10-QPeriod: Q3 FY2023

CARRIER GLOBAL Corp Quarterly Report for Q3 Ended Sep 30, 2023

Filed October 26, 2023For Securities:CARR

Summary

Carrier Global Corporation (CARR) reported its third-quarter and year-to-date results for the period ending September 30, 2023. Total net sales increased by 5% for the quarter and 11% for the nine-month period compared to the prior year, driven by organic growth and strategic acquisitions, particularly the consolidation of Toshiba Carrier Corporation (TCC). The company's significant strategic move involves the pending acquisition of Viessmann's climate solutions business for approximately €12 billion, expected to close by year-end 2023. Concurrently, Carrier plans to exit its Fire & Security and Commercial Refrigeration businesses in 2024, signaling a significant portfolio transformation. While revenue shows growth, net income attributable to common shareholders saw a substantial decrease of 73% for the quarter and 72% for the nine-month period, largely impacted by non-recurring items, including a significant loss on the mark-to-market valuation of forward contracts related to the Viessmann acquisition and the deconsolidation of Kidde-Fenwal, Inc. (KFI) due to its Chapter 11 filing.

Financial Highlights

49 data points
Beta

Revenue

$4.93B

Net Income

$357.00M

7.2% Net Margin

EPS (Diluted)

$0.42

Total Assets

$26.54B

Cash & Equivalents

$3.69B

Free Cash Flow

$1.04B

Financial Statements
Beta
Revenue$4.93B
R&D Expenses$126.00M
SG&A Expenses$664.00M
Operating Expenses$4.24B
Operating Income$510.00M
Net Income$357.00M
EPS (Basic)$0.43
EPS (Diluted)$0.42
Shares Outstanding (Basic)838.70M
Shares Outstanding (Diluted)854.70M

Key Highlights

  • 1Net sales increased 5% year-over-year for Q3 2023 to $5.73 billion and 11% for the first nine months to $16.99 billion, driven by organic growth (3% Q3, 4% YTD) and acquisitions.
  • 2The company announced a significant strategic move with an agreement to acquire Viessmann's climate solutions business for approximately €12 billion, expected to close by year-end 2023.
  • 3Carrier plans to exit its Fire & Security and Commercial Refrigeration businesses over the course of 2024, further reshaping its business portfolio.
  • 4Net income attributable to common shareholders decreased significantly by 73% in Q3 to $357 million and 72% for the nine months to $929 million, primarily due to non-recurring items.
  • 5The deconsolidation of Kidde-Fenwal, Inc. (KFI) due to its Chapter 11 bankruptcy filing resulted in a $297 million loss in Q3 and impacted overall financial results.
  • 6Gross margin improved to 31.7% in Q3 (up from 27.1% YoY) and 29.1% for the nine months (up from 27.5% YoY), reflecting pricing improvements and productivity initiatives.
  • 7The company ended the quarter with $3.9 billion in cash and cash equivalents, demonstrating a solid liquidity position.

Frequently Asked Questions

For the three months ended September 30, 2023, Carrier Global Corp reported total net sales of $5.73 billion, a 5% increase year-over-year. However, net income attributable to common shareholders decreased by 73% to $357 million, largely due to significant non-recurring charges, including a loss on mark-to-market valuation of foreign currency contracts and the deconsolidation of Kidde-Fenwal, Inc. Gross margin improved to 31.7%.

The most significant strategic initiative is the announced agreement to acquire Viessmann's climate solutions business for approximately €12 billion, expected to close by the end of 2023. Additionally, Carrier plans to exit its Fire & Security and Commercial Refrigeration businesses in 2024. These moves indicate a strategic shift towards intelligent climate and energy solutions.

Profitability, as measured by Net income attributable to common shareholders, was significantly impacted negatively in the third quarter of 2023. The reported net income of $357 million is a 73% decrease compared to $1.312 billion in the prior year. This decline is attributed to a $257 million loss on the mark-to-market valuation of forward contracts related to the Viessmann acquisition and a $297 million loss from the deconsolidation of Kidde-Fenwal, Inc. due to its bankruptcy filing.

Carrier Global Corp ended the quarter with $3.9 billion in cash and cash equivalents, an increase from $3.52 billion at the end of 2022. The company also has access to a $2.0 billion revolving credit facility and a $2.0 billion commercial paper program, with no outstanding borrowings under either as of September 30, 2023. This indicates a strong liquidity position to fund operations and strategic initiatives.