Dave Gitlin wouldn’t take no for an answer.
In early 2022, the recently named CEO of HVAC giant Carrier Global launched a relentless campaign to acquire the crown jewel in the worldwide industry’s fastest-growing market, electrical heating in Europe. His target: Germany’s Viessmann Climate Solutions. But the proudly independent, family-owned enterprise was thriving under its 33-year-old, bespectacled fourth-generation leader, Max Viessmann. The manufacturer lauded by Germany’s chancellor as a symbol of national economic might was famously not for sale. Gitlin, however, persuaded Max to let him fly in for a dinner, in his company’s hometown of Allendorf, a rural hamlet 80 miles north of Frankfurt. Following a friendly chat about industry trends at the Viessmann family’s Michelin-starred, rough-hewn-stone-lined eatery on the historic town square, as Gitlin recalls, “I left putting my chances at half a percent to one percent. But not zero.”
Those were odds Gitlin could work with. As Gitlin puts it, he “stalked” Max for face time over several months and two continents. “Max would say that he was landing in Boston, and I’d say, ‘Great, I’ll meet you there tonight for dinner!’” says Gitlin. “I kept chasing him down.” When Max told Dave he’d alighted in Frankfurt or New York, Gitlin would exclaim that by an amazing coincidence, he was heading to the same locale that very day! Capping the courtship, Gitlin wrote Max missives that his colleagues describe as the M&A version of “love letters.” In them, Gitlin stressed the cultural kinship between Viessmann and Carrier: their more-than-century-old histories of innovation seeded by their legendary founders, their shared embrace of the green revolution, and a conviction on both sides that the best manufacturing ideas flow not from the C-suites but the hands and voices on the factory floor.
Gitlin’s charm offensive worked. In January, Carrier purchased Viessmann Climate Solutions for $13.3 billion, marking one of the largest acquisition in the annals of the heating, ventilation, and air conditioning trade. Gitlin’s coup in capturing Viessmann spotlights something perhaps even more important: Carrier’s rare good fortune in landing Gitlin. A 22-year veteran of conglomerate United Technologies (now RTX), where he rose to head the aerospace systems arm, Gitlin took the Carrier job when UTC determined to spin off its HVAC and Otis elevator arms, in mid-2019. In April 2020, Carrier emerged as a public company, free for the first time ever to chart its own course.
Put simply, over the four-and-a-half-year period since Carrier shares (CARR) debuted on the NYSE, Dave Gitlin, at age 55, arguably stands as not only the most successful CEO you’ve probably never heard of, but also the most successful industrial CEO in America. That assessment rests on two criteria. The first is Carrier’s performance for shareholders. From Carrier’s entrance as a public company through mid-November 2024, its stock has soared from $13.75 to $75.00, or 445%, lifting its market cap from $12 billion to $67 billion. Over that span, Carrier has delivered total shareholder returns (TSR) of 40.1% a year. That record beats Microsoft (25.8%), Alphabet (29.8%), and Apple (34.2%), and until its Trump election rally, closely trailed Tesla (now 62.3%). His performance also caught the eye of Boeing, where he joined the board in 2021. My reporting found that late last year, Gitlin was the directors’ first choice to become CEO. But the Carrier board had countered Boeing’s overtures by awarding Gitlin one of the biggest retention packages on record, designed to keep him at the helm through 2029. If Carrier stock keeps cranking, Gitlin could pocket upwards of $200 million from the award. When I asked why he decided not to pursue what may be the most prestigious job in corporate America, Gitlin quips, “Do you mind if I duck whether Boeing talked to me about the role? I was just deeply committed to Carrier.”
What makes the overhaul so exceptional is that all through the near frenzy of sectors added and axed—he either sold, or reached contracts to unload, all the non-core businesses in five separate transactions, at excellent prices—Gitlin posted sterling financial results across the board, driving the epic gains in share price. Since the end of 2020, Carrier’s raised its revenues by 44%, or nearly 10% a year, to a projected of $22.5 billion for 2024. In the same time frame, it’s swelled operating margins, the percentage of each dollar in those fast-rising revenues banked in profits, by 2.9 points to 15.5%, and hiked its adjusted operating income by 16% annually to a forecast $3.95 billion for 2024, a projection it’s en route to reaching. Says Deane Dray, an analyst at RBC Capital Markets, “Gitlin and his team did something comparable to running a race while juggling a bunch of balls at full stride, and keeping them all in the air.”
Tech CEOs can make their mark with bold predictions and flashy products. But industrial CEOs like Gitlin are a different breed—he’s climbed the ladder by quietly insisting on excellence. For Gitlin that means standing on the factory floor while pressing a worker to trim seconds on the time it takes to install a valve. Or revamping the executive comp system to pay out only if Carrier way outperforms its rivals. It certainly helps that he has the wind at his back: Carrier is benefiting from explosive sales in areas driven by Big Tech itself, notably heavy demand for cooling data centers powered by super-hot AI chips. But overall Carrier and Gitlin epitomize how the top old-line, unsung industrial players (a group which also includes electrical equipment giant Eaton Industries, GE Aerospace, and HVAC rival Trane) are the antithesis of dinosaurs. Instead, they’re sprinters that are beating most of the Mag Seven as investment outperformers.
A great operator
Gitlin is seated at a small round table, just about the sole big piece of furniture besides his desk in his smallish top-floor office at Carrier’s headquarters in Palm Beach Gardens, Fla. The view stretches across the grounds’ tropical plantings to a two-lane local road. The building itself somewhat resembles the multileveled back of a window air conditioner. Covering the all-glass façade is a hatchwork of well over 100 panels, set in narrow horizontal rows, that are tinted electronically to lower glare and save energy.
In fact, the facility doubles as a tribute to Carrier’s products and history. Customers are treated to guided tours featuring the two towering, 290-ton “chillers” that cool the complex, and a museum showcasing the cylindrical slide rule devised to calculate dew points by Willis Carrier, the master locksmith who built the world’s first AC unit at a Brooklyn printing plant in 1902 and, on a $32,000 investment, cofounded Carrier in 1915. The exhibits include a montage explaining the ventilation system the company installed and manages for the Vatican, crafted to create an air cushion shielding Michelangelo’s Sistine Chapel frescoes from darkening pollution.
Gitlin—who stands a strapping 6'3"—carved his own path early on. He grew up in Hartford, Connecticut, the second-born of three brothers. Their father was, in Dave’s words, “a lawyer who put himself through college on odd jobs,” and rose to co-found one of the nation’s top international bankruptcy firms. “No one thought a Hartford firm could be at that global scale alongside the firms in New York and London,” marvels Gitlin. Dave calls his two siblings his “best friends,” and credits his dad Richard as “my inspiration.” The Gitlin boys all excelled at business: Jeff, the eldest, is a partner at PWC in Hartford, and younger brother Michael resides in L.A. As CEO of the Capital Group, one of the world’s largest investment firms, managing more than $2.7 trillion in assets.
It was at Cornell University in a poli-sci course (he was class of ’91) that he spotted his future wife Stephanie. As she tells it, his fraternity and her sorority held a joint mixer, and Dave recruited a wingman to secure access to Stephanie. “I was talking to another guy and suddenly this big football player friend of Dave’s comes over and picks the guy up and moves him out of the way. Then Dave swoops in,” Stephanie told Coins2Day. They’ve been married for 30 years, and share three children, two boys and a girl, all aged 23 to 27.
After graduation Gitlin headed to law school at the University of Connecticut, serving as editor of the law review, then spent two years interning for a Connecticut federal judge. (Stephanie got her JD from the University of Pennsylvania but has retired as a litigation attorney.) In Gitlin’s words, he “broke the record for the shortest time working at a law firm, just four months.” He yearned for a fast-moving field where things got made and results got measured. In 1997, he applied for an in-house counsel post at Harford-based UTC, telling interviewers that his goal was transitioning to the business side. He eventually took on a chief of staff role for the president, then got an MBA at MIT—where he worked on a team project assessing the lean manufacturing processes at both Toyota and GM—and found his zone.
For Gitlin, the experience proved a revelation. In our talks, he rhapsodized, in deep detail, over the wonders he’d witnessed at the Toyota factory in Georgetown, Ky. “You only understand the beauty of it by seeing it happen on the shop floor,” he declared. “In the kaizen events, they were constantly taking minutes and seconds out of the time to make a part or car. It showed that the people closest to the product, the workers on the line, know how make the best improvements.” Seeing how factory folk had devised a wood block as an improvised barrier to prevent Camry batteries from being installed in Corollas produced side by side in Georgetown was in itself an epiphany for the aspiring manager.
In 2007, when UTC CEO Louis Chenevert needed someone to send on a rescue mission, Gitlin was ready. He was dispatched to the Hamilton Sundstrand factory in San Diego, where bottlenecks were delaying deliveries of its auxiliary power units, or APUs, to customers. The late shipments were slowing Boeing’s push to secure FAA certification on production of its 787 Dreamliner, a program years behind schedule.
In San Diego, parts were arriving late from suppliers, forcing assembly-line workers to install them in the wrong sequence, or “out of station.” Gitlin engaged the contractors to adjust the lead times so that components arrived just as needed, and restored a smooth workflow through the plant, working closely with Pat Shanahan, now the CEO of Spirit AeroSystems and then head of the campaign to fix Boeing’s 787 snafus. “I would go to the shop floor every day to be sure the parts were feeding onto the line on a just-in-time basis,” says Gitlin. On-time delivery of APUs improved by over 20%, greatly aiding progress on the 787, which started commercial flights in 2011.
“Dave was in knee-deep and got the problem resolved,” Chenevert, who retired from UTC in late 2014, told Coins2Day. “He was a good operating guy who could take on big challenges and get them done. He loved to spend time in what we called the ‘clinics’ for defective parts, questioning the engineers on why components failed and how to make them better.”
In 2012, UTC bought Goodrich Corp., a maker of landing gear and flight controls, for $18.4 billion, marking the largest aerospace acquisition ever, and Chenevert tapped Gitlin to lead the integration. “When you’re a purchaser, there’s a tendency to think you do things better than the company you’re buying,” says Gitlin. “That’s the wrong approach. Goodrich was better than UTC at pushing down responsibility, and measuring the results, to all levels of management. We’ve adopted that system at Carrier.” Gitlin’s success in melding the two huge platforms was his ticket to the top job at UTC Aerospace Systems in the fall of 2013. By the time UTC added Rockwell Collins in November of 2019, Gitlin’s unit boasted sales of over $15 billion and 40,000 employees.
Still, the route to possibly heading all of UTC looked closed, since CEO Greg Hayes was just 58. In mid-2019, Gitlin pounced when Hayes offered him to lead a newly independent Carrier. “I hadn’t written a résumé in 28 years,” he says. “I saw Carrier as a chance to paint on a blank canvas.” But shepherding Carrier through the spin and setting it on a steady course proved extremely difficult. In the eight months before the offering on April 3, 2020, and shortly thereafter, Gitlin changed 70% of his dozen or so direct reports, hiring a new CFO, general counsel, and heads of engineering, operations, and aftermarket sales. Two weeks before Carrier was to ring the bell at the NYSE, the COVID outbreak forced the executive team to work from home, so Gitlin conducted the road show via Zoom.
In Carrier’s first months as a public company, the pandemic pushed the newly liberated enterprise into a danger zone. Carrier was carrying a staggering $11 billion debt load, and had just $1 billion in cash. In April and May, sales dropped by well over 20% versus 2019. Gitlin fretted that Carrier’s leverage ratio would rise so high that it would violate the limits set in its loan covenants. “That could have triggered a lot of bad things. To be honest with you, there were a lot of sleepless nights,” recalls Gitlin.
To satisfy the creditors, Carrier agreed to temporarily limit its dividend payments, and raised extra cash to bolster its liquidity. But miraculously, its finances rebounded strongly in June, when orders jumped 40%. “Things took off in the residential business because people were spending time at home, and created home offices where they installed ductless AC systems or replaced boilers that made a lot of noise with quiet new heat pumps,” he recalls. “Sales to health care facilities were also strong, and those benefits far more than offset the weakness in the office sector.” The second-half comeback was so robust that for 2020, Carrier managed to match the previous year’s sales.
As the near-crisis eased, Gitlin strove to make Carrier something it had never been: a growth machine.
A competitive streak
According to coworkers, Gitlin exudes a relentless positivity that’s contagious, and seems to spread its own type of electrification that jolts them into fulfilling his seemingly outrageous deadlines. His competitive streak is just as evident on the golf course as the office or assembly line. “He’ll always have a small bet going,” says general counsel Kevin O’Connor. “He says, ‘Let’s have fun, but let’s also make it a competition,’ he likes that edge.” Explains the seven-handicapper CEO, “Even if I don’t play well and win the match and bet, I’ll be somewhat happy. If I play really well and lose, I’m not happy.”
That competitive streak is evident as he talks about Carrier’s transformation. “We think of ourselves as a 100-year-old startup,” he says. “We need that energy for the complete reinvention we’re doing. When you were in the corporate office at UTC, you’d wake up every morning and worry about revenue passenger miles in China, the DOD budget, and the elevator market in Malaysia. What we said is that we needed focus. Here, if you’re worried about refrigeration units in supermarkets across Europe, which we sold, you might miss great opportunities that are right in front of you, like Viessmann.”
Likewise, Gitlin rejects the approach where CEOs make big investments that, they promise investors, will hurt short-term profits, but pay off handsomely in the years to come—a mindset he’s seen too much of. “We call our objective ‘performing while transforming,’” he avows. “We believe very, very strongly that even though there may be all these portfolio changes and lots of transformational activities, we need to deliver results consistently for our shareholders.”
Gitlin’s go-go mindset is what he calls “humble but hungry.” He radically changed the comp plan so that “you have to outcompete your peers to get rewarded.” Half of the long-term awards are in regular stock options; the other half in performance share units or PSUS. Fifty percent of those deliver the maximum payout only if Carrier’s total return outstrips the average gains posted by the top three-quarters of 29 industrial peers over three years. The brass get an equally sumptuous slug of PSUs if they hit the highest benchmark by achieving compound EPS growth of at least 12%, over the same extended interval. If Carrier’s shares flatline and its EPS rises in the sub-6% range, the execs get zip, and if the stock increases just a bit, and they miss the competitive benchmarks, they pocket relatively puny payouts.
The second plank incorporates a big productivity initiative. For Carrier, Gitlin and his team custom-refined a version of UTC’s lean manufacturing framework, itself based partly on the Toyota Production System Gitlin so admired as an MBA student. The idea behind Carrier Excellence: Centralize functions to reduce costs and raise purchasing power, and spread manufacturing best practices found in one factory across all of Carrier. When he arrived, Carrier was doing neither. “We had 140 different ERP [enterprise resource planning] systems that did cash management, payroll, tax services, and other functions,” says CFO Patrick Goris. “Businesses were all doing it separately, some outsourcing, some doing it internally.” Under CE, Carrier moved all of the activities to six “centers of excellence” located mainly in low-cost cities, including Monterrey, Mexico, and Hyderabad, India. The shift contributed greatly to large dollar reduction in G&A expense.
On the manufacturing side, prior to Gitlin’s arrival, Carrier’s plants, today numbering 47, were all purchasing the likes of compressors, motors, steel, copper, and aluminum on their own. As a result, they relied too heavily on small, relatively high-cost local contractors known as “tail suppliers.” Today, Carrier has consolidated all of its buying into six hubs that include Palm Beach Gardens and Viessmann’s base in Allendorf. Each does all the global purchasing for a set group of components and materials. By massing that buying clout, Carrier lowered its total production spend, running at around $10 billion a year, by 4% last year, according to global operations chief Adrian Button. In addition, the CE drive has raised the efficiency of the formerly laggard, non-lean plants to the level of its champions—by sharing what works. “We set a standard of how we do something and do it everywhere,” says Button. Example: AGS or automation robots were doing a great job ferrying parts, right on time, to workstations at the plants in Japan and China, so Carrier is now deploying the super-efficient couriers-on-rollers all over the world.
Button marvels at the CEO’s love for mingling among the folks wielding torque wrenches and screwdrivers to fashion AC units and chillers. “He goes to all 47 plants at least once a year, and spends as much time on the floor as he does meeting with managers and customers,” says Button. Gitlin, notes the operations head, will stand by a station to check if a welder, say, is meeting the “Takt Time” allotted for a given task. “You can tell so much from being on the factory floor how efficiently a plant is running, what ‘good’ looks like,’” adds Button. “Dave knows what ‘good’ looks like, and lets you know if it’s happening.”
He’s also not afraid to set "stretch" goals.
Gitlin has succeeded in delivering such outsize profit growth and stock performance by fielding the rare team that’s willing to strive for the boss’s signature, super-elastic targets, prizes so audacious they initially appear out of reach. He’s managed to recruit this band of tightrope walkers, in large part, by attracting stars who worked for him at UTC, and there performed comparable wonders under his command. “Dave assembled a team from scratch, and the people who came left excellent, stable jobs, and knew they were joining something really risky that had loads of debt. But they came anyway,” says Nadia Villeneuve, the human resources chief. “So the ‘followership’ from his former life is a big deal." Among those who joined from his former employer are general counsel O’Connor, the top product officer, and head of the refrigeration unit.
A pivotal hire was business development chief Ajay Agrawal, who held top positions under Gitlin for five years at UTC. It was Agrawal who orchestrated the super-fast sale of the five non-HVAC businesses at premium prices. “Dave’s approach to motivating people is putting them on a pedestal, praising them to investors, the board, and other employees,” says Agrawal. “At our global town halls in front of 50,000 people, he’d say, ‘This guy Ajay’s as good as it gets.’ He’d tell me that ‘I talked to the board about you.’ That shows he deeply trusts you, but also puts the onus on you to make sure he’s right.” As Villeneuve puts it, Gitlin rallies his lieutenants by pushing the theme, “I said you’re great, so you better be great!”
Luring Agrawal from UTC proved pivotal to clinching a central Gitlin objective: rapidly expanding the “aftermarkets” franchise. A main reason Gitlin took the Carrier job: Long-term, post-sales service contracts formed a crucial profit generator at the aerospace business he ran at UTC, and he recognized that the field represented a huge, mostly untapped opportunity for Carrier. Gitlin set a highly ambitious marker for growth that he immodestly dubbed “double digits forever.” Agrawal’s outfit hustled like crazy, and delivered—raising aftermarket sales from $3.5 billion when Gitlin took charge to a run rate of $5.5 billion a year. Now, the segment is waxing at well above the 10%-plus-per-year pace that Gitlin set as a benchmark. Carrier is also securing service contracts on 40% of the chillers that it sells once they’re off warranty, double the share in 2020. The total revenue on those agreements, spread across many years, can equal 10 times the $25 million, say, a customer pays for the hardware.
Given that AI chips produce seven times the heat of regular semiconductors, data centers are another growth driver: In a skyscraper or large hotel, Gitlin says, Carrier would deploy around three large chillers. “But even now, data centers are installing 30 to 50. We have one project using 100,” he notes. The third leg of his growth plan—the Viessmann deal he circled the globe to clinch—has had a rockier start. In July, Carrier projected that its sales for its newly acquired arm will fall by 15% in 2024 versus last year. The main reason: Suspensions and delays for subsidy schemes in several countries, the most prominent coming in Germany. “I didn’t do this deal based on what we thought would happen in Q1 of 2024,” says Gitlin who is confident the fit is right and it will eventually pay off.
That confidence stems, too, from what he’s learned from the leaders he admires, including his friend Larry Culp. They connected shortly after Culp took over GE, and the two bonded over their similar challenges: getting huge corporate machines to rev at top speed and dismantling conglomerates. Gitlin says that he and Culp often dine together, and take long walks talking about such issues as lean manufacturing and a regimen called “policy deployment” that sets KPI goals for all employees that “cascade” to the company’s total objective for financial performance. “When we talked about those things, I knew we spoke a common language,” says Gitlin.
In fact, when Gitlin first contemplated buying Viessmann, he asked Culp’s view on the criteria for making big, transformative acquisitions. “He said on big deals, ‘Always differentiate between stretching and straining,’ meaning you need to know when you’re within the right bounds, and when you’re outside.”
Gitlin has thus far proved an expert at stretching to the max, but staying inside the lines that define a sound, enduring strategy. And never, ever taking no for an answer.
