Carrier Global Corporation · NYSE:CARR
Carrier Global — Q3 2021 Earnings Presentation
26 slides from Carrier Global's earnings presentation, Oct 28, 2021
Slide 1: Q3 2021 Earnings Conference Call
Q3 2021 EARNINGS CONFERENCE CALL October 28, 2021
Slide 2: Cautionary Statement
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 pla
Slide 3: Q3 2021 Summary
Q3 2021 Summary Highlights $5,341M Sales Reported +7% Y/Y Organic* +4% Y/Y Strong demand driving backlog growth Addressing unprecedented supply chain challenges Adjusted Operating $858M Profit* (1)% Y/Y Double-digit aftermarket growth Free Cash Flow* $505M M&A strategy progressing well Raising full-
Slide 4: Supply Chain
Supply Chain CHALLENGES TACTICAL MITIGATION • Metal blocking • Proactive attendance and retention management Commodity pricing and inflation • Embedded resources at suppliers • Freight contracts and advanced booking • 24-hour war rooms • Increasing forecast windows Electronics and part shortages STR
Slide 5: Progress on Key Growth Initiatives
Progress on Key Growth Initiatives Healthy Safe Sustainable Intelligent Carrier CarrierRental RentalSystems Systems K-12 healthy building wins Kidde Carrier Transicold Abound ✓ Northern California Mantecha ✓ Launched MOON Smart Home ✓ Equipped Pro à Pro’s first all ✓ Implemented at Emory School Dist
Slide 6: Aftermarket Playbook Being Effectively Implemented
Aftermarket Playbook Being Effectively Implemented Results Connected devices / services ✓ Substantial increase in connected equipment ✓ EcoEnergy’s big data / AI driven platform awarded Digital Remote monitoring / predictive analytics Overall IoT Company of the Year1 ✓ On track to add 3,500 CCR stor
Slide 7: Inorganic Growth
Inorganic Growth HVAC Fire & Security Fire & Security ✓ Leader in data center infrastructure ✓ Leader in digital real estate solutions ✓ Specializes in advanced residential management software alarm systems ✓ Complements Supra to form a ✓ Complements ALC, Carrier’s best-in- comprehensive real estate
Slide 8: Q3 2021 Results
Q3 2021 Results Q3 2021 Q3 2020 Y/Y Sales $5,341M $5,002M 7% Organic sales* 4% Acquisition 2% FX 1% Adjusted operating profit* $858M $867M (1)% Adjusted operating margin* 16.1% 17.3% (120) bps Adjusted effective tax rate* 19.7% 24.9% (520) bps Adjusted EPS* $0.71 $0.67 $0.04 Free cash flow* $505M $8
Slide 9: Q3 2021 HVAC Results
Q3 2021 HVAC Results Q3 2021 Y/Y Highlights Sales $3,054M 6% Better than expected 2% sales decline in NA residential HVAC; balanced field inventory levels Organic sales* 2% Acquisitions 3% FX 1% 14% sales growth in light commercial Adjusted operating profit* $583M (3)% Adjusted operating margin* 19.
Slide 10: Q3 2021 Refrigeration Results
Q3 2021 Refrigeration Results Q3 2021 Y/Y Highlights Sales $1,011M 15% Transport sales up 24% Organic sales* 14% FX 1% Sensitech and aftermarket up double-digits Adjusted operating profit* $121M 19% Adjusted operating margin* 12.0% 40 bps Healthy backlog Carrier sponsored and participated in the ini
Slide 11: Q3 2021 Fire & Security Results
Q3 2021 Fire & Security Results Q3 2021 Y/Y Highlights Sales $1,377M 4% Growth in commercial fire, access solutions, and Organic sales* 2% industrial fire FX 2% Adjusted operating profit* $198M (3)% Products grew 3% despite supply chain challenges Adjusted operating margin* 14.4% (100) bps Marioff H
Slide 12: Organic Order Trends
Organic Order Trends Orders by Key Business Line Q3 2021 Orders by Geography Q3 2021 (Y/Y) (Y/Y) HVAC* 5% - 10% Americas* ~5% Residential & Light Commercial 0% - 5% Commercial HVAC* 10% - 15% EMEA ~15% Refrigeration 15% - 20% Transport Refrigeration >15% Commercial Refrigeration 15% - 20% China (5%)
Slide 13: Updated 2021 Outlook
Updated 2021 Outlook Updated (Oct 28th) Prior (Jul 29th) Up ~16% Y/Y Up 14% - 16% Y/Y Sales Organic* +~13% Y/Y Organic* +10% - 12% Y/Y Acquisitions +1% Y/Y Acquisitions +1% Y/Y FX +2% Y/Y FX +3% Y/Y Adjusted Operating Margin* >13.5% >13.5% Adjusted EPS* ~$2.20 $2.10 - $2.20 Adjusted Effective Tax Ra
Slide 14: 2021 Adjusted EPS Outlook Bridge
2021 Adjusted EPS* Outlook Bridge ~$0.05 ~$0.04 ~($0.04) Price ~$0.06 Cost ~($0.10) ~$2.20 $2.15 2021 Adjusted EPS Volume / other Price / cost Tax rate 2021 Adjusted EPS (prior guidance midpoint) (updated guidance) Carrier 700 outlook now ~$75M; expecting Q4 price/cost to be neutral 13 *See appendix
Slide 15: Summary
Summary Continue to deliver on commitments in the face of supply chain challenges Investing in, and driving organic growth tied to our strategic roadmap Orders and backlog position us well for continued growth in Q4 and 2022 Executing on our disciplined M&A strategy Well-positioned to drive healthy,
Slide 16: Appendix
APPENDIX
Slide 17: Use and Definitions of Non-GAAP Financial Measures
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 certa
Slide 18: Additional Items
Additional Items Updated outlook Prior outlook Shares outstanding (diluted) ~890M ~890M Corporate expenses / eliminations ~$220M $220M - $240M Adjusted interest expense, net* ~$293M $285M - $290M Adjusted effective tax rate* ~22% ~24% Non-service pension benefit ~$68M ~$70M Capital expenditures ~$37
Slide 19: Q3 2021 Adjusted EPS Bridge
Q3 2021 Adjusted EPS* Bridge $0.05 $0.01 ($0.01) ($0.01) $0.71 $0.67 2020 Adjusted EPS Operational Interest Tax Rate Share Count 2021 Adjusted EPS 18 *See “Use and Definitions of Non-GAAP Financial Measures” for additional information regarding non-GAAP measures
Slide 20: Carrier Q3 2021 vs 2020 Sales Reconciliation
Carrier Q3 2021 vs 2020 Sales Reconciliation Y/Y % Three Months Ended September 30, 2021 Compared with Three Months Ended September 30, 2020 (Unaudited) Factors Contributing to Total % change in Net Sales Acquisitions / Organic FX Translation Divestitures, net Other Total HVAC 2 % 1 % 3 % — % 6 % Re
Slide 21: Segment Adjusted Operating Profit Reconciliation
Segment Adjusted Operating Profit Reconciliation (Unaudited) For the Three Months Ended For the Nine Months Ended September 30, September 30, (dollars in millions - Income (Expense)) 2021 2020 2021 2020 HVAC Net sales $ 3,054 $ 2,892 $ 8,660 $ 7,142 Operating profit $ 573 $ 839 $ 1,511 $ 1,364 Restr
Slide 22: Q3 2021 EPS Reconciliation
Q3 2021 EPS Reconciliation (Unaudited) For the Three Months Ended September 30, 2021 For the Nine Months Ended September 30, 2021 (In millions) Reported Adjustments Adjusted Reported Adjustments Adjusted Net sales $ 5,341 $ — $ 5,341 $ 15,480 $ — $ 15,480 Operating profit 828 30 a 858 2,182 105 a 2,
Slide 23: Q3 2020 EPS Reconciliation
Q3 2020 EPS Reconciliation (Unaudited) For the Three Months Ended September 30, 2020 For the Nine Months Ended September 30, 2020 (In millions) Reported Adjustments Adjusted Reported Adjustments Adjusted Net sales $ 5,002 $ — $ 5,002 $ 12,862 $ — $ 12,862 Operating profit 1,081 (214) a 867 1,838 (59
Slide 24: Segment Net Sales and Operating Profit
Segment Net Sales and Operating Profit (Unaudited) For the Three Months Ended September 30, For the Nine Months Ended September 30, 2021 2020 2021 2020 (In millions) Reported Adjusted Reported Adjusted Reported Adjusted Reported Adjusted Net sales HVAC $ 3,054 $ 3,054 $ 2,892 $ 2,892 $ 8,660 $ 8,660
Slide 25: Free Cash Flow Reconciliation
Free Cash Flow Reconciliation (Unaudited) Q1 Q2 Q3 Q4 FY Q1 Q2 Q3 (In millions) 2020 2020 2020 2020 2020 2021 2021 2021 Net cash flows provided by operating activities $ 47 $ 509 $ 937 199 $ 1,692 $ 184 $ 561 $ 579 Less: Capital expenditures 48 46 57 161 312 53 79 74 Free cash flow $ (1) $ 463 $ 880
Slide 26: Carrier Q3 2021 vs 2019 Organic Sales Reconciliation
Carrier Q3 2021 vs 2019 Organic Sales Reconciliation Three Months Ended September 30, 2021 Compared with Three Months Ended September 30, 2019 (Unaudited) Factors Contributing to Total % change in Net Sales Acquisitions / Organic FX Translation Divestitures, net Other Total Consolidated 7% 2 % 2 % —