Carrier Global Corporation · NYSE:CARR
Carrier Global — Q2 2021 Earnings Presentation
27 slides from Carrier Global's earnings presentation, Jul 29, 2021
Slide 1: Q2 2021 Earnings Conference Call
Q2 2021 EARNINGS CONFERENCE CALL July 29, 2021
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: Sale of Chubb
Sale of Chubb Agreement to sell Fire & Security Field business (Chubb) for enterprise value of $3.1 billion Divestiture makes Carrier a more focused global provider of healthy, safe, sustainable and intelligent building and cold chain solutions Transaction improves Carrier’s growth profile, focus on
Slide 4: Q2 2021 Summary
Q2 2021 Summary $5,440M Highlights Sales Reported +37% Y/Y Organic* +31% Y/Y Acquisitions +1% Y/Y F/X +5% Y/Y Sales, adjusted operating profit and free cash flow ahead of our expectations Adjusted Operating $821M Profit* Continued traction on aftermarket and digital initiatives +72% Y/Y Closed acqui
Slide 5: Well-Positioned in Attractive Markets
Well-Positioned in Attractive Markets Secular Drivers Strategic • Healthy, safe, sustainable & Sustainability and healthy Healthy Safe intelligent environments Fire • Market leadership • Recurring revenues Security Climate and regulatory changes Growth Focus Areas Growing middle class and • Strength
Slide 6: Healthy and Intelligent
Healthy and Intelligent Healthy Intelligent Recurring Revenues ✓ Carrier products in over 100M homes ✓ ABOUND pilots across the U.S. with ✓ Chiller service coverage increased customers in the commercial building, ✓ On track for 10,000 more chillers K-12 education, entertainment and under contract ✓
Slide 7: Sustainability Leadership
Sustainability Leadership Environmental Improved energy efficiency, operational Automated Logic WebCTRL efficiencies and sustainability performance building automation system MSCI Improved from A to AA 68 MMT of avoided Most efficient heat pump in its class* Greenhouse gases GHG emissions for 2020 I
Slide 8: Q2 2021 Results
Q2 2021 Results Q2 2021 Q2 2020 Y/Y Sales $5,440M $3,972M 37% Organic sales* 31% Acquisition 1% FX 5% Adjusted operating profit* $821M $476M 72% Adjusted operating margin* 15.1% 12.0% 310 bps Adjusted effective tax rate* 25.0% 28.0% (300) bps Adjusted EPS* $0.64 $0.33 $0.31 Free cash flow* $482M $46
Slide 9: Q2 2021 HVAC Results
Q2 2021 HVAC Results Q2 2021 Y/Y Highlights Sales $3,120M 36% 34% sales growth in North American residential HVAC Organic sales* 32% Acquisitions 1% Over 20% growth in commercial HVAC FX 3% Adjusted operating profit* $582M 62% Double digit growth in aftermarket Adjusted operating margin* 18.7% 300 b
Slide 10: Q2 2021 Refrigeration Results
Q2 2021 Refrigeration Results Q2 2021 Y/Y Highlights Sales $1,021M 46% Accelerating NA truck/trailer Organic sales* 38% FX 8% Continued strength in container demand Adjusted operating profit* $126M 97% Adjusted operating margin* 12.3% 320 bps Higher freight costs Seaco Global increased its sustainab
Slide 11: Q2 2021 Fire & Security Results
Q2 2021 Fire & Security Results Q2 2021 Y/Y Highlights Sales $1,403M 33% Commercial and residential fire remained strong Organic sales* 25% FX 8% Double digit Access Solutions growth Adjusted operating profit* $169M 51% Adjusted operating margin* 12.0% 140 bps Industrial fire returned to growth In s
Slide 12: Organic Order Trends
Organic Order Trends Orders by Key Business Line Q2 2021 Orders by Geography Q2 2021 (Y/Y) (Y/Y) HVAC* 30% - 35% Americas* ~35% Residential & Light Commercial >30% Commercial HVAC* >30% EMEA 40% - 45% Refrigeration 50% - 55% Transport Refrigeration ~60% Commercial Refrigeration >40% China 20% - 25%
Slide 13: Q2 2021 Adjusted EPS Bridge
Q2 2021 Adjusted EPS* Bridge $0.01 $0.02 $0.01 ($0.01) $0.28 $0.64 $0.33 2020 Adjusted EPS Operational FX Interest Tax Rate Share Count 2021 Adjusted EPS 12 *See appendix for additional information regarding non-GAAP measures
Slide 14: Updated 2021 Outlook
Updated 2021 Outlook Updated (Jul 29th) Prior (Apr 29th) Up 14% - 16% Y/Y Up 7% - 10% Y/Y Sales Organic* +10% - 12% Y/Y Organic* +5% - 8% Y/Y Acquisitions +1% Y/Y FX +2% Y/Y FX +3% Y/Y Adjusted Operating Margin* >13.5% ~13.5% Adjusted Effective Tax Rate* ~24% ~24% Adjusted EPS* $2.10 - $2.20 $1.95 -
Slide 15: 2021 Adjusted EPS Outlook Bridge
2021 Adjusted EPS* Outlook Bridge ~$0.01 ~($0.01) ~$0.15 $2.15 $2.00 2021 Adjusted EPS Operational Interest / Pension Income Chigo Acquisition 2021 Adjusted EPS (prior guidance midpoint) (updated guidance midpoint) 14 *See appendix for additional information regarding non-GAAP measures
Slide 16: Sale of Chubb Fire and Security
Sale of Chubb Fire and Security Chubb Profile Transaction Summary Capital Deployment • ~$2.2B of sales in 2021 (about 40% • Enterprise value of $3.1B • ~$2.6 billion in cash at 6/30/2021 and of Fire & Security revenues) ~$2.6 billion in net proceeds • Estimated net proceeds ~$2.6B • ~$750 million de
Slide 17: Summary
Summary Executing on portfolio optimization Achieving strong first half results in a challenging supply chain environment Meaningfully increasing the 2021 full year outlook Well-positioned to drive healthy, safe, sustainable and intelligent building and cold chain solutions 16
Slide 18: Appendix
APPENDIX
Slide 19: 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 20: Additional Items
Additional Items Updated outlook Prior outlook Shares outstanding (diluted) ~890M ~889M Corporate expenses / eliminations $220M - $240M $225M - $250M Adjusted interest expense, net* $285M - $290M $295M - $300M Adjusted effective tax rate* ~24% ~24% Non-service pension benefit ~$70M $60M - $70M Capit
Slide 21: Carrier Q2 2021 vs 2020 Sales Reconciliation
Carrier Q2 2021 vs 2020 Sales Reconciliation Y/Y % Three Months Ended June 30, 2021 Compared with Three Months Ended June 30, 2020 (Unaudited) Factors Contributing to Total % change in Net Sales Acquisitions / Organic FX Translation Divestitures, net Other Total HVAC 32 % 3 % 1 % — % 36 % Refrigerat
Slide 22: 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)) 2021 2020 2021 2020 HVAC Net sales $ 3,120 $ 2,291 $ 5,606 $ 4,250 Operating profit $ 573 $ 358 $ 938 $ 525 Restructuring (7) (1
Slide 23: Q2 2021 EPS Reconciliation
Q2 2021 EPS Reconciliation (Unaudited) For the Three Months Ended June 30, 2021 For the Six Months Ended June 30, 2021 (In millions) Reported Adjustments Adjusted Reported Adjustments Adjusted Net sales $ 5,440 $ — $ 5,440 $ 10,139 $ — $ 10,139 Operating profit 783 38 a 821 1,354 75 a 1,429 Operatin
Slide 24: Q2 2020 EPS Reconciliation
Q2 2020 EPS Reconciliation (Unaudited) For the Three Months Ended June 30, 2020 For the Six Months Ended June 30, 2020 (In millions) Reported Adjustments Adjusted Reported Adjustments Adjusted Net sales $ 3,972 $ — $ 3,972 $ 7,860 $ — $ 7,860 Operating profit 442 34 a 476 757 155 a 912 Operating mar
Slide 25: Segment Net Sales and Operating Profit
Segment Net Sales and Operating Profit (Unaudited) For the Three Months Ended June 30, For the Six Months Ended 2021 2020 2021 2020 (In millions) Reported Adjusted Reported Adjusted Reported Adjusted Reported Adjusted Net sales HVAC $ 3,120 $ 3,120 $ 2,291 $ 2,291 $ 5,606 $ 5,606 $ 4,250 $ 4,250 Ref
Slide 26: Free Cash Flow Reconciliation
Free Cash Flow Reconciliation (Unaudited) Q1 Q2 Q3 Q4 FY Q1 Q2 (dollars in millions) 2020 2020 2020 2020 2020 2021 2021 Net cash flows provided by operating activities $ 47 $ 509 $ 937 199 $ 1,692 $ 184 $ 561 Less: Capital expenditures 48 46 57 161 312 53 79 Free cash flow $ (1) $ 463 $ 880 $ 38 $ 1
Slide 27: Carrier Q2 2021 vs 2019 Organic Sales Reconciliation
Carrier Q2 2021 vs 2019 Organic Sales Reconciliation Y/Y % Three Months Ended June 30, 2021 Compared with Three Months Ended June 30, 2019 (Unaudited) Factors Contributing to Total % change in Net Sales Acquisitions / Organic FX Translation Divestitures, net Other Total Consolidated 7% 3% —% —% 10 %