Carrier Global Corporation · NYSE:CARR
Carrier Global — Q4 2021 Earnings Presentation
30 slides from Carrier Global's earnings presentation, Feb 8, 2022
Slide 1: Q4 2021 Earnings Conference Call
Q4 2021 EARNINGS CONFERENCE CALL February 8, 2022
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: Toshiba Carrier Corporation (TCC) Acquisition
Toshiba Carrier Corporation (TCC) Acquisition Partnership since 1999 Transaction Highlights ~6,000 employees • Carrier acquires substantially all of Toshiba’s 40% 60% economic ownership stake in TCC for ~$900M • Toshiba to retain 5% equity stake in TCC Calendar Year 2021* • Incremental to Carrier CY
Slide 4: Strategic Rationale
Strategic Rationale Fast growing VRF Differentiated Iconic brand and Complementary, cost- segment technologies complementary channel efficient footprint HSD CAGR1 ✓ Strengthens position in electrification and sustainability VRF market size1 ✓ Wide range of efficient heat pump ✓ Complementary channel
Slide 5: Q4 2021 Summary
Q4 2021 Summary Highlights $5,133M Sales Organic* +11% Y/Y Reported +12% Y/Y Orders momentum remains strong; record backlogs Continued inflationary pressure partially offset by higher- Adjusted Operating $517M than-expected price realization Profit* +14% Y/Y Traction on strategic priorities and afte
Slide 6: 2021 – Strong Financial Performance
2021 – Strong Financial Performance 2/9/21 10/28/21 FY 2021 Financial Highlights Guidance Guidance Results Organic* Organic* Organic* • Portfolio-wide share gains contributed to strong Sales organic sales + 4-6% Y/Y +~13% Y/Y +15% Y/Y • 80 bps of adjusted operating margin expansion Adjusted Op. Marg
Slide 7: Progress on Key Initiatives in 2021
Progress on Key Initiatives in 2021 ESG and Intelligent Healthy Sustainability ✓ Ultra-low GWP heat pumps ✓ ~$500M healthy buildings orders; ✓ Launched innovative Abound and decarbonize E.ON’s London ~$700M pipeline Lynx platforms customers by 50% ✓ Over 42K OptiClean units sold to- ✓ Sensitech and
Slide 8: 2022 Guidance
2022 Guidance 2022 Guidance** (excluding impact of TCC Key Focus Areas acquisition) ~$20B • Accelerate differentiated technical / digital Organic* up HSD offerings Sales FX ~(1%) Acquisitions ~1% Divestitures ~(10%) • ESG and sustainability leadership • Double-digit aftermarket growth Adjusted Opera
Slide 9: Q4 2021 Results
Q4 2021 Results Q4 2021 Q4 2020 Y/Y Sales $5,133M $4,594M 12% Organic sales* 11% Acquisitions 2% FX (1)% Adjusted operating profit* $517M $453M 14% Adjusted operating margin* 10.1% 9.9% 20 bps Adjusted effective tax rate* 13.5% 26.3% Adjusted EPS* $0.44 $0.31 Free cash flow* $775M $38M *See appendix
Slide 10: Q4 2021 HVAC Results
Q4 2021 HVAC Results Q4 2021 Y/Y Highlights NA residential HVAC strength continues; field inventory Sales $2,730M 17% levels up in-line with sell-through Organic sales* 14% Acquisitions 3% Margins impacted by acquisitions and price/cost; FX 0% price/cost slightly positive Adjusted operating profit*
Slide 11: Q4 2021 Refrigeration Results
Q4 2021 Refrigeration Results Q4 2021 Y/Y Highlights Global truck/trailer and container sales both up ~30% Sales $1,090M 15% Organic sales* 17% FX (2)% Fully electric trailer units operational in 10 countries Adjusted operating profit* $125M 14% Underlying demand for transport remained strong; order
Slide 12: Q4 2021 Fire & Security Results
Q4 2021 Fire & Security Results Q4 2021 Y/Y Highlights Continued double-digit order momentum in Products; Sales $1,431M 2% strong backlog entering 2022 Organic sales* 3% FX (1)% Improved price realization, but price/cost still negative Adjusted operating profit* $199M 7% Adjusted operating margin* 1
Slide 13: Organic Order Trends
Organic Order Trends Orders by Key Business Line Q4 2021 Orders by Geography** Q4 2021 (Y/Y) (Y/Y) HVAC* 30% - 35% Americas 25% - 30% Residential & Light Commercial >50% Commercial HVAC* 15% - 20% EMEA 10% - 15% Refrigeration ~(5%) Transport Refrigeration1 (10%) - (5%) Commercial Refrigeration Flatt
Slide 14: Q4 2021 Adjusted EPS Bridge
Q4 2021 Adjusted EPS* Bridge $0.07 $0.06 $0.01 ($0.01) $0.44 $0.31 2020 Adjusted EPS Operational Acquisitions Interest expense, net Tax rate 2021 Adjusted EPS 13 *See “Use and Definitions of Non-GAAP Financial Measures” for additional information regarding non-GAAP measures
Slide 15: 2022 Guidance
2022 Guidance Total Company** Segment Sales (excluding impact of TCC acquisition) Organic* up HSD HVAC ~$20B Reported up HSD Organic* up HSD Sales FX ~(1%) Acquisitions ~1% Organic* up M-HSD Refrigeration Divestitures ~(10%) Reported up M-HSD Organic* up M-HSD Fire & Security Reported down ~30% Adju
Slide 16: 2022 Adjusted EPS Guidance Bridge
2022 Adjusted EPS* Guidance Bridge ~$0.24 ~$0.05 ~($0.01) ~($0.05) ~($0.24) Operational ~($0.18) 0.04 – 0.05 Non-cash pension ~($0.06) $2.26 ~$2.20 ~$2.25 ~$2.02 2021 Adjusted EPS Absence of Chubb 2021 Adjusted EPS Operational FX / Interest expense, Tax rate Share count 2022 Adjusted EPS without Chu
Slide 17: Cost Reduction
Cost Reduction 2021 Carrier 700 2022 Productivity Guidance Gross Material Carrier 700 Gross Productivity Productivity inflation* Savings Supply Chain + - - Supply Chain + Factory + N/A + Factory + G&A Savings + N/A + G&A Savings + Total ~$300M ~($300M) ~$0M Total ~$300M *Does not capture all cost in
Slide 18: Capital Allocation
Capital Allocation 2022 Capital Deployment Organic growth Cash as of 12/31/21 $3.0B Gross cash from Chubb sale $2.9B 2022 FCF guidance* ~$1.65B Inorganic growth Cash available to deploy ~$7.5B Debt repayment ~$0.75B Growing dividend Pending Toshiba acquisition ~$0.9B Dividends paid ~$0.5B Share repu
Slide 19: Summary
Summary Strong 2021 performance Strategic investments and performance position us well for 2022 Balance sheet enables us to play offense on capital deployment Well-positioned to drive healthy, safe, sustainable and intelligent building and cold chain solutions 18
Slide 20: Appendix
APPENDIX
Slide 21: 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 22: Additional Items
Additional Items 2022 guidance (excluding impact of TCC acquisition) Shares outstanding (diluted) ~871M Corporate expenses / eliminations $210M - $230M Adjusted interest expense, net* $275M - $285M Adjusted effective tax rate* ~22% Non-service pension income / (expense) ($10M) – ($5M) Capital expend
Slide 23: 2021 Adjusted EPS Bridge
2021 Adjusted EPS* Bridge $0.16 $0.45 $0.03 ($0.03) ($0.01) $2.26 $1.66 2020 Adjusted EPS Operational Acquisitions FX Tax rate Share count 2021 Adjusted EPS 22 *See “Use and Definitions of Non-GAAP Financial Measures” for additional information regarding non-GAAP measures
Slide 24: Carrier 2021 vs 2020 Sales Reconciliation
Carrier 2021 vs 2020 Sales Reconciliation Y/Y % Three Months Ended December 31, 2021 Compared with Three Months Ended December 31, 2020 (Unaudited) Factors Contributing to Total % change in Net Sales FX Acquisitions / Organic Translation Divestitures, net Other Total HVAC 14% —% 3% —% 17% Refrigerat
Slide 25: Segment Adjusted Operating Profit Reconciliation
Segment Adjusted Operating Profit Reconciliation (Unaudited) For the Three Months Ended For the Year Ended December 31, December 31, (In millions - Income (Expense)) 2021 2020 2021 2020 HVAC Net sales $ 2,730 $ 2,336 $ 11,390 $ 9,478 Operating profit $ 227 $ 1,098 $ 1,738 $ 2,462 Restructuring (15)
Slide 26: 2021 EPS Reconciliation
2021 EPS Reconciliation (Unaudited) For the Three Months Ended December 31, 2021 For the Year Ended December 31, 2021 (In millions, except per share amounts) Reported Adjustments Adjusted Reported Adjustments Adjusted Net sales $ 5,133 $ — $ 5,133 $ 20,613 $ — $ 20,613 Operating profit $ 463 54 a $
Slide 27: 2020 EPS Reconciliation
2020 EPS Reconciliation (Unaudited) For the Three Months Ended December 31, 2020 For the Year Ended December 31, 2020 (In millions, except per share amounts) Reported Adjustments Adjusted Reported Adjustments Adjusted Net sales $ 4,594 $ — $ 4,594 $ 17,456 $ — $ 17,456 Operating profit $ 1,245 (792)
Slide 28: Segment Net Sales and Operating Profit
Segment Net Sales and Operating Profit (Unaudited) For the Three Months Ended December 31, For the Year Ended December 31, 2021 2020 2021 2020 (In millions) Reported Adjusted Reported Adjusted Reported Adjusted Reported Adjusted Net sales HVAC $ 2,730 $ 2,730 $ 2,336 $ 2,336 $ 11,390 $ 11,390 $ 9,47
Slide 29: Free Cash Flow Reconciliation
Free Cash Flow Reconciliation (Unaudited) Q1 Q2 Q3 Q4 FY Q1 Q2 Q3 Q4 FY (In millions) 2020 2020 2020 2020 2020 2021 2021 2021 2021 2021 Net cash flows provided by operating activities $ 47 $ 509 $ 937 $ 199 $ 1,692 $ 184 $ 561 $ 579 $ 913 $ 2,237 Less: Capital expenditures 48 46 57 161 312 53 79 74
Slide 30: Net Debt Reconciliation
Net Debt Reconciliation (Unaudited) As of December 31, (In millions) 2021 (2) 2020 (1) Long-term debt $ 9,513 $ 10,036 Current portion of long-term debt 183 191 Less: Cash and cash equivalents 2,987 3,115 Net debt $ 6,709 $ 7,112 (1) On April 1 and April 2, 2020, Carrier received cash contributions