01—Abstract
Summary
Summary of the 10-Q filed April 30, 2026. Cited figures are marked; the original filing is the authoritative source.
Carrier Global Corporation reported a net sales increase of 2% to $5.34 billiona for the first quarter of 2026 compared to the same period in 2025.
However, the company experienced a significant 39% decline in net earnings attributable to common shareholders, reporting $238 millionb ($0.28 diluted EPS) in Q1 2026 compared to $412 million ($0.47 diluted EPS) in Q1 2025. This earnings decrease was driven by a substantial drop in gross margin (down 14% to $1.24 billion), largely due to lower volumes in key end-markets and increased restructuring costs, leading to a 440 basis point reduction in gross margin as a percentage of sales. The company's operating profit also saw a sharp decline of 59% to $259 million.
This was impacted by a 21% increase in operating expenses, largely due to higher Selling, General & Administrative (SG&A) costs related to restructuring initiatives and increased compensation. Despite a 10% increase in net sales for the Climate Solutions Transportation segment, other segments like Climate Solutions Americas, Europe, and Asia Pacific experienced declining sales and significant drops in segment operating profit, highlighting broad-based market challenges. Management has initiated restructuring efforts, incurring $108 millionc in restructuring costs during the quarter.
02—Key points
Key Highlights
- Net sales increased by 2% to $5.34 billion year-over-year, driven by a 10% increase in the Climate Solutions Transportation segment and foreign currency translation benefits, partially offset by organic declines in other segments.
- Net earnings attributable to common shareholders decreased by 42% to $238 million, resulting in diluted EPS of $0.28 compared to $0.47 in the prior year's quarter.
- Gross margin declined by 14% to $1.24 billion, and as a percentage of net sales, it fell from 27.7% to 23.3%, attributed to lower volumes, under-absorption, and restructuring costs.
- Operating profit decreased significantly by 59% to $259 million due to lower gross margins and a 21% increase in operating expenses, primarily SG&A, driven by restructuring initiatives.
- The company incurred $108 million in restructuring costs during the quarter, impacting profitability and reflecting ongoing efforts to improve operating performance.
- Significant year-over-year declines were observed in segment operating profit for Climate Solutions Americas (down 35%), Climate Solutions Europe (down 15%), and Climate Solutions Asia Pacific, Middle East & Africa (down 33%), indicating broad market headwinds.
- Carrier announced plans to sell its Riello business for approximately $430 million, expected to close in the first half of 2026, and continues to manage its business portfolio through strategic acquisitions and divestitures.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-QQ1 FY2026filed April 30, 2026Financial Statements
Q1 FY2026 against Q1 FY2025
| Line item | Q1 FY2026Q1 FY2025 | Change |
|---|---|---|
| Revenue | $5.34B$5.22B | +2.4% |
| R&D Expenses | $143.00M$153.00M | −6.5% |
| SG&A Expenses | $861.00M$729.00M | +18.1% |
| Operating Expenses | $5.10B$4.66B | +9.6% |
| Operating Income | $259.00M$629.00M | −58.8% |
| Net Income | $238.00M$412.00M | −42.2% |
| EPS (Basic) | $0.29$0.47 | −38.3% |
| EPS (Diluted) | $0.28$0.47 | −40.4% |
| Shares Outstanding (Basic) | 835.00M866.90M | −3.7% |
| Shares Outstanding (Diluted) | 842.80M878.30M | −4.0% |
05—Questions
Frequently Asked Questions
What drove the significant decrease in net earnings for Carrier Global Corporation in Q1 2026?
The substantial decrease in net earnings was primarily driven by a significant decline in gross margin, which fell by 14% to $1.24 billion. This was caused by lower sales volumes in key end-markets across several segments, leading to under-absorption of costs. Additionally, the company incurred $108 million in restructuring costs, which further impacted profitability. Operating expenses also increased by 21%, mainly due to higher Selling, General & Administrative (SG&A) expenses related to these restructuring efforts.
How did the different business segments perform in the first quarter of 2026?
Performance varied across segments. The Climate Solutions Transportation segment showed strength with a 10% increase in net sales and a slight increase in operating profit. However, the other segments faced challenges: Climate Solutions Americas saw a 3% net sales decrease and a 35% drop in operating profit due to reduced residential demand. Climate Solutions Europe's net sales increased 11% (largely due to foreign currency translation), but operating profit decreased 15% due to volume reductions and price promotions. Climate Solutions Asia Pacific, Middle East & Africa experienced a 1% net sales increase, but a significant 33% decrease in operating profit, impacted by economic challenges in China and volume reductions.
What is the impact of the planned sale of the Riello business?
Carrier Global Corporation has entered into an agreement to sell its Riello business for approximately $430 million, with an expected closing in the first half of 2026. This divestiture is part of the company's strategy to manage its business portfolio. The assets and liabilities of Riello are already presented as held for sale on the balance sheet. While this transaction is intended to streamline operations and potentially provide capital, its immediate impact on the Q1 2026 results is primarily related to classifying these assets and liabilities as held for sale, as detailed in Note 15.
What is the company's liquidity position and outlook?
As of March 31, 2026, Carrier Global Corporation reported $1.37 billion in cash and cash equivalents. The company's primary source of liquidity is operating cash flows. Management believes that available cash and operating cash flows are sufficient to meet future operating needs. They also have access to a $2.5 billion revolving credit facility and a commercial paper program for additional capital. The company paid $201 million in dividends and repurchased $306 million of its common stock during the quarter, demonstrating ongoing capital allocation to shareholders while maintaining financial flexibility.
06—Continue