01—Abstract
Summary
Summary of the 10-Q filed April 28, 2022. Cited figures are marked; the original filing is the authoritative source.
Carrier Global Corp reported a net sales of $4.65 billiona for the first quarter of 2022, a slight decrease of 1% compared to the prior year, primarily impacted by divestitures and foreign currency translation, partially offset by a strong 10% organic growth driven by pricing improvements and higher volumes, particularly in the HVAC segment.
The company saw a significant increase in operating profit to $1.74 billionb, up from $571 million in the prior year, largely due to the substantial gain from the sale of the Chubb Fire & Security business. Despite this, gross margins decreased by 7% to $1.29 billion, impacted by the divestiture of Chubb, increased commodity and component costs, and higher freight expenses. The company continues to navigate supply chain challenges and inflationary pressures, implementing pricing actions and investing in supply chain resilience.
02—Key points
Key Highlights
- Net sales for the quarter were $4.65 billion, a 1% decrease year-over-year, with organic sales up 10% driven by HVAC segment strength.
- Operating profit surged to $1.74 billion, a significant increase from $571 million in the prior year, primarily due to a $1.1 billion gain from the sale of the Chubb Fire & Security business.
- Gross margin declined by 7% to $1.29 billion, with gross margin as a percentage of net sales decreasing to 27.8% from 29.7% due to divestitures and rising costs.
- The company repurchased approximately $741 million of its common stock during the quarter, demonstrating a commitment to returning capital to shareholders.
- Carrier is strategically managing its portfolio, including the recent agreement to acquire a majority stake in Toshiba Carrier Corporation (TCC) for approximately $900 million.
- Despite ongoing supply chain challenges and inflationary pressures, the company is implementing pricing strategies and investing in supply chain resilience.
- Cash and cash equivalents increased to $3.6 billion from $3.0 billion at the end of the prior year, providing strong liquidity.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-QQ1 FY2022filed April 28, 2022Financial Statements
Q1 FY2022 against Q1 FY2021
| Line item | Q1 FY2022Q1 FY2021 | Change |
|---|---|---|
| Revenue | $4.65B$4.70B | −1.0% |
| R&D Expenses | $125.00M$121.00M | +3.3% |
| SG&A Expenses | $601.00M$743.00M | −19.1% |
| Operating Expenses | $4.09B$4.17B | −2.0% |
| Operating Income | $1.74B$571.00M | +204.2% |
| Net Income | $1.39B$384.00M | +261.2% |
| EPS (Basic) | $1.62$0.44 | +268.2% |
| EPS (Diluted) | $1.58$0.43 | +267.4% |
| Shares Outstanding (Basic) | 853.30M869.30M | −1.8% |
| Shares Outstanding (Diluted) | 874.10M889.80M | −1.8% |
05—Questions
Frequently Asked Questions
What was the primary driver of the significant increase in operating profit?
The substantial increase in operating profit was primarily driven by the gain of $1.1 billion recognized from the sale of the Chubb Fire & Security business on January 3, 2022.
How are supply chain issues and inflation affecting Carrier's financial performance?
Carrier is experiencing increased costs for commodities and components, as well as transportation delays, which have negatively impacted sales and results. The company is mitigating these effects through pricing actions, supply chain investments, and working with suppliers.
What is the company's strategy regarding capital allocation?
Carrier is focused on a balanced capital allocation strategy that includes funding organic and inorganic growth initiatives (such as the TCC acquisition), returning capital to shareholders through share repurchases and dividends, and maintaining strong liquidity.
How has the divestiture of the Chubb Fire & Security business impacted the company's financial statements?
The divestiture resulted in a significant gain recognized in the current quarter and has removed Chubb's historical financial results from the current period's comparisons, leading to a decrease in reported net sales and a different segment composition.
06—Continue