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Carrier Reports First Quarter 2020 Earnings

May 8, 2020
- Sales of $3.9 billion
- GAAP operating profit of $315 million; adjusted operating profit of $436 million
- GAAP EPS of $0.11; adjusted EPS $0.35
- Identified $425 million in full-year cost reductions

PALM BEACH GARDENS, Fla., May 8, 2020 /PRNewswire/ -- Carrier Global Corporation (NYSE: CARR) today reported financial results for the first quarter of 2020. Carrier is a leading global provider of innovative heating, ventilating and air conditioning (HVAC), refrigeration, fire, security and building automation technologies. 

"We moved early to address the COVID-19 pandemic head-on with a focus on protecting our employees, and throughout this, our 53,000 global employees demonstrated resilience and commitment to continuing to provide our critical products," said Carrier President & CEO Dave Gitlin. "At the same time, we remain laser focused on our strategic growth priorities, including growing our base, increasing product extensions and geographic coverage and focusing on services and digital. We are also taking aggressive cost actions, identifying $425 million of savings and a 40-50% reduction in planned capital spending, while preserving investments in those initiatives that are most critical to position Carrier for growth when economic conditions improve. We are a more agile, customer-focused company with a clear roadmap to drive best-in-class organic growth."

First Quarter Results
Carrier's first quarter sales of $3.9 billion were down 10% compared to last year, a 9% decline organically. About half of the sales decline was due to the expected reduction in gas furnace sales, North America truck trailer sales and the wind-down of a residential intrusion business, with the remainder largely related to COVID-19. GAAP operating profit in the quarter of $315 million was down 37%, but adjusted operating profit of $436 million was down 16% helped by the benefit of Carrier's aggressive cost containment and the acceleration of Carrier 600, a program expected to remove $600 million in costs over three years. GAAP EPS was $0.11 and, on an adjusted basis, EPS was $0.35 after excluding net nonrecurring and restructuring charges. Net income in the quarter was $96 million and included $210 million of net nonrecurring and restructuring charges. Net cash flows provided by operating activities was $47 million and capital expenditures were $48 million, resulting in a use of free cash flow of $1 million, a substantial improvement from the negative $224 million of free cash flow in the prior year's first quarter. Importantly, Carrier's cash balance at the time of the spin was approximately $1.3 billion.

Gitlin added, "In light of the essential nature of our products and solutions, I am so proud of the tremendous work our people have done to support our customers during these critical times. We are also focused on delivering new product offerings to support enhanced safety and health needs as societies and communities begin to open. For example, indoor air quality will be critical and we worked rapidly to release OptiClean, a unique system that can filter microscopic-sized contaminants. In our fire and security business, with our touchless solutions, we can eliminate many physical contact points to improve health and safety. And we are essential in helping to preserve and protect food and pharmaceuticals with our cold chain solutions." 

Full-Year 2020 Scenarios  
On April 3, 2020, Carrier withdrew its full year 2020 outlook for sales, adjusted operating profit, and free cash flow due to the impact of COVID-19. Given continued uncertainty, Carrier considered a range of different assumptions and the most reasonable scenarios fall into the following ranges:

  • Sales of $15 - $17 billion
  • Adjusted operating profit of $1.7 - $2.0 billion
  • Free cash flow in excess of $1 billion*

*Note: When we provide expectations for adjusted operating profit and free cash flow on a forward-looking basis, a reconciliation of the differences between the non-GAAP expectations and the corresponding GAAP measures generally is not available without unreasonable effort. See "Use and Definitions of Non-GAAP Financial Measures" below for additional information.

Conference Call
Carrier will host a live webcast of its earnings conference call today, Friday, May 8, 2020, at 8:30 a.m. ET. To access the webcast, visit the Events & Presentations section of the Carrier Investor Relations site at ir.carrier.com/news-and-events/events-and-presentations or to listen to the earnings call by phone, dial (877) 742-9091.   

About Carrier 
Carrier Global Corporation is a leading global provider of innovative HVAC, refrigeration, fire, security and building automation technologies. Supported by the iconic Carrier name, the company's portfolio includes industry-leading brands such as Carrier, Kidde, Edwards, LenelS2 and Automated Logic. For more information, visit www.corporate.carrier.com or follow Carrier on social media at @Carrier.

Use and Definitions of Non-GAAP Financial Measures 
Carrier Global Corporation ("Carrier") reports its financial results in accordance with accounting principles generally accepted in the United States ("GAAP").

We supplement the reporting of our financial information determined under GAAP with certain non-GAAP financial information.  The non-GAAP information presented provides investors with additional useful information, but should not be considered in isolation or as substitutes for the related GAAP measures.  Moreover, other companies may define non-GAAP measures differently, which limits the usefulness of these measures for comparisons with such other companies. We encourage investors to review our financial statements and publicly-filed reports in their entirety and not to rely on any single financial measure.

Organic sales, adjusted operating profit, adjusted net income, adjusted earnings per share ("EPS"), and the adjusted effective tax rate are non-GAAP financial measures.  Organic sales represents consolidated net sales (a GAAP measure), excluding the impact of foreign currency translation, acquisitions and divestitures completed in the preceding twelve months and other significant items of a non-recurring and/or nonoperational nature (hereinafter referred to as "other significant items"). Adjusted operating profit represents operating profit (a GAAP measure), excluding restructuring costs and other significant items.  Adjusted net income represents net income attributable to common shareowners (a GAAP measure), excluding restructuring costs and other significant items.  Adjusted EPS represents diluted earnings per share (a GAAP measure), excluding restructuring costs and other significant items. The adjusted effective tax rate represents the effective tax rate (a GAAP measure), excluding restructuring costs and other significant items.  For the business segments, when applicable, adjustments of operating profit and margins represent operating profit, excluding restructuring and other significant items.

GAAP financial results include the impact of changes in foreign currency exchange rates (AFX). We use the non-GAAP measure "at constant currency" or "CFX" to show changes in our financial results without giving effect to period-to-period currency fluctuations. Under U.S. GAAP, income statement results are translated in U.S. dollars at the average exchange rate for the period presented.  Management believes that the non-GAAP measures just mentioned are useful in providing period-to-period comparisons of the results of the Company's ongoing operational performance.

Free cash flow is a non-GAAP financial measure that represents net cash flows provided by operating activities (a GAAP measure) less capital expenditures.  Management believes free cash flow is a useful measure of liquidity and an additional basis for assessing Carrier's ability to fund its activities, including the financing of acquisitions, debt service, repurchases of Carrier's common stock and distribution of earnings to shareholders.

A reconciliation of the non-GAAP measures to the corresponding amounts prepared in accordance with GAAP appears in the tables in this Appendix. The tables provide additional information as to the items and amounts that have been excluded from the adjusted measures.

When we provide our expectations for adjusted EPS, adjusted operating profit, adjusted effective tax rate, organic sales and free cash flow on a forward-looking basis, a reconciliation of the differences between the non-GAAP expectations and the corresponding GAAP measures (expected diluted EPS, operating profit, the effective tax rate, sales and expected net cash flows provided by operating activities) generally is not available without unreasonable effort due to potentially high variability, complexity and low visibility as to the items that would be excluded from the GAAP measure in the relevant future period, such as unusual gains and losses, the ultimate outcome of pending litigation, fluctuations in foreign currency exchange rates, the impact and timing of potential acquisitions and divestitures, and other structural changes or their probable significance.  The variability of the excluded items may have a significant, and potentially unpredictable, impact on our future GAAP results.

Cautionary Statement 
This communication contains statements which, to the extent they are not statements of historical or present fact, constitute "forward-looking statements" under the securities laws.  From time to time, oral or written forward-looking statements may also be included in other information released to the public.  These forward-looking statements are intended to provide management's current expectations or plans for our future operating and financial performance, based on assumptions currently believed to be valid.  Forward-looking statements can be identified by the use of words such as "believe," "expect," "expectations," "plans," "strategy," "prospects," "estimate," "project," "target," "anticipate," "will," "should," "see," "guidance," "outlook," "confident," "scenario" and other words of similar meaning in connection with a discussion of future operating or financial performance or the separation from United Technologies (the "Separation"). Forward-looking statements may include, among other things, statements relating to future sales, earnings, cash flow, results of operations, uses of cash, share repurchases, tax rates and other measures of financial performance or potential future plans, strategies or transactions of Carrier following the Separation, including the estimated costs associated with the Separation and other statements that are not historical facts. All forward-looking statements involve risks, uncertainties and other factors that may cause actual results to differ materially from those expressed or implied in the forward-looking statements. For those statements, we claim the protection of the safe harbor for forward-looking statements contained in the U.S. Private Securities Litigation Reform Act of 1995. Such risks, uncertainties and other factors include, without limitation: (1) the effect of economic conditions in the industries and markets in which we and our businesses operate in the U.S. and globally and any changes therein, including financial market conditions, fluctuations in commodity prices, interest rates and foreign currency exchange rates, levels of end market demand in construction, the impact of weather conditions, pandemic health issues (including COVID-19 and its effects, among other things, on production and on global supply, demand, and distribution disruptions as the outbreak continues and results in an increasingly prolonged period of travel, commercial and/or other similar restrictions and limitations), natural disasters and the financial condition of our customers and suppliers; (2) challenges in the development, production, delivery, support, performance and realization of the anticipated benefits of advanced technologies and new products and services; (3) future levels of indebtedness, including indebtedness incurred in connection with the Separation, and capital spending and research and development spending; (4) future availability of credit and factors that may affect such availability, including credit market conditions and capital structure and credit ratings; (5) the timing and scope of future repurchases of our common stock, including market conditions and the level of other investing activities and uses of cash; (6) delays and disruption in the delivery of materials and services from suppliers; (7) cost reduction efforts and restructuring costs and savings and other consequences thereof; (8) new business and investment opportunities; (9) the anticipated benefits of moving away from diversification and balance of operations across product lines, regions and industries; (10) the outcome of legal proceedings, investigations and other contingencies; (11) the impact of pension plan assumptions and on future cash contributions and earnings; (12) the impact of the negotiation of collective bargaining agreements and labor disputes; (13) the effect of changes in political conditions in the U.S. and other countries in which we and our businesses operate, including the effect of changes in U.S. trade policies or the United Kingdom's withdrawal from the European Union, on general market conditions, global trade policies and currency exchange rates in the near term and beyond; (14) the effect of changes in tax, environmental, regulatory (including among other things import/export) and other laws and regulations in the U.S. and other countries in which we and our businesses operate; (15) the ability of Carrier to retain and hire key personnel; (16) the scope, nature, impact or timing of acquisition and divestiture activity, including among other things integration of acquired businesses into existing businesses and realization of synergies and opportunities for growth and innovation and incurrence of related costs; (17) the expected benefits of the Separation; (18) a determination by the IRS and other tax authorities that the Distribution or certain related transactions should be treated as taxable transactions; (19) risks associated with indebtedness incurred as a result of financing transactions undertaken in connection with the Separation; (20) the risk that dis-synergy costs, costs of restructuring transactions and other costs incurred in connection with the Separation will exceed Carrier's estimates; and (21) the impact of the Separation on Carrier's business and Carrier's resources, systems, procedures and controls, diversion of management's attention and the impact on relationships with customers, suppliers, employees and other business counterparties.

The above list of factors is not exhaustive or necessarily in order of importance. For additional information on identifying factors that may cause actual results to vary materially from those stated in forward-looking statements, see Carrier's registration statement on Form 10 and the reports of Carrier on Forms, 10-Q and 8-K filed with or furnished to the SEC from time to time. Any forward-looking statement speaks only as of the date on which it is made, and Carrier assumes no obligation to update or revise such statement, whether as a result of new information, future events or otherwise, except as required by applicable law.

Contact:

Media Inquiries
Danielle Canzanella
561-365-1101
Danielle.Canzanella@Carrier.com

Investor Relations
Sam Pearlstein
561-365-2251
Sam.Pearlstein@Carrier.com

 

Carrier Global Corporation

Condensed Combined Statement of Operations



(Unaudited)


For the Quarters Ended
March 31,

(dollars in millions, except per share amounts; shares in millions)

2020


2019

Net Sales:




Product sales

$

3,147



$

3,566


Service sales

741



757



3,888



4,323


Costs and expenses




Cost of products sold

2,237



2,565


Cost of services sold

529



532


Research and development

98



97


Selling, general and administrative

692



684



3,556



3,878


Equity method investment net earnings

29



40


Other (expense) income, net

(46)



15


Operating profit

315



500


Non-service pension benefit

17



39


Interest (expense) income, net

(37)



4


Income from operations before income taxes

295



543


Income tax expense

193



140


Net income from operations

102



403


Less: Non-controlling interest in subsidiaries' earnings from operations

6



3


Net income attributable to common shareowners

$

96



$

400






Earnings per share 1




Basic

$

0.11



$

0.46


Diluted

$

0.11



$

0.46


Weighted average number of shares outstanding 1




Basic

866



866


Diluted

866



866


 

1 Earnings per share for all periods presented were calculated using the number shares that were distributed to UTC shareowners immediately following the Separation. For periods prior to the Separation it is assumed that there are no dilutive equity instruments as there were no equity awards in Carrier outstanding prior to the Separation.


 

 

Carrier Global Corporation

Segment Net Sales and Operating Profit



(Unaudited)


For the Quarters Ended
March 31,

(dollars in millions)

2020


2019

Net sales




HVAC

$

1,959



$

2,168


Refrigeration

808



962


Fire & Security

1,206



1,290


Segment sales

3,973



4,420


Eliminations and other

(85)



(97)


Combined net sales

$

3,888



$

4,323






Operating profit




HVAC

$

167



$

293


Refrigeration

99



127


Fire & Security

120



132


Segment operating profit

386



552


Eliminations and other

(35)



(17)


General corporate expenses

(36)



(35)


Combined operating profit

$

315



$

500






Segment operating profit margin




HVAC

8.5

%


13.5

%

Refrigeration

12.3

%


13.2

%

Fire & Security

10.0

%


10.2

%





Segment operating profit margin

9.7

%


12.5

%


 

 

Carrier Global Corporation

Operating Profit Adjusted for Restructuring Costs and

Non-recurring and Non-operational Items



(Unaudited)


For the Quarters Ended March 31,


2020


2019

(dollars in millions)

Reported


Adjusted


Reported


Adjusted

Operating profit








HVAC

$

167



$

242



$

293



$

297


Refrigeration

99



99



127



130


Fire & Security

120



126



132



145


Segment operating profit

386



467



552



572


Eliminations and other

(35)



5



(17)



(17)


General corporate expenses

(36)



(36)



(35)



(35)


Combined operating profit

$

315



$

436



$

500



$

520


















Segment operating profit margin








HVAC

8.5

%


12.4

%


13.5

%


13.7

%

Refrigeration

12.3

%


12.3

%


13.2

%


13.5

%

Fire & Security

10.0

%


10.4

%


10.2

%


11.2

%









Segment operating profit margin

9.7

%


11.8

%


12.5

%


12.9

%


 

 

Carrier Global Corporation

Reconciliation of Reported (GAAP) to Adjusted (Non-GAAP)

Adjusted Operating Profit & Operating Profit Margin




(Unaudited)




For the Quarters Ended



March 31,


(dollars in millions - Income (Expense))

2020


2019


HVAC



Net sales

$

1,959



$

2,168










Operating profit

$

167



$

293




Restructuring

(2)



(17)




Impairment charge on minority owned joint venture investment

(71)






Gain on sale of interest in joint venture



13




Separation costs

(2)






Adjusted operating profit

$

242



$

297




Adjusted operating profit margin

12.4

%


13.7

%








Refrigeration






Net sales

$

808



$

962










Operating profit

$

99



$

127




Restructuring



(3)




Adjusted operating profit

$

99



$

130




Adjusted operating profit margin

12.3

%


13.5

%








Fire & Security






Net sales

$

1,206



$

1,290










Operating profit

$

120



$

132




Restructuring

(3)



(13)




Separation costs

(3)






Adjusted operating profit

$

126



$

145




Adjusted operating profit margin

10.4

%


11.2

%








General Corporate Expenses and Eliminations and Other






Net sales

$

(85)



$

(97)










Operating profit

$

(71)



$

(52)




Separation costs

(40)






Adjusted operating profit

$

(31)



$

(52)









Carrier Combined






Net sales

$

3,888



$

4,323










Operating profit

$

315



$

500




Total restructuring costs

(5)



(33)




Total non-recurring and non-operational items

(116)



13




Combined adjusted operating profit

$

436



$

520



 

 

Carrier Global Corporation

Reconciliation of Reported (GAAP) to Adjusted (Non-GAAP) Results

Adjusted Net Income, Earnings Per Share, and Effective Tax Rate



(Unaudited)


For the Quarters Ended March 31,

(dollars in millions - Income (Expense))

2020


2019

Net income attributable to common shareowners

$

96



$

400






Total restructuring costs

(5)



(33)






Total non-recurring and non-operational items included in operating profit

(116)



13






Non-recurring and non-operational items included in Interest expense, net:




Debt issuance costs relating to Carrier's separation from United Technologies

(5)








Tax effect of restructuring and non-recurring and non-operational items

13



6






Significant non-recurring and non-operational items included in Income tax expense:




Adjustment related to a valuation allowance recorded against a United Kingdom tax
loss and credit carryforward as a result of separation related activities

(51)




Adjustment resulting from Carrier's decision to no longer permanently reinvest certain
pre-2018 unremitted non-U.S. earnings

(46)




Significant non-recurring and non-operational items included in Income tax expense

(97)








Total significant non-recurring and non-operational items

(210)



$

(14)






Adjusted net income attributable to common shareowners

$

306



$

414






Diluted earnings per share

$

0.11



$

0.46


Impact on diluted earnings per share

(0.24)



(0.02)


Adjusted diluted earnings per share

$

0.35



$

0.48






Effective tax rate

65.4

%


25.8

%

Impact on effective tax rate

(39.5)

%


0.1

%

Adjusted effective tax rate

25.9

%


25.9

%

 

 

Carrier Global Corporation

Components of Changes in Net Sales


Quarter Ended March 31, 2020 Compared with Quarter Ended March 31, 2019



(Unaudited)


Factors Contributing to Total % change in Net Sales


Organic


FX
Translation


Acquisition /
Divestitures, net


Other


Total

HVAC

(9)

%


(1)

%


%


%


(10)

%

Refrigeration

(14)

%


(2)

%


%


%


(16)

%

Fire & Security

(5)

%


(2)

%


%


%


(7)

%

Combined

(9)

%


(1)

%


%


%


(10)

%

 

 

Carrier Global Corporation

Condensed Combined Balance Sheet



(Unaudited)

(dollars in millions)

March 31,
2020


December 31,
2019

Assets




Cash and cash equivalents

$

768



$

952


Accounts receivable, net

2,674



2,726


Contract assets, current

651



622


Inventories, net

1,556



1,332


Other assets, current

319



327


Total current assets

5,968



5,959






Future income tax benefits

454



$

500


Fixed assets, net

1,638



1,663


Operating lease right-of-use assets

865



832


Intangible assets, net

1,014



1,083


Goodwill

9,648



9,884


Pension and post-retirement assets

473



490


Equity method investments

1,664



1,739


Other assets

277



256


Total Assets

$

22,001



$

22,406






Liabilities and Equity




Accounts payable

$

1,776



$

1,701


Accrued liabilities

1,972



2,088


Contract liabilities, current

485



443


Current portion of long-term debt

218



237


Total current liabilities

4,451



4,469


Long-term debt

11,029



82


Future pension and post-retirement obligations

456



456


Future income tax obligations

1,161



1,099


Operating lease liabilities

708



682


Other long-term liabilities

1,170



1,183


Total Liabilities

18,975



7,971






UTC Net investment




UTC Net investment

4,433



15,355


Accumulated other comprehensive loss

(1,736)



(1,253)


Total UTC Net investment

2,697



14,102






Non-controlling interest

329



333


Total Equity

3,026



14,435


Total Liabilities and Equity

$

22,001



$

22,406






Debt Ratios: 1




Total debt to total capitalization

79

%



Net debt to net capitalization

78

%



 

1 Debt to total capitalization equals total debt divided by total debt plus equity. Net debt to net capitalization equals total debt less cash and cash equivalents divided by total debt plus equity less cash and cash equivalents.


 

 

Carrier Global Corporation

Condensed Combined Statement of Cash Flows



(Unaudited)


For the Quarters Ended
March 31,

(dollars in millions)

2020


2019

Operating Activities




Net income from operations

$

102



$

403


Adjustments to reconcile net income from operations to net cash
flows provided by (used in) operating activities, net of a
cquisitions and dispositions




Depreciation and amortization

81



85


Deferred income tax provision

135



15


Stock compensation costs

13



8


Equity method investment net earnings

(29)



(40)


Distributions from equity method investments

10



5


Impairment charge on minority owned joint venture investment

71




Changes in operating assets and liabilities




Accounts receivable, net

(19)



(148)


Contract assets, current

(39)



(51)


Inventories, net

(264)



(230)


Other assets, current

(10)



8


Accounts payable and accrued liabilities

(24)



(227)


Contract liabilities, current

51



27


Pension contributions

(25)



(22)


Other operating activities, net

(6)



(16)


Net cash flows provided by (used in) operating activities

47



(183)


Investing Activities




Capital expenditures

(48)



(41)


Disposition of businesses



1


Other investing activities, net

(80)



(3)


Net cash flows used in investing activities

(128)



(43)


Financing Activities




(Decrease) increase in short-term borrowings, net

(44)



6


Issuance of long-term debt

10,961



52


Repayment of long-term debt

(34)



(1)


Dividends paid to non-controlling interest

(8)



(2)


Net transfers to UTC

(10,948)



(89)


Other financing activities, net

(3)



(23)


Net cash flows used in financing activities

(76)



(57)


Effect of foreign exchange rate changes on cash and cash equivalents

(28)



16


Net decrease in cash and cash equivalents and restricted cash

(185)



(267)


Cash, cash equivalents and restricted cash, beginning of period

957



1,134


Cash, cash equivalents and restricted cash, end of period

772



867


Less: restricted cash

4



4


Cash and cash equivalents, end of period

$

768



$

863



 

 

Carrier Global Corporation

Free Cash Flow Reconciliation



(Unaudited)


For the Quarters Ended March 31,

(dollars in millions)

2020


2019

Net income attributable to common shareowners

$

96





$

400




Net cash flows provided by (used in) operating activities

$

47





$

(183)




Less: Capital expenditures

48





41




Free cash flow

$

(1)





$

(224)




Free cash flow as a percentage of net income attributable
to common shareowners



(1)

%




(56)

%

 

 

Supplemental Quarterly Information


Carrier Global Corporation

Condensed Combined Statement of Operations by Quarter



(Unaudited)


For the Year Ended


For the Quarters Ended


(dollars in millions, except per share amounts;
shares in millions)

March 31,
2019


June 30,
2019


September 30,
2019


December 31,
2019


December 31,
2019

Net sales










Total product sales

$

3,566



$

4,139



$

3,998



$

3,657



$

15,360


Total service sales

757



823



824



844



3,248



4,323



4,962



4,822



4,501



18,608


Costs and expenses










Cost of products sold

2,565



2,906



2,784



2,635



10,890


Cost of services sold

532



582



592



593



2,299


Research and development

97



103



102



99



401


Selling, general and administrative

684



680



702



695



2,761



3,878



4,271



4,180



4,022



16,351


Equity method investment net earnings

40



80



78



38



236


Other income (expense), net

15



34



(91)



40



(2)


Operating profit

500



805



629



557



2,491


Non-service pension benefit

39



38



47



30



154


Interest income, net

4



16



3



4



27


Income from operations before income taxes

543



859



679



591



2,672


Income tax expense

140



65



175



137



517


Net income from operations

403



794



504



454



2,155


Less: Non-controlling interest in subsidiaries' earnings
from operations

3



10



12



14



39


Net income attributable to common shareowners

$

400



$

784



$

492



$

440



$

2,116












Earnings per share 1










Basic

$

0.46



$

0.91



$

0.57



$

0.50



$

2.44


Diluted

$

0.46



$

0.91



$

0.57



$

0.50



$

2.44


Weighted average number of shares outstanding 1









Basic

866



866



866



866



866


Diluted

866



866



866



866



866


 

1 Earnings per share for all periods presented were calculated using the number shares that were distributed to UTC shareowners immediately following the Separation. For periods prior to the Separation it is assumed that there are no dilutive equity instruments as there were no equity awards in Carrier outstanding prior to the Separation.

 

 

Carrier Global Corporation

Segment Net Sales and Operating Profit by Quarter



(Unaudited)


For the Year Ended


For the Quarters Ended


(dollars in millions)

March 31,
2019


June 30
2019


September 30,
2019


December 31,
2019


December 31,
2019

Net sales










HVAC

$

2,168



$

2,735



$

2,602



$

2,207



$

9,712


Refrigeration

962



955



922



953



3,792


Fire & Security

1,290



1,386



1,402



1,422



5,500


Segment sales

4,420



5,076



4,926



4,582



19,004


Eliminations and other

(97)



(114)



(104)



(81)



(396)


Combined net sales

$

4,323



$

4,962



$

4,822



$

4,501



$

18,608












Operating profit










HVAC

$

293



$

545



$

404



$

321



$

1,563


Refrigeration

127



121



125



159



532


Fire & Security

132



184



205



187



708


Segment operating profit

552



850



734



667



2,803


Eliminations and other

(17)



(15)



(63)



(61)



(156)


General corporate expenses

(35)



(30)



(42)



(49)



(156)


Combined operating profit

$

500



$

805



$

629



$

557



$

2,491












Segment operating profit margin










HVAC

13.5

%


19.9

%


15.5

%


14.5

%


16.1

%

Refrigeration

13.2

%


12.7

%


13.6

%


16.7

%


14.0

%

Fire & Security

10.2

%


13.3

%


14.6

%


13.2

%


12.9

%











Segment operating profit margin

12.5

%


16.7

%


14.9

%


14.6

%


14.7

%

 

 

Reconciliation of Reported (GAAP) to Adjusted (Non-GAAP)

Operating Profit & Operating Profit Margin by Quarter





(Unaudited)





For the Quarters Ended


For the Year Ended

(dollars in millions - Income (Expense))


March 31,
2019


June 30
2019


September 30,
2019


December 31,
2019


December 31,
2019

HVAC


Net sales


$

2,168



$

2,735



$

2,602



$

2,207



$

9,712















Operating profit


$

293



$

545



$

404



$

321



$

1,563



Restructuring


(17)



(18)



(12)



(9)



(56)



Impairment of joint venture investment






(108)





(108)



Gain on sale of interests in joint ventures


13



21





23



57



Adjusted operating profit


$

297



$

542



$

524



$

307



$

1,670



Adjusted operating profit margin


13.7

%


19.8

%


20.1

%


13.9

%


17.2

%













Refrigeration


Net sales


$

962



$

955



$

922



$

953



$

3,792















Operating profit


$

127



$

121



$

125



$

159



$

532



Restructuring


(3)



(4)



(7)





(14)



Net gain on expropriated plant








22



22



Adjusted operating profit


$

130



$

125



$

132



$

137



$

524



Adjusted operating profit margin


13.5

%


13.1

%


14.3

%


14.4

%


13.8

%













Fire & Security


Net sales


$

1,290



$

1,386



$

1,402



$

1,422



$

5,500















Operating profit


$

132



$

184



$

205



$

187



$

708



Restructuring


(13)



(8)



(14)



(18)



(53)



Pension plan amendment








(7)



(7)



Adjusted operating profit


$

145



$

192



$

219



$

212



$

768



Adjusted operating profit margin


11.2

%


13.9

%


15.6

%


14.9

%


14.0

%













General Corporate Expenses and Eliminations and Other


Net sales


$

(97)



$

(114)



$

(104)



$

(81)



$

(396)















Operating profit


$

(52)



$

(45)



$

(105)



$

(110)



$

(312)



Restructuring






(1)



(2)



(3)



Consultant contract termination






(34)





(34)



Separation costs






(13)



(46)



(59)



Adjusted operating profit


$

(52)



$

(45)



$

(57)



$

(62)



$

(216)














Carrier Combined


Net sales


$

4,323



$

4,962



$

4,822



$

4,501



$

18,608















Operating profit


$

500



$

805



$

629



$

557



$

2,491



Total restructuring costs


(33)



(30)



(34)



(29)



(126)



Total non-recurring and non-operational items


13



21



(155)



(8)



(129)



Combined adjusted operating profit


$

520



$

814



$

818



$

594



$

2,746



 

 

Carrier Global Corporation

Reconciliation of Reported (GAAP) to Adjusted (Non-GAAP) Results

Adjusted Net Income, Earnings Per Share, and Effective Tax Rate by Quarter



(Unaudited)


For the Quarters Ended


For the Year
Ended

(dollars in millions - Income (Expense))

March 31,
2019


June 30
2019


September 30,
2019


December 31,
2019


December 31,
2019

Net income attributable to common
shareowners

$

400



$

784



$

492



$

440



$

2,116


Total restructuring costs

(33)



(30)



(34)



(29)



(126)












Total non-recurring and non-operational items
included in operating profit

13



21



(155)



(8)



(129)












Non-recurring and non-operational
items included in Interest expense, net:










Interest income associated with participation
in amnesty settlement



8







8


Interest income associated with IRS settlement



8







8












Tax effect of restructuring and non-recurring and
non-operational items

6



3



22



8



39












Non-recurring and non-operational items
included in Income tax expense:










Favorable income tax adjustments related to
tax amnesty



95







95


Adjustments related to several tax settlements



54







54


Tax adjustment resulting from announcement
of intention to separate commercial businesses





19





19


Significant non-recurring and non-operational
items included in Income tax expense



149



19





168












Total non-recurring and non-operational items

(14)



159



(148)



(29)



(32)


Adjusted net income attributable to common
shareowners

$

414



$

625



$

640



$

469



$

2,148












Diluted earnings per share

$

0.46



$

0.91



$

0.57



$

0.50



$

2.44


Impact on diluted earnings per share

(0.02)



0.18



(0.17)



(0.03)



(0.04)


Adjusted diluted earnings per share

$

0.48



$

0.73



$

0.74



$

0.53



$

2.48












Effective tax rate

25.8

%


7.6

%


25.8

%


23.2

%


19.4

%

Impact on effective tax rate

0.1

%


17.9

%


(0.9)

%


(0.1)

%


5.5

%

Adjusted effective tax rate

25.9</