10-QPeriod: Q3 FY2022

CARRIER GLOBAL Corp Quarterly Report for Q3 Ended Sep 30, 2022

Filed October 27, 2022For Securities:CARR

Summary

Carrier Global Corporation's (CARR) third-quarter 2022 results show a significant increase in net income attributable to common shareholders, driven by strong performance in the HVAC segment and substantial gains from the sale of its Chubb Fire & Security business and the acquisition of Toshiba Carrier Corporation (TCC). Despite a slight overall decrease in net sales year-over-year, primarily due to foreign currency translation and the divestiture of Chubb, the company demonstrated robust organic sales growth across its segments, particularly in HVAC, indicating strong underlying demand for its products and services. Profitability was bolstered by strategic pricing actions to offset inflationary pressures and supply chain costs, alongside significant non-cash gains from the TCC acquisition. Management highlights continued investment in innovation and supply chain resilience, while also actively returning capital to shareholders through share repurchases and dividends.

Financial Highlights

49 data points
Beta

Revenue

$5.45B

Net Income

$1.33B

24.4% Net Margin

EPS (Diluted)

$1.53

Total Assets

$25.35B

Cash & Equivalents

$2.98B

Free Cash Flow

$790.00M

Financial Statements
Beta
Revenue$5.45B
R&D Expenses$143.00M
SG&A Expenses$624.00M
Operating Expenses$4.74B
Operating Income$1.53B
Net Income$1.33B
EPS (Basic)$1.56
EPS (Diluted)$1.53
Shares Outstanding (Basic)839.60M
Shares Outstanding (Diluted)856.50M

Key Highlights

  • 1Net income attributable to common shareholders significantly increased to $1.312 billion for the three months ended September 30, 2022, up from $469 million in the prior year period.
  • 2Total net sales for the three months ended September 30, 2022, were $5.451 billion, a 2% increase year-over-year, driven by 8% organic sales growth.
  • 3The HVAC segment showed strong performance with a 22% increase in net sales to $3.734 billion, boosted by pricing improvements and the partial acquisition of Toshiba Carrier Corporation (TCC).
  • 4The company recognized a significant non-cash gain of $732 million from the fair value re-measurement of its previously held equity investment in TCC upon its acquisition.
  • 5A substantial gain of $1.1 billion was recognized from the sale of the Chubb Fire & Security business, completed in January 2022.
  • 6The company repurchased $1.3 billion of its common stock during the first nine months of 2022 and authorized an additional $2.0 billion increase to its share repurchase program in October 2022.
  • 7Despite supply chain challenges and inflationary cost pressures, the company's pricing actions and productivity initiatives helped to partially offset these impacts on gross margin.

Frequently Asked Questions

The substantial increase in net income was primarily driven by a $1.1 billion gain from the sale of the Chubb Fire & Security business and a $732 million non-cash gain recognized upon acquiring a majority stake in Toshiba Carrier Corporation (TCC). Strong operational performance, particularly in the HVAC segment, and effective pricing strategies also contributed to the improved profitability.

The acquisition of TCC, completed on August 1, 2022, led to the consolidation of TCC's assets, liabilities, and results of operations into Carrier's HVAC segment. It also resulted in a significant non-cash gain of $732 million from re-measuring the previously held equity investment to fair value. TCC's operations contributed to the 22% net sales growth in the HVAC segment for the third quarter.

Carrier acknowledges ongoing global supply chain challenges and inflationary cost pressures, which have impacted sales and results. The company is taking proactive steps to mitigate these effects, including working with suppliers, improving supply chain resilience through automation and dual sourcing, and implementing pricing actions. While these efforts are helping, management expects these challenges to continue to impact the business for the foreseeable future.

Carrier is actively returning capital through a robust share repurchase program. The company repurchased $1.3 billion of its common stock in the first nine months of 2022 and recently authorized an additional $2.0 billion increase to its share repurchase program in October 2022. They also paid dividends totaling $384 million in the same period.