Carrier Global Corporation · NYSE:CARR
Carrier Global — Q1 2021 Earnings Presentation
24 slides from Carrier Global's earnings presentation, Apr 29, 2021
Slide 1: Q1 2021 Earnings Conference Call
Q1 2021 EARNINGS CONFERENCE CALL April 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: Q1 2021 Summary
Q1 2021 Summary Highlights $4,699M Sales Reported +21% Y/Y Organic* +17% Y/Y Stronger than expected start to 2021 F/X +4% Y/Y Improving order trends and backlog Adjusted Operating $608M Profit* +~40% Y/Y Continued traction on aftermarket initiatives Addressing supply chain challenges Free Cash Flow*
Slide 4: Driving Shareholder Returns
Driving Shareholder Returns Growth ✓ Strengthen and grow core • Tenacious cost reduction ✓ Product extensions and • Talent and inclusion Focus geographic coverage • Customer-centric Areas ✓ Grow services and digital • G&A transformation and simplification • Innovation leadership • ESG Performance Gr
Slide 5: Organic and Inorganic Growth
Organic and Inorganic Growth Organic Inorganic • Healthy, safe and sustainable buildings pipeline • Expanding in attractive global VRF and light >$500M and Q1 orders >$80M commercial markets • ABOUND launched in April • Design and manufacturing capabilities in rapidly growing VRF segment • Sensitech
Slide 6: Q1 2021 Results
Q1 2021 Results Q1 2021 Q1 2020 Y/Y Sales $4,699M $3,888M 21% Organic sales* 17% FX 4% Adjusted operating profit* $608M $436M 39% Adjusted operating margin* 12.9% 11.2% 170bps Adjusted effective tax rate* 21.1% 25.9% (480)bps Adjusted EPS* $0.48 $0.35 $0.13 Free cash flow* $131M $(1)M $132M *See app
Slide 7: Q1 2021 HVAC Results
Q1 2021 HVAC Results Q1 2021 Y/Y Highlights Sales $2,486M 27% 48% sales growth in North American residential HVAC and distributor movement up ~20% Organic sales* 25% FX 2% Mid-teens growth in commercial HVAC Adjusted operating profit* $369M 52% Adjusted operating margin* 14.8% 240bps Double digit gr
Slide 8: Q1 2021 Refrigeration Results
Q1 2021 Refrigeration Results Q1 2021 Y/Y Highlights Sales $1,005M 24% Strong container demand Organic sales* 19% FX 5% Return to growth in commercial refrigeration Adjusted operating profit* $129M 31% Unfavorable mix and supply chain challenges Adjusted operating margin* 12.8% 50bps North America t
Slide 9: Q1 2021 Fire & Security Results
Q1 2021 Fire & Security Results Q1 2021 Y/Y Highlights Strong demand in March for commercial and Sales $1,304M 8% residential fire Organic sales* 3% FX 5% Industrial fire declines due to oil & gas weakness Adjusted operating profit* $164M 30% Adjusted operating margin* 12.6% 220bps Chubb booked larg
Slide 10: Organic Order Trends
Organic Order Trends Orders by Key Business Line Q1 2021 Orders by Geography Q1 2021 (Y/Y) (Y/Y) HVAC* 40% - 45% Americas* >40% Residential & Light Commercial >60% Commercial HVAC* >15% EMEA 5% - 10% Refrigeration 35% - 40% Transport Refrigeration >55% Commercial Refrigeration ~0% China >100% Fire &
Slide 11: Q1 2021 Adjusted EPS Bridge
Q1 2021 Adjusted EPS* Bridge $0.01 $0.02 ($0.03) ($0.04) $0.18 ($0.01) $0.48 $0.35 2020 Adjusted EPS Operational Beijer & Deferred / FX Interest Tax Rate Share Count 2021 Adjusted EPS Equity Comp 10 *See appendix for additional information regarding non-GAAP measures
Slide 12: Updated 2021 Outlook
Updated 2021 Outlook Updated (Apr 29th) Prior (Feb 9th) Up 7% - 10% Y/Y Up 6% - 8% Y/Y Sales Organic* +5% - 8% Y/Y Organic* +4% - 6% Y/Y FX +2% Y/Y FX +2% Y/Y Adjusted Operating Margin* ~13.5% ~13.5% Up ~70 bps Y/Y Up ~70 bps Y/Y Adjusted Effective Tax Rate* ~24% ~25% Adjusted EPS* $1.95 - $2.05 $1.
Slide 13: 2021 Adjusted EPS Outlook Bridge
2021 Adjusted EPS* Outlook Bridge ~$0.02 ~$0.02 ~$0.06 $2.00 $1.90 2021 Adjusted EPS Operational Interest Tax Rate 2021 Adjusted EPS (prior guidance midpoint) (updated guidance midpoint) 12 *See appendix for additional information regarding non-GAAP measures
Slide 14: 2021 Capital Allocation
2021 Capital Allocation Organic Capex ~$375M Share repurchase Bolt-on M&A ~5 million Balanced >$200M shares deployment Debt Dividends reduction ~$425M ~$500M 13
Slide 15: Summary
Summary Strong execution, improving demand Positioned for strong top and bottom-line growth in 2021 and beyond Implementing additional price increases given supply chain headwind Strong free cash flow supports balanced capital allocation priorities Well-positioned to drive healthy, safe, and sustain
Slide 16: Appendix
APPENDIX
Slide 17: 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 18: Additional Items
Additional Items Updated outlook Prior outlook Shares outstanding (diluted) ~889M ~889M Corporate expenses / eliminations $225M - $250M $225M - $250M Adjusted interest expense, net* $295M - $300M $300M - $325M Adjusted effective tax rate* ~24% ~25% Non-service pension benefit $60M - $70M $60M - $70M
Slide 19: Carrier Q1 2021 vs 2020 Sales Reconciliation
Carrier Q1 2021 vs 2020 Sales Reconciliation Y/Y % Three Months Ended March 31, 2021 Compared with Three Months Ended March 31, 2020 (Unaudited) Factors Contributing to Total % change in Net Sales FX Acquisitions / Organic Translation Divestitures, net Other Total HVAC 25 % 2 % — % — % 27 % Refriger
Slide 20: Segment Adjusted Operating Profit Reconciliation
Segment Adjusted Operating Profit Reconciliation (Unaudited) For the Three Months Ended March 31, (dollars in millions - Income (Expense)) 2021 2020 HVAC Net sales $ 2,486 $ 1,959 Operating profit $ 365 $ 167 Restructuring (4) (2) (Unaudited) Impairment of joint venture investment — (71) For the Thr
Slide 21: Q1 2021 EPS Reconciliation
Q1 2021 EPS Reconciliation (Unaudited) For the Three Months Ended March 31, 2021 (In millions) 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 552 Income tax expense (104) (
Slide 22: Q1 2020 EPS Reconciliation
Q1 2020 EPS Reconciliation (Unaudited) For the Three Months Ended March 31, 2020 (In millions) Reported Adjustments Adjusted Net sales $ 3,888 $ — $ 3,888 Operating profit 315 121 a 436 Operating margin 8.1 % 11.2 % Income from operations before income taxes 295 126 a,b 421 Income tax expense (193)
Slide 23: Segment Net Sales and Operating Profit
Segment Net Sales and Operating Profit (Unaudited) For the Three Months Ended March 31, 2021 2020 (In millions) Reported Adjusted Reported Adjusted Net sales HVAC $ 2,486 $ 2,486 $ 1,959 $ 1,959 Refrigeration 1,005 1,005 808 808 Fire & Security 1,304 1,304 1,206 1,206 Segment sales 4,795 4,795 3,973
Slide 24: Free Cash Flow Reconciliation
Free Cash Flow Reconciliation Free Cash Flow Reconciliation (Unaudited) Q1 Q2 Q3 Q4 FY Q1 (dollars in millions) 2020 2020 2020 2020 2020 2021 Net cash flows provided by operating activities $ 47 $ 509 $ 937 199 $ 1,692 $ 184 Less: Capital expenditures 48 46 57 161 312 53 Free cash flow $ (1) $ 463 $