01—Abstract
Summary
Summary of the 10-K filed February 6, 2024. Cited figures are marked; the original filing is the authoritative source.
Carrier Global Corporation (CARR) reported significant strategic advancements in its 2023 10-K filing.
The company completed a major acquisition of Viessmann's climate solutions business for $14.2 billiona, a move expected to strengthen its position in intelligent climate and energy solutions, particularly in the European residential market. Strategically, Carrier announced plans to divest its Fire & Security Access Solutions business and its Commercial Refrigeration business, signaling a focused transformation towards its core HVAC and climate technology offerings. The company also highlighted its commitment to innovation and sustainability, with substantial investments planned for developing healthier, safer, and more sustainable building and cold chain solutions.
Despite a decrease in operating profit year-over-year, impacted by acquisition and divestiture-related costs and specific segment challenges, Carrier's net sales saw an increase driven by organic growth and acquisitions. Investors should note the company's ongoing portfolio transformation, its strategic investments in digital solutions and sustainability, and the integration of the significant Viessmann acquisition. While the company faces risks common to global industrial companies, such as supply chain disruptions and economic volatility, its strategic focus and brand strength position it to capitalize on long-term secular trends in its key markets.
02—Key points
Key Highlights
- Completed the acquisition of Viessmann's climate solutions business for $14.2 billion, significantly expanding its European presence and product portfolio in residential climate solutions.
- Announced plans to divest its Fire & Security Access Solutions business (to Honeywell) and Commercial Refrigeration business (to Haier), indicating a strategic focus on core HVAC and climate technologies.
- Reported an 8% increase in net sales to $22.1 billion for the year ended December 31, 2023, driven by organic growth and acquisitions, despite a decrease in operating profit due to acquisition-related costs.
- Demonstrated commitment to sustainability by planning over $2 billion in investments by 2030 for healthy, safe, sustainable solutions and aiming for carbon-neutral operations.
- Significant increase in cash and cash equivalents to $10.0 billion, providing liquidity for strategic initiatives and operations.
- Continued investment in research and development for new product development and technology innovation, particularly related to energy efficiency and digital controls.
- Navigated challenges including inflationary cost pressures and supply chain constraints, while implementing pricing actions and productivity initiatives to mitigate impacts.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2023, Carrier Global Corp kept $0.07.
- Revenue$18.95B100.0%
- Cost of revenue−$13.79B72.8%
- Gross profit$5.16B27.2%
- Operating costs−$3.00B15.8%
- Operating income$2.16B11.4%
- Interest, other & tax−$811.0M4.3%
- Net income$1.35B7.1%
Where FY2023 revenue went
$18.95B- Cost of revenue: $13.79B, 73% of revenue
- SG&A: $2.61B, 14% of revenue
- Net income: $1.35B, 7.1% of revenue
- R&D: $493.0M, 2.6% of revenue
- Interest, other & tax: $811.0M, 4.3% of revenue
Kept 7.1% as net income
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2023filed February 6, 2024Financial Statements
FY2023 against FY2022
| Line item | FY2023FY2022 | Change |
|---|---|---|
| Revenue | $18.95B$17.29B | +9.6% |
| Cost of Revenue | $13.79B$12.99B | +6.1% |
| Gross Profit | $5.16B$4.30B | +20.1% |
| R&D Expenses | $493.00M$416.00M | +18.5% |
| SG&A Expenses | $2.61B$1.98B | +31.9% |
| Operating Expenses | $16.89B$15.38B | +9.8% |
| Operating Income | $2.16B$3.98B | −45.8% |
| Interest Expense | $306.00M$238.00M | +28.6% |
| Net Income | $1.35B$3.58B | −62.4% |
| EPS (Basic) | $1.61$4.19 | −61.6% |
| EPS (Diluted) | $1.58$4.10 | −61.5% |
| Shares Outstanding (Basic) | 837.30M843.40M | −0.7% |
| Shares Outstanding (Diluted) | 853.00M861.20M | −1.0% |
05—Questions
Frequently Asked Questions
What is the strategic significance of the Viessmann acquisition?
The acquisition of Viessmann's climate solutions business for $14.2 billion is Carrier's most significant strategic move. It significantly enhances Carrier's portfolio in intelligent climate and energy solutions, particularly by strengthening its offerings in heat pumps, photovoltaic systems, and home battery storage for the residential market in Europe. This aligns with global trends towards sustainability and energy transition.
What is Carrier's strategy regarding its business segments?
Carrier is undergoing a significant portfolio transformation. The company announced plans to exit its Fire & Security Access Solutions business and its Commercial Refrigeration business. This strategic shift aims to focus resources and capital on its core HVAC and climate technology solutions, where it sees greater opportunities for growth and aligns with its vision of being a global leader in intelligent climate and energy solutions.
How did Carrier's financial performance evolve in 2023?
For the year ended December 31, 2023, Carrier reported a net sales increase of 8% to $22.1 billion. However, operating profit decreased significantly by 49% compared to 2022, primarily due to $220 million in acquisition and divestiture-related costs, as well as specific segment performance challenges and increased selling, general, and administrative expenses. The company's balance sheet strengthened with cash and cash equivalents reaching $10.0 billion.
What are Carrier's key risks and how is it managing them?
Carrier faces various risks, including those related to international operations, supply chain disruptions, cybersecurity, economic conditions, and regulatory changes, particularly concerning climate. The company actively manages these through strategic sourcing, improving supply chain resilience, investing in IT security, hedging financial risks, and adapting its product portfolio to evolving regulations and market demands. The company also has significant indebtedness, a portion of which was incurred to finance the Viessmann acquisition.
06—Continue