Carrier Global Corporation · NYSE:CARR
Carrier Global — Q3 2022 Earnings Presentation
29 slides from Carrier Global's earnings presentation, Oct 27, 2022
Slide 1: Q3 2022 Earnings Conference Call
Q3 2022 EARNINGS CONFERENCE CALL October 27, 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: Q3 2022 Summary
Q3 2022 Summary Highlights Sales $5,451M Organic* +8% Y/Y Strong aftermarket growth Price/cost positive Adjusted Operating $861M Supply chain improvements later than anticipated Profit* Flattish Y/Y Backlog remains strong; up double-digits Y/Y Successfully closed Toshiba Carrier Corp. acquisition Fr
Slide 4: Value Creation Framework
Value Creation Framework FOCUS AREAS DRIVERS Above-market organic growth • Secular trends: Health / wellness, sustainability, digitalization, and growing middle class • Innovation and differentiation • Aftermarket Margin expansion • Price to at least offset inflation • 2-3% gross productivity of tot
Slide 5: Secular Trends Driving Sustained Growth
Secular Trends Driving Sustained Growth Sustainability / ESG Health / Wellness Digitalization Heat Disruptive Grid connectivity Electrification Advanced Multi-sensing & Abound & Lynx Automation, Controls Pumps cooling & telematics & hydrogen IAQ Sensors Sensor Fusion & Integration ✓ N.A. Resi heat p
Slide 6: Aftermarket and Recurring Revenues
Aftermarket and Recurring Revenues Aftermarket Sales Q3 Highlights Parts ✓ Double-digit growth +DD Capture ✓ New National Accounts continue to be added to Breeze Platform ~$7.0B+ Service ✓ HSD sales growth; double-digit growth YTD Coverage ✓ On-track for 70K chillers under BluEdge contract, 40%+ att
Slide 7: 2022 Adjusted EPS Performance
2022 Adjusted EPS* Performance Strong 2022 Performance Entering 2023 With Proven Playbook ✓ Secular trends $2.35 $2.35 $2.30 Top line ✓ Strong backlog $2.30 ✓ Aftermarket growth $2.25 $2.20 ✓ Productivity Bottom line ✓ Price / cost positive ✓ Free cash flow ✓ Organic and inorganic growth Capital ✓ D
Slide 8: Q3 2022 Results
Q3 2022 Results Q3 2022 Q3 2021 Y/Y Sales $5,451M $5,341M 2% Organic sales* 8% Acquisitions / divestitures, net (2%) FX (4%) Adjusted operating profit* $861M $865M Flattish Adjusted operating margin* 15.8% 16.2% (40 bps) Adjusted effective tax rate* 23.0% 19.8% Adjusted EPS* $0.70 $0.71 Free cash fl
Slide 9: Q3 2022 HVAC Results
Q3 2022 HVAC Results Q3 2022 Y/Y Highlights HSD sales growth in NA residential HVAC Sales $3,734M 22% Organic sales* 13% Light Commercial grew over 20% Acquisitions / divestitures, net 12% FX (3%) Commercial HVAC aftermarket up double-digits Y/Y Adjusted operating profit* $624M 6% Commercial HVAC sa
Slide 10: Q3 2022 Refrigeration Results
Q3 2022 Refrigeration Results Q3 2022 Y/Y Highlights North America truck/trailer sales up high-teens Y/Y and Sales $923M (9%) orders almost tripled Organic sales* (1%) FX (8%) Container sales and orders down Y/Y Adjusted operating profit* $118M (2%) Sensitech sales up double-digits Adjusted operatin
Slide 11: Q3 2022 Fire & Security Results
Q3 2022 Fire & Security Results Q3 2022 Y/Y Highlights Sales $905M (34%) Double digit sales growth in Residential Organic sales* 5% and Industrial Fire Acquisitions / divestitures, net (36%) FX (3%) Commercial Fire Americas sales growth up 20% Sales excluding Chubb** 6% Strong sales and orders growt
Slide 12: Organic Order Trends
Organic Order Trends Orders by Key Business Line Q3 2022 Orders by Geography Q3 2022 (Y/Y) (Y/Y) HVAC* 0% - 5% Americas* ~10% Residential & Light Commercial (10% - 5%) Commercial HVAC* 15% - 20% EMEA ~(10%) Refrigeration 5% - 10% Transport Refrigeration ~25% Commercial Refrigeration ~(25%) China 0%
Slide 13: Updated 2022 Guidance
Updated 2022 Guidance Prior Guidance Updated Guidance** ~$20.8B ~$20.4B Sales Organic* up HSD Organic* up HSD FX ~(3%) FX ~(4%) Acq / Div, net ~(5%) Acq / Div, net ~(5%) Adjusted Operating Margin* Up ~40 bps Up ~60 bps Adjusted EPS* $2.25 - $2.35 $2.30 - $2.35 Free Cash Flow*1 1Includes ~$200M in ta
Slide 14: Summary
Summary • Strong year-to-date performance; narrowing full-year earnings outlook to the high-end • Continued traction on technology differentiation and aftermarket growth • Backlog up double digits and extends into 2023 • Additional share repurchase authorization in support of balanced capital alloca
Slide 15: Appendix
APPENDIX
Slide 16: 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 17: Additional Items
Additional Items Updated guidance Prior guidance Shares outstanding (diluted) ~860M ~860M Corporate expenses / eliminations ~$190M $200M - $220M** Adjusted interest expense, net* ~$250M $245M - $255M Adjusted effective tax rate* ~22% ~22% Non-service pension income / (expense) ~($5M) ($10M) – ($5M)*
Slide 18: Q3 2022 Adjusted EPS Bridge
Q3 2022 Adjusted EPS* Bridge $0.02 $0.00 $0.03 ($0.01) ~($0.05) Share count $0.03 Tax rate ($0.03) $0.71 $0.70 ~$0.66 2021 Adjusted EPS Divestitures Operational TCC FX Other 2022 Adjusted EPS 17 *See “Use and Definitions of Non-GAAP Financial Measures” for additional information regarding non-GAAP m
Slide 19: Carrier Q3 2022 vs 2021 Sales Reconciliation
Carrier Q3 2022 vs 2021 Sales Reconciliation Y/Y % Three Months Ended September 30, 2022 Compared with Three Months Ended September 30, 2021 (Unaudited) Factors Contributing to Total % change in Net Sales FX Acquisitions / Organic Translation Divestitures, net Other Total HVAC 13 % (3) % 12 % — % 22
Slide 20: 2022 Adjusted Operating Profit Reconciliation
2022 Adjusted Operating Profit Reconciliation (Unaudited) Three Months Ended September 30, 2022 General Fire & Eliminations Corporate (In millions) HVAC Refrigeration Security and Other Expenses Carrier Net sales $ 3,734 $ 923 $ 905 $ (111) $ — $ 5,451 Segment operating profit $ 1,314 $ 116 $ 142 $
Slide 21: 2021 Adjusted Operating Profit Reconciliation
2021 Adjusted Operating Profit Reconciliation (Unaudited) Three Months Ended September 30, 2021 General Fire & Eliminations Corporate (In millions) HVAC Refrigeration Security and Other Expenses Carrier Net sales $ 3,054 $ 1,011 $ 1,377 $ (101) $ — $ 5,341 Segment operating profit $ 573 $ 119 $ 182
Slide 22: 2022 Adjusted Operating Profit Reconciliation
2022 Adjusted Operating Profit Reconciliation (Unaudited) Nine Months Ended September 30, 2022 General Fire & Eliminations Corporate (In millions) HVAC Refrigeration Security and Other Expenses Carrier Net sales $ 10,092 $ 2,940 $ 2,610 $ (326) $ — $ 15,316 Segment operating profit $ 2,369 $ 370 $ 1
Slide 23: 2021 Adjusted Operating Profit Reconciliation
2021 Adjusted Operating Profit Reconciliation (Unaudited) Nine Months Ended September 30, 2021 General Fire & Eliminations Corporate (In millions) HVAC Refrigeration Security and Other Expenses Carrier Net sales $ 8,660 $ 3,037 $ 4,084 $ (301) $ — $ 15,480 Segment operating profit $ 1,511 $ 369 $ 48
Slide 24: Q3 2022 EPS Reconciliation
Q3 2022 EPS Reconciliation (Unaudited) Three Months Ended September 30, 2022 Nine Months Ended September 30, 2022 (In millions, except per share amounts) Reported Adjustments Adjusted Reported Adjustments Adjusted Net sales $ 5,451 $ — $ 5,451 $ 15,316 $ — $ 15,316 Operating profit $ 1,526 (665) a $
Slide 25: Q3 2021 EPS Reconciliation
Q3 2021 EPS Reconciliation (Unaudited) Three Months Ended September 30, 2021 Nine Months Ended September 30, 2021 (In millions, except per share amounts) Reported Adjustments Adjusted Reported Adjustments Adjusted Net sales $ 5,341 $ — $ 5,341 $ 15,480 $ — $ 15,480 Operating profit $ 828 37 a $ 865
Slide 26: Free Cash Flow Reconciliation
Free Cash Flow Reconciliation (Unaudited) Q1 Q2 Q3 Q4 FY Q1 Q2 Q3 (In millions) 2021 2021 2021 2021 2021 2022 2022 2022 Net cash flows provided by (used in) operating activities $ 184 $ 561 $ 579 $ 913 $ 2,237 $ (202) $ 32 $ 790 Less: Capital expenditures 53 79 74 138 344 56 66 91 Free cash flow $ 1
Slide 27: Net Debt Reconciliation
Net Debt Reconciliation (Unaudited) (In millions) September 30, 2022 December 31, 2021 Long-term debt $ 8,670 $ 9,513 Current portion of long-term debt 219 183 Less: Cash and cash equivalents 2,985 2,987 Net debt $ 5,904 $ 6,709 26 See “Use and Definitions of Non-GAAP Financial Measures” for additio
Slide 28: Net Sales Excluding Chubb Reconciliation
Net Sales Excluding Chubb Reconciliation Y/Y % (Unaudited) Three Months Ended Nine Months Ended September 30, 2021 September 30, 2021 Fire and Fire and Carrier Security Carrier Security Net Sales: Reported $ 5,341 $ 1,377 $ 15,480 $ 4,084 Chubb (520) (520) (1,622) (1,622) Net sales excluding impact
Slide 29: Amortization of Acquired Intangibles
Amortization of Acquired Intangibles (Unaudited) Q1 Q2 Q3 Q4 FY Q1 Q2 Q3 (In millions) 2021 2021 2021 2021 2021 2022 2022 2022 HVAC $ — $ 4 $ 7 $ 4 $ 15 $ 4 $ 4 $ 16 Fire & Security — — — — — 1 1 1 Total Carrier — 4 7 4 15 5 5 17 Associated tax effect — (1) (2) (1) (4) (1) (1) (7) Net impact to adju