Carrier Global Corporation · NYSE:CARR
Carrier Global — Q3 2020 Earnings Presentation
20 slides from Carrier Global's earnings presentation, Oct 29, 2020
Slide 1: Q3 2020 Earnings Conference Call
Q3 2020 EARNINGS CONFERENCE CALL October 29, 2020
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. From time to time, oral or written forward- looking statements may also be included in other info
Slide 3: Q3 2020 Summary
Q3 2020 Summary Highlights $5,002M Sales Up 4% Y/Y NA residential demand remained strong Overall business improved sequentially Adjusted Operating $867M Profit1 Up 6% Y/Y Increasing Carrier 600 to Carrier 700 Continued strong free cash flow performance $880M Free Cash Flow1 Up 55% Y/Y Growth initiat
Slide 4: Driving Shareholder Returns
Driving Shareholder Returns • Tenacious cost reduction Enterprise Be the world leader in healthy, • Talent and inclusion safe, and sustainable building • Customer-centric Strategy and cold chain solutions • G&A transformation and simplification • Innovation leadership • ESG Performance Growth Cultur
Slide 5: Carrier Enterprise Strategy
Carrier Enterprise Strategy Healthy, Safe and Sustainable Buildings Healthy, Safe and Sustainable Cold Chain VENTILATION MOISTURE AIR QUALITY NOISE THERMAL HEALTH FILTRATION SAFETY & SECURITY 4
Slide 6: Order Trends
Order Trends Orders by Key Business Line Q2 2020 Q3 2020 Orders by Geography Q2 2020 Q3 2020 (Y/Y %) (Y/Y %) HVAC1 (5)% 25% North America1 0% 30% Residential & Light Commercial 5% 60% Commercial HVAC1 (15)% 0% EMEA (25)% 0% Refrigeration 0% 15% Transport Refrigeration 15% 30% Commercial Refrigeratio
Slide 7: Q3 2020 Financial Summary
Q3 2020 Financial Summary (Millions except EPS) Q3 2019 Q3 2020 Y/Y % Residential HVAC strength continued through Q3 Sales $4,822 $5,002 4% 1 Organic sales 3% GAAP operating profit $629 $1,081 72% 1 Improved productivity and continued cost control Adjusted operating2 profit $818 $867 6% GAAP EPS $0.
Slide 8: Q3 2020 Segment Results
Q3 2020 Segment Results (Millions) HVAC Refrigeration Fire & Security Q3 Y/Y % Q3 Y/Y % Q3 Y/Y % Sales $2,892 11% $876 (5)% $1,324 (6)% Organic sales1 11% (6)% (7)% GAAP operating profit $839 108% $103 (18)% $200 (2)% Adjusted operating profit1 $598 14% $102 (23)% $204 (7)% + + + NA residential Cont
Slide 9: Cost Reduction Progress
Cost Reduction Progress (Millions) May 8th July 30th Updated 2020 Targets Targets Targets Carrier 700 ~$225 ~$250 ~$250 Investments ~($75) ~($100) ~($100) Non-recurring cost ~$300 ~$300 ~$250 containment actions Productivity / ~($200) ~($200) ~($150) absorption Total ~$250 ~$250 ~$250 8
Slide 10: Cash Flow and Balance Sheet
Cash Flow and Balance Sheet YTD Free Cash Flow1 Cash Balance Strong Q3 cash generation Up 58% Proceeds from Beijer sale $3.8B $1.3B Declared dividend $2.7B $850M $1.3B Plan to reduce debt by $1.5B in Q4 YTD 2019 YTD 2020 4/3/2020 6/30/2020 9/30/2020 9 1 See appendix for additional information regard
Slide 11: 2020 Outlook
2020 Outlook Watch items Revised July 2020 Outlook 2020 Outlook Sales $15.5B – $17.0B ~$17.3B Adjusted Operating Profit1 $1.8B – $2.0B ~$2.2B Free Cash Flow1 At least $1.1B ~$1.5B 10 1 See appendix for additional information regarding non-GAAP measures
Slide 12: Summary
Summary Strong demand and execution in residential HVAC supports improved 2020 outlook Well-positioned to drive healthy, safe, and sustainable building and cold chain solutions Increasing Carrier 600 to Carrier 700 Continued strong free cash flow supports Q4 debt paydown Positioned for medium term m
Slide 13: Appendix
APPENDIX
Slide 14: 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 15: 2020 Key Items
2020 Key Items Shares outstanding (diluted) ~880M Corporate expenses / eliminations ~$225M Interest expense ~$285M Adjusted effective tax rate1 ~26% Capital expenditures ~$275M Depreciation & amortization ~ $320M 14 1See page 13 and page 18 for additional information regarding non-GAAP measures
Slide 16: Carrier Q3 2020 vs Q3 2019 Sales Reconciliation
Carrier Q3 2020 vs Q3 2019 Sales Reconciliation Y/Y % Three Months Ended September 30, 2020 Compared with Three Months Ended September 30, 2019 (Unaudited) Factors Contributing to Total % change in Net Sales FX Acquisitions / Organic Translation Divestitures, net Other Total HVAC 11 % —% —% —% 11 %
Slide 17: 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)) 2020 2019 2020 2019 HVAC Net sales $ 2,892 $ 2,602 $ 7,142 $ 7,505 Operating profit $ 839 $ 404 $ 1,364 $ 1,242 Restru
Slide 18: Constant Currency Reconciliation
Constant Currency Reconciliation For the Quarters Ended September 30th (dollars in millions) 2020 2019 % YoY HVAC Adjusted Operating Profit $ 598 $ 524 14 % Impact of Foreign Exchange (5) Adjusted Operating Profit at constant currency $ 603 $ 524 15 % Refrigeration Adjusted Operating Profit $ 102 $
Slide 19: 2020 EPS Reconciliation
2020 EPS Reconciliation (Unaudited) For the Three Months Ended For the Nine Months Ended S eptember 30, S eptember 30, (dollars in millions - Income (Expense)) 2020 2019 2020 2019 Net income attributable to common shareowners $ 741 $ 492 $ 1,098 $ 1,676 Total restructuring costs (3) (34) (19) (97) T
Slide 20: Free Cash Flow Reconciliation
Free Cash Flow Reconciliation (Unaudited) For the Three Months Ended March 31, (dollars in millions) 2020 2019 Net income attributable to common shareowners $ 96 $ 400 Net cash flows provided by operating activities $ 47 $ (183) Less: Capital expenditures 48 41 Free cash flow $ (1) $ (224) Free cash