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Carrier Reports Third Quarter 2023 Results

  • Net sales up 5% versus third quarter 2022; organic sales up 3%
  • GAAP EPS of $0.42 and adjusted EPS of $0.89
  • Net cash inflows from operating activities were $1.04 billion and free cash flow generation was $949 million
  • Increasing adjusted EPS guidance for 2023 from $2.55 - $2.65 to ~$2.70

PALM BEACH GARDENS, Fla. , Oct. 26, 2023 /PRNewswire/ -- Carrier Global Corporation (NYSE:CARR), global leader in intelligent climate and energy solutions, today reported strong financial results for the third quarter of 2023 and raised its full year adjusted operating margin and adjusted EPS guidance.

"Carrier continues to perform while transforming, delivering another strong quarter highlighted by an over 400 basis points increase in gross margins and solid cash flow growth," said Carrier Chairman & CEO David Gitlin. "Traction with our digitally enabled life-cycle solutions continues to build as we delivered another quarter of double-digit aftermarket growth. We are again raising our full year guidance for adjusted operating margin and adjusted EPS. We remain on track to complete the transformational combination with Viessmann Climate Solutions in early January 2024, and we are pleased with the interest level in our strategic business exits.  I could not be more proud of the team as we continue to make progress on our mission to become the global leader in intelligent climate and energy solutions."

Third Quarter 2023 Results

Carrier's third quarter sales of $5.7 billion were up 5% compared to the prior year and organic sales grew 3% over the same period. Organic sales strength continued with 4% growth in the HVAC segment with commercial HVAC up high-single-digits and North America residential and light commercial HVAC up 5% organically. Fire and Security sales were up 6% organically while Refrigeration sales were down 3% organically driven by declines in container and commercial refrigeration only partially offset by strength in global truck and trailer.

GAAP operating profit in the quarter of $645 million was down 58% from last year, mainly due to the absence of last year's $732 million gain related to the acquisition of Toshiba Carrier Corporation.  Adjusted operating profit of $1.0 billion was up 21% compared to last year.

Net income was $357 million and adjusted net income was $765 million. GAAP EPS was $0.42 and adjusted EPS was $0.89. Net cash flows generated in operating activities were $1.04 billion and capital expenditures were $92 million, resulting in free cash flow of $949 million.

Full-Year 2023 Guidance

Carrier updated the following guidance for 2023:


Current Guidance

Prior Guidance

Sales

 

Over $22B

Organic* up MSD

FX ~0%

Acquisitions / Divestitures, net +~5%

 

Over $22B

Organic* up MSD

FX ~0%

Acquisitions / Divestitures, net +~5%

Adjusted Operating Margin*

~14.5%

Includes ~50 bps negative impact from TCC

14.0% - 14.5%

Includes ~50 bps negative impact from TCC

Adjusted EPS*

~$2.70

$2.55 - $2.65

Free Cash Flow*

Over $1.9B

~$1.9B

*Note: When the company provides expectations for organic sales, adjusted operating profit, adjusted operating margin, adjusted EPS and free cash flow on a forward-looking basis, a reconciliation of the differences between the non-GAAP expectations and the corresponding GAAP measures generally is not available without unreasonable effort. See "Use and Definitions of Non-GAAP Financial Measures" below for additional information.

Conference Call

Carrier will host a webcast of its earnings conference call today, Thursday, October 26, 2023, at 7:30 a.m. ET. To access the webcast, visit the Events & Presentations section of the Carrier Investor Relations site at ir.carrier.com/news-and-events/events-and-presentations or to listen to the earnings call by phone, participants must pre-register at Carrier Earnings Call Registration. All registrants will receive dial-in information and a PIN allowing access to the live call.

About Carrier

Carrier Global Corporation, global leader in intelligent climate and energy solutions, is committed to creating solutions that matter for people and our planet for generations to come. From the beginning, we've led in inventing new technologies and entirely new industries. Today, we continue to lead because we have a world-class, diverse workforce that puts the customer at the center of everything we do. For more information, visit corporate.carrier.com or follow Carrier on social media at @Carrier.

Cautionary Statement

This communication contains statements which, to the extent they are not statements of historical or present fact, constitute "forward-looking statements" under the securities laws. These forward-looking statements are intended to provide management's current expectations or plans for Carrier's future operating and financial performance, based on assumptions currently believed to be valid. Forward-looking statements can be identified by the use of words such as "believe," "expect," "expectations," "plans," "strategy," "prospects," "estimate," "project," "target," "anticipate," "will," "should," "see," "guidance," "outlook," "confident," "scenario" and other words of similar meaning in connection with a discussion of future operating or financial performance. Forward-looking statements may include, among other things, statements relating to revised outlook and guidance, future sales, earnings, cash flow, results of operations, uses of cash, share repurchases, tax rates and other measures of financial performance or potential future plans, strategies or transactions of Carrier, Carrier's plans with respect to its indebtedness and other statements that are not historical facts. All forward-looking statements involve risks, uncertainties and other factors that may cause actual results to differ materially from those expressed or implied in the forward-looking statements. For additional information on identifying factors that may cause actual results to vary materially from those stated in forward-looking statements, see Carrier's reports on Forms 10-K, 10-Q and 8-K filed with or furnished to the U.S. Securities and Exchange Commission from time to time. Any forward-looking statement speaks only as of the date on which it is made, and Carrier assumes no obligation to update or revise such statement, whether as a result of new information, future events or otherwise, except as required by applicable law.

CARR-IR

Contact:   

Investor Relations


Sam Pearlstein


561-365-2251


[email protected]




Media Inquiries


Ashley Barrie


561-365-1260


[email protected]

 

SELECTED FINANCIAL DATA, NON-GAAP MEASURES AND DEFINITIONS

Following are tables that present selected financial data of Carrier Global Corporation ("Carrier"). Also included are reconciliations of non-GAAP measures to their most comparable GAAP measures.

Use and Definitions of Non-GAAP Financial Measures

Carrier Global Corporation ("Carrier") reports its financial results in accordance with accounting principles generally accepted in the United States ("GAAP"). We supplement the reporting of our financial information determined under GAAP with certain non-GAAP financial information. The non-GAAP information presented provides investors with additional useful information, but should not be considered in isolation or as substitutes for the related GAAP measures. Moreover, other companies may define non-GAAP measures differently, which limits the usefulness of these measures for comparisons with such other companies. We encourage investors to review our financial statements and publicly filed reports in their entirety and not to rely on any single financial measure. A reconciliation of the non-GAAP measures to the corresponding amounts prepared in accordance with GAAP appears in the tables in this Appendix. The tables provide additional information as to the items and amounts that have been excluded from the adjusted measures.

Organic sales, adjusted operating profit, adjusted operating margin, incremental margins / earnings conversion, earnings before interest, taxes and depreciation and amortization ("EBITDA"), adjusted EBITDA, adjusted net income, adjusted earnings per share ("EPS"), adjusted interest expense, net, adjusted effective tax rate and net debt are non-GAAP financial measures.

Organic sales represents consolidated net sales (a GAAP measure), excluding the impact of foreign currency translation, acquisitions and divestitures completed in the preceding twelve months and other significant items of a nonoperational nature (hereinafter referred to as "other significant items"). Adjusted operating profit represents operating profit (a GAAP measure), excluding restructuring costs, amortization of acquired intangibles and other significant items. Adjusted operating margin represents adjusted operating profit as a percentage of net sales (a GAAP measure). Incremental margins / earnings conversion represents the year-over-year change in adjusted operating profit divided by the year-over-year change in net sales. EBITDA represents net income attributable to common shareholders (a GAAP measure), adjusted for interest income and expense, income tax expense, and depreciation and amortization. Adjusted EBITDA represents EBITDA, as calculated above, excluding non-service pension benefit, non-controlling interest in subsidiaries' earnings from operations, restructuring costs and other significant items. Adjusted net income represents net income attributable to common shareowners (a GAAP measure), excluding restructuring costs, amortization of acquired intangibles and other significant items. Adjusted EPS represents diluted earnings per share (a GAAP measure), excluding restructuring costs, amortization of acquired intangibles and other significant items. Adjusted interest expense, net represents interest expense (a GAAP measure) and interest income (a GAAP measure), net excluding other significant items. The adjusted effective tax rate represents the effective tax rate (a GAAP measure), excluding restructuring costs, amortization of acquired intangibles and other significant items. Net debt represents long-term debt (a GAAP measure) less cash and cash equivalents (a GAAP measure). For the business segments, when applicable, adjustments of operating profit and operating margins represent operating profit, excluding restructuring, amortization of acquired intangibles and other significant items.

Free cash flow is a non-GAAP financial measure that represents net cash flows provided by operating activities (a GAAP measure) less capital expenditures. Management believes free cash flow is a useful measure of liquidity and an additional basis for assessing Carrier's ability to fund its activities, including the financing of acquisitions, debt service, repurchases of Carrier's common stock and distribution of earnings to shareowners.

Orders are contractual commitments with customers to provide specified goods or services for an agreed upon price and may not be subject to penalty if cancelled.

When we provide our expectations for organic sales, adjusted operating profit, adjusted operating margin, adjusted interest expense, net, adjusted effective tax rate, incremental margins/earnings conversion, EBITDA, adjusted EBITDA, adjusted EPS and free cash flow on a forward-looking basis, a reconciliation of the differences between the non-GAAP expectations and the corresponding GAAP measures (expected net sales, operating profit, operating margin, interest expense, effective tax rate, incremental operating margin, net income attributable to common shareowners, diluted EPS and net cash flows provided by operating activities) generally is not available without unreasonable effort due to potentially high variability, complexity and low visibility as to the items that would be excluded from the GAAP measure in the relevant future period, such as unusual gains and losses, the ultimate outcome of pending litigation, fluctuations in foreign currency exchange rates, the impact and timing of potential acquisitions and divestitures, future restructuring costs, and other structural changes or their probable significance. The variability of the excluded items may have a significant, and potentially unpredictable, impact on our future GAAP results.

 

Carrier Global Corporation

Condensed Consolidated Statement of Operations



(Unaudited)


 Three Months Ended
September 30,


Nine Months Ended
September 30,

(In millions, except per share amounts)

2023


2022


2023


2022

Net sales








Product sales

$           5,081


$           4,891


$         15,122


$         13,723

Service sales

650


560


1,874


1,593

Total Net sales

5,731


5,451


16,996


15,316

Costs and expenses








Cost of products sold

(3,428)


(3,569)


(10,655)


(9,930)

Cost of services sold

(487)


(405)


(1,392)


(1,169)

Research and development

(157)


(143)


(447)


(390)

Selling, general and administrative

(831)


(624)


(2,336)


(1,839)

Total Costs and expenses

(4,903)


(4,741)


(14,830)


(13,328)

Equity method investment net earnings

75


63


171


222

Other income (expense), net

(258)


753


(648)


1,872

Operating profit

645


1,526


1,689


4,082

Non-service pension (expense) benefit

-


-


-


(2)

Interest (expense) income, net

(51)


(56)


(164)


(165)

Income from operations before income taxes

594


1,470


1,525


3,915

Income tax (expense) benefit

(213)


(138)


(524)


(609)

Net income from operations

381


1,332


1,001


3,306

Less: Non-controlling interest in subsidiaries' earnings from
operations

24


20


72


42

Net income attributable to common shareowners

$              357


$           1,312


$              929


$           3,264









Earnings per share








Basic

$             0.43


$             1.56


$             1.11


$             3.86

Diluted

$             0.42


$             1.53


$             1.09


$             3.78

Weighted-average number of shares outstanding








Basic

838.7


839.6


836.6


846.1

Diluted

854.7


856.5


852.7


864.3

 

Carrier Global Corporation

Condensed Consolidated Balance Sheet




(Unaudited)

(In millions)


September 30, 2023


December 31, 2022

Assets





Cash and cash equivalents


$                   3,902


$                      3,520

Accounts receivable, net


3,030


2,833

Contract assets, current


605


537

Inventories, net


2,562


2,640

Other assets, current


412


349

Total current assets


10,511


9,879

Future income tax benefits


712


612

Fixed assets, net


2,210


2,241

Operating lease right-of-use assets


577


642

Intangible assets, net


1,100


1,342

Goodwill


9,825


9,977

Pension and post-retirement assets


29


26

Equity method investments


1,166


1,148

Other assets


414


219

Total Assets


$                 26,544


$                    26,086






Liabilities and Equity





Accounts payable


$                   2,887


$                      2,833

Accrued liabilities


2,832


2,610

Contract liabilities, current


496


449

Current portion of long-term debt


134


140

Total current liabilities


6,349


6,032

Long-term debt


8,651


8,702

Future pension and post-retirement obligations


337


349

Future income tax obligations


553


568

Operating lease liabilities


465


529

Other long-term liabilities


1,687


1,830

Total Liabilities


18,042


18,010






Equity





Common stock


9


9

Treasury stock


(1,972)


(1,910)

Additional paid-in capital


5,517


5,481

Retained earnings


6,486


5,866

Accumulated other comprehensive loss


(1,856)


(1,688)

Non-controlling interest


318


318

Total Equity


8,502


8,076

Total Liabilities and Equity


$                 26,544


$                    26,086

 

Carrier Global Corporation

Condensed Consolidated Statement of Cash Flows



(Unaudited)



Nine Months Ended September 30,

(In millions)


2023


2022

Operating Activities





Net income from operations


$             1,001


$             3,306

Adjustments to reconcile net income to net cash flows from operating activities:





Depreciation and amortization


407


257

Deferred income tax provision


(151)


(107)

Stock-based compensation costs


63


58

Equity method investment net earnings


(171)


(222)

(Gain) loss on extinguishment of debt


-


(36)

(Gain) loss on sale of investments / deconsolidation


278


(1,844)

Changes in operating assets and liabilities





Accounts receivable, net


(297)


(433)

Contract assets, current


(74)


(201)

Inventories, net


7


(492)

Other assets, current


(75)


(3)

Accounts payable and accrued liabilities


491


180

Contract liabilities, current


55


34

Defined benefit plan contributions


(17)


(10)

Distributions from equity method investments


45


55

Other operating activities, net


(17)


78

Net cash flows provided by (used in) operating activities


1,545


620

Investing Activities





Capital expenditures


(236)


(213)

Investments in businesses, net of cash acquired


(69)


(472)

Disposition of businesses


54


2,944

Settlement of derivative contracts, net


(66)


(202)

Kidde-Fenwal, Inc. deconsolidation


(134)


-

Other investing activities, net


20


(12)

Net cash flows provided by (used in) investing activities


(431)


2,045

Financing Activities





Increase (decrease) in short-term borrowings, net


(35)


(125)

Issuance of long-term debt


14


421

Repayment of long-term debt


(15)


(1,185)

Repurchases of common stock


(62)


(1,261)

Dividends paid on common stock


(465)


(384)

Dividends paid to non-controlling interest


(46)


(22)

Other financing activities, net


(79)


(28)

Net cash flows provided by (used in) financing activities


(688)


(2,584)

Effect of foreign exchange rate changes on cash and cash equivalents


(45)


(115)

Net increase (decrease) in cash and cash equivalents and restricted cash


381


(34)

Cash, cash equivalents and restricted cash, beginning of period


3,527


3,025

Cash, cash equivalents and restricted cash, end of period


3,908


2,991

Less: restricted cash


6


6

Cash and cash equivalents, end of period


$             3,902


$             2,985

 

Carrier Global Corporation

Segment Net Sales and Operating Profit



(Unaudited)


 Three Months Ended September 30,


Nine Months Ended September 30,


2023


2022


2023


2022

(In millions)

Reported


Adjusted


Reported


Adjusted


Reported


Adjusted


Reported


Adjusted

Net sales
















HVAC

$    4,008


$    4,008


$    3,734


$    3,734


$  11,846


$  11,846


$  10,092


$  10,092

Refrigeration

924


924


923


923


2,794


2,794


2,940


2,940

Fire & Security

923


923


905


905


2,724


2,724


2,610


2,610

Segment sales

5,855


5,855


5,562


5,562


17,364


17,364


15,642


15,642

Eliminations and other

(124)


(124)


(111)


(111)


(368)


(368)


(326)


(326)

Net sales

$    5,731


$    5,731


$    5,451


$    5,451


$  16,996


$  16,996


$  15,316


$  15,316

















Operating profit
















HVAC

$       763


$    833


$    1,314


$       624


$    1,940


$    2,114


$    2,369


$    1,715

Refrigeration

107


111


116


118


327


341


370


382

Fire & Security

164


169


142


150


100


414


1,494


402

Segment operating profit

1,034


1,113


1,572


892


2,367


2,869


4,233


2,499

Eliminations and other

(298)


(41)


(10)


(10)


(482)


(112)


(50)


(50)

General corporate expenses

(91)


(28)


(36)


(21)


(196)


(107)


(101)


(71)

Operating profit

$       645


$ 1,044


$    1,526


$       861


$    1,689


$    2,650


$    4,082


$    2,378

















Operating  margin















HVAC

19.0 %


20.8 %


35.2 %


16.7 %


16.4 %


17.8 %


23.5 %


17.0 %

Refrigeration

11.6 %


12.0 %


12.6 %


12.8 %


11.7 %


12.2 %


12.6 %


13.0 %

Fire & Security

17.8 %


18.3 %


15.7 %


16.6 %


3.7 %


15.2 %


57.2 %


15.4 %

Total Carrier

11.3 %


18.2 %


28.0 %


15.8 %


9.9 %


15.6 %


26.7 %


15.5 %

 

Carrier Global Corporation

Reconciliation of Reported (GAAP) to Adjusted (Non-GAAP)

Operating Profit



(Unaudited)


Three Months Ended September 30, 2023

(In millions)

HVAC


Refrigeration


Fire &
Security


Eliminations
and Other


General
Corporate
Expenses


Carrier

Net sales

$      4,008


$            924


$         923


$            (124)


$                -


$      5,731













Segment operating profit

$         763


$            107


$         164


$            (298)


$              (91)


$         645

Reported operating margin

19.0 %


11.6 %


17.8 %






11.3 %













Adjustments to segment operating profit:












Restructuring costs

$           25


$                4


$           (1)


$                -


$                -


$           28

Amortization of acquired intangibles

35


-


2


-


-


37

Acquisition step-up amortization (1)

10


-


-


-


-


10

Acquisition/divestiture-related costs

-


-


-


-


62


62

Bridge loan financing costs

-


-


-


1


-


1

Viessmann-related hedges

-


-


-


257


-


257

KFI deconsolidation

-


-


4


-


-


4

Total adjustments to operating profit

$           70


$                4


$             5


$              258


$                62


$         399













Adjusted operating profit

$         833


$            111


$         169


$              (40)


$              (29)


$      1,044

Adjusted operating margin

20.8 %


12.0 %


18.3 %






18.2 %

 


(Unaudited)


Three Months Ended September 30, 2022

(In millions)

HVAC


Refrigeration


Fire &
Security


Eliminations
and Other


General
Corporate
Expenses


Carrier

Net sales

$      3,734


$            923


$         905


$            (111)


$                -


$       5,451













Segment operating profit

$      1,314


$            116


$         142


$              (10)


$              (36)


$       1,526

Reported operating margin

35.2 %


12.6 %


15.7 %






28.0 %













Adjustments to segment operating profit:












Restructuring costs

$             2


$                3


$             1


$                -


$                -


$              6

Amortization of acquired intangibles

16


-


1


-


-


17

Acquisition step-up amortization (1)

24


-


-


-


-


24

Acquisition/divestiture-related costs

-


-


-


-


15


15

Chubb gain

-


-


7


-


-


7

TCC acquisition-related gain (2)

(732)


-


-


-


-


(732)

Russia/Ukraine asset impairment

-


(1)


(1)


-


-


(2)

Total adjustments to operating profit

$       (690)


$                2


$             8


$                -


$                15


$        (665)













Adjusted operating profit

$         624


$            118


$         150


$              (10)


$              (21)


$          861

Adjusted operating margin

16.7 %


12.8 %


16.6 %






15.8 %


(1) Amortization of the step-up to fair value of acquired inventory and backlog.

(2) The carrying value of our previously held TCC equity investments were recognized at fair value at the TCC acquisition date.

 

Carrier Global Corporation

Reconciliation of Reported (GAAP) to Adjusted (Non-GAAP)

Operating Profit



(Unaudited)


Nine Months Ended September 30, 2023

(In millions)

HVAC


Refrigeration


Fire &

Security


Eliminations

and Other


General
Corporate
Expenses


Carrier

Net sales

$    11,846


$         2,794


$      2,724


$            (368)


$                -


$    16,996













Segment operating profit

$      1,940


$            327


$         100


$            (482)


$            (196)


$      1,689

Reported operating margin

16.4 %


11.7 %


3.7 %






9.9 %













Adjustments to segment operating profit:












Restructuring costs

$           27


$              14


$           11


$                  2


$                -


$           54

Amortization of acquired intangibles

108


-


6


-


-


114

Acquisition step-up amortization (1)

31


-


-


-


-


31

Acquisition/divestiture-related costs

-


-


-


-


88


88

Bridge load financing costs

-


-


-


1


-


1

Viessmann-related hedges

-


-


-


368


-


368

TCC acquisition-related gain (2)

8


-


-


-


-


8

KFI deconsolidation

-


-


297


-


-


297

Total adjustments to operating profit

$         174


$              14


$         314


$              371


$                88


$         961













Adjusted operating profit

$      2,114


$            341


$         414


$            (111)


$            (108)


$      2,650

Adjusted operating margin

17.8 %


12.2 %


15.2 %






15.6 %

 


(Unaudited)


Nine Months Ended September 30, 2022

(In millions)

HVAC


Refrigeration


Fire &

Security


Eliminations

and Other


General
Corporate
Expenses


Carrier

Net sales

$    10,092


$         2,940


$      2,610


$            (326)


$                -


$     15,316













Segment operating profit

$      2,369


$            370


$      1,494


$              (50)


$            (101)


$       4,082

Reported operating margin

23.5 %


12.6 %


57.2 %






26.7 %













Adjustments to segment operating profit:












Restructuring costs

$             8


$                9


$           10


$                -


$                  2


$            29

Amortization of acquired intangibles

24


-


3


-


-


27

Acquisition step-up amortization (1)

24




-


-


-


24

Acquisition/divestiture-related costs

-


-


-


-


28


28

Chubb gain

-


-


(1,105)


-


-


(1,105)

TCC acquisition-related gain (2)

(732)


-


-


-


-


(732)

Russia/Ukraine asset impairment

-


3


-


-


-


3

Charge resulting from legal matter

22


-


-


-


-


22

Total adjustments to operating profit

$       (654)


$              12


$    (1,092)


$                -


$                30

$  30

$     (1,704)













Adjusted operating profit

$      1,715


$            382


$         402


$              (50)


$              (71)


$       2,378

Adjusted operating margin

17.0 %


13.0 %


15.4 %






15.5 %


(1) Amortization of the step-up to fair value of acquired inventory and backlog.

(2)  The carrying value of our previously held TCC equity investments were recognized at fair value and subsequently adjusted.

 

Carrier Global Corporation

Reconciliation of Reported (GAAP) to Adjusted (Non-GAAP) Results

Net Income, Earnings Per Share and Effective Tax Rate



(Unaudited)


Three Months Ended September 30, 2023


Nine Months Ended September 30, 2023

(In millions, except per share amounts)

Reported


Adjustments


Adjusted


Reported


Adjustments


Adjusted

Net sales

$       5,731


$              -


$       5,731


$  16,996


$              -


$ 16,996













Operating profit

$          645


399

a

$       1,044


$    1,689


961

a

$   2,650

Operating margin

11.3 %




18.2 %


9.9 %




15.6 %













Income from operations before income taxes

$          594


410

a,b

$       1,004


$    1,525


993

a,b

$   2,518

Income tax expense

$         (213)


(2)

c

$         (215)


$      (524)


(45)

c

$    (569)

Effective tax rate

35.9 %




21.4 %


34.4 %




22.6 %













Net income attributable to common shareowners

$          357


$            408


$          765


$       929


$            948


$   1,877













Summary of Adjustments:












Restructuring costs



$              28

a





$              54

a


Amortization of acquired intangibles



37

a





114

a


Acquisition step-up amortization (1)



10

a





31

a


Acquisition/divestiture-related costs



62

a





88

a


Viessmann-related hedges



257

a





368

a


TCC acquisition-related gain (2)



-

a





8

a


KFI deconsolidation



4

a





297

a


Bridge loan financing costs (3)



12

a,b





33

a,b


Total adjustments



$            410






$            993















Tax effect on adjustments above



$            (35)






$            (78)



Tax specific adjustments



33






33



Total tax adjustments



$              (2)

c





$            (45)

c














Shares outstanding - Diluted

854.7




854.7


852.7




852.7













Earnings per share - Diluted

$         0.42




$         0.89


$      1.09




$     2.20


(1) Amortization of the step-up to fair value of acquired inventory and backlog.

(2)  The carrying value of our previously held TCC equity investments were recognized at fair value and subsequently adjusted.

(3)  Includes commitment fees recognized in Selling, general and administrative.

 

Carrier Global Corporation

Reconciliation of Reported (GAAP) to Adjusted (Non-GAAP) Results

Net Income, Earnings Per Share and Effective Tax Rate



(Unaudited)


Three Months Ended September 30, 2022


Nine Months Ended September 30, 2022

(In millions, except per share amounts)

Reported


Adjustments


Adjusted


Reported


Adjustments


Adjusted

Net sales

$    5,451


$                -


$       5,451


$  15,316


$                -


$   15,316













Operating profit

$    1,526


(665)

a

$          861


$    4,082


(1,704)

a

$     2,378

Operating margin

28.0 %




15.8 %


26.7 %




15.5 %













Income from operations before income taxes

$    1,470


(665)

a

$          805


$    3,915


(1,732)

a,b

$     2,183

Income tax expense

$      (138)


(47)

c

$         (185)


$      (609)


148

c

$       (461)

Effective tax rate

9.4 %




23.0 %


15.6 %




21.1 %













Net income attributable to common shareowners

$    1,312


$            (712)


$          600


$    3,264


$         (1,584)


$     1,680













Summary of Adjustments:












Restructuring costs



$                  6

a





$                29

a


Amortization of acquired intangibles



17

a





27

a


Acquisition step-up amortization (1)



24

a





24

a


Acquisition/divestiture-related costs



15

a





28

a


Chubb gain



7

a





(1,105)

a


TCC acquisition-related gain (2)



(732)

a





(732)

a


Russia/Ukraine asset impairment



(2)

a





3

a


Charge resulting from legal matter



-

a





22

a


Debt extinguishment (gain), net (3)



-

b





(28)

b


Total adjustments



$            (665)






$         (1,732)















Tax effect on adjustments above



$              (15)






$              185



Tax specific adjustments



(32)






(37)



Total tax adjustments



$              (47)

c





$              148

c














Shares outstanding - Diluted

856.5




856.5


864.3




864.3













Earnings per share - Diluted

$      1.53




$         0.70


$      3.78




$       1.94


(1) Amortization of the step-up to fair value of acquired inventory and backlog.

(2) The carrying value of our previously held TCC equity investments were recognized at fair value at the TCC acquisition date.

(3) The Company repurchased approximately $1.15 billion of aggregate principal senior notes on March 30, 2022 and recognized a net gain of $33 million and wrote-off $5 million of unamortized deferred financing costs in Interest (expense) income, net.

 

Carrier Global Corporation

Reconciliation of Reported (GAAP) to Adjusted (Non-GAAP) Results


Components of Changes in Net Sales


Three Months Ended September 30, 2023  Compared with Three Months Ended September 30, 2022



(Unaudited)


Factors Contributing to Total % change in Net Sales


Organic


FX
Translation


Acquisitions /

Divestitures, net


Other


Total

HVAC

4 %


- %


3 %


- %


7 %

Refrigeration

(3) %


3 %


- %


- %


- %

Fire & Security

6 %


1 %


- %


(5) %


2 %

Consolidated

3 %


1 %


1 %


- %


5 %





















Nine Months Ended September 30,  2023 Compared with Nine Months Ended September 30, 2022



(Unaudited)


Factors Contributing to Total % change in Net Sales


Organic


FX

Translation


Acquisitions /

Divestitures, net


Other


Total

HVAC

6 %


(1) %


12 %


- %


17 %

Refrigeration

(4) %


- %


(1) %


- %


(5) %

Fire & Security

8 %


(1) %


- %


(3) %


4 %

Consolidated

4 %


(1) %


8 %


- %


11 %

 

Historical Amounts of Amortization of Acquired Intangibles




(Unaudited)



Q1


Q2


Q3


Q4


FY

(In millions)


2022


2022


2022


2022


2022

HVAC


$             4


$             4


$           16


$           22


$           46

Fire & Security


1


1


1


1


4

Total Carrier


5


5


17


23


50

Associated tax effect


(1)


(1)


(7)


(4)


(13)

Net impact to adjusted results


$             4


$             4


$           10


$           19


$           37

 

Free Cash Flow Reconciliation




(Unaudited)



Q1


Q2


Q3


Q4


FY


Q1


Q2


Q3

(In millions)


2022


2022


2022


2022


2022


2023


2023


2023

Net cash flows provided by
(used in) operating activities


$       (202)


$           32


$         790


$      1,123


$      1,743


$         120


$         384


$      1,041

Less: Capital expenditures


56


66


91


140


353


70


74


92

Free cash flow


$       (258)


$         (34)


$         699


$         983


$      1,390


$           50


$         310


$         949

 

Net Debt Reconciliation




(Unaudited)

(In millions)


September 30, 2023


December 31, 2022

Long-term debt


$                       8,651


$                       8,702

Current portion of long-term debt


134


140

Less: Cash and cash equivalents


3,902


3,520

Net debt


$                       4,883


$                       5,322

 

SOURCE Carrier Global Corporation