The outdoor unit contains the compressor, condenser coil, and expansion valve, while the indoor unit contains the evaporator coil and air handling unit. The system works by using a refrigerant to transfer heat from the outside air or ground into the home during the winter, and from the home to the outside during the summer. This allows the system to provide both heating and cooling for the home. It is called a split system because the two main components are separated and installed in different locations.