10-QPeriod: Q3 FY2024

CARRIER GLOBAL Corp Quarterly Report for Q3 Ended Sep 30, 2024

Filed October 25, 2024For Securities:CARR

Summary

Carrier Global Corporation (CARR) reported strong revenue growth of 21% in the third quarter of 2024, reaching $6.0 billion, and 18% for the nine-month period to $17.3 billion. This growth was largely driven by the acquisition of Viessmann Climate Solutions (VCS) and a 4% organic sales increase in the third quarter. Net earnings attributable to common shareholders increased by 25% to $447 million ($0.49 per diluted share) for the quarter, and a significant 229% to $3.1 billion ($3.34 per diluted share) for the nine-month period. The company continues its portfolio transformation with the planned divestiture of Commercial Refrigeration and Commercial & Residential Fire businesses, while strengthening its core HVAC and Refrigeration segments. The company successfully managed inflationary pressures through pricing actions and productivity initiatives, though gross margin as a percentage of net sales saw a slight decrease due to acquisition-related amortization. Significant debt was managed through proactive tender offers, and the company's liquidity remains robust with substantial cash and equivalents. The AFFF litigation settlement represents a significant liability, though management anticipates insurance proceeds to cover these costs.

Financial Highlights

49 data points
Beta

Revenue

$5.98B

Net Income

$447.00M

7.5% Net Margin

EPS (Diluted)

$0.49

Total Assets

$40.20B

Cash & Equivalents

$2.22B

Free Cash Flow

-$269.00M

Financial Statements
Beta
Revenue$5.98B
R&D Expenses$172.00M
SG&A Expenses$799.00M
Operating Expenses$5.28B
Operating Income$763.00M
Net Income$447.00M
EPS (Basic)$0.50
EPS (Diluted)$0.49
Shares Outstanding (Basic)901.20M
Shares Outstanding (Diluted)915.00M

Key Highlights

  • 1Net sales increased by 21% to $6.0 billion in Q3 2024 and by 18% to $17.3 billion for the nine-month period ended September 30, 2024.
  • 2Net earnings attributable to common shareholders rose 25% to $447 million ($0.49 diluted EPS) in Q3 2024, and surged 229% to $3.1 billion ($3.34 diluted EPS) year-to-date.
  • 3Organic sales grew 4% in Q3 2024, demonstrating continued underlying business strength, primarily driven by the HVAC segment.
  • 4The acquisition of Viessmann Climate Solutions (VCS) significantly contributed to revenue growth, adding 20% to Net Sales in the HVAC segment.
  • 5Carrier is actively managing its portfolio, with recent or pending divestitures of Commercial Refrigeration and Commercial & Residential Fire businesses.
  • 6The company recorded a $565 million liability for the AFFF litigation settlement, with expectations of insurance proceeds offsetting this cost.
  • 7Total debt decreased to $12.4 billion as of September 30, 2024, from $14.3 billion at the end of 2023, indicating successful debt management.

Frequently Asked Questions

The acquisition of VCS, completed in January 2024, significantly contributed to Carrier's revenue growth, adding 20% to the HVAC segment's net sales in the third quarter and for the nine-month period. While it boosted overall sales, the integration led to increased selling, general, and administrative expenses and a reduction in gross margin as a percentage of net sales due to acquisition-related amortization and inventory step-up costs.

Carrier continues to actively transform its portfolio. The company completed the sale of Access Solutions for $5.0 billion and Industrial Fire for $1.4 billion. The sale of Commercial Refrigeration was completed on October 1, 2024, and the sale of the Commercial & Residential Fire business is expected to close by the end of 2024. These divestitures are part of a strategic move to focus on core HVAC and Refrigeration businesses.

Carrier recorded a liability of $565 million in the third quarter of 2024 related to the AFFF litigation settlement. The company expects insurance proceeds, estimated to be up to $2.4 billion, to cover the amounts paid under the settlement agreements. While the settlement is significant, management believes insurance will mitigate the financial impact.

Carrier has actively managed its debt, reducing total debt to $12.4 billion as of September 30, 2024, from $14.3 billion at the end of 2023, partly through tender offers and debt repayments. The company maintains a strong liquidity position with $2.2 billion in cash and cash equivalents and has access to a $2.0 billion revolving credit facility, indicating sufficient financial flexibility for operations and strategic initiatives.