Carrier Global Corporation · NYSE:CARR
Carrier Global — Q2 2020 Earnings Presentation
19 slides from Carrier Global's earnings presentation, Jul 30, 2020
Slide 1: Q2 2020 Earnings Conference Call
Q2 2020 EARNINGS CONFERENCE CALL July 30, 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: Progress on Priorities | COVID-19
Progress on Priorities | COVID-19 1 • Distributed 2.5M masks across the business • Thermal screening 100% of employees at scale locations People • Putting Carrier’s suite of Healthy Buildings Program offerings in our own facilities 2 Customers and • Factories and suppliers are operational Business C
Slide 4: Focusing on Strategic Priorities
Focusing on Strategic Priorities Maintaining Focus on Strategic The New Carrier Social New Normal: Emerging Trend Imperatives Healthy, Safe and Sustainable Agility and increased focus Cultural on winning is yielding early Buildings Transformation results Strengthen and grow core Carrier Operating La
Slide 5: Order Trends
Order Trends North America1 EMEA (Y/Y %) (Y/Y %) 40% (15)% (25)% (10)% (25)% (30)% April May June April May June F&S Strong Residential HVAC and F&S demand in June Commercial HVAC orders soft in Europe Chubb orders impacted by shutdowns 1Excludes NORESCO 4
Slide 6: Q2 2020 Financial Summary
Q2 2020 Financial Summary (Millions except EPS) Q2 2019 Q2 2020 Y/Y % April and May sales declined as expected. June sales much stronger than anticipated helped by Sales $4,962 $3,972 (20)% residential HVAC 1 Organic sales (19)% GAAP operating profit $805 $442 (45)% 1 Aggressive cost actions partial
Slide 7: Q2 2020 Segment Results
Q2 2020 Segment Results (Millions) HVAC Refrigeration Fire & Security Q2 Y/Y % Q2 Y/Y % Q2 Y/Y % Sales $2,291 (16)% $700 (27)% $1,057 (24)% Organic sales1 (15)% (25)% (22)% GAAP Operating Profit $358 (34)% $61 (50)% $106 (42)% Adjusted Operating Profit1 $359 (34)% $64 (49)% $112 (42)% + + + NA resid
Slide 8: Cost Reduction Progress
Cost Reduction Progress (Millions) May 8th Targets Updated 2020 Targets Carrier 600 ~$225 ~$250 Investments ~($75) ~($100) Non-Recurring Cost Containment ~$300 ~$300 Actions Productivity / Absorption ~($200) ~($200) Total ~$250 ~$250 7
Slide 9: Cash Flow and Balance Sheet
Cash Flow and Balance Sheet H1 Free Cash Flow 1 Cash Balance Strong cash position Up 64% Declared dividend Renegotiated term loan and revolver covenants $462M $2.7B No borrowings on $2B revolver $282M $1.3B No debt maturities until 2023 $952M H1 2019 H1 2020 12/31/19 04/03/20 06/30/20 $750M bond iss
Slide 10: 2020 Outlook
2020 Outlook Watch items May 8th Revised Scenario Ranges 2020 Outlook Sales $15.0B – $17.0B $15.5B – $17.0B Adjusted Operating Profit1 $1.7B – $2.0B $1.8B – $2.0B Free Cash Flow1 At least $1.0B At least $1.1B 9 1 See appendix for additional information regarding non-GAAP measures
Slide 11: Summary
Summary Effective and aggressive actions on cost containment and cash flow Better than expected Q2 enables increased investment in growth in H2 and revised FY outlook Healthy buildings & cold chain solutions present attractive opportunities Positioned for medium-term outlook of mid-single digit sale
Slide 12: Appendix
APPENDIX
Slide 13: 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 14: 2020 Key Items
2020 Key Items Shares outstanding (diluted) 870M – 875M Corporate expenses / eliminations $200M – $225M Interest expense $290M - $300M Adjusted effective tax rate1 26% – 27% Capital expenditures $250M - $275M Depreciation & amortization ~ $320M 13 See page 12 for additional information regarding non
Slide 15: Carrier Q2 2020 vs Q2 2019 Sales Reconciliation
Carrier Q2 2020 vs Q2 2019 Sales Reconciliation Y/Y % Three Months Ended June 30, 2020 Compared with Three Months Ended June 30, 2019 (Unaudited) Factors Contributing to Total % change in Net Sales FX Acquisitions / Organic Translation Divestitures, net Other Total HVAC (15)% (1)% —% —% (16)% Refrig
Slide 16: Segment adjusted operating profit reconciliation
Segment adjusted operating profit reconciliation (Unaudited) For the Three Months Ended For the Six Months Ended June 30, June 30, (dollars in millions - Income (Expense)) 2020 2019 2020 2019 HVAC Net sales $ 2,291 $ 2,735 $ 4,250 $ 4,903 Operating profit $ 358 $ 545 $ 525 $ 838 Restructuring (1) (1
Slide 17: Constant currency reconciliation
Constant currency reconciliation For the Quarters Ended June 30 (dollars in millions) 2020 2019 % YoY HVAC Adjusted Operating Profit $ 359 $ 542 (34%) Impact of Foreign Exchange (7) Adjusted Operating Profit at constant currency $ 366 $ 542 (32%) Refrigeration Adjusted Operating Profit $ 64 $ 125 (4
Slide 18: 2020 EPS reconciliation
2020 EPS reconciliation (Unaudited) For the Three Months Ended For the Six Months Ended June 30, June 30, (dollars in millions - Income (Expense)) 2020 2019 2020 2019 Net income attributable to common shareowners $ 261 $ 784 $ 357 $ 1,184 Total restructuring costs (11) (30) (16) (63) Total non-recur
Slide 19: 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 (used in) operating activities $ 47 (183) Less: Capital expenditures 48 41 Free cash flow $ (1) $ (224) F