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Global and US HVAC (Heating, Ventilation and Air Conditioning) Market Research Report, 2018-2019

Published By :

Chisult Insight Co., Limited

Published Date : Jun 2018

Category :


No. of Pages : 288 Pages

2017 was another solid year for the HVAC industry, with an ongoing recovery continuing to generate solid MSD type levels of growth in residential with low to MSD growth in commercial. While both cycles are getting longer, we are somewhat more balanced around risks to the upside and downside. We see another few years of above average normalized growth in residential (MSD) as the tailwinds from the housing echo replacement boom are likely at least partially real and pent-up demand from the recession is not quite done yet, while the non-res cycle is shifting to lower growth but still has some legs left to sustain growth. The key risk item, outside of weather or a drastic shift in the US economy, is price/cost, with commodity prices rising and OEMs committing to pass through price to offset, but with some differences in timing which could cause near term hiccups to quarterly earnings. Overall, industry fundamentals remain solid and steady, with a positive setup and mostly stable competitive dynamics with little risk of disruption despite increasing technological evolution in the space.

US Resi momentum continues amid strong fundamental demand backdrop: little debate near term but focus shifting to length and sustainability of the cycle.

Replacement rates have now reached the high end of historical ranges, and the market has officially regained its long term trend line, as pent-up replacement demand from the recession has consistently bolstered MSD+ type growth over the past several years. Our analysis assumes that there is still some legs left in the pent-up demand story, but with further upside dependent on the handoff to the housing boom echo effect, which most expect to create some level of above average replacement demand as units put in during the housing bubble in the early to mid-2000s are now coming up for replacement. Simple arithmetic would indicate significant upside over the next several years, but we do see caveats as the housing bubble was focused in the South where units may not last as long (and hence upside would have already been realized), the market is now moving past trend line, and rates are rising along with system prices on higher commodity costs. We continue to see a base case scenario with MSD unit growth out to 2020, which only factors in a portion of the theoretical upside from pent-up demand and the replacement boom, after which we think the industry could return to a more normalized LSD type growth level. Uits are lasting longer nowadays, extending useful life and allowing for extended warranties, which could theoretically extend the HVAC upcycle for a longer period and mitigate a potentially negative impact as the positive tailwind for replacement opportunities from the housing bubble turns into a headwind from the housing crash towards the mid-2020s, but none of this is dialed explicitly into our base case yet. More near term, weather comps are more normal this year after 2016 saw a cooler start with late heat, and we assume MSD growth in housing. Bottom line, we model 5% unit growth in residential for both 2018 and 2019.

US Commercial HVAC steady.

This market remains a more straightforward call, where we see 3-4% growth in 2018/19, following ~5% growth in 2013-17. This assumes ~3-4% underlying construction growth over the next two years, with replacement steady in the ~4% range. We expect unitary and applied to grow at similar rates, with applied potentially growing slightly faster due to strength in institutional non-res verticals. Overall, the commercial HVAC market depends more on the macro and commercial construction than any industry-specific driver, and we expect steady growth here as the market remains well below peak and the non-res cycle remains solid, though getting later in the cycle with less relative upside.

Price/cost the key debate as inflation and tariffs driving incremental commodity headwinds; price should offset in resi/unitary, but risk in large commercial applied.

Overall commentary from companies entering the year had mostly been positive that price increases would be enough to offset rising commodities, but with potential for tariffs and another recent run-up in prices there could be incremental risk. Residential and light commercial unitary pricing should be able to offset higher commodities with potential for another round of price increases later this year to offset any incremental headwinds, while those at the larger end and with more applied exposure sounded incrementally more negative versus standing guidance. We think the point of differentiation here is that applied HVAC business is booked as much as 12 months in advance, with pricing generally locked in at that point and making for a longer lag on the ability to pass through commodity-related price increases, while the nature of bids lends itself to more competition given decades of installed base influence being fought for by three players in a relatively visible manner with a relatively educated buyer. 

Technology: VRF and inverter technology are factors, but legacy business models have proven resilient; IOT an increasing focus.

Ductless remains a key strategic theme, and we continue to think it should represent ~15% of the industry for both resi and commercial. However, growth rates appear to have cooled somewhat over the past year or two, more in the low DD range than 20%+, and while Asian partnerships are critical, the US remains solidly a ducted market. After VRF, the next wave of hype around the industry has been inverter technology, with almost all OEMs talking up capabilities at the premium end of the market, with some making noise around bringing this technology to more mainstream products. Similarly, the hype here is probably a bit ahead of reality, with inverters representing <5% of US shipments and legacy scroll technologies remaining resilient as EMR continues to innovate well and position their Climate business well strategically. IOT is also a hot topic as OEMs have honed in on their strategies and smart home technology adoption is picking up. On the resi side, OEMs are deploying smart sensors to build diagnostic/prognostic capabilities, and distributors have aggressively invested in technologies to develop cloud based apps for contractors and business intelligence expertise. We don’t envision a scenario where an HVAC player ends up owning the connected home, but the business model remains protected from disruption given the local contractor model, and HVAC companies should be able to effectively capture the value from their part of the connected home chain. In commercial, there has been a stepped up focus on leveraging building controls to improve HVAC performance and integrate the system into the overall connected building.

Competitive dynamics mostly stable; potential for another round of consolidation but properties limited.

Competitively, dynamics remain stable, overall, but with some incremental share shift and a more pronounced focus on new product introductions over the past year. In terms of share, Trane appears to be the biggest winner near term, growing solidly above market in both resi and commercial, while Lennox continues to grow at or above market as well. Carrier and York have generally underperformed, though they have introduced some new products and relative growth is showing signs of improvement. Daikin appears to be growing about in line, and we have been impressed with what we have seen from Rheem as an up and comer. Trane and Lennox aggressively invested in new products over the past several years, smartly reinvesting during a cycle uptick with low commodity prices, but appear to be switching more to a harvesting mode near term, whereas, Carrier and York had underinvested but are now rolling out new products to address key markets. Daikin is focused on ramping its new facility near term, while Watsco has invested heavily in new technology and EMR remains the technology leader in compressors, deftly navigating an evolving landscape to remain on top. In terms of potential OEM consolidation, we continue to see rationale for another round of consolidation, but we don’t view anything as imminent near term given other portfolio concerns at UTX/JCI, and a limited amount of other properties which could be for sale.

Table of Contents

1. Introduction

1.1 Abstract
1.2 HVAC Technology
1.2.1 Cooling Basics
1.2.2 Residential Cooling Applications
1.2.3 Commercial Cooling Applications

2. Summary
2.1 Global Market Overview
2.2 Residential HVAC
2.3 Commercial HVAC
2.4 Strategy Landscape
2.5 Snapshot & Key Players
2.6 Regulation
2.6.1 A Look Back at the 14 SEER Transition
2.6.2 A look back at 10-13 SEER transition
2.6.3 A look back at the 2010 refrigerant changeover

3. Residential HVAC Market
3.1 Near-term Outlook
3.1.1 Market Size
3.1.2 Replacement Demand
3.1.3 AC/Heat Pump Unit Forecast
3.2 Long-term Outlook
3.2.1 Market Model Basics
3.2.2 New Construction
3.2.3 Non-Construction Adoption
3.2.4 Replacement Demand
3.3 Residential HVAC Market Landscape
3.3.1 Market Share
3.3.2 Distribution

4. Commercial HVAC Market
4.1 Construction Trends
4.2 Order & Revenue Trends
4.3 International Markets
4.4 Overview of Commercial Services Sector
4.4 Energy Efficiency-Key Commercial Driver
4.5 Market Landscape

5. Ductless Market in North America
5.1 Introduction
5.2 Market Status
5.3 Competitive Landscape

6. Sub-Markets
6.1 Compressors
6.2 Thermostats
6.3 Refrigerants
6.4 Motors

7. Industry Consolidation Outlook

8. Research on HVAC Margins and Financial Performance of Major Players

8.1 Industrial Margins
8.2 Financial Analysis of Major Players

List of Table

Sketch Map of Mechanical Refrigeration Cycle
Central AC Split System with Furnace
Application Distribution of A/C Equipment Market (Units), 2015
Light Commercial System
Large Commercial Chiller (left) and Chiller Installed (right)
Market Size of Global HVAC Equipment Industry, 1996-2019E
Distribution of Global HVAC Market (including aftermarket & services), 2017
Distribution of Global HVAC Market (excluding aftermarket & services), 2017
Market Share of Key Global Enterprises, 2017
Summary of Key Global Enterprises
Residential Unitary AC/Heat Pump Shipments, 2017-2018E
Relation between EMR US Climate Sales and AHRI Unit Shipments
Implied Replacement versus Actual Replacement, 1989-2019E
Overall Residential HVAC Market Regained Trendline, 1973-2019E
Tal HVAC Shipment Growth,2014-2019E
HVAC Industry Residential Equipment Revenue Growth by Segments, 2012-2019E
Breakout of US Residential Unitary Market (Condensing Units), 2017
Residential Durable Good Replacement Map
HVAC Replacements Only Partially Correlated with Existing Home Sales
Residential Unitary Market Share, 2017
Residential Unitary HVAC Industry Chain Map
US Commercial HVAC Market Size by Segments, 2011-2019E
Commercial HVAC Product Breakdown, 2017
Lennox View of North American Commercial Unitary Market
US Light Commercial End-Market Breakout
Commercial Unitary Applications by Floor Space, U.S. Non Commercial Building, 2012
Small to Middle Market Size Buildings (1,000-25,000 sq ft) Cooling Apparatus
Large Size Buildings (25,000->500,000 sq ft) Cooling Apparatus
Light Commercial Market Share, 2017
Market Size of Common Applied Equipment Products and Competitors
Global Chiller and Airside Equipment Markets, 2015
Global Chiller and Airside Equipment Markets by Region
Air Cooled 250 Ton RT Market Share
Air Cooled >250 Ton RT Market Share
Major Air Cooled Chiller Offerings by Company
Water Cooled Market Share
Centrifugal 0-300 Ton Market Share
Major Water Cooled Chiller Offerings by Company
Centrifugal >300Ton Market Share
Large Commercial/Applied End-Market Breakout
Chiller Applications by Floor Space, U.S. Commercial Building
Small to Middle Market Size Buildings (1,000-25,000 sq ft)
Large Size Buildings (25,000->500,000 sq ft)
Buying Decision Tree of Commercial HVAC
Global Large Commercial Market Share, 2017
Residential HVAC Growth Rates, 1Q16-1Q17
Residential HVAC Growth Rates, 1Q15-1Q17
Market Share of Key Players across Various HVAC Market Segments, 2017
Regional Efficiency Standards Map (as Proposed)
Minimum Federal Standards
AHRI Reported vs. Underlying (ex pre-buy) Volume Growth Estimates, 2014-2017E
Lennox Resi Organic vs AHRI Shipments
Lennox Volume vs. Mix vs. Price, 1Q14-4Q16
EMR Climate Organic Growth, 2005-2011
EMR Climate Organic Growth, 2011-2016E
14 SEER vs. 13 SEER pricing gap
Industry unit shipments analysis, 2013-2016
Gross margin analysis, 2013-2016
13 vs 14 SEER Illustrative Gross Margin (Product Level), 2013-2017
13 vs 14 SEER Illustrative Gross Margin (Industry Level)
Goodman has gained market share during the past two minimum SEER transitions
Trane mix was solid when focused solely on high end products
Residential HVAC OEM Growth Rates Similar Through Transition
2005 industry mix
2006 industry mix
The 10 SEER Pre-Buy in 2005 Was Somewhere Around 900,000 Units
OEM revenues outpaced volume declines…
…as 13 SEER was ~75% higher cost
Trane saw a positive mix impact…
…offsetting volume related declines
Approximate View of Resi OEM Revenue Drivers
OEM revenues and margins benefited from 13 SEER transition
Value brand has gained market share during the past two minimum SEER transitions
Goodman cost advantage during 13 SEER transition (indexed)
Climate: Sales Growth from Penetration
Climate Margins at Historical Highs Boosted by Scroll Compressor Penetration
EMR Climate orders growth 2005-06
EMR Climate total segment and US organic growth 2005-2007
Trane residential margins began to moderate in 2007
While the cost of an R-22/R-410A unit is similar, a system change-out can be ~2X more expensive when incorporating component costs
Without R-22 replacement option, system change-outs >2x cost of compressor repair
Industry SEER mix
Illustrative table of furnace/tax credit replacement options, 2010
Components ~15% of industry dollar value...
...growing 15% in 2010,but contributing only ~2% to growth rates
R-410A demand destruction weighed significantly on 2010 growth
Replacement units increased in 2011, helped by R-22 availability
R-22 as a % of total residential units
2Q11 and 3Q11 resi growth rates at Lennox/Trane lagged industry data...
Units were weaker in 2012…
…but equipment revenues were stronger
HVAC Industry Approximate Revenue Mix
Company Revenue Growth vs. AHRI Units Growth, 2011-2017
Condensing Units Mix by SEER, 2009-2018E
“Attachment"" Rates for Components Move with R-410A Mix, 2010-2017E
Ratio of Furnace Shipments to AC/Heat Pump Shipments, 1977-2017
HVAC Industry Residential Equipment Revenue Model, 2012-2019E
Industry Revenue Estimate vs. Public HVAC Growth Rates, 2011-2017
Industry Revenue Growth Versus Public Players Resi Growth, 2009-2017
Company Revenue Growth vs. AHRI Units Growth, 2011-2015
Copper Price, 1989-2018
Copper Price (Short-Term View)
Steel Price, 2008-2018
SteelPrice (Short-Term View)
OEM Price/costGuidance
A/C PPI vs. Metals PPI, 1979-2017
HVAC Equipment PPI Spread, 1978-2017
Retail Gas Prices Tend to Follow Crude Oil Prices, 1995-2017
Consumer Confidence Follows Retail Gas Prices, 1995-2017
Consumer Confidence Trends with Employment, 1989-2017
Consumer Confidence vs. HVAC Replacement Rates, 1989-2017
Existing Home Sales vs. HVAC Replacement Rates, 1999-2017
HVAC Replacement vs. Major Economic Index, 1989-2019E
~600KUnits of Pent-Up Replacement Demand
Pent-Up Demand Could Add ~3% per Year to Replacement Growth
LT Housing Completions, 1968-2016
The ""Replacement Bubble"" Could Theoretically Add ~5% to Annual Replacement Growth
Installed Base Age vs Replacement Rate, 1991-2019E
Industry Shipments by Region
South Accounted for Over Half of the Housing Boom from 2002-2006
Housing Starts in the South: 2002-2006 vs Long-Term Averages
Replacement Boom Upside Sensitivity to Avg. Life of Unit in South
Overall Residential HVAC Market Regained Trendline in 2017…
…and Replacement Demand Regained Trendline in 2016
…but Housing Completions Still Below Normalized
Housing Completions Annual Growth, 1969-2017
Downside Scenario Replacement Rates vs History, 1989-2018E
Housing Recession Could Drive Downside in Replacement Opportunity Post 2020
Housing Sensitivity to Interest Rate Rises
Annual Homeowner Vacancy Rates for US by Region, 1968-2016
AC/Heat Pump Units for New Residential Construction, 2004-2019E
Growth in Occupied Homes with AC, 1974-2017
Replacement vs. Installed Base, 1976-2017
Annual Cooling Degree Days Y/Y vs. Replacement (Non-New Housing) Shipments Y/Y
2017 Cooler than 2016, But Still Hot
CDD by Month vs Annual Shipments, 2014-2017
Early/Late Season Shipments vs Annual Shipments
Historical % Shipments by Month
CDD vs AHRI Shipments, 2002-2017
Growth in Replacement Opportunities (Unit Breaks), 2011-2019E
EMR US Climate Sales vs. AHRI Unit Shipments, 2009-2017
Revenue Growth of WSO Products (Including Replacement Parts) and WSO Equipment, 2007-2017
AHAM Window Unit Shipments vs. AHRI Unitary Shipments, 1985-2015
After Outgrowing Unitary Shipments in 2010-11, Window Units Dipped in 2013-15
Percentage of Occupied Homes with Window A/C, 1985-2013
AC/heat Pump Unit Shipments Forecast
Total HVAC Shipment Growth,2014-2019E
Residential Unitary Shipments, 2017-2018E
AHRI Annual Unitary Shipments, 1973-2017
Annual Housing Completions, 1973-2017
Growth in Housing Stock, 1965-2017
Annual Household Formation, 1965-2017
HVAC Usage -All US Residential Households, 2015
Central Air Penetration by Original Construction Date, 2015
Central Air Penetration by Housing Type, 2015
Air Conditioning Penetration by Region/Type, 2015
Occupied Homes with Central Air Conditioning, 1974-2017
Build of Annual Shipments for New Housing, 1973-2017
Installed Base Estimates, 1973-2017
Penetration Rates of Central A/C Are Slowing, 1973-2016
Replacement Demand Estimates, 1973-2017
US Housing Completions, 1973-2017
Non-Construction Adoption/Penetration, 1975-2018
Installed Base Age vs. Replacement Rate, 1991-2019E
Replacement units and Installed Base units, 1976-2017
Historical % of Installed Base Replaced and Implied Life, 1989-2017
Historical Replacement Rates vs. Consumer Confidence, 1989-2016
Historical Replacement Rates vs. Unemployment Rates, 1989-2016
Historical Replacement Rates vs. Existing Home Sales, 1999-2017
Historical Replacement Rates vs. Case-Shiller Index, 2000-2016
Historical Replacement Rates vs. Housing Starts, 1989-2016
Historical Replacement Rates vs. NAHB Survey, 1990-2016
Increased Cost of A/C Replacement over the Last Decade
Replacement units, 2015-2017E
Medium-Term Replacement Demand (Replacement as % of Installed Base), 1989-2019E
Overall Residential HVAC Market Regaining Trend line, 1973-2019E
Resi HVAC Market Summary, 2000-2019E
Housing Recession Could Drive Downside in Replacement Opportunity Post 2020
Residential Unitary Market Share, 2017
Goodman Outperformed Through the 13 SEER Transition and the Most Recent Downturn…
… Driving Continued Market Share Gains
2005 Estimated Industry Efficiency Mix
2006 Estimated Industry Efficiency Mix
Most Manufacturers Adopt a Good, Better, Best Model
Mini Split Market, 2008-2017
Residential HVAC Growth Rates, Q12016-Q42017
Residential HVAC Growth Rates: Trane vs Carrier
Residential HVAC Growth Rates?Q12015-Q42017
Commercial HVAC Growth Rates?Q12015-Q42017
Long Term Forecasts for Key HVAC Players?2017-2020
Summary of IR/Trane’s Strategic Initiatives
Summary of Lennox Strategic Initiatives
Summary of Carrier Strategic Initiatives
Summary of JCI Strategic Initiatives
Summary of Goodman/Daikin Strategic Initiatives
Residential HVAC Has a Fragmented, Two-Step Distribution System
There Are Benefits to both Company-Owned and Independent Distribution
Distribution Breakdown by OEM
Trane: 50% Company Owned, 50% Independent Distributors
Previous Lennox Distribution Strategy
New Lennox Distribution Strategy
PartsPlus Stores Plan of Lennox, 2010-2022
DaveNet Portal Improves Direct to Dealer Capabilities
PartsPlus Market Penetration
Lennox Has Expanded Same-Day Coverage for Emergency Replacement
Watsco a Leader in a Fragmented Market
Ranking of Top 50 HVAC/R Distributors (2017 ranking and data)
Ranking of Top 50 HVAC/R Distributors (2017 ranking and data, continued)
Key Acquisitions since 2000 (Excluding Carrier Enterprises)
US Non-Residential Construction – US Census Data, 1993-2017
Categories (Shaded) Included in EE/MI Non-Res Index, Nov 2017
Total Non-Res Construction vs. EE/MI Non-Res Index, 1993-2017
Office Spending – Public Versus Private
Commercial Spending – Public Versus Private
Education Spending – Public Versus Private
Healthcare Spending – Public Versus Private
Public EE/MI Index V Private EE/MI Index, 2003-2017
EE/MI Construction Put-in-Place Index—Public vs. Private, 2009-2017
US Non-Res Construction for Office, Commercial, Healthcare, Education, Manufacturing & Lodging, 1993-2017
US Non-Res Construction Total EE/MI vs Private EE/MI, 1994-2017
EE/MI Non-Residential Construction Index vs. ABI (Historical View)
EE/MI Non-Residential Construction Index versus ABI (Near-Term View)
EE/MI Non-Residential Construction Index versus ABI C&I and Institutional (Historical View)
EE/MI Non-Residential Construction Index versus ABI C&I and Institutional (Near-Term View)
Dodge New Non-Res Contracts versus EE/MI Non Residential Construction Index (Historical View)
Dodge New Non-Res Contracts versus EE/MI NonResidential Construction Index (Near-Term View)
Non-Res Building Construction Employment & Non-Farm Payroll Employees versus EE/MI Non-Residential Construction Index (Historical View)
Non-Res Building Construction Employment versus EE/MI Non-Residential Construction Index (Near-Term View)
Commercial Real Estate Lending Standards and Loan Demand (Fed Loan Officers Survey, Historical View)
Commercial Real Estate Lending Standards and Loan Demand (Fed Loan Officers Survey, Near-Term View)
Commercial Real Estate Lending Standards versus EE/MI Non-Residential Private Construction Index
Loan Demand versus EE/MI Non-Residential Private Construction Index
EE/MI Composite Non-Res Indicator versus Construction in EE/MI Non-Res Verticals (Historical View)
EE/MI Composite Non-Res Indicator versus Construction in EE/MI Non-Res Verticals (Near-Term View)
Summary Table of Growth Rates of EE-MI and Building players
Non-Res Construction versus Related Company Revenue Growth
Commercial HVAC Orders of Major Players, 2010-2017
Commercial HVAC Revenues of Major Public Players, 2010-2017
Key Qualitative Differences between Commercial Unitary and Applied HVAC
Trends in Unitary Markets Have Historically Led Later-Cycle Applied, 1992-2017
Lennox Retail Exposure
Public vs Private Put-in-Place Spend, 2009-2017
Estimates of Historical US Commercial HVAC Equipment Growth, 1992-2019E
US Commercial HVAC Equipment—New Versus Replacement Estimates, 1992-2017
US Commercial HVAC Market (Through-Cycle Average)
US Commercial HVAC Market, 2017E
Replacement Demand versus Capacity Utilization, 1992-2017
Replacement Demand versus Vacancy Rates
Replacement Demand versus Property Returns, 1992-2014
Replacement Demand versus Corporate Profits, 1992-2017
Commercial HVAC Replacement Demand versus Macro Index, 1992-2017
Commercial Replacement Demand Regained Pre-Crisis Levels in 2011
Commercial HVAC Replacement Demand versus Macro Index, 1992-2017
Assumed Proxy for US Commercial HVAC Construction
Assumed New Construction Growth (Based on Weighted Index), 2003-2019E
Non-Res Put-in-Place Data by Vertical (2015 Actual and Assumed), 2004-2019E
US Commercial HVAC Model
US Equipment Growth Forecasts – Applied Versus Unitary, 2000-2019E
Ductless Commercial VRF Has Grown to 5-10% Share of the Market
Key Commercial HVAC Players’ Estimated Geographic Sales Breakout
Estimates of US Versus Global Equipment Growth for US OEMs, 2002-2019E
BSRIA Estimates of Global Chiller and Airside Equipment
BSRIA Estimates of Global Chiller and Airside Equipment
Trane Quarterly Commercial HVAC Organic Revenue Growth and Regional Comments
Carrier Quarterly Commercial HVAC Equipment Order Growth (CCS Commercial Business Segment)
Retail Sales of RACs in China, 2009-2017
Market Share of Inverter ACs in China
Asia Represents Nearly 20% of IR Commercial HVAC Revenues
Estimated 2011-20E HVAC/Controls Growth Value from Incremental Building Stock
Asia Represents ~50% of World Chiller Market
Asia Represents ~80% of World VRF Market
China Centrifugal Chiller Shipments, 2008-2014
Daikin China Commercial HVAC Growth Rates
Trane Commercial Segment Sales Breakout
JCI Building Efficiency
For Trane, Commercial Services Have Historically Been Less Cyclical
ESCO Revenues by Contract Type
ESCO Revenues by Vertical
ESCO Revenues by Function
Leading Energy Services Companies (ESCOs)
The ESCO Market Grew Strongly Through the Downturn
Longer Term Opportunity Significant
2017 US Energy Consumption Structure
Energy Consumption by HVAC as % of Total Sector
Commercial Buildings as % of Total US Energy Use
Total Residential/Commercial Building Energy
Chiller Payback Analysis
Energy Efficiency Spending Source
Commercial Buildings Energy Use by Function
Light Commercial Market Share (~$6B), 2017
Common Applied Equipment Products and Competitors
Global Large Commercial Market Share (~$16B), 2017
Air Cooled 250 Ton RT Market Share
Air Cooled >250 Ton RT Market Share
Major Air Cooled Chiller Offerings by Company
Water Cooled Market Share
Centrifugal 0-300 Ton Market Share
Major Water Cooled Chiller Offerings by Company
Centrifugal >300Ton Market Share
Ducted (Outdoor and Indoor Integrated and the Air Is Carried Through Ducts)
Ductless (Outdoor and Indoor Separated and Connected with Refrigerant Pipes)
Illustration of Commercial VRF Application for a Multi-Story Building
VRF versus Traditional HVAC Systems All-in Cost Estimates
VRF versus Traditional HVAC Systems All-in Cost Estimates
VRF versus Traditional HVAC Systems Equipment Cost Estimates
Annual Energy Cost Difference Between Traditional Ducted and VRF
Market Size of US Ductless Market, 2008-2017
US Commercial VRF Market Size, 2013-2020E
Ductless Mini-Split/VRF Relative to Traditional Unitary/Applied HVAC Markets
Ductless Residential Shipments Have Grown Rapidly…
… but Are Still Small Relative to the Unitary Market
Residential Mini-Splits Disproportionately Concentrated in Northeast, Mid-Atlantic, and West Coast
Approximate North America Commercial HVAC Market
US VRF Market Units
Ductless Share of Commercial Market Well Below That of Europe/Asia
Daikin North America Presence (Ex-Goodman)
Daikin Is Targeting Substantial Synergies from Goodman Transaction
Timeline of Major Goodman Integration Goals
Daikin/Goodman North America Ductless Growth
Daikin America HVAC Revenues
Daikin Operating Margin
Compressor Dynamics by Market Tier
Scroll Compressor Market, 2008-2017
Scroll Compressor Market Unit Split
Scroll Compressor Market Share (Worldwide)
Climate Penetration Gains Were a Key Driver of EMR Climate Growth Last Cycle
Scroll Accounted for 75% of Climate Sales Growth Last Cycle
Climate Margins Also Benefited from Scroll Compressor Penetration
HVAC Compressor Inverter Technology
China Market Share of Inverter ACs
Compressor Dynamics by Market Tier
Copeland UltraTech Delivers Humidity and Efficiency Improvements
Scroll Compressor OEM Factory Presence, 2014
Approximate North America Control Revenues
Top 10 Smart Thermostat Vendors
Leaderboard Grid Thermostats, 2016
Leaderboard Grid Thermostats, 2015
Leaderboard Grid Thermostats, 2013
Smart Thermostat Market Units, 2013-2020E
Refrigerant Comparisons
R-22 Production Allocations, 2015-2020
Refrigerant Transition Summary
Estimated R-22 Refrigerant Prices (Industry Average), 1Q2013-4Q2017
Solstice vs. R32 vs. R410A
Evolution of Refrigerant Regulations and HON Products
Historical HVAC Deal Comps
Potential Resi HVAC Properties
Carrier Simplified End Market Exposures
UTX Simplified End Market Exposures
Typical Residential HVAC OEM Cost Structure
Mix Averaged ~3% per Year for the OEMs 2004-2010, Negative in 2011-12, Modestly Positive in 2013-16, Flattish in 2017
An Illustrative Model Shows That 3% of Price Can Offset Significant Inflation
Total Unit Cost
Fragmented, Two-Tier Distribution System Is Key to Pricing Power
A/C PPI vs. Metals PPI
Price Realization Slowed in 2012 and Picked Back up in 2013-2017
Historical Operating Margins of Major HVAC Players, 2005-2017
US Census Bureau Data Show HVACR Employment Down 18% from 2007 to 2011
Key Cost Reduction Metrics for Carrier Restructuring Programs
Summary of Key Carrier Actions
Key Cost-Reduction Metrics for Lennox Restructuring Programs
Goodman Employees & Floor Space?2006-2010
Goodman Property Footprint (March 2006)
Goodman Property Footprint (March 2010)
Operating Margin Comparison, 2007-2017
Gross Margin Comparison, 2008-2017
R&D Spending Comparison, 2009-2017
Capex/Sales Comparison, 2009-2017
Capex/D&A Comparison, 2009-2017
Asset Turnover Comparison, 2009-2017

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