Carrier Global Corporation · NYSE:CARR
Carrier Global — Q4 2020 Earnings Presentation
22 slides from Carrier Global's earnings presentation, Feb 9, 2021
Slide 1: Q4 2020 Earnings Conference Call
Q4 2020 EARNINGS CONFERENCE CALL February 9, 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: Q4 2020 Summary
Q4 2020 Summary Highlights $4,594M Sales Reported +2% Residential HVAC demand remained strong Organic flat Y/Y F/X +2% Exited 2020 with strong backlog and order trends Adjusted Operating $453M Continued traction on Carrier 700 Profit1 Funded ~$75M of investments $38M Increased dividend by 50% Free C
Slide 4: The New Carrier
The New Carrier 2020: Laying the Foundation 2021: Building for the future The Carrier Way Embedding culture and operating system into DNA Carrier Excellence, Carrier Alliance Mid-single digit organic growth through enterprise Carrier 700 strategy and targeted growth initiatives Strengthened team Str
Slide 5: 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 6: 2021 Outlook
2021 Outlook 2021 Outlook Up 6% - 8% Y/Y Sales Organic +4% - 6% Y/Y FX +~2% Y/Y Adjusted Operating Margin1 ~13.5% Up ~70 bps Y/Y Adjusted EPS1 $1.85 - $1.95 Up 11% - 17% Y/Y Free Cash Flow1 ~$1.6B Driving Solid Top and Bottom-Line Growth in 2021 1 See appendix for additional information regarding no
Slide 7: Q4 2020 Consistent With Outlook
Q4 2020 Consistent With Outlook Q4 2020 Y/Y % 2020 Y/Y % 10/29/20 outlook Sales $4,594M 2% $17,456M (6)% ~$17.3B 1 Organic sales 0% (6)% FX 2% 0% 1 Adjusted operating profit $453M (24)% $2,232M (19)% ~$2.2B 1 Adjusted operating margin 9.9% 12.8% 1 Adjusted effective tax rate 26.3% 26.0% 1 Adjusted E
Slide 8: 2020 Segment Results
2020 Segment Results (Millions) HVAC Refrigeration Fire & Security Q4 Y/Y % FY Y/Y % Q4 Y/Y % FY Y/Y % Q4 Y/Y % FY Y/Y % Sales $2,336 6% 9,478 (2)% $949 (0)% 3,333 (12)% $1,398 (2)% 4,985 (9)% Organic sales1 4% (2)% (3)% (12)% (5)% (9)% Adjusted $231 (25)% 1,430 (14)% $110 (20)% 375 (28)% $186 (12)%
Slide 9: Order Trends
Order Trends Orders by Key Business Line Q3 2020 Q4 2020 Orders by Geography Q3 2020 Q4 2020 (Y/Y %) (Y/Y %) HVAC1 25% 10% Americas1 30% 10% Residential & Light Commercial 60% 20% Commercial HVAC1 0% 0% EMEA 0% 15% Refrigeration 15% 40% Transport Refrigeration 30% 50% Commercial Refrigeration (10)%
Slide 10: 2021 Outlook
2021 Outlook Total Company Segment Sales Outlook Up 6% - 8% Y/Y Up mid-single digits Sales Organic +4% - 6% Y/Y HVAC Organic up low-to-mid single digits FX +2% Y/Y Adjusted Operating Margin1 ~13.5% Refrigeration Up mid-teens Up ~70 bps Y/Y Organic up low-teens Up mid-single digits Adjusted Effective
Slide 11: 2021 Adjusted EPS Bridge
2021 Adjusted EPS1 Bridge ~ $0.02 ~ $0.04 ~($0.03) ~($0.02) ~$0.23 Adj. op. profit EPS $1.90 Core growth $260M $0.22 Carrier 700 $225M $0.19 2020 COVID factory disruption tailwinds $125M $0.10 $1.66 Flat Investment ($150M) ($0.13) 2020 One-time cost action headwinds ($200M) ($0.17) Absence of Beijer
Slide 12: Increased Financial Flexibility
Increased Financial Flexibility Net Debt2 Strong free cash flow and proceeds from Beijer sale $9.9B Prepaid $1.75 billion term loan $7.1B ~$6.1B Expect to further reduce debt by $500 million in 2021 1 Apr. 3rd, 2020 Dec. 31, 2020 Dec. 31, 2021E 1 Excludes impact of potential acquisitions and divesti
Slide 13: 2021 Capital Allocation
2021 Capital Allocation Organic Capex ~$375M Share repurchase program announced Share repurchase Bolt-on ~5 million M&A shares Balanced Announced 50% dividend increase deployment Debt Dividends reduction Portfolio review and M&A ~$425M ~$500M 12
Slide 14: Summary
Summary Improving demand and execution Well-positioned to drive healthy, safe, and sustainable building and cold chain solutions Carrier 700 funds investments and offsets temporary cost headwinds Continued strong free cash flow supports balanced capital allocation priorities Positioned for strong to
Slide 15: Appendix
APPENDIX
Slide 16: 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 17: Additional Items
Additional Items 2020 2021 outlook Shares outstanding (diluted) 880M ~889M Corporate expenses / eliminations $201M $225M - $250M Interest expense, net $288M $300M - $325M Adjusted effective tax rate1 26.0% ~25% Non-service pension benefit $60M $60M - $70M Capital expenditures $312M ~$375M Depreciati
Slide 18: Carrier 2020 vs 2019 Sales Reconciliation
Carrier 2020 vs 2019 Sales Reconciliation Y/Y % Three Months Ended December 31, 2020 Compared with Three Months Ended December 31, 2019 Factors Contributing to Total % change in Net Sales FX Acquisitions / (Unaudited) Organic Translation Divestitures, net Other Total HVAC 4% 2% —% —% 6% Refrigeratio
Slide 19: Segment Adjusted Operating Profit Reconciliation
Segment Adjusted Operating Profit Reconciliation For the Three Months Ended For the Year Ended (Unaudited) December 31, December 31, (dollars in millions - Income (Expense)) 2020 2019 2020 2019 HVAC Net sales $ 2,336 $ 2,207 $ 9,478 $ 9,712 Operating profit $ 1,098 $ 321 $ 2,462 $ 1,563 Restructurin
Slide 20: 2020 EPS Reconciliation
2020 EPS Reconciliation (Unaudited) For the Three Months Ended For the Twelve Months Ended (dollars in millions - Income (Expense)) 2020 2019 2020 2019 Net income attributable to common shareowners $ 884 $ 440 $ 1,982 $ 2,116 Total restructuring costs (30) (29) (49) (126) Total non-recurring and non
Slide 21: 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
Slide 22: Net Debt to Adjusted EBITDA Reconciliation
Net Debt to Adjusted EBITDA Reconciliation Twelve Months Ended (dollars in millions) December 31, 2020 March 31, 2020 Long-term debt $ 10,036 $ 11,029 Current portion of long-term debt 191 218 Less: Cash and cash equivalents 3,115 768 Net debt(1) $ 7,112 $ 10,479 Net income attributable to common sh