Carrier Global Corporation · NYSE:CARR
Carrier Global — Q1 2022 Earnings Presentation
28 slides from Carrier Global's earnings presentation, Apr 28, 2022
Slide 1: Q1 2022 Earnings Conference Call
Q1 2022 EARNINGS CONFERENCE CALL April 28, 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: Q1 2022 Summary
Q1 2022 Summary Highlights $4,654M Sales Organic* +10% Y/Y Reported (1%) Y/Y Growth and demand remain strong; backlog up ~30% Y/Y Adjusted Operating $650M Sales excluding Chubb up 12% Y/Y** Profit* +7% Y/Y Price/cost neutral, better than expected Free Cash Flow* ($258M) Supply chain challenges drivi
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 to fun
Slide 5: Secular Trends Drive Sustained Growth
Secular Trends Drive Sustained Growth Health / Wellness Sustainability / ESG Digitalization Growing Middle Class ✓ Q1 healthy building orders ✓ CORTIX solution wins 2022 AI ✓ Abound: Key wins spanned ✓ Global residential fire Q1 sales $125M; pipeline $850M (up 20% Excellence Award from Business vert
Slide 6: Accelerate Core Growth Through Innovation and Differentiation
Accelerate Core Growth Through Innovation and Differentiation New Product Introductions Robust Development Pipeline ✓ On track for more than 125 new product introductions ✓ Healthy, safe, sustainable and intelligent focused in 2022 (21 released in Q1) ✓ Early-stage disruptive studies and partnership
Slide 7: Aftermarket and Recurring Revenues
Aftermarket and Recurring Revenues Aftermarket Sales Growth Q1 Highlights $7.0B+ Q1 Aftermarket up HSD Y/Y ✓ Double-digit growth despite supply chain challenges Parts ✓ Breeze platform launched to national accounts • “Healthy” Capture upgrades • Zero - carbon ✓ Strong upgrades traction in F&S and Re
Slide 8: Margin Expansion
Margin Expansion • Improved Q1 margins by 110 bps • Better-than-expected price / cost • Gross productivity on track for ~$300M in 2022 • Added an additional 100K factory automation hours in Q1; targeting 6 million hours by 2026 • On track to increase dual sourcing of critical components to over 40%
Slide 9: Q1 2022 Results
Q1 2022 Results Q1 2022 Q1 2021 Y/Y Sales $4,654M $4,699M (1%) Organic sales* 10% Acquisitions / divestitures, net (10%) FX (1%) Sales excluding Chubb** 12% Adjusted operating profit* $650M $608M 7% Adjusted operating margin* 14.0% 12.9% 110 bps Adjusted effective tax rate* 16.0% 21.1% Adjusted EPS*
Slide 10: Q1 2022 HVAC Results
Q1 2022 HVAC Results Q1 2022 Y/Y Highlights Sales $2,970M 19% Over 20% sales growth in NA residential HVAC; both movement and splits/furnaces field inventories up LSD Organic sales* 18% Acq / div, net 3% FX (2%) Over 30% sales growth in light commercial Adjusted operating profit* $474M 28% Global ap
Slide 11: Q1 2022 Refrigeration Results
Q1 2022 Refrigeration Results Q1 2022 Y/Y Highlights Sales $976M (3%) Container down as expected vs. a record prior year Organic sales* 1% FX (4%) North America truck/trailer backlog up double-digits sequentially vs. 4Q21 Adjusted operating profit* $112M (13%) Commercial refrigeration up MSD Adjuste
Slide 12: Q1 2022 Fire & Security Results
Q1 2022 Fire & Security Results Q1 2022 Y/Y Highlights Sales $818M (37%) Double-digit order growth across the portfolio Organic sales* 4% Acq / div, net (40%) FX (1%) Commercial Fire Americas and Industrial Fire up double digits Sales excluding Chubb** 8% Adjusted operating profit* $116M (29%) Resid
Slide 13: Organic Order Trends
Organic Order Trends Orders by Key Business Line Q1 2022 Orders by Geography Q1 2022 (Y/Y) (Y/Y) HVAC* 10% - 15% Americas* 5% - 10% Residential & Light Commercial ~10% Commercial HVAC* 15% - 20% EMEA 10% - 15% Refrigeration Flattish Transport Refrigeration (5%) – 0% Commercial Refrigeration 5% - 10%
Slide 14: Disciplined Capital Allocation
Disciplined Capital Allocation Priorities Q1 Highlights 1 ORGANIC GROWTH $2.9B cash proceeds from Chubb sale 2 INORGANIC GROWTH $741M of shares repurchased ~$830M authorization remaining 3 GROWING DIVIDEND Repurchased $1.15B of notes Expect to issue ~$400M Yen-denominated debt to fund TCC acquisitio
Slide 15: 2022 Guidance
2022 Guidance 2022 Outlook** (excluding the pending Toshiba Carrier Corp. acquisition) ~$20B Organic* up HSD Sales FX ~(1%) Acquisitions ~1% Divestitures ~(10%) Adjusted Operating Margin* Up ~75 bps Adjusted EPS* $2.20 - $2.30 Free Cash Flow* ~$1.65B Includes ~$200M in tax payments on Chubb gain Str
Slide 16: Summary
Summary Strong start to the year Secular trends and backlog position company for continued strong growth Aggressive price / cost actions and execution driving margin expansion Toshiba remains on track to close by end of Q3; capacity for further capital deployment Leadership in healthy, safe, sustain
Slide 17: Appendix
APPENDIX
Slide 18: 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 19: Additional Items
Additional Items Updated guidance Prior guidance Shares outstanding (diluted) ~865M ~871M Corporate expenses / eliminations $210M - $230M $210M - $230M Adjusted interest expense, net* $270M - $280M $275M - $285M Adjusted effective tax rate* ~22% ~22% Non-service pension income / (expense) ($10M) – (
Slide 20: Q1 2022 Adjusted EPS Bridge
Q1 2022 Adjusted EPS* Bridge $0.03 $0.01 $0.09 ($0.01) ~($0.06) $0.54 $0.48 ~$0.42 2021 Adjusted EPS Divestitures Operational FX Tax rate Share count 2022 Adjusted EPS 19 *See “Use and Definitions of Non-GAAP Financial Measures” for additional information regarding non-GAAP measures
Slide 21: Carrier Q1 2022 vs 2021 Sales Reconciliation
Carrier Q1 2022 vs 2021 Sales Reconciliation Y/Y % For the Three Months Ended March 31, 2022 Compared with the Three Months Ended March 31, 2021 (Unaudited) Factors Contributing to Total % change in Net Sales FX Acquisitions / Organic Translation Divestitures, net Other Total HVAC 18 % (2) % 3 % — %
Slide 22: 2022 Adjusted Operating Profit Reconciliation
2022 Adjusted Operating Profit Reconciliation (Unaudited) For the Three Months Ended March 31, 2022 General Fire & Eliminations Corporate (In millions) HVAC Refrigeration Security and Other Expenses Carrier Net sales $ 2,970 $ 976 $ 818 $ (110) $ — $ 4,654 Segment operating profit $ 470 $ 107 $ 1,21
Slide 23: 2021 Adjusted Operating Profit Reconciliation
2021 Adjusted Operating Profit Reconciliation (Unaudited) For the Three Months Ended March 31, 2021 General Fire & Eliminations Corporate (In millions) HVAC Refrigeration Security and Other Expenses Carrier Net sales $ 2,486 $ 1,005 $ 1,304 $ (96) $ — $ 4,699 Segment operating profit $ 365 $ 127 $ 1
Slide 24: 2022 EPS Reconciliation
2022 EPS Reconciliation (Unaudited) For the Three Months Ended March 31, 2022 (In millions, except per share amounts) Reported Adjustments Adjusted Net sales $ 4,654 $ — $ 4,654 Operating profit $ 1,737 (1,087) a $ 650 Operating margin 37.3 % 14.0 % Income from operations before income taxes $ 1,688
Slide 25: 2021 EPS Reconciliation
2021 EPS Reconciliation (Unaudited) For the Three Months Ended March 31, 2021 (In millions, except per share amounts) Reported Adjustments Adjusted Net sales $ 4,699 $ — $ 4,699 Operating profit $ 571 37 a $ 608 Operating margin 12.2 % 12.9 % Income from operations before income taxes $ 496 56 a,b $
Slide 26: Free Cash Flow Reconciliation
Free Cash Flow Reconciliation (Unaudited) Q1 Q2 Q3 Q4 FY Q1 (In millions) 2021 2021 2021 2021 2021 2022 Net cash flows provided by (used in) operating activities $ 184 $ 561 $ 579 $ 913 $ 2,237 $ (202) Less: Capital expenditures 53 79 74 138 344 56 Free cash flow $ 131 $ 482 $ 505 $ 775 $ 1,893 $ (2
Slide 27: Net Debt Reconciliation
Net Debt Reconciliation (Unaudited) (In millions) March 31, 2022 December 31, 2021 Long-term debt $ 8,305 $ 9,513 Current portion of long-term debt 256 183 Less: Cash and cash equivalents 3,604 2,987 Net debt $ 4,957 $ 6,709 26 See “Use and Definitions of Non-GAAP Financial Measures” for additional
Slide 28: Net Sales Excluding Chubb Reconciliation
Net Sales Excluding Chubb Reconciliation Y/Y % (Unaudited) For the Three Months Ended March 31, 2021 Fire and Carrier Security Net Sales: Reported $ 4,699 $ 1,304 Chubb (548) (548) Net sales excluding impact of Chubb $ 4,151 $ 756 Percentage increase in Net sales excluding impact of Chubb 12 % 8% 27