Carrier Global Corporation · NYSE:CARR
Carrier Global — Investor Day (February 2022)
125 slides from Carrier Global's investor day presentation, Feb 22, 2022
Slide 1: Investor Day Feb 22, 2022
FEB 22, 2022 INVESTOR DAY
Slide 2: Cautionary Statement
1 INVESTOR DAY 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 expe
Slide 3: Agenda
2 INVESTOR DAY AGENDA Topic Time Presenter Sam Pearlstein Opening Remarks Vice President Investor Relations Dave Gitlin Carrier Strategic Overview Chairman & CEO Jennifer Anderson Sustainability Senior Vice President Strategy, Business Development & Chief Sustainability Officer 8:30 – 10:00 am Bobby
Slide 4: Investor Day - Dave Gitlin
FEB 22, INVESTOR DAY 2022 Dave Gitlin
Slide 5: Why Carrier
4 INVESTOR DAY WHY CARRIER 1 Secular trends driving increased total addressable market 2 Carrier leading through technology / digital transformation, life-cycle solutions and ESG leadership 3 Rigorous cost reduction to fund investments and improve margins 4 Compelling financial algorithm 5 Strong ba
Slide 6: Carrier Overview
5 INVESTOR DAY CARRIER OVERVIEW ‘21 KEY DATA POINTS1 WHAT WE DO Fire & $20.6B ~58,000 Security Aftermarket Asia Pacific SALES EMPLOYEES HVAC 13.6% 160+ SALES Americas SALES2 SALES ADJ. OP. PROFIT* % COUNTRIES MIX2 EMEA BY REGION2 $1.9B Refrigeration FREE CASH FLOW* Original equipment DIGITAL AND TEC
Slide 7: Carrier Since Spin: Commitments Made and Kept
6 INVESTOR DAY February 2020 Investor Day Accomplishments ✓ Living The Carrier Way CARRIER People and culture ✓ Cultivating a performance culture and a talented, diverse workforce SINCE SPIN: ✓ ESG: embedded in DNA and growth strategy COMMITMENTS Three pillars ✓ Portfolio-wide share gains driving or
Slide 8: Meet the Moment
7 INVESTOR DAY MEET THE MOMENT
Slide 9: Secular Trends Drive Sustained Growth for Building and Cold Chain Solutions
8 INVESTOR DAY SECULAR TRENDS DRIVE SUSTAINED GROWTH FOR BUILDING AND COLD CHAIN SOLUTIONS HEALTH AND WELLNESS SUSTAINABILITY DIGITALIZATION GROWING MIDDLE CLASS Wellness economy ($T)¹ Annual infrastructure investments for Global spend on digital Middle-class population global net zero by 2050 trans
Slide 10: Secular Trends Driving Building Transformation
9 INVESTOR DAY SECULAR TRENDS DRIVING BUILDING TRANSFORMATION BUILDINGS OF YESTERDAY BUILDINGS OF TOMORROW People spend Indoor air can be Functional ~90% 3-5x of our time more polluted than HEALTHY indoors1 outdoor air1 Buildings account 1 in 5 existing Carbon for~40% buildings retrofitted to emitte
Slide 11: Carrier's Integrated Portfolio
10 INVESTOR DAY CARRIER’S INTEGRATED PORTFOLIO One-stop-shop for healthy, safe, sustainable, and intelligent solutions.
Slide 12: Secular Trends Driving Cold Chain Transformation
11 INVESTOR DAY SECULAR TRENDS DRIVING COLD CHAIN TRANSFORMATION COLD CHAIN OF YESTERDAY COLD CHAIN OF TOMORROW 1 in 9 As much as 50% of annual Carbon emitters people go to bed HEALTHY hungry every night1 vaccine are wasted or lost1 SUSTAINABLE 475M tons of Eliminating food waste could decrease glob
Slide 13: Global Market Growing as a Result of Recent Secular Tailwinds
12 INVESTOR DAY GLOBAL MARKET GROWING AS A RESULT OF RECENT SECULAR TAILWINDS GROWTH IN BUILDING GROWTH IN COLD CHAIN SOLUTIONS MARKET ¹ SOLUTIONS MARKET ¹ Annual total Cumulative Annual total Cumulative 350 market addressable incremental addressable market incremental opportunity opportunity 5.5% -
Slide 14: Strong Organic Growth
13 INVESTOR DAY STRONG ORGANIC GROWTH FEBRUARY 2020 ANALYST DAY FEBRUARY 2022 ANALYST DAY STRATEGIC INITIATIVES TO OUTGROW CARRIER POSITIONED TO CAPTURE BASE MARKET SHARE OF EXPANDED TAM M-HSD +~1-2% Growth +~2% MSD growth ~6-8% 1. Strengthen and grow core 2. Product extensions and geographic covera
Slide 15: Differentiation
14 INVESTOR DAY DIFFERENTIATION STRATEGIC INITIATIVES TO CARRIER POSITIONED TO CAPTURE OUTGROW BASE MARKET SHARE OF EXPANDED TAM Integrated HVAC and Unmatched installed F&S healthy and safe base 330K 33M 1.8M 90M+1 Commercial Residential Refrigeration Fire and solutions HVAC HVAC equipment security
Slide 16: Accelerated Cost Transformation
15 INVESTOR DAY ACCELERATED COST TRANSFORMATION SUSTAINED 2-3% YoY GROSS PRODUCTIVITY R&D Selling G&A 2-3% TARGETED COST CATEGORIES: Factory 1 ~$14B Supply Chain SUPPLY CHAIN FACTORY / G&A ANNUAL COST FOOTPRINT REDUCTION OPTIMIZATION 1. 2021 excluding Chubb
Slide 17: Operational Excellence
16 INVESTOR DAY OPERATIONAL EXCELLENCE SUPPLY CHAIN FACTORY FOOTPRINT G&A OPTIMIZATION Carrier Global Centers Carrier Business Excellence of Excellence Services +10% >200 >2x 2x bps 75% 6M 85% 75% 35% 3M 2021 2026 2021 2026 2021 2026 2021 2026 Critical component Automation hours Low cost hours G&A a
Slide 18: Disciplined Capital Deployment Within Solid Investment Grade Credit Rating
17 INVESTOR DAY DISCIPLINED CAPITAL DEPLOYMENT WITHIN SOLID INVESTMENT GRADE CREDIT RATING 1 ORGANIC GROWTH 2 INORGANIC GROWTH 3 GROWING DIVIDEND 4 SHARE REPURCHASES
Slide 19: Continued Portfolio Review and Playing Offense on M&A
18 INVESTOR DAY CONTINUED PORTFOLIO REVIEW AND PLAYING OFFENSE ON M&A PRIORITIES ACCOMPLISHMENTS Acquisitions Enhance sustainability leadership 1 Bolster building and cold chain ecosystems Accelerate digital and aftermarket growth Enhance technology differentiation and disruption Divestitures Expand
Slide 20: Carrier's Medium Term Value Creation Framework
19 INVESTOR DAY CARRIER’S MEDIUM TERM VALUE CREATION FRAMEWORK1 Organic sales growth ~6-8% Cost reduction 2-3% annual productivity Adj. operating margin expansion >50 bps/yr Adj. EPS Double-digit growth Free cash flow ~100% of net income 1. Before M&A, including Toshiba Carrier Corp.
Slide 21: Proud of our accomplishments thus far
Proud of our accomplishments thus far… and we have tremendous opportunity ahead
Slide 22: Sustainability Solutions
FEB 22, INVESTOR DAY 2022 SUSTAINABILITY SOLUTIONS Jennifer Anderson
Slide 23: Why Carrier ESG?
22 SUSTAINABILITY WHY CARRIER ESG? SUSTAINABLE SOLUTIONS SUSTAINABLE INVESTMENTS ESG IN PRACTICE Decarbonization enablement Carbon neutrality focus Electrification 2030 ESG goals road map Sustainable innovations Digital technologies Committed Carrier leadership Disruptive building Energy efficiency
Slide 24: A Changing World
23 SUSTAINABILITY A CHANGING WORLD Secular Drivers annual greenhouse gas reduction target 7.6% needed to limit global temperature to 1.5°C. Health and wellness The building sector accounts for 40% of global greenhouse gas emissions. Sustainability HVAC systems account for approximately 40% of a buil
Slide 25: Sustainable Solutions Framework
24 SUSTAINABILITY SUSTAINABLE SOLUTIONS FRAMEWORK Enable efficiencies through sustainable solutions Design Deliver Lead with recurring value design and via service and assessment reporting expertise Monetizing opportunities across the lifecycle
Slide 26: Future of Sustainable Buildings
25 SUSTAINABILITY FUTURE OF SUSTAINABLE BUILDINGS MARKET OPPORTUNITY SOLUTIONS OPPORTUNITY CARRIER’S LEADERSHIP • Founding company #1 of the U.S. Green Building Council® (USGBC) ~$225B • Founding member of the International WELL Building Institute™ Aftermarket • > 200M sq ft of building space certif
Slide 27: Future of Sustainable Cold Chain
26 SUSTAINABILITY FUTURE OF SUSTAINABLE COLD CHAIN MARKET OPPORTUNITY SOLUTIONS OPPORTUNITY CARRIER’S LEADERSHIP • Founding member of Global Food Cold Chain Council ~$25B • World's first natural refrigerant (CO2) technology for container refrigeration – NaturaLINE Aftermarket • World’s first autonom
Slide 28: Good for the Planet and Good for Customers
27 SUSTAINABILITY GOOD FOR THE PLANET AND GOOD FOR CUSTOMERS Product Planet Customer Annual GHG Savings Annual Operational Savings Vector eCool1 65% 75% All electric TRU PowerCO2OL1 77% 30% Commercial refrigeration AquaEdge® 19DV2 62% 40% Water-cooled chiller Infinity® 26 Air Conditioner with 38% 28
Slide 29: Helping Our Customers Reach Their Sustainability Goals
28 SUSTAINABILITY HELPING OUR CUSTOMERS REACH THEIR SUSTAINABILITY GOALS Home Depot City of London ▪ Technology implementation and ▪ Innovative district heating and process transformation cooling plant in the City of London ▪ Energy and maintenance ▪ Three Carrier high-efficiency management via pred
Slide 30: Investing in a Sustainable Future
29 SUSTAINABILITY INVESTING IN A SUSTAINABLE FUTURE Carrier is committed VRF AND HEAT PUMPS CARRIER VENTURES to progressing our Consistent with our Strategy, Mission: customers the acquisitions of Toshiba Invest in companies with Carrier and Giwee help support sustainable innovations and decarboniza
Slide 31: ESG Is in Our DNA - 2030 Goals
30 SUSTAINABILITY ESG IS IN OUR DNA – 2030 GOALS OUR PLANET OUR PEOPLE OUR COMMUNITIES Invest over $2B to develop Achieve water neutrality in Exceed benchmark employee Positively impact communities by healthy, safe, sustainable and our operations, prioritizing engagement. enabling access to safe and
Slide 32: 2030 ESG Goals - Progress to Date
31 SUSTAINABILITY 2030 ESG GOALS – PROGRESS TO DATE ENVIRONMENTAL SOCIAL GOVERNANCE ~137M 1/3 88% metric tons of GREENHOUSE WOMEN EXECUTIVES INDEPENDENT GAS EMISSIONS AVOIDED globally DIRECTOR NOMINEES from products sold and avoided food waste since 2020 CONNECTED 1st 50% COMPENSATION Carrier manufa
Slide 33: Carrier's Carbon Neutrality Roadmap
32 SUSTAINABILITY CARRIER’S CARBON NEUTRALITY ROADMAP Scope 1 & 2 Emissions: Path to Zero Scope 1: Direct emissions Reduce our energy demand GHG Emissions Mix On-site fuel use and refrigerants • Invest in CapEx/OpEx • Optimize energy consumption Absolute reduction and emissions 2019 50% 50% (SBTi) 2
Slide 34: Recognition & Industry Leadership
33 SUSTAINABILITY RECOGNITION & INDUSTRY LEADERSHIP Named to Named an Change the World List ESG Industry Top-Rated Company Fortune, 2021 Sustainalytics, 2021 Among the Received a rating of Best Places to Work for LGBTQ Equality AA in the MSCI ESG Ratings assessment Human Rights Campaign Foundation C
Slide 35: We Are Only at the Beginning of Our Journey
34 SUSTAINABILITY Delivering Sustainable ...WE ARE Solutions for our customers ONLY AT THE BEGINNING OF OUR Investing in disruptive technologies through M&A and Carrier Ventures JOURNEY Defined roadmap for our internal 2030 goals Industry leadership in ESG
Slide 36: Digital - Bobby George
FEB 22, INVESTOR DAY 2022 DIGITAL Bobby George
Slide 37: Why Carrier Digital
36 DIGITAL WHY CARRIER DIGITAL DOMAIN INSTALLED TALENT PLATFORMS & TECHNOLOGY EXPERTISE BASE TRANSFORMED SCALE APPROACH Digital Innovation 127M+ Team with 10+ Physical Installed 800+ Ecosystem Interoperability and Products Assets Software launches Partnerships Open Standards 160+ 55% 40+ Digital Cou
Slide 38: Evolution of Digitally-Enabled Innovation
37 DIGITAL EVOLUTION OF DIGITALLY-ENABLED INNOVATION TOMORROW TODAY YESTERDAY Software-defined hardware HW & SW innovation Hardware engineering Data-driven value Outcomes as a Service Product attribute innovation Asset performance Insights via analytics & ML AI-led optimization Focused on Carrier pr
Slide 39: Carrier Digital Strategy
38 DIGITAL CARRIER DIGITAL STRATEGY Connect our installed Modernize legacy Launch new platforms, base software for cloud products and services CLOUD Cloud SaaS CONNECTED OUTCOMES ASSETS HEALTHY & SUSTAINABLE INTELLIGENT SAFE Partnership Ecosystem Leveraging cloud connectivity to drive customer outco
Slide 40: Connect Our Installed Base
39 DIGITAL CONNECT OUR INSTALLED BASE UNIFIED EDGE STRATEGY CONNECTED INSTALLED BASE: IMPACT OF CONNECTIVITY NON-RESIDENTIAL PRODUCTS Edge Connectivity Types 1.1M Chillers +20% attach rate • Telematics • Edge device CCR • Embedded edge ~10x 15-20% reduction in equipment Growth downtime Key Features
Slide 41: Cloud-Based Platform for Healthy, Safe and Sustainable Buildings
40 DIGITAL THE CLOUD-BASED PLATFORM FOR HEALTHY, SAFE AND SUSTAINABLE BUILDINGS Key Benefits • Cross-system insights • Performance optimization • Advanced analytics CUSTOMER Healthy & Sustainability Safe & Asset Well-Being OUTCOMES Secure Management Differentiation • Open platform • Rapid onboarding
Slide 42: Actionable Intelligence Across the Connected Cold Chain
41 DIGITAL ACTIONABLE INTELLIGENCE ACROSS THE CONNECTED COLD CHAIN Key Benefits • Reduce food & medicine loss • Optimize supply chain logistics • Increase resilience to disruption CUSTOMER • Enable sustainability Fleet Cargo Cold Cold OUTCOMES Chain Systems Differentiation • Advanced IoT • End-to-en
Slide 43: Digital Drives Increased Lifecycle Value
42 DIGITAL DIGITAL 1 Investments in platforms + talent + partnerships DRIVES INCREASED 2 Accelerated pace of innovation via software defined hardware LIFECYCLE VALUE 3 Greater customer intimacy driving lifecycle services Increased TAM's, recurring revenue & 4 margin accretive Critical to accelerate
Slide 44: Aftermarket - Ajay Agrawal
FEB 22, INVESTOR DAY 2022 AFTERMARKET Ajay Agrawal
Slide 45: Why Carrier Aftermarket
44 AFTERMARKET WHY CARRIER AFTERMARKET 2021 SALES (~$4.5B1) Large growth potential relative to TAM Comprehensive Portfolio Fire & Growing need for healthy building and Security • Parts sustainability upgrades • Digital/Service • Modifications & Refrigeration HVAC & Upgrades 10 points+ higher gross m
Slide 46: Lifecycle Opportunity from Carrier Installed Base
45 AFTERMARKET LIFECYCLE OPPORTUNITY FROM CARRIER INSTALLED BASE POTENTIAL PRODUCT FAMILY INSTALLED BASE LIFECYCLE VALUE (units) (multiple of equipment sale) Commercial HVAC 330K ~5-10x1 Light Commercial HVAC 2M ~1-3x Residential HVAC 33M ~0.5-1x Refrigeration Equipment 1.8M ~0.5-1.5x1 Fire & Securi
Slide 47: Carrier Aftermarket Outlook
46 AFTERMARKET CARRIER AFTERMARKET OUTLOOK INSTALLED BASE OPPORTUNITY GROWTH DRIVERS • Service coverage • Digital offerings and remote solutions • Modifications and upgrades • Healthy building upgrades Addressable • High single-digit market to low double- • Energy efficiency/ for Carrier digit growt
Slide 48: Lifecycle Solutions Approach
47 AFTERMARKET LIFECYCLE SOLUTIONS APPROACH Vision CARRIER IS THE CUSTOMER’S FIRST CHOICE FOR SERVICE AND THE ONE-STOP SHOP ACROSS THE LIFECYCLE Principles We design products We service our We connect our We upgrade fielded We are the first with full lifecycle view equipment equipment equipment choi
Slide 49: Carrier Playbook in Action
48 AFTERMARKET CARRIER PLAYBOOK IN ACTION TRANSFORMATION BUILDING BLOCKS ✓ Aftermarket leaders in place ✓ Global service brand ✓ Talent upskilling ✓ Lifecycle mapping and priorities ✓ Added sales capacity ✓ Feedback loop/NPS surveys ✓ Parts strategies and execution ✓ Digital platforms ✓ Metrics and
Slide 50: Aftermarket Growth Drivers
49 AFTERMARKET SERVICE COVERAGE Chillers Under Contract 130K+ • Add 10-15K chillers under contract per year AFTERMARKET • Ramp to 60%+ new equipment attach rate 60K+ • GROWTH ~45K pre-2019 ~50K 2020 2021 2026+ Bring BluEdge value to customers • Digital services DRIVERS <20% 25% 38% 60%+ • • Break/fi
Slide 51: Carrier Aftermarket Growth Formula
50 AFTERMARKET CARRIER AFTERMARKET GROWTH FORMULA HSD-LDD • “Healthy” upgrades • Zero-carbon outcomes • Abound energy • Abound/Lynx management • Remote solutions • Prognostics • Service attachment LSD • Tiered offerings • XaaS models • Catalog expansion • Breeze/e-commerce Base Parts Capture Service
Slide 52: Example: Abound in Action
51 AFTERMARKET EXAMPLE: ABOUND IN ACTION INTELLIGENT REMOTE ENERGY CUSTOMER BACKBONE MANAGEMENT EXAMPLES Managed Assets Managed Sq Ft • Carrier’s award-winning AI platform • Actionable intelligence from real-time data Home Specialty Consumer 1M+ 1.3B+ improvement and craft electronics • Product agno
Slide 53: Winning and Driving Customer Outcomes
52 AFTERMARKET HVAC: ONE COURT HEALTHY & SQUARE SUSTAINABLE 50% WINNING • High-efficiency chillers modernization reduction in energy consumption AND DRIVING • Building automation + VFD upgrade Remote Commissioning & inspection CUSTOMER OUTCOMES Refrigeration: INTELLIGENT 10-20% reduction in downtime
Slide 54: Aftermarket Key Takeaways
53 AFTERMARKET AFTERMARKET KEY TAKEAWAYS AFTERMARKET SALES GROWTH HSD- Attractive business LDD • Gross margins 10+ points higher than $7.0B+ Carrier average 11% ~3% Large growth potential vs. TAM CAGR $4.5B • Massive current installed base $4.0B • ~$2.5B growth in ~5 years $3.7B Proven playbook alre
Slide 55: HVAC - Chris Nelson
FEB 22, INVESTOR DAY 2022 HVAC Chris Nelson
Slide 56: Why Carrier HVAC
55 HVAC WHY CARRIER HVAC HVAC Leader Slated for MSD-HSD Growth Margin Runway #1 position in key Share gains poised to Material productivity segments continue Iconic brand Global aftermarket Aftermarket and controls: recognized globally opportunity shifting portfolio mix Most comprehensive Well posit
Slide 57: HVAC Overview
HVAC OVERVIEW 2 0 2 1 R E S U LT S 1 W H AT W E D O VRF & Int’l Light Commercial Asia Pac $11.4B Service & Controls NET SALES Commercial EMEA PORTFOLIO OEM / AM GEOGRAPHY 15.6% ADJ. OPERATING MARGIN* % NA Residential & Light Commercial Equipment Americas MARKET POSITION D I F F E R E N T I AT I O N
Slide 58: A True Global Leader
57 HVAC A TRUE GLOBAL LEADER Manufacturing and Design Service Footprint Channel EMEA EMEA EMEA 7 Factories >75 locations ~5k partners 6 Design centers Americas Americas Americas 9 Factories >105 locations >1.7k partners 5 Design centers Asia Pacific Asia Pacific Asia Pacific 6 Factories >540 locatio
Slide 59: Since Spin: Commitments Made and Kept
58 HVAC SINCE SPIN: COMMITMENTS MADE AND KEPT Strengthen and Grow Core Invest in sales force Right products Increase Product Extensions and Geographic Rapidly grow VRF Expand in Asia Coverage Grow Aftermarket Accelerate service and Controls growth Digital offering
Slide 60: Investments Have Driven Results
59 HVAC INVESTMENTS HAVE DRIVEN RESULTS (2021 VPY) Revenue +20% • Adj. operating profit* +24% • Adj. operating margin* +0.5 pts SHARE GROWTH NEW GROWTH AREAS AFTERMARKET & CONTROLS N.A. residential VRF sales were up ~2x Chillers under contract and light commercial including M&A >60k Global applied >
Slide 61: TCC: Transformational Deal in VRF
60 HVAC TCC: TRANSFORMATIONAL DEAL IN VRF Strategic Rationale Transformation Strategy 1 Fast growing VRF 2 Differentiated 3 Complementary, cost-efficient segment technologies footprint Seasoned segment leadership HSD CAGR1 ✓ Electrification and sustainability New global business unit ✓ Efficient hea
Slide 62: Positioned for Success and Accelerated Growth
61 HVAC POSITIONED FOR SUCCESS AND ACCELERATED GROWTH Foundation for Success Healthy Sustainable Right Products Aftermarket Momentum 2019 2021 AquaEdge® Infinity 24 TruVu 19MV Heat Pump Controller 20% ofhigher buildings surveyed had ratios of indoor to 40% Ofemissions greenhouse gas are attributable
Slide 63: Commercial Buildings
62 HVAC COMMERCIAL BUILDINGS Core Growth Secular Trend Accelerators Leading Product Healthy Sustainable Platforms AquaEdge® AquaSnap® 19MV 30RB Sales Force Award winning air scrubber New high efficiency chiller Own VRF Demand for increased air Stronger focus on high efficiency, changes and improved
Slide 64: N.A. Residential and Light Commercial
63 HVAC N.A. RESIDENTIAL AND LIGHT COMMERCIAL Core Growth Secular Trend Accelerators Broadest Product Win 2023 Regulatory Indoor Air Quality Offering Lower GWP Dedicated Pro-install Direct-to- Award-winning split systems Advanced air management Refrigerant Outdoor Air consumer Systems Cold Climate O
Slide 65: Aftermarket
64 HVAC AFTERMARKET SMART Service 2026 Secular Trend Accelerators Connected Customer 60%+ Attachment rate Healthy Assessments Accelerated Retrofit ~130K chiller contracts Connected Connected K-12 Energy Centrifugal Evaporative Chiller (IoT) Command Center Assessment Audit VFD Cooling 65K+ chillers C
Slide 66: Digital
65 HVAC DIGITAL Pillars of Growth Secular Trend Accelerators Invest in cloud platform HEALTHY SUSTAINABLE Over 750M sq ft Energy management Expand building automation capability Technology Field Footprint 0.5B kWh Saved for customers in 2021 Data Center Infrastructure Management Software Continuous
Slide 67: Driving Sustained Margin Expansion
66 HVAC DRIVING SUSTAINED MARGIN EXPANSION PRICE/COST AFTERMARKET OPERATIONAL EXCELLENCE Price/Cost: At least neutral in 2022 Aftermarket and 30% over the medium term High-cost vs. Shift to ~70% low cost over controls mix: low-cost mix: the medium term Supply chain Optimizing in-region sourcing Shif
Slide 68: Why Carrier HVAC
67 HVAC WHY CARRIER HVAC HVAC Leader Slated for MSD-HSD Growth Margin Runway #1 position in key Share gains poised to Material productivity segments continue Iconic brand Global aftermarket Aftermarket and controls: recognized globally opportunity shifting portfolio mix Most comprehensive Well posit
Slide 69: Fire & Security - Jurgen Timperman
FEB 22, INVESTOR DAY 2022 FIRE & SECURITY Jurgen Timperman
Slide 70: What's Changed
69 FIRE & SECURITY WHAT’S CHANGED FIRE & SECURITY PRODUCTS + FIELD NEW FIRE & SECURITY1 $5.5 Billion sales ~$3.4 Billion sales 13% Adjusted operating margin ~15.6% Adjusted operating margin High tech products and Labor-intensive field business digitally-enabled services Broad and complex portfolio F
Slide 71: Why Carrier F&S
70 FIRE & SECURITY WHY CARRIER F&S #1 or #2 in every segment with iconic brands Highly profitable segment gaining share through focused investments Global opportunity to increase protection of homes from fire and other hazards Healthy, Safe & Intelligent tailwind adding 1-2 pts of organic growth Mar
Slide 72: Fire & Security Overview
FIRE & SECURITY OVERVIEW 2 0 2 1 R E S U LT S 1 W H AT W E D O Industrial Aftermarket Asia Pacific ~$3.4B NET SALES ECO EMEA SALES SALES BY SYSTEMS MIX REGION 15.6% ADJ. OPERATING MARGIN* % Residential Commercial Products Americas FLAGSHIP BRANDS C O M P E L L I N G S TAT I S T I C S INDUSTRY LEADER
Slide 73: Megatrends Driving Sustainable Growth
72 FIRE & SECURITY MEGATRENDS DRIVING SUSTAINABLE GROWTH HOMES HEALTH & SAFETY BUILDING SECURITY <30% $6B+ 90%+ $12B $80B+ $10T+ of U.S. homes global under-protected building occupants in building damages Global market for the Cost of cybercrime to protected to NFPA residential fire safety believe t
Slide 74: Differentiated Position
73 FIRE & SECURITY DIFFERENTIATED POSITION Total Addressable Market (TAM) in billions Differentiation Residential Fire • Unparalleled installed base FIRE SECURITY • Best-in-class detection tech • Lowest cost manufacturing Carrier #1 Carrier #2 TAM TAM Commercial Fire • Channel loyalty $11B $8B • • D
Slide 75: Growth Strategy
74 FIRE & SECURITY GROWTH STRATEGY Carrier Growth Pillars Grow Core with Innovation Grow in Adjacencies – Grow through Digital & Healthy Buildings & Homes Recurring Services NPD Vitality HB&H Sales Growth rates 2X >6X 2X 2021 2026 2021 2026 Core Digital • ~ 60+ New Product Launches per year • Expand
Slide 76: Healthy, Safe, Sustainable & Intelligent Homes
75 FIRE & SECURITY HEALTHY, SAFE, SUSTAINABLE & INTELLIGENT HOMES How are we winning today? Growth Accelerators Digitized installed Smart home #1 Residential Fire Expanded portfolio + base + integration 400M DEVICES SOLD1 IN 90M HOMES1 Total portfolio sales Share gain = Market expansion ( ↓ Replacem
Slide 77: Healthy, Safe, Sustainable & Intelligent Buildings (Fire)
76 FIRE & SECURITY HEALTHY, SAFE, SUSTAINABLE & INTELLIGENT BUILDINGS (FIRE) How are we winning today? Growth Accelerators Pioneering Healthy Buildings Expanded Lifecycle Innovation Globally Services Carrier Cloud Wireless Fire Alarm Indoor Air Quality #2 Commercial Fire Intelligent Emergency respon
Slide 78: Healthy, Safe, Sustainable & Intelligent Buildings (Access)
77 FIRE & SECURITY HEALTHY, SAFE, SUSTAINABLE & INTELLIGENT BUILDINGS (ACCESS) How are we winning today? Growth Accelerators Software as Occupant Experience #1 Access Software Service + Mobile Credentials + Services EXTENSIVE OPEN Facial Elevator PARTNER PLATFORM Convenient Integrated Recognition Co
Slide 79: Example: Mobile Credentialing
78 FIRE & SECURITY EXAMPLE: MOBILE CREDENTIALING Immense potential for What is it? Progress to date (2019-21) continued growth A secure, unique, Increase penetration personalized digital key on 1 + of installed base your mobile phone to grant <20% today Access Anywhere Anytime 875K → 1M agents + 2 E
Slide 80: Total Building Solutions for Carrier
79 FIRE & SECURITY TOTAL BUILDING SOLUTIONS FOR CARRIER Core Building Systems Building Platforms Solutions (F&S only) Outcomes Intelligent Detection (Fire, IAQ) & Mitigation FIRE Carrier Cloud • Detection • Notification Remote Monitoring • Panel/ Control • Evacuation Healthy Asset Health Monitoring
Slide 81: Driving Sustained Margin Expansion
80 FIRE & SECURITY DRIVING SUSTAINED MARGIN EXPANSION INNOVATION & PRICING OPERATIONAL EXCELLENCE AFTERMARKET & DIGITAL Innovation: margin accretive NPD Productivity: 2-3% gross benefit Aftermarket Growth: ~2x rate of core, through differentiation and value-based higher margin pricing Automation inv
Slide 82: Why Carrier F&S
81 FIRE & SECURITY WHY CARRIER F&S #1 or #2 in every segment with iconic brands Highly profitable segment gaining share through focused investments Global opportunity to increase protection of homes from fire and other hazards Healthy, Safe & Intelligent tailwind adding 1-2 pts of organic growth Mar
Slide 83: Refrigeration - Tim White
FEB 22, INVESTOR DAY 2022 REFRIGERATION Tim White
Slide 84: Why Carrier Refrigeration
83 REFRIGERATION WHY CARRIER REFRIGERATION Cold Chain Leader Slated for MSD-HSD Growth Margin Runway #1 position in key Differentiated sustainability Aftermarket and segments solutions digital portfolio mix shift $35B addressable Growth in emerging cold Commercial refrigeration market chain markets
Slide 85: Refrigeration Overview
84 REFRIGERATION REFRIGERATION OVERVIEW 2 0 2 1 R E S U LT S W H AT W E D O Asia Commercial Aftermarket Pacific Refrigeration $4.1B NET SALES SALES BY SALES SALES SEGMENT MIX BY REGION 12.1% ADJ. OPERATING Americas MARGIN* % Transport Original equipment EMEA COMPREHENSIVE COLD CHAIN SOLUTIONS PORTFO
Slide 86: Macro Trends Supporting Growth
85 REFRIGERATION MACRO TRENDS SUPPORTING GROWTH SUSTAINABILITY EMERGING MARKETS DIGITALIZATION Reducing carbon emissions Cold chain infrastructure Increasing real-time data and development analytics Emerging market transport refrigeration Installed base of active spend and growth outlook cold chain
Slide 87: Differentiation
86 REFRIGERATION DIFFERENTIATION END-TO-END LEADING INNOVATION GLOBAL COLD CHAIN SOLUTIONS AND TECHNOLOGY SCALE Sustainable electric transport refrigeration Largest installed base First to market & largest installed ~1.8M Carrier transport ~50K stores with Carrier base in trailer refrigeration units
Slide 88: Transport: Reducing Cyclicality
87 REFRIGERATION TRANSPORT: REDUCING CYCLICALITY PROGRESSIVE GROWTH ACCELERATORS Global refrigerated North America refrigerated Three sources of sustained, stable growth container unit sales trailer unit sales +HSD to low Aftermarket & Digital, DD growth recurring revenue Parts, service agreements,
Slide 89: eCool: Electric Transport Refrigeration
88 REFRIGERATION eCool: ELECTRIC TRANSPORT REFRIGERATION Trailer Regional/long-haul Regen. First to market / TRU Battery Power Global leader Vector eCool: EMEA (‘20) + APAC (’21) + Americas (‘22) Truck Middle-mile/city-to-city Syberia eCool New product launch Industrial partnerships Light Commercial
Slide 90: Winning with Customers: Sustainability
89 REFRIGERATION WINNING WITH CUSTOMERS: SUSTAINABILITY FIRST AUTONOMOUS TRANSPORT ELECTRIC REFRIGERATION SYSTEM LIFECYCLE REVENUE TO CARRIER 1.5 to 2x increase Total system value Service attachment Software subscriptions Lifec ycle Value: Today Lifec ycle Value: Future Diesel Electric LIFECYC
Slide 91: Commercial Refrigeration
90 REFRIGERATION COMMERCIAL REFRIGERATION FUNDAMENTALS ACCELERATORS Turnkey stationary refrigeration solutions Natural refrigerant provide complete lifecycle coverage CO2 systems PowerCO2OL racks Equipment Aftermarket CO2 refrigeration “Sustainable” systems Warehouse Solutions delivery refrigeration
Slide 92: Digital Solutions
91 REFRIGERATION DIGITAL SOLUTIONS FUNDAMENTALS ACCELERATORS Cloud-based ecosystem for both current and New Lynx products delivering value-added new cold chain customers customer outcomes Refrigerated Lynx road and Equipment Operational Energy and Fleet shipping fleets health and savings emissions u
Slide 93: Aftermarket
92 REFRIGERATION AFTERMARKET Connected + analytics-enabled Lifecycle + outcomes focused “Intelligent” Installed base of equipment / monitoring and Lynx Services and aftermarket software solutions Asset lifecycle visibility Cloud/SaaS Environment Services Service relationship management Remote Advanc
Slide 94: Winning with Customers: Intelligence
93 REFRIGERATION WINNING WITH CUSTOMERS: INTELLIGENCE ADDING INTELLIGENCE AND VALUE ACROSS THE COLD CHAIN COLD CHAIN ~60% improvement in COMPLIANCE food loss reduction for an international fast-food chain $200K+ annual operating cost PRE-TRIP savings opportunity identified INSPECTIONS attributable t
Slide 95: Margin Expansion
94 REFRIGERATION MARGIN EXPANSION Commercial Refrigeration Aftermarket Growth Carrier Excellence Transformation Higher margin service and digital sales Complexity and overhead reduction Automation Asset-light, value-driven retrofits Pricing Lean Turnkey & service process improvements Supply chain re
Slide 96: Why Carrier Refrigeration
95 REFRIGERATION WHY CARRIER REFRIGERATION Cold Chain Leader Slated for MSD-HSD Growth Margin Runway #1 position in key Differentiated sustainability Aftermarket and segments solutions digital portfolio mix shift $35B addressable Growth in emerging cold Commercial refrigeration market chain markets
Slide 97: Financial Update - Patrick Goris
FEB 22, INVESTOR DAY 2022 FINANCIAL UPDATE Patrick Goris
Slide 98: Strong Performance Since Spin
97 FINANCE STRONG PERFORMANCE SINCE SPIN… 2021 CAPITAL TOTAL RESULTS STRUCTURE SHAREHOLDER RETURN • Highest organic* revenue growth • Divested non-core assets • Initiated dividend amongst peers at 15% • ~$3.7B net proceeds • $2B+ share repurchase • 80 bps adjusted operating margin* authorization exp
Slide 99: Value Creation Framework
98 FINANCE VALUE CREATION FRAMEWORK Above- Strong market Margin Tax Capital revenue + expansion + efficiency + free cash + deployment flow growth Re-invest in profitable growth Acquisitions / 6-8% organic >50 ~22% ~100% net share-count revenue growth bps/year ongoing ETR of net income reduction1 Dou
Slide 100: Above-Market Revenue Growth
99 FINANCE RESEARCH & DEVELOPMENT ($M) 2.7% ABOVE-MARKET 2.2% 2.4% REVENUE GROWTH… 401 503 ~540 2019 2021 2022E Expense % of Sales SALESFORCE1 ~5,800 ~5,800 ~4,900 2019 2021 2022E Funded by investments 1. Excludes Chubb
Slide 101: Margin Expansion
100 FINANCE MARGIN EXPANSION • Investments • Productivity • Inflation • Aftermarket mix • Merit increases • Price ~25-30% gross margin + ~$100M / year ~30-35% core earnings conversion (excluding impact of currency and acquisitions) Current Volume leverage Tailwinds Headwinds Medium-term operating ma
Slide 102: Productivity
101 FINANCE PRODUCTIVITY R&D FOCUS AREAS Selling Supply Chain • Material substitution • Low-cost sourcing G&A • Dual sourcing of critical components Factory TARGETED COST CATEGORIES: • Footprint optimization Factory 1 • Automation ~$14B • Carrier Excellence G&A • Organizational streamlining • Shared
Slide 103: Aftermarket Focus Fuels Growth
102 FINANCE AFTERMARKET FOCUS FUELS GROWTH… $7.0B+ KEY TAKE-AWAYS HSD- LDD • Attractive business • Large growth potential $4.5B • Proven playbook already delivering results • High single to low double-digit growth 1 1 2021 2 3 2026+ …at >10 points higher than company average gross margins 1. Exclude
Slide 104: Investments
103 FINANCE INVESTMENTS… PRIORITIES HOW WE MEASURE SUCCESS Accelerate organic growth ✓ Organic growth • R&D ✓ Aftermarket and recurring revenues • Digital capabilities and offerings ✓ Service attachment • Selling resources Productivity ✓ Margin expansion • Operational efficiency ✓ Selling expense as
Slide 105: Tax Efficiency - A Value Driver
104 FINANCE TAX EFFICIENCY - A VALUE DRIVER... 26% 21% ~22% ~22% 2020 2021 2022E 2023E+ Adjusted Effective Tax Rate* …expecting ~22% ongoing adjusted effective tax rate *Includes discrete tax items; see appendix for additional information regarding non-GAAP measures Note: under current tax law, and
Slide 106: Free Cash Flow
105 FINANCE FREE CASH FLOW ~100% KEY MESSAGES • Strong free cash flow generation ~95% (midpoint) • Chubb divestiture and JV structure simplification improve FCF profile • Non-cash pension income eliminated • Reducing JV equity vs. dividend income gap • ~$400M cash tax headwinds 2023- 2026 related to
Slide 107: Working Capital Efficiency Improving
106 FINANCE WORKING CAPITAL EFFICIENCY IMPROVING… FOCUS AREAS 13.6% Accounts payable 12.0% • Consolidating payment runs • Centralized vendor negotiations • Extending terms with vendors Inventory • Supplier consolidation • Increased direct shipments ~$2.5B ~$2.5B • Improved supplier visibility • Risk
Slide 108: Very Attractive Debt Profile
107 FINANCE VERY ATTRACTIVE DEBT PROFILE… KEY MESSAGES ($ Millions) ✓ Targeting Baa2 / BBB investment-grade credit rating 2,000 2,000 2,000 ✓ Net debt / adj. EBITDA ~2.0x 1,500 3.58% 2.72% 2.24% 1,250 ✓ Attractive maturity schedule 750 2.49% 3.38% ✓ Weighted average coupon <3% 2.70% ✓ $750M debt pay
Slide 109: Disciplined Capital Deployment
108 FINANCE DISCIPLINED CAPITAL DEPLOYMENT… KEY MESSAGES • P&L investments funded by productivity Organic growth • Capex ~1.75% of sales • Primary metric: FCF yield > WACC + risk premium Inorganic growth by years 3-5 • Sustainable through the cycle Growing dividend • 30% payout ratio by 2023 vs. ~27
Slide 110: Acquisitions
109 FINANCE ACQUISITIONS FINANCIAL PRIORITIES ASSESSMENT METRICS Enhance sustainability leadership FCF Yield Bolster building and cold chain ecosystems EPS accretive by year 2 Accelerate digital and aftermarket growth Margin accretive Enhance technology differentiation and disruption Expand adjacenc
Slide 111: Value Creation Framework
110 FINANCE VALUE CREATION FRAMEWORK Above- Strong market Margin Tax Capital revenue + expansion + efficiency + free cash + deployment flow growth Re-invest in profitable growth Acquisitions / 6-8% organic >50 ~22% ~100% net share-count revenue growth bps/year ongoing ETR of net income reduction1 Do
Slide 112: Summary
111 FINANCE SUMMARY Differentiated financial returns since spin Value creation framework to drive continued performance Multiple self-help levers Significant capital deployment capacity
Slide 113: Why Carrier
112 INVESTOR DAY WHY CARRIER 1 Secular trends driving increased total addressable market 2 Carrier leading through technology / digital transformation, life-cycle solutions and ESG leadership 3 Rigorous cost reduction to fund investments and improve margins 4 Compelling financial algorithm 5 Strong
Slide 114: Q&A
113 INVESTOR DAY Q&A
Slide 115: Investor Day
FEB 22, 2022 INVESTOR DAY
Slide 116: Appendix
115 INVESTOR DAY APPENDIX …and plenty of opportunity ahead
Slide 117: 2022 Guidance
116 INVESTOR DAY 2022 GUIDANCE Total Company1 Segment Sales (excludes impact of Toshiba) Organic* up HSD HVAC Reported up HSD ~$20B Organic* up M-HSD Refrigeration Organic* up HSD Reported up M-HSD Sales FX ~(1%) Acquisitions ~1% Fire & Security Organic* up M-HSD Reported down ~30% Divestitures ~(10
Slide 118: Use and Definitions of Non-GAAP Financial Measures
117 INVESTOR DAY 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 unde
Slide 119: Carrier 2021 vs 2020 Sales Reconciliation
118 INVESTOR DAY CARRIER 2021 VS 2020 SALES RECONCILIATION (Unaudited) Factors Contributing to Total % Change in Net S ales 2021 vs 2020 General Corporate Expenses and Fire & Eliminations HVAC Refrigeration S ecurity and Other Total Organic 17% 21% 7% 0% 15% FX Translation 1% 3% 4% 0% 2% Acquisition
Slide 120: Segment Adjusted Operating Profit Reconciliation
119 INVESTOR DAY SEGMENT ADJUSTED OPERATING PROFIT RECONCILIATION (Unaudited) (Unaudited) For the Year Ended December 31, 2021 For the Year Ended December 31, 2020 General General Corporate Corporate Expenses and Expenses and Fire & Eliminations Fire & Eliminations (In millions) HVAC Refrigeration S
Slide 121: EPS Reconciliation
120 INVESTOR DAY EPS RECONCILIATION (Unaudited) For the Year Ended December 31, 2021 For the Year Ended December 31, 2020 (In millions, except per share amounts) Reported Adjustments Adjusted Reported Adjustments Adjusted Net sales $ 20,613 $ - $ 20,613 $ 17,456 $ - $ 17,456 Operating profit 2,645 1
Slide 122: Net Debt to Adjusted EBITDA Reconciliation
121 INVESTOR DAY NET DEBT TO ADJUSTED EBITDA RECONCILIATION (Unaudited) For the Year For the Twelve Ended December Months Ended (1) (In millions) 31, 2021 March 31, 2020 Long-term debt $ 9,513 $ 11,029 Current portion of long-term debt 183 218 Less: Cash and cash equivalents 2,987 768 Net debt $ 6,7
Slide 123: Working Capital Reconciliation
122 INVESTOR DAY WORKING CAPITAL RECONCILIATION (Unaudited) December 31, December 31, (In millions) 2021 2019 Accounts receivable, net $ 2,403 $ 2,726 Inventory 1,970 1,332 Contract assets, current 503 622 Accounts payable (2,334) (1,701) Contract liabilities, current (415) (443) Working capital $ 2
Slide 124: Fire & Security Segment Reconciliation
123 INVESTOR DAY FIRE & SECURITY SEGMENT RECONCILIATION (Unaudited) For the Year Ended December 31, 2021 Fire & Fire & Security Security (1) (In millions) (Reported) Chubb (Adjusted) Net Sales $ 5,515 $ (2,159) $ 3,356 Segment operating profit $ 662 $ 133 $ 529 Adjustments to segment operating profi
Slide 125: Free Cash Flow Reconciliation
124 INVESTOR DAY FREE CASH FLOW RECONCILIATION (Unaudited) For the Year Ended December (In millions) 31, 2021 Net cash flows provided by operating activities $ 2,237 Less: Capital expenditures 344 Free cash flow $ 1,893