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Carrier Reports First Quarter 2020 Earnings

  • Sales of $3.9 billion
  • GAAP operating profit of $315 million; adjusted operating profit of $436 million
  • GAAP EPS of $0.11; adjusted EPS $0.35
  • Identified $425 million in full-year cost reductions

Carrier Global Corporation (NYSE:CARR) today reported financial results for the first quarter of 2020. Carrier is a leading global provider of innovative heating, ventilating and air conditioning (HVAC), refrigeration, fire, security and building automation technologies.

“We moved early to address the COVID-19 pandemic head-on with a focus on protecting our employees, and throughout this, our 53,000 global employees demonstrated resilience and commitment to continuing to provide our critical products,” said Carrier President & CEO Dave Gitlin. “At the same time, we remain laser focused on our strategic growth priorities, including growing our base, increasing product extensions and geographic coverage and focusing on services and digital. We are also taking aggressive cost actions, identifying $425 million of savings and a 40-50% reduction in planned capital spending, while preserving investments in those initiatives that are most critical to position Carrier for growth when economic conditions improve. We are a more agile, customer-focused company with a clear roadmap to drive best-in-class organic growth.”

First Quarter Results
Carrier’s first quarter sales of $3.9 billion were down 10% compared to last year, a 9% decline organically. About half of the sales decline was due to the expected reduction in gas furnace sales, North America truck trailer sales and the wind-down of a residential intrusion business, with the remainder largely related to COVID-19. GAAP operating profit in the quarter of $315 million was down 37%, but adjusted operating profit of $436 million was down 16% helped by the benefit of Carrier’s aggressive cost containment and the acceleration of Carrier 600, a program expected to remove $600 million in costs over three years. GAAP EPS was $0.11 and, on an adjusted basis, EPS was $0.35 after excluding net nonrecurring and restructuring charges. Net income in the quarter was $96 million and included $210 million of net nonrecurring and restructuring charges. Net cash flows provided by operating activities was $47 million and capital expenditures were $48 million, resulting in a use of free cash flow of $1 million, a substantial improvement from the negative $224 million of free cash flow in the prior year’s first quarter. Importantly, Carrier’s cash balance at the time of the spin was approximately $1.3 billion.

Gitlin added, “In light of the essential nature of our products and solutions, I am so proud of the tremendous work our people have done to support our customers during these critical times. We are also focused on delivering new product offerings to support enhanced safety and health needs as societies and communities begin to open. For example, indoor air quality will be critical and we worked rapidly to release OptiClean, a unique system that can filter microscopic-sized contaminants. In our fire and security business, with our touchless solutions, we can eliminate many physical contact points to improve health and safety. And we are essential in helping to preserve and protect food and pharmaceuticals with our cold chain solutions.”

Full-Year 2020 Scenarios
On April 3, 2020, Carrier withdrew its full year 2020 outlook for sales, adjusted operating profit, and free cash flow due to the impact of COVID-19. Given continued uncertainty, Carrier considered a range of different assumptions and the most reasonable scenarios fall into the following ranges:

  • Sales of $15 - $17 billion
  • Adjusted operating profit of $1.7 - $2.0 billion
  • Free cash flow in excess of $1 billion*

* Note: When we provide expectations for adjusted operating profit 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 live webcast of its earnings conference call today, Friday, May 8, 2020, at 8:30 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, dial (877) 742-9091.

About Carrier
Carrier Global Corporation is a leading global provider of innovative HVAC, refrigeration, fire, security and building automation technologies. Supported by the iconic Carrier name, the company’s portfolio includes industry-leading brands such as Carrier, Kidde, Edwards, LenelS2 and Automated Logic. For more information, visit www.corporate.carrier.com or follow Carrier on social media at @Carrier.

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.

Organic sales, adjusted operating profit, adjusted net income, adjusted earnings per share (“EPS”), and the adjusted effective tax rate 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 non-recurring and/or nonoperational nature (hereinafter referred to as “other significant items”). Adjusted operating profit represents operating profit (a GAAP measure), excluding restructuring costs and other significant items.  Adjusted net income represents net income attributable to common shareowners (a GAAP measure), excluding restructuring costs and other significant items.  Adjusted EPS represents diluted earnings per share (a GAAP measure), excluding restructuring costs and other significant items. The adjusted effective tax rate represents the effective tax rate (a GAAP measure), excluding restructuring costs and other significant items.  For the business segments, when applicable, adjustments of operating profit and margins represent operating profit, excluding restructuring and other significant items.

GAAP financial results include the impact of changes in foreign currency exchange rates (AFX). We use the non-GAAP measure “at constant currency” or “CFX” to show changes in our financial results without giving effect to period-to-period currency fluctuations. Under U.S. GAAP, income statement results are translated in U.S. dollars at the average exchange rate for the period presented.  Management believes that the non-GAAP measures just mentioned are useful in providing period-to-period comparisons of the results of the Company’s ongoing operational performance.

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 shareholders.

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.

When we provide our expectations for adjusted EPS, adjusted operating profit, adjusted effective tax rate, organic sales 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 diluted EPS, operating profit, the effective tax rate, sales and expected 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, 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.

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.  From time to time, oral or written forward-looking statements may also be included in other information released to the public.  These forward-looking statements are intended to provide management’s current expectations or plans for our 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 or the separation from United Technologies (the “Separation”). Forward-looking statements may include, among other things, statements relating to 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 following the Separation, including the estimated costs associated with the Separation 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 those statements, we claim the protection of the safe harbor for forward-looking statements contained in the U.S. Private Securities Litigation Reform Act of 1995. Such risks, uncertainties and other factors include, without limitation: (1) the effect of economic conditions in the industries and markets in which we and our businesses operate in the U.S. and globally and any changes therein, including financial market conditions, fluctuations in commodity prices, interest rates and foreign currency exchange rates, levels of end market demand in construction, the impact of weather conditions, pandemic health issues (including COVID-19 and its effects, among other things, on production and on global supply, demand, and distribution disruptions as the outbreak continues and results in an increasingly prolonged period of travel, commercial and/or other similar restrictions and limitations), natural disasters and the financial condition of our customers and suppliers; (2) challenges in the development, production, delivery, support, performance and realization of the anticipated benefits of advanced technologies and new products and services; (3) future levels of indebtedness, including indebtedness incurred in connection with the Separation, and capital spending and research and development spending; (4) future availability of credit and factors that may affect such availability, including credit market conditions and capital structure and credit ratings; (5) the timing and scope of future repurchases of our common stock, including market conditions and the level of other investing activities and uses of cash; (6) delays and disruption in the delivery of materials and services from suppliers; (7) cost reduction efforts and restructuring costs and savings and other consequences thereof; (8) new business and investment opportunities; (9) the anticipated benefits of moving away from diversification and balance of operations across product lines, regions and industries; (10) the outcome of legal proceedings, investigations and other contingencies; (11) the impact of pension plan assumptions and on future cash contributions and earnings; (12) the impact of the negotiation of collective bargaining agreements and labor disputes; (13) the effect of changes in political conditions in the U.S. and other countries in which we and our businesses operate, including the effect of changes in U.S. trade policies or the United Kingdom’s withdrawal from the European Union, on general market conditions, global trade policies and currency exchange rates in the near term and beyond; (14) the effect of changes in tax, environmental, regulatory (including among other things import/export) and other laws and regulations in the U.S. and other countries in which we and our businesses operate; (15) the ability of Carrier to retain and hire key personnel; (16) the scope, nature, impact or timing of acquisition and divestiture activity, including among other things integration of acquired businesses into existing businesses and realization of synergies and opportunities for growth and innovation and incurrence of related costs; (17) the expected benefits of the Separation; (18) a determination by the IRS and other tax authorities that the Distribution or certain related transactions should be treated as taxable transactions; (19) risks associated with indebtedness incurred as a result of financing transactions undertaken in connection with the Separation; (20) the risk that dis-synergy costs, costs of restructuring transactions and other costs incurred in connection with the Separation will exceed Carrier’s estimates; and (21) the impact of the Separation on Carrier’s business and Carrier’s resources, systems, procedures and controls, diversion of management’s attention and the impact on relationships with customers, suppliers, employees and other business counterparties.

The above list of factors is not exhaustive or necessarily in order of importance. For additional information on identifying factors that may cause actual results to vary materially from those stated in forward-looking statements, see Carrier’s registration statement on Form 10 and the reports of Carrier on Forms, 10-Q and 8-K filed with or furnished to the SEC 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.

 

Carrier Global Corporation
Condensed Combined Statement of Operations

 

(Unaudited)

 

For the Quarters Ended March 31,

(dollars in millions, except per share amounts; shares in millions)

2020

 

2019

Net Sales:

 

 

 

Product sales

$

3,147 

 

 

$

3,566 

 

Service sales

741 

 

 

757 

 

 

3,888 

 

 

4,323 

 

Costs and expenses

 

 

 

Cost of products sold

2,237 

 

 

2,565 

 

Cost of services sold

529 

 

 

532 

 

Research and development

98 

 

 

97 

 

Selling, general and administrative

692 

 

 

684 

 

 

3,556 

 

 

3,878 

 

Equity method investment net earnings

29 

 

 

40 

 

Other (expense) income, net

(46)

 

 

15 

 

Operating profit

315 

 

 

500 

 

Non-service pension benefit

17 

 

 

39 

 

Interest (expense) income, net

(37)

 

 

 

Income from operations before income taxes

295 

 

 

543 

 

Income tax expense

193 

 

 

140 

 

Net income from operations

102 

 

 

403 

 

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

 

 

 

Net income attributable to common shareowners

$

96 

 

 

$

400 

 

 

 

 

 

Earnings per share 1

 

 

 

Basic

$

0.11 

 

 

$

0.46 

 

Diluted

$

0.11 

 

 

$

0.46 

 

Weighted average number of shares outstanding 1

 

 

 

Basic

866

 

866

Diluted

866

 

866

¹  Earnings per share for all periods presented were calculated using the number shares that were distributed to UTC shareowners immediately following the Separation. For periods prior to the Separation it is assumed that there are no dilutive equity instruments as there were no equity awards in Carrier outstanding prior to the Separation.

 

Carrier Global Corporation
Segment Net Sales and Operating Profit

 

(Unaudited)

 

For the Quarters Ended March 31,

(dollars in millions)

2020

 

2019

Net sales

 

 

 

HVAC

$

1,959 

 

 

$

2,168 

 

Refrigeration

808 

 

 

962 

 

Fire & Security

1,206 

 

 

1,290 

 

Segment sales

3,973 

 

 

4,420 

 

Eliminations and other

(85)

 

 

(97)

 

Combined net sales

$

3,888 

 

 

$

4,323 

 

 

 

 

 

Operating profit

 

 

 

HVAC

$

167 

 

 

$

293 

 

Refrigeration

99 

 

 

127 

 

Fire & Security

120 

 

 

132 

 

Segment operating profit

386 

 

 

552 

 

Eliminations and other

(35)

 

 

(17)

 

General corporate expenses

(36)

 

 

(35)

 

Combined operating profit

$

315 

 

 

$

500 

 

 

 

 

 

Segment operating profit margin

 

 

 

HVAC

8.5 

%

 

13.5 

%

Refrigeration

12.3 

%

 

13.2 

%

Fire & Security

10.0 

%

 

10.2 

%

 

 

 

 

Segment operating profit margin

9.7 

%

 

12.5 

%

 

Carrier Global Corporation
Operating Profit Adjusted for Restructuring Costs and
Non-recurring and Non-operational Items

 

(Unaudited)

 

For the Quarters Ended March 31,

 

2020

 

2019

(dollars in millions)

Reported

 

Adjusted

 

Reported

 

Adjusted

Operating profit

 

 

 

 

 

 

 

HVAC

$

167 

 

 

$

242 

 

 

$

293 

 

 

$

297 

 

Refrigeration

99 

 

 

99 

 

 

127 

 

 

130 

 

Fire & Security

120 

 

 

126 

 

 

132 

 

 

145 

 

Segment operating profit

386 

 

 

467 

 

 

552 

 

 

572 

 

Eliminations and other

(35)

 

 

 

 

(17)

 

 

(17)

 

General corporate expenses

(36)

 

 

(36)

 

 

(35)

 

 

(35)

 

Combined operating profit

$

315 

 

 

$

436 

 

 

$

500 

 

 

$

520 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Segment operating profit margin

 

 

 

 

 

 

 

HVAC

8.5 

%

 

12.4 

%

 

13.5 

%

 

13.7 

%

Refrigeration

12.3 

%

 

12.3 

%

 

13.2 

%

 

13.5 

%

Fire & Security

10.0 

%

 

10.4 

%

 

10.2 

%

 

11.2 

%

 

 

 

 

 

 

 

 

Segment operating profit margin

9.7 

%

 

11.8 

%

 

12.5 

%

 

12.9 

%

 

Carrier Global Corporation
Reconciliation of Reported (GAAP) to Adjusted (Non-GAAP)
Adjusted Operating Profit & Operating Profit Margin

 

 

(Unaudited)

 

 

 

For the Quarters Ended March 31,

 

   

 

(dollars in millions - Income (Expense))

2020

 

2019

 

HVAC

 

 

Net sales

$

1,959 

 

 

$

2,168 

 

 

 

 

 

 

 

 

 

Operating profit

$

167 

 

 

$

293 

 

 

 

Restructuring

(2)

 

 

(17)

 

 

 

Impairment charge on minority owned joint venture investment

(71)

 

 

— 

 

 

 

Gain on sale of interest in joint venture

— 

 

 

13 

 

 

 

Separation costs

(2)

 

 

— 

 

 

 

Adjusted operating profit

$

242 

 

 

$

297 

 

 

 

Adjusted operating profit margin

12.4 

%

 

13.7 

%

 

 

 

 

 

 

 

Refrigeration

 

 

 

 

 

Net sales

$

808 

 

 

$

962 

 

 

 

 

 

 

 

 

 

Operating profit

$

99 

 

 

$

127 

 

 

 

Restructuring

— 

 

 

(3)

 

 

 

Adjusted operating profit

$

99 

 

 

$

130 

 

 

 

Adjusted operating profit margin

12.3 

%

 

13.5 

%

 

 

 

 

 

 

 

Fire & Security

 

 

 

 

 

Net sales

$

1,206 

 

 

$

1,290 

 

 

 

 

 

 

 

 

 

Operating profit

$

120 

 

 

$

132 

 

 

 

Restructuring

(3)

 

 

(13)

 

 

 

Separation costs

(3)

 

 

— 

 

 

 

Adjusted operating profit

$

126 

 

 

$

145 

 

 

 

Adjusted operating profit margin

10.4 

%

 

11.2 

%

 

 

 

 

 

 

 

General Corporate Expenses and Eliminations and Other

 

 

 

 

 

Net sales

$

(85)

 

 

$

(97)

 

 

 

 

 

 

 

 

 

Operating profit

$

(71)

 

 

$

(52)

 

 

 

Separation costs

(40)

 

 

— 

 

 

 

Adjusted operating profit

$

(31)

 

 

$

(52)

 

 

 

 

 

 

 

 

Carrier Combined

 

 

 

 

 

Net sales

$

3,888 

 

 

$

4,323 

 

 

 

 

 

 

 

 

 

Operating profit

$

315 

 

 

$

500 

 

 

 

Total restructuring costs

(5)

 

 

(33)

 

 

 

Total non-recurring and non-operational items

(116)

 

 

13 

 

 

 

Combined adjusted operating profit

$

436 

 

 

$

520 

 

 

 

Carrier Global Corporation
Reconciliation of Reported (GAAP) to Adjusted (Non-GAAP) Results
Adjusted Net Income, Earnings Per Share, and Effective Tax Rate

 

(Unaudited)

 

For the Quarters Ended March 31,

(dollars in millions - Income (Expense))

2020

 

2019

Net income attributable to common shareowners

$

96

 

 

$

400

 

 

 

 

 

Total restructuring costs

(5)

 

 

(33)

 

 

 

 

 

Total non-recurring and non-operational items included in operating profit

(116)

 

 

13 

 

 

 

 

 

Non-recurring and non-operational items included in Interest expense, net:

 

 

 

Debt issuance costs relating to Carrier's separation from United Technologies

(5)

 

 

— 

 

 

 

 

 

Tax effect of restructuring and non-recurring and non-operational items

13 

 

 

 

 

 

 

 

Significant non-recurring and non-operational items included in Income tax expense:

 

 

 

Adjustment related to a valuation allowance recorded against a United Kingdom tax loss and credit carryforward as a result of separation related activities

(51)

 

 

— 

 

Adjustment resulting from Carrier's decision to no longer permanently reinvest certain pre-2018 unremitted non-U.S. earnings

(46)

 

 

— 

 

Significant non-recurring and non-operational items included in Income tax expense

(97)

 

 

— 

 

 

 

 

 

Total significant non-recurring and non-operational items

(210)

 

 

$

(14)

 

 

 

 

 

Adjusted net income attributable to common shareowners

$

306 

 

 

$

414 

 

 

 

 

 

Diluted earnings per share

$

0.11 

 

 

$

0.46 

 

Impact on diluted earnings per share

(0.24)

 

 

(0.02)

 

Adjusted diluted earnings per share

$

0.35 

 

 

$

0.48 

 

 

 

 

 

Effective tax rate

65.4 

%

 

25.8 

%

Impact on effective tax rate

(39.5)

%

 

0.1 

%

Adjusted effective tax rate

25.9 

%

 

25.9 

%

 

Carrier Global Corporation
Components of Changes in Net Sales
Quarter Ended March 31, 2020 Compared with Quarter Ended March 31, 2019

 

(Unaudited)

 

Factors Contributing to Total % change in Net Sales

 

Organic

 

FX Translation

 

Acquisition / Divestitures, net

 

Other

 

Total

HVAC

(9)

%

 

(1)

%

 

— 

%

 

— 

%

 

(10)

%

Refrigeration

(14)

%

 

(2)

%

 

— 

%

 

— 

%

 

(16)

%

Fire & Security

(5)

%

 

(2)

%

 

— 

%

 

— 

%

 

(7)

%

Combined

(9)

%

 

(1)

%

 

— 

%

 

— 

%

 

(10)

%

 

Carrier Global Corporation
Condensed Combined Balance Sheet

 

(Unaudited)

(dollars in millions)

March 31,
2020

 

December 31,
2019

Assets

 

 

 

Cash and cash equivalents

$

768

 

 

$

952

 

Accounts receivable, net

2,674

 

 

2,726

 

Contract assets, current

651

 

 

622

 

Inventories, net

1,556

 

 

1,332

 

Other assets, current

319 

 

 

327

 

Total current assets

5,968

 

 

5,959

 

 

 

 

 

Future income tax benefits

$

454

 

$

500 

 

Fixed assets, net

1,638 

 

 

1,663 

 

Operating lease right-of-use assets

865 

 

 

832 

 

Intangible assets, net

1,014 

 

 

1,083 

 

Goodwill

9,648 

 

 

9,884 

 

Pension and post-retirement assets

473

 

 

490

 

Equity method investments

1,664

 

 

1,739

 

Other assets

277 

 

 

256 

 

Total Assets

$

22,001 

 

 

$

22,406 

 

 

 

 

 

Liabilities and Equity

 

 

 

Accounts payable

$

1,776 

 

 

$

1,701 

 

Accrued liabilities

1,972 

 

 

2,088 

 

Contract liabilities, current

485 

 

 

443 

 

Current portion of long-term debt

218 

 

 

237 

 

Total current liabilities

4,451 

 

 

4,469 

 

Long-term debt

11,029 

 

 

82 

 

Future pension and post-retirement obligations

456 

 

 

456 

 

Future income tax obligations

1,161 

 

 

1,099 

 

Operating lease liabilities

708 

 

 

682 

 

Other long-term liabilities

1,170 

 

 

1,183 

 

Total Liabilities

18,975 

 

 

7,971 

 

 

 

 

 

UTC Net investment

 

 

 

UTC Net investment

4,433 

 

 

15,355 

 

Accumulated other comprehensive loss

(1,736)

 

 

(1,253)

 

Total UTC Net investment

2,697 

 

 

14,102 

 

 

 

 

 

Non-controlling interest

329 

 

 

333 

 

Total Equity

3,026 

 

 

14,435 

 

Total Liabilities and Equity

$

22,001 

 

 

$

22,406 

 

 

 

 

 

Debt Ratios: 1

 

 

 

Total debt to total capitalization

79 

%

 

 

Net debt to net capitalization

78 

%

 

 

¹ Debt to total capitalization equals total debt divided by total debt plus equity. Net debt to net capitalization equals total debt less cash and cash equivalents divided by total debt plus equity less cash and cash equivalents.

 

Carrier Global Corporation
Condensed Combined Statement of Cash Flows

 

(Unaudited)

 

For the Quarters Ended March 31,

(dollars in millions)

2020

 

2019

Operating Activities

 

 

 

Net income from operations

$

102 

 

 

$

403 

 

Adjustments to reconcile net income from operations to net cash flows provided by (used in) operating activities, net of acquisitions and dispositions

 

 

 

Depreciation and amortization

81 

 

 

85 

 

Deferred income tax provision

135 

 

 

15 

 

Stock compensation costs

13 

 

 

 

Equity method investment net earnings

(29)

 

 

(40)

 

Distributions from equity method investments

10 

 

 

 

Impairment charge on minority owned joint venture investment

71 

 

 

— 

 

Changes in operating assets and liabilities

 

 

 

Accounts receivable, net

(19)

 

 

(148)

 

Contract assets, current

(39)

 

 

(51)

 

Inventories, net

(264)

 

 

(230)

 

Other assets, current

(10)

 

 

 

Accounts payable and accrued liabilities

(24)

 

 

(227)

 

Contract liabilities, current

51 

 

 

27 

 

Pension contributions

(25)

 

 

(22)

 

Other operating activities, net

(6)

 

 

(16)

 

Net cash flows provided by (used in) operating activities

47 

 

 

(183)

 

Investing Activities

 

 

 

Capital expenditures

(48)

 

 

(41)

 

Disposition of businesses

— 

 

 

 

Other investing activities, net

(80)

 

 

(3)

 

Net cash flows used in investing activities

(128)

 

 

(43)

 

Financing Activities

 

 

 

(Decrease) increase in short-term borrowings, net

(44)

 

 

 

Issuance of long-term debt

10,961 

 

 

52 

 

Repayment of long-term debt

(34)

 

 

(1)

 

Dividends paid to non-controlling interest

(8)

 

 

(2)

 

Net transfers to UTC

(10,948)

 

 

(89)

 

Other financing activities, net

(3)

 

 

(23)

 

Net cash flows used in financing activities

(76)

 

 

(57)

 

Effect of foreign exchange rate changes on cash and cash equivalents

(28)

 

 

16 

 

Net decrease in cash and cash equivalents and restricted cash

(185)

 

 

(267)

 

Cash, cash equivalents and restricted cash, beginning of period

957 

 

 

1,134 

 

Cash, cash equivalents and restricted cash, end of period

772 

 

 

867 

 

Less: restricted cash

 

 

 

Cash and cash equivalents, end of period

$

768 

 

 

$

863 

 

 

Carrier Global Corporation
Free Cash Flow Reconciliation

 

(Unaudited)

 

For the Quarters Ended March 31,

(dollars in millions)

2020

 

2019

Net income attributable to common shareowners

$

96 

 

 

 

 

$

400 

 

 

 

Net cash flows provided by (used in) operating activities

$

47 

 

 

 

 

$

(183)

 

 

 

Less: Capital expenditures

48 

 

 

 

 

41 

 

 

 

Free cash flow

$

(1)

 

 

 

 

$

(224)

 

 

 

Free cash flow as a percentage of net income attributable to common shareowners

 

 

(1)

%

 

 

 

(56)

%




Supplemental Quarterly Information

Carrier Global Corporation
Condensed Combined Statement of Operations by Quarter

 

(Unaudited)

 

For the Year Ended

 

For the Quarters Ended

 

(dollars in millions, except per share amounts; shares in millions)

March 31,
2019

 

June 30,
2019

 

September 30,
2019

 

December 31,
2019

 

December 31,
2019

Net sales

 

 

 

 

 

 

 

 

 

Total product sales

$

3,566 

 

 

$

4,139 

 

 

$

3,998 

 

 

$

3,657 

 

 

$

15,360 

 

Total service sales

757 

 

 

823 

 

 

824 

 

 

844 

 

 

3,248 

 

 

4,323 

 

 

4,962 

 

 

4,822 

 

 

4,501 

 

 

18,608 

 

Costs and expenses

 

 

 

 

 

 

 

 

 

Cost of products sold

2,565 

 

 

2,906 

 

 

2,784 

 

 

2,635 

 

 

10,890 

 

Cost of services sold

532 

 

 

582 

 

 

592 

 

 

593 

 

 

2,299 

 

Research and development

97 

 

 

103 

 

 

102 

 

 

99 

 

 

401 

 

Selling, general and administrative

684 

 

 

680 

 

 

702 

 

 

695 

 

 

2,761 

 

 

3,878 

 

 

4,271 

 

 

4,180 

 

 

4,022 

 

 

16,351 

 

Equity method investment net earnings

40 

 

 

80 

 

 

78 

 

 

38 

 

 

236 

 

Other income (expense), net

15 

 

 

34 

 

 

(91)

 

 

40 

 

 

(2)

 

Operating profit

500 

 

 

805 

 

 

629 

 

 

557 

 

 

2,491 

 

Non-service pension benefit

39 

 

 

38 

 

 

47 

 

 

30 

 

 

154 

 

Interest income, net

 

 

16 

 

 

 

 

 

 

27 

 

Income from operations before income taxes

543 

 

 

859 

 

 

679 

 

 

591 

 

 

2,672 

 

Income tax expense

140 

 

 

65 

 

 

175 

 

 

137 

 

 

517 

 

Net income from operations

403 

 

 

794 

 

 

504 

 

 

454 

 

 

2,155 

 

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

 

 

10 

 

 

12 

 

 

14 

 

 

39 

 

Net income attributable to common shareowners

$

400 

 

 

$

784 

 

 

$

492 

 

 

$

440 

 

 

$

2,116 

 

 

 

 

 

 

 

 

 

 

 

Earnings per share 1

 

 

 

 

 

 

 

 

 

Basic

$

0.46 

 

 

$

0.91 

 

 

$

0.57 

 

 

$

0.50 

 

 

$

2.44 

 

Diluted

$

0.46 

 

 

$

0.91 

 

 

$

0.57 

 

 

$

0.50 

 

 

$

2.44 

 

Weighted average number of shares outstanding 1

 

 

 

 

 

 

 

 

Basic

866 

 

 

866 

 

 

866 

 

 

866 

 

 

866 

 

Diluted

866 

 

 

866 

 

 

866 

 

 

866 

 

 

866 

 

¹ Earnings per share for all periods presented were calculated using the number shares that were distributed to UTC shareowners immediately following the Separation. For periods prior to the Separation it is assumed that there are no dilutive equity instruments as there were no equity awards in Carrier outstanding prior to the Separation.

 

Carrier Global Corporation
Segment Net Sales and Operating Profit by Quarter

 

 

(Unaudited)

 

For the Year Ended

 

For the Quarters Ended

 

(dollars in millions)

March 31,
2019

 

June 30,
2019

 

September 30,
2019

 

December 31,
2019

 

December 31,
2019

Net sales

 

 

 

 

 

 

 

 

 

HVAC

$

2,168 

 

 

$

2,735 

 

 

$

2,602 

 

 

$

2,207 

 

 

$

9,712 

 

Refrigeration

962 

 

 

955 

 

 

922 

 

 

953 

 

 

3,792 

 

Fire & Security

1,290 

 

 

1,386 

 

 

1,402 

 

 

1,422 

 

 

5,500 

 

Segment sales

4,420 

 

 

5,076 

 

 

4,926 

 

 

4,582 

 

 

19,004 

 

Eliminations and other

(97)

 

 

(114)

 

 

(104)

 

 

(81)

 

 

(396)

 

Combined net sales

$

4,323 

 

 

$

4,962 

 

 

$

4,822 

 

 

$

4,501 

 

 

$

18,608 

 

 

 

 

 

 

 

 

 

 

 

Operating profit

 

 

 

 

 

 

 

 

 

HVAC

$

293 

 

 

$

545 

 

 

$

404 

 

 

$

321 

 

 

$

1,563 

 

Refrigeration

127 

 

 

121 

 

 

125 

 

 

159 

 

 

532 

 

Fire & Security

132 

 

 

184 

 

 

205 

 

 

187 

 

 

708 

 

Segment operating profit

552 

 

 

850 

 

 

734 

 

 

667 

 

 

2,803 

 

Eliminations and other

(17)

 

 

(15)

 

 

(63)

 

 

(61)

 

 

(156)

 

General corporate expenses

(35)

 

 

(30)

 

 

(42)

 

 

(49)

 

 

(156)

 

Combined operating profit

$

500 

 

 

$

805 

 

 

$

629 

 

 

$

557 

 

 

$

2,491 

 

 

 

 

 

 

 

 

 

 

 

Segment operating profit margin

 

 

 

 

 

 

 

 

 

HVAC

13.5 

%

 

19.9 

%

 

15.5 

%

 

14.5 

%

 

16.1 

%

Refrigeration

13.2 

%

 

12.7 

%

 

13.6 

%

 

16.7 

%

 

14.0 

%

Fire & Security

10.2 

%

 

13.3 

%

 

14.6 

%

 

13.2 

%

 

12.9 

%

 

 

 

 

 

 

 

 

 

 

Segment operating profit margin

12.5 

%

 

16.7 

%

 

14.9 

%

 

14.6 

%

 

14.7 

%


Reconciliation of Reported (GAAP) to Adjusted (Non-GAAP)
Operating Profit & Operating Profit Margin by Quarter

 

 

 

(Unaudited)

 

 

 

 

For the Quarters Ended

 

For the Year Ended

(dollars in millions - Income (Expense))

 

March 31,
2019

 

June 30,
2019

 

September 30,
2019

 

December 31,
2019

 

December 31,
2019

HVAC

 

Net sales

 

$

2,168 

 

 

$

2,735 

 

 

$

2,602 

 

 

$

2,207 

 

 

$

9,712 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating profit

 

$

293 

 

 

$

545 

 

 

$

404 

 

 

$

321 

 

 

$

1,563 

 

 

Restructuring

 

(17)

 

 

(18)

 

 

(12)

 

 

(9)

 

 

(56)

 

 

Impairment of joint venture investment

 

— 

 

 

— 

 

 

(108)

 

 

— 

 

 

(108)

 

 

Gain on sale of interests in joint ventures

 

13 

 

 

21 

 

 

— 

 

 

23 

 

 

57 

 

 

Adjusted operating profit

 

$

297 

 

 

$

542 

 

 

$

524 

 

 

$

307 

 

 

$

1,670 

 

 

Adjusted operating profit margin

 

13.7 

%

 

19.8 

%

 

20.1 

%

 

13.9 

%

 

17.2 

%

 

 

 

 

 

 

 

 

 

 

 

 

Refrigeration

 

Net sales

 

$

962 

 

 

$

955 

 

 

$

922 

 

 

$

953 

 

 

$

3,792 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating profit

 

$

127 

 

 

$

121 

 

 

$

125 

 

 

$

159 

 

 

$

532 

 

 

Restructuring

 

(3)

 

 

(4)

 

 

(7)

 

 

— 

 

 

(14)

 

 

Net gain on expropriated plant

 

— 

 

 

— 

 

 

— 

 

 

22 

 

 

22 

 

 

Adjusted operating profit

 

$

130 

 

 

$

125 

 

 

$

132 

 

 

$

137 

 

 

$

524 

 

 

Adjusted operating profit margin

 

13.5 

%

 

13.1 

%

 

14.3 

%