by quarter. It is what it is. It's kind of how the customers wanted it, but we are really well positioned to deliver that in the second half. We're not worried about that.

Even though it's really cold outside here, we are kind of tiptoeing closer to the spring selling season, so maybe we can pivot to resi. What are you guys seeing out there? I know Watsco was here yesterday and making some encouraging comments about their sales trend. There's a lot in their portfolio, but a little more constructive. I know it's early. What are you guys seeing in the latest turn of the cards there as an indication for the season?

Yes, everything consistent with what we thought, quarter-to-date. If you step back, we said down -- volume down kind of in that low double-digit range, and we said sales down in the high single digit. When you look at it, you would be down about 20% in the first half and up about 10% in the second half. And that 10% is driven by the absence of destocking in the second half. So for the full year, that gives you 5%. I think down around 20% in the first quarter is how we planned it, and things are going to plan. Movement has been -- January and February in line with what we thought, same with March to date. So I feel certainly encouraged by the fact that there's nothing that is in any way worse than what we thought, and we'll have to see how the rest of the quarter and how the season plays out. I'll say this, that one of the most important metrics, KPIs that we have within Carrier is field inventory. We got burned last year by having more field inventory in the channel than we should have as we kind of went into the season and came out of it in the summer, and we are determined to not let that happen again. So we wanted to end the year and January down 30% year-over-year, which we did. We ended February down 30% year-over-year. And we still are in that range of down 30% as we sit here today. If you look at where we are, our field inventory absolute levels, if you compare it to a 6-year average, for us at Carrier, it's down about 15% to 20%, and we're back to like 2018 levels. So we're being -- we will 100% support the ramp. And if the ramp is better than we think because of demand or the heating season or cooling season, we will 100% support our customers, but we also don't want to get out over our skis on field inventory. So in 1Q, we were absolutely tracking to what we thought, and we will also be careful to prioritize field inventory over sales, and I think we'll be able to manage both of those equations.

Got it. And so would you -- so you're saying inventories are low. Are they -- I guess, the first quarter steps up nicely from a shipment perspective. They're going to remain pretty low through the first quarter is what you're saying?

Yes.

Into the selling season?

Yes.

Okay. Got it. Okay. You also made a few waves with your industry projection on the quarter -- on the quarterly call, down 15% -- or 10% to 15%, I think it was, right? Are you still feeling like that's the right number? Is there -- is that just a hedge for bad things to happen, as the former CEO of UTC used to say? But -- or what's the underlying model for that one?

Yes. I mean, look, the way we came up with the number was that we said all of these -- this perfect storm we had in the second half of last year, like these 4 macros that all went south at the same time where existing home sales at a 20-year low, soft new home construction, weak consumer, consumer confidence at 30-year that started with a 6. We just assume that all of that continues into this year. And then if you took the second half number and you assume that continues into this year, the second half of '26 versus the second half of '24 would put you down 30%. So we assume the first half would be down 30% versus the first half of '24. So that's how we came up with the math. Did we want to be confident that we're going to not miss after what happened last year? Of course. But we -- it's a short-cycle business. There's a lot of variables that we don't quite know how they're going to play out. 1Q is tracking as we expected. And then we'll have to see. I will say, if I may, Steve, that in terms of controlling the controllables, there's a lot of really good stuff we're doing behind the scenes that go beyond just tracking what the weather in Chicago is going to be. I mean, we see hydronics as an enormous opportunity for us, early days there. We see Carrier Energy, this integrated battery heat pump, as a significant opportunity. You know, Steve, we used to not be a thermostat player. Now we've introduced it at the high end. We're introducing it across the entire portfolio, with digital as one of the real priority areas that we have here in North America. So I could double-click on any of those topics, but I do think there's a lot going on underneath the covers with CSA resi that positions us quite well.

I guess just if you throw all those in, and I know there was an announcement with -- you guys are partnering with Google and Tesla, I think, on the energy storage combination, which is an interesting one. But if you kind of sum all those up, you should outperform the industry if you're doing pretty well on those. Is that like still a 3%-ish, low single-digit percentage uplift for you guys relative to the industry, you think, over time?

It's hard to say a precise answer to that. What I'll tell you is today, we're a little under, like we're close to 1/3 of the market. And we have very high margins in that business. I think the Carrier Energy piece, we've sized at a run rate number of like $500 million of incremental a year. We're working -- that one partnership that we kind of established with Google and Tesla and others to influence local policy is -- we think that's exciting, but we're working closely with 10 utilities and 2 of the hyperscalers. So that's really exciting. We're going to come out with our Gen 1 product. That's already out there today. We are in Carrier homes. We're testing it. We need to validate that not only will the heat pump move over to the battery during peak hours, but you can return the electrons, the excess electrons during peak too back to the grid. So that's getting certified by EPRI. That's going really well. And then our cost-optimized unit, our Gen 2 unit comes out next year. So that's going well. Our hydronics, we came out with a unit that is really for an air-to-water, which is a very small part of the North American market. And now for air-to-air, we have technology that others have with an integrated heat pump with a boiler, but we're also working something else in kind of the more to come category that I think could be quite disruptive that will come out next year that can get us more -- leveraging our heat pump to get us more into that hydronics space for air-to-air market.

Where are you on ductless now in your portfolio? You guys -- Toshiba, obviously, good technology move. Where are you on ductless now?

Ductless is great. I mean, it's a high-margin business for us. When -- I would say, 2010 that we were probably like 5%. And today, it's in the high teens in terms of market share. So we've come a really long way. We're in spitting distance of 20% share. I remember actually at our Investor Day...

Is it globally or U.S.?

I'm talking U.S. right now.

U.S. Yes, got it.

We're using the global technology. But specifically for the ductless market in North America, we've gained share. If you look at the crossover unit that we introduced here in North America, we did that 3 years ago. Since we've done that, our CAGR for that unit has been 36% over these last 3 years. So some people don't even realize that we have -- that's really what you even asked us about. On February 10 of 2020, at the New York Stock Exchange, you were focused on ductless. Rightfully so, you thought it was a growing market. See, I remember what you...

That's when you said you have a guy in the basement calculating the market and the replacement age.

Yes, we're going to go out.

Yes. Because he says the guy in the basement, is he still around?

Yes. No, we let him see the sun once. Every 5 years, he's allowed out. Actually, last year, he was not allowed out.

Yes, yes.

So -- but if you look at this this unit that we introduced last year, it's basically -- the external unit, as you know, is ductless, and it could pair with either a ducted or a ductless indoor unit. We've gained tremendous amount of share. And that's part of the beauty is we can leverage Toshiba technology. We can leverage Viessmann technology to gain share in that really important space. It's very high margin. If you look at our ductless business in the U.S., that new product that we introduced just 3 years ago is 40% of our sales today. And we're working on more innovation. So ductless in the U.S. or North America is about 15% of the market. It's growing. It's growing quite well, and we're really well positioned there.

Can we just talk very quickly about price? You referenced the 1% for resi. What do you expect for price? Any updates there as we kind of move into the selling season that's pretty much set, that's pretty much baked?

Yes. We feel good about that.

Okay. Okay. And then just going to touch quickly on Europe. What -- any update on the dynamics there? Dover was here yesterday. They do the heat exchangers at SWEP. And they were pretty bullish, saying it's bouncing off, but off of a very low level. They don't quite have the boiler offset that you guys may have. But what -- any updates there of note since the fourth quarter?

Well, look, I think the short answer is no major updates, things are tracking to what we thought. I would say heat pump is very strong. We said heat pumps would be up double digits. Our model assumed boilers down low single digits, but we also have the market down mid- to high single digits, and that will be driven by boilers. I think that -- so when we look at 1Q, everything is tracking to kind of what we thought. The thing to watch, I would say two things to watch in that market that are perhaps in the category of reasons to believe that we may -- as we start to dig our way out of this, I mean, you think about the German market, north of 1 million units down to 600,000, that's a big pill to swallow over 3 years. But number one is we have this new product coming out that will be transformational. We -- today, Viessmann, a very premium brand. This one will be in the mid- to upper tier, Viessmann-branded. Lower cost product, but lower cost to install. So if subsidies come down in certain countries, this is like perfect not only for the German market as a second offering or to convert non-Viessmann installers, but in places like Poland and elsewhere, this is like perfectly positioned. So this product is 100% one to watch. And then we're going to have to see the impact of this war because, obviously, there's more planned replacement on the residential side in Europe than there is North America. And what happened with the Russian invasion of Ukraine was there was a lot more -- there was this kind of rush to move away from fossil fuel because Europeans get reminded that 85% of their natural gas comes from outside of Europe. And you don't want to -- they don't want to be reliant on Russia or the Middle East or the U.S. So we're going to have to see when natural gas prices went from EUR 30 per watt hour to almost 2x that in the span of 5 days. It's a bit of a reminder that it's probably a good idea to switch to heat pumps over time. So we'll see the impact of that over time.

So it sounds a little more encouraging on -- but nothing in the results. Everything is kind of on track so far, but a little more encouraging, some signs of life?

Yes.

On the light commercial side, just really quickly, anything moving there relative to guidance? And any verticals stand out?

No, I'd say the two that probably stand out, K-12 is a little bit better than we thought. Retail, especially where we go direct to the retail customers, the national accounts, those are going very well. We said that 1Q, the first half would be down around 10%, second half down mid- to high single digits. I think that in 1Q, it's probably slightly better than we thought it was going to be, but we'll have to see, a couple of weeks left.

And then lastly, just the transport refrigeration business. Is this a keeper? Is this going to remain in the portfolio?

We like the business. We like the business. Ed Dryden and the team are doing a very good job. The way we handicapped the year at flat year-over-year that -- the Container business just has really tough comps, and then Truck Trailer would be a little bit more positive and offset some of that. I'd say to start the year, container has been stronger than we thought. I mean, if you think about some of the impacts of the war, one is suboptimization of the container fleet out there, which can drive more orders. So I think Container in 1Q, 2Q will be probably a little bit better than we thought, but we have really tough comps in the second half. But we got to keep our eye on Truck Trailer because their customers are under some pressure with raising fuel prices. So we are where we thought we would be, and we feel good about the first half of Container. We'll keep an eye on the rest of the business. But no real new news, and it's a good -- it's a really good high-margin business that's got -- been dealing with some of the short-cycle stuff at recent lows, and those will come out of that.

And then the -- just moving to the bottom line, the $50 million to $100 million in positive price/cost spread, I think that's the number. Is that still intact? And anything moving around on tariffs?

No. Look, the one thing I'll say on kind of tariffs overall, you have IEEPA, you have 232, you have 122. And so we deal with input costs that are all over -- that change every day. It could be raw material, it could be tariffs. The short answer to your question, Steve, is no news. But we will get a point of price, give you a couple of hundred million and you combine tariffs and raw material, that's a couple of hundred million, and we'll offset one with the other. But I do believe that I think it's a misnomer to say that all we did is pass IEEPA along to our customers because when you have input costs that go up and you're raising price, it's hard to do a one-for-one connection to that. So we manage all kinds of moving parts in the cost and price formula to get where we need to get to. But we have a formula around productivity that's been proven to work, and it will work again this year.

So is there a little bit of upside there, potentially?

I don't think so. I don't want to say that. It's premature to say that. But we feel like -- we feel that we can overcome a lot of surprises. We have, every year since we spun, whether it was COVID, supply chain issues, maybe you see some logistics issues that happened with suboptimization of container. We don't worry about surprises because we have a formula that works.

Great. Any questions out there? We have time for one question, maybe. Nope? Nobody asked a question the entire event.

Maybe your last event, someone would do it.

I mean, look, I just think I asked all the great questions. Not enough out there.

Yes.

All right.

Thanks for having us, Steve. Appreciate it. Good to see you again.