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Carrier Reports Strong 2023 Results and Announces 2024 Outlook

February 6, 2024

Fourth Quarter 2023 Highlights

  • Sales of $5.1B
  • Operating margin expansion of 340 basis points and adjusted operating margin expansion of 80 basis points
  • GAAP EPS of $0.49, up 53% vs. 2022 and adjusted EPS of $0.53, up 33% vs. 2022
  • Net cash flow from operating activities of $1.1B and free cash flow of $829M

Full Year 2023 Highlights

  • Sales of $22.1B, up 8% compared to 2022 including 3% organic growth
  • Gross margins up 210 basis points compared to 2022
  • GAAP EPS of $1.58 and adjusted EPS of $2.73
  • Net cash flow from operating activities of $2.6B and free cash flow of $2.1B, up 49% and 53% respectively

Outlook for 2024

  • Global Access Solutions and Commercial Refrigeration included through June 30, 2024
  • Viessmann Climate Solutions sales expected to grow mid-single-digits
  • Assumes ~$4.5B net proceeds from business exits are used for debt reduction
  • Sales of ~$26.5B with mid-single-digit organic* growth
  • Adjusted operating margin* of 15.0% - 15.5%, up > 50 basis points compared to 2023
  • Adjusted EPS* of $2.80 - $2.90
  • Free cash flow* of ~$0.7B (includes $1.7B of expected tax payments on the gains from the announced business exits, restructuring, and transaction-related costs): up ~10% excluding these expected items

PALM BEACH GARDENS, Fla., Feb. 6, 2024 /PRNewswire/ -- Carrier Global Corporation (NYSE:CARR), global leader in intelligent climate and energy solutions, today reported strong financial results for the fourth quarter and full year of 2023. The Company projects continued solid organic growth in 2024 supported by a projected fourth consecutive year of double-digit aftermarket growth, innovation, and significant secular tailwinds.

"Our fourth quarter results continue to show Carrier's ability to perform while transforming with strong operating profit growth and EPS up over 30% compared to the prior year.  For full-year 2023, we grew gross margins 210 basis points on 3% organic sales growth with both operating and free cash flow up about 50% compared to the prior year," said Carrier Chairman & CEO David Gitlin. "In addition to delivering results ahead of our projections for the year, we completed our game-changing combination with Viessmann Climate Solutions in January and reached definitive agreements to sell both our Global Access Solutions and Commercial Refrigeration businesses for close to $6B combined.  Looking forward to 2024, our solid backlog levels and sustainability leadership position Carrier for another year of strong financial performance."

Fourth Quarter 2023 Results

Carrier's fourth quarter sales of $5.1B were flat compared to the prior year including flat organic sales growth, a 1% tailwind from currency translation and a 1% net negative impact from acquisitions and divestitures. Sales in the HVAC segment were down 1% organically. North America Residential & Light Commercial HVAC sales declined high single digits due to weaker than expected residential sales as distributors reduced inventory levels. This was offset by high single digit growth in Commercial HVAC globally.  The Refrigeration segment returned to growth this quarter, with organic sales up 6% driven by growth in Transport Refrigeration. Fire and Security organic sales were down 1% driven by Global Access Solutions and Residential Fire partially offset by growth in Industrial Fire.

GAAP operating profit in the quarter of $607M was up 40% from the fourth quarter of 2022. Adjusted operating profit of $557M was up 8%.

Net income and adjusted net income were $420M and $452M, respectively. GAAP EPS of $0.49 and adjusted EPS of $0.53 benefitted from operating margin expansion and lower effective tax rates. Net cash flows provided by operating activities for the quarter were approximately $1.1B and capital expenditures were $233M, resulting in free cash flow of $829M.

Full-Year 2023 Results

Carrier's 2023 sales of $22.1B increased 8% compared to the prior year including organic sales growth of 3% and a 5% impact from acquisitions and divestitures. Gross margins increased 210 basis points compared to the prior year. GAAP operating profit of $2.3B decreased 49% due to prior year gains on the sale of Chubb and the acquisition of Toshiba Carrier, while adjusted operating profit increased 11% to $3.2B.  Operating margin decreased due to the prior year impact of the Chubb and Toshiba Carrier-related gains.  Adjusted operating margin increased despite the impact from the consolidation of Toshiba Carrier. Strong price realization more than offset continued inflation and productivity savings more than offset strategic incremental investments.

GAAP EPS was $1.58 and adjusted EPS was $2.73.  Net income was $1.3B, and adjusted net income was $2.3B.  Net cash flows provided by operating activities were $2.6B and capital expenditures were $469M, resulting in free cash flow of $2.1B.  During the quarter the company issued $5.6B of debt related to the acquisition of Viessmann Climate Solutions.

Full-Year 2024 Guidance

Carrier is announcing the following outlook for 2024:


2024 Guidance**

Sales

~$26.5B
Organic* up MSD
FX 0%
Acquisitions +20%
Divestitures (5%)

Adjusted Operating
Margin*

 

15.0% - 15.5%

 

Adjusted EPS*

$2.80 - $2.90



Free Cash Flow*

~$0.7B
Includes $1.7B of expected tax payments on
the gains from the announced business
exits, restructuring, and transaction- related
costs


*Note: When the company provides expectations for organic sales, adjusted operating profit, adjusted operating margin, adjusted EPS 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.

**As of February 6, 2024

Conference Call

Carrier will host a webcast of its earnings conference call today, Tuesday, February 6, 2024, at 7:30 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, participants must pre-register at Carrier Earnings Call Registration. All registrants will receive dial-in information and a PIN allowing access to the live call.

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. These forward-looking statements are intended to provide management's current expectations or plans for Carrier's 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. 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, Carrier's plans with respect to its indebtedness 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 additional information on identifying factors that may cause actual results to vary materially from those stated in forward-looking statements, see Carrier's reports on Forms 10-K, 10-Q and 8-K filed with or furnished to the U.S. Securities and Exchange Commission 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.

About Carrier

Carrier Global Corporation, global leader in intelligent climate and energy solutions, is committed to creating solutions that matter for people and our planet for generations to come. From the beginning, we've led in inventing new technologies and entirely new industries. Today, we continue to lead because we have a world-class, diverse workforce that puts the customer at the center of everything we do. For more information, visit corporate.carrier.com or follow Carrier on social media at @Carrier.

CARR-IR

Contact:

Investor Relations


Sam Pearlstein


561-365-2251


Sam.Pearlstein@Carrier.com




Media Inquiries


Ashley Barrie


561-365-1260


Ashley.Barrie@Carrier.com

SELECTED FINANCIAL DATA, NON-GAAP MEASURES AND DEFINITIONS

Following are tables that present selected financial data of Carrier Global Corporation. Also included are reconciliations of non-GAAP measures to their most comparable GAAP measures.

Use and Definitions of Non-GAAP Financial Measures

Carrier Global Corporation ("we" or "our") 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. 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.

Organic sales, adjusted operating profit, adjusted operating margin, incremental margins / earnings conversion, earnings before interest, taxes and depreciation and amortization ("EBITDA"), adjusted EBITDA, adjusted net income, adjusted earnings per share ("EPS"), adjusted interest expense, net, adjusted effective tax rate and net debt 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 nonoperational nature (hereinafter referred to as "other significant items"). Adjusted operating profit represents operating profit (a GAAP measure), excluding restructuring costs, amortization of acquired intangibles and other significant items. Adjusted operating margin represents adjusted operating profit as a percentage of net sales (a GAAP measure). Incremental margins / earnings conversion represents the year-over-year change in adjusted operating profit divided by the year-over-year change in net sales. EBITDA represents net income attributable to common shareholders (a GAAP measure), adjusted for interest income and expense, income tax expense, and depreciation and amortization. Adjusted EBITDA represents EBITDA, as calculated above, excluding non-service pension benefit, non-controlling interest in subsidiaries' earnings from operations, restructuring costs and other significant items. Adjusted net income represents net income attributable to common shareowners (a GAAP measure), excluding restructuring costs, amortization of acquired intangibles and other significant items. Adjusted EPS represents diluted earnings per share (a GAAP measure), excluding restructuring costs, amortization of acquired intangibles and other significant items. Adjusted interest expense, net represents interest expense (a GAAP measure) and interest income (a GAAP measure), net excluding other significant items. The adjusted effective tax rate represents the effective tax rate (a GAAP measure), excluding restructuring costs, amortization of acquired intangibles and other significant items. Net debt represents long-term debt (a GAAP measure) less cash and cash equivalents (a GAAP measure). For the business segments, when applicable, adjustments of operating profit and operating margins represent operating profit, excluding restructuring, amortization of acquired intangibles and other significant items.

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 our ability to fund its activities, including the financing of acquisitions, debt service, repurchases of our common stock and distribution of earnings to shareowners.

Orders are contractual commitments with customers to provide specified goods or services for an agreed upon price and may not be subject to penalty if cancelled.

When we provide our expectations for organic sales, adjusted operating profit, adjusted operating margin, adjusted interest expense, net, adjusted effective tax rate, incremental margins/earnings conversion, adjusted EPS 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 net sales, operating profit, operating margin, interest expense, effective tax rate, incremental operating margin, diluted EPS and 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, future restructuring costs, 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.

 

Carrier Global Corporation
Consolidated Statement of Operations



(Unaudited)


Three Months Ended
December 31,


Year Ended
December 31,

(In millions, except per share amounts)

2023


2022


2023


2022

Net sales








Product sales

$             4,441


$             4,527


$          19,563


$          18,250

Service sales

661


578


2,535


2,171

Total Net sales

5,102


5,105


22,098


20,421

Costs and expenses








Cost of products sold

(3,176)


(3,407)


(13,831)


(13,337)

Cost of services sold

(492)


(451)


(1,884)


(1,620)

Research and development

(170)


(149)


(617)


(539)

Selling, general and administrative

(961)


(673)


(3,297)


(2,512)

Total Costs and expenses

(4,799)


(4,680)


(19,629)


(18,008)

Equity method investment net earnings

40


40


211


262

Other income (expense), net

264


(32)


(384)


1,840

Operating profit

607


433


2,296


4,515

Non-service pension benefit (expense)

(1)


(2)


(1)


(4)

Interest (expense) income, net

(47)


(54)


(211)


(219)

Income from operations before income taxes

559


377


2,084


4,292

Income tax expense

(120)


(99)


(644)


(708)

Net income from operations

439


278


1,440


3,584

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

19


8


91


50

Net income attributable to common shareowners

$                420


$                270


$            1,349


$            3,534









Earnings per share








Basic

$               0.50


$               0.32


$              1.61


$              4.19

Diluted

$               0.49


$               0.32


$              1.58


$              4.10

Weighted-average number of shares outstanding








Basic

839.6


835.6


837.3


843.4

Diluted

854.2


852.2


853.0


861.2









 

Carrier Global Corporation
Consolidated Balance Sheet



(Unaudited)


As of December 31,

(In millions)

2023


2022

Assets




Cash and cash equivalents

$      10,015


$            3,520

Accounts receivable, net

2,481


2,833

Contract assets, current

306


537

Inventories, net

2,217


2,640

Assets held for sale

3,314


Other assets, current

447


349

Total current assets

18,780


9,879

Future income tax benefits

739


612

Fixed assets, net

2,293


2,241

Operating lease right-of-use assets

491


642

Intangible assets, net

1,028


1,342

Goodwill

7,989


9,977

Pension and post-retirement assets

32


26

Equity method investments

1,140


1,148

Other assets

330


219

Total Assets

$      32,822


$          26,086

Liabilities and Equity




Accounts payable

$        2,742


$            2,833

Accrued liabilities

2,811


2,610

Contract liabilities, current

425


449

Liabilities held for sale

862


Current portion of long-term debt

51


140

Total current liabilities

6,891


6,032

Long-term debt

14,242


8,702

Future pension and post-retirement obligations

155


349

Future income tax obligations

535


568

Operating lease liabilities

391


529

Other long-term liabilities

1,603


1,830

Total Liabilities

23,817


18,010





Equity




Common stock, par value $0.01; 4,000,000,000 shares authorized; 883,068,393 and 876,487,480 shares
issued; 839,910,275 and 834,664,966 outstanding as of December 31, 2023 and 2022, respectively

9


9

Treasury stock

(1,972)


(1,910)

Additional paid-in capital

5,535


5,481

Retained earnings

6,591


5,866

Accumulated other comprehensive loss

(1,486)


(1,688)

Non-controlling interest

328


318

Total Equity

9,005


8,076

Total Liabilities and Equity

$      32,822


$          26,086

 

Carrier Global Corporation
Consolidated Statement of Cash Flows



(Unaudited)


Year Ended December 31,

(In millions)

2023


2022

Operating Activities




Net income from operations

$              1,440


$              3,584

Adjustments to reconcile net income from operations to net cash flows from operating activities




Depreciation and amortization

542


380

Deferred income tax provision

(233)


(124)

Stock-based compensation cost

81


77

Equity method investment net earnings

(211)


(262)

(Gain) loss on extinguishment of debt


(36)

(Gain) loss on sale of investments / deconsolidation

278


(1,815)

Changes in operating assets and liabilities




Accounts receivable, net

(148)


(145)

Contract assets, current

93


(51)

Inventories, net

237


(334)

Other assets, current

(117)


104

Accounts payable and accrued liabilities

477


61

Contract liabilities, current

74


29

Defined benefit plan contributions

(33)


(16)

Distributions from equity method investments

129


148

Other operating activities, net

(2)


143

Net cash flows provided by (used in) operating activities

2,607


1,743

Investing Activities




Capital expenditures

(469)


(353)

Investment in businesses, net of cash acquired

(84)


(506)

Dispositions of businesses

54


2,902

Settlement of derivative contracts, net

(50)


(194)

Payment to former shareholders of TCC


(104)

Kidde-Fenwal, Inc. deconsolidation

(134)


Other investing activities, net

23


Net cash flows provided by (used in) investing activities

(660)


1,745

Financing Activities




(Decrease) increase in short-term borrowings, net

(15)


(140)

Issuance of long-term debt

5,609


432

Repayment of long-term debt

(111)


(1,275)

Repurchases of common stock

(62)


(1,380)

Dividends paid on common stock

(620)


(509)

Dividends paid to non-controlling interest

(58)


(46)

Other financing activities, net

(131)


(13)

Net cash flows provided by (used in) financing activities

4,612


(2,931)

Effect of foreign exchange rate changes on cash and cash equivalents

88


(56)

Net increase (decrease) in cash and cash equivalents and restricted cash, including cash classified in
current assets held for sale

6,647


501

Less: Change in cash balances classified as assets held for sale

157


Net increase (decrease) in cash and cash equivalents and restricted cash

6,490


501

Cash, cash equivalents and restricted cash, beginning of period

3,527


3,026

Cash, cash equivalents and restricted cash, end of period

10,017


3,527

Less: restricted cash

2


7

Cash and cash equivalents, end of period

$            10,015


$              3,520

 

Carrier Global Corporation
Segment Net Sales and Operating Profit



(Unaudited)


Three Months Ended December 31,


Year Ended December 31,


2023


2022


2023


2022

(In millions)

Reported


Adjusted


Reported


Adjusted


Reported


Adjusted


Reported


Adjusted

Net sales
















HVAC

$    3,293


$    3,293


$    3,316


$    3,316


$  15,139


$  15,139


$  13,408


$  13,408

Refrigeration

1,024


1,024


943


943


3,818


3,818


3,883


3,883

Fire & Security

909


909


960


960


3,633


3,633


3,570


3,570

Segment sales

5,226


5,226


5,219


5,219


22,590


22,590


20,861


20,861

Eliminations and other

(124)


(124)


(114)


(114)


(492)


(492)


(440)


(440)

Net sales

$    5,102


$    5,102


$    5,105


$    5,105


$  22,098


$  22,098


$  20,421


$  20,421

















Operating profit
















HVAC

$       335


$    397


$       241


$       317


$    2,275


$    2,511


$    2,610


$    2,032

Refrigeration

101


108


113


114


428


449


483


496

Fire & Security

109


129


136


139


209


543


1,630


541

Segment operating profit

545


634


490


570


2,912


3,503


4,723


3,069

Eliminations and other

207


(55)


(30)


(30)


(275)


(166)


(80)


(78)

General corporate expenses

(145)


(22)


(27)


(24)


(341)


(130)


(128)


(97)

Operating profit

$       607


$    557


$       433


$       516


$    2,296


$    3,207


$    4,515


$    2,894

















Operating margin















HVAC

10.2 %


12.1 %


7.3 %


9.6 %


15.0 %


16.6 %


19.5 %


15.2 %

Refrigeration

9.9 %


10.5 %


12.0 %


12.1 %


11.2 %


11.8 %


12.4 %


12.8 %

Fire & Security

12.0 %


14.2 %


14.2 %


14.5 %


5.8 %


14.9 %


45.7 %


15.2 %

Total Carrier

11.9 %


10.9 %


8.5 %


10.1 %


10.4 %


14.5 %


22.1 %


14.2 %

 

Carrier Global Corporation
Reconciliation of Reported (GAAP) to Adjusted (Non-GAAP)
Operating Profit



(Unaudited)


Three Months Ended December 31, 2023

(In millions)

HVAC


Refrigeration


Fire &
Security


Eliminations
and Other


General
Corporate
Expenses


Carrier

Net sales

$       3,293


$          1,024


$          909


$            (124)


$               —


$       5,102













Segment operating profit

$          335


$             101


$          109


$              207


$           (145)


$          607

Reported operating margin

10.2 %


9.9 %


12.0 %






11.9 %













Adjustments to segment operating profit:












Restructuring costs

$            17


$                 7


$            11


$                  8


$               —


$            43

Amortization of acquired intangibles

35






35

Acquisition step-up amortization (1)

10






10

Acquisition/divestiture-related costs



9



123


132

Bridge loan financing costs




2



2

Viessmann-related hedges




(272)



(272)

Total adjustments to operating profit

$            62


$                 7


$            20


$            (262)


$             123


$          (50)













Adjusted operating profit

$          397


$             108


$          129


$              (55)


$             (22)


$          557

Adjusted operating margin

12.1 %


10.5 %


14.2 %






10.9 %



(Unaudited)


Three Months Ended December 31, 2022

(In millions)

HVAC


Refrigeration


Fire &
Security


Eliminations
and Other


General
Corporate
Expenses


Carrier

Net sales

$       3,316


$             943


$          960


$            (114)


$               —


$       5,105













Segment operating profit

$          241


$             113


$          136


$              (30)


$             (27)


$          433

Reported operating margin

7.3 %


12.0 %


14.2 %






8.5 %













Adjustments to segment operating profit:












Restructuring costs

$            —


$                 1


$              1


$                —


$               —


$              2

Amortization of acquired intangibles

22



1




23

Acquisition step-up amortization (1)

27






27

Acquisition/divestiture-related costs





3


3

TCC acquisition-related gain (2)

27






27

Russia/Ukraine asset impairment



1




1

Total adjustments to operating profit

$            76


$                 1


$              3


$                —


$                 3


$            83













Adjusted operating profit

$          317


$             114


$          139


$              (30)


$             (24)


$          516

Adjusted operating margin

9.6 %


12.1 %


14.5 %






10.1 %


(1) Amortization of the step-up to fair value of acquired inventory and backlog.

(2) The carrying value of our previously held TCC equity investments were recognized at fair value at the TCC acquisition date.

 

Carrier Global Corporation
Reconciliation of Reported (GAAP) to Adjusted (Non-GAAP)
Operating Profit



(Unaudited)


Year Ended December 31, 2023

(In millions)

HVAC


Refrigeration


Fire &
Security


Eliminations
and Other


General
Corporate
Expenses


Carrier

Net sales

$     15,139


$          3,818


$       3,633


$             (492)


$               —


$     22,098













Segment operating profit

$       2,275


$             428


$          209


$             (275)


$           (341)


$       2,296

Reported operating margin

15.0 %


11.2 %


5.8 %






10.4 %













Adjustments to segment operating profit:












Restructuring costs

$            44


$               21


$            22


$                 10


$               —


$            97

Amortization of acquired intangibles

143



6




149

Acquisition step-up amortization (1)

41






41

Acquisition/divestiture-related costs



9



211


220

Bridge loan financing costs




3



3

TCC acquisition-related gain (2)

8






8

Viessmann-related hedges




96



96

KFI deconsolidation



297




297

Total adjustments to operating profit

$          236


$               21


$          334


$               109


$             211


$          911













Adjusted operating profit

$       2,511


$             449


$          543


$             (166)


$           (130)


$       3,207

Adjusted operating margin

16.6 %


11.8 %


14.9 %






14.5 %















(Unaudited)


Year Ended December 31, 2022

(In millions)

HVAC


Refrigeration


Fire &
Security


Eliminations
and Other


General
Corporate
Expenses


Carrier

Net sales

$     13,408


$          3,883


$       3,570


$             (440)


$               —


$     20,421













Segment operating profit

$       2,610


$             483


$       1,630


$               (80)


$           (128)


$       4,515

Reported operating margin

19.5 %


12.4 %


45.7 %






22.1 %













Adjustments to segment operating profit:












Restructuring Cost

$              8


$               10


$            11


$                   2


$               —


$            31

Amortization of acquired intangibles

46



4




50

Acquisition step-up amortization (1)

51






51

Acquisition/divestiture-related costs





31


31

Chubb gain



(1,105)




(1,105)

TCC acquisition-related gain (2)

(705)






(705)

Russia/Ukraine asset impairment


3


1




4

Charge resulting from legal matter

22






22

Total adjustments to operating profit

$        (578)


$               13


$     (1,089)


$                   2


$               31


$     (1,621)













Adjusted operating profit

$       2,032


$             496


$          541


$               (78)


$             (97)


$       2,894

Adjusted operating margin

15.2 %


12.8 %


15.2 %






14.2 %


(1) Amortization of the step-up to fair value of acquired inventory and backlog.

(2) The carrying value of our previously held TCC equity investments were recognized at fair value at the TCC acquisition date.

 

Carrier Global Corporation 
Reconciliation of Reported (GAAP) to Adjusted (Non-GAAP) Results
Net Income, Earnings Per Share, and Effective Tax Rate



(Unaudited)


Three Months Ended December 31, 2023


Year Ended December 31, 2023

(In millions, except per share amounts)

Reported


Adjustments


Adjusted


Reported


Adjustments


Adjusted

Net sales

$    5,102


$                —


$     5,102


$ 22,098


$                —


$ 22,098













Operating profit

$       607


(50)

a

$        557


$   2,296


911

a

$   3,207

Operating margin

11.9 %




10.9 %


10.4 %




14.5 %













Income from operations before income taxes

$       559


(33)

a,b

$        526


$   2,084


960

a,b

$   3,044

Income tax expense

$     (120)


65

c

$        (55)


$    (644)


20

c

$    (624)

Income tax rate

21.5 %




10.5 %


30.9 %




20.5 %













Net income attributable to common
shareowners

$       420


$                32


$        452


$   1,349


$              980


$   2,329













Summary of Adjustments:












Restructuring costs



$                43

a





$                97

a


Amortization of acquired intangibles



35

a





149

a


Acquisition step-up amortization (1)



10

a





41

a


Acquisition/divestiture-related costs



132

a





220

a


Viessmann-related hedges



(272)

a





96

a


TCC acquisition-related gain (2)



a





8

a


KFI deconsolidation



a





297

a


Bridge loan financing costs (3)



19

a, b





52

a, b


Total adjustments



$              (33)






$              960















Tax effect on adjustments above



$              (36)






$            (114)



Tax specific adjustments



101






134



Total tax adjustments



$                65

c





$                20

c














Shares outstanding - Diluted

854.2




854.2


853.0




853.0













Earnings per share - Diluted

$      0.49




$       0.53


$     1.58




$     2.73


(1) Amortization of the step-up to fair value of acquired inventory and backlog.

(2)  The carrying value of our previously held TCC equity investments were recognized at fair value and subsequently adjusted.

(3)  Includes commitment fees recognized in Operating profit.

 

Carrier Global Corporation
Reconciliation of Reported (GAAP) to Adjusted (Non-GAAP) Results
Net Income, Earnings Per Share, and Effective Tax Rate



(Unaudited)


Three Months Ended December 31, 2022


Year Ended December 31, 2022

(In millions, except per share
amounts)

Reported


Adjustments


Adjusted


Reported


Adjustments


Adjusted

Net sales

$    5,105


$                —


$      5,105


$  20,421


$                —


$  20,421













Operating profit

$       433


83

a

$         516


$    4,515


(1,621)

a

$    2,894

Operating margin

8.5 %




10.1 %


22.1 %




14.2 %













Income from operations before income taxes

$       377


83

a

$         460


$    4,292


(1,649)

a, b

$    2,643

Income tax expense

$       (99)


(13)

c

$       (112)


$     (708)


135

c

$     (573)

Income tax rate

26.3 %




24.3 %


16.5 %




21.7 %













Net income attributable to common
shareowners

$       270


$                70


$         340


$    3,534


$         (1,514)


$    2,020













Summary of Adjustments:












Restructuring costs



$                  2

a





$                31

a


Amortization of acquired intangibles



23

a





50

a


Acquisition step-up amortization (1)



27

a





51

a


Acquisition/divestiture-related costs



3

a





31

a


Chubb gain



a





(1,105)

a


TCC acquisition-related gain (2)



27

a





(705)

a


Russia/Ukraine asset impairment



1

a





4

a


Charge resulting from legal matter



a





22

a


Debt extinguishment (gain), net (3)



b





(28)

b


Total adjustments



$                83






$         (1,649)















Tax effect on adjustments above



$              (13)






$              172



Tax specific adjustments








(37)



Total tax adjustments



$              (13)

c





$              135

c














Shares outstanding - Diluted

852.2




852.2


861.2




861.2













Earnings per share - Diluted

$      0.32




$        0.40


$      4.10




$      2.34


(1) Amortization of the step-up to fair value of acquired inventory and backlog.

(2) The carrying value of our previously held TCC equity investments were recognized at fair value at the TCC acquisition date.

(3) The Company repurchased approximately $1.15 billion of aggregate principal senior notes on March 30, 2022 and recognized a net gain of $33 million and wrote-off $5 million of unamortized deferred financing costs in Interest (expense) income, net.

 

Carrier Global Corporation
Reconciliation of Reported (GAAP) to Adjusted (Non-GAAP) Results


Components of Changes in Net Sales


Three Months Ended December 31, 2023 Compared with Three Months Ended December 31, 2022



(Unaudited)


Factors Contributing to Total % change in Net Sales


Organic


FX
Translation


Acquisitions /
Divestitures, net


Other


Total

HVAC

(1) %


1 %


(1) %


— %


(1) %

Refrigeration

6 %


3 %


— %


— %


9 %

Fire & Security

(1) %


1 %


(5) %


— %


(5) %

Consolidated

— %


1 %


(1) %


— %


— %


Year Ended December 31, 2023 Compared with Year Ended December 31, 2022



(Unaudited)


Factors Contributing to Total % change in Net Sales


Organic


FX Translation


Acquisitions /
Divestitures, net


Other


Total

HVAC

5 %


(1) %


9 %


— %


13 %

Refrigeration

(2) %


1 %


(1) %


— %


(2) %

Fire & Security

6 %


(1) %


(3) %


— %


2 %

Consolidated

3 %


— %


5 %


— %


8 %

 

Historical Amounts of Amortization of Acquired Intangibles




(Unaudited)







Q1


Q2


Q3


Q4


FY


Q1


Q2


Q3


Q4


FY

(In millions)


2022


2022


2022


2022


2022


2023


2023


2023


2023


2023

HVAC


$         4


$         4


$       16


$       22


$       46