10-QPeriod: Q2 FY2022

CARRIER GLOBAL Corp Quarterly Report for Q2 Ended Jun 30, 2022

Filed July 28, 2022For Securities:CARR

Summary

Carrier Global Corporation's (CARR) second-quarter 2022 results show a net sales decrease of 4% to $5.21 billion, primarily impacted by the divestiture of the Chubb Fire & Security business and ongoing supply chain challenges. Despite this, organic sales grew by 7%, driven by strong demand and pricing improvements across the HVAC and Refrigeration segments. Net income attributable to common shareholders increased by 18% year-over-year to $573 million, or $0.67 per diluted share. The company continues to manage costs effectively, with operating expenses down 25% largely due to the Chubb divestiture, and has a solid liquidity position with $3.0 billion in cash and cash equivalents. The six-month period paints a similar picture, with a 3% decrease in net sales to $9.87 billion, offset by a 9% organic sales growth. Net income attributable to common shareholders more than doubled to $1.95 billion ($2.25 per diluted share), significantly boosted by a substantial gain from the Chubb divestiture. The company is actively managing its portfolio, including the pending acquisition of a majority stake in Toshiba Carrier Corporation, and is focused on navigating persistent supply chain issues while benefiting from long-term secular trends in its core markets.

Financial Highlights

50 data points
Beta

Revenue

$5.21B

Net Income

$587.00M

11.3% Net Margin

EPS (Diluted)

$0.67

Total Assets

$23.66B

Cash & Equivalents

$3.02B

Free Cash Flow

$32.00M

Financial Statements
Beta
Revenue$5.21B
R&D Expenses$122.00M
SG&A Expenses$614.00M
Operating Expenses$4.50B
Operating Income$819.00M
Net Income$587.00M
EPS (Basic)$0.68
EPS (Diluted)$0.67
Shares Outstanding (Basic)845.70M
Shares Outstanding (Diluted)862.70M

Key Highlights

  • 1Total net sales for Q2 2022 decreased by 4% to $5.21 billion compared to Q2 2021, largely due to the Chubb divestiture and supply chain constraints.
  • 2Organic sales grew by 7% in Q2 2022, indicating underlying demand strength, especially in the HVAC and Refrigeration segments.
  • 3Net income attributable to common shareholders rose 18% year-over-year to $573 million in Q2 2022, with diluted EPS at $0.67.
  • 4The company reported a significant net gain of $1.1 billion on the sale of its Chubb Fire & Security business in Q1 2022, which heavily influenced the six-month net income and operating profit.
  • 5Operating expenses decreased by 25% in Q2 2022, primarily due to the absence of Chubb's operational costs and ongoing cost management initiatives.
  • 6Carrier had a strong liquidity position with $3.0 billion in cash and cash equivalents as of June 30, 2022, and no outstanding borrowings under its revolving credit facility or commercial paper program.
  • 7The company is progressing with the acquisition of a majority stake in Toshiba Carrier Corporation (TCC), expected to close in early August 2022.

Frequently Asked Questions

The sale of the Chubb Fire & Security business, completed on January 3, 2022, significantly impacted the financial results. It led to a decrease in reported net sales due to its absence in the current period compared to the prior year. However, it also resulted in a substantial net gain of $1.1 billion recognized in the first half of 2022, boosting net income and contributing to a large decrease in operating expenses and selling, general, and administrative costs.

Carrier is implementing several strategies to mitigate supply chain challenges and inflationary pressures. These include working closely with suppliers, investing in supply chain resilience through automation and dual sourcing, implementing pricing actions, and focusing on productivity initiatives. Despite these efforts, these challenges continue to impact sales and profitability.

Carrier is focused on long-term growth driven by secular trends such as urbanization and sustainability. Key strategic initiatives include investing in R&D for new products and technologies, particularly in energy-efficient and digital solutions. The company is also actively managing its portfolio, exemplified by the pending acquisition of a majority stake in Toshiba Carrier Corporation, which is expected to strengthen its position in the HVAC market.

Carrier actively managed its debt during the quarter by completing tender offers to repurchase approximately $1.15 billion of its senior notes. This resulted in a net gain and write-off of deferred financing costs. The company maintained a strong liquidity position with $3.0 billion in cash and cash equivalents and no outstanding borrowings under its credit facilities. The net debt to net capitalization ratio improved.